What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-10 · 164 added, 148 removed, 743 unchanged (30% of the section changed)

2 unchanged sentences

(In thousands, except share and par value amounts)

September 30,

Current assets:

19 unchanged sentences

Preferred stock, $ 0.0001 par value;

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

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

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

Common stock, $ 0.0001 par value;

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

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

151,053,118 and 150,448,363 shares issued at September 30, 2023 and December 31, 2022, respectively;

150,537,752 and 149,333,258 shares outstanding at September 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses:

31 unchanged sentences

Balance at June 30, 2023

Exercise of stock options

Vesting of early exercised stock options

Stock-based compensation expense

Unrealized gain on marketable securities, net

Balance at September 30, 2023

Condensed Consolidated Statements of Stockholders’

Equity - Continued

(In thousands, except share data)

Comprehensive

13 unchanged sentences

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

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

1 unchanged sentence

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

3 unchanged sentences

In-process research and development expenses

(Accretion) amortization on marketable securities, net

Accretion on marketable securities, net

Changes in operating assets and liabilities:

21 unchanged sentences

Vesting of early exercised options

Operating lease assets obtained in exchange for lease obligation

Operating lease assets obtained in exchange for lease obligations

Reduction in operating lease assets due to lease amendment

14 unchanged sentences

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

As of June 30, 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.

As of September 30, 2023, the Company had $ 296.7 million in cash, cash equivalents, and short-term marketable securities, and $ 46.9 million in long-term marketable securities.

As of September 30, 2023, the Company had an accumulated deficit of $ 576.3 million.

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

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.

From its inception through September 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).

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

The Company does not expect to generate any revenues from product sales unless and until the Company successfully completes development and obtains regulatory approval for any of its product candidates, which will not be for at least the next several years, if ever.

2 unchanged sentences

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

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

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

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

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

The condensed consolidated results for the three and nine months ended September 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 .

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 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 had deposited cash of $ 408,000 as of September 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.

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

29 unchanged sentences

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that the Company adopts as of the specified effective date.

There are no recent accounting pronouncements adopted or pending adoption that the Company expects will have a material impact on its condensed consolidated financial statements and related disclosures.

The Company qualifies as an “emerging growth company”

4 unchanged sentences

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

Fair value measurements as of June 30, 2023 using

Fair value measurements as of September 30, 2023 using

Quoted prices in

active markets

September 30,

for identical

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

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

(Affini-T) at cost.

6 unchanged sentences

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

June 30, 2023

September 30, 2023

US treasury securities

10 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 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

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 September 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):

September 30, 2023

Unrealized losses less than 12 months

16 unchanged sentences

Supranational debt securities

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 September 30, 2023, there were 50 available-for-sale securities with an estimated fair value of $ 199.6 million in gross unrealized loss positions, of which 2 available-for-sale securities with an estimated fair value of $ 10.0 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 June 30, 2023 and December 31, 2022, unrealized losses on available-for-sale securities are not attributed to credit risk.

As of September 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 $ 1.2 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.

Accrued interest on the Company’s available-for-sale securities was $ 926,000 and $ 748,000 as of September 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

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

September 30,

Laboratory equipment

5 unchanged sentences

Property and equipment, net

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.

Depreciation and amortization expense related to property and equipment was $ 941,000 and $ 2.8 million for the three and nine months ended September 30, 2023 , respectively, and $ 771,000 and $ 1.7 million for the three and nine months ended September 30, 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

15 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 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.

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

As of September 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 and six months ended June 30, 2023 and 2022 .

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

In December 2022, the Company entered into an exclusive license agreement (as amended, 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.

6 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 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.

As of September 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 September 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 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.

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

As of September 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 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.

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

As of September 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 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.

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

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

University of California, San Francisco

1 unchanged sentence

The UCSF Agreement was amended in May 2021.

Under the UCSF Agreement, the Company made upfront payments of $ 50,000 to the Regents and pays the Regents an annual license maintenance fee during the term of the license, but such fee will not be due on any anniversary if, on that date, the Company is making royalty payments to the Regents.

The Company is obligated to make future development and regulatory milestone payments of up to $ 6.4 million and a sales milestone payment of $ 2.0 million for either of the first two licensed products.

