What changed in this filing

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Item 1. Financial Statements

2022-05-10 compared with 2021-11-09 · 274 added, 353 removed, 464 unchanged (57% of the section changed)

3 unchanged sentences

(in thousands, except share and par value data)

September 30,

Current assets:

1 unchanged sentence

Short-term investments

Accounts receivable

Prepaid expenses and other current assets (includes related party amounts

of $ 14 and $ 0 , respectively)

Prepaid expenses and other current assets (includes related party amounts of $ 23 and $ 0 , respectively)

Total current assets

Restricted cash

Property and equipment, net

1 unchanged sentence

Other long-term assets

Liabilities, Convertible Preferred Stock and Stockholders’

Equity (Deficit)

Liabilities and Stockholders’

Current liabilities:

6 unchanged sentences

Deferred revenue, net of current portion

Operating lease liabilities, net of current portion

Total liabilities

Commitments and contingencies (Note 3)

Convertible preferred stock, $ 0.001 par value;

authorized shares –

0 and 6,838,829 at

September 30, 2021 and December 31, 2020, respectively;

issued and outstanding

shares –

0 and 6,838,829 at September 30, 2021 and December 31, 2020, respectively;

liquidation preference –

$ 0 and $ 21,709 at September 30, 2021

and December 31, 2020, respectively

Stockholders’

equity (deficit):

Preferred stock, $ 0.001 par value;

authorized shares –

10,000,000 and 0 at

September 30, 2021 and December 31, 2020, respectively;

10,000,000 at

March 31, 2022 and December 31, 2021, respectively;

no shares issued

and outstanding at September 30, 2021 and December 31, 2020

and outstanding at March 31, 2022 and December 31, 2021

Common stock, $ 0.001 par value;

authorized shares –

200,000,000 and 9,000,000 at

September 30, 2021 and December 31, 2020, respectively;

200,000,000 at

March 31, 2022 and December 31, 2021, respectively;

issued shares –

and 1,257,736 at September 30, 2021 and December 31, 2020, respectively;

and 41,622,962 at March 31, 2022 and December 31, 2021, respectively;

shares –

41,171,963 and 1,046,599 at September 30, 2021 and December 31, 2020,

41,393,660 and 41,243,137 at March 31, 2022 and December 31, 2021,

Additional paid-in capital

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’

equity (deficit)

Total liabilities, convertible preferred stock and stockholders’

equity (deficit)

Total liabilities and stockholders’

See accompanying notes.

3 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Collaboration revenue

6 unchanged sentences

Loss from operations

Other income (expense):

Other income:

Interest income

Interest expense –

related parties

Change in fair value of convertible promissory notes –

related parties

Total other income (expense)

Total other income

Other comprehensive loss:

Unrealized gain (loss) on available-for-sale securities, net

Unrealized loss on available-for-sale securities, net

Comprehensive loss

6 unchanged sentences

Equity (Deficit)

For the Nine Months Ended September 30, 2021 and 2020

For the Three Months Ended March 31, 2022 and 2021

(in thousands, except share data)

Convertible Preferred Stock

Comprehensive

1 unchanged sentence

Balance at December 31, 2021

Issuance of Series A convertible preferred stock, net of

$ 278 of issuance costs

Issuance of Series B convertible preferred stock, net of

$ 175 of issuance costs

Conversion of convertible preferred stock to common stock

in connection with initial public offering

Initial public offering, net of $ 18,733 of issuance costs

Exercise of common stock options

2 unchanged sentences

Unrealized gain (loss) on investment securities

Balance at September 30, 2021

Balance at March 31, 2022

Convertible Preferred Stock

Comprehensive

Stockholders’

Balance at December 31, 2020

Issuance of Series Seed 2 convertible preferred stock, net of

$ 39 of issuance costs

Conversion of convertible promissory notes into Series Seed 2

convertible preferred stock

Issuance of Series A convertible preferred stock,

net of $ 278 of issuance costs

Exercise of common stock options

1 unchanged sentence

Stock-based compensation

Balance at September 30, 2020

See accompanying notes.

Janux Therapeutics, Inc.

Unaudited Condensed Statements of Convertible Preferred Stock and Stockholders’

Equity (Deficit)

For the Three Months Ended September 30, 2021 and 2020

(in thousands, except share data)

Convertible Preferred Stock

Comprehensive

Stockholders’

Balance at June 30, 2021

Vesting of restricted shares

Stock-based compensation

Unrealized gain (loss) on investment securities

Balance at September 30, 2021

Convertible Preferred Stock

Comprehensive

Stockholders’

Balance at June 30, 2020

Vesting of restricted shares

Stock-based compensation

Balance at September 30, 2020

Balance at March 31, 2021

See accompanying notes.

2 unchanged sentences

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities

Adjustments to reconcile net loss to net cash used in operating activities:

Loss on disposal of assets

Stock-based compensation

Noncash interest –

related parties

Amortization (accretion) of premiums/discounts on investments, net

Increase in fair value of convertible promissory notes –

related parties

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses and other current assets (includes related party amounts of $ 14

and $ 0 , respectively)

Prepaid expenses and other current assets (includes related party amounts of $ 23 and $( 50 ), respectively)

Other long-term assets

Accounts payable (includes related party amounts of $ 0

and $ 50 , respectively)

Accrued expenses (includes related party amounts of $( 544 ) and $ 195 ,

respectively)

Accounts payable

Accrued expenses (includes related party amounts of $( 32 ) and $( 544 ), respectively)

