What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-08 compared with 2024-11-07 · 122 added, 259 removed, 314 unchanged (55% of the section changed)

3 unchanged sentences

(amounts in thousands, except share and per share amounts)

September 30,

2025 December 31,

3 unchanged sentences

Prepaid expenses and other current assets

Other receivables 464 1,350

Total current assets

10 unchanged sentences

Operating lease liability, current

Deferred revenue, current

Note payable, current

Total current liabilities

1 unchanged sentence

Operating lease liability, net of current portion

Deferred revenue, net of current portion

Note payable, net of discount, issuance costs, and current portion 26,585 26,095

25,617 32,656

Derivative liability 2,658 2,829

3 unchanged sentences

Stockholders’ equity:

Preferred stock, $ 0.0001 par value, 5,000,000 shares authorized as of September 30, 2024 and December 31, 2023;

no shares issued or outstanding as of September 30, 2024 and December 31, 2023

Common stock, $ 0.0001 par value, 200,000,000 shares authorized as of September 30, 2024 and December 31, 2023;

43,721,772 and 39,107,048 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Preferred stock, $ 0.0001 par value, 5,000,000 shares authorized as of March 31, 2025 and December 31, 2024;

no shares issued or outstanding as of March 31, 2025 and December 31, 2024

Common stock, $ 0.0001 par value, 200,000,000 shares authorized as of March 31, 2025 and December 31, 2024;

44,827,159 shares issued and outstanding as of March 31, 2025 and December 31, 2024

Additional paid-in capital

11 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Collaboration revenue $ — $ 742

3 unchanged sentences

General and administrative

4,596 4,310 14,424 13,856

Total operating expenses

2 unchanged sentences

( 17,991 ) ( 17,162 )

Other income:

Other (expense) income:

Interest income 997 1,973

Interest expense ( 1,263 ) ( 1,003 )

Loss on extinguishment of debt

— — ( 553 ) —

Other income (expense), net 168 ( 1 )

97 ( 5 ) 1,709 ( 1,136 )

Total other income

451 966 3,131 2,176

$ ( 16,673 ) $ ( 8,285 ) $ ( 50,115 ) $ ( 25,365 )

Net loss per common share, basic

$ ( 0.38 ) $ ( 0.23 ) $ ( 1.17 ) $ ( 0.72 )

Net loss per common share, diluted

Total other (expense) income ( 98 ) 969

$ ( 18,089 ) $ ( 16,193 )

Weighted-average common shares outstanding, basic

Net loss per common share, basic and diluted

$ ( 0.40 ) $ ( 0.39 )

Weighted-average common shares outstanding, diluted

Weighted-average common shares outstanding, basic and diluted

44,827,159 41,607,279

7 unchanged sentences

Balance at December 31, 2024 44,827,159 $ 5 $ 487,973 $ ( 414,588 ) $ 73,390

Issuance of common stock from at the market offering, net of issuance costs of $ 985

4,169,324 — 20,089 — 20,089

Stock-based compensation expense — — 2,006 — 2,006

Stock option exercises 5,999 — 12 — 12

— — — ( 18,089 ) ( 18,089 )

Balance at March 31, 2025 44,827,159 $ 5 $ 489,979 $ ( 432,677 ) $ 57,307

Issuance of common stock from at the market offering, net of issuance costs of $ 61

172,996 — 1,002 — 1,002

Issuance of common stock, net 246,680 — 76 — 76

Stock-based compensation expense — — 2,602 — 2,602

Stock option exercises 100 — — — —

— — — ( 17,249 ) ( 17,249 )

Balance at June 30, 2024 43,702,147 4 481,529 ( 377,515 ) 104,018

Issuance of common stock from at the market offering, net of issuance costs of $ 50

8,500 — — — —

Stock-based compensation expense — — 2,011 — 2,011

Stock option exercises 11,125 — 23 — 23

— — — ( 16,673 ) ( 16,673 )

Balance at September 30, 2024 43,721,772 $ 4 $ 483,563 $ ( 394,188 ) $ 89,379

Additional Paid-in Capital

2 unchanged sentences

Balance at December 31, 2023 39,107,048 $ 4 $ 455,443 $ ( 344,073 ) $ 111,374

Issuance of common stock from at the market offering, net of issuance cost of $ 103

3,824,249 — 8,610 — 8,610

Stock-based compensation expense — — 2,108 — 2,108

— — — ( 11,982 ) ( 11,982 )

Balance at March 31, 2023 35,339,323 3 439,757 ( 318,687 ) 121,073

Issuance of common stock from at the market offering, net of issuance costs of $ 985

4,169,324 — 20,089 — 20,089

Issuance of common stock, net

28,739 — 45 45

Stock-based compensation expense — — 2,305 — 2,305

1 unchanged sentence

— — — ( 16,193 ) ( 16,193 )

Balance at June 30, 2023 35,641,784 3 442,381 ( 323,785 ) 118,599

Issuance of common stock from at the market offering, net of issuance costs of $ 29

15,000 — 30 — 30

Stock-based compensation expense — — 2,097 — 2,097

Stock option exercises 1,266 — 2 — 2

— — — ( 8,285 ) ( 8,285 )

Balance at September 30, 2023 35,658,050 $ 3 $ 444,510 $ ( 332,070 ) $ 112,443

Balance at March 31, 2024 43,282,371 $ 4 $ 477,849 $ ( 360,266 ) $ 117,587

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

2 unchanged sentences

(amounts in thousands)

