What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-11 · 229 added, 167 removed, 744 unchanged (35% of the section changed)

2 unchanged sentences

(In thousands, except share and par value amounts)

September 30,

Current assets:

18 unchanged sentences

Preferred stock, $ 0.0001 par value;

80,000,000 shares authorized as of June 30, 2022 and December 31, 2021;

no shares issued and outstanding as of June 30, 2022 and December 31, 2021

80,000,000 shares authorized as of September 30, 2022 and December 31, 2021;

no shares issued and outstanding as of September 30, 2022 and December 31, 2021

Common stock, $ 0.0001 par value;

800,000,000 shares authorized as of June 30, 2022 and December 31, 2021;

122,063,473 and 121,382,547 shares issued at June 30, 2022 and December 31, 2021, respectively;

120,545,318 and 119,102,505 shares outstanding at June 30, 2022 and December 31, 2021, respectively

800,000,000 shares authorized as of September 30, 2022 and December 31, 2021;

122,306,969 and 121,382,547 shares issued at September 30, 2022 and December 31, 2021, respectively;

121,024,938 and 119,102,505 shares outstanding at September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

6 unchanged sentences

(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,

Operating expenses:

2 unchanged sentences

General and administrative

Contribution of common stock to Erasca Foundation

Total operating expenses

8 unchanged sentences

Other comprehensive income (loss):

Unrealized loss on marketable securities, net

Unrealized (loss) gain on marketable securities, net

Comprehensive loss

1 unchanged sentence

Condensed Consolidated Statements of Convertible Preferred Stock and Stock holders’

Equity (Deficit)

(In thousands, except share data)

2 unchanged sentences

Stockholders'

Income (Loss)

Balance at December 31, 2021

11 unchanged sentences

Balance at June 30, 2022

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’

(In thousands, except share data)

Exercise of stock options

Vesting of early exercised stock options

Stock-based compensation expense

Unrealized loss on marketable securities, net

Balance at September 30, 2022

Preferred Stock

2 unchanged sentences

Income (Loss)

Equity (Deficit)

Balance at December 31, 2020

12 unchanged sentences

Balance at June 30, 2021

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

Issuance of common stock in initial public offering, net of $ 28,001 in discounts and offering costs

Issuance of common stock to Erasca Foundation

Disgorgement of stockholder's short-swing profits

Exercise of stock options

Vesting of early exercised stock options

Stock-based compensation expense

Unrealized gain on marketable securities, net

Balance at September 30, 2021

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

1 unchanged sentence

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

3 unchanged sentences

In-process research and development expenses

Amortization on marketable securities, net

Issuance of common stock to Erasca Foundation

(Accretion) amortization on marketable securities, net

Change in fair value of preferred stock purchase right liability

11 unchanged sentences

Purchases of property and equipment

Net cash (used in) provided by investing activities

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from the issuance of common stock in initial public offering, net of discounts and offering costs

Proceeds from the issuance of convertible preferred stock, net of issuance costs

1 unchanged sentence

Proceeds from issuance of common stock under the Employee Stock Purchase Plan

Proceeds from the disgorgement of stockholder's short-swing profits

Net cash provided by financing activities

3 unchanged sentences

Supplemental disclosure of noncash investing and financing activities:

Issuance of common stock to Erasca Foundation

Issuance of common stock in connection with asset acquisition

1 unchanged sentence

Amounts accrued for purchases of property and equipment

Conversion of preferred stock to common stock upon initial public offering

Vesting of early exercised options

Amounts accrued for deferred offering costs

Supplemental disclosure of noncash operating activities:

Operating lease assets obtained in exchange for lease obligation

Tenant improvement allowance included in operating lease liabilities

Reduction in operating lease assets due to lease amendment

Tenant improvement allowance included in operating lease liabilities

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

13 unchanged sentences

Since inception, the Company has devoted substantially all of its efforts and resources to organizing and staffing the Company, business planning, raising capital, identifying, acquiring and in-licensing the Company’s product candidates, establishing its intellectual property portfolio, conducting research, preclinical studies, and clinical trials, establishing arrangements with third parties for the manufacture of its product candidates and related raw materials, and providing general and administrative support for these operations.

As of June 30, 2022, the Company had $ 371.5 million in cash, cash equivalents, and short-term marketable securities, and $ 19.3 million in long-term marketable securities.

As of June 30, 2022, the Company had an accumulated deficit of $ 310.2 million.

As of September 30, 2022, the Company had $ 355.9 million in cash, cash equivalents, and short-term marketable securities, and $ 9.6 million in long-term marketable securities.

As of September 30, 2022, the Company had an accumulated deficit of $ 345.7 million.

The Company has incurred significant operating losses and negative cash flows from operations.

From its inception through June 30, 2022, the Company’s financial support has primarily been provided from the sale of its convertible preferred stock and the sale of its common stock in its initial public offering (IPO).

From its inception through September 30, 2022, the Company’s financial support has primarily been provided from the sale of its convertible preferred stock and the sale of its common stock in its initial public offering (IPO).

As the Company continues its expansion, it expects to use its cash, cash equivalents, and short-term marketable securities to fund research and development, working capital, and other general corporate purposes.

3 unchanged sentences

The Company’s failure to raise capital or enter into such other arrangements when needed would have a negative impact on the Company’s financial condition and could force the Company to delay, limit, reduce or terminate its research and development programs or other operations, or grant rights to develop and market product candidates that the Company would otherwise prefer to develop and market itself.

The Company believes its cash, cash equivalents, and short-term marketable securities as of June 30, 2022 will be sufficient for the Company to fund operations for at least one year from the issuance date of these condensed consolidated financial statements.

The Company believes its cash, cash equivalents, and short-term marketable securities as of September 30, 2022 will be sufficient for the Company to fund operations for at least one year from the issuance date of these condensed consolidated financial statements.

Initial public offering

19 unchanged sentences

Unaudited interim financial information

The accompanying condensed consolidated balance sheet as of June 30, 2022, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2022 and 2021, the condensed consolidated statements of convertible preferred stock and stockholders’

equity (deficit) for the three and six months ended June 30, 2022 and 2021 and the condensed consolidated statements of cash flows for the six months ended June 30, 2022 and 2021 are unaudited.

The unaudited condensed consolidated interim financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s condensed consolidated financial position as of June 30, 2022 and the condensed consolidated results of its operations and cash flows for the three and six months ended June 30, 2022 and 2021.

The condensed consolidated financial data and other information disclosed in these notes related to the three and six months ended June 30, 2022 and 2021 are unaudited.

The condensed consolidated results for the three and six months ended June 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022 , any other interim periods, or any future year or period.

The accompanying condensed consolidated balance sheet as of September 30, 2022, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2022 and 2021, the condensed consolidated statements of convertible preferred stock and stockholders’

equity (deficit) for the three and nine months ended September 30, 2022 and 2021 and the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 are unaudited.

The unaudited condensed consolidated interim financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s condensed consolidated financial position as of September 30, 2022 and the condensed consolidated results of its operations and cash flows for the three and nine months ended September 30, 2022 and 2021.

The condensed consolidated financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2022 and 2021 are unaudited.

The condensed consolidated results for the three and nine months ended September 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022 , any other interim periods, or any future year or period.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 24, 2022.

5 unchanged sentences

Cash, cash equivalents and restricted cash

Cash and cash equivalents include cash in readily available checking and savings accounts, money market funds, and corporate debt securities.

Cash and cash equivalents include cash in readily available checking and savings accounts, money market funds, and US treasury securities.

The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents.

The Company had deposited cash of $ 408,000 as of June 30, 2022 and December 31, 2021 to secure a letter of credit in connection with the lease of the Company’s facilities (see Note 11).

The Company had deposited cash of $ 408,000 as of September 30, 2022 and December 31, 2021 to secure a letter of credit in connection with the lease of the Company’s facilities (see Note 11).