Deferred revenue

Operating lease right-of-use assets and liabilities, net

Net cash used in operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities

2 unchanged sentences

Maturities of short-term investments

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities

Proceeds from issuance of convertible promissory notes

Proceeds from issuance of Series Seed 2 convertible preferred stock, net of issuance costs

Proceeds from issuance of Series A convertible preferred stock, net of issuance costs

Proceeds from issuance of Series B convertible preferred stock, net of issuance costs

Proceeds from exercise of vested and unvested common stock options

Proceeds from initial public offering, net of issuance costs

Proceeds from exercise of vested and unvested common stock options and employee stock purchase plan

Payment of initial public offering costs

Net cash provided by financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents –

beginning of period

Cash and cash equivalents –

end of period

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash –

beginning of year

Cash, cash equivalents and restricted cash –

Supplemental disclosure of noncash investing and financing activities

Conversion of convertible preferred stock in connection with initial public offering

Conversion of convertible promissory notes and accrued interest into shares of

convertible preferred stock

Unpaid fixed asset additions

1 unchanged sentence

Unpaid equity issuance costs

Unrealized gain (loss) on short-term investments

Operating lease liabilities arising from right-of-use assets

Unrealized loss on short-term investments

See accompanying notes.

10 unchanged sentences

Liquidity and Capital Resources

From its inception through September 30, 2021, the Company has devoted substantially all its efforts to organizing and staffing, business planning, raising capital and developing its TRACTr and TRACIr therapeutic platforms and preclinical assets.

The Company has incurred net losses and negative cash flows from operations since inception and had an accumulated deficit of $ 34.0 million as of September 30, 2021.

From its inception through March 31, 2022, the Company has devoted substantially all its efforts to organizing and staffing, business planning, raising capital and developing its TRACTr and TRACIr therapeutic platforms and preclinical assets.

The Company has incurred net losses and negative cash flows from operations since inception and had an accumulated deficit of $ 60.8 million as of March 31, 2022 .

The Company has a limited operating history, has not generated any product revenue, and the sales and income potential of its business is unproven.

2 unchanged sentences

The Company plans to continue to fund its losses from operations and capital funding needs through public or private equity or debt financings or other sources.

The COVID-19 pandemic continues to rapidly evolve and has already resulted in a significant disruption of global capital markets.

The impact of the COVID-19 pandemic on capital markets may affect the availability, amount and type of financing available to us in the future.

If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned programs.

3 unchanged sentences

Unaudited Interim Financial Information

The unaudited condensed financial statements as of September 30, 2021 , and for the three and nine months ended September 30, 2021 and 2020, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), and with accounting principles generally accepted in the United States (“GAAP”) applicable to interim financial statements.

The unaudited condensed financial statements as of March 31, 2022, and for the three months ended March 31, 2022 and 2021, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), and with accounting principles generally accepted in the United States (“GAAP”) applicable to interim financial statements.

These unaudited condensed financial statements have been prepared on the same basis as the Company’s audited financial statements and include all adjustments, consisting of only normal recurring accruals, which in the opinion of management are necessary to present fairly the Company’s financial position as of the interim date and results of operations for the interim periods presented.

1 unchanged sentence

The condensed balance sheet data as of December 31, 2021 was derived from the Company’s audited financial statements but does not include all disclosures required by GAAP.

These unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2020, included in the Company’s prospectus filed with SEC on June 11, 2021 pursuant to Rule 424(b) under the Securities Act of 1933, as amended.

These unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2021.

Use of Estimates

The Company’s financial statements are prepared in accordance with GAAP.

The preparation of the Company’s financial statements requires it to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s financial statements and accompanying notes.

The most significant estimates in the Company’s financial statements relate to estimates to complete the performance obligations and the estimated transaction price for collaboration revenue, accruals for research and

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

development expenses, stock-based compensation and fair value measurements.

significant estimates in the Company’s financial statements relate to estimates to complete the performance obligations and the estimated transaction price for collaboration revenue, accruals for research and development expenses, stock-based compensation and fair value measurements.

These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenues and expenses that are not readily apparent from other sources.

Although the impact of the COVID-19 pandemic to the Company’s business and operating results presents additional uncertainty, the Company continues to use the best information available to update its accounting estimates.

Actual results may differ materially and adversely from these estimates.

Fair Value Option

As permitted under Accounting Standards Codification (“ASC”) 825, Financial Instruments , (“ASC 825”), the Company has elected the fair value option to account for its convertible promissory notes issued since inception.

In accordance with ASC 825, the Company recorded these convertible promissory notes at fair value with changes in fair value recorded in the statements of operations and comprehensive loss.

As a result of applying the fair value option, direct costs and fees related to the convertible promissory notes were recognized in earnings as incurred and not deferred.

For the three and nine months ended September 30, 2020, the Company recognized $ 0 and $ 1.7 million, respectively, of increase in fair value of convertible promissory notes –

related party.

The convertible promissory notes were converted into Series Seed 2 convertible preferred stock in June 2020.

Fair Value Measurements

6 unchanged sentences

Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, prepaid and other current assets, accounts payable, and accrued liabilities, approximate fair value due to the short-term nature of those instruments.

Financial assets measured at fair value on a recurring basis consist of short-term investments.

The fair value of short-term investments classified within Level 1 is based on quoted prices in active markets as provided by the Company’s investment managers.

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, prepaid and other current assets, accounts payable, and accrued liabilities, approximate fair value due to the short-term nature of those instruments.

The fair value of assets classified within Level 1 is based on quoted prices in active markets as provided by the Company’s investment managers.

The fair value of short-term investments classified within Level 2 is based on standard observable inputs, including reported trades, broker/dealer quotes, and bids and/or offers.

