What changed in this filing

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Item 1. Financial Statements

2024-08-12 compared with 2024-05-08 · 209 added, 95 removed, 410 unchanged (43% of the section changed)

15 unchanged sentences

Accrued expenses and other current liabilities

Proceeds from prepayment of private placement

Operating lease liabilities

6 unchanged sentences

Preferred stock, $ 0.0001 par value;

80,000,000 shares authorized at March 31, 2024 and December 31, 2023;

no shares issued and outstanding at March 31, 2024 and December 31, 2023

80,000,000 shares authorized at June 30, 2024 and December 31, 2023;

no shares issued and outstanding at June 30, 2024 and December 31, 2023

Common stock, $ 0.0001 par value;

800,000,000 shares authorized at March 31, 2024 and December 31, 2023;

151,497,138 and 151,462,103 shares issued at March 31, 2024 and December 31, 2023, respectively;

151,249,219 and 151,090,227 shares outstanding at March 31, 2024 and December 31, 2023, respectively

800,000,000 shares authorized at June 30, 2024 and December 31, 2023;

273,163,958 and 151,462,103 shares issued at June 30, 2024 and December 31, 2023, respectively;

273,039,997 and 151,090,227 shares outstanding at June 30, 2024 and December 31, 2023, 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:

Research and development

In-process research and development

General and administrative

8 unchanged sentences

Other comprehensive income (loss):

Unrealized (loss) gain on marketable securities, net

Unrealized gain (loss) on marketable securities, net

Comprehensive loss

11 unchanged sentences

Balance at March 31, 2024

Issuance of common stock in private placement, net of $ 1,396 in fees and expenses

Issuance of common stock in underwritten offering, net of $ 9,574 in discounts and offering costs

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 gain on marketable securities, net

Balance at June 30, 2024

Comprehensive

7 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

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:

2 unchanged sentences

Stock-based compensation expense

In-process research and development expenses

Accretion on marketable securities, net

Impairment charge on operating lease assets and property and equipment

Impairment charge on investment in equity securities

Changes in operating assets and liabilities:

9 unchanged sentences

Purchases of property and equipment

Net cash provided by investing activities

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from prepayment of private placement

Proceeds from issuance of common stock in private placement, net of fees and expenses

Proceeds from issuance of common stock in underwritten offering, net of discounts and offering costs

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

Net decrease in cash, cash equivalents and restricted cash

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

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

2 unchanged sentences

Amounts accrued for purchases of property and equipment

Amounts accrued for offering costs

Vesting of early exercised options

Amounts accrued for offering costs

Amounts accrued for deferred offering costs

Obligation accrued for investment in equity securities

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

13 unchanged sentences

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

As of March 31, 2024, the Company had $ 297.7 million in cash, cash equivalents, and short-term marketable securities.

As of March 31, 2024, the Company had an accumulated deficit of $ 641.0 million.

As of June 30, 2024, the Company had $ 408.4 million in cash, cash equivalents, and short-term marketable securities and $ 51.8 million in long-term marketable securities.

As of June 30, 2024, the Company had an accumulated deficit of $ 704.2 million.

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

From its inception through March 31, 2024, 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.

From its inception through June 30, 2024, 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), underwritten offerings, and a private placement of common stock.

The Company expects to use its cash, cash equivalents, and 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 March 31, 2024, plus the net proceeds received in April 2024 from the Company's private placement, which closed on April 2, 2024, 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 marketable securities as of June 30, 2024 will be sufficient for the Company to fund operations for at least one year from the issuance date of these condensed consolidated financial statements.

2024 underwritten offering

In May 2024, the Company completed the sale and issuance of 99,459,458 shares of its common stock, including the exercise in full by the underwriters of their option to purchase 12,972,972 shares of its common stock, at a price to the public of $ 1.85 per share (the 2024 Offering).

Proceeds from the 2024 Offering were $ 174.4 million, net of underwriting discounts and commissions and offering costs of $ 9.6 million.

2024 private placement

In March 2024, the Company entered into a stock purchase agreement with the purchasers named therein for the private placement of 21,844,660 shares of its common stock at a price of $ 2.06 per share (the 2024 Private Placement).

