What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-15 compared with 2022-11-09 · 235 added, 392 removed, 581 unchanged (52% of the section changed)

2 unchanged sentences

(In thousands, except share and par value amounts)

September 30,

Current assets:

3 unchanged sentences

Total current assets

Long-term marketable securities

Property and equipment, net

8 unchanged sentences

Operating lease liabilities, net of current portion

Other liabilities

Total liabilities

2 unchanged sentences

Preferred stock, $ 0.0001 par value;

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

80,000,000 shares authorized at March 31, 2023 and December 31, 2022;

no shares issued and outstanding at March 31, 2023 and December 31, 2022

Common stock, $ 0.0001 par value;

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

800,000,000 shares authorized at March 31, 2023 and December 31, 2022;

150,647,707 and 150,448,363 shares issued at March 31, 2023 and December 31, 2022, respectively;

149,699,528 and 149,333,258 shares outstanding at March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital

6 unchanged sentences

(In thousands, except share and per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating expenses:

2 unchanged sentences

General and administrative

Contribution of common stock to Erasca Foundation

Total operating expenses

3 unchanged sentences

Other expense

Change in fair value of preferred stock purchase right liability

Total other income (expense), net

2 unchanged sentences

Other comprehensive income (loss):

Unrealized (loss) gain on marketable securities, net

Unrealized gain (loss) on marketable securities, net

Comprehensive loss

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

Condensed Consolidated Statements of Convertible Preferred Stock and Stock holders’

Equity (Deficit)

Condensed Consolidated Statements of Stock holders’

(In thousands, except share data)

Preferred Stock

Comprehensive

Stockholders'

Income (Loss)

Balance at December 31, 2022

1 unchanged sentence

Vesting of early exercised stock options

Repurchases of early exercised stock options and restricted stock

Stock-based compensation expense

Unrealized loss on marketable securities, net

Unrealized gain on marketable securities, net

Balance at March 31, 2023

Exercise of stock options

Issuance of common stock under the Employee Stock Purchase Plan

Vesting of early exercised stock options

Stock-based compensation expense

Unrealized loss on marketable securities, net

Balance at June 30, 2022

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

Comprehensive

Stockholders'

Income (Loss)

Equity (Deficit)

Balance at December 31, 2021

Issuance of Series B-2 convertible preferred stock for cash, net of $ 95 in issuance costs

Issuance of common stock in connection with asset acquisition

Exercise of stock options

Vesting of early exercised stock options

Repurchases of restricted stock

Stock-based compensation expense

1 unchanged sentence

Balance at March 31, 2022

Issuance of common stock in connection with license agreement

Exercise of stock options

Vesting of early exercised stock options

Stock-based compensation expense

Unrealized loss on marketable securities, net

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)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

3 unchanged sentences

In-process research and development expenses

Issuance of common stock to Erasca Foundation

(Accretion) amortization on marketable securities, net

Change in fair value of preferred stock purchase right liability

Changes in operating assets and liabilities:

1 unchanged sentence

Accounts payable

Accrued expenses and other current liabilities

Accrued expenses and other current and long-term liabilities

Operating lease assets and liabilities, net

6 unchanged sentences

Purchases of property and equipment

Net cash used in investing activities

Net cash provided by (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

Proceeds from the exercise of stock options, net of repurchases

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

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

Proceeds from the exercise of stock options

Net cash provided by financing activities

Net (decrease) increase in cash, cash equivalents and restricted cash

Net decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of the period

1 unchanged sentence

Supplemental disclosure of noncash investing and financing activities:

Issuance of common stock to Erasca Foundation

Issuance of common stock in connection with asset acquisition

Issuance of common stock in connection with license agreement

Amounts accrued for purchases of property and equipment

Conversion of preferred stock to common stock upon initial public offering

Vesting of early exercised options

Operating lease assets obtained in exchange for lease obligation

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 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.

As of March 31, 2023, the Company had $ 389.7 million in cash, cash equivalents, and short-term marketable securities.

As of March 31, 2023, the Company had an accumulated deficit of $ 514.2 million.

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

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).

From its inception through March 31, 2023, 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) and underwritten offering (2022 Offering).

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 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

On July 20, 2021, the Company completed its IPO in which the Company issued and sold 21,562,500 shares of its common stock, including the exercise in full by the underwriters of their option to purchase 2,812,500 shares of common stock, at a price to the public of $ 16.00 per share.

Proceeds from the IPO, net of underwriting discounts and commissions of $ 24.2 million and offering costs of $ 3.8 million, were $ 317.0 million.

In connection with the completion of the IPO, all outstanding shares of convertible preferred stock were converted into 71,263,685 shares of common stock.

Reverse stock split

On July 9, 2021, the Company effected a one-for- 1.2 reverse stock split of its issued and outstanding shares of common stock (the Reverse Stock Split).

The par value and the number of authorized shares of the convertible preferred stock and common stock were not adjusted as a result of the Reverse Stock Split.

All issued and outstanding common stock and the conversion prices and ratio of the convertible preferred stock have been retroactively adjusted to reflect this Reverse Stock Split for all periods presented.

The Company believes its cash, cash equivalents, and short-term marketable securities as of March 31, 2023 will be sufficient for the Company to fund operations for at least one year from the issuance date of these condensed consolidated financial statements.

Underwritten offering

In December 2022, the Company completed the 2022 Offering pursuant to which the Company issued and sold 15,384,616 shares of its common stock at a price to the public of $ 6.50 per share.

Proceeds from the offering were $ 94.9 million, net of underwriting discounts and commissions and offering costs of $ 5.1 million.

Basis of presentation

7 unchanged sentences

The preparation of the Company’s condensed consolidated financial statements in conformity with US GAAP requires the Company to make estimates and assumptions that impact the reported amounts of assets, liabilities, expenses, and the disclosure of contingent assets and liabilities in the condensed consolidated financial statements and accompanying notes.

Accounting estimates and management judgments reflected in the condensed consolidated financial statements include, but are not limited to, the accrual of research and development expenses, fair value of common stock, preferred stock and freestanding instruments, stock-based compensation expense, and the incremental borrowing rate for determining the operating lease asset and liability.

Accounting estimates and management judgments reflected in the condensed consolidated financial statements include, but are not limited to, the accrual of research and development expenses, fair value of common stock, stock-based compensation expense, and the incremental borrowing rate for determining the operating lease asset and liability.

Management evaluates its estimates on an ongoing basis.