Nine Months Ended

September 30,

Three Months Ended

Operating activities:

5 unchanged sentences

Non-cash lease expense

Loss on extinguishment of debt 553 —

Change in fair value of derivative liabilities

Change in fair value of success payment liability

Amortization of debt issuance costs — 60

Change in fair value of derivative liability

Changes in operating assets and liabilities:

10 unchanged sentences

Purchases of property and equipment

( 131 ) ( 571 )

Net cash used in investing activities

( 131 ) ( 571 )

Financing activities:

Proceeds from at the market offering of common stock, net of issuance costs — 20,247

Proceeds from drawdown of term loans 30,000 40,000

Payment of debt issuance costs

Repayment of term loan

Proceeds from issuances under Employee Stock Purchase Plan

Proceeds from stock option exercises

Net cash provided by financing activities

10,533 49,356

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

13 unchanged sentences

Supplemental disclosure of non-cash investing and financing activities:

Purchases of property and equipment in accounts payable and accrued expenses $ 124 $ 198

Issuance costs in accounts payable, accrued expenses and other current assets, net

Fair value of derivative liability issued with term loan

Issuance costs in accounts payable and accrued expenses

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

5 unchanged sentences

As used throughout these unaudited, condensed consolidated financial statements, the terms “Werewolf,” “we,” “us,” and “our” refer to the business of Werewolf Therapeutics, Inc., and its wholly owned subsidiary.

We are an innovative biopharmaceutical company pioneering the development of therapeutics engineered to stimulate the body’s immune system for the treatment of cancer.

We are an innovative biopharmaceutical company pioneering the development of therapeutics engineered to stimulate the body’s immune system for the treatment of cancer and other immune-mediated conditions.

Our headquarters are located in Watertown, Massachusetts.

11 unchanged sentences

Even if our product development efforts are successful, it is uncertain when, if ever, we will realize significant revenue from product sales.

We had cash and cash equivalents of $ 122.8 million at September 30, 2024.

We had cash and cash equivalents of $ 92.0 million at March 31, 2025.

We expect that our cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements for at least twelve months from the date of issuance of the condensed consolidated financial statements in this Form 10-Q.

1 unchanged sentence

We expect to finance our future cash needs through a combination of equity or debt financings, collaboration agreements, strategic alliances and licensing arrangements.

There is no guarantee that additional financing will be available to us on acceptable terms, or at all.

If we fail to raise capital as and when needed, we may be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts, or seek to merge with or to be acquired by another company.

Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying condensed consolidated financial statements as of September 30, 2024 and December 31, 2023, and for the three and nine months ended September 30, 2024 and 2023, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and generally accepted accounting principles in the United States of America (“GAAP”) as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”) for condensed consolidated financial information.

The accompanying condensed consolidated financial statements as of March 31, 2025 and December 31, 2024, and for the three months ended March 31, 2025 and 2024, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and generally accepted accounting principles in the United States of America (“GAAP”) as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”) for condensed consolidated financial information.

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

1 unchanged sentence

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 11, 2025 (the “2024 Annual Report”).

The information presented in the condensed consolidated financial statements and related notes as of September 30, 2024, and for the three and nine months ended September 30, 2024 and 2023, is unaudited.

The information presented in the condensed consolidated financial statements and related notes as of March 31, 2025, and for the three months ended March 31, 2025 and 2024, is unaudited.

The December 31, 2024 condensed consolidated balance sheet included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including notes, required by GAAP for complete financial statements.

Interim results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024, or any future period.

Interim results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2025, or any future period.

The accompanying condensed consolidated financial statements include the accounts of Werewolf Therapeutics, Inc.

3 unchanged sentences

The significant accounting policies and estimates used in the preparation of the condensed consolidated financial statements are described in our audited financial statements as of and for the year ended December 31, 2024, and the notes thereto, which are included in the 2024 Annual Report.

Other than as set forth below there have been no material changes in our significant accounting policies during the nine months ended September 30, 2024.

Other than as set forth below there have been no material changes in our significant accounting policies during the three months ended March 31, 2025.

Use of Estimates

3 unchanged sentences

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU No.

2020-06”), which reduces the number of accounting models for convertible debt instruments and convertible preferred stock as well as amends the derivatives scope exception for contracts in an entity’s own equity.

2020-06 also simplifies the diluted earnings per share calculation in certain areas.

We adopted ASU No.

2020-06 on January 1, 2024.

The adoption did not have a material impact on the condensed consolidated financial statements.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU No.

2 unchanged sentences

2023-09”), which enhances the transparency and decision usefulness of income tax disclosures primarily related to rate reconciliation and income taxes paid.

We adopted ASU No.

2023-09 on January 1, 2025.

The adoption did not have a material impact on our condensed consolidated financial statements.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-04) (“ASU No.

2024-03”), which requires the disclosure of additional information about specific expense categories in the notes to the consolidated financial statements at interim and annual reporting periods.

The provisions of ASU No.

2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and are required to be applied on a prospective basis.

Our management is currently evaluating the impact that this standard will have on our consolidated financial statements.

2024-03 are effective for annual reporting periods beginning after December 31, 2026, with early adoption permitted.

We are currently evaluating the impact that this standard will have on our consolidated financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.

3 unchanged sentences

Collaboration and License Agreement

Detailed description of the contractual terms and our accounting for the agreement described below is included in our audited financial statements and notes in the 2023 Annual Report.