On April 2, 2024, the 2024 Private Placement closed and the net proceeds were $ 43.7 million, after deducting placement agent fees and estimated expenses of approximately $ 1.3 m illion.

The Company received $ 6.9 million of the proceeds in March 2024 prior to the closing of the 2024 Private Placement, which is recorded in cash and cash equivalents and as a liability in proceeds from prepayment of private placement on the condensed consolidated balance sheets.

Proceeds from the 2024 Private Placement were $ 43.6 million, after deducting placement agent fees and expenses of approximately $ 1.4 m illion.

Basis of presentation

7 unchanged sentences

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

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

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

Management evaluates its estimates on an ongoing basis.

1 unchanged sentence

Unaudited interim financial information

The accompanying condensed consolidated balance sheet as of March 31, 2024, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2024 and 2023, the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2024 and 2023 and the condensed consolidated statements of cash flows for the three months ended March 31, 2024 and 2023 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, 2024 and the condensed consolidated results of its operations and cash flows for the three months ended March 31, 2024 and 2023.

The condensed consolidated financial data and other information disclosed in these notes related to the three months ended March 31, 2024 and 2023 are unaudited.

The condensed consolidated results for the three months ended March 31, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period.

The accompanying condensed consolidated balance sheet as of June 30, 2024, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2024 and 2023, the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2024 and 2023 and the condensed consolidated statements of cash flows for the six months ended June 30, 2024 and 2023 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, 2024 and the condensed consolidated results of its operations and cash flows for the three and six months ended June 30, 2024 and 2023.

The condensed consolidated financial data and other information disclosed in these notes related to the three and six months ended June 30, 2024 and 2023 are unaudited.

The condensed consolidated results for the three and six months ended June 30, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024, 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, 2023 filed with the SEC on March 27, 2024 .

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 commercial paper.

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, 2024 and December 31, 2023 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, 2024 and December 31, 2023 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.

49 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, 2024 using

Fair value measurements as of June 30, 2024 using

Quoted prices in

4 unchanged sentences

Money market funds (1)

Commercial paper (1)

US treasury securities (2)

2 unchanged sentences

Commercial paper (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, 2023 using

14 unchanged sentences

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

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

As of March 31, 2024 and December 31, 2023 , the Company held a $ 2.0 million equity investment in Affini-T Therapeutics, Inc.

(Affini-T) at cost.

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

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

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, 2024 and December 31, 2023 , the Company held $ 1.8 million and $ 2.0 million in equity investments in Affini-T Therapeutics, Inc.

(Affini-T) at cost, less impairment, respectively.

An impairment adjustment of $ 402,000 was made to the value of the Company’s equity investment in Affini-T during the three months ended June 30, 2024.

The Company was notified by Affini-T of an extension financing in June 2024 and the terms of such financing.

Accordingly, the Company reassessed the value of its equity investment in Affini-T using a market approach.

This represents a Level 3 nonrecurring fair value measurement.

Calculating the fair value of the equity investment involves unobservable inputs, including the terms and preferences of the extension financing, and significant estimates and assumptions.

Changes in the estimates and assumptions used could materially affect the amount of impairment loss recognized in the period the equity investment is considered impaired.

This impairment was offset by a new investment obligation of approximately $ 235,000 recorded as of June 30, 2024.

In July 2024, the Company paid approximately $ 157,000 of the obligation related to the extension financing.

No transfers between levels have occurred during the periods presented.

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

Cash equivalents consist of money market funds, short-term marketable securities consist of US treasury securities, US government agency securities, corporate debt securities and commercial paper, 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 benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, 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, 2024

June 30, 2024

US treasury securities

2 unchanged sentences

Commercial paper

US treasury securities

US government agency securities

December 31, 2023

4 unchanged sentences

US treasury 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, 2024 and December 31, 2023, aggregated by category and the length of time that the securities have been in a continuous loss position (in thousands):

March 31, 2024

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, 2024 and December 31, 2023, aggregated by category and the length of time that the securities have been in a continuous loss position (in thousands):

June 30, 2024

Unrealized losses less than 12 months

17 unchanged sentences

Commercial paper

As of March 31, 2024, there were 28 available-for-sale securities with an estimated fair value of $ 162.5 million in gross unrealized loss positions, none of which were in an unrealized loss position for more than 12 months.