4 unchanged sentences

No transfers between levels have occurred during the periods presented.

The following table summarizes the Company’s financial instruments measured at fair value on a recurring basis (in thousands):

The following tables summarize the Company’s financial instruments measured at fair value on a recurring basis (in thousands):

Fair Value Measurements at

5 unchanged sentences

Observable Inputs

As of September 30, 2021:

As of March 31, 2022:

Cash equivalents:

Money market funds

Commercial paper

Total cash equivalents

Short-term investments:

Treasury securities

Corporate debt securities

Commercial paper

Total short-term investments

Restricted cash:

Money market account

Total restricted cash

Total assets measured at fair value on a recurring basis

1 unchanged sentence

Notes to Unaudited Condensed Financial Statements–(Continued)

Fair Value Measurements at

Reporting Date Using

Quoted Prices in

Active Markets for

Identical Assets

Significant Other

Observable Inputs

As of December 31, 2021:

Cash equivalents:

Money market funds

Commercial paper

Total cash equivalents

Short-term investments:

Treasury securities

Corporate debt securities

Commercial paper

Total short-term investments

Restricted cash:

Money market account

Total restricted cash

Total assets measured at fair value on a recurring basis

Cash and Cash Equivalents

1 unchanged sentence

Cash and cash equivalents include cash in readily available checking accounts, commercial paper and money market funds.

Restricted Cash

Restricted cash consists of a money market account securing a standby letter of credit issued in connection with the Company’s Torrey Plaza operating lease (as defined and described in Note 3).

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the accompanying balance sheets that sum to the amounts shown in the statements of cash flows (in thousands):

Cash and cash equivalents

Restricted cash

Total cash and cash equivalents and restricted cash

Short-Term Investments

1 unchanged sentence

treasury securities, corporate debt securities and commercial paper.

The Company has classified these investments as available-for-sale, as the sale of such investments may be required prior to maturity to implement management strategies, and therefore has classified all short-term investments with maturity dates beyond three months at the date of purchase as current assets in the accompanying balance sheets.

Those investments with maturity dates of three months or less at the date of purchase are presented as cash equivalents in the accompanying balance sheets.

Short-term investments are carried at fair value with the unrealized gains and losses included in accumulated other comprehensive income (loss) as a component of stockholders’

equity (deficit) until realized.

Any premium or discount arising at purchase is amortized and/or accreted to interest income as an adjustment to yield using the straight-line method over the life of the instrument.

Any premium or discount arising at purchase is amortized or accreted to interest income as an adjustment to yield using the straight-line method over the life of the instrument.

The Company records an allowance for credit losses when unrealized losses are due to credit-related factors.

Realized gains and losses are calculated using the specific identification method and recorded as interest income or expense.

The Company has determined there were no material declines in fair values of its investments due to credit-related factors as of September 30, 2021.

The following table summarizes short-term investments (in thousands):

As of September 30, 2021

Realized gains and losses are calculated using the specific identification method and recorded as interest income.

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

The following tables summarize short-term investments (in thousands):

As of March 31, 2022

Treasury securities

Commercial paper

As of December 31, 2021

Treasury securities

Corporate debt securities

Commercial paper

The amortized cost and estimated fair value in the table above exclud es $ 28,000 o f accrued interest receivable as of September 30, 2021 included in prepaid expenses and other current assets in the accompanying balance sheets.

The amortized cost and estimated fair value in the table above exclud es $ 0.1 million and $ 0.2 million o f accrued interest receivable as of March 31, 2022 and December 31, 2021, respectively.

Accrued interest receivable is included in prepaid expenses and other current assets in the accompanying balance sheets.

Contractual maturities of available-for-sale debt securities are as follows (in thousands):

As of September 30, 2021

As of March 31, 2022

Due in 1 Year or Less

3 unchanged sentences

Commercial paper

As of September 30, 2021, aggregated gross unrealized losses of available-for-sale investments were not material and no allowance for credit losses has been recorded.

Additionally, no realized gains or losses on sales of short-term investments have been recorded through September 30, 2021.

The Company had no short-term investments as of or during the year ended December 31, 2020.

As of December 31, 2021

Due in 1 Year or Less

Due Between 1 and 2 Years

Treasury securities

Corporate debt securities

Commercial paper

As of March 31, 2022 , all of our available-for-sale debt securities were in an aggregate gross unrealized loss position.

The Company considers the decline in market value for the securities to be primarily attributable to current economic conditions and interest rate adjustments, rather than credit-related factors.

These particular investments have been in an unrealized loss position for less than 12 months and it is not more likely than not that the Company will be required to sell any of its securities prior to maturity.

No allowance for credit losses has been recorded as of March 31, 2022 or December 31, 2021.

Additionally, no realized gains or losses on sales of short-term investments were recorded for the three months ended March 31, 2022 or March 31, 2021.

Concentrations of Risk

2 unchanged sentences

The Company has not experienced any losses in such account and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institution in which those deposits are held.

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

The Company is also subject to credit risk from its accounts receivable.

1 unchanged sentence

financial condition and generally does not require collateral.

As of December 31, 2020 and September 30, 2021, all of the

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Company’s accounts receivable, if any, relate to a single customer.

For the three and nine months ended September 30, 2021, all of the Company’s revenue related to a single customer.

The Company determines if a contract contains a lease at the inception of the contract and evaluates each lease agreement to determine whether the lease is an operating or finance lease .

For leases where the Company is the lessee, right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease.

Liabilities from operating leases are included in current portion of operating lease liabilities, and operating lease liabilities, net of current portion on the accompanying balance sheets.