During the nine months ended September 30, 2024, we continued to perform under our exclusive global collaboration and license agreement (the “Collaboration Agreement”) with Jazz Pharmaceuticals Ireland Limited ("Jazz"), pursuant to which we recognized revenue utilizing the cost-to-cost input method, which best depicts the research and development services performed for the customer.

Revenue from the transaction price was recognized over time as research and development services were performed.

A detailed description of the contractual terms and our accounting for our exclusive global collaboration and license agreement (the “Collaboration Agreement”) with Jazz Pharmaceuticals Ireland Limited ("Jazz") is included in our audited financial statements and notes in the 2024 Annual Report.

In June 2024, we executed a transfer agreement (the “Transfer Agreement”) to assign our rights in a development agreement with a contract manufacturer of our interferon alpha INDUKINE molecule JZP898 to Jazz.

1 unchanged sentence

As of the execution of the Transfer Agreement, we no longer have any material performance obligations under the Collaboration Agreement.

As a result, all deferred revenue related to the Collaboration Agreement has been recognized as of September 30, 2024.

The following table summarizes research and development costs incurred and revenue recognized in connection with our performance under the Collaboration Agreement:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

(in thousands)

Revenue recognized

— 5,897 1,885 18,442

Cost incurred

— 911 545 8,184

The following table presents changes in our contract liabilities during the nine months ended September 30, 2024:

Balance as of December 31, 2023 Additions Reductions Balance as of September 30, 2024

(in thousands)

Contract liabilities:

Deferred revenue $ 1,340 $ — $ ( 1,340 ) $ —

Total contract liabilities

$ 1,340 $ — $ ( 1,340 ) $ —

All deferred revenue related to the Collaboration Agreement has been recognized as of September 30, 2024

Unbilled receivables related to the Collaboration Agreement of $ 0.4 million are included within other receivables in the accompanying condensed consolidated balance sheet as of December 31, 2023.

We had no unbilled receivables as of September 30, 2024.

Receivables related to the Collaboration Agreement of $ 0.5 million and $ 0.9 million are included within other receivables in the accompanying condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, respectively.

Revenue recognized during the nine months ended September 30, 2024 and 2023, includes $ 1.3 million and $ 5.9 million of revenue that was included in deferred revenue as of December 31, 2023 and 2022, respectively.

As a result, all remaining deferred revenue related to the Collaboration Agreement had been recognized upon execution of the Transfer Agreement.

Revenue recognized during the three months ended March 31, 2024 includes $ 0.4 million of revenue that was included in deferred revenue as of December 31, 2023.

At the end of each reporting period, we re-evaluate our estimate of the transaction price associated with the Collaboration Agreement and determine if variable consideration previously excluded from the transaction should be included in the transaction price based on changes in circumstances, if any.

During the nine months ended September 30, 2024, we did not recognize any adjustment to the transaction price associated with variable consideration previously excluded from the transaction price.

During the nine months ended September 30, 2023 the overall transaction price was adjusted to include $ 5.0 million in variable consideration that was previously excluded based on our evaluation of the variable constraint associated with the variable payment.

The total revenue recognized during the three and nine months ended September 30, 2023 included a cumulative catch-up of revenue of $ 4.2 million related to the adjustment to the overall transaction price.

As of September 30, 2024, we have not received any royalty payments under the Collaboration Agreement.

During the three months ended March 31, 2025 and 2024, we did not recognize any adjustments to the transaction price associated with variable consideration previously excluded from the transaction price.

As of March 31, 2025, we have not received any royalty payments under the Collaboration Agreement.

Financial Instruments and Fair Value Measurements

Our assets that are required to be measured at fair value on a recurring basis consist of money market funds, classified as cash, cash equivalents and restricted cash and cash equivalents on our condensed consolidated balance sheets as September 30, 2024 and December 31, 2023.

Our liabilities that are required to be measured at fair value on a recurring basis consist of a derivative liability pursuant to a loan and security agreement (the “K2HV Loan Agreement”) with K2 HealthVentures LLC (“K2HV”) (see Note 6, Term Loan ) on our condensed consolidated balance sheet as September 30, 2024.

We did not have any liabilities that are required to be measured at fair value on a recurring basis as of December 31, 2023.

The carrying amounts reflected in the condensed consolidated balance sheets for cash, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values, due to their short-term nature.

Assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 were as follows:

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2025 were as follows:

Level 1 Level 2

3 unchanged sentences

$ 86,557 $ — $ — $ 86,557

$ — $ — $ 2,735 $ 2,735

Derivative liability

$ — $ — $ 2,658 $ 2,658

Assets measured at fair value on a recurring basis as of December 31, 2023 were as follows:

Total liabilities

$ — $ — $ 2,658 $ 2,658

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 were as follows:

Level 1 Level 2

3 unchanged sentences

$ 105,526 $ — $ — $ 105,526

There were no changes in valuation techniques used during the three or nine months ended September 30, 2024.

Derivative liability

$ — $ — $ 2,829 $ 2,829

Total liabilities

$ — $ — $ 2,829 $ 2,829

There were no changes in valuation techniques used during the three months ended March 31, 2025.

Derivative Liability

In May 2024, we entered into the K2HV Loan Agreement, as further described in Note 6, which provides up to $ 60.0 million principal in term loans.

1 unchanged sentence

The Fixed Price Conversion and Variable Price Conversion within the K2HV Loan Agreement are required to be bifurcated as a single compound embedded derivative carried at fair value, with subsequent changes in fair value recognized in the condensed consolidated statements of operations.