As of June 30, 2024, there were 40 available-for-sale securities with an estimated fair value of $ 230.7 million in gross unrealized loss positions, of which four available-for-sale securities with an estimated fair value of $ 22.3 million were in an unrealized loss position for more than 12 months.

A s of December 31, 2023 , there were 22 available-for-sale securities with an estimated fair value of $ 105.6 million in gross unrealized loss positions , none of which were in an unrealized loss position for more than 12 months.

As of March 31, 2024 and December 31, 2023, 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.

As of June 30, 2024 and December 31, 2023, unrealized losses on available-for-sale securities are not attributed to credit risk.

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 $ 871,000 and $ 1.1 million as of March 31, 2024 and December 31, 2023 , 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 $ 2.2 million and $ 1.1 million as of June 30, 2024 and December 31, 2023 , 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 $ 998,000 and $ 894,000 for the three months ended March 31, 2024 and 2023 , respectively.

Depreciation and amortization expense related to property and equipment was $ 1.1 million and $ 2.1 million for the three and six months ended June 30, 2024 , respectively, and $ 955,000 and $ 1.8 million for the three and six months ended June 30, 2023 , respectively.

Accrued expenses and other current liabilities

4 unchanged sentences

Accrued professional services

Accrued offering costs

Accrued property and equipment

Accrued offering and deferred offering costs

Other accruals

10 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, 2024 and 2023.

As of March 31, 2024 and December 31, 2023 , no milestones had been accrued as the underlying contingencies were not probable or estimable.

Emerge Life Sciences, Pte.

In March 2021, the Company entered into an asset purchase agreement (ELS Purchase Agreement) with Emerge Life Sciences, Pte.

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

Under the terms of the ELS Purchase Agreement, 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, 2024 and 2023 .

No IPR&D expense was recorded during the three and six months ended June 30, 2024 and 2023.

As of June 30, 2024 and December 31, 2023 , no milestones had been accrued as the underlying contingencies were not probable or estimable.

License agreements

7 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, 2024 and 2023.

As of March 31, 2024 and December 31, 2023 , 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, 2024 and 2023.

Guangzhou Joyo Pharmatech Co., Ltd

In May 2024, the Company entered into an exclusive license agreement (the Joyo License Agreement) with Guangzhou Joyo Pharmatech Co., Ltd.

(Joyo) under which the Company was granted an exclusive, worldwide (except mainland China, Hong Kong, and Macau), royalty-bearing license to certain patent and other intellectual property rights owned or controlled by Joyo to develop, manufacture, and commercialize certain pan-RAS inhibitors in all fields of use.

The Company has an option to expand the territory of the license to include mainland China, Hong Kong and Macau by making a $ 50.0 million payment to Joyo on or prior to the first dosing of the first patient in a Phase 2 clinical trial by either the Company or Joyo, or a payment of $ 150.0 million after the first dosing of the first patient in a Phase 2 clinical trial by either the Company or Joyo and before filing a new drug application (or the foreign equivalent) by either the Company or Joyo.

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

The license granted under the Joyo License Agreement is subject to Joyo’ reserved right to develop, manufacture, use, and commercialize licensed products in mainland China, Hong Kong and Macau, unless the Company exercises its option to expand the license to include mainland China, Hong Kong and Macau.

Under the Joyo License Agreement, the Company made an upfront cash payment to Joyo of $ 12.5 million.

The Company is obligated to make development and regulatory milestone payments of up to $ 51.5 million (or up to $ 57.5 million if the Company’s territory is expanded to include mainland China, Hong Kong, and Macau) and commercial milestone payments of up to $ 125.0 million upon the achievement of the corresponding milestones.

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

For the three and six months ended June 30, 2024 , the Company recorded $ 12.5 million in IPR&D expense related to the upfront cash payment.

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

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

Upon expiration of the Joyo License Agreement, on a licensed product-by-licensed product and country-by-country basis, the license granted to the Company with respect to such product in such countries shall be deemed to be fully paid-up, royalty-free, non-terminable, irrevocable and perpetual.