The Company is also obligated to pay royalties on net sales of all licensed products in the low-single digit percentages, subject to a minimum annual royalty payment in the low six figures, commencing on the year of the first sale of a licensed product and continuing, on a licensed product-by-licensed product and country-by-country basis, until there are no valid claims of the licensed patent rights covering the licensed product in such country.

Additionally, the Company is obligated to pay tiered sublicensing fees, with the first two tiers in the low-to-mid teen percentages and the third tier at 30 %, on certain fees the Company receives from any sublicense that the Company grants, depending on the stage of development of a licensed product when such sublicense is granted.

Under the UCSF Agreement, the Company made upfront payments of $ 50,000 to the Regents and paid the Regents an annual license maintenance fee during the term of the license, but such fee would not have been due on any anniversary if, on that date, the Company was then making royalty payments to the Regents.

The Company was obligated to make future development and regulatory milestone payments of up to $ 6.4 million and a sales milestone payment of $ 2.0 million for either of the first two licensed products.

The Company was also obligated to pay royalties on net sales of all licensed products in the low-single digit percentages, subject to a minimum annual royalty payment in the low six figures, commencing on the year of the first sale of a licensed product and continuing, on a licensed product-by-licensed product and country-by-country basis, until there were no valid claims of the licensed patent rights covering the licensed product in such country.

Additionally, the Company was obligated to pay tiered sublicensing fees, with the first two tiers in the low-to-mid teen percentages and the third tier at 30 %, on certain fees the Company received from any sublicense that the Company granted, depending on the stage of development of a licensed product when such sublicense was granted.

Prior to the execution of the amendment, the Company was obligated to make a cash payment to the Regents in the event of the Company’s initial public offering, a change of control transaction or a reverse merger (the Corporate Milestone).

1 unchanged sentence

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

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

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

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

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

The termination of the UCSF Agreement, including termination of the exclusive license granted to the Company under the UCSF Agreement, was 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 June 30, 2023, there were 15,048,630 stock-based awards available for future grant under the 2021 Plan.

As of September 30, 2023, there were 15,174,985 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 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.

Outstanding at September 30, 2023

Options exercisable at September 30, 2023

The weighted-average grant date fair value of options granted for the three and nine months ended September 30, 2023 was $ 1.99 and $ 2.74 , respectively, and for the three and nine months ended September 30, 2022 was $ 4.91 and $ 7.50 , respectively.

As of September 30, 2023, the unrecognized compensation cost related to unvested stock option grants was $ 56.4 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, 2023 was $ 21,000 and $ 914,000 , respectively.

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.

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

3 unchanged sentences

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

As of June 30, 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.

As of September 30, 2023 and December 31, 2022, there were 515,366 shares and 1,115,105 shares subject to repurchase by the Company, respectively.

As of September 30, 2023 and December 31, 2022, the Company recorded $ 632,000 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Risk-free interest rate

16 unchanged sentences

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

The Company recognized 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 Company recognized stock-based compensation expense related to the ESPP of $ 198,000 and $ 1.3 million during the three and nine months ended September 30, 2023, respectively, and $ 166,000 and $ 834,000 during the three and nine months ended September 30, 2022, respectively.

As of September 30, 2023, the unrecognized compensation cost related to the ESPP was $ 1.4 million and is expected to be recognized as expense over approximately 1.67 years.

As of September 30, 2023 and December 31, 2022, $ 317,000 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 zero and 223,696 shares under the ESPP during the three and nine months ended September 30, 2023, respectively, and zero and 150,642 shares during the three and nine months ended September 30, 2022, respectively.

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Risk-free interest rate

1 unchanged sentence

2.24 %- 3.14 %

4.70 %- 5.35 %

2.24 %- 3.14 %

Expected volatility

1 unchanged sentence

84.74 %- 87.89 %

72.54 %- 82.79 %

84.74 %- 87.89 %

Expected term (in years)

Expected dividend yield

(1) No grants were made under the ESPP during the three months ended September 30, 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

1 unchanged sentence

Common stock reserved for future issuance

Common stock reserved for future issuance consisted of the following as of June 30, 2023 and December 31, 2022:

Common stock reserved for future issuance consisted of the following as of September 30, 2023 and December 31, 2022:

September 30,

Stock options issued and outstanding

3 unchanged sentences

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

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.