The following table reconciles the change in fair value of the conversion option derivative liability during the nine months ended September 30, 2024 based on Level 3 inputs:

Derivative Liability

(in thousands)

The following table reconciles the change in fair value of the derivative liability during the three months ended March 31, 2025 based on Level 3 inputs (in thousands):

Balance at December 31, 2024 $ 2,829

Fair value of embedded derivative at issuance of term loan

Change in fair value ( 171 )

Balance at September 30, 2024 $ 2,735

Balance at March 31, 2025 $ 2,658

The change in fair value of the derivative liability is included in other income (expense), net in the accompanying condensed consolidated statements of operations.

We recognized a gain on the change in fair value of the derivative liability of $ 0.1 million and $ 1.7 million during the three and nine months ended September 30, 2024, respectively.

The fair value of the conversion option derivative liability in the term loan was estimated using the Monte Carlo model.

A summary of the weighted-average significant unobservable inputs (Level 3 inputs) used in measuring the conversion option derivative liability in the term loan as of September 30, 2024 and May 2, 2024 (inception) is as follows:

September 30, 2024 May 2, 2024

$ 2.12 $ 6.08

101.0 % 101.0 %

We recognized a gain on the change in fair value of the derivative liability of $ 0.2 million during the three months ended March 31, 2025.

The fair value of the derivative liability in the term loan was estimated using the Monte Carlo model.

A summary of the weighted-average significant unobservable inputs (Level 3 inputs) used in measuring the derivative liability in the term loan as of March 31, 2025 and December 31, 2024 is as follows:

March 31, 2025 December 31, 2024

Stock Price $ 0.97 $ 1.48

Volatility 106.0 % 103.0 %

Risk-free rate (continuous) 3.9 % 4.2 %

1 unchanged sentence

Dividend yield (continuous) — % — %

Success Payment Liability

In April 2022, we entered into an amended and restated loan and security agreement (the “PWB Loan Agreement”) with Pacific Western Bank (“PWB”), as described below in Note 6.

In conjunction with the PWB Loan Agreement, we became obligated to pay to PWB a one-time success payment of up to $ 1.6 million (the “Success Fee”) upon achieving certain conditions defined in the PWB Loan Agreement (the “Success Fee Event”).

The Success Fee Event occurred during the second quarter of 2023, resulting in the immediate payment in full of the required Success Fee.

Prior to the occurrence of the Success Fee Event, we recognized a success payment liability that was stated at fair value and was considered Level 3 because its fair value measurement was based, in part, on significant inputs not observed in the market.

Upon completion of the Success Fee Event, we paid the total $ 1.6 million success payment and removed the corresponding success payment liability.

We remeasured the success payment liability at each reporting date and immediately prior to the Success Fee Event.

During the nine months ended September 30, 2023, we recognized expense of $ 1.0 million associated with the change in the fair value of the success payment liability which is included in other income (expense), net in the accompanying condensed consolidated statements of operations.

We had no outstanding obligation associated with the Success Fee as of September 30, 2024 or December 31, 2023.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities were comprised as follows:

September 30,

2025 December 31,

(in thousands)

Manufacturing $ 4,617 $ 4,783

Employee compensation and benefits 1,632 3,616

Contract research 1,408 820

Manufacturing 2,681 2,772

Professional fees 1,099 747

5 unchanged sentences

In April 2022, we entered into the PWB Loan Agreement with PWB and subsequently drew down an aggregate of $ 40.0 million in term loans.

The term loans accrued interest on the outstanding daily balance at a floating annual rate equal to greater of:

(i) 0.5 % above the prime rate then in effect or (ii) 4.5 %.

The term loans accrued interest on the outstanding daily balance at a floating annual rate equal to greater of (i) 0.5 % above the prime rate then in effect or (ii) 4.5 %.

If the prime rate changed throughout the term, the interest rate would have been adjusted effective on the date of the prime rate change.

All interest chargeable under the PWB Loan Agreement was computed on a 360-day year for the actual number of days elapsed, with interest payable monthly.

We recognized interest expense related to the PWB Loan Agreement of $ 1.3 million during the nine months ended September 30, 2024.

We recognized interest expense related to the PWB Loan Agreement of $ 0.9 million and $ 1.9 million during the three and nine months ended September 30, 2023, respectively.

We did no t recognize interest expense related to the PWB Loan Agreement during the three months ended September 30, 2024.

We recognized interest expense related to the PWB Loan Agreement of $ 1.0 million during the three months ended March 31, 2024.

In May 2024, we repaid all amounts outstanding under the PWB Loan Agreement, using $ 29.5 million in net loan proceeds received under the K2HV Loan Agreement, as described below, together with $ 10.5 million in existing cash.

7 unchanged sentences

$ 25.0 million from the first tranche commitment and $ 5.0 million from the second tranche commitment.

A third tranche commitment of up to $ 10.0 million is available to be drawn at our option between January 1, 2025 and June 30, 2025, subject to the achievement, as determined by the administrative agent in its discretion, of certain time-based, clinical and regulatory milestones and receipt of not less than $ 60.0 million in net cash proceeds from certain financing activities, with at least $ 50.0 million from a single offering of common stock.

A third tranche commitment of up to $ 10.0 million is available to be drawn at our option through June 30, 2025, subject to the achievement, as determined by the administrative agent in its discretion, of certain time-based, clinical and regulatory milestones and receipt of not less than $ 60.0 million in net cash proceeds from certain financing activities, with at least $ 50.0 million from a single offering of common stock.