The Company does not have any financing leases.

Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet.

The Company does not have material short-term lease costs.

Lease liabilities are measured at the present value of the lease payments not yet paid discounted using the discount rate for the lease established at the lease commencement date.

To determine the present value, the implicit rate is used when readily determinable.

For those leases where the implicit rate is not provided, the Company determines an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments.

ROU assets are measured as the present value of the lease payments and also include any prepaid lease payments made and any other indirect costs incurred, and exclude any lease incentives received.

Lease terms may include the impact of options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Lease expense for operating leases is recognized on a straight-line basis over the lease term.

The Company has elected the practical expedient to account for the lease and non-lease components, such as common area maintenance charges, as a single lease component for the Company's facilities leases.

As of March 31, 2022, and December 31, 2021, all of the Company’s accounts receivable, if any, relate to a single customer.

For the three months ended March 31, 2022 , all of the Company’s revenue related to a single customer.

Revenue Recognition

16 unchanged sentences

(i) the expected value method, which is the sum of probability-weighted amounts in a range of possible consideration amounts, and (ii) the mostly likely amount method, which identifies the single most likely amount in a range of possible consideration amounts.

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

If a contract has multiple performance obligations, the Company allocates the transaction price to each distinct performance obligation in an amount that reflects the consideration the Company is entitled to receive in exchange for satisfying each distinct performance obligation.

6 unchanged sentences

All research and development costs are expensed in the period incurred.

Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and payments made in advance of performance are reflected in the accompanying balance sheets as prepaid expenses.

Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and payments made in advance of performance are

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

reflected in the accompanying balance sheets as prepaid expenses.

The Company records accruals for estimated costs incurred for ongoing research and development activities.

3 unchanged sentences

Stock-Based Compensation

Stock-based compensation expense represents the cost of the grant date fair value of equity awards recognized over the requisite service period of the awards (generally the vesting period) on a straight-line basis.

Stock-based compensation expense represents the grant date fair value of equity awards, consisting of stock options and employee stock purchase rights, recognized on a straight-line basis over the requisite service period for stock options and over the respective offering period for employee stock purchase plan rights.

The Company estimates the fair value of equity awards using the Black-Scholes option pricing model and recognizes forfeitures as they occur.

6 unchanged sentences

Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for potentially dilutive securities.

The Company has excluded weighted-average unvested shares of 477,408 shares, 202,655 shares, 457,556 shares and 255,473 shares from the weighted-average number of common shares outstanding for the three months ended September 30, 2021 and 2020 and nine months ended September 30, 2021 and 2020, respectively.

The Company has excluded weighted-average unvested shares of 307,765 shares and 304,303 shares from the weighted-average number of common shares outstanding for the three months ended March 31, 2022 and 2021, respectively.

Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and dilutive common stock equivalents outstanding for the period determined using the treasury-stock and if-converted methods.

1 unchanged sentence

Potentially dilutive securities not included in the calculation of diluted net loss per share, because to do so would be anti-dilutive, are as follows (in common stock equivalent shares):

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

September 30,

Convertible preferred stock outstanding

1 unchanged sentence

Unvested common stock

Employee stock purchase plan shares

Total potentially dilutive shares

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 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):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .

The new guidance, among other things, simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments, and amends existing earnings-per-share (“EPS”) guidance by requiring that an entity use the if-converted method when calculating diluted EPS for convertible instruments.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, with early adoption permitted for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The Company plans to adopt the new guidance effective January 1, 2022 and is currently evaluating the effect adoption will have on its financial position, results of operations or related disclosures.

Balance Sheet Details

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

September 30,

Laboratory equipment

4 unchanged sentences

Property and equipment, net

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Accrued liabilities consist of the following (in thousands):

September 30,

Accrued compensation (including related party amounts of $ 0 and $ 32 , respectively)

Accrued research and development (including related party amounts of $ 0

and $ 14 , respectively)

Other accrued liabilities (including related party amounts of $ 0 and $ 244 , respectively)

Accrued research and development

Other accrued liabilities

Commitments and Contingencies

2 unchanged sentences

patent rights, know-how and biological materials (“WuXi Biologics Licensed Technology”), to use the WuXi Biologics Licensed Technology to make, use, sell, offer for sale and import certain therapeutic products produced through the use of the cell line licensed by WuXi Biologics under the Cell Line License Agreement (“WuXi Biologics Licensed Product”).

Specifically, the WuXi Biologics Licensed Technology is used to manufacture a component of the Company’s PSMA-TRACTr and EGFR-TRACTr product candidates.

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Specifically, the WuXi Biologics Licensed Technology is used to manufacture a component of the Company’s PSMA-TRACTr (JANX007) and EGFR-TRACTr (JANX008) product candidates.

In consideration for the license, the Company paid WuXi Biologics a non-refundable, one-time license fee of $ 0.2 million upon Wuxi Biologics’

6 unchanged sentences

prior written notice and the Company’s payment of all amounts due to WuXi Biologics through the effective date of termination, (ii) by either party for the other party’s material breach that remains uncured for 30 days after written notice, and (iii) by WuXi Biologics if the Company fails to make a payment and such failure continues for 30 days after receiving notice of such failure.

Contingencies

From time to time, the Company may be subject to claims or suits arising in the ordinary course of business.

The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

Operating Leases

In August 2021, the Company entered into a lease agreement (the "Lease") located in San Diego, California for the Company’s general office use .

In August 2021, the Company entered into a lease agreement (the "Ocean Air Lease") located in San Diego, California for the Company’s general office use .

The Company determined this facilities lease was an operating lease at the inception of the lease contract.

