What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-14 compared with 2024-08-13 · 121 added, 112 removed, 238 unchanged (49% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together in conjunction with our unaudited condensed consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report, and our audited consolidated financial statements and notes thereto as of and for the fiscal year ended December 31, 2023 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in the Form 10.

Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report contain forward-looking statements that involve risk and uncertainties, including those described in the section titled “Special Note Regarding Forward-Looking Statements.” As a result of many factors, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report, and our audited consolidated financial statements and notes thereto as of and for the fiscal year ended December 31, 2023 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in the Form 10.

Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report contains forward-looking statements that involve risk and uncertainties, including those described in the section titled “Special Note Regarding Forward-Looking Statements.” As a result of many factors, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

We are a clinical-stage biopharmaceutical company with a pipeline of novel biologic therapeutic candidates, developed using our proprietary modular protein engineering platforms.

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Separation from Former Parent

In January 2024, Inhibrx, Inc., or the Former Parent, announced its intent, as approved by its board of directors, to effect the spin-off of INBRX-101, an optimized, recombinant alpha-1 antitrypsin, or AAT, augmentation therapy currently in a registrational trial for the treatment of patients with alpha-1 antitrypsin deficiency.

In January 2024, Inhibrx, Inc., or the Former Parent, announced its intent, as approved by its board of directors, to effect the spin-off of INBRX-101, an optimized, recombinant alpha-1 antitrypsin, or AAT, augmentation therapy in a registrational trial for the treatment of patients with alpha-1 antitrypsin deficiency.

On May 29, 2024, the Former Parent completed a distribution to holders of its shares of common stock of 92% of the issued and outstanding shares of common stock of the Company, or the Distribution.

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__________________

* Currently being investigated in colorectal and gastric adenocarcinoma, malignant pleural mesothelioma, chondrosarcoma and synovial sarcoma.

* Currently being investigated in chondrosarcoma, Ewing sarcoma, colorectal cancer, and certain other solid tumor types.

** Currently being investigated in patients with non-small cell lung cancer, or NSCLC, and head and neck squamous cell carcinoma, or HNSCC.

ozekibart (INBRX-109)

Our most advanced therapeutic candidate, ozekibart (INBRX-109), is a tetravalent death receptor 5, or DR5, agonist currently being evaluated in patients diagnosed with difficult-to-treat cancers, such as chondrosarcoma, mesothelioma, colorectal cancer, Ewing sarcoma and pancreatic adenocarcinoma.

ozekibart (INBRX-109) is a tetravalent death receptor 5, or DR5, agonist currently being evaluated in patients diagnosed with difficult-to-treat cancers, such as chondrosarcoma, mesothelioma, colorectal cancer, Ewing sarcoma and pancreatic adenocarcinoma.

Chondrosarcoma

In June 2021, based on the initial Phase 1 data results, we initiated a registration-enabling Phase 2 trial for the treatment of unresectable or metastatic conventional chondrosarcoma for which the United States Food and Drug Administration, or FDA, and the European Medicine Agency, or EMA, granted orphan drug designation in November 2021 and August 2022, respectively.

In June 2021, based on the initial Phase 1 data results, we initiated a registration-enabling Phase 2 trial for the treatment of unresectable or metastatic conventional chondrosarcoma for which the United States Food and Drug Administration, or FDA, and the European Medicines Agency, or EMA, granted orphan drug designation in November 2021 and August 2022, respectively.

The primary endpoint for this Phase 2 trial is progression-free survival, or PFS.

Data from the registration-enabling Phase 2 trial in unresectable or metastatic conventional chondrosarcoma is expected during the middle of 2025.

Ewing sarcoma

Ewing sarcoma and colorectal adenocarcinoma

On November 2, 2023, we announced preliminary efficacy and safety data from the Phase 1 trial of ozekibart (INBRX-109) in combination with Irinotecan, or IRI, and Temozolomide, or TMZ, for the treatment of advanced or metastatic, unresectable Ewing sarcoma.

Overall, ozekibart (INBRX-109) in combination with IRI/TMZ was well tolerated from a safety perspective.

Based on this preliminary data, the ongoing Phase 1/2 trial in the Ewing sarcoma cohort was expanded.

We are also in the process of expanding the cohort for colorectal adenocarcinoma.

The data from both of these cohorts is expected during the middle of 2025.

INBRX-106 is a precisely engineered hexavalent sdAb-based therapeutic candidate targeting OX40, designed to be an optimized agonist of this co-stimulatory receptor.

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We observed durable responses across multiple tumor types.

We expanded the enrollment for Part 2, single agent dose expansion, to increase the dataset in the single agent cohorts and to enroll additional NSCLC patients.

We expect to announce additional data from Part 2 in 2025.

We continue to enroll patients with NSCLC and HNSCC in Part 4, combination expansion cohorts.

We are in the process of expanding these cohorts and expect to initiate at least one additional cohort by mid 2024.

We expect to have a more mature dataset during the third quarter of 2025 and plan to provide an update at that time.