1 unchanged sentence

Unaudited interim financial information

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.

The accompanying condensed consolidated balance sheet as of March 31, 2023, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2023 and 2022, the condensed consolidated statements of stockholders’

equity for the three months ended March 31, 2023 and 2022 and the condensed consolidated statements of cash flows for the three months ended March 31, 2023 and 2022 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 March 31, 2023 and the condensed consolidated results of its operations and cash flows for the three months ended March 31, 2023 and 2022.

The condensed consolidated financial data and other information disclosed in these notes related to the three months ended March 31, 2023 and 2022 are unaudited.

The condensed consolidated results for the three months ended March 31, 2023 are not necessarily indicative of results to be expected for the year ending December 31, 2023, 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, 2022 filed with the SEC on March 23, 2023 .

7 unchanged sentences

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 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 had deposited cash of $ 408,000 as of March 31, 2023 and December 31, 2022 to secure a letter of credit in connection with the lease of the Company’s facilities (see Note 10).

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

15 unchanged sentences

Interest and dividends on securities classified as available-for-sale are included in interest income.

Through its wholly-owned subsidiary, Erasca Ventures, the Company has also invested in equity securities of a company whose securities are not publicly traded and whose fair value is not readily available.

This investment is recorded using cost minus impairment, plus or minus changes in its estimated fair value resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

9 unchanged sentences

Level 3—Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

Recently adopted accounting pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (ASU 2016-13) and also issued subsequent amendments to the initial guidance:

ASU 2018-19, ASU 2019-04, ASU 2019-05, and ASU 2019-11.

The standard requires that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used, and it establishes additional disclosure requirements related to credit risks.

For available-for-sale debt securities with expected credit losses, this standard now requires allowances to be recorded instead of reducing the amortized cost of the investment.

This guidance was originally effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption was permitted.

In November 2019, the FASB subsequently issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):

Effective Dates, whereby the effective date of this standard for smaller reporting companies was deferred to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and early adoption is still permitted.

The Company adopted ASU 2016-13, and related updates, on a modified retrospective basis on January 1, 2022 , and the adoption had an immaterial impact on its condensed consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU 2020-06, Debt:

Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (ASU 2020-06), which simplifies the accounting for convertible instruments and contracts in an entity’s own equity.

This guidance is effective for the Company in its annual reporting period beginning after December 15, 2023, including interim periods within that reporting period, with early adoption permitted only as of annual reporting periods beginning after December 15, 2020.

The Company adopted ASU 2020-06 on a modified retrospective basis on January 1, 2022 , and the adoption had no impact on its condensed consolidated financial statements and related disclosures.

In January 2020, the FASB issued ASU 2020-01, Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815 (ASU 2020-01), which clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method.

In addition, ASU 2020-01 states that for the purpose of applying paragraph 815-10-15-141(a), an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option in accordance with the financial instruments guidance in Topic 825.

The Company adopted the provisions of ASU 2020-01 prospectively as of January 1, 2022 , and the adoption had no impact on its condensed consolidated financial statements and related disclosures.

Recently issued accounting pronouncements not yet adopted

6 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 September 30, 2022 using

Fair value measurements as of March 31, 2023 using

Quoted prices in

active markets

September 30,

for identical

4 unchanged sentences

US treasury securities (2)

Commercial paper (2)

US government agency securities (2)

Corporate debt securities (2)

Supranational debt security (2)

US treasury securities (3)

Commercial paper (2)

Supranational debt securities (2)

Total fair value of assets

1 unchanged sentence

(2) Included as short-term marketable securities on the condensed consolidated balance sheets.

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

Fair value measurements as of December 31, 2022 using

6 unchanged sentences

US treasury securities (2)

US government agency securities (2)

Corporate debt securities (2)

1 unchanged sentence

Supranational debt securities (2)

US treasury securities (3)

Total fair value of assets

1 unchanged sentence

(2) Included as short-term marketable securities on the condensed consolidated balance sheets.

(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 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.

As of March 31, 2023 and December 31, 2022 , the Company held a $ 2.0 million equity investment in Affini-T Therapeutics, Inc.

(Affini-T) at cost.

No adjustments have been made to the value of the Company’s investment in Affini-T since its initial measurement either due to impairment or based on observable price changes.

None of the Company’s non-financial assets or liabilities are recorded at fair value on a non-recurring basis.

No transfers between levels have occurred during the periods presented.

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.

Cash equivalents consist of money market funds and US treasury securities and short-term marketable securities consist of US treasury securities, US government agency securities, corporate debt securities, commercial paper, and supranational debt 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):

September 30, 2022

March 31, 2023

US treasury securities

Commercial paper

US government agency securities

Corporate debt securities

Supranational debt security

US treasury securities

Commercial paper

Supranational debt securities

December 31, 2022

US treasury securities

US government agency securities

Corporate debt securities

1 unchanged sentence

Supranational debt securities

The following tables present fair values and gross unrealized losses for those available-for-sale securities that were in an unrealized loss position as of March 31, 2023 and December 31, 2022, aggregated by category and the length of time that the securities have been in a continuous loss position (in thousands):

March 31, 2023

Unrealized losses less than 12 months

Unrealized losses 12 months or greater

Unrealized losses

US treasury securities

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

Corporate debt securities

Commercial paper

Supranational debt securities

December 31, 2022

Unrealized losses less than 12 months

Unrealized losses 12 months or greater

Unrealized losses

US treasury securities

Corporate debt securities

Supranational debt securities

As of March 31, 2023, there were 34 available-for-sale securities with an estimated fair value of $ 79.2 million in gross unrealized loss positions, of which 6 available-for-sale securities with an estimated fair value of $ 29.5 million were in an unrealized loss position for more than 12 mont hs.

As of December 31, 2022 , there were 35 available-for-sale securities with an estimated fair value of $ 107.9 million in gross unrealized loss positions , of which 10 available-for-sale securities with an estimated fair value of $ 44.0 million were in an unrealized loss position for more than 12 months.

As of March 31, 2023 and December 31, 2022, 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.

Additionally, the Company does not intend to sell the securities nor is it more likely than not that the Company will be required to sell the securities before recovery of their amortized cost basis.

Accrued interest on the Company’s available-for-sale securities was $ 1.0 million and $ 748,000 as of March 31, 2023 and December 31, 2022 , respectively, and was included in prepaid expenses and other current assets on the condensed consolidated balance sheets.