According to accounting standards, the Lease commenced on September 1, 2021 and has a term of 14 months from the commencement date.

According to accounting standards, the Ocean Air Lease commenced on September 1, 2021 and has a term of 14 months from the commencement date.

There are no options to extend the term or early termination provisions.

Future minimum noncancelable operating lease payments as of September 30, 2021 are as follows (in thousands):

2021 (remaining)

Future minimum noncancelable operating lease payments as of March 31, 2022, excluding operating leases that have not commenced as of March 31, 2022, are as follows (in thousands):

Total minimum lease payments

3 unchanged sentences

Operating lease liabilities, net of current portion

The weighted average remaining lease term for the Company’s operating lease is 1.1 years as of September 31, 2021.

Operating lease expense and cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended September 30, 2021 was not material.

No operating lease expense was recorded in 2020 as the Company had no operating leases that had commenced during that period.

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

The weighted-average remaining lease term for the Company’s Ocean Air Lease is 0.6 years as of March 31, 2022.

Operating lease expense and cash paid for amounts included in the measurement of lease liabilities for three months ended March 31, 2022 was not material.

No operating lease expense was recorded during the three months ended March 31, 2021 as the Company had no operating leases that had commenced during that period.

In October 2021, the Company entered into a noncancelable operating lease agreement (the "Torrey Plaza Lease") to lease office and laboratory space in San Diego, California.

As of March 31, 2022 , the Torrey Plaza Lease had not commenced and an associated right of use asset or lease liability is not included on the accompanying balance sheets.

The targeted lease commencement date is July 2022 with a lease term of 126 months from the date of commencement.

The lease provides an option to extend the term of the lease for a period of 5 years beyond the initial term.

As required under the terms of the lease, in October 2021 the Company entered into a standby letter of credit, which is secured by a money market account in the amount of $ 0.8 million.

The letter of credit is subject to draw down by the landlord upon certain events of breach or default by the Company.

The letter of credit amount is subject to a 50 % reduction subject to certain conditions on or following the date that is 54 months following the lease commencement date.

Estimated annual undiscounted future minimum lease payments under the Torrey Plaza Lease are as follows (in thousands):

Contingencies

From time to time, the Company may be subject to claims or suits arising in the ordinary course of business.

The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

Related Party Transactions

In August 2017, the Company entered into a Support Services Agreement with COI Pharmaceuticals, Inc.

In August 2017, the Company entered into a Support Services Agreement (the "2017 Support Services Agreement") with COI Pharmaceuticals, Inc.

(“COI”) that outlines the terms of services provided by COI to the Company, as well as the fees charged for such services.

1 unchanged sentence

The Company pays COI quarterly prepayments for estimated costs to be incurred under the agreement in such quarter.

Either party may terminate the support services agreement by giving 30 days’

prior notice.

The support services agreement automatically renews in August of each year unless terminated by either party by giving 30 days’

prior notice.

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

On January 1, 2021, the Company entered into a second Support Services Agreement with COI, which superseded the August 2017 Support Services Agreement.

The agreement modified the nature of services provided to the Company considering the transition of certain individuals as full-time Janux employees effective January 1, 2021.

In January 2021, the Company entered into a second Support Services Agreement with COI (the "2021 Support Services Agreement"), which superseded the 2017 Support Services Agreement.

The agreement modified the nature of services provided to the Company considering the transition of certain individuals as full-time Company employees effective January 1, 2021.

The services will no longer include services normally associated with the roles of Chief Executive Officer, President and Senior Vice President.

Other services associated with certain back-office and administrative and research and development services, including facilities support and other terms of the original agreement remain unchanged.

The initial term of the second Support Services Agreement expires in January 2022 and will automatically renew for one or more additional periods of one year unless terminated by either party by giving 30 days’

prior notice.

Expense recognized by the Company under the Support Services Agreement with COI was as follows (in thousands):

The 2021 Support Services Agreement was renewed in January 2022 and will continue to renew for additional one-year renewal periods until terminated by the parties.

Either party may terminate the 2021 Support Services Agreement with 30 days written notice.

Expense recognized by the Company under the 2017 Support Services Agreement and the 2021 Support Services Agreement for the three months ended March 31, 2022 and 2021 was as follows (in thousands):

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Three Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

General and administrative

At September 30, 2021, the Company had prepaid expenses and other current assets of $ 14,000 with COI.

At December 31, 2020, the Company had accounts payable and accrued expenses due to COI or its affiliates of $ 0.5 million.

For the nine months ended September 30, 2021, the Company paid COI $ 14,000 related to the purchase of property and equipment.

Convertible Preferred Stock and Stockholders’

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Convertible Preferred Stock

On March 1, 2021, the Company entered into a Series A preferred stock purchase agreement with various investors, pursuant to which it issued and sold an aggregate of 5,894,740 shares of its Series A convertible preferred stock at a price per share of $ 9.50 for gross proceeds of $ 56.0 million.

On April 15, 2021, the Company entered into a Series B preferred stock purchase agreement with various investors, pursuant to which it issued and sold an aggregate of 8,038,073 shares of its Series B convertible preferred stock at a price per share of $ 15.551 for gross proceeds of $ 125.0 million.

In connection with the Company’s IPO, all outstanding shares of the Company’s convertible preferred stock automatically converted into 26,608,460 shares of common stock.

In March 2021, the Company entered into a Series A preferred stock purchase agreement with various investors, pursuant to which it issued and sold an aggregate of 5,894,740 shares of its Series A convertible preferred stock at a price per share of $ 9.50 for gross proceeds of $ 56.0 million.

