What changed in this filing

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Item 1. Financial Statements

2023-08-10 compared with 2023-05-15 · 220 added, 145 removed, 671 unchanged (35% of the section changed)

7 unchanged sentences

Total current assets

Long-term marketable securities

Property and equipment, net

13 unchanged sentences

Preferred stock, $ 0.0001 par value;

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

80,000,000 shares authorized at June 30, 2023 and December 31, 2022;

no shares issued and outstanding at June 30, 2023 and December 31, 2022

Common stock, $ 0.0001 par value;

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

800,000,000 shares authorized at June 30, 2023 and December 31, 2022;

151,042,118 and 150,448,363 shares issued at June 30, 2023 and December 31, 2022, respectively;

150,383,261 and 149,333,258 shares outstanding at June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

6 unchanged sentences

(In thousands, except share and per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating expenses:

25 unchanged sentences

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, 2023

Comprehensive

7 unchanged sentences

Balance at March 31, 2022

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

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

1 unchanged sentence

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

16 unchanged sentences

Purchases of property and equipment

Net cash provided by (used in) investing activities

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from the exercise of stock options

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

Net cash provided by financing activities

5 unchanged sentences

Vesting of early exercised options

Operating lease assets obtained in exchange for lease obligation

Reduction in operating lease assets due to lease amendment

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

3 unchanged sentences

(Erasca or the Company) is a clinical-stage precision oncology company singularly focused on discovering, developing, and commercializing therapies for RAS/MAPK pathway-driven cancers.

The Company has assembled a wholly-owned or controlled RAS/MAPK pathway-focused pipeline including 12 disclosed modality-agnostic programs aligned with its three therapeutic strategies of:

(i) targeting key upstream and downstream signaling nodes in the RAS/MAPK pathway;

(ii) targeting RAS directly;

and (iii) targeting escape routes that emerge in response to treatment.

The Company has assembled a wholly-owned or controlled RAS/MAPK pathway-focused pipeline consisting of modality-agnostic programs aligned with its three therapeutic strategies of:

(1) targeting key upstream and downstream signaling nodes in the RAS/MAPK pathway;

(2) targeting RAS directly;

and (3) targeting escape routes that emerge in response to treatment.

The Company was incorporated under the laws of the State of Delaware on July 2, 2018, as Erasca, Inc., and is headquartered in San Diego, California.

4 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 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.

As of June 30, 2023, the Company had $ 317.2 million in cash, cash equivalents, and short-term marketable securities, and $ 48.1 million in long-term marketable securities.

As of June 30, 2023, the Company had an accumulated deficit of $ 546.0 million.

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

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).

From its inception through June 30, 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 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.

The Company believes its cash, cash equivalents, and short-term marketable securities as of June 30, 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

14 unchanged sentences

Unaudited interim financial information

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.

The accompanying condensed consolidated balance sheet as of June 30, 2023, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2023 and 2022, the condensed consolidated statements of stockholders’

equity for the three and six months ended June 30, 2023 and 2022 and the condensed consolidated statements of cash flows for the six months ended June 30, 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 June 30, 2023 and the condensed consolidated results of its operations and cash flows for the three and six months ended June 30, 2023 and 2022.

The condensed consolidated financial data and other information disclosed in these notes related to the three and six months ended June 30, 2023 and 2022 are unaudited.

The condensed consolidated results for the three and six months ended June 30, 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 .

5 unchanged sentences

Cash, cash equivalents and restricted cash

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

Cash and cash equivalents include cash in readily available checking and savings accounts and money market funds.

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 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 had deposited cash of $ 408,000 as of June 30, 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.

37 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 March 31, 2023 using

Fair value measurements as of June 30, 2023 using

Quoted prices in

5 unchanged sentences

US treasury securities (2)

US government agency securities (2)

1 unchanged sentence

Commercial paper (2)

Supranational debt securities (2)

US treasury securities (3)

US government agency 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.

Fair value measurements as of December 31, 2022 using

14 unchanged sentences

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

As of June 30, 2023 and December 31, 2022 , the Company held a $ 2.0 million equity investment in Affini-T Therapeutics, Inc.