The Company has classified the restricted cash as a noncurrent asset on its condensed consolidated balance sheets.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows (in thousands):

September 30,

Cash and cash equivalents

52 unchanged sentences

The following tables summarize the Company’s financial assets measured at fair value on a recurring basis and their respective input levels based on the fair value hierarchy (in thousands):

Fair value measurements as of June 30, 2022 using

Fair value measurements as of September 30, 2022 using

Quoted prices in

active markets

September 30,

for identical

3 unchanged sentences

US treasury securities (1)

US treasury securities (2)

Commercial paper (2)

Corporate debt securities (2)

Yankee debt security (2)

Supranational debt security (2)

20 unchanged sentences

(3) Included as long-term marketable securities on the condensed consolidated balance sheets.

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

As of June 30, 2022 , the Company has recorded a $ 2.0 million equity investment in Affini-T Therapeutics, Inc.

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

As of September 30, 2022 , the Company has recorded a $ 2.0 million equity investment in Affini-T Therapeutics, Inc.

(Affini-T) at cost, subject to impairment in accordance with ASC 321, Investments—Equity Securities.

1 unchanged sentence

No transfers between levels have occurred during the periods presented.

Cash equivalents consist of money market funds, short-term marketable securities consist of US treasury securities, corporate debt securities, commercial paper, Yankee debt securities and supranational debt securities, and long-term marketable securities consist of US treasury securities.

Cash equivalents consist of money market funds and US treasury securities;

short-term marketable securities consist of US treasury securities, commercial paper, corporate debt securities, and supranational debt securities;

and long-term marketable securities consist of US treasury securities.

The Company obtains pricing information from its investment manager and generally determines the fair value of marketable securities usi ng standard observable inputs, including reported trades, broker/dealer quotes, and bid and/or offers.

1 unchanged sentence

The following tables summarize the Company’s marketable securities accounted for as available-for-sale securities (in thousands, except years):

June 30, 2022

September 30, 2022

US treasury securities

1 unchanged sentence

Corporate debt securities

Yankee debt security

Supranational debt security

6 unchanged sentences

US treasury securities

As of June 30, 2022, there were 25 av ailable-for-sale securities with an estimated fair value of $ 70.2 million that were i n gross unrealized loss positions.

As of September 30, 2022, there were 30 available-for-sale securities with an estimated fair value of $ 88.0 million that were in gross unrealized loss positions.

None had been in such position for greater than 12 months.

As of December 31, 2021 , there were 19 available-for-sale securities with an estimated fair value of $ 68.0 million in gross unrealized loss positions.

As of June 30, 2022 and December 31, 2021 , unrealized losses on available-for-sale securities are not attributed to credit risk.

As of September 30, 2022 and December 31, 2021 , unrealized losses on available-for-sale securities are not attributed to credit risk.

The Company believes that an allowance for credit losses is unnecessary because the unrealized losses on certain of the Company’s available-for-sale securities are due to market factors and interest rate increases.

2 unchanged sentences

Property and equipment, net consisted of the following (in thousands):

September 30,

Construction in process

6 unchanged sentences

Property and equipment, net

Depreciation and amortization expense related to property and equipment was $ 534,000 and $ 937,000 for the three and six months ended June 30, 2022 , respectively, and $ 169,000 and $ 318,000 for the three and six months ended June 30, 2021 , respectively.

Depreciation and amortization expense related to property and equipment was $ 771,000 and $ 1.7 million for the three and nine months ended September 30, 2022 , respectively, and $ 191,000 and $ 509,000 for the three and nine months ended September 30, 2021 , respectively.

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

September 30,

Accrued research and development expenses

16 unchanged sentences

The Company recorded IPR&D expense of $ 50.0 million during the year ended December 31, 2020 in connection with the asset acquisition.

No IPR&D expense was recorded during the three and six months ended June 30, 2022 and 2021.

As of June 30, 2022 and December 31, 2021 , no milestones had been accrued as the underlying contingencies were not probable or estimable.

No IPR&D expense was recorded during the three and nine months ended September 30, 2022 and 2021.

As of September 30, 2022 and December 31, 2021 , no milestones had been accrued as the underlying contingencies were not probable or estimable.

Emerge Life Sciences, Pte.

3 unchanged sentences

Under the ELS Purchase Agreement, ELS was committed to performing certain studies on the applicable antibodies to assist in development activities, the costs of which were mutually agreed upon and for which the Company was responsible.

No IPR&D expense was recorded during the three and six months ended June 30, 2022 .

The Company recorded IPR&D expense of $ 0 and $ 3.7 million during the three and six months ended June 30, 2021, respectively, in connection with the asset acquisition.

No IPR&D expense was recorded during the three and nine months ended September 30, 2022 .

The Company recorded IPR&D expense of $ 0 and $ 3.7 million during the three and nine months ended September 30, 2021, respectively, in connection with the asset acquisition.

Pursuant to the ELS Purchase Agreement, at any time between 12 months and 36 months after the effective date of the ELS Purchase Agreement, if the Company reasonably determines that none of the Antibodies should be taken into human clinical trials due to safety, efficacy or chemistry, manufacturing and controls (CMC) issues, then the Company has the option to select another antibody developed and solely owned by ELS that is not the subject of a license, collaboration, or option to a third party (the Option).

12 unchanged sentences

and (ii) equally split all net sublicensing revenues earned under sublicense agreements that the Company enters into with any third party before commencement of the first Phase I clinical trial for a licensed product.

No IPR&D expense was recorded during the three and six months ended June 30, 2022 and 2021.

No IPR&D expense was recorded during the three and nine months ended September 30, 2022 and 2021.

Katmai Pharmaceuticals, Inc.

6 unchanged sentences

The Company is also obligated to pay tiered royalties on net sales of each licensed product, at rates ranging from the mid- to high-single digit percentages, subject to a minimum annual royalty payment in the low six figures and certain permitted deductions.

The Company recorded IPR&D expense of $ 0 and $ 2.0 million in connection with a development milestone payment made during the three and six months ended June 30, 2022 , respectively.

No IPR&D expense was recorded during the three and six months ended June 30, 2021.

The Company recorded IPR&D expense of $ 0 and $ 2.0 million in connection with a development milestone payment made during the three and nine months ended September 30, 2022 , respectively.

No IPR&D expense was recorded during the three and nine months ended September 30, 2021.

In April 2020, the Company entered into a license agreement with LifeArc (the LifeArc Agreement) under which the Company was granted an exclusive, worldwide license to certain materials, know-how, and intellectual property rights owned or controlled by LifeArc to develop, manufacture, use, and commercialize certain ULK inhibitors for all applications.

3 unchanged sentences

The Company is also obligated to pay royalties on net sales of all licensed products, in the low-single digit percentages, subject to certain reductions.

No IPR&D expense was recorded during the three and six months ended June 30, 2022 and 2021.

No IPR&D expense was recorded during the three and nine months ended September 30, 2022 and 2021.

University of California, San Francisco

8 unchanged sentences

In August 2021, following the achievement of the Corporate Milestone, the Company made a cash payment to the Regents in the amount of $ 1.7 million.

No IPR&D expense was recorded during the three and six months ended June 30, 2022 .

The Company recorded IPR&D expense of $ 5.5 million during the three and six months ended June 30, 2021 related to the issuance of 944,945 shares of the Company's common stock to the Regents.

No IPR&D expense was recorded during the three and nine months ended September 30, 2022 .

The Company recorded IPR&D expense of $ 1.7 million and $ 7.2 million during the three and nine months ended September 30, 2021 related to the Corporate Milestone cash payment and issuance of 944,945 shares of the Company's common stock to the Regents, respectively.

Stockholders’

4 unchanged sentences

equity (deficit) on the consolidated balance sheets because the holders of such shares had liquidation rights in the event of a deemed liquidation that, in certain situations, were not solely within the control of the Company and would require the redemption of the then-outstanding convertible preferred stock.

There were no shares of convertible preferred stock outstanding as of June 30, 2022 and December 31, 2021.

The Company had 800,000,000 shares of its common stock authorized as of June 30, 2022 and December 31, 2021.