Property and equipment, net

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

September 30,

Construction in process

Laboratory equipment

5 unchanged sentences

Property and equipment, net

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.

Depreciation and amortization expense related to property and equipment was $ 894,000 and $ 403,000 for the three months ended March 31, 2023 and 2022 , 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

1 unchanged sentence

Unvested early exercised stock option liability

Accrued property and equipment

Accrued professional services

Accrued property and equipment

Other accruals

5 unchanged sentences

Asana and ASN had previously entered into a license agreement, which was amended and restated prior to the closing of the merger transaction (the Asana License Agreement, and collectively with the Asana Merger Agreement, the Asana Agreements), pursuant to which ASN acquired an exclusive, worldwide license to certain intellectual property rights relating to inhibitors of ERK1 and ERK2 owned or controlled by Asana to develop and commercialize ERAS-007 and certain other related compounds for all applications.

Under the Asana Merger Agreement, the Company made an upfront payment of $ 20.0 million and issued 4,000,000 shares of its Series B-2 convertible preferred stock to Asana at a value of $ 7.50 per share or a total fair value of $ 30.0 million.

In connection with the Company’s IPO, these shares of Series B-2 convertible preferred stock were converted into 3,333,333 shares of the Company’s common stock.

Under the Asana Merger Agreement, in 2020, the Company made an upfront payment of $ 20.0 million and issued 4,000,000 shares of its Series B-2 convertible preferred stock to Asana at a value of $ 7.50 per share or a total fair value of equity of $ 30.0 million.

In connection with the Company's IPO, these shares of Series B-2 convertible preferred stock were converted into 3,333,333 shares of the Company’s common stock.

The Company is obligated to make future development and regulatory milestone cash payments for a licensed product in an amount of up to $ 90.0 million.

1 unchanged sentence

The Company is not obligated to pay royalties on the net sales of licensed products.

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 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.

No IPR&D expense was recorded during the three months ended March 31, 2023 and 2022.

As of March 31, 2023 and December 31, 2022 , no milestones had been accrued as the underlying contingencies were not probable or estimable.

Emerge Life Sciences, Pte.

1 unchanged sentence

(ELS) wherein it purchased all rights, title, and interest (including all patent and other intellectual property rights) to EGFR antibodies directed against the EGFR domain II (EGFR-D2) and domain III (EGFR-D3) as well as a bispecific antibody where one arm is directed against EGFR-D2 and the other is directed against EGFR-D3 (the Antibodies).

Under the terms of the ELS Purchase Agreement, the Company made an upfront payment of $ 2.0 million and issued to ELS 500,000 shares of the Company’s common stock at a value of $ 3.36 per share or a total fair value of $ 1.7 million.

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 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).

If the Company elects to exercise the Option, then ELS will provide to the Company a list of all available antibodies that meet the aforementioned requirements, and the Company has the right to select one antibody from the list.

Upon the Company’s selection of an antibody, ELS will assign to the Company all rights, title and interest to such antibody (including patent and other intellectual property rights) subject to any pre-existing obligations or restrictions.

In the event that the Company wishes to have ELS conduct any studies on such optioned antibody, then after mutual agreement as to the scope of the studies, the Company will be responsible for the cost for such studies.

Under the terms of the ELS Purchase Agreement, in 2021, the Company made an upfront payment of $ 2.0 million and issued to ELS 500,000 shares of the Company’s common stock at a value of $ 3.36 per share or a total fair value of equity of $ 1.7 million.

No IPR&D expense was recorded during the three months ended March 31, 2023 and 2022 .

License agreements

Novartis Pharma AG

In December 2022, the Company entered into an exclusive license agreement (the Novartis Agreement) with Novartis Pharma AG (Novartis) under which the Company was granted an exclusive, worldwide, royalty-bearing license to certain patent and other intellectual property rights owned or controlled by Novartis to develop, manufacture, use, and commercialize naporafenib in all fields of use.

The Company has the right to sublicense (through multiple tiers) its rights under the Novartis Agreement, subject to certain limitations and conditions, and is required to use commercially reasonable efforts to commercialize licensed products in certain geographical markets.

The license granted under the Novartis Agreement is subject to Novartis’

reserved right to:

(i) develop, manufacture, use, and commercialize compounds unrelated to naporafenib under the licensed patent rights and know-how, (ii) use the licensed patent rights and know-how for non-clinical research purposes, and (iii) use the licensed patent rights and know-how to the extent necessary to perform ongoing clinical trials and perform its obligations under existing contracts and under the Novartis Agreement.

Under the Novartis Agreement, the Company made an upfront cash payment to Novartis of $ 20.0 million and issued to Novartis 12,307,692 shares of common stock of the Company having an aggregate value of approximately $ 80.0 million.

The Company is obligated to make future regulatory milestone payments of up to $ 80.0 million and sales milestone payments of up to $ 200.0 million.

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.

The Company recorded $ 100.0 million in IPR&D expense during the year ended December 31, 2022 in connection with the Novartis Agreement.

As of March 31, 2023 and December 31, 2022 , the Company had recorded $ 0 and $ 20.0 million in accounts payable on the condensed consolidated balance sheets related to the upfront cash payment, respectively.

As of March 31, 2023 and December 31, 2022 , no milestones are accrued as the underlying contingencies are not probable or estimable.

The Novartis Agreement will expire upon the last to expire royalty term, which is determined on a licensed product-by-licensed product and country-by-country basis, and is the later of:

(i) ten years from the date of first commercial sale for the licensed product in such country, (ii) the last to expire valid claim within the licensed patent rights covering such licensed product, or (iii) the expiration of all regulatory exclusivity for the licensed product in such country.

Upon expiration of the Novartis Agreement, on a licensed product-by-licensed product and country-by-country basis, the Company will have a fully paid-up, perpetual, and irrevocable license to develop, manufacture, use, and commercialize the licensed products.

The Novartis Agreement may be terminated in its entirety by either party in the event of an uncured material breach by the other party.

Novartis may terminate the Novartis Agreement upon written notice in the event the Company becomes subject to specified bankruptcy, insolvency, or similar circumstances.

The Company may terminate the Novartis Agreement in its entirety at any time upon the provision of prior written notice to Novartis.

Upon termination of the Novartis Agreement for any reason, all rights and licenses granted to the Company will terminate.

In addition, upon termination of the Novartis Agreement for any reason other than its natural expiration, Novartis has an option to negotiate a license under any patent rights, know-how, or other intellectual property rights relating to the licensed products that are owned or controlled by the Company for the purpose of developing, manufacturing and commercializing the licensed products on terms to be negotiated between the parties.