(Affini-T) at cost.

2 unchanged sentences

No transfers between levels have occurred during the periods presented.

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.

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

March 31, 2023

June 30, 2023

US treasury securities

2 unchanged sentences

Commercial paper

Supranational debt securities

US treasury securities

US government agency securities

December 31, 2022

4 unchanged sentences

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

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 June 30, 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):

June 30, 2023

Unrealized losses less than 12 months

4 unchanged sentences

US treasury securities

US government agency securities

Corporate debt securities

Commercial paper

Supranational debt securities

December 31, 2022

7 unchanged sentences

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 June 30, 2023, there were 49 available-for-sale securities with an estimated fair value of $ 177.9 million in gross unrealized loss positions, of which 4 available-for-sale securities with an estimated fair value of $ 19.8 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.

As of June 30, 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.

Accrued interest on the Company’s available-for-sale securities was $ 1.2 million and $ 748,000 as of June 30, 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

7 unchanged sentences

Property and equipment, net

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.

Depreciation and amortization expense related to property and equipment was $ 955,000 and $ 1.8 million for the three and six months ended June 30, 2023 , respectively, and $ 534,000 and $ 937,000 for the three and six months ended June 30, 2022 , respectively.

Accrued expenses and other current liabilities

17 unchanged sentences

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

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.

No IPR&D expense was recorded during the three and six months ended June 30, 2023 and 2022.

As of June 30, 2023 and December 31, 2022 , no milestones had been accrued as the underlying contingencies were not probable or estimable.

Emerge Life Sciences, Pte.

2 unchanged sentences

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 .

No IPR&D expense was recorded during the three and six months ended June 30, 2023 and 2022 .

License agreements

9 unchanged sentences

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.

As of June 30, 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 June 30, 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:

15 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 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.

No IPR&D expense was recorded during the three and six months ended June 30, 2023 and 2022.

As of June 30, 2023 and December 31, 2022 , no milestones are accrued as the underlying contingencies are not probable or estimable.

Katmai Pharmaceuticals, Inc.

6 unchanged sentences

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

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.

No IPR&D expense was recorded during the three and six months ended June 30, 2023 .

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

As of June 30, 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.

3 unchanged sentences

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

No IPR&D expense was recorded during the three 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.

No IPR&D expense was recorded during the three and six months ended June 30, 2023 and 2022.

As of June 30, 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 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.

No IPR&D expense was recorded during the three and six months ended June 30, 2023 and 2022.

As of June 30, 2023 and December 31, 2022 , no milestones are accrued as the underlying contingencies are not probable or estimable.

On August 7, 2023, we sent a notice of termination to the Regents with respect to the UCSF Agreement.

Termination of the UCSF Agreement, including termination of the exclusive license granted to us under the UCSF Agreement, will be effective as of October 6, 2023.

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 March 31, 2023, there were 14,846,946 stock-based awards available for future grant under the 2021 Plan.

As of June 30, 2023, there were 15,048,630 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 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.

Outstanding at June 30, 2023

Options exercisable at June 30, 2023

The weighted-average grant date fair value of options granted for the three and six months ended June 30, 2023 was $ 2.05 and $ 2.83 , respectively, and for the three and six months ended June 30, 2022 was $ 5.00 and $ 7.71 , respectively.

As of June 30, 2023, the unrecognized compensation cost related to unvested stock option grants was $ 62.5 million and is expected to be recognized as expense over approximately 2.71 years.

The intrinsic value of the options exercised for the three and six months ended June 30, 2023 was $ 376,000 and $ 893,000 , respectively.

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

Prior to the Company's 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 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.

As of June 30, 2023 and December 31, 2022, there were 658,857 shares and 1,115,105 shares subject to repurchase by the Company, respectively.

As of June 30, 2023 and December 31, 2022, the Company recorded $ 800,000 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 March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Risk-free interest rate

1 unchanged sentence

2.53 %- 3.23 %

3.46 %- 4.22 %

1.46 %- 3.23 %

Expected volatility

1 unchanged sentence

85.51 %- 87.11 %

83.20 %- 85.81 %

85.51 %- 87.11 %

Expected term (in years)

6 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 $ 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.