The Company had 122,063,473 and 121,382,547 shares of its common stock issued and 120,545,318 and 119,102,505 shares of common stock outstanding as of June 30, 2022 and December 31, 2021, respectively.

There were no shares of convertible preferred stock outstanding as of September 30, 2022 and December 31, 2021.

The Company had 800,000,000 shares of its common stock authorized as of September 30, 2022 and December 31, 2021.

The Company had 122,306,969 and 121,382,547 shares of its common stock issued and 121,024,938 and 119,102,505 s hares of common stock outstanding as of September 30, 2022 and December 31, 2021, respectively.

In August 2022, the Company entered into an Open Market Sale Agreement (the Sale Agreement) with Jefferies LLC (the Agent), pursuant to which the Company may offer and sell shares of the Company’s common stock having an aggregate offering price of up to $ 200 million from time to time, in “at the market”

offerings through the Agent.

Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of sale, or as otherwise agreed with the Agent.

The Agent will receive a commission from the Company of up to 3.0 % of the gross proceeds of any shares of common stock sold under the Sale Agreement.

There have been no shares of the Company's common stock sold under the Sale Agreement as of September 30, 2022.

Shares of common stock subject to repurchase

2 unchanged sentences

Any shares subject to repurchase by the Company are not deemed, for accounting purposes, to be outstanding until those shares vest.

As of June 30, 2022 and December 31, 2021 , 30,384 shares and 212,674 shares of common stock, respectively, were subject to repurchase by the Company.

As of September 30, 2022 and December 31, 2021 , zero and 212,674 shares of common stock, respectively, were subject to repurchase by the Company.

The unvested stock liability related to these awards is immaterial for all periods presented.

For the three and six months ended June 30, 2022 , 91,146 and 182,290 shares vested, respectively.

For the three and six months ended June 30, 2021 , 91,146 and 182,293 shares vested, respectively.

For the three and nine months ended September 30, 2022 , 30,384 and 212,674 shares vested, respectively.

For the three and nine months ended September 30, 2021 , 91,146 and 273,439 shares vested, respectively.

Stock-based compensation

4 unchanged sentences

In addition, the number of shares of common stock available for issuance under the 2021 Plan may be increased annually on the first day of each calendar year during the term of the 2021 Plan, beginning in 2022, by an amount equal to the lesser of (i) 5 % of the shares of common stock outstanding on the final day of the immediately preceding calendar year or (ii) such smaller number of shares as determined by the Company’s board of directors or an authorized committee of the board of directors.

As of June 30, 2022, there were 16,404,213 stock-based awards available for future grant under the 2021 Plan.

As of September 30, 2022, there were 16,170,804 stock-based awards available for future grant under the 2021 Plan.

Subsequent to July 2021, no further awards will be granted under the 2018 Plan and all future stock-based awards will be granted under the 2021 Plan.

11 unchanged sentences

Outstanding at December 31, 2021

Outstanding at June 30, 2022

Options exercisable at June 30, 2022

The weighted-average grant date fair value of options granted for the three and six months ended June 30, 2022 was $ 5.00 and $ 7.71 , re spectively, and for the three and six months ended June 30, 2021 was $ 4.59 and $ 3.45 , respectively.

As of June 30, 2022, the unrecognized compensation cost related to unvested stock option grants was $ 61.1 million and is expected to be recognized as expense over approximately 2.76 years.

The intrinsic value of the options exercised for the three and six months ended June 30, 2022 was $ 1.0 million and $ 4.3 million, respectively.

The intrinsic value of the options exercised for the three and six months ended June 30, 2021 was $ 1.5 million and $ 1.9 million, respectively.

Outstanding at September 30, 2022

Options exercisable at September 30, 2022

The weighted-average grant date fair value of options granted for the three and nine months ended September 30, 2022 was $ 4.91 and $ 7.50 , respectively, and for the three and nine months ended September 30, 2021 was $ 12.29 and $ 3.96 , respectively.

As of September 30, 2022, the unrecognized compensation cost related to unvested stock option grants was $ 57.0 million and is expected to be recognized as expense over approximately 2.59 years.

The intrinsic value of the options exercised for the three and nine months ended September 30, 2022 was $ 1.5 million and $ 5.9 million, respectively.

The intrinsic value of the options exercised for the three and nine months ended September 30, 2021 was $ 663,000 and $ 2.5 million, respectively.

Prior to the Company's IPO, certain individuals were granted the ability to early exercise their stock options.

3 unchanged sentences

The cash received in exchange for exercised and unvested shares related to stock options granted is recorded as a liability for the early exercise of stock options on the accompanying condensed consolidated balance sheets and will be transferred into common stock and additional paid-in capital as the shares vest.

As of June 30, 2022 and December 31, 2021 , there were 1,448,961 shares and 1,854,427 shares subject to repurchase by the Company, respectively.

As of June 30, 2022 and December 31, 2021, the Company recorded $ 2.2 million and $ 2.9 million of liabilities associated with shares issued with repurchase rights, respectively, which is recorded in accrued expenses and other current liabilities.

As of September 30, 2022 and December 31, 2021, there were 1,282,031 shares and 1,854,427 shares subject to repurchase by the Company, respectively.

As of September 30, 2022 and December 31, 2021, the Company recorded $ 1.9 million and $ 2.9 million of liabilities associated with shares issued with repurchase rights, respectively, which is recorded in accrued expenses and other current liabilities.

The assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee and nonemployee stock option grants were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Risk-free interest rate

16 unchanged sentences

In addition, the number of shares of common stock available for issuance under the ESPP may be increased annually on the first day of each calendar year during the term of the ESPP, beginning in 2022, by an amount equal to the lesser of (i) 1% of the shares of common stock outstanding on the final day of the immediately preceding calendar year or (ii) such smaller number of shares as determined by the Company’s board of directors or an authorized committee of the board of directors.

The Company recognized $ 167,000 and $ 668,000 of stock-based compensation expense related to the ESPP during the three and six months ended June 30, 2022.

As of June 30, 2022, the unrecognized compensation cost related to the ESPP was $ 4.6 million and is expected to be recognized as expense over approximately 1.96 years.

As of June 30, 2022, $ 44,000 h as been withheld on behalf of employees for future purchase under the ESPP and is included in accrued expenses and other current liabilities on the condensed consolidated balance sheet.

The Company issued and sold 150,642 shares under the ESPP during the three and six months ended June 30, 2022.

The Company recognized stock-based compensation expense related to the ESPP of $ 166,000 and $ 834,000 during the three and nine months ended September 30, 2022, respectively, and $ 278,000 during the three and nine months ended September 30, 2021.

As of September 30, 2022, the unrecognized compensation cost related to the ESPP was $ 3.4 million and is expected to be recognized as expense over approximately 1.70 years.

As of September 30, 2022 and December 31, 2021, $ 261,000 and $ 102,000 h as been withheld on behalf of employees for future purchase under the ESPP, respectively, and is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets.

The Company issued and sold zero and 150,642 shares under the ESPP during the three and nine months ended September 30, 2022 .

No shares were issued and sold under the ESPP during the three and nine months ended September 30, 2021.

The assumptions used in the Black-Scholes option pricing model to determine the fair value of the stock to be purchased under the ESPP were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Risk-free interest rate

1 unchanged sentence

2.24 %- 3.14 %

0.05 %- 0.19 %

Expected volatility

1 unchanged sentence

84.74 %- 87.89 %

70.99 %- 88.50 %

Expected term (in years)

Expected dividend yield

(1) The ESPP was not in effect until July 2021.

(1) No grant was made under the ESPP during the three months ended September 30, 2022.

Restricted stock

1 unchanged sentence

The weighted-average grant date fair value of restricted stock granted in 2018 was $ 0 .

No shares of restricted stock were granted during the three and six months ended June 30, 2022 and 2021.

No shares of restricted stock were granted during the three and nine months ended September 30, 2022 and 2021.

The restricted stock shares are subject to forfeiture upon the stockholders’

2 unchanged sentences

As such, the Company recognizes the measurement date fair value of the restricted stock over the vesting period as compensation expense.