NiKang Therapeutics, Inc.

1 unchanged sentence

(NiKang) under which the Company was granted an exclusive, worldwide license to certain intellectual property rights owned or controlled by NiKang related to certain SHP2 inhibitors to develop and commercialize ERAS-601 and certain other related compounds for all applications.

Under the NiKang Agreement, the Company made an upfront payment of $ 5.0 million to NiKang and reimbursed NiKang $ 0.4 million for certain initial manufacturing costs.

In addition, the Company paid $ 7.0 million in April 2020 related to the publication of a US patent application that covered the composition of matter of ERAS-601.

Under the NiKang Agreement, in 2020, the Company made an upfront payment of $ 5.0 million to NiKang and reimbursed NiKang $ 0.4 million for certain initial manufacturing costs.

In addition, the Company paid $ 7.0 million in 2020 related to the publication of a US patent application that covered the composition of matter of ERAS-601.

The Company is also obligated to pay (i) development and regulatory milestone payments in an aggregate amount of up to $ 16.0 million for the first licensed product, of which $ 4.0 million was paid in January 2021, and $ 12.0 million for a second licensed product, and (ii) commercial milestone payments in an aggregate amount of up to $ 157.0 million for the first licensed product and $ 151.0 million for a second licensed product.

2 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 nine months ended September 30, 2022 and 2021.

No IPR&D expense was recorded during the three months ended March 31, 2023 and 2022.

As of March 31, 2023 and December 31, 2022 , no milestones are accrued as the underlying contingencies are not probable or estimable.

Katmai Pharmaceuticals, Inc.

4 unchanged sentences

In connection with the Company's IPO, these shares of Series B-1 convertible preferred stock and Series B-2 convertible preferred stock were converted into 395,555 shares of the Company's common stock, in the aggregate.

The Company is obligated to make future development and regulatory milestone payments of up to $ 24.0 million and commercial milestone payments of up to $ 101.0 million.

The Company is obligated to make future development and regulatory milestone payments of up to $ 26.0 million, of which $ 2.0 million was paid in March 2022, and commercial milestone payments of up to $ 101.0 million.

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 nine months ended September 30, 2022 , respectively.

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

No IPR&D expense was recorded during the three months ended March 31, 2023 .

The Company recorded IPR&D expense of $ 2.0 million in connection with a development milestone payment made during the three months ended March 31, 2022.

As of March 31, 2023 and December 31, 2022 , no milestones are accrued as the underlying contingencies are not probable or estimable.

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.

Under the LifeArc Agreement, the Company was granted the license at no upfront cost and a period of three months after the effective date to conduct experiments on LifeArc’s compounds.

Upon completion of this initial testing period, the Company had the option to continue the license and make a one-time license payment of $ 75,000 to LifeArc, which payment was subsequently made.

Upon completion of this initial testing period, the Company had the option to continue the license and make a one-time license payment of $ 75,000 to LifeArc, which payment was subsequently made in 2020.

The Company is obligated to make future development milestone payments for a licensed product of up to $ 11.0 million and sales milestone payments of up to $ 50.0 million.

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 nine months ended September 30, 2022 and 2021.

No IPR&D expense was recorded during the three months ended March 31, 2023 and 2022.

As of March 31, 2023 and December 31, 2022 , no milestones are accrued as the underlying contingencies are not probable or estimable.

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 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’

In connection with the IPO, on July 20, 2021, the Company amended and restated its certificate of incorporation to, among other things, (i) increase the number of authorized shares of common stock from 156,000,000 to 800,000,000 and (ii) authorize 80,000,000 shares of undesignated preferred stock with a par value of $ 0.0001 per share.

Convertible preferred stock

Upon the closing of the IPO in July 2021, all shares of convertible preferred stock then outstanding converted into 71,263,685 shares of common stock.

Prior to conversion, t he Company’s convertible preferred stock was classified outside of stockholders’

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 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

During 2018, the Company issued 1,458,332 shares of restricted stock for cash at a price of $ 0.0001 per share.

The restricted stock vests 25 % one year from the vesting commencement date and monthly thereafter over a three-year period and is subject to repurchase by the Company in the event of any voluntary or involuntary termination of services to the Company prior to vesting.

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

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 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.

No IPR&D expense was recorded during the three months ended March 31, 2023 and 2022.

As of March 31, 2023 and December 31, 2022 , no milestones are accrued as the underlying contingencies are not probable or estimable.

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

As of March 31, 2023, there were 14,846,946 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, 2022

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.

Outstanding at March 31, 2023

Options exercisable at March 31, 2023

The weighted-average grant date fair value of options granted for the three months ended March 31, 2023 and 2022 was $ 2.94 and $ 8.36 , respectively.

As of March 31, 2023, the unrecognized compensation cost related to unvested stock option grants was $ 72.0 million and is expected to be recognized as expense over approximately 2.87 years.

The intrinsic value of the options exercised for the three months ended March 31, 2023 and 2022 was $ 517,000 and $ 3.4 million, respectively.

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

The shares of common stock issued from the early exercise of unvested stock options are restricted and continue to vest in accordance with the original vesting schedule.

2 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 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.

As of March 31, 2023 and December 31, 2022, there were 948,179 shares and 1,115,105 shares subject to repurchase by the Company, respectively.

As of March 31, 2023 and December 31, 2022, the Company recorded $ 1.5 million and $ 1.7 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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Risk-free interest rate

1 unchanged sentence

1.46 %- 1.74 %

1.46 %- 3.38 %

0.59 %- 1.09 %

Expected volatility

1 unchanged sentence

85.86 %- 85.99 %

85.51 %- 87.11 %

81.93 %- 84.98 %

Expected term (in years)

1 unchanged sentence

Employee stock purchase plan

In July 2021, the Company’s board of directors adopted and the Company’s stockholders approved the ESPP, which became effective in connection with the IPO.

In July 2021, the Company’s board of directors adopted and the Company’s stockholders approved the Company's 2021 Employee Stock Purchase Plan (the ESPP), which became effective in connection with the IPO.

The ESPP permits participants to contribute up to a specified percentage of their eligible compensation during a series of offering periods of 24 months , each comprised of four six-month purchase periods, to purchase the Company’s common stock.