A fourth tranche commitment of up to $ 20.0 million is available to be drawn down at our option through May 1, 2026 or if the third tranche is funded, May 1, 2027, subject to Lender’s review of our clinical, financial and operating plan and subject to the Lender’s consent in its sole and absolute discretion.

The term loan matures on May 1, 2028, and we are obligated to make interest only payments for the first 24 months, or 36 months if the third tranche is funded, followed by interest and equal principal payments each month thereafter through the maturity date.

The term loan bears a variable interest rate equal to the greater of (i) 10.3 %, and (ii) the sum of (A) the prime rate last quoted in The Wall Street Journal (or a comparable replacement rate if The Wall Street Journal ceases to quote such rate)

and (B) 1.8 %.

We may prepay, at our option, all, but not less than all, of the outstanding principal balance and all accrued and unpaid interest with respect to the principal balance being prepaid of the term loans, subject to a prepayment premium to which the Lenders are entitled and certain notice requirements.

We may prepay, at our option, all, but not less than all, of the outstanding principal balance and all accrued and

unpaid interest with respect to the principal balance being prepaid of the term loans, subject to a prepayment premium to which the Lenders are entitled and certain notice requirements.

We are obligated to pay a final fee equal to 6.95 % of the aggregate amount of the term loans funded, or the Final Fee, to occur upon the earliest of (i) the maturity date, (ii) the acceleration of the term loans, and (iii) the prepayment of the term loans.

5 unchanged sentences

As security for our obligations under the K2HV Loan Agreement, we granted the Lenders a first priority security interest on substantially all of our assets (other than intellectual property), subject to certain exceptions.

The K2HV Loan Agreement contains customary representations and warranties, events of default and affirmative and negative covenants, including covenants that limit or restrict our ability to, among other things, dispose of assets, make changes to the our business, management, ownership or business locations, merge or consolidate, incur additional indebtedness, incur additional liens, pay dividends or other distributions or repurchase equity, make investments, and enter into certain transactions with affiliates, in each case subject to certain exceptions.

The K2HV Loan Agreement contains customary representations and warranties, events of default and affirmative and negative covenants, including covenants that limit or restrict our ability to, among other things, dispose of assets, make changes to our business, management, ownership or business locations, merge or consolidate, incur additional indebtedness, incur additional liens, pay dividends or other distributions or repurchase equity, make investments, and enter into certain transactions with affiliates, in each case subject to certain exceptions.

Upon the occurrence of an event of default, a default interest rate of an additional 5.0 % per annum may be applied to the outstanding loan balances, and the Lenders may declare all outstanding obligations immediately due and payable and exercise all of their rights and remedies as set forth in the K2HV Loan Agreement and under applicable law.

As of September 30, 2024, we are in compliance with all covenants.

As of March 31, 2025, we are in compliance with all covenants.

Subject to certain conditions, we granted the Lenders the right, prior to repayment of the term loans, to invest up to $ 5.0 million in the aggregate in future offerings of capital stock, at market terms, subject to certain exceptions and conditions.

1 unchanged sentence

These debt issuance costs, together with the fair value of the embedded derivative of $ 4.5 million at inception of the K2HV Loan Agreement, resulted in a debt discount of $ 5.1 million which is being amortized to interest expense over the term of the K2HV Loan Agreement using the effective interest method.

As of September 30, 2024, the fair value of the term loan was estimated to be $ 28.5 million.

As of March 31, 2025, the fair value of the term loan was estimated to be approximately $ 27.8 million.

The fair value was measured using a discounted cash flow analysis, specifically the yield method, which requires the use of Level 3 inputs in the fair value hierarchy.

The outstanding term loans payable consists of the following:

September 30, 2024

March 31, 2025 December 31, 2024

(in thousands)

3 unchanged sentences

The following table provides the components of interest expense related to the K2HV Loan Agreement:

Three Months Ended September 30, 2024 Nine Months Ended September 30, 2024

Three Months Ended

(in thousands)

Interest expense based on coupon interest rate ( 10.3 %) of outstanding term loans

$ 790 $ 1,305

Accretion of debt discount and Final Fee ( 8.94 %)

Amortization of debt discount and accretion of Final Fee ( 8.94 %)

Total interest expense on effective rate ( 19.24 %)

$ 1,244 $ 2,045

The following table presents the total principal payments and Final Fee scheduled to become due during each of the years ended December 31:

Principal Payments and Final Fee

(in thousands)

2024 (remaining as of September 30, 2024)

The following table presents the total principal payments and Final Fee scheduled to become due during each of the years ended December 31 (in thousands):

2025 (remaining as of March 31, 2025)

Total principal payments and Final Fee $ 32,085

2 unchanged sentences

Common stockholders are entitled to dividends if and when declared by our board of directors.

As of September 30, 2024, no dividends on common stock had been declared by us.

On May 10, 2022, we entered into a Sales Agreement (the “Sales Agreement”) with Leerink Partners LLC (“Leerink Partners”), formerly known as SVB Securities LLC, pursuant to which we may offer and sell shares of our common stock (the “ATM Offering”).

As of March 31, 2025, no dividends on common stock had been declared by us.

On May 10, 2022, we entered into a Sales Agreement (the “Sales Agreement”) with Leerink Partners LLC (“Leerink Partners”), pursuant to which we are entitled to offer and sell shares of our common stock (the “ATM Offering”).