As of June 30, 2022 and December 31, 2021 , 38,810 shares and 212,941 shares of common stock, respectively, were subject to forfeiture.

The summary of the Company’s restricted stock activity during the six months ended June 30, 2022 is as follows:

As of September 30, 2022 and December 31, 2021 , zero and 212,941 shares of common stock, respectively, were subject to forfeiture.

The summary of the Company’s restricted stock activity during the nine months ended September 30, 2022 is as follows:

Nonvested at December 31, 2021

Nonvested at June 30, 2022

At June 30, 2022 , the total unrecognized compensation related to unvested restricted stock awards granted was $ 0 .

Nonvested at September 30, 2022

At September 30, 2022 , the total unrecognized compensation related to unvested restricted stock awards granted was $ 0 .

Stock-based compensation expense

The allocation of stock-based compensation for all stock awards was as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

1 unchanged sentence

Common stock reserved for future issuance

Common stock reserved for future issuance consisted of the following as of June 30, 2022 and December 31, 2021:

Common stock reserved for future issuance consisted of the following as of September 30, 2022 and December 31, 2021:

September 30,

Stock options issued and outstanding

3 unchanged sentences

The Company has facility leases for office space under non-cancellable and cancelable operating leases with various expiration dates through 2032 and equipment under a non-cancellable operating lease with a term expiring in 2026 .

Operating lease cost was approximately $ 1.0 million and $ 2.0 million, including variable lease costs of $ 278,000 and $ 396,000 , and short-term lease costs of $ 31,000 and $ 62,000 , during the three and six months ended June 30, 2022 , respectively.

Operating lease cost was approximately $ 380,000 and $ 742,000 , including variable lease costs of $ 123,000 and $ 228,000 , and short-term lease costs of $ 30,000 and $ 59,000 , during the three and six months ended June 30, 2021, respectively.

The Company paid $ 417,000 and $ 535,000 in ca sh for operating leases that were included in the operating activities section of the condensed consolidated statements of cash flows for the six months ended June 30, 2022 and 2021, respectively.

The weighted-average remaining lease term and the weighted-average discount rate of the Company’s operating leases were 9.60 years and 8.35 % at June 30, 2022 , respectively.

Operating lease cost was approximatel y $ 2.6 million and $ 5.1 million, including variable lease costs of $ 701,000 and $ 1.1 million, and short-term lease costs of $ 24,000 and $ 86,000 , durin g the three and nine months ended September 30, 2022 , respectively.

Operating lease cost was approximately $ 905,000 and $ 1.6 million, including variable lease costs of $ 96,000 and $ 324,000 , and short-term lease costs of $ 30,000 and $ 89,000 , during the three and nine months ended September 30, 2021, respectively.

The Company paid $ 585,000 and $ 803,000 in ca sh for operating leases that were included in the operating activities section of the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021, respectively.

The weighted-average remaining lease term and the weighted-average discount rate of the Company’s operating leases were 9.50 years and 8.97 % at September 30, 2022 , respectively.

The weighted-average remaining lease term and the weighted-average discount rate of the Company’s operating leases was 9.86 years and 6.9 % at December 31, 2021, respectively.

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As discussed in Note 2, the Company provided a letter of credit to the lessor for $ 408,000 , which expires October 31, 2031 .

In December 2021, the Company entered into a lease agreement for 29,542 square feet of office and laboratory space in South San Francisco, California (the 2021 Lease).

The lease will be accounted for as an operating lease with the associated operating lease assets and liabilities recorded upon commencement, which occurred in July 2022 .

In December 2021, the Company entered into a lease agreement for 29,542 square feet of office and laboratory space in South San Francisco, California.

The lease is accounted for as an operating lease with the associated operating lease assets and liabilities recorded upon commencement, which occurred in July 2022 .

T he non-cancellable operating lease has an initial term of 124 months with an option to extend the lease term by 5 years at the then current market rates and includes aggregate monthly payments to the lessor of approximately $ 34.4 million beginning in November 2022 with a rent escalation clause and a tenant improvement allowance of approximately $ 8.2 million.

The construction and design of the tenant improvements is the primary responsibility of the lessor.

While the Company is involved in certain aspects of construction and design for certain interior features and leasehold improvements that will be beneficial to the Company to better suit its business needs and intended purpose of the space, all construction is handled directly by the landlord.

While the Company was involved in certain aspects of construction and design for certain interior features and leasehold improvements that is beneficial to the Company to better suit its business needs and intended purpose of the space, all construction was handled directly by the landlord.

The Company was not deemed to be the accounting owner of the tenant improvements prior to or after the construction period.

All payments made by the Company for landlord-owned tenant improvements are recorded as prepaid rent on the condensed consolidated balance sheets prior to lease commencement.

In February 2022, the actual project costs exceeded the tenant improvement allowances by $ 5.1 million, which was paid directly to the landlord by the Company and was recorded as prepaid rent in the condensed consolidated balance sheet and as a cash outflow from operating activities in the condensed consolidated statement of cash flows.

All payments made by the Company for landlord-owned tenant improvements were recorded as prepaid rent on the condensed consolidated balance sheets prior to lease commencement.

In February 2022, the expected project costs exceeded the tenant improvement allowances by $ 5.1 million, which was paid directly to the landlord by the Company and was recorded as prepaid rent in the condensed consolidated balance sheets and as a cash outflow from operating activities in the condensed consolidated statements of cash flows.

The Company paid a security deposit of $ 874,000 in December 2021 that was recorded as other assets in the condensed consolidated balance sheets.

Future minimum lease payments under the operating leases with initial lease terms in excess of one year (excluding the 2021 Lease) as of June 30, 2022 are as follows (in thousands):

Future minimum lease payments under the operating leases with initial lease terms in excess of one year as of September 30, 2022 are as follows (in thousands):

Year ending December 31,

2022 (remaining six months)

2022 (remaining three months)

Total lease payments

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There are no matters currently outstanding for which any such liabilities have been accrued.

No provision for federal, state or foreign income taxes has been recorded for the three and six months ended June 30, 2 0 22 and 2 0 21 .

No provision for federal, state or foreign income taxes has been recorded for the three and nine months ended September 30, 2 0 22 and 2 0 21 .

The Company has incurred net operating losses for all the periods presented and has not reflected any benefit of such net operating loss carryforwards in the accompanying condensed consolidated financial statements due to uncertainty around utilizing these tax attributes within their respective carryforward periods.

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The Company’s policy is to recognize interest expense and penalties related to income tax matters as tax expense.

For the three and six months ended June 30, 2022 and 2021 , the Company has no t recognized any interest or penalties related to income taxes.

For the three and nine months ended September 30, 2022 and 2021 , the Company has no t recognized any interest or penalties related to income taxes.

In March and December 2020, in response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (the CARES Act) was passed and provided for a refundable employee retention credit, which can be used to offset payroll tax liabilities.

On March 11, 2021, President Biden signed the American Rescue Plan Act, which includes several provisions previously enacted under the CARES Act, such as measures that extended and expanded the employee retention credit through December 31, 2021.

However, on November 15, 2021, President Biden signed into law the Infrastructure Investment and Jobs Act, which terminated the employee retention credit for wages paid in the fourth calendar quarter of 2021 for employers that are not recovery startup businesses.

Pursuant to the employee retention credit, eligible employers could receive a 50 % or 70 % credit on qualified wages against their employment taxes each quarter during the eligible periods in 2020 and 2021, respectively, with any excess credits eligible for refunds.

During the three months ended September 30, 2022, the Company recorded an employee retention credit of $ 2.2 million upon completion of an analysis providing reasonable assurance that the Company met the conditions set forth in the CARES Act and it was reasonably assured that the Company will receive the employee retention credit.

The employee retention credit is recorded in research and development expenses and general and administrative expenses in the manner in which the qualified wages and related costs were classified.