2 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 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 September 30,

Nine Months Ended September 30,

Risk-free interest rate

0.05 %- 0.19 %

2.24 %- 3.14 %

0.05 %- 0.19 %

Expected volatility

70.99 %- 88.50 %

84.74 %- 87.89 %

70.99 %- 88.50 %

Expected term (in years)

Expected dividend yield

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

Restricted stock

The Company granted 1,795,827 shares of its restricted stock in 2018, which vest 25 % one year from the vesting commencement date and monthly thereafter over a three-year period.

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 nine months ended September 30, 2022 and 2021.

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

termination of employment or service to the Company.

Any shares subject to forfeiture are not deemed, for accounting purposes, to be outstanding until those shares vest.

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

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 September 30, 2022

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

The Company recognized stock-based compensation expense related to the ESPP of $ 707,000 and $ 501,000 during the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, the unrecognized compensation cost related to the ESPP was $ 2.2 million and is expected to be recognized as expense over approximately 1.24 years.

As of March 31, 2023 and December 31, 2022, $ 418,000 and $ 74,000 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.

No shares were issued and sold under the ESPP during the three months ended March 31, 2023 and 2022.

Stock-based compensation expense

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Research and development

1 unchanged sentence

Common stock reserved for future issuance

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

September 30,

Common stock reserved for future issuance consisted of the following as of March 31, 2023 and December 31, 2022:

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 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.

Total lease costs were approximately $ 3.1 million and $ 1.2 million, including operating lease costs of $ 1.9 million and $ 1.0 million, variable lease costs of $ 1.2 million and $ 117,000 , and short-term lease costs of $ 0 and $ 31,000 , durin g the three months ended March 31, 2023 and 2022, respectively.

The Company paid $ 863,000 and $ 273,000 in cash for operating leases that were included in the operating activities section of the condensed consolidated statements of cash flows for the three months ended March 31, 2023 and 2022, respectively.

The weighted-average remaining lease term and the weighted-average discount rate of the Company’s operating leases were 9.02 years and 8.95 % at March 31, 2023 , respectively.

The weighted-average remaining lease term and the weighted-average discount rate of the Company’s operating leases was 9.26 years and 8.96 % at December 31, 2022, respectively.

2 unchanged sentences

Facility leases

In 2018, the Company entered into a lease agreement for approximately 11,000 square feet of office space in San Diego, California which was subsequently amended resulting in a total of 16,153 square feet of office space leased (the 2018 Lease).

The amended space was accounted for as a separate lease.

The 2018 Lease was again modified in November 2021 to amend the termination date from May 2024 to April 2022 .

The Company remeasured the associated lease liability using the incremental borrowing rate at the date of the second amendment selected on the basis of the remaining lease term and remaining lease payments and adjusted the operating lease asset accordingly, resulting in a $ 539,000 gain on remeasurement, which was recorded as other income (expense), net in the consolidated statements of operations and comprehensive loss.

The 2018 Lease was again modified in April 2022 to amend the termination date from April 2022 to May 2022 .

The Company’s lea se payments consisted primarily of fixed rental payments for the right to use the underlying leased assets over the lease term.

The Company was responsible for operating expenses over base operating expenses as defined in the original lease agreement.

In September 2020, the Company entered into a lease agreement for 59,407 square feet of laboratory and office space in San Diego, California, which represented a portion of a new facility that was under construction and which was subsequently amended in March 2021 to expand the rented premises by 18,421 square feet (the 2020 Lease).

4 unchanged sentences

The 2020 Lease, as amended, has an initial term of 10.75 years and includes aggregate monthly payments to the lessor of approximately $ 51.6 million beginning in May 2023 with a rent escalation clause, and a tenant improvement allowance of approximately $ 16.8 million.

The Company is responsible for its share of operating expenses based on actual operating expenses incurred by the landlord.

The 2020 Lease is cancellable at the Company’s request after the 84 th month with 12 months written notice and a lump-sum cancellation payment of $ 2.5 million.

3 unchanged sentences

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.

The Company is responsible for its share of operating expenses based on actual operating expenses incurred by the landlord.

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

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 were recorded as prepaid rent on the condensed consolidated balance sheets prior to lease commencement.

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 and included in the operating lease asset upon 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.

Upon lease commencement, the $ 5.1 million of prepaid rent was included in the operating lease asset .

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 as of September 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 March 31, 2023 are as follows (in thousands):

Year ending December 31,

2022 (remaining three months)

2023 (remaining nine months)

Total lease payments

Amount representing interest

Tenant improvement allowance receivable

Operating lease liabilities

2 unchanged sentences

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 nine months ended September 30, 2 0 22 and 2 0 21 .

No provision for federal, state or foreign income taxes has been recorded for the three months ended March 31, 2 0 23 and 2 0 22 .

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.

1 unchanged sentence

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

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.

For the three months ended March 31, 2023 and 2022 , the Company has no t recognized any interest or penalties related to income taxes.

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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

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

3 unchanged sentences

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:

September 30,

Options to purchase common stock

5 unchanged sentences

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

During the three months ended March 31, 2023 and 2022 , 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.

3 unchanged sentences

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

In November 2022, the Erasca Foundation repaid the promissory note.

As of March 31, 2023 and December 31, 2022 , no amounts related to the non-interest bearing promissory note were recorded in the condensed consolidated balance sheets.

Affini-T Therapeutics, Inc.

35 unchanged sentences

Our modality-agnostic approach aims to allow us to selectively and potently inhibit or degrade critical signaling nodes with small molecule therapeutics, large molecule therapeutics, and protein degraders.

Our purpose-built pipeline includes three clinical-stage programs (ERK and SHP2 inhibitors, which together comprise our first, innovative MAPKlamp approach, and an EGFR inhibitor), one preclinical-stage program (central nervous system (CNS)-penetrant KRAS G12C inhibitor), and seven discovery-stage programs targeting other key oncogenic drivers.

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) with the US Food and Drug Administration (FDA) every 12-18 months through 2026.

Our purpose-built pipeline includes five clinical-stage programs (a pan-RAF inhibitor, ERK and SHP2 inhibitors, which together comprise our first, innovative MAPKlamp approach, a central nervous system (CNS)-penetrant EGFR inhibitor, and a CNS-penetrant KRAS G12C inhibitor), and seven discovery-stage programs targeting other key oncogenic drivers.

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 downstream and upstream nodes, respectively, 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 receptor tyrosine kinase (RTK), SHP2, RAS, and/or RAF inhibitors.

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).