The Joyo License Agreement may be terminated in its entirety by either party in the event of an uncured material breach by the other party or in the event the other party becomes subject to specified bankruptcy, insolvency, or similar circumstances.

Joyo may terminate the Joyo License Agreement in the event that the Company or its affiliates or any of its or their sublicensees institutes, prosecutes or otherwise participates in any challenge to the licensed patents.

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

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

In addition, the licenses granted to Joyo under certain patent and other intellectual property rights owned or controlled by the Company to develop, manufacture, use, and commercialize the licensed products in mainland China, Hong Kong and Macau will survive the termination of the Joyo License Agreement for any reason, unless the Company exercises its option to expand the license to include mainland China, Hong Kong and Macau, in which case such licenses to Joyo will terminate automatically;

and Joyo has an option to negotiate a license under any patent rights, know-how, or other intellectual property rights relating to the licensed products that are owned or controlled by the Company for the purpose of developing, manufacturing and commercializing the licensed products in the Company’s territory on terms to be negotiated between the parties.

Medshine Discovery Inc.

In May 2024, the Company entered into an exclusive license agreement (the Medshine License Agreement) with Medshine Discovery Inc.

(Medshine) under which the Company was granted an exclusive, worldwide, royalty-bearing license to certain patent and other intellectual property rights owned or controlled by Medshine to develop, manufacture, and commercialize certain pan-KRAS inhibitors in all fields of use.

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

Under the Medshine License Agreement, the Company made an upfront cash payment to Medshine of $ 10.0 million.

The Company is obligated to make development and regulatory milestone payments of up to $ 30.0 million and commercial milestone payments of up to $ 130.0 million upon the achievement of the corresponding milestones.

The Company is also obligated to pay a low-single digit percentage royalty on net sales of all licensed products, subject to certain reductions.

For the three and six months ended June 30, 2024 , the Company recorded $ 10.0 million in IPR&D expense related to the upfront cash payment.

The Medshine License 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:

Upon expiration of the Medshine License Agreement, on a licensed product-by-licensed product and country-by-country basis, the license granted to the Company with respect to such product in such countries shall be deemed to be fully paid-up, royalty-free, non-terminable, irrevocable and perpetual.

The Medshine License Agreement may be terminated in its entirety by either party in the event of an uncured material breach by the other party or in the event the other party becomes subject to specified bankruptcy, insolvency, or similar circumstances.

Medshine may terminate the Medshine License Agreement in the event that the Company or its affiliates or any of its or their sublicensees commences or actively and voluntarily participates in any challenge to the licensed patents.

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

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

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

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, 2024 and 2023.

As of March 31, 2024 and December 31, 2023 , 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, 2024 and 2023.

NiKang Therapeutics, Inc.

7 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, 2024 and 2023.

As of March 31, 2024 and December 31, 2023 , no milestones are accrued as the underlying contingencies are not probable or estimable.

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

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

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

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

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

No IPR&D expense was recorded during the three months ended March 31, 2024 and 2023.

As of March 31, 2024 and December 31, 2023 , 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, 2024 and 2023.

As of June 30, 2024 and December 31, 2023, no milestones are accrued for any license agreements as the underlying contingencies are not probable or estimable.

Stock-based compensation

4 unchanged sentences

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

As of March 31, 2024, there were 13,204,701 stock-based awards available for future grant under the 2021 Plan.

As of June 30, 2024, there were 12,913,020 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, 2023

Outstanding at March 31, 2024

Options exercisable at March 31, 2024

The weighted-average grant date fair value of options granted for the three months ended March 31, 2024 and 2023 was $ 1.25 and $ 2.94 , respectively.

As of March 31, 2024, the unrecognized compensation cost related to unvested stock option grants was $ 55.9 million and is expected to be recognized as expense over approximately 2.75 years.

The intrinsic value of the options exercised for the three months ended March 31, 2024 and 2023 was $ 47,000 and $ 517,000 , respectively.