Net loss per share

The following table summarizes the computation of basic and diluted net loss per share of the Company (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,

Weighted-average shares of common stock used in computing net loss per share, basic and diluted

Net loss per share, basic and diluted

The Company’s potentially dilutive securities, which include its convertible preferred stock prior to the IPO, options to purchase common stock, shares purchasable under the ESPP and common stock subject to repurchase related to unvested restricted stock and options early exercised, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

The Company’s potentially dilutive securities, which include options to purchase common stock, shares purchasable under the ESPP and common stock subject to repurchase related to unvested restricted stock and options early exercised, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

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

The Company excluded the following potential common shares, presented as amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect:

Three Months Ended June 30,

Six Months Ended June 30,

Convertible preferred stock issued

September 30,

Options to purchase common stock

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The current COVID-19 pandemic, which is impacting worldwide economic activity, poses the risk that the Company or its employees, contractors, suppliers, and other partners may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities.

During the three and six months ended June 30, 2022 and 2021, the Company has not experienced significant impact from the pandemic.

During the three and nine months ended September 30, 2022 and 2021, the Company has not experienced significant impact from the pandemic.

The extent to which the COVID-19 pandemic will impact the Company’s business will depend on future developments that are highly uncertain and cannot be predicted at this time.

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The Company's chief executive officer and certain board members serve as directors of the Erasca Foundation and the Company's chief executive officer, chief financial officer, and general counsel are also officers of the Erasca Foundation.

In July 2021, the Company issued 1,093,557 shares of its common stock to the Erasca Foundation as a contribution and recorded $ 17.5 million to such contribution of common stock to the Erasca Foundation in the Company's condensed consolidated statements of operations and comprehensive loss.

In December 2021, the Company loaned the Erasca Foundation $ 100,000 in exchange for a non-interest bearing promissory note that matures one year following the date of the note.

As of June 30, 2022 , $ 100,000 is recorded as a receivable in prepaid expenses and other current assets in the condensed consolidated balance sheet.

As of September 30, 2022 , $ 100,000 is recorded as a receivable in prepaid expenses and other current assets in the condensed consolidated balance sheet.

Affini-T Therapeutics, Inc.

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One of the Company’s board members is also a member of the board of Affini-T.

Subsequent events

On August 11, 2022, the Company entered into an Open Market Sale Agreement (the Sale Agreement) with Jefferies LLC (the Agent), pursuant to which the Company may offer and sell shares of the Company’s common stock having an aggregate offering price of up to $ 200 million from time to time, in “at the market”

offerings through the Agent.

Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of sale, or as otherwise agreed with the Agent.

The Agent will receive a commission from the Company of up to 3.0 % of the gross proceeds of any shares of common stock sold under the Sale Agreement.

The Company is not obligated to sell, and the Agent is not obligated to buy or sell, any shares of common stock under the Sale Agreement.

No assurance can be given that the Company will sell any shares of common stock under the Sale Agreement, or, if it does, as to the price or amount of shares of common stock that it sells or the dates when such sales will take place.

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

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In 2023, we expect to have four product candidates in the clinic.

In addition, we expect to file an additional investigational new drug application (IND) every 12-18 months through 2026.

In addition, we expect to file an additional investigational new drug application (IND) with the US Food and Drug Administration (FDA) every 12-18 months through 2026.

We believe our world-class team’s capabilities and experience, further guided by our scientific advisory board, which includes the world’s leading experts in the RAS/MAPK pathway, uniquely position us to achieve our bold mission of erasing cancer.

Our lead product candidates are ERAS-007 (our oral ERK1/2 inhibitor) and ERAS-601 (our oral SHP2 inhibitor), which target upstream and downstream nodes of the RAS/MAPK pathway.

We are pursuing a broad clinical development plan across multiple tumor types for ERAS-007, which we refer to as our HERKULES series of clinical trials, that includes both monotherapy and combinations with approved and investigational agents, such as RTK, SHP2, RAS, and/or RAF inhibitors.

Our lead product candidates are ERAS-007 (our oral ERK1/2 inhibitor) and ERAS-601 (our oral SHP2 inhibitor), which target downstream and upstream nodes, respectively, of the RAS/MAPK pathway.

Our current HERKULES Phase 1b/2 clinical trials are exploring both tissue agnostic and tissue specific indications in patients with solid tumors, including non-small cell lung cancer (NSCLC), colorectal cancer (CRC), and pancreatic ductal adenocarcinoma (PDAC).

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In September 2021, we dosed the first patient in HERKULES-2, a Phase 1b/2 master protocol clinical trial for ERAS-007 and/or ERAS-601 in combination with various agents in patients with NSCLC.

In September 2021, we dosed the first patient in HERKULES-3, a Phase 1b/2 master protocol clinical trial for ERAS-007 in combination with various agents in patients with gastrointestinal (GI) cancers.

In September 2021, we dosed the first patient in HERKULES-3, a Phase 1b/2 master protocol clinical trial for ERAS-007 in combination with various agents in patients with gastrointestinal (GI)

In September 2021, we announced a clinical trial collaboration and supply agreement (CTCSA) with Pfizer Inc.

(Pfizer) in connection with the HERKULES-3 trial.

Under the terms of the agreement, we are sponsoring and funding the clinical trial and

Pfizer is providing its BRAF inhibitor, encorafenib (BRAFTOVI), at no cost.

Under the terms of the agreement, we are sponsoring and funding the clinical trial and Pfizer is providing its BRAF inhibitor, encorafenib (BRAFTOVI), at no cost.

Additionally, in March 2022, we announced a CTCSA with Eli Lilly and Company (Lilly) in connection with the HERKULES-3 trial.

Under the terms of the agreement, we are sponsoring and funding the clinical trial and Lilly is providing its EGFR antibody, cetuximab (ERBITUX), at no cost.

Further, in October 2022, we announced a second CTCSA with Pfizer in connection with the HERKULES-3 trial.

Under the terms of the agreement, we are sponsoring and funding the clinical trial and Pfizer is providing its CDK4/6 inhibitor, palbociclib (IBRANCE), at no cost.

The master protocols for each of the HERKULES-2 and -3 Phase 1b/2 clinical trials provide the flexibility to explore additional combinations and expand into other NSCLC and GI cancer indications, respectively.

These two trials are expected to provide proof-of-concept (PoC) data and may be expanded to enable potential accelerated approvals in their respective indications.

We recently decided to close the HERKULES-4 clinical trial prior to enrolling patients in order to further focus our clinical efforts on solid tumors where we see the most promising avenues to make an impact on patients in the near term.

We closed the HERKULES-4 clinical trial prior to enrolling patients in order to further focus our clinical efforts on solid tumors where we see the most promising avenues to make an impact on patients in the near term.

As data emerge, we will re-evaluate hematologic malignancies in the context of our overall clinical development plan.

We expect to report Phase 1b monotherapy data from HERKULES-1 in the second half of 2022.

These data will include preliminary monotherapy safety and pharmacokinetics to support dose selection for combinations of ERAS-007.

In September 2022, we announced preliminary data related to ERAS-007 at a virtual R&D Day event that are discussed in more detail below.

In addition, in October 2022, we reported additional Phase 1b monotherapy data from HERKULES-1 at the 2022 EORTC-NCI-AACR Molecular Targets and Cancer Therapeutics Symposium.

These data included preliminary monotherapy safety and pharmacokinetics to support dose selection for combinations of ERAS-007.

In addition, we anticipate multiple additional data readouts from our HERKULES clinical trials, including a Phase 1b combination data readout from HERKULES-3 in the first half of 2023 and a Phase 1b combination data readout from HERKULES-2 in 2023.

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ERAS-601 is designed to block oncogenic signal transduction and delay the onset of therapeutic resistance, and thereby serve as a backbone of combination therapy.

In the fourth quarter of 2020, we dosed the first patient in FLAGSHP-1, a Phase 1 clinical trial for ERAS-601 in patients with advanced solid tumors.

In December 2020, we dosed the first patient in FLAGSHP-1, a Phase 1 clinical trial for ERAS-601 in patients with advanced solid tumors.