Our lead product candidate is naporafenib, for which we plan to begin a pivotal Phase 3 trial in the first half of 2024 in patients with NRAS-mutated (NRASm) melanoma, following the planned initiation of a Phase 1b trial in the second half of 2023 for patients with tissue agnostic RAS Q61X cancers to inform additional clinical development.

Naporafenib is a pan-RAF inhibitor with first-in-class and best-in-class potential in patients with NRASm melanoma, RAS Q61X tissue agnostic solid tumors, and other RAS/MAPK pathway-driven tumors.

RAF proteins are ubiquitously expressed serine-threonine kinases that constitute a key node of the RAS/MAPK pathway downstream of RAS and upstream of MEK.

The RAF protein family consists of ARAF, BRAF, and CRAF (RAF1) that are activated through dimerization.

Mutations in RAF proteins have been observed in many cancers, such as melanoma, colorectal cancer (CRC), non-small cell lung cancer (NSCLC), and thyroid cancer.

We in-licensed naporafenib from Novartis in December 2022 pursuant to the Novartis Agreement.

Naporafenib has been dosed in over 500 patients to date, whereby safety, tolerability, pharmacokinetics (PK), and pharmacodynamics have been established in both monotherapy and in certain combinations, with clinical proof-of-concept (PoC) data in combination with trametinib (MEKINIST) for patients with NRASm melanoma, which includes NRAS Q61X melanoma, and preliminary clinical PoC data with trametinib for patients with RAS Q61X in NSCLC.

Naporafenib complements what we believe to be the deepest, wholly-owned or controlled RAS/MAPK pathway-focused pipeline in the industry.

We are pursuing a broad development strategy for naporafenib that could address up to approximately 3.5 million patients worldwide, thereby significantly expanding our total addressable patient population.

Our planned development for naporafenib includes a series of SEACRAFT trials designed to evaluate naporafenib’s development opportunities in combination with other targeted therapies.

We are prioritizing rapid development of naporafenib + trametinib in the planned Phase 1b SEACRAFT-1 trial in patients with RAS Q61X tissue agnostic tumors and in the planned Phase 3 SEACRAFT-2 trial in patients with NRASm melanoma.

SEACRAFT-1 is supported by clinical PoC data in patients with NRAS Q61X melanoma and preliminary clinical PoC data in patients with KRAS Q61X NSCLC.

In May 2023, we executed a clinical trial collaboration and supply agreement (CTCSA) with Novartis in connection with the SEACRAFT-1 trial.

Under the terms of the agreement, we are sponsoring and funding the clinical trial and Novartis is providing its MEK inhibitor, trametinib, at no cost.

The initiation of SEACRAFT-2 is supported by clinical PoC data in patients with NRASm melanoma, as presented by Novartis at the American Association for Cancer Research Annual Meeting 2022 and European Society for Medical Oncology Congress 2022 medical conferences and as published in March 2023 by de Braud et al.

in the Journal of Clinical Oncology .

We are also exploring additional combinations of naporafenib with other proprietary therapeutic agents in our pipeline as well as with other therapies.

Our next two most-advanced 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 NSCLC, CRC, and pancreatic ductal adenocarcinoma.

In May 2021, we dosed the first patient in HERKULES-1, a Phase 1b/2 clinical trial designed to evaluate ERAS-007 as a single agent and in combination with various RAS/MAPK pathway targeting agents in advanced solid tumors.

In December 2022, we dosed the first patient to evaluate ERAS-007 in combination with ERAS-601 (the MAPKlamp portion of HERKULES-1) in advanced solid tumors.

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)

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.

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.

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 connection with our HERKULES-3 trial, we have announced CTCSAs with Pfizer Inc.

for its BRAF inhibitor, encorafenib (BRAFTOVI), and CDK4/6 inhibitor, palbociclib (IBRANCE), Eli Lilly and Company (Lilly) for its EGFR antibody, cetuximab (ERBITUX), and Pierre Fabre for its BRAF inhibitor, encorafenib (BRAFTOVI) in key international territories.

In all these cases, we are sponsoring and funding the clinical trial and the partner is providing its drug to us 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 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.

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.

These two trials are expected to provide PoC data and may be expanded to enable potential accelerated approvals in their respective indications.

In October 2022, we reported Phase 1b monotherapy data from HERKULES-1 at the 2022 EORTC-NCI-AACR Molecular Targets and Cancer Therapeutics Symposium (2022 Triple Meeting).

These data included preliminary monotherapy safety and PK 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 dose escalation combination data readout in RAS- and RAF-mutated GI malignancies from HERKULES-3 in the first half of 2023, a Phase 1b combination data readout from HERKULES-2 in the first half of 2023, a Phase 1b dose expansion combination data readout in BRAF-mutated CRC from HERKULES-3 between the second half of 2023 and the first half of 2024, and a Phase 1b combination data readout for ERAS-007 and ERAS-601 from HERKULES-1 in the first half of 2024.

In June 2022, we announced an additional Phase 1b PoC clinical trial to investigate ERAS-007 in combination with a KRAS G12C inhibitor in KRAS G12C-driven NSCLC and CRC.

While we have agreed to provide ERAS-007 for this clinical trial, the trial will be funded by a grant that the principal investigators received from Stand Up To Cancer (SU2C).

While we have agreed to provide ERAS-007 for this clinical trial, the trial will be funded by a grant that the principal investigators received from Stand Up To Cancer.

ERAS-601 is designed to be a potent and selective oral inhibitor of SHP2, a convergent node for upstream RTK signaling and a critical “on/off switch”

that activates RAS-GTP signaling.

SHP2 also drives tumor cell proliferation and development of resistance.

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.

Activation of SHP2 also drives tumor cell proliferation and development of resistance.

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

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.

In July 2022, we announced a CTCSA with Lilly in connection with the FLAGSHP-1 trial.

ERAS-601 combinations are being evaluated in the FLAGSHP-1 and HERKULES-1 clinical trials for patients with human papillomavirus (HPV)-negative advanced head and neck squamous cell carcinoma (HNSCC) and RAS/MAPK-altered solid tumors, respectively.

Future development of ERAS-601 combinations may include CRC and other tumor types, based upon the data from the FLAGSHP-1 HNSCC patients and data observed in HERKULES-1.

In July 2022, we announced a second CTCSA with Lilly in connection with the FLAGSHP-1 trial.

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.

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 October 2022, we reported Phase 1 monotherapy data from FLAGSHP-1 at the 2022 Triple Meeting.