The Sales Agreement provides that Leerink Partners will be entitled to a sales commission equal to 3.0 % of the gross sales price per share of all shares sold under the ATM Offering.

2 unchanged sentences

Following our filing of the Prospectus Supplement, we are now entitled to offer and sell shares of our common stock with an aggregate offering price of up to $ 75.0 million pursuant to the Sales Agreement.

During the nine months ended September 30, 2024, we sold 4,350,820 shares of our common stock at an average price of $ 5.10 per share for net proceeds of $ 21.1 million after deducting sales commissions and offering expenses.

During the nine months ended September 30, 2023, we sold 4,111,281 shares of our common stock at an average price of $ 2.37 per share for net proceeds of $ 9.3 million after deducting sales commissions and offering expenses.

During the three months ended March 31, 2025, we did not sell any shares of our common stock under the ATM Offering.

During the three months ended March 31, 2024, we sold 4,169,324 shares of our common stock at an average price of $ 5.05 per share for net proceeds of $ 20.1 million after deducting sales commissions and offering expenses.

We have reserved shares of common stock for issuance as follows:

As of September 30, 2024 As of December 31, 2023

As of March 31, 2025 As of December 31, 2024

Shares reserved for exercises of outstanding stock options

10,282,640 7,634,937

Shares reserved for vesting of restricted stock units

145,000 361,500

Shares reserved for exercises of warrants

46,487 58,904

Shares reserved for future issuance under the 2021 Employee Stock Purchase Plan

Shares reserved for issuance under the 2021 Employee Stock Purchase Plan

657,399 433,264

Shares reserved for future issuance under the 2021 Stock Incentive Plan 2,057,187 1,911,660

Shares reserved for future issuance as part of the K2HV Loan Agreement conversion feature

Shares reserved for issuance under the 2021 Stock Incentive Plan

1,513,575 1,919,921

Shares reserved for issuance as part of the K2HV Loan Agreement conversion feature

791,364 791,364

Total shares reserved for future issuance

2 unchanged sentences

We are authorized to issue 5,000,000 shares of undesignated preferred stock in one or more series.

As of September 30, 2024, no shares of preferred stock were issued or outstanding.

As of March 31, 2025, no shares of preferred stock were issued or outstanding.

Stock-based Compensation

2017 Stock Incentive Plan

In December 2017, we adopted the 2017 Stock Incentive Plan (as amended and restated, the “2017 Plan”), under which we could grant incentive stock options (“ISOs”), non-qualified stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), stock appreciation rights and other stock-based awards to eligible employees, officers, directors and consultants.

In December 2017, we adopted the 2017 Stock Incentive Plan (the “2017 Plan”), as amended and restated, under which we could grant incentive stock options (“ISOs”), non-qualified stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), stock appreciation rights and other stock-based awards to eligible employees, officers, directors and consultants.

The terms of stock options and RSAs, including vesting requirements, were determined by our board of directors, subject to the provisions of the 2017 Plan.

2021 Stock Incentive Plan

In April 2021, our board of directors adopted and our stockholders approved the 2021 Stock Incentive Plan (the “2021 Plan”), which became effective immediately prior to the effectiveness of our initial public offering (“IPO”).

As a result of the adoption of the 2021 Plan, no further awards will be made under the 2017 Plan.

3 unchanged sentences

We initially registered 3,352,725 shares of common stock under the 2021 Plan, pursuant to a Registration Statement on Form S-8 filed with the SEC on April 30, 2021, which was comprised of (i) 2,843,116 shares of common stock reserved for issuance under the 2021 Plan, (ii) 31,884 shares of common stock originally reserved for issuance under the 2017 Plan that became available for issuance under the 2021 Plan upon the completion of the IPO, and (iii) 477,725 shares of unvested restricted stock subject to repurchase by us that may become issuable under the 2021 Plan following such repurchase.

The 2021 Plan also provides that an additional number of shares will be added annually to the shares authorized for issuance under the 2021 Plan on the first day of each fiscal year, beginning with the fiscal year ended December 31, 2022 and continuing until, and including, the fiscal year ending December 31, 2031.

The 2021 Plan also provides that an additional number of shares will be added annually to the shares authorized for issuance under the 2021 Plan on the first day of each fiscal year, beginning with the fiscal year ending December 31, 2022 and continuing until, and including, the fiscal year ending December 31, 2031.

The number of shares added each year will be equal to the lesser of (i) 5 % of the number of outstanding common stock on such date and (ii) such amount as determined by our board of directors.

As of September 30, 2024, a total of 4,911,502 additional shares have been added to the total shares authorized for issuance under the 2021 Plan in accordance with these terms.

As of March 31, 2025, a cumulative total of 7,152,859 additional shares have been added to the total shares authorized for issuance under the 2021 Plan in accordance with these terms.

2021 Employee Stock Purchase Plan

2 unchanged sentences

The purchase price of each of the shares purchased, in a given purchase period, will be equal to 85 % of the lesser of the closing price of a share of our common stock on (i) the first day of the offering period, or (ii) the last day of the offering period.

During the nine months ended September 30, 2024, 35,180 shares of our common stock were purchased by participants of the 2021 ESPP for total proceeds of $ 0.1 million.

During the nine months ended September 30, 2023, 28,739 shares of our common stock were purchased by participants of the 2021 ESPP for no minal proceeds.