ERAS-601 combinations are being evaluated in the FLAGSHP-1 and HERKULES-2 clinical trials for patients with CRC, head and neck cancer, and NSCLC.

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Under the terms of the agreement, we are sponsoring and funding the clinical trial and Lilly is providing its EGFR inhibitor, cetuximab (ERBITUX), at no cost.

We expect to report Phase 1 monotherapy data from FLAGSHP-1 in the second half of 2022.

These data will include preliminary monotherapy safety and pharmacokinetics to support dose selection for combinations of ERAS-601.

In September 2022, we announced preliminary data related to ERAS-601 at a virtual R&D Day event that are discussed in more detail below.

In addition, in October 2022, we reported additional Phase 1 monotherapy data from FLAGSHP-1 at the 2022 EORTC-NCI-AACR Molecular Targets and Cancer Therapeutics Symposium.

These data included preliminary monotherapy safety and pharmacokinetics to support dose selection for combinations of ERAS-601.

In addition, we anticipate a Phase 1b combination data readout from FLAGSHP-1 in triple wildtype (KRAS/NRAS/BRAF wildtype) CRC in the first half of 2023.

In September 2022, we announced promising preliminary data for ERAS-007 and ERAS-601 in BRAF-driven and RAS/MAPK-altered solid tumors at a virtual R&D Day event.

A retrospective pooled analysis of all trials evaluating ERAS-007 or ERAS-601 in advanced solid tumors was performed that included our ongoing HERKULES-1 and FLAGSHP-1 trials and the Asana BioSciences’

previously completed ASN007-101 trial.

The analysis was designed to identify responsive subsets that were particularly sensitive to ERAS-007 or ERAS-601 for prioritized combination development within indications of high unmet medical need where no targeted therapies with regular approval are available.

Patients with solid tumors with RAS/MAPK alterations were segmented into two groups based on differing levels of responsiveness to monotherapy inhibition and differences in RAS/MAPK pathway reactivation:

(1) patients with CRC and (2) patients with non-CRC.

Key findings from the retrospective pooled interim analysis of ERAS-007 and ERAS-601 included:

23% (6/26) of patients with RAS/MAPK-altered non-CRC solid tumors responded (2 confirmed and 4 unconfirmed partial responses) to single agent ERAS-007 or ERAS-601;

44% (4/9) with a subset of BRAF-driven non-CRC solid tumors responded (1 confirmed and 3 unconfirmed partial responses) to single agent ERAS-007 or ERAS-601;

ERAS-007 and ERAS-601 had favorable safety and tolerability monotherapy profiles with largely non-overlapping treatment-related adverse events that are expected to be monitorable and manageable at the likely recommended combination doses.

The above results are based on data cutoff dates of November 6, 2020, July 11, 2022, and May 16, 2022 for the ASN007-101, FLAGSHP-1, and HERKULES-1 trials, respectively.

In February 2022, we dosed the first patient in our THUNDERBBOLT-1 Phase 1 clinical trial for ERAS-801, our CNS-penetrant EGFR inhibitor, in patients with recurrent glioblastoma multiforme (GBM).

In the second half of 2022, we expect to file an IND with the US Food and Drug Administration (FDA) for ERAS-3490, the CNS-penetrant development candidate we nominated from our ERAS-1 KRAS G12C inhibitor franchise.

We are also advancing seven other programs targeting key oncogenic drivers in the RAS/MAPK pathway, which we will need to successfully progress through discovery and IND-enabling activities prior to advancing these programs into clinical development, if at all.

In the second half of 2022, we expect to file an IND with the FDA for ERAS-3490, the CNS-penetrant development candidate we nominated from our ERAS-1 KRAS G12C inhibitor franchise.

We are also advancing seven other disclosed programs targeting key oncogenic drivers in the RAS/MAPK pathway, which we will need to successfully progress through discovery and IND-enabling activities prior to advancing these programs into clinical development, if at all.

We do not own or operate, and currently have no plans to establish, any manufacturing facilities.

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Our aggregate net proceeds from the offering were $317.0 million, net of underwriting discounts and commissions of $24.2 million and offering costs of $3.8 million.

In August 2022, we entered into an Open Market Sale Agreement (the Sale Agreement) with Jefferies LLC (the Agent), pursuant to which we may offer and sell shares of our common stock having an aggregate offering price of up to $200 million from time to time, in “at the market”

offerings through the Agent.

Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of sale, or as otherwise agreed with the Agent.

The Agent will receive a commission from us of up to 3.0% of the gross proceeds of any shares of common stock sold under the Sale Agreement.

There have been no shares of our common stock sold under the Sale Agreement as of September 30, 2022.

Since our inception in 2018, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, identifying, acquiring, and in-licensing our product candidates, establishing our intellectual property portfolio, conducting research, preclinical studies and clinical trials, establishing arrangements with third parties for the manufacture of our product candidates and related raw materials, and providing general and administrative support for these operations.

We do not have any products approved for sale and have not generated any revenue.

As of June 30, 2022, we have raised a total of $665.4 million to fund our operations, comprised primarily of gross proceeds from our IPO and the sale and issuance of convertible preferred stock.

As of June 30, 2022, we had cash, cash equivalents and marketable securities of $390.8 million.

As of September 30, 2022, we have raised a total of $665.4 million to fund our operations, comprised primarily of gross proceeds from our IPO and the sale and issuance of convertible preferred stock.

As of September 30, 2022, we had cash, cash equivalents and marketable securities of $365.5 million.

We have incurred significant operating losses since inception.

Our net losses were $35.6 million and $28.2 million for the three months ended June 30, 2022 and 2021, respectively, and $72.1 million and $46.2 million for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, we had an accumulated deficit of $310.2 million.

Our net losses were $35.5 million and $46.1 million for the three months ended September 30, 2022 and 2021, respectively, and $107.6 million and $92.3 million for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, we had an accumulated deficit of $345.7 million.

We expect our expenses and operating losses will increase substantially for the foreseeable future, particularly if and as we conduct our ongoing and planned clinical trials and preclinical studies;

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

Based upon our current operating plans, we believe that our cash, cash equivalents and marketable securities as of June 30, 2022 will be sufficient to fund our operations into the second half of 2024.

Based upon our current operating plans, we believe that our cash, cash equivalents and marketable securities as of September 30, 2022 will be sufficient to fund our operations into the second half of 2024.

We do not expect to generate any revenues from product sales until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which we expect will take a number of years and may never occur.

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Our financial condition and results of operations may also be impacted by other factors we may not be able to control, such as global supply chain disruptions, uncertain global economic conditions, global trade disputes or political instability.

We do not believe that such factors had a material adverse impact on our results of operations during the three months ended June 30, 2022.

We do not believe that such factors had a material adverse impact on our results of operations during the three months ended September 30, 2022.

Our acquisition and license agreements

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the costs of laboratory supplies and acquiring, developing and manufacturing preclinical study materials;

facilities and depreciation, which include direct and allocated expenses for rent of facilities and depreciation of equipment.

facilities and depreciation, which include direct and allocated expenses for rent of facilities and depreciation.

The following table summarizes our research and development expenses incurred for the following periods (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Other clinical program

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Results of operations

Comparison of the three months ended June 30, 2022 and 2021

The following table summarizes our results of operations for the three months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30,

Comparison of the three months ended September 30, 2022 and 2021

The following table summarizes our results of operations for the three months ended September 30, 2022 and 2021 (in thousands):

Three Months Ended September 30,

Operating expenses:

2 unchanged sentences

General and administrative

Contribution of common stock to Erasca Foundation

Total operating expenses

2 unchanged sentences

Research and development expenses

Research and development expenses were $27.5 million for the three months ended June 30, 2022 compared to $17.6 million for the three months ended June 30, 2021.

The increase of $9.9 million was primarily driven by a $4.9 million increase in expenses incurred in connection with clinical trials, preclinical studies and discovery activities, a $2.1 million increase in stock-based compensation expense primarily due to increases in our stock price and headcount, a $1.9 million increase in personnel costs primarily due to an increase in headcount, and a $0.9 million increase in facilities and depreciation.