In April 2021, the Company entered into a Series B preferred stock purchase agreement with various investors, pursuant to which it issued and sold an aggregate of 8,038,073 shares of its Series B convertible preferred stock at a price per share of $ 15.551 for gross proceeds of $ 125.0 million.

Initial Public Offering

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Proceeds from the Company’s IPO, net of underwriting discounts and commissions and other offering costs, were $ 204.2 million.

In connection with the Company’s IPO, all outstanding shares of the Company’s convertible preferred stock automatically converted into 26,608,460 shares of the Company's common stock.

2017 Equity Incentive Plan

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2021 Equity Incentive Plan

In June 2021, the Company’s board of directors and stockholders adopted the 2021 Equity Incentive Plan (the “2021 Plan,”

In June 2021, the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan,”

and together with the 2017 Plan the “Plans”).

The 2021 Plan became effective upon the date of the underwriting agreement related to the

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Company’s IPO.

Under the 2021 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock awards, performance cash awards and other forms of stock awards to employees, directors and consultants.

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The number of shares reserved that were remaining under the 2017 Plan as of the effective date of the 2021 Plan, or 1,424,110 shares, were added to the shares initially reserved under the 2021 Plan upon its effectiveness and any future cancellations under the 2017 Plan will become available for future issuance under the 2021 Plan.

In addition, the number of shares of common stock available for issuance under the 2021 Plan will automatically increase on January 1 of each calendar year, starting on January 1, 2022 through January 1, 2031, in an amount equal to 5% of the total number of shares of the Company’s common stock on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the Company’s board of directors.

In addition, the number of shares of common stock available for issuance under the 2021 Plan automatically increases on January 1 of each calendar year, starting on January 1, 2022 through January 1, 2031, in an amount equal to 5% of the total number of shares of the Company’s common stock on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the Company’s board of directors.

As of March 31, 2022 , there were 6,407,967 shares authorized for issuance under the 2021 Plan, inclusive of shares added from 2017 Plan cancellations.

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

A summary of the Company’s stock option activity under its Plans is as follows (in thousands, except share, per share data and years):

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Forfeited or cancelled

Balance at September 30, 2021

Vested and expected to vest at September 30, 2021

Exercisable at September 30, 2021

The weighted average grant date fair value per share of option grants for the nine months ended September 30, 2021 and 2020 wa s $ 7.83 , and $ 0.43 , resp ectively.

The total intrinsic value of stock options exercised for the nine months ended September 30, 2021 and 2020 was $ 1.0 million and $ 0 , respectivel y.

As of September 30, 2021, total unrecognized stock-based compensation cost was $ 36.5 million, which is expected to be recognized over a remaining weighted-average period of approximately 3.3 years.

Balance at March 31, 2022

Vested and expected to vest at March 31, 2022

Exercisable at March 31, 2022

The weighted-average grant date fair value per share of option grants for the three months ended March 31, 2022 and 2021 was $ 14.02 , and $ 3.12 , respectively.

The total intrinsic value of stock options exercised for the three months ended March 31, 2022 and 2021 was $ 0.1 million and $ 1.0 , respectively.

As of March 31, 2022 , total unrecognized stock-based compensation cost associated with option grants was $ 52.8 million, which is expected to be recognized over a remaining weighted-average period of approximately 3.1 years.

The assumptions used in the Black-Scholes option pricing model to determine the fair value of stock option grants under its Plans were as follows:

Nine Months Ended

September 30,

Three Months Ended

Risk-free interest rate

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The expected term represents the period of time that options are expected to be outstanding.

Because the Company does not have historical exercise behavior, it determines the expected life assumption using the simplified method, for

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

employees, which is an average of the contractual term of the option and its vesting period.

Because the Company does not have historical exercise behavior, it determines the expected life assumption using the simplified method, for employees, which is an average of the contractual term of the option and its vesting period.

The expected term for nonemployee options is generally the contractual term.

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2021 Employee Stock Purchase Plan

In June 2021, the Company’s board of directors and stockholders adopted the 2021 Employee Stock Purchase Plan (the “ESPP”).

The ESPP became effective immediately prior to the date of the underwriting agreement related to the IPO.

In June 2021, the Company adopted the 2021 Employee Stock Purchase Plan (the “ESPP”), which became effective on June 10, 2021.

The ESPP permits eligible employees who elect to participate in an offering under the ESPP to have up to 15 % of their eligible earnings withheld, subject to certain limitations, to purchase shares of common stock pursuant to the ESPP.

The price of common stock purchased under the ESPP is equal to 85 % of the lower of the fair market value of the common stock at the commencement date of each offering period or the relevant date of purchase.

A total of 466,000 shares of common stock were approved to be initially reserved for issuance under the ESPP.

In addition, the number of shares of common stock available for issuance under the ESPP will automatically increase on January 1 of each calendar year, starting on January 1, 2022 through January 1, 2031, in an amount equal to the lesser of (i) 1 % of the total number of shares of the Company’s common stock on the last day of the calendar month before the date of each automatic increase and (ii) 932,000 shares;

A total o f 466,000 shares of common stock were approved to be initially reserved for issuance under the ESPP.

In addition, the number of shares of common stock available for issuance under the ESPP

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

automatically increases on January 1 of each calendar year, starting on January 1, 2022 through January 1, 2031, in an amount equal to the lesser of (i) 1 % of the total number of shares of the Company’s common stock on the last day of the calendar month before the date of each automatic increase and (ii) 932,000 shares;

provided that before the date of any such increase, the Company’s board of directors may determine that such increase will be less than the amount set forth in clauses (i) and (ii).