During the three months ended March 31, 2025 and 2024, no shares of our common stock were purchased by participants of the 2021 ESPP.

Stock-Based Compensation Expense

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(in thousands)

2 unchanged sentences

General and administrative

1,035 1,089 3,244 3,088

Total stock-based compensation

$ 2,006 $ 2,305

We may, at our discretion, repurchase unvested shares of restricted stock issued pursuant to the 2017 Plan at the initial purchase price if the employees or non-employees terminate their service relationship with us.

The shares are recorded in stockholders’ deficit as they vest.

As of December 31, 2023, all RSAs granted to employees or non-employees had become fully vested or had been previously forfeited.

No RSAs were granted during the nine months ended September 30, 2024.

Accordingly, we had no unrecognized stock-based compensation expense related to unvested RSAs as of September 30, 2024.

No RSAs vested during the three months ended September 30, 2023.

The aggregate fair value of RSAs that vested during the nine months ended September 30, 2023, based upon the fair values of the stock underlying the RSAs on the date of vesting, was $ 0.2 million.

We have granted RSUs to our employees under the 2021 Plan.

The following table summarizes RSU activity during the nine months ended September 30, 2024:

Shares/Units Weighted-Average

Grant Date Fair

Value Per Share

Unvested at December 31, 2023 361,500 $ 3.92

( 211,500 ) $ 4.97

( 5,000 ) $ 2.45

Unvested at September 30, 2024 145,000 $ 2.45

As of September 30, 2024, we had unrecognized stock-based compensation expense related to unvested RSUs of $ 0.1 million, which we expect to recognize over a weighted-average period of approximately 0.2 years.

The aggregate fair value of RSUs that vested during the nine months ended September 30, 2024, was $ 0.7 million based upon the fair value of the stock underlying the RSUs on the day of vesting.

No RSUs vested during the three months ended September 30, 2024 or during the three or nine months ended September 30, 2023.

As of December 31, 2024, all RSUs granted to employees or non-employees had become fully vested or had been previously forfeited.

No RSUs were granted during the three months ended March 31, 2025.

Accordingly, we had no unrecognized stock-based compensation expense related to unvested RSUs as of March 31, 2025.

No RSUs vested during the three months ended March 31, 2024.

Stock Option Activity

During the year ended December 31, 2022, we granted performance-based stock options to certain executive officers for the purchase of an aggregate of 883,352 shares of common stock with a grant date fair value of $ 3.36 per share.

These stock options would have vested only upon achievement of specified performance targets related to certain business objectives on or before December 31, 2023.

As of September 30, 2023, none of these options were vested because none of the specified performance targets had been achieved.

Because achievement of the specified performance targets was not deemed probable as of September 30, 2023, we did no t record any expense for these stock options during the three or nine months ended September 30, 2023.

As of December 31, 2023, the specified performance targets had not been achieved, and accordingly, all outstanding performance-based stock options expired without vesting.

No additional performance-based stock options have been granted during the three or nine months ended September 30, 2024.

The fair value of stock options granted during the three and nine months ended September 30, 2024 and 2023 was calculated on the date of grant using the following weighted-average assumptions:

The fair value of stock options granted during the three months ended March 31, 2025 and 2024 was calculated on the date of grant using the following weighted-average assumptions:

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Risk-free interest rate

4.3 % 4.3 % 4.0 % 3.9 %

Expected term (in years)

6.0 6.0 6.0 6.0

Expected annual dividend yield

— % — % — % — %

Expected volatility

95.3 % 92.6 %

Using the Black-Scholes option pricing model, the weighted-average grant date fair value of stock options granted during the three months ended September 30, 2024 and 2023 was $ 1.76 and $ 1.91 per share, respectively.

Using the Black-Scholes option

pricing model, the weighted-average grant date fair value of stock options granted during the nine months ended September 30, 2024 and 2023 was $ 3.57 and $ 1.56 per share, respectively.

The following table summarizes stock option activity during the nine months ended September 30, 2024:

Using the Black-Scholes option pricing model, the weighted-average grant date fair value of stock options granted during the three months ended March 31, 2025 and 2024 was $ 1.22 and $ 3.59 per share, respectively.

The following table summarizes stock option activity during the three months ended March 31, 2025:

Options Outstanding

Number of Options

Weighted-Average Exercise Price per Share

Weighted-Average Remaining

Number of Options Weighted-Average Exercise Price per Share Weighted-Average Remaining

Contractual Life

3 unchanged sentences

( 254,510 ) $ 3.24

( 426,287 ) $ 4.99

Outstanding at September 30, 2024 7,497,671 $ 6.33 7.64 $ 0.3

Exercisable at September 30, 2024 4,471,589 $ 7.19 6.97 $ 0.2

The aggregate intrinsic fair value of stock options exercised during the three and nine months ended September 30, 2024 and 2023 was nominal for each period.

As of September 30, 2024, we had unrecognized stock-based compensation expense related to unvested stock options of $ 10.6 million, which we expect to recognize over a weighted-average period of approximately 2.3 years.

Outstanding at March 31, 2025 10,282,640 $ 5.00 7.82 $ —

Exercisable at March 31, 2025 5,285,639 $ 7.01 6.57 $ —

No stock options were exercised during the three months ended March 31, 2025.

The aggregate intrinsic fair value of stock options exercised during the three months ended March 31, 2024 was nominal .

As of March 31, 2025, we had unrecognized stock-based compensation expense related to unvested stock options of $ 9.8 million, which we expect to recognize over a weighted-average period of approximately 2.4 years.