Research and development expenses were $28.2 million for the three months ended September 30, 2022 compared to $20.0 million for the three months ended September 30, 2021.

The increase of $8.2 million was primarily driven by a $4.4 million increase in expenses incurred in connection with clinical trials, preclinical studies and discovery activities, a $2.0 million increase in facilities-related expenses and depreciation primarily due to our new San Diego and South San Francisco facilities which we moved into in the second and third quarters of 2022, respectively, a $1.2 million increase in stock-based compensation expense primarily due to increases in our stock price and headcount, and a $1.0 million increase in outsourced services and consulting fees, partially offset by a net decrease of $0.7 million in personnel costs primarily due to the employee retention credit of $1.5 million recorded during the three months ended September 30, 2022 offset by an increase in headcount.

In-process research and development expenses

In-process research and development expenses were $0 for the three months ended June 30, 2022 compared to $5.5 million for the three months ended June 30, 2021.

In-process research and development expenses for the three months ended June 30, 2021 related to the issuance of 944,945 shares of our common stock at a price of $5.81 per share or a total fair value of $5.5 million in connection with the amendment to our license agreement with The Regents of the University of California, San Francisco (the Regents).

In-process research and development expenses were $0 for the three months ended September 30, 2022 compared to $1.7 million for the three months ended September 30, 2021.

In-process research and development expenses for the three months ended September 30, 2021 related to the cash payment of $1.7 million following the completion of our IPO in connection with the amendment to our license agreement with The Regents of the University of California, San Francisco (the Regents).

General and administrative expenses

General and administrative expenses were $8.4 million for the three months ended June 30, 2022 compared to $5.1 million for the three months ended June 30, 2021.

The increase of $3.3 million was primarily driven by an increase of $1.3 million in stock-based compensation expense due to increases in our stock price and headcount, an increase of $1.0 million in insurance costs, an increase of $0.7 million in facilities and office related expenses, and an increase of $0.5 million in personnel costs primarily due to an increase in headcount, partially offset by decreases in legal and accounting fees of $0.6 million, in the aggregate.

General and administrative expenses were $8.8 million for the three months ended September 30, 2022 compared to $6.9 million for the three months ended September 30, 2021.

The increase of $1.9 million was primarily driven by an increase of $1.0 million in stock-based compensation expense due to increases in our stock price and headcount, increases of $1.0 million in legal and accounting fees, in the aggregate, and an increase of $0.3 million in facilities and office-related expenses, partially offset by a net decrease in personnel costs of $0.5 million primarily due to the employee retention credit of $0.7 million recorded during the three months ended September 30, 2022 and a decrease in insurance costs of $0.2 million.

Contribution of common stock to the Erasca Foundation

Expenses of $17.5 million were recognized for the three months ended September 30, 2021 in connection with the issuance of 1,093,557 shares of our common stock as a contribution to the Erasca Foundation in conjunction with our IPO.

No such expenses were recognized for the three months ended September 30, 2022.

Other income (expense), net

Other income (expense), net was $297,000 for the three months ended June 30, 2022 compared to $(30,000) for the three months ended June 30, 2021.

The increase of $327,000 was primarily related to an increase in interest earned on our cash, cash equivalents and marketable securities during the three months ended June 30, 2022.

Comparison of the six months ended June 30, 2022 and 2021

The following table summarizes our results of operations for the six months ended June 30, 2022 and 2021 (in thousands):

Six Months Ended June 30,

Other income (expense), net was $1.5 million for the three months ended September 30, 2022 compared to $(25,000) for the three months ended September 30, 2021.

The increase of $1.5 million was primarily related to an increase in interest earned on our cash, cash equivalents and marketable securities during the three months ended September 30, 2022.

Comparison of the nine months ended September 30, 2022 and 2021

The following table summarizes our results of operations for the nine months ended September 30, 2022 and 2021 (in thousands):

Nine Months Ended September 30,

Operating expenses:

2 unchanged sentences

General and administrative

Contribution of common stock to Erasca Foundation

Total operating expenses

2 unchanged sentences

Research and development expenses

Research and development expenses were $54.9 million for the six months ended June 30, 2022 compared to $29.8 million for the six months ended June 30, 2021.

The increase of $25.1 million was primarily driven by a $12.7 million increase in expenses incurred in connection with clinical trials, preclinical studies and discovery activities, a $5.3 million increase in personnel costs primarily due to an increase in headcount, a $4.3 million increase in stock-based compensation expense primarily due to increases in our stock price and headcount, a $1.5 million increase in facilities and depreciation, and a $0.6 million increase in outsourced services and consulting fees.

Research and development expenses were $83.1 million for the nine months ended September 30, 2022 compared to $49.8 million for the nine months ended September 30, 2021.

The increase of $33.3 million was primarily driven by a $17.1 million increase in expenses incurred in connection with clinical trials, preclinical studies and discovery activities, a $5.5 million increase in stock-based compensation expense primarily due to increases in our stock price and headcount, a $4.6 million net increase in personnel costs primarily due to an increase in headcount offset by the employee retention credit of $1.5 million recorded during the nine months ended September 30, 2022, a $3.5 million increase in facilities-related expenses and depreciation primarily due to our new San Diego and South San Francisco facilities which we moved into in the second and third quarters of 2022, respectively, and a $1.6 million increase in outsourced services and consulting fees.

In-process research and development expenses

In-process research and development expenses were $2.0 million for the six months ended June 30, 2022 compared to $9.2 million for the six months ended June 30, 2021.

In-process research and development expenses for the six months ended June 30, 2022 related to a development milestone payment of $2.0 million in connection with our license agreement with Katmai Pharmaceuticals, Inc.

In-process research and development expenses for the six months ended June 30, 2021 related to the

issuance of 944,945 shares of our common stock at a price of $5.81 per share or a total fair value of $5.5 million in connection with the amendment to our license agreement with the Regents and a $2.0 million upfront payment and issuance of 500,000 shares of our common stock to Emerge Life Sciences, Pte.

In-process research and development expenses were $2.0 million for the nine months ended September 30, 2022 compared to $10.8 million for the nine months ended September 30, 2021.

In-process research and development expenses for the nine months ended September 30, 2022 related to a development milestone payment of $2.0 million in connection with our license agreement with Katmai Pharmaceuticals, Inc.

In-process research and development expenses for the nine months ended September 30, 2021 related to the cash payment of $1.7 million following the completion of our IPO and the issuance of 944,945 shares of our common stock at a price of $5.81 per share or a total fair value of $5.5 million in connection with the amendment to our license agreement with the Regents, and a $2.0 million upfront payment and issuance of 500,000 shares of our common stock to Emerge Life Sciences, Pte.

(ELS) at a price of $3.36 per share or a total fair value of $1.7 million in connection with the purchase agreement we entered into in March 2021 with ELS.

General and administrative expenses

General and administrative expenses were $15.5 million for the six months ended June 30, 2022 compared to $8.8 million for the six months ended June 30, 2021.

The increase of $6.7 million was primarily driven by an increase of $2.7 million in stock-based compensation expense due to increases in our stock price and headcount, an increase of $1.9 million in insurance costs, an increase of $1.2 million in personnel costs primarily due to an increase in headcount, and an increase of $1.2 million in facilities and office related expenses, partially offset by decreases in legal and accounting fees of $0.8 million, in the aggregate.

General and administrative expenses were $24.3 million for the nine months ended September 30, 2022 compared to $15.7 million for the nine months ended September 30, 2021.

The increase of $8.6 million was primarily driven by an increase of $3.8 million in stock-based compensation expense due to increases in our stock price and headcount, an increase of $1.7 million in insurance costs, an increase of $1.5 million in facilities and office-related expenses, a net increase of $0.7 million in personnel costs primarily due to an increase in headcount partially offset by the employee retention credit of $0.7 million recorded during the nine months ended September 30, 2022, and increases in legal and accounting fees of $0.2 million, in the aggregate.