The Company recognized stock-based compensation expense related to the ESPP of $ 349,000 and $ 1.1 million during the three and six months ended June 30, 2023, respectively, and $ 167,000 and $ 668,000 during the three and six months ended June 30, 2022, respectively.

As of June 30, 2023, the unrecognized compensation cost related to the ESPP was $ 3.3 million and is expected to be recognized as expense over approximately 1.94 years.

As of June 30, 2023 and December 31, 2022, $ 48,000 and $ 74,000 has 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 223,696 shares under the ESPP during the three and six months ended June 30, 2023 and 150,642 shares during the three and six months ended June 30, 2022.

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

Three Months Ended June 30,

Six Months Ended June 30,

Risk-free interest rate

4.70 %- 5.35 %

2.24 %- 3.14 %

4.70 %- 5.35 %

2.24 %- 3.14 %

Expected volatility

72.54 %- 82.79 %

84.74 %- 87.89 %

72.54 %- 82.79 %

84.74 %- 87.89 %

Expected term (in years)

Expected dividend yield

Stock-based compensation expense

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

1 unchanged sentence

Common stock reserved for future issuance

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

Common stock reserved for future issuance consisted of the following as of June 30, 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 .

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.

Total lease costs were approximately $ 2.8 million and $ 5.8 million, including operating lease costs of $ 1.9 million and $ 3.8 million and variable lease costs of $ 859,000 and $ 2.0 million, durin g the three and six months ended June 30, 2023, respectively.

Total lease costs were approximately $ 1.3 million and $ 2.5 million, including operating lease costs of $ 1.0 million and $ 2.0 million, variable lease costs of $ 278,000 and $ 396,000 , and short-term lease costs of $ 31,000 and $ 62,000 , durin g the three and six months ended June 30, 2022, respectively.

The Company paid $ 2.6 million and $ 417,000 in cash for operating leases that were included in the operating activities section of the condensed consolidated statements of cash flows for the six months ended June 30, 2023 and 2022, respectively.

The weighted-average remaining lease term and the weighted-average discount rate of the Company’s operating leases were 8.78 years and 8.95 % at June 30, 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.

10 unchanged sentences

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.

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

As discussed in Note 2, the Company provided a letter of credit to the lessor for $ 408,000 , which expires July 29, 2032 .

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

9 unchanged sentences

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

Future minimum lease payments under the operating leases with initial lease terms in excess of one year as of June 30, 2023 are as follows (in thousands):

Year ending December 31,

2023 (remaining nine months)

2023 (remaining six months)

Total lease payments

4 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 months ended March 31, 2 0 23 and 2 0 22 .

No provision for federal, state or foreign income taxes has been recorded for the three and six months ended June 30, 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 months ended March 31, 2023 and 2022 , the Company has no t recognized any interest or penalties related to income taxes.

For the three and six months ended June 30, 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 March 31,

Three Months Ended June 30,

Six Months Ended June 30,

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:

Three Months Ended June 30,

Six Months Ended June 30,

Options to purchase common stock

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Total potentially dilutive shares

COVID-19 pandemic

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 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.

Related party transactions

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In May 2021, the Company established the Erasca Foundation to provide support such as direct research grants, hardship grants, patient advocacy, patient education in underserved populations, and funding for other initiatives to positively impact society that align with the Company’s mission.

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 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.

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.

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 chief business officer, and general counsel are also officers of the Erasca Foundation.

In April 2023, the Company loaned the Erasca Foundation $ 125,000 in exchange for a non-interest bearing promissory note that matures one year following the date of the note.

As of June 30, 2023 and December 31, 2022 , $ 125,000 and $ 0 is recorded in prepaid expenses and other current assets in the condensed consolidated balance sheets, respectively.

Affini-T Therapeutics, Inc.

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This Quarterly Report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act).