As of June 2024, a seamless Phase 2/3 clinical trial has been initiated for INBRX-106 in combination with Keytruda as a first-line treatment for patients with local advanced recurrent or metastatic head HNSCC.

This trial will recruit patients who have not received prior checkpoint inhibitors and whose tumors express a PDL-1 CPS equal to or greater than 20.

We plan to enroll approximately 60 patients in the Phase 2 portion with a primary endpoint of ORR supported by secondary endpoints of duration of response, PFS, and safety.

In Part 4 of the Phase 1/2 trial, we continue to enroll patients with NSCLC and HNSCC, both in combination with Keytruda.

In one cohort, we are investigating NSCLC patients who all had previous checkpoint inhibitor exposure and have a PDL-1 tumor proportion score, or TPS, of greater than 50%.

We have also expanded the HNSCC cohort, which is evaluating HNSCC patients who are CPI naive with a combined positive score, or CPS, of greater than one.

Primary endpoints for these cohorts are objective response rate, or ORR, disease control rate, or DCR, duration of response, or DOR, and safety.

In addition, a new cohort has been initiated in NSCLC to evaluate chemotherapy when used in conjunction with the INBRX-106 and Keytruda combination.

The primary endpoint for this cohort is safety.

We expect to have a more mature dataset on all three cohorts during the second half of 2025 and plan to provide an update at that time.

In June 2024, a seamless Phase 2/3 clinical trial was initiated for INBRX-106 in combination with Keytruda as a first-line treatment for patients with local advanced recurrent or metastatic head HNSCC.

This trial recruits patients who have not received prior checkpoint inhibitors and whose tumors express a PDL-1 CPS equal to or greater than 20.

We plan to enroll approximately 60 patients in the Phase 2 portion with a primary endpoint of ORR supported by secondary endpoints of DOR, PFS, and safety.

We expect to announce initial data on Phase 2 during the second half of 2025.

If positive, this data will ungate the Phase 3 portion, where approximately 350 patients will be randomized to INBRX-106 or placebo in combination with Keytruda.

The primary endpoint for the Phase 3 portion of the study will be PFS and overall survival.

If positive, we anticipate this data will ungate the Phase 3 portion, where we expect approximately 350 patients will be randomized to INBRX-106 or placebo in combination with Keytruda.

The co-primary endpoints for the Phase 3 portion of the study will be PFS and overall survival.

Components of Results of Operations

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As of the date of this Quarterly Report, our research and development expenses have related primarily to research activities, including our discovery efforts, and preclinical and clinical development and the manufacturing of our therapeutic candidates.

Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

Research and development expenses are recognized as incurred and payments made prior to

the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

In accordance with the applicable accounting and regulatory requirements, we track all research and development expenses in the aggregate and do not manage or track either external or internal expenses on a program-by-program basis.

External research and development expenses are instead managed and tracked by the nature of the activity, and primarily consist of contract manufacturing and clinical trial expenses.

Internal research and development

expenses primarily relate to personnel, early research and consumable costs, which are deployed across multiple projects under development.

Internal research and development expenses primarily relate to personnel, early research and consumable costs, which are deployed across multiple projects under development.

We manage and prioritize our research and development expenses based on scientific data, probability of successful technical development and regulatory approval, market potential and unmet medical need, among other considerations.

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Internal research and development expenses consist of:

• salaries, benefits and other related costs, including non-cash stock-based compensation, for personnel engaged in research and development functions;

• salaries, benefits and other related costs, including non-cash stock-based compensation under the former Amended and Restated 2017 Employee, Director and Consultant Equity Incentive Plan, or the 2017 Plan, and the 2024 Omnibus Incentive Plan, or the 2024 Plan, for personnel engaged in research and development functions;

• facilities, depreciation and other expenses, which include direct and allocated expenses for depreciation and amortization, rent and maintenance of facilities;

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• the number of patients that participate in the trials;

• the ability to identify patients eligible for our clinical trials;

• the number of doses that patients receive;

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• the efficacy and safety profile of our therapeutic candidates;

• the uncertainties related to potential economic downturn, geopolitical events and widespread health events on capital and financial markets.

• the timing, receipt, and terms of any approvals from applicable regulatory authorities including the FDA and non-U.S.

• maintaining a continued acceptable safety profile of our therapeutic candidates following approval, if any;

• significant and changing government regulation and regulatory guidance;

• the ability to attract and retain personnel;

• the impact of any business interruptions to our operations or to those of the third parties with whom we work;

• the uncertainties related to potential economic downturn, inflation, interest rates, geopolitical events and widespread health events on capital and financial markets, the supply chain and our expenses;

• the extent to which we establish additional strategic collaborations or other arrangements.