In June 2021, employees began to enroll in the ESPP and the Company’s first offering period commenced.

Stock-based compensation expense related to the ESPP for the three and nine months ended September 30, 2021 was $ 0.1 million.

For the three months ended March 31, 2022 , stock-based compensation expense related to the ESPP was $ 0.1 million and unrecognized stock-based compensation expense related to the ESPP wa s $ 0.5 million as of March 31, 2022.

Stock-Based Compensation Expense

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Three Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

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Vested shares

Balance at September 30, 2021

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Balance at March 31, 2022

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance consists of the following:

September 30,

Conversion of preferred stock

Common stock options outstanding

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Research Collaboration and Exclusive License Agreement

In December 2020, the Company entered into a research collaboration and exclusive license agreement with Merck to develop TRACTr product candidates that are distinct from those in its internally developed pipeline (“Merck Agreement”).

The Company recogniz ed $ 1.2 million and $ 2.0 million of r evenue under the Merck Agreement for the three and nine months ended September 30, 2021.

No revenue was recognized under the Merck Agreement during 2020.

As of September 30, 2021, aggregate deferred revenue related to the Merck Agreement w as $ 7.1 million, of which $ 5.3 million was classified as current.

The Compan y had $ 0 and $ 8.0 million of accounts receivable outstanding as of September 30, 2021 and December 31, 2020, respectively.

On December 15, 2020 (the “Effective Date”), the Company entered into a research collaboration and exclusive license agreement (the “Merck Agreement”), pursuant to which the Company granted Merck Sharp & Dohme Corp.

(“Merck”) an exclusive, worldwide, royalty-bearing, sublicensable license to certain of its patent rights and know-how for up to two collaboration targets (“First Collaboration Target”

and “Second Collaboration Target”, together the “Collaboration Targets”) related to next generation T cell engager immunotherapies for the treatment of cancer.

In each case, once the Collaboration Targets are designated by Merck, they have the right to research, develop, make, have made, use, import, offer to sell, and sell compounds and any licensed products related thereto.

Merck selected one of the Collaboration Targets upon execution of the Merck Agreement and selected the Second Collaboration Target in May 2022.

Following the research term, Merck will have the sole right to research, develop, manufacture, and commercialize the licensed compounds and products directed against the Collaboration Targets.

Consideration in the Merck Agreement consists of (i) an $ 8.0 million non-refundable and non-creditable upfront fee, (ii) $ 8.0 million payable upon the selection

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

of the Second Collaboration Target, (iii) research program funding (iv) development and regulatory milestones, (v) commercial milestones, and (vi) royalty payments.

Under the Merck Agreement, the Company is eligible to receive up to an aggregate of $ 142.5 million per Collaboration Target in milestone payments ($ 285.0 million collectively for both Collaboration Targets), contingent on the achievement of certain regulatory and development milestones.

Merck is also required to make milestone payments to the Company upon the successful completion of certain commercial milestones, in an aggregate amount not to exceed $ 350.0 million for each licensed product under either of the Collaboration Targets.

The Merck Agreement provides that Merck is obligated to pay to the Company tiered royalty payments on a product-by-product and country-by-country basis, ranging from low single-digit to low teens percentage royalty rates on specified portions of annual net sales for licensed products under either of the Collaboration Targets that are commercialized.

Such royalties are subject to reduction, on a product-by-product and country-by-country basis, for licensed products not covered by patent claims, or that require Merck to obtain a license to obtain a license to third-party intellectual property in order to commercialize the licensed products, or that are subject to compulsory licensing.

The Merck Agreement will terminate at the end of the calendar year in which the expiration of all royalty obligations occurs for all licensed products under the agreement.

Merck has the unilateral right to terminate the Merck Agreement in its entirety or on a Collaboration Target by Collaboration Target basis at any time and for any reason upon prior written notice to the Company.

Both parties have the right to terminate the agreement for an uncured material breach, certain illegal or unethical activities, and insolvency of the other party.

Upon expiration of the agreement but not early termination thereof, and provided all payments due under the agreement have been made, Merck’s exclusive licenses under the agreement will become fully paid-up and perpetual.

The Company recognized $ 1.6 million and $ 0.4 million of revenue under the Merck Agreement for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, aggregate deferred revenue related to the Merck Agreement was $ 4.6 million, all of which was classified as current.

The Company did no t have an accounts receivable balance outstanding as of March 31, 2022 and December 31, 2021, respectively.

The remaining performance obligations under the Merck Agreement relate to the Company’s conduct of research services and the Company’s participation in a joint research committee.

The Company estimates the remaining term of the research services, over which revenue will be recogni zed, to be 1.5 years a s of September 30, 2021.

The Company estimates the remaining term of the research services, over which revenue will be recognized, to be 1.0 year as of March 31, 2022 .

Effective April 2021, the Company adopted a defined contribution retirement savings plan under Section 401(k) of the Internal Revenue Code available to eligible employees.

Employee contributions are voluntary and determined on an individual basis, limited to the maximum amount allowable under federal tax regulations.

Under the plan, the Company makes a mandatory annual contribution of 3 % of the eligible employees’

Under the plan, the Company makes a mandatory annual contribution of up to 3 % of eligible employees’

compensation.

Employer contributions paid through September 30, 2021 were immaterial.

Employer contributions for the three months ended March 31, 2022 were immaterial.

Subsequent Events

On October 1, 2021, the Company entered into a noncancelable lease agreement to lease office and laboratory space in San Diego, California.

The targeted lease commencement date is July 2022 and will have a lease term of 126 months.

The Company has one option to extend the lease term for a period of 5 years .