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

In April 2023, we announced promising initial Phase 1b dose escalation data from FLAGSHP-1 for ERAS-601 in combination with cetuximab in patients with advanced solid tumors at the American Association for Cancer Research Annual Meeting 2023 medical conference.

In addition, we anticipate a Phase 1b combination data readout in HPV-negative HNSCC in the first half of 2024.

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 FDA for ERAS-3490, the CNS-penetrant development candidate we nominated from our ERAS-1 KRAS G12C inhibitor franchise.

In May 2023, we announced that the US Food and Drug Administration (FDA) granted Fast Track Designation (FTD) to ERAS-801 for the treatment of adult patients with GBM with EGFR gene alterations.

Programs that receive FTD benefit from early and frequent interactions with the FDA during the clinical development process and, if relevant criteria are met, the FDA may consider reviewing portions of a marketing application before the sponsor submits the complete application.

In December 2022, the FDA cleared the investigational new drug application (IND) 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.

5 unchanged sentences

We believe that this strategy allows us to maintain a more efficient infrastructure by eliminating the need for us to invest in our own manufacturing facilities, equipment, and personnel while also enabling us to focus our expertise and resources on the design and development of our product candidates.

In July 2021, we completed our initial public offering (IPO) and issued 21,562,500 shares of our common stock, including the exercise in full by the underwriters of their option to purchase 2,812,500 shares of our common stock, at a price to the public of $16.00 per share.

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 December 2022, we completed the 2022 Offering and issued 15,384,616 shares of our common stock at a price to the public of $6.50 per share.

Proceeds from the 2022 Offering were $94.9 million, net of underwriting discounts and commissions and offering costs of $5.1 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”

2 unchanged sentences

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.

There have been no shares of our common stock sold under the Sale Agreement as of March 31, 2023.

In July 2021, we completed our IPO and issued 21,562,500 shares of our common stock, including the exercise in full by the underwriters of their option to purchase 2,812,500 shares of our common stock, at a price to the public of $16.00 per share.

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.

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 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.

As of March 31, 2023, we have raised a total of $765.4 million to fund our operations, comprised primarily of gross proceeds from our IPO and 2022 Offering and the sale and issuance of convertible preferred stock.

As of March 31, 2023, we had cash, cash equivalents and marketable securities of $389.7 million.

We have incurred significant operating losses since inception.

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.

Our net losses were $33.2 million and $36.5 million for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, we had an accumulated deficit of $514.2 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;

8 unchanged sentences

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 September 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 March 31, 2023 will be sufficient to fund our operations into the second half of 2025.

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.

2 unchanged sentences

Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce, or terminate our research and development programs or other operations, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

The COVID-19 worldwide pandemic has presented substantial public health and economic challenges and is affecting our employees, patients, physicians and other healthcare providers, communities and business operations, as well as the US and global economies and financial markets.

The COVID-19 worldwide pandemic has presented substantial public health and economic challenges and affected our employees, patients, physicians and other healthcare providers, communities and business operations, as well as the US and global economies and financial markets.

To date, we have not experienced material disruptions in our business operations.

disrupt the supply chain and the manufacture or shipment of drug substances and finished drug products for our product candidates for use in our research, preclinical studies and clinical trials;

delay, limit or prevent our employees and CROs from continuing research and development activities;

impede our clinical trial initiation and recruitment and the ability of patients to continue in clinical trials, including the risk that participants enrolled in our clinical trials will contract COVID-19 or other epidemic disease while the clinical trial is ongoing, which could impact the results of the clinical trial, including by increasing the number of observed adverse events;

impede testing, monitoring, data collection and analysis and other related activities;

any of which could delay our preclinical studies and clinical trials and increase our development costs, and have a material adverse effect on our business, financial condition and results of operations.

The extent to which the COVID-19 pandemic impacts our results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact.

However, while it is not possible at this time to estimate the impact that COVID-19 could have on our business in the future, particularly as we advance our product candidates through clinical development, the continued spread of COVID-19 and the measures taken by the governmental authorities, and any future epidemic disease outbreaks, could delay our clinical trials and preclinical studies and increase our development costs, and have a material adverse effect on our business, financial condition and results of operations.

The extent to which the COVID-19 pandemic and any future epidemic disease outbreak impacts our results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact.

Additionally, inflation generally affects us by increasing our employee-related costs and other expenses.

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 September 30, 2022.

We do not believe that such factors had a material adverse impact on our results of operations during the three months ended March 31, 2023.

Our acquisition and license agreements

16 unchanged sentences

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

Three Months Ended September 30,

Nine Months Ended September 30,

Other clinical program

Three Months Ended March 31,

Naporafenib (1)

Other clinical programs

Other discovery and preclinical programs

Total research and development expenses

(1) We in-licensed Naporafenib in December 2022.

We expect our research and development expenses to increase substantially for the foreseeable future as we continue to conduct our ongoing research and development activities, conduct clinical trials and advance our preclinical research programs toward clinical development, particularly as more of our product candidates move into later stages of development, which typically cost more.

23 unchanged sentences

significant and changing government regulation and regulatory guidance;

the impact of any interruptions to our operations or to those of the third parties with whom we work due to the ongoing COVID-19 pandemic and other events (such as the ongoing conflict between Russia and Ukraine and the increased rate of inflation in the United States);

the impact of any interruptions to our operations or to those of the third parties with whom we work due to the ongoing COVID-19 pandemic and other geopolitical and economic events (such as the ongoing conflict between Russia and Ukraine, inflationary trends in the United States and financial institution instability);

the extent to which we establish additional collaboration, license or other arrangements.

9 unchanged sentences

We expect our general and administrative expenses will increase substantially for the foreseeable future as we continue to increase our general and administrative headcount to support our continued research and development activities and, if any product candidates receive marketing approval, commercialization activities, as well as to support our operations generally.

We also expect to incur increased costs associated with operating as a public company.

These increased costs will likely include increased expenses related to audit, legal, regulatory and tax services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs associated with operating as a public company.

Other income (expense), net

1 unchanged sentence

Interest income consists primarily of interest earned on our cash, cash equivalents and marketable securities.

Change in fair value of preferred stock purchase right liability

Our issuance of shares of our Series B-1 convertible preferred stock in April and August 2020 potentially obligated us to issue 13,175,191 shares of our Series B-2 convertible preferred stock at a price of $7.50 per share in an additional closing to certain purchasers of our Series B-1 convertible preferred stock, upon the achievement of certain milestones set forth in the Series B financing purchase agreement.