General and Administrative

General and administrative, or G&A, expenses consist primarily of:

• salaries, benefits and other related costs, including non-cash stock-based compensation, for personnel engaged in G&A functions;

• expenses incurred in connection with accounting and audit services, legal services, including costs associated with obtaining and maintaining our patent portfolio, investor relations and consulting expenses under agreements with third parties, such as consultants and contractors;

• salaries, benefits and other related costs, including non-cash stock-based compensation under the former 2017 Plan and 2024 Plan, for personnel engaged in G&A functions;

• expenses incurred in connection with accounting, audit, and tax services, legal services, including costs associated with obtaining and maintaining our patent portfolio, investor relations and consulting expenses under agreements with third parties, such as consultants and contractors;

• expenses incurred in connection with commercialization and business development activity;

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We expect increased costs related to pre-commercialization and business development activities, including the hiring of additional personnel as we continue to build our commercial team in preparation for our future product launches.

Additionally, we expect other professional service fees to increase, including but not limited to, patent-related costs for filing, prosecution and maintenance of our product candidates, and compliance costs, accounting, legal, investor and public relations and additional personnel.

Additionally, we expect other professional service fees to increase, including but not limited to, patent-related costs for filing, prosecution and maintenance of our therapeutic candidates, and compliance costs, accounting, legal, regulatory and tax-related services, investor and public relations and additional personnel.

Other Income (Expense)

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Results of Operations

Comparison of the Three Months Ended June 30, 2024 and June 30, 2023

Comparison of the Three Months Ended September 30, 2024 and September 30, 2023

The following table summarizes our condensed consolidated results of operations for each of the periods indicated (in thousands, except percentages):

THREE MONTHS ENDED

JUNE 30, CHANGE

SEPTEMBER 30, CHANGE

2024 2023 ($) (%)

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Other income (expense)

Gain related to transaction with Acquirer 2,021,498 — 2,021,498 100 %

Interest expense — (8,149) 8,149 (100) %

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Provision for income taxes — 2 (2) (100) %

Net income (loss) $ 1,858,011 $ (47,052) $ 1,905,063 (4,049) %

$ (43,864) $ (51,789) $ 7,925 (15) %

License Fee Revenue

License fee revenue during the three months ended June 30, 2024 was $0.1 million and consisted of revenue related to our Option and License Agreement with Regeneron Pharmaceuticals, Inc., or the 2020 Regeneron Agreement, which we recognized following granting a six-month extension of the option term.

License fee revenue during the three months ended June 30, 2023 was $30,000 and consisted of revenue related to a former option agreement which was completed during 2023.

License fee revenue during the three months ended September 30, 2023 was $0.1 million and consisted of revenue related to a former option agreement which was completed during 2023.

We did not recognize any revenue during the three months ended September 30, 2024.

Research and Development Expense

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THREE MONTHS ENDED

JUNE 30, CHANGE

SEPTEMBER 30, CHANGE

2024 2023 ($) (%)

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Total research and development expenses $ 38,893 $ 38,057 $ 836 2 %

Research and development expenses increased by $33.5 million from $34.1 million during the three months ended June 30, 2023 to $67.6 million during the three months ended June 30, 2024.

Research and development expenses increased by $0.8 million from $38.1 million during the three months ended September 30, 2023 to $38.9 million during the three months ended September 30, 2024.

The overall increase was primarily due to the following factors:

• contract manufacturing expense increased by $6.3 million, due to the nature of the development and manufacturing activities performed during the current period with our CDMO and CRO partners supporting our clinical and preclinical therapeutic candidates, which reflect the stage-specific needs of our programs and include early and late stage drug substance clinical manufacturing, analytical development, quality control, or QC, testing and stability studies, as well as drug product development, scale-up, robustness studies and selected biologics license applications, or BLA,-enabling activities;

• personnel-related expense increased by $27.1 million, which was primarily related to $25.9 million in stock option expense recognized upon the acceleration of outstanding options in connection with the close of the Merger;

• facility and equipment-related expense increased by $1.0 million, which was attributable to expenses related to capitalized software placed in service during the period;

• other research and development expense increased by $2.9 million, which was primarily attributable to an increase in preclinical studies and the purchase of lab supplies;

• offset in part by clinical trial expense which decreased by $3.7 million, primarily due to decreased expenses incurred following the termination of our INBRX-105 program, which we announced during the first quarter of 2024 and the spin-off of our INBRX-101 program, which occurred during the second quarter of 2024.

G&A expenses increased by $86.1 million from $7.3 million during the three months ended June 30, 2023 to $93.4 million during the three months ended June 30, 2024.

The overall increase during the three months ended June 30, 2024 was primarily due to the following factors:

• expenses related to the Merger of $67.5 million, consisting of legal, advisory, consulting services performed in connection to the transaction and SEC filing fees in connection with filings related to the transaction;

• personnel-related expenses increased by $16.1 million, which was primarily related to $15.2 million in stock option expense recognized upon the acceleration of outstanding options in connection with the close of the Merger;

• pre-commercialization expenses increased by $1.6 million, primarily related to increases in consulting services to support our commercial operations business intelligence strategies and our market research expenses related to ozekibart (INBRX-109) and INBRX-101 prior to the Merger;

• professional services-related expenses related to legal services increased by $1.1 million, which was primarily attributable to intellectual property, other general corporate matters, and legal proceedings.