Total lease costs were approximately $ 2.8 million and $ 8.6 million, including operating lease costs of $ 1.9 million and $ 5.7 million and variable lease costs of $ 859,000 and $ 2.9 million, durin g the three and nine months ended September 30, 2023, respectively.

Total lease costs were approximately $ 2.6 million and $ 5.1 million, including operating lease costs of $ 1.9 million and $ 3.9 million, 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.

The Company paid $ 4.7 million and $ 585,000 in cash 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, 2023 and 2022, respectively.

The weighted-average remaining lease term and the weighted-average discount rate of the Company’s operating leases were 8.53 years and 8.95 % at September 30, 2023 , respectively.

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

The weighted-average remaining lease term does not include any renewal options at the election of the Company.

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In April 2022, the 2020 Lease was modified to amend the rent commencement date from February 2022 to May 2022 .

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 2020 Lease, as amended, has a 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.

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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 June 30, 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 September 30, 2023 are as follows (in thousands):

Year ending December 31,

2023 (remaining six months)

2023 (remaining three months)

Total lease payments

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

No provision for federal, state or foreign income taxes has been recorded for the three and six months ended June 30, 2 0 23 and 2 0 22 .

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

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

For the three and six months ended June 30, 2023 and 2022 , the Company has no t recognized any interest or penalties related to income taxes.

For the three and nine months ended September 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

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

Net loss per share, basic and diluted

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

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

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

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

Three Months Ended June 30,

Six Months Ended June 30,

September 30,

Options to purchase common stock

Restricted stock subject to future vesting

Options early exercised subject to future vesting

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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.

As of September 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 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.

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 and war 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 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 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.

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 additional 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 RAS Q61X solid tumors to inform additional clinical development.

Our lead product candidate is naporafenib, for which we plan to begin a pivotal Phase 3 trial in the first half of 2024 for patients with NRAS-mutated (NRASm) melanoma.

We initiated a Phase 1b trial in August 2023 for patients with RAS Q61X solid tumors to inform additional clinical development pathways for naporafenib.

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.

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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.

We exclusively in-licensed naporafenib from Novartis in December 2022.

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 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.

We are pursuing a broad development strategy for naporafenib that 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 Phase 1b SEACRAFT-1 trial in patients with RAS Q61X solid tumors, which dosed its first patient in August 2023, 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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In all these cases, we are sponsoring and funding the clinical trial and the partner is providing its drug to us at no cost.

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.

In June 2022, we announced an additional investigator-sponsored Phase 1b PoC clinical trial to investigate ERAS-007 in combination with a KRAS G12C inhibitor in patients with KRAS G12C-driven NSCLC and CRC to be funded by a grant that the principal investigators received from Stand Up To Cancer.

In September 2023, we were informed by the principal investigators that they would not be moving forward with initiating such trial.

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.

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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.

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

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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 are also advancing additional programs targeting key oncogenic drivers in the RAS/MAPK pathway, which we will need to successfully progress through discovery and investigational new drug application (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 June 30, 2023.

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

As of September 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 September 30, 2023, we had cash, cash equivalents and marketable securities of $343.6 million.

We have incurred significant operating losses since inception.

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.

Our net losses were $30.4 million and $35.5 million for the three months ended September 30, 2023 and 2022, respectively, and $95.3 million and $107.6 million for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, we had an accumulated deficit of $576.3 million.

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

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

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

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

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Naporafenib (1)

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Results of operations

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,

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

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

Three Months Ended September 30,

Operating expenses:

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Research and development expenses

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.

Research and development expenses were $25.2 million for the three months ended September 30, 2023 compared to $28.2 million for the three months ended September 30, 2022.

The decrease of $3.0 million was primarily driven by decreases of $4.8 million in expenses incurred in connection with clinical trials, preclinical studies and discovery activities and $0.9 million in outsourced services and consulting fees, resulting primarily from our pipeline prioritization decisions, partially offset by a $2.2 million increase in personnel costs due to an increase in headcount and the employee retention credit of $1.5 million recorded during the three months ended September 30, 2022.