All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, research and development plans, the anticipated timing, costs, design and conduct of our ongoing and planned preclinical studies and planned clinical trials for our product candidates, the timing and likelihood of regulatory filings and approvals for our product candidates, our ability to commercialize our product candidates, if approved, the impact of the COVID-19 pandemic and global geopolitical events, such as the ongoing conflict between Russia and Ukraine, on our business, the pricing and reimbursement of our product candidates, if approved, the potential to develop future product candidates, the potential benefits of current and future licenses, acquisitions, and strategic arrangements with third parties, and our intent to enter into any future strategic arrangements, the timing and likelihood of success, plans and objectives of management for future operations and future results of anticipated product development efforts, are forward-looking statements.

All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, research and development plans, the anticipated timing, costs, design and conduct of our ongoing and planned preclinical studies and planned clinical trials for our product candidates, the timing and likelihood of regulatory filings and approvals for our product candidates, our ability to commercialize our product candidates, if approved, the impact of global geopolitical events on our business, the pricing and reimbursement of our product candidates, if approved, the potential to develop future product candidates, the potential benefits of current and future licenses, acquisitions, and strategic arrangements with third parties, and our intent to enter into any future strategic arrangements, the timing and likelihood of success, plans and objectives of management for future operations and future results of anticipated product development efforts, are forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,”

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Our company was co-founded by leading pioneers in precision oncology and RAS targeting to create novel therapies and combination regimens designed to comprehensively shut down the RAS/MAPK pathway for the treatment of cancer.

We have assembled what we believe to be the deepest, wholly-owned or controlled RAS/MAPK pathway-focused pipeline in the industry, including 12 disclosed modality-agnostic programs aligned with our three therapeutic strategies of:

We have assembled what we believe to be the deepest, wholly-owned or controlled RAS/MAPK pathway-focused pipeline in the industry, consisting of modality-agnostic programs aligned with our three therapeutic strategies of:

(1) targeting key upstream and downstream signaling nodes in the RAS/MAPK pathway;

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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 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.

Our purpose-built pipeline includes four clinical-stage programs (a pan-RAF inhibitor, an ERK inhibitor, a SHP2 inhibitor, and a central nervous system (CNS)-penetrant EGFR inhibitor), and several 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 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.

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 RAS Q61X solid tumors to inform additional clinical development.

Naporafenib is a pan-RAF inhibitor with first-in-class and best-in-class potential to treat patients with NRASm melanoma, RAS Q61X 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.

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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 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.

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

We are prioritizing rapid development of naporafenib + trametinib in the planned Phase 1b SEACRAFT-1 trial in patients with RAS Q61X solid 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.

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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.

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

Our 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.

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

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.

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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.

for its BRAF inhibitor, encorafenib (BRAFTOVI), 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 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.

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

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 May 2023, we announced promising preliminary data for ERAS-007 combinations in patients with GI malignancies as part of two poster presentations that we presented at the American Society of Clinical Oncology Annual Meeting in June 2023.

In June 2023, we provided updates with respect to our HERKULES series of clinical trials.

These updates consisted of the following:

ERAS-007 plus the encorafenib and cetuximab combination (EC) in EC-naïve patients with BRAFm CRC:

We are expanding the evaluation of this combination in EC-naïve patients based on encouraging early efficacy data

ERAS-007 plus EC in EC-treated patients with BRAFm CRC:

We have gated enrollment of EC-treated patients until we have evaluated the efficacy data in the EC-naïve CRC population

ERAS-007 plus osimertinib in patients with post-osimertinib EGFR-mutant NSCLC:

We have deprioritized evaluation of this combination in this indication as clinical efficacy data do not support continued evaluation

ERAS-007 plus palbociclib in patients with KRAS- or NRAS-mutant CRC and KRAS-mutant PDAC:

We have deprioritized evaluation of this combination in this indication as clinical efficacy data do not support continued evaluation

ERAS-007 plus ERAS-601 in patients with advanced solid tumors:

We have deprioritized evaluation of this combination as dose escalation safety data do not support continued evaluation of regimen tested

With respect to the HERKULES-3 Phase 1b trial for ERAS-007 plus EC in EC-naïve BRAFm CRC patients, we anticipate a Phase 1b dose expansion data readout between the second half of 2023 and the first half of 2024.