We determined our obligation to issue these shares of Series B-2 convertible preferred stock represented a freestanding financial instrument that required liability accounting.

This freestanding preferred stock purchase right liability for the Series B-2 convertible preferred stock was recorded at fair value upon issuance and was subsequently remeasured to fair value at each reporting date.

Changes in the fair value of the preferred stock purchase right liability were recognized in the condensed consolidated statements of operations and comprehensive loss until the obligation for the Series B-2 shares was fulfilled upon the Series B-2 issuance in January 2021.

Results of operations

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:

Research and development

In-process research and development

General and administrative

Contribution of common stock to Erasca Foundation

Total operating expenses

Loss from operations

Total other income (expense), net

Research and development expenses

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 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 $8.8 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 $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,

Comparison of the three months ended March 31, 2023 and 2022

The following table summarizes our results of operations for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

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 $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.

Research and development expenses were $27.6 million for the three months ended March 31, 2023 compared to $27.4 million for the three months ended March 31, 2022.

The increase of $0.2 million was primarily driven by a $2.3 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 $1.1 million increase in stock-based compensation expense, and a $0.7 million increase in personnel costs, partially offset by a $3.1 million decrease in expenses incurred in connection with clinical trials, preclinical studies and discovery activities, and a $0.8 million decrease in outsourced services and consulting fees.

In-process research and development expenses

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.

In-process research and development expenses were $0 for the three months ended March 31, 2023 compared to $2.0 million for the three months ended March 31, 2022.

In-process research and development expenses for the three months ended March 31, 2022 related to a development milestone payment of $2.0 million in connection with our license agreement with Katmai Pharmaceuticals, Inc.

General and administrative expenses

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.

General and administrative expenses were $9.4 million for the three months ended March 31, 2023 compared to $7.1 million for the three months ended March 31, 2022.

The increase of $2.4 million was primarily driven by an increase of $1.3 million in stock-based compensation expense, an increase of $0.6 million in personnel costs, and an increase of $0.3 million in facilities and office-related expenses.

Other income (expense), net

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.

Other income (expense), net was $3.8 million for the three months ended March 31, 2023 compared to $47,000 for the three months ended March 31, 2022.

The increase of $3.8 million was primarily related to an increase in interest earned on our cash, cash equivalents and marketable securities during the three months ended March 31, 2023.

Liquidity and capital resources

7 unchanged sentences

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.

There have been no shares of our common stock sold under the Sale Agreement as of March 31, 2023.

In December 2022, we completed the 2022 Offering and issued 15,384,616 shares of our common stock at a price to the public of $6.50 per share.

Proceeds from the 2022 Offering were $94.9 million, net of underwriting discounts and commissions and offering costs of $5.1 million.

Future capital requirements

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

As of March 31, 2023, we had cash, cash equivalents and marketable securities of $389.7 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 2025.

14 unchanged sentences

willingness to pay out-of-pocket for any approved products in the absence of coverage and/or adequate reimbursement from third-party payors;

any delays and cost increases that result from the COVID-19 pandemic and other events (such as the ongoing conflict between Russia and Ukraine and the increased rate of inflation in the United States);

any delays and cost increases that result from the COVID-19 pandemic and other geopolitical and economic events (such as the ongoing conflict between Russia and Ukraine, inflation trends in the United States and financial institution instability);

the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements;

1 unchanged sentence

We have no other committed sources of capital.

Until we can generate a sufficient amount of product revenue to finance our cash requirements, if ever, we expect to finance our future cash needs primarily through equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements.

Until we can generate a sufficient amount of product revenue to finance our cash requirements, if ever, we expect to finance our future cash needs primarily through equity offerings (including through the Sale Agreement), debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements.

However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all.

4 unchanged sentences

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

Nine Months Ended September 30,

Three Months Ended March 31,

Net cash (used in) provided by:

2 unchanged sentences

Financing activities

Net (decrease) increase in cash, cash equivalents and restricted cash

Net decrease in cash, cash equivalents and restricted cash

Operating activities

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.

Cash used in operating activities was $26.4 million during the three months ended March 31, 2023, primarily resulting from a net loss of $33.2 million and accretion on marketable securities of $1.0 million, partially reduced by stock-based compensation expense of $6.8 million and depreciation and amortization 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 $3.3 million primarily due to the receipt of $2.3 million in reimbursement from our landlord for tenant improvements, an increase in accounts payable of $0.4 million, and a decrease in prepaid expenses and other current and long-term assets of $0.7 million, offset by a decrease in accrued expenses and other current and long-term liabilities of $4.4 million.

Cash used in operating activities was $25.8 million during the three months ended March 31, 2022, primarily resulting from a net loss of $36.5 million, partially reduced by stock-based compensation expense of $4.4 million, changes in operating assets and liabilities of $3.8 million, in-process research and development expenses of $2.0 million, which are reflected in investing activities, and depreciation expense of $0.4 million.

Net cash provided by changes in operating assets and liabilities consisted primarily of an increase in operating lease assets and liabilities of $11.1 million primarily due to the receipt of $10.3 million in reimbursement from our landlord for tenant improvements and an increase in accounts payable of $1.9 million, partially offset by an increase in prepaid expenses and other current and long-term assets of $5.5 million, and a decrease of accrued expenses and other current and long-term liabilities of $3.7 million.

Investing activities

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.

Net cash provided by investing activities was $14.7 million during the three months ended March 31, 2023 as compared to cash used in investing activities of $1.8 million during the three months ended March 31, 2022.

The increase in cash provided by investing activities of $16.5 million was primarily the result of an increase in maturities of marketable securities of $40.9 million, a decrease in purchases of property and equipment of $6.1 million, and a decrease of $2.0 million in payments made for investment in equity securities, partially offset by an $18.0 million increase in in-process research and development and a $14.5 million increase in purchases of marketable securities.

Financing activities

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.

Net cash generated from financing activities was $0.2 million during the three months ended March 31, 2023 as compared to $0.5 million during the three months ended March 31, 2022.

We received $0.2 million from the exercise of stock options during the three months ended March 31, 2023 compared to $0.5 million during the three months ended March 31, 2022.

Contractual obligations and commitments

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 –

As of March 31, 2023, 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,”

included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 23, 2023.

Off-balance sheet arrangements

During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Critical accounting policies and estimates

5 unchanged sentences

Actual results may differ materially from these estimates.

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 –

As of March 31, 2023, 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,”

16 unchanged sentences

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