In-process research and development expenses

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

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

General and administrative 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.

General and administrative expenses were $9.4 million for the three months ended September 30, 2023 compared to $8.8 million for the three months ended September 30, 2022.

The increase of $0.7 million was primarily driven by an increase of $1.0 million in personnel costs due to an increase in headcount and the employee retention credit of $0.7 million recorded during the three months ended September 30, 2022, and an increase of $0.7 million in stock-based compensation expense, partially offset by a $1.0 million decrease in legal and accounting fees.

Other income (expense), net

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,

Other income (expense), net was $4.3 million for the three months ended September 30, 2023 compared to $1.5 million for the three months ended September 30, 2022.

The increase of $2.8 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, 2023.

Comparison of the nine months ended September 30, 2023 and 2022

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

Nine Months Ended September 30,

Operating expenses:

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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.

Research and development expenses were $79.0 million for the nine months ended September 30, 2023 compared to $83.1 million for the nine months ended September 30, 2022.

The decrease of $4.1 million was primarily driven by decreases of $11.2 million in expenses incurred in connection with clinical trials, preclinical studies and discovery activities and $3.2 million in outsourced services and consulting fees, resulting primarily from our pipeline prioritization decisions, partially offset by a $4.4 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 $3.6 million increase in personnel costs due to an increase in headcount and the employee retention credit of $1.5 million recorded during the nine months ended September 30, 2022, and a $2.3 million increase in stock-based compensation expense.

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.

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

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.

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.

General and administrative expenses were $28.6 million for the nine months ended September 30, 2023 compared to $24.3 million for the nine months ended September 30, 2022.

The increase of $4.4 million was primarily driven by increases of $3.1 million in stock-based compensation expense, $1.8 million in personnel costs due to an increase in headcount and the employee retention credit of $0.7 million recorded during the nine months ended September 30, 2022, and $0.5 million in facilities and office-related expenses, partially offset by a decrease in legal and accounting fees of $0.8 million.

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.

Other income (expense), net was $12.3 million for the nine months ended September 30, 2023 compared to $1.8 million for the nine months ended September 30, 2022.

The increase of $10.5 million was primarily related to an increase in interest earned on our cash, cash equivalents and marketable securities during the nine months ended September 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 June 30, 2023.

There have been no shares of our common stock sold under the Sale Agreement as of September 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 June 30, 2023, we had cash, cash equivalents and marketable securities of $365.3 million.

As of September 30, 2023, we had cash, cash equivalents and marketable securities of $343.6 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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The following table shows a summary of our cash flows for the periods presented (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash (used in) provided by:

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Operating activities

Cash used in operating activities was $52.3 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.

Cash used in operating activities was $76.4 million during the nine months ended September 30, 2023, primarily resulting from a net loss of $95.3 million and accretion on marketable securities of $4.8 million, partially reduced by stock-based compensation expense of $20.1 million, depreciation and amortization expense of $2.8 million, and changes in operating assets and liabilities of $0.8 million.

Net cash provided by changes in operating assets and liabilities consisted primarily of an increase in operating lease assets and liabilities, net of $3.3 million primarily due to the receipt of $2.3 million in reimbursement from our landlord for tenant improvements, and an increase in accounts payable of $0.8 million, partially offset by a decrease in accrued expenses and other current and long-term liabilities of $3.3 million.

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.

Investing activities

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.

Net cash used in investing activities was $95.8 million during the nine months ended September 30, 2023 as compared to $66.2 million during the nine months ended September 30, 2022.

The increase in cash used in investing activities of $29.6 million was primarily the result of an increase in purchases of marketable securities of $158.8 million and an increase in in-process research and development of $18.0 million, offset by an increase in maturities of marketable securities of $133.3 million, and decreases in purchases of property and equipment of $12.0 million and payments made for investments in equity securities of $2.0 million.

Financing activities

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.

Net cash provided by financing activities was $0.8 million during the nine months ended September 30, 2023 as compared to $1.9 million during the nine months ended September 30, 2022.

During the nine months ended September 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 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 ESPP.

Contractual obligations and commitments

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 –

As of September 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 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 –

As of September 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,”

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

What changed 10-Q

Item 1. Financial Statements