• clinical trial expense increased by $2.8 million, primarily due to the expansion of our ongoing registration-enabling Phase 2 trial for ozekibart (INBRX-109) for the treatment of unresectable or metastatic conventional chondrosarcoma and due to the expansion of our INBRX-106 Phase 1/2 trial and initiation of the Phase 2/3 trial for HNSCC, including expenses for in-house clinical trial support, offset in part by decreased expenses incurred following the termination of our INBRX-105 program, which we announced during the first quarter of 2024 and the spin-off of our INBRX-101 program, which occurred during the second quarter of 2024;

• personnel-related expense decreased by $2.5 million, which was primarily related to a decrease in stock compensation expense as a result of less stock options outstanding under the 2024 Plan following the termination of the 2017 Plan in connection with the Merger;

• facility and equipment-related expense increased by $0.8 million, which was attributable to expenses related to capitalized software placed in service during the current year;

• other research and development expense decreased by $0.2 million, which was primarily attributable to a decrease in preclinical studies, offset in part by increases in clinical consulting services.

G&A expenses remained consistent at $7.9 million during each of the three months ended September 30, 2024 and September 30, 2023.

During the three months ended September 30, 2024, the composition of these expenses fluctuated primarily due to the following factors:

• personnel-related expenses decreased by $0.9 million, which was primarily related to a decrease in stock compensation expense as a result of less stock options outstanding under the 2024 Plan following the termination of the 2017 Plan in connection with the Merger;

• offset by professional services-related expenses related to legal and accounting services, which increased by $1.0 million, primarily attributable to intellectual property, other general corporate matters, and legal proceedings.

Other income (expense)

Interest expense.

Interest expense decreased by $2.5 million from $7.9 million during the three months ended June 30, 2023 to $5.4 million during the three months ended June 30, 2024, all of which relates to interest incurred and the amortization of debt discounts related to the 2020 Loan Agreement with Oxford and subsequent amendments between November 2020 and October 2022, or collectively, the Amended 2020 Loan Agreement.

The decrease in interest expense is the result of the extinguishment of the Amended 2020 Loan Agreement in connection with the Merger.

We did not incur any interest following the close of the Merger on May 30, 2024, the date upon which the Acquirer assumed our outstanding debt.

Interest expense was $8.1 million during the three months ended September 30, 2023, all of which related to interest incurred and the amortization of debt discounts related to the 2020 Loan Agreement with Oxford and subsequent amendments between November 2020 and October 2022, or collectively, the Amended 2020 Loan Agreement.

We did not incur any interest during the three months ended September 30, 2024 following the closing of the Merger on May 30, 2024, the date upon which the Acquirer assumed our outstanding debt.

Interest income.

During the three months ended June 30, 2024, we earned $2.7 million of interest income related to interest earned on our sweep and money market account balances.

During the three months ended June 30, 2023, we earned $2.4 million of interest income, which consisted of $0.1 million of interest income related to interest earned on our sweep and money market account balances and $2.3 million of interest earned on our investments in U.S.

During the three months ended September 30, 2024, we earned $2.9 million of interest income related to interest earned on our sweep and money market account balances.

During the three months ended September 30, 2023, we earned $2.3 million of interest income, which consisted of $1.7 million of interest income related to interest earned on our sweep and money market account balances and $0.6 million of interest earned on our investments in U.S.

Treasury Bills.

Gain related to transaction with Acquirer.

During the three months ended June 30, 2024, we earned $2.0 billion of other income, consisting of gains recorded in connection with the completion of the Merger.

We recorded a gain of $1.7 billion related to Merger consideration for our outstanding common stock, warrants, and stock options, in addition to $211.3 million related to the extinguishment of our Amended 2020 Loan assumed by the Acquirer.

In addition to the Acquirer assuming our outstanding debt, the Acquirer assumed outstanding assets and liabilities related to INBRX-101 upon the transaction, resulting in a gain of $14.5 million.

The Acquirer also reimbursed us for or paid on our behalf $68.0 million of transaction costs related to the Merger, resulting in a gain.

We do not expect future income or gains in connection with the Merger in future periods.

Comparison of the Six Months Ended June 30, 2024 and June 30, 2023

Comparison of the Nine Months Ended September 30, 2024 and September 30, 2023

The following table summarizes our condensed consolidated results of operations for each of the periods indicated (in thousands, except percentages):

SIX MONTHS ENDED

JUNE 30, CHANGE

NINE MONTHS ENDED

SEPTEMBER 30, CHANGE

2024 2023 ($) (%)

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Interest income 8,937 7,221 1,716 24 %

Other income, net (26) (287) 261 (91) %

Total other expense 2,014,026 (10,858) 2,024,884 (18,649) %

Other income (expense), net

15 (422) 437 (104) %

Total other income (expense)

2,016,959 (16,818) 2,033,777 (12,093) %

Provision for income taxes 2 7 (5) (71) %

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License Fee Revenue

License fee revenue during the six months ended June 30, 2024 was $0.1 million and consisted of revenue related to our Regeneron Agreement, which we recognized following granting a six-month extension of the option term.

License fee revenue during the six months ended June 30, 2023 was $47,000 and consisted of revenue related to a former option agreement which was completed during 2023.