Outstanding at June 30, 2024

Options exercisable at June 30, 2024

The weighted-average grant date fair value of options granted for the three and six months ended June 30, 2024 was $ 1.48 and $ 1.28 , respectively, and for the three and six months ended June 30, 2023 was $ 2.05 and $ 2.83 , respectively.

As of June 30, 2024, the unrecognized compensation cost related to unvested stock option grants was $ 47.4 million and is expected to be recognized as expense over approximately 2.67 years.

The intrinsic value of the options exercised for the three and six months ended June 30, 2024 was $ 123,000 and $ 170,000 , respectively.

The intrinsic value of the options exercised for the three and six months ended June 30, 2023 was $ 376,000 and $ 893,000 , 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 March 31, 2024 and December 31, 2023, there were 247,919 shares and 371,876 shares subject to repurchase by the Company, respectively.

As of March 31, 2024 and December 31, 2023, the Company recorded $ 309,000 and $ 464,000 of liabilities associated with shares issued with repurchase rights, respectively, which is recorded in accrued expenses and other current liabilities.

As of June 30, 2024 and December 31, 2023, there were 123,961 shares and 371,876 shares subject to repurchase by the Company, respectively.

As of June 30, 2024 and December 31, 2023, the Company recorded $ 155,000 and $ 464,000 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

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3.50 %- 3.98 %

3.84 %- 4.64 %

3.46 %- 4.22 %

Expected volatility

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83.20 %- 85.02 %

82.72 %- 83.91 %

83.20 %- 85.81 %

Expected term (in years)

Expected dividend yield

Effective May 21, 2024, and in accordance with the terms of the 2021 Plan, the Company's board of directors approved a stock option repricing (the Option Repricing) whereby the exercise price of each Repriced Option (as defined below) was reduced to $ 2.35 per share, the closing stock price on May 21, 2024.

For purposes of the Option Repricing, “Repriced Options” are 7,478,918 outstanding stock options as of May 21, 2024 (vested and unvested) granted under the 2021 Plan and held by those eligible employees of the Company identified by the Company's board of directors, excluding the Company’s Section 16 officers (the Chairman and Chief Executive Officer, the Chief Financial Officer and Chief Business Officer, the Chief Medical Officer, and the General Counsel) and the Company's board of directors.

To the extent a Repriced Option is exercised prior to the Premium End Date (as defined below), the eligible employee will be required to pay the original exercise price per share of the Repriced Options in connection with any exercise of the Repriced Option.

The “Premium End Date” means the earliest of (i) May 21, 2026;

(ii) the date of a change in control of the Company;

(iii) the date of the eligible employee’s death or disability;

or (iv) the date of the eligible employee’s termination without cause, provided that such termination without cause occurs after May 21, 2025.

Except for the reduction in the exercise prices of the Repriced Options as described above, the Repriced Options will retain their existing terms and conditions as set forth in the 2021 Plan and the applicable award agreements.

All repriced options will retain their original vesting schedule.

The Option Repricing resulted in $ 1.1 million of incremental cost, which was calculated using the Black-Scholes option pricing model, of which $ 559,000 of the incremental cost will be recognized on a straight-line basis through the Premium End Date, and $ 558,000 of the incremental cost will be recognized on a straight-line basis over the greater of the period through the Premium End Date or the remaining service period.

The incremental cost is included in general and administrative expense and research and development expense on the condensed consolidated statements of operations and comprehensive loss.

Employee stock purchase plan

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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 $ 342,000 and $ 707,000 during the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, the unrecognized compensation cost related to the ESPP was $ 1.5 million and is expected to be recognized as expense over approximately 1.69 years.

As of March 31, 2024 and December 31, 2023, $ 317,000 and $ 46,000 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, 2024 and 2023.

The Company recognized stock-based compensation expense related to the ESPP of $ 103,000 and $ 444,000 during the three and six months ended June 30, 2024, respectively, and $ 349,000 and $ 1.1 million during the three and six months ended June 30, 2023, respectively.

As of June 30, 2024, the unrecognized compensation cost related to the ESPP was $ 1.0 million and is expected to be recognized as expense over approximately 1.47 years.