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”

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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-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.

ERAS-601 combinations are being evaluated in the FLAGSHP-1 clinical trial for patients with advanced solid tumors, including human papillomavirus (HPV)-negative advanced head and neck squamous cell carcinoma (HNSCC).

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

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

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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.

We anticipate a Phase 1b combination data readout in advanced solid tumors, including 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).

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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.

In June 2023, we announced that the FDA granted Orphan Drug Designation (ODD) to ERAS-801 for the treatment of malignant glioma, which includes GBM.

ODD entitles a party to the potential for seven years of post-approval marketing exclusivity, subject to certain exemptions, and financial incentives such as tax advantages and user fee waivers.

In June 2023, we announced that we deprioritized ERAS-3490, our CNS-penetrant KRAS G12C inhibitor, and would not be actively seeking to enroll patients in the AURORAS-1 Phase 1 clinical trial in patients with KRAS G12C-mutated solid tumors.

This deprioritization occurred before enrolling any patients in AURORAS-1 and was due to the increasingly competitive landscape for small- and mid-cap biopharma companies in the KRAS G12C inhibitor market, despite the fact that we believe that ERAS-3490 has the potential for differentiation in this market.

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

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

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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 March 31, 2023.

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

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

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.

As of June 30, 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 June 30, 2023, we had cash, cash equivalents and marketable securities of $365.3 million.

We have incurred significant operating losses since inception.

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.

Our net losses were $31.8 million and $35.6 million for the three months ended June 30, 2023 and 2022, respectively, and $65.0 million and $72.1 million for the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, we had an accumulated deficit of $546.0 million.

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

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

Based upon our current operating plans, we believe that our cash, cash equivalents and marketable securities as of March 31, 2023 will be sufficient to fund our operations into the second half of 2025.

Based upon our current operating plans, we believe that our cash, cash equivalents and marketable securities as of June 30, 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.

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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 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.

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, financial institution instability, 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 March 31, 2023.

Our financial condition and results of operations may also be impacted by other factors we may not be able to control, such as geopolitical and economic events.

We do not believe that such factors had a material adverse impact on our results of operations during the three months ended June 30, 2023.

Our acquisition and license agreements

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Naporafenib (1)

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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 geopolitical and economic events (such as the ongoing conflict between Russia and Ukraine, inflationary trends in the United States and financial institution instability);

the impact of any interruptions to our operations or to those of third parties with whom we work due to geopolitical and economic events;

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

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Results of operations

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,

Comparison of the three months ended June 30, 2023 and 2022

The following table summarizes our results of operations for the three months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended June 30,

Operating expenses:

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Research and development expenses

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.

Research and development expenses were $26.2 million for the three months ended June 30, 2023 compared to $27.5 million for the three months ended June 30, 2022.

The decrease of $1.3 million was primarily driven by a $3.2 million decrease in expenses incurred in connection with clinical trials, preclinical studies and discovery activities, and a $1.5 million decrease in outsourced services and consulting fees, partially offset by a $1.8 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 $0.9 million increase in stock-based compensation expense, and a $0.7 million increase in personnel costs.

In-process research and development expenses

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.

In-process research and development expenses were $0 for the three months ended June 30, 2023 and 2022.

General and administrative expenses

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.

General and administrative expenses were $9.8 million for the three months ended June 30, 2023 compared to $8.4 million for the three months ended June 30, 2022.

The increase of $1.3 million was primarily driven by an increase of $1.1 million in stock-based compensation expense and an increase of $0.2 million in personnel costs.

Other income (expense), net

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.

Other income (expense), net was $4.2 million for the three months ended June 30, 2023 compared to $0.3 million for the three months ended June 30, 2022.

The increase of $3.9 million was primarily related to an increase in interest earned on our cash, cash equivalents and marketable securities during the three months ended June 30, 2023.