License fee revenue during the nine months ended September 30, 2024 was $0.1 million and consisted of revenue related to our Regeneron Agreement, which we recognized following the grant of a six-month extension of the option term.

License fee revenue during the nine months ended September 30, 2023 was $0.2 million and consisted of revenue related to a former option agreement which was completed during 2023.

Research and Development Expense

The following table sets forth the primary external and internal research and development expenses (in thousands, except percentages):

SIX MONTHS ENDED

JUNE 30, CHANGE

NINE MONTHS ENDED

SEPTEMBER 30, CHANGE

2024 2023 ($) (%)

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Total research and development expenses $ 170,376 $ 109,549 $ 60,827 56 %

Research and development expenses increased by $60.0 million from $71.5 million during the six months ended June 30, 2023 to $131.5 million during the six months ended June 30, 2024.

Research and development expenses increased by $60.8 million from $109.5 million during the nine months ended September 30, 2023 to $170.4 million during the nine months ended September 30, 2024.

The overall increase was primarily due to the following factors:

• contract manufacturing expense increased by $21.1 million due to the nature of the development and manufacturing activities performed during the current period at our CDMO and CRO partners supporting our clinical and preclinical therapeutic candidates, which reflect the stage-specific needs of our programs, including early and late stage drug substance clinical manufacturing, analytical development, QC testing, and stability studies, as well as drug product development, scale-up, robustness studies, and selected BLA-enabling activities;

• clinical trial expense increased by $6.1 million, primarily due to the progression of our ongoing registration-enabling Phase 2 trial for ozekibart (INBRX-109) for the treatment of unresectable or metastatic conventional chondrosarcoma and our INBRX-106 Phase 1/2 trial, as well as costs incurred for our registration-enabling Phase 2 trial for INBRX-101 for the treatment of emphysema due to AATD, prior to our spin-off of the INBRX-101 program during the period.

• clinical trial expense increased by $8.9 million, primarily due to the expansion of our ongoing registration-enabling Phase 2 trial for ozekibart (INBRX-109) for the treatment of unresectable or metastatic conventional chondrosarcoma and due to the expansion of our INBRX-106 Phase 1/2 trial and initiation of the Phase 2/3 trial for HNSCC, including expenses for in-house clinical trial support, as well as costs incurred for our registration-enabling Phase 2 trial for INBRX-101 for the treatment of emphysema due to AATD, prior to our spin-off of the INBRX-101 program during the period.

These expenses were offset in part by reduced clinical expenses following the termination of our INBRX-105 program;

• personnel-related expense increased by $29.0 million, which was primarily related to $25.9 million in stock option expense recognized upon the acceleration of outstanding options in connection with the close of the Merger;

• personnel-related expense increased by $26.6 million, which was primarily related to $25.9 million in stock option expense recognized upon the acceleration of outstanding options in connection with the closing of the Merger;

• facility and equipment-related expense increased by $1.9 million, which was attributable to expenses related to capitalized software placed in service during the period;

• other research and development expense increased by $2.6 million, which was primarily attributable to an increase in preclinical studies and the purchase of lab supplies.

G&A expenses increased by $89.7 million from $13.7 million during the six months ended June 30, 2023 to $103.3 million during the six months ended June 30, 2024.

The overall increase during the six months ended June 30, 2024, was primarily due to the following factors:

• expenses related to the Merger of $68.1 million, consisting of legal, advisory, consulting services performed in connection to the transaction and SEC filing fees in connection with filings related to the transaction;

• other research and development expense increased by $2.4 million, which was primarily attributable to an increase in preclinical studies and clinical consulting services.

G&A expenses increased by $89.7 million from $21.5 million during the nine months ended September 30, 2023 to $111.2 million during the nine months ended September 30, 2024.

The overall increase during the nine months ended September 30, 2024, was primarily due to the following factors:

• expenses related to the Merger of $68.1 million, consisting of legal, advisory, and consulting services performed in connection to the transaction, and SEC filing fees in connection with filings related to the transaction;

• personnel-related expenses increased by $16.4 million, which was primarily related to $15.2 million in stock option expense recognized upon the acceleration of outstanding options in connection with the close of the Merger;

• pre-commercialization expenses increased by $1.8 million, primarily related to increases in consulting services to support our commercial operations business intelligence strategies and our market research expenses related to ozekibart (INBRX-109) and INBRX-101 prior to the Merger;

• professional services-related expenses related to legal services increased by $2.9 million, which was primarily attributable to intellectual property, other general corporate matters, and legal proceedings;

• pre-commercialization expenses increased by $2.2 million, primarily related to increases in consulting services and scientific publications to support our commercial operations business intelligence strategies related to ozekibart (INBRX-109) and prior to the Merger, related to INBRX-101, in addition to a focus on patient advocacy and recruitment efforts, offset in part by a decrease in market research efforts following the disposition of INBRX-101.

Other Expense

Interest expense.

Interest expense decreased by $2.0 million from $15.5 million during the six months ended June 30, 2023 to $13.5 million during the six months ended June 30, 2024, all of which relates to interest incurred and the amortization of debt discounts related to the Amended 2020 Loan Agreement.