As of June 30, 2024 and December 31, 2023, $ 43,000 and $ 46,000 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 252,444 shares under the ESPP during the three and six months ended June 30, 2024 and 223,696 shares under the ESPP during the three and six months ended June 30, 2023.

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

4.75 %- 5.39 %

4.70 %- 5.35 %

4.75 %- 5.39 %

4.70 %- 5.35 %

Expected volatility

68.73 %- 74.72 %

72.54 %- 82.79 %

68.73 %- 74.72 %

72.54 %- 82.79 %

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

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Common stock reserved for future issuance

Common stock reserved for future issuance consisted of the following as of March 31, 2024 and December 31, 2023:

Common stock reserved for future issuance consisted of the following as of June 30, 2024 and December 31, 2023:

Stock options issued and outstanding

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Operating leases

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 $ 2.7 million and $ 3.1 million, including operating lease costs of $ 1.9 million and $ 1.9 million, variable lease costs of $ 916,000 and $ 1.2 million, and sublease income of $ 84,000 and $ 0, durin g the three months ended March 31, 2024 and 2023, respectively.

The Company paid $ 2.1 million and $ 863,000 in cash for operating leases, net of sublease income, that were included in the operating activities section of the condensed consolidated statements of cash flows for the three months ended March 31, 2024 and 2023, respectively.

The weighted-average remaining lease term and the weighted-average discount rate of the Company’s operating leases were 8.05 years and 8.96 %, respectively, at March 31, 2024 .

The Company has facility leases for office space under non-cancellable and cancellable 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 $ 3.2 million and $ 5.9 million, including operating lease costs of $ 2.4 million and $ 4.3 million, variable lease costs of $ 918,000 and $ 1.8 million, and sublease income of $ 132,000 and $ 216,000, durin g the three and six months ended June 30, 2024, 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.

The Company paid $ 4.1 million and $ 2.6 million in cash for operating leases, net of sublease income, that is included in the operating activities section of the condensed consolidated statements of cash flows for the six months ended June 30, 2024 and 2023, respectively.

The weighted-average remaining lease term and the weighted-average discount rate of the Company’s operating leases were 7.81 years and 8.96 %, respectively, at June 30, 2024 .

The weighted-average remaining lease term and the weighted-average discount rate of the Company’s operating leases were 8.29 years and 8.95 %, respectively, at December 31, 2023.

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The Company determined the sublease to be an operating lease.

Therefore, the Company will recognize sublease income on a straight-line basis over the lease term in its condensed consolidated statements of operations and comprehensive loss as a reduction to operating lease costs because the sublease is outside of the Company's normal business operations.

Therefore, the Company recognizes sublease income on a straight-line basis over the lease term in its condensed consolidated statements of operations and comprehensive loss as a reduction to operating lease costs because the sublease is outside of the Company's normal business operations.

The Company will continue to account for the operating lease asset and related liability of the original lease as it did prior to the commencement of the sublease.

The Company recorded a reduction to operating lease costs of $ 84,000 related to income from this sublease during the three months ended March 31, 2024.

Future minimum lease payments under the operating leases with initial lease terms in excess of one year as of March 31, 2024 are as follows (in thousands):

The Company recorded a reduction to operating lease costs of $ 132,000 and $ 216,000 related to income from this sublease during the three and six months ended June 30, 2024, respectively.

In June 2024, the Company committed to a plan to sublease the first floor of its corporate headquarters in San Diego, California and in July 2024, the Company executed an agreement to sublease such space.

Pursuant to the agreement, the subleased space is approximately 18,421 square feet of office space with a sublease term of 61 months beginning in October 2024, with early access in August 2024.

The agreement includes an option for the subtenant to renew for an additional year and an early termination clause.

In connection with the sublease plan of the first floor, the Company reassessed its asset groups for testing long-lived assets for impairment and determined the first floor operating lease assets and related property and equipment represented an asset group separate from the entity wide asset group.

The Company concluded that the carrying value of the first floor asset group was not recoverable as it exceeded the future net undiscounted cash flows that are expected to be generated from the use and eventual disposition of the assets within the asset group.

The Company determined the fair value of the first floor asset group based on the income approach using a discounted cash flow model.