Comparison of the six months ended June 30, 2023 and 2022

The following table summarizes our results of operations for the six months ended June 30, 2023 and 2022 (in thousands):

Six Months Ended June 30,

Operating expenses:

Research and development

In-process research and development

General and administrative

Total operating expenses

Loss from operations

Total other income (expense), net

Research and development expenses

Research and development expenses were $53.8 million for the six months ended June 30, 2023 compared to $54.9 million for the six months ended June 30, 2022.

The decrease of $1.1 million was primarily driven by a $6.3 million decrease in expenses incurred in connection with clinical trials, preclinical studies and discovery activities, and a $2.3 million decrease in outsourced services and consulting fees, partially offset by a $4.2 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 $2.0 million increase in stock-based compensation expense, and a $1.4 million increase in personnel costs.

In-process research and development expenses

In-process research and development expenses were $0 for the six months ended June 30, 2023 compared to $2.0 million for the six months ended June 30, 2022.

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

General and administrative expenses

General and administrative expenses were $19.2 million for the six months ended June 30, 2023 compared to $15.5 million for the six months ended June 30, 2022.

The increase of $3.7 million was primarily driven by increases of $2.3 million in stock-based compensation expense, $0.8 million in personnel costs, and $0.3 million in facilities and office-related expenses.

Other income (expense), net

Other income (expense), net was $8.0 million for the six months ended June 30, 2023 compared to $0.3 million for the six months ended June 30, 2022.

The increase of $7.7 million was primarily related to an increase in interest earned on our cash, cash equivalents and marketable securities during the six months ended June 30, 2023.

Liquidity and capital resources

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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 March 31, 2023.

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

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Future capital requirements

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

As of June 30, 2023, we had cash, cash equivalents and marketable securities of $365.3 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.

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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 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;

any delays and cost increases that result from geopolitical and economic events;

costs associated with any products or technologies that we may in-license or acquire.

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

Three Months Ended March 31,

Six Months Ended June 30,

Net cash (used in) provided by:

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Operating activities

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.

Cash used in operating activities was $52.3 million during the six months ended June 30, 2023, primarily resulting from a net loss of $65.0 million, accretion on marketable securities of $2.4 million, and changes in operating assets and liabilities of $0.6 million, partially reduced by stock-based compensation expense of $13.9 million and depreciation and amortization expense of $1.8 million.

Net cash used from changes in operating assets and liabilities consisted primarily of a decrease in accounts payable, accrued expenses and other current and long-term liabilities of $5.9 million, partially offset by an increase in operating lease assets and liabilities, net of $3.5 million primarily due to the receipt of $2.3 million in reimbursement from our landlord for tenant improvements, and an increase in prepaid expenses and other current and long-term assets of $1.8 million.

Cash used in operating activities was $52.9 million during the six months ended June 30, 2022, primarily resulting from a net loss of $72.1 million, partially reduced by stock-based compensation expense of $9.5 million, changes in operating assets and liabilities of $6.7 million, in-process research and development expenses of $2.0 million, which are reflected in investing activities, and depreciation 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, net of $11.9 million primarily due to the receipt of $10.3 million in reimbursement from our landlord for tenant improvements, partially offset by an increase in prepaid expenses and other current and long-term assets of $4.6 million, and a decrease of accrued expenses and other current and long-term liabilities of $0.6 million.

Investing activities

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.

Net cash used in investing activities was $94.0 million during the six months ended June 30, 2023 as compared to $11.0 million during the six months ended June 30, 2022.

The increase in cash used in investing activities of $83.0 million was primarily the result of an increase in purchases of marketable securities of $177.2 million and an increase in in-process research and development of $18.0 million, offset by an increase in maturities of marketable securities of $99.8 million, and decreases in purchases of property and equipment of $10.4 million and payments made for investments in equity securities of $2.0 million.

Financing activities

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.

Net cash provided by financing activities was $0.8 million during the six months ended June 30, 2023 as compared to $1.5 million during the six months ended June 30, 2022.

During the six months ended June 30, 2023, we received $0.5 million from the issuance of common stock under our Employee Stock Purchase Plan (ESPP) and $0.3 million from the exercise of stock options.

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

Contractual obligations and commitments

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 –

As of June 30, 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,”

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Actual results may differ materially from these estimates.

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 –

As of June 30, 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