Interest expense decreased by $10.1 million from $23.6 million during the nine months ended September 30, 2023 to $13.5 million during the nine months ended September 30, 2024, all of which relates to interest incurred and the amortization of debt discounts related to the Amended 2020 Loan Agreement.

The decrease in interest expense is the result of the extinguishment of the Amended 2020 Loan Agreement in connection with the Merger.

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Interest income.

During the six months ended June 30, 2024, we earned $6.0 million of interest income related to interest earned on our sweep and money market account balances.

During the six months ended June 30, 2023, we earned $4.9 million of interest income, which consisted of $1.1 million of interest income related to interest earned on our sweep and money market account balances and $3.8 million of interest earned on our investments in U.S.

During the nine months ended September 30, 2024, we earned $8.9 million of interest income related to interest earned on our sweep and money market account balances.

During the nine months ended September 30, 2023, we earned $7.2 million of interest income, which consisted of $2.8 million of interest income related to interest earned on our sweep and money market account balances and $4.4 million of interest earned on our investments in U.S.

Treasury Bills.

The increase in interest income during the six months ended June 30, 2024 is the result of higher cash and cash equivalent balances, coupled with rising interest rates, generating higher returns.

The increase in interest income during the nine months ended September 30, 2024 is the result of higher cash and cash equivalent balances, coupled with rising interest rates, generating higher returns.

Gain related to transaction with Acquirer.

During the six months ended June 30, 2024, we earned $2.0 billion of other income, consisting of gains recorded in connection with the completion of the Merger.

During the nine months ended September 30, 2024, we earned $2.0 billion of other income, consisting of gains recorded in connection with the completion of the Merger.

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Our net income or losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities, as well as the timing of other corporate transactions.

During the six months ended June 30, 2024, we had net income of $1.8 billion following the close of the Merger and during the six months ended June 30, 2023, our net loss was $96.0 million.

As of June 30, 2024, we had an accumulated deficit of $14.4 million and cash and cash equivalents of $226.9 million.

Based upon our current operating plans, we believe that our existing cash and cash equivalents will be sufficient to fund our operations for at least the next 12 months from the date these unaudited condensed consolidated financial statements are issued.

During the nine months ended September 30, 2024,

we had net income of $1.7 billion following the closing of the Merger, and during the nine months ended September 30, 2023, our net loss was $147.8 million.

As of September 30, 2024, we had an accumulated deficit of $58.3 million and cash and cash equivalents of $196.3 million.

Our forecast of the period through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect.

The process of conducting preclinical studies and testing product candidates in clinical trials is costly, and the timing of progress and expenses in these studies and trials is uncertain.

The process of conducting preclinical studies and testing therapeutic candidates in clinical trials is costly, and the timing of progress and expenses in these studies and trials is uncertain.

We expect to continue to incur net losses for the foreseeable future until, if ever, we have an approved product and can successfully commercialize it.

We expect our research and development expenses to increase as we continue our development of, and seek marketing approvals for, our therapeutic candidates (especially as we move more candidates into later stages of clinical development), and begin to commercialize any approved products, if ever.

At this time, we are preparing to proceed with the commercialization of certain of our product candidates, if ever approved.

At this time, we are preparing to proceed with the commercialization of certain of our therapeutic candidates, if ever approved.

As a result, we will incur significant pre-commercialization expenses in preparation for launch, the outcome of which is uncertain.

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We also expect additional general and administrative expenses as we hire additional personnel and incur increased accounting, audit, legal, regulatory and compliance, investor and public relations expense to support our continued expansion.

Until such time we, if ever, can generate substantial product revenue, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including strategic licensing and collaborations, strategic transactions, or other similar arrangements and transactions, and from time to time, we engage in discussions with potential acquirers regarding the disposition of one or more of our product candidates.

If the Company does raise additional capital through public or private equity or convertible debt offerings, the ownership interests of its existing stockholders will be diluted, and the terms of those securities may include liquidation or other preferences that adversely affect its stockholders’ rights.

If the Company raises capital through additional debt financings, it may be subject to covenants limiting or restricting its ability to take specific actions, such as incurring additional debt or making certain capital expenditures.

To the extent that the Company raises additional capital through strategic licensing, collaboration or other similar agreements, it may have to relinquish valuable rights to its therapeutic candidates, future revenue streams or research programs at an earlier stage of development or on less favorable terms than it would otherwise choose, or to grant licenses on terms that may not be favorable to the Company.

However, there can be no assurance as to the availability or terms upon which such finances or capital might be available in the future.