The cash flows used in the model were discounted using a rate of 13.5 %.

Based on this analysis, the Company recognized a noncash impairment charge of $ 4.7 million, including $ 2.4 million for the operating lease assets and $ 2.3 million for the leasehold improvements and furniture, of which $ 3.0 million was recorded to research and development expense and $ 1.7 million was recorded to general and administrative expense during the three and six months ended June 30, 2024.

This represents a Level 3 nonrecurring fair value measurement.

Calculating the fair value of the asset group involves significant estimates and assumptions, including projected future cash flows and a discount rate.

Changes in the estimates and assumptions used could materially affect the amount of impairment loss recognized in the period the asset group is considered impaired.

Future minimum lease payments under operating leases as of June 30, 2024 are as follows (in thousands):

Year ending December 31,

2024 (remaining nine months)

2024 (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, 2024 and 2023.

Strategic reprioritization

In May 2024, in connection with the execution of the Joyo License Agreement and the Medshine License Agreement, the Company approved a strategic reprioritization to focus the Company’s resources on its naporafenib program, its ERAS-0015 product candidate, which is the lead candidate from the Joyo License Agreement, and its ERAS-4001 product candidate, which is the lead candidate from the Medshine License Agreement.

The Company deprioritized its HERKULES-3 clinical trial evaluating ERAS-007 in combination with encorafenib and cetuximab (EC) in patients with EC-naïve BRAFm colorectal cancer, its THUNDERBBOLT-1 clinical trial evaluating ERAS-801 in patients with recurrent glioblastoma, and its ERAS-4 pan-KRAS program.

The Company will explore further advancement of the ERAS-801 program, including via select investigator-sponsored trials, and certain of the existing ERAS-4 molecules may serve as backup compounds for ERAS-4001.

In connection with this strategic reprioritization, the Company also approved a reduction in the Company’s workforce by approximately 18%, primarily affecting employees working in certain drug discovery functions or on the deprioritized programs and trials.

As a result, the Company recognized $ 2.2 million in total charges in the three and six months ended June 30, 2024 in the condensed consolidated statements of operations and comprehensive loss based upon the underlying employees’ role within the Company in connection with the reduction in force.

These charges consisted primarily of one-time cash charges for termination benefits which were substantially all paid in June 2024.

No provision for federal, state or foreign income taxes has been recorded for the three and six months ended June 30, 2024 and 2023.

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, 2024 and 2023 , the Company has no t recognized any interest or penalties related to income taxes.

For the three and six months ended June 30, 2024 and 2023 , 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

11 unchanged sentences

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

In April 2024, the Company donated $ 125,000 to 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.

In December 2023, the Erasca Foundation repaid the note.

In April 2024, the Company donated $ 125,000 to the Erasca Foundation, which is recorded in general and administrative expense in the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2024.

Affini-T Therapeutics, Inc.

The Company holds a $ 2.0 million equity investment in Affini-T.

As of June 30, 2024 and December 31, 2023 , the Company held a $ 1.8 million and $ 2.0 million equity investment in Affini-T, respectively (see Note 3).

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

Subsequent event

On April 2, 2024, the Company completed the 2024 Private Placement in which the Company issued and sold 21,844,660 shares of common stock at a price of $ 2.06 per share.

Net proceeds from the 2024 Private Placement, after deducting placement agent fees and estimated expenses, were $ 43.7 million.

July 2024 ATM Offering

From July 1, 2024 through the date of this filing, the Company sold 9,231,114 shares of common stock at a weighted average price of $ 2.37 per share under the Open Market Sale Agreement effective August 2022 (the Sale Agreement) with Jefferies LLC (the Agent).

Pursuant to the Sale Agreement, the Company may offer and sell shares of its common stock having an aggregate offering price of up to $ 200 million from time to time, in “at the market” offerings (an ATM Offering) through the Agent.

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

Pursuant to the Sale Agreement, the Agent receives a commission from the Company of up to 3.0 % of the gross proceeds of any shares of common stock sold under the Sale Agreement.

Proceeds from the ATM Offering were $ 21.1 million, net of commissions and expenses of $ 0.8 million .

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