Related Parties

4 unchanged sentences

The term of the sublease agreement commenced in June 2022 and ended in March 2024, with no option to extend.

We received cash payments under the sublease of approximately $ 0.4 million during the nine months ended September 30, 2024.

In addition, we received $ 0.2 million from Crossbow in June 2022 as a security deposit, which was remitted to Crossbow following the termination of the sublease.

We received $ 0.2 million from Crossbow in June 2022 as a security deposit, which was remitted to Crossbow following the termination of the sublease.

Net Loss Attributable to Common Stockholders per Share

For purposes of the diluted net loss attributable to common stockholders per share calculation, outstanding stock options, unvested RSAs, unvested RSUs, the conversion option derivative under the K2HV Loan Agreement, and warrants to purchase common stock are considered to be potentially dilutive securities, however the following outstanding shares of common stock equivalents were excluded from the calculation of diluted net loss attributable to common stockholders per share because their effect would be anti-dilutive:

September 30,

however, the following weighted-average amounts were excluded from the calculation of diluted net loss attributable to common stockholders per share because their effect would be anti-dilutive:

Outstanding stock options

4 unchanged sentences

Common stock to be issued under the 2021 ESPP 91,857 34,227

7,747,805 6,882,540

As described below, the conversion option derivative under the K2HV Loan Agreement was determined to be dilutive for the nine months ended September 30, 2024.

However, the effect of the conversion option derivative would have been anti-dilutive for the three months ended September 30, 2024.

Accordingly, we have excluded 791,364 shares of common stock equivalents that are available to be issued in conjunction with the conversion option derivative from the calculation of diluted net loss attributable to common stockholders per share for the three months ended September 30, 2024.

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the applicable period.

In computing diluted net loss per share, only potential shares of common stock equivalents that are dilutive are included.

We considered each issue or series of issues of potential shares of common stock separately when determining whether potential shares of common stock equivalents are dilutive or anti-dilutive.

We made such determination in sequence from the most dilutive to the least dilutive and concluded that the conversion option derivative under the K2HV Loan Agreement is dilutive to net loss per share for the nine months ended September 30, 2024.

Pursuant to FASB ASC Topic 260, Earnings Per Share , we applied the if-converted method to determine the effect of the conversion option derivative under the K2HV Loan Agreement on the diluted earnings per share calculations.

Pursuant to such method, we adjusted the numerator for the gain recognized during the period in net loss due to the change in the fair value of the conversion option derivative liability under the K2HV Loan Agreement and the interest expense recognized during the period that is attributable to the portion of the term loan that is subject to the conversion option.

We also increased the denominator to include the weighted-average number of additional shares of common stock that would have been outstanding if the conversion option derivative under the K2HV Loan Agreement were converted at the inception of the K2HV Loan Agreement.

The following table summarizes the computations of basic and diluted net loss per share as presented in our condensed consolidated statements of operations:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

(in thousands, except share and per share amounts)

Net loss $ ( 16,673 ) $ ( 8,285 ) $ ( 50,115 ) $ ( 25,365 )

change in fair value of derivative liability

Common stock to be issued upon exercise of the K2HV Loan Agreement conversion feature

11,212,348 7,905,495

interest expense on converted term loan

Adjusted net loss $ ( 16,673 ) $ ( 8,285 ) $ ( 51,525 ) $ ( 25,365 )

Weighted-average common stock outstanding, basic 43,704,836 35,653,924 42,947,282 35,335,286

Dilutive effect of common stock issuable from assumed conversion of convertible term loan — — 439,005 —

Weighted-average common stock outstanding, diluted 43,704,836 35,653,924 43,386,287 35,335,286

Net loss per share

Basic $ ( 0.38 ) $ ( 0.23 ) $ ( 1.17 ) $ ( 0.72 )

Diluted $ ( 0.38 ) $ ( 0.23 ) $ ( 1.19 ) $ ( 0.72 )

Segment Information

We have one reportable segment which focuses on the discovery and development of cancer therapeutics.

The segment derives its revenues from the Collaboration Agreement with Jazz (see Note 3, Collaboration and License Agreement ).

Our chief operating decision maker (“CODM”) manages our operations on an integrated basis for the purpose of allocating resources.

When evaluating our financial performance, our CODM regularly reviews total expenses and expenses by function and makes decisions using this information based on the performance of the enterprise as a whole.

Our CODM primarily evaluates the performance of the enterprise based on results that have a direct impact on our available cash and cash equivalents and accordingly places less significance on non-cash expenses such as stock-based compensation and depreciation expenses in determining how to allocate resources.

Segment assets regularly reviewed by our CODM include measures of liquidity, primarily available cash and cash equivalents, and are consistent with the presentation of cash and cash equivalents reported in our condensed consolidated balance sheets.

The following is a summary of our segment and consolidated net loss, including significant segment expenses:

Three Months Ended

(in thousands)

Collaboration revenue $ — $ 742

Clinical development 4,329 2,728

Manufacturing 4,088 4,393

General and administrative support 3,823 3,739

Research and discovery 3,319 4,275

Other segment expenses (a)

Interest income 997 1,973

Interest expense ( 1,263 ) ( 1,003 )

Other income (expense), net 168 ( 1 )

Segment and consolidated net loss $ ( 18,089 ) $ ( 16,193 )

(a) Other segment expenses includes non-cash expenses for stock-based compensation and depreciation expenses.

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