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• whether and when we are able to obtain marketing approval to market any of our therapeutic candidates and the outcome of meetings with applicable regulatory agencies, including the FDA;

• our ability to successfully commercialize any therapeutic candidates that receive marketing approval;

• our ability to successfully commercialize, including the costs and timing of manufacturing, any therapeutic candidates that receive marketing approval;

• the emergence and effect of competing or complementary therapeutics or therapeutic candidates;

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• our ability to retain our current employees and the need and ability to hire additional management and scientific and medical personnel;

• the costs and timing of establishing or securing sales and marketing capabilities if any current or future therapeutic candidate is approved;

• the terms and timing of any strategic licensing, collaboration or other similar agreement that we have established or may establish;

• our ability to repay, refinance or restructure our indebtedness when payment is due, including in the event such indebtedness is accelerated;

• our ability to achieve market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved therapeutics;

• our ability to repay, refinance or restructure when payment is due any indebtedness we might incur, including in the event such indebtedness is accelerated;

• the valuation of our capital stock;

• the continuing or future effects of a potential economic downturn, geopolitical events, and widespread health events on capital and financial markets.

• the continuing or future effects of a potential economic downturn, inflation, interest rates, geopolitical events, and widespread health events on capital and financial markets, the supply chain and our expenses.

We do not own or operate manufacturing and testing facilities for the production of any of our therapeutic candidates, nor do we have plans to develop our own manufacturing operations in the foreseeable future.

currently rely on a limited number of third-party contract manufacturers for all of our required raw materials, antibodies and other biologics for our preclinical research, clinical trials, and if and when applicable, commercial product, and employ internal resources to manage our manufacturing relationships with these third parties.

We currently rely on a limited number of third-party contract manufacturers for all of our required raw materials, antibodies and other biologics for our preclinical research, clinical trials, and if and when applicable, commercial product, and employ internal resources to manage our manufacturing relationships with these third parties.

Our material cash requirements from known contractual and other obligations primarily relate to our lease obligations and services provided by our third party CROs and CDMOs.

We have two leases for our laboratory and office space, which expire in 2025, with an option to extend the leases for an additional five years.

As of June 30, 2024, we had future minimum rental payments under these leases of $2.3 million, all of which are classified as current.

As of September 30, 2024, we had future minimum rental payments under these leases of $1.9 million, all of which are classified as current.

For more information regarding these lease agreements, refer to Note 8 to the unaudited condensed consolidated financial statements.

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These contracts are generally cancellable, with notice, at our option.

We have recorded accrued expenses of approximately $18.0 million in our condensed consolidated balance sheets for expenditures incurred by CROs and CDMOs as of June 30, 2024.

We have recorded accrued expenses of approximately $21.2 million in our condensed consolidated balance sheets for expenditures incurred by CROs and CDMOs as of September 30, 2024.

Cash Flow Summary

The following table sets forth a summary of the net cash flow activity for each of the periods indicated (in thousands):

SIX MONTHS ENDED JUNE 30,

NINE MONTHS ENDED SEPTEMBER 30,

Net cash used in operating activities $ (150,689) $ (136,488)

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Net cash provided by financing activities 71,678 201,101

Net decrease in cash and cash equivalents $ (51,064) $ (81,373)

Net increase (decrease) in cash and cash equivalents $ (81,592) $ 63,462

Operating Activities

Net cash used in operating activities was $120.4 million during the six months ended June 30, 2024 and consisted primarily of a net income of $1.8 billion, adjusted for non-cash items.

Non-cash adjustments primarily relate to gains recorded upon the Merger of $2.0 billion.

Other non-cash adjustments include accretion on our debt discount and the non-cash portion of interest expense related to our debt of $2.1 million, stock-based compensation expense of $52.6 million, depreciation and amortization of $0.8 million and non-cash lease expense of $0.9 million.

Changes in operating assets and liabilities also contributed to the cash used in operating activities, primarily related to an increase in prepaid expenses and other current assets of $3.4 million, excluding those related to INBRX-101 transferred to the Acquirer in the Merger, and an increase in other non-current assets of $3.6 million due to prepayments and additional deposits we made to our CRO partners during the period.

Additionally, receivables increased by $0.6 million as related to revenue and other income earned under the Transition Services Agreement, while the operating lease liability decreased by $1.0 million as a result of lease payments made throughout the period.

These uses of cash were offset by increases in accrued expenses and other current liabilities of $29.9 million and an increase in accounts payable of $21.5 million due to the timing of payments to our CRO and CDMO partners during the period, each of which excludes the liabilities related to INBRX-101 which were assumed by the Acquirer in the Merger.

Net cash used in operating activities was $82.2 million during the six months ended June 30, 2023 and consisted primarily of a net loss of $96.0 million, adjusted for non-cash items including accretion on our debt discount and the non-cash portion of interest expense related to our debt of $2.4 million, stock-based compensation expense of $11.9 million, depreciation and amortization of $0.6 million, and non-cash lease expense of $0.9 million.

Changes in operating assets and liabilities also contributed to the cash used in operating activities, primarily related to an increase in prepaid expenses and other current assets of $4.1 million, offset in part by increases in accrued expenses and other current liabilities of $2.3 million and accounts payable of $0.8 million, primarily due to the timing of payments to our CRO and CDMO partners during the period.

Net cash used in operating activities was $150.7 million during the nine months ended September 30, 2024 and consisted primarily of net income of $1.7 billion, adjusted for non-cash items.