Contribution of common stock to the Erasca Foundation

Expenses of $17.5 million were recognized for the nine months ended September 30, 2021 in connection with the issuance of 1,093,557 shares of our common stock as a contribution to the Erasca Foundation in conjunction with our IPO.

No such expenses were recognized for the nine months ended September 30, 2022.

Other income (expense), net

Other income (expense), net was $344,000 for the six months ended June 30, 2022 compared to $1.6 million for the six months ended June 30, 2021.

The decrease of $1.2 million was primarily related to the change in fair value of the preferred stock purchase right liability of $1.6 million recorded in the six months ended June 30, 2021 as a result of the obligation of the Series B-2 shares being fulfilled upon the Series B-2 issuance in January 2021, partially offset by an increase of $0.4 million in interest earned on our cash, cash equivalents and marketable securities during the six months ended June 30, 2022.

Other income (expense), net was $1.8 million for the nine months ended September 30, 2022 compared to $1.5 million for the nine months ended September 30, 2021.

The increase of $0.3 million was primarily related to an increase of $1.9 million in interest earned on our cash, cash equivalents and marketable securities during the nine months ended September 30, 2022, partially offset by the change in fair value of the preferred stock purchase right liability of $1.6 million recorded in the nine months ended September 30, 2021 as a result of the obligation of the Series B-2 shares being fulfilled upon the Series B-2 issuance in January 2021.

Liquidity and capital resources

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Prior to the IPO, we received aggregate gross proceeds of $320.4 million from the sale of shares of our convertible preferred stock.

In August 2022, we entered into the Sale Agreement with the Agent, pursuant to which we may offer and sell shares of our common stock having an aggregate offering price of up to $200 million from time to time, in “at the market”

offerings through the Agent.

Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of sale, or as otherwise agreed with the Agent.

The Agent will receive a commission from us of up to 3.0% of the gross proceeds of any shares of common stock sold under the Sale Agreement.

There have been no shares of our common stock sold under the Sale Agreement as of September 30, 2022.

Future capital requirements

As of June 30, 2022, we had cash, cash equivalents and marketable securities of $390.8 million.

As of September 30, 2022, we had cash, cash equivalents and marketable securities of $365.5 million.

Based upon our current operating plans, we believe that our cash, cash equivalents and marketable securities will be sufficient to fund our operations into the second half of 2024.

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The following table shows a summary of our cash flows for the periods presented (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash (used in) provided by:

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Operating activities

Cash used in operating activities was $52.9 million during the six months ended June 30, 2022, primarily resulting from a net loss of $72.1 million, partially reduced by stock-based compensation of $9.5 million, changes in operating assets and liabilities of $6.7 million, in-process research and development expenses of $2.0 million, which are reflected in investing activities, and depreciation expense of $0.9 million.

Net cash provided by changes in operating assets and liabilities consisted primarily of an increase in operating lease assets and liabilities of $11.9 million primarily due to the receipt of $10.3 million in reimbursement from our landlord for tenant improvements, partially offset by an increase in prepaid expenses and other current and long-term assets of $4.6 million, and a decrease of accrued expenses and other current liabilities of $0.6 million.

Cash used in operating activities was $33.9 million during the six months ended June 30, 2021, primarily resulting from a net loss of $46.2 million, partially reduced by in-process research and development expenses of $9.2 million, which is reflected in noncash and investing activities, stock-based compensation expense of $2.4 million, changes in operating assets and liabilities of $2.0 million and depreciation expense of $0.3 million, partially offset by a $1.6 million change in fair value of the preferred stock purchase right liability.

Cash used in operating activities was $76.9 million during the nine months ended September 30, 2022, primarily resulting from a net loss of $107.6 million, partially reduced by changes in operating assets and liabilities of $12.4 million, stock-based compensation of $14.7 million, in-process research and development expenses of $2.0 million, which are reflected in investing activities, and depreciation expense of $1.7 million.

Net cash provided by changes in operating assets and liabilities consisted primarily of an increase in operating lease assets and liabilities of $12.4 million primarily due to the receipt of $14.2 million in reimbursement from our landlord for tenant improvements and increases in accounts payable, accrued expenses and other current liabilities of $4.5 million, partially offset by an increase in prepaid expenses and other current and long-term assets of $4.5 million.

Cash used in operating activities was $57.1 million during the nine months ended September 30, 2021, primarily resulting from a net loss of $92.3 million, partially reduced by the issuance of common stock to the Erasca Foundation of $17.5 million, which is reflected in noncash investing and financing activities, in-process research and development expenses of $10.8 million, which are reflected in noncash and investing activities, stock-based compensation expense of $5.4 million, changes in operating assets and liabilities of $2.4 million and depreciation expense of $0.5 million, partially offset by a $1.6 million change in fair value of the preferred stock purchase right liability.

Net cash provided by changes in operating assets and liabilities consisted primarily of increases in accounts payable, accrued expenses and other current liabilities of $7.6 million, partially offset by an increase in prepaid expenses and other current and long-term assets of $5.6 million.

Investing activities

Net cash used in investing activities was $11.0 million during the six months ended June 30, 2022 as compared to cash generated from investing activities of $4.3 million during the six months ended June 30, 2021.

The increase in cash used in investing activities of $15.3 million was primarily the result of a decrease in maturities of marketable securities of $15.7 million, an increase in purchases of property and equipment of $11.2 million, and the $2.0 million payment made for our investment in Affini-T Therapeutics, Inc., partially offset by a $9.6 million decrease in purchases of marketable securities and a $4.0 million decrease in in-process research and development.

Net cash used in investing activities was $66.2 million during the nine months ended September 30, 2022 as compared to cash used in investing activities of $0.6 million during the nine months ended September 30, 2021.

The increase in cash used in investing activities of $65.6 million was primarily the result of an increase in purchases of marketable securities of $52.7 million, an increase in purchases of property and equipment of $8.3 million, a decrease in maturities of marketable securities of $8.2 million, and the $2.0 million payment made for our investment in Affini-T Therapeutics, Inc., partially offset by a $5.7 million decrease in in-process research and development.

Financing activities

Net cash generated from financing activities was $1.5 million during the six months ended June 30, 2022 as compared to $120.7 million during the six months ended June 30, 2021.

During the six months ended June 30, 2022, we received $0.8 million from the exercise of stock options and $0.6 million from the issuance of common stock under our Employee Stock Purchase Plan.

During the six months ended June 30, 2021, we received $119.4 million from the sale of shares of our Series B-2 convertible preferred stock, net of issuance costs, and $1.3 million from the exercise of stock options.

Net cash generated from financing activities was $1.9 million during the nine months ended September 30, 2022 as compared to $438.3 million during the nine months ended September 30, 2021.

During the nine months ended September 30, 2022, we received $1.3 million from the exercise of stock options and $0.6 million from the issuance of common stock under our Employee Stock Purchase Plan.

During the nine months ended September 30, 2021, we received $317.0 million from the issuance of common stock in our IPO, net of underwriting discounts and commissions and offering costs, $119.4 million from the sale of shares of our Series B-2 convertible preferred stock, net of issuance costs, $1.3 million from the exercise of stock options and $0.6 million from the disgorgement of a stockholder's short-swing profits.

Contractual obligations and commitments

As of June 30, 2022, there have been no material changes outside the ordinary course of our business to the contractual obligations we reported in “Management’s discussion and analysis of financial condition and results of operations –

As of September 30, 2022, there have been no material changes outside the ordinary course of our business to the contractual obligations we reported in “Management’s discussion and analysis of financial condition and results of operations –

Cash requirements due to contractual obligations and other commitments,”

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Actual results may differ materially from these estimates.

As of June 30, 2022, there have been no material changes to our critical accounting policies and estimates from those disclosed in “Management’s discussion and analysis of financial condition and results of operations –

As of September 30, 2022, there have been no material changes to our critical accounting policies and estimates from those disclosed in “Management’s discussion and analysis of financial condition and results of operations –

Critical accounting policies and estimates,”

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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