Non-cash adjustments primarily related to gains recorded upon the Merger of $2.0 billion.

Other non-cash adjustments included accretion on our debt discount and the non-cash portion of interest expense related to our debt of $2.1 million, stock-based compensation expense, including expense related to the acceleration of options upon the Merger, of $55.5 million, depreciation and amortization of $1.6 million and non-cash lease expense of $1.4 million.

Changes in operating assets and liabilities also contributed to the cash used in operating activities, primarily related to an increase in other non-current assets of $3.5 million due to prepayments and additional deposits we made to our CRO partners during the period.

Additionally, the operating lease liability decreased by $1.3 million as a result of lease payments made throughout the period.

These uses of cash were offset by increases in accrued expenses and other current liabilities of $35.9 million and an increase in accounts payable of $21.0 million due to the timing of payments to our CRO and CDMO partners during the period, each of which excludes the liabilities related to INBRX-101 which were assumed by the Acquirer in the Merger.

Net cash used in operating activities was $136.5 million during the nine months ended September 30, 2023 and consisted primarily of a net loss of $147.8 million, adjusted for non-cash items including accretion on our debt discount and the non-cash portion of interest expense related to our debt of $3.7 million, stock-based compensation expense of $18.4 million, depreciation and amortization of $0.9 million and non-cash lease expense of $1.3 million.

Changes in operating assets and liabilities also contributed to the cash used in operating activities, primarily related to an increase in prepaid expenses and other current assets of $19.3 million due to the prepayment of raw materials to one of our CDMO partners during the third quarter of 2023 and a decrease in accounts payable of $0.8 million.

This was offset in part by an increase in accrued expenses and other current liabilities of $8.7 million due to the timing of payments to our CRO and CDMO partners during the period.

Additionally, the operating lease liability decreased by $1.4 million as a result of lease payments made throughout the period, while deferred revenue decreased by $0.2 million due to the recognition of revenue under a former option agreement upon declination of the option.

Investing Activities

Net cash used in investing activities was $2.3 million and $0.3 million during the six months ended June 30, 2024 and June 30, 2023, respectively, and was related to capital purchases of software and laboratory equipment.

Net cash used in investing activities was $2.6 million and $1.2 million during the nine months ended September 30, 2024 and September 30, 2023, respectively, and was related to capital purchases of software and laboratory equipment.

Financing Activities

Net cash provided by financing activities was $71.7 million and $1.2 million during the six months ended June 30, 2024 and June 30, 2023, respectively, which consisted of proceeds upon the exercise of stock options.

Net cash provided by financing activities was $71.7 million during the nine months ended September 30, 2024, which consisted of proceeds upon the exercise of stock options.

Net cash provided by financing activities was $201.1 million during the nine months ended September 30, 2023, which consisted primarily of gross proceeds of $200.0 million from the issuance of our common stock and pre-funded warrants to purchase shares of our common stock in a private placement transaction, offset in part by the payment of $0.1 million of issuance costs associated with this transaction.

Additionally, we received approximately $1.2 million of proceeds upon the exercise of stock options.

Critical Accounting Estimates and Policies

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The preparation of financial statements requires us to make estimates and judgements that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures.

We base our estimates on historical experience and on various other assumptions that we believe

to be reasonable under the circumstances.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

Changes in estimates are reflected in reported results for the period in which they become known.

Actual results could differ significantly from the estimates made by our management.

There have been no material changes to our critical accounting policies and estimates from those disclosed in our financial statements and the related notes and other financial information included in the Exhibit 99.1 to the Form 10.

There have been no material changes to our critical accounting policies and estimates from those disclosed in our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Exhibit 99.1 to the Form 10.

Emerging Growth Company

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As such, we are eligible for exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies, including, but not limited to, presenting only two years of audited financial statements, not being required to comply with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation, and an exemption from the requirements to obtain a non-binding advisory vote on executive compensation or golden parachute arrangements.

In addition, an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards.

This provision allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

We have elected to avail ourselves of this provision of the JOBS Act.

As a result, we will not be subject to new or revised accounting standards at the same time as other public companies that are not emerging growth companies.

Therefore, our consolidated financial statements may not be comparable to those of companies that comply with new or revised accounting pronouncements as of public company effective dates.

In addition, an emerging growth company can take advantage of an extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.

We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Smaller Reporting Company Status

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We will remain a smaller reporting company as long as either:

(i) the market value of our common shares held by non-affiliates is less than $250 million as of the last business day of our most recently completed second fiscal quarter;

or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our common shares held by non-affiliates is less than $700 million as of the last business day of our most recently completed second fiscal quarter.

(i) the market value of the shares of our common stock held by non-affiliates is less than $250.0 million as of the last business day of our most recently completed second fiscal quarter;

or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of the shares of our common stock held by non-affiliates is less than $700.0 million as of the last business day of our most recently completed second fiscal quarter.

Recent Accounting Pronouncements

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Quantitative and Qualitative Disclosures about Market Risks.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and are not required to provide the information required under this item.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act, and are not required to provide the information required under this item.

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 2. Management’s Discussion and Analysis