Pursuant to the lease and during the term thereof, the Company has a one-time right of first offer to lease additional space in the building to the extent such space becomes available.

Aggregate base rent payable during the lease term is approximately $ 38.0 million, inclusive of a six month abatement period and annual increases in rental payments of 3 %.

The Company will be required to pay its proportional share of utilities, operating expenses and certain taxes, assessments and fees of the premises under the terms of the lease.

The lease provides that the landlord shall provide an allowance of up to $ 10.6 million to fund the costs of the design, permitting and construction of permanently affixed improvements to the premises.

As required under the terms of the lease, in October 2021 the Company entered into a letter of credit in the amount of $ 0.8 million, to be classified as restricted cash, which is subject to draw down by the landlord upon certain events of breach or default by the Company.

The letter of credit amount is subject to a 50 % reduction subject to certain conditions on or following the date that is 54 months following the lease commencement date.

As described in Note 6, pursuant to the Merck Agreement, Merck selected the Second Collaboration Target in May 2022.

In consideration of its selection of the Second Collaboration Target, Merck is obligated to pay us an upfront payment of $ 8.0 million.

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 with our unaudited condensed financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and related notes included in the prospectus dated June 10, 2021 that forms a part of our Registration Statement on Form S-1 (File No.

333-256297), as filed with the Securities and Exchange Commission (SEC) pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the Securities Act), on June 11, 2021 (the Prospectus).

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and related notes thereto as of and for the year ended December 31, 2021 included in the Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC), on March 18, 2022.

Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties.

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While TCE therapeutics have displayed potent anti-tumor activity in hematological cancers, developing TCEs to treat solid tumors has faced challenges due to the limitations of prior TCE technologies, namely (i) overactivation of the immune system leading to cytokine release syndrome (CRS), (ii) on-target, healthy tissue toxicities and (iii) poor pharmacokinetics (PK) leading to short half-life.

We are using our TRACTr platform technology to engineer product candidates designed to overcome these limitations.

We use our TRACTr platform technology to engineer product candidates designed to overcome these limitations.

We are developing a broad pipeline with lead programs targeting prostate-specific membrane antigen (PSMA), epidermal growth factor receptor (EGFR), and trophoblast cell surface antigen 2 (TROP2), with all of our programs currently in the preclinical or discovery stage.

We expect to submit Investigational New Drug applications (IND) for our PSMA-TRACTr in the first half of 2022, for our EGFR-TRACTr in the second half of 2022 and for our TROP2-TRACTr in 2023.

We are also applying our proprietary technology to develop a TRACIr costimulatory bispecific product candidate against programmed death-ligand 1 (PD-L1) and Cluster of Differentiation 28 (CD28) designed to further enhance the anti-tumor activity of T cells, which we believe has the potential to be used as a single-agent or in combination with our current TRACTr pipeline.

We recently submitted an Investigational New Drug application (IND) for our PSMA-TRACTr (JANX007).

We expect to submit an IND for our EGFR-TRACTr (JANX008) in the second half of 2022, and for our TROP2-TRACTr in 2023.

Based on data we have generated in non-human primates (NHPs), we believe our TRACTr and TRACIr product candidates have the potential for (i) significantly reduced risk of toxic CRS responses, (ii) reduced risk of on-target, healthy tissue toxicities, and (iii) improved half-life with once-weekly dosing in humans.

We expect to select a PD-L1xCD28 TRACIr development candidate in 2022.

We selected a PD-L1xCD28 TRACIr development candidate in the fourth quarter of 2021.

We expect to submit an IND for this product candidate in 2023.

We were incorporated in June 2017.

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We have funded our operations primarily with the net proceeds from the issuance of convertible promissory notes, the issuance of convertible preferred stock, the exercise of common stock options, proceeds from our initial public offering and amounts received under a collaboration agreement with Merck Sharp & Dohme Corp.

On March 1, 2021, we entered into a Series A preferred stock purchase agreement with various investors, pursuant to which we issued and sold an aggregate of 5,894,740 shares of our Series A convertible preferred stock at a price per share of $9.50 for gross proceeds of $56.0 million.

On April 15, 2021, we entered into a Series B preferred stock purchase agreement with various investors, pursuant to which we issued and sold an aggregate of 8,038,073 shares of our Series B convertible preferred stock at a price per share of $15.551 for gross proceeds of $125.0 million.

In June 2021, we completed our initial public offering (IPO) and sold 13,110,000 shares of our common stock at $17.00 per share.

Proceeds from our IPO, net of underwriting discounts and commissions and other offering costs, were $204.2 million.

All outstanding shares of our convertible preferred stock converted into common stock in connection with our IPO.

We have incurred operating losses since our inception and have not yet generated any product revenue.

Our net losses were $19.3 million and $5.1 million, respectively, for the nine months ended September 30, 2021 and 2020.

As of September 30, 2021, we had an accumulated deficit of $34.0 million.

Our net losses were $13.4 million and $2.3 million for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, we had an accumulated deficit of $60.8 million.

Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on a variety of factors including the timing and scope of our preclinical studies and our expenditures on other research and development activities and the timing of any revenue recognition under our collaboration agreement with Merck.

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However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all.

Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates or to our platform technology that we would otherwise prefer to develop and market ourselves.

Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates or to our platform technologies that we would otherwise prefer to develop and market ourselves.

The global COVID-19 pandemic continues to rapidly evolve, and we will continue to monitor the COVID-19 situation closely.

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We will continue to actively monitor the rapidly evolving situation related to COVID-19 and may take further actions that alter our operations, including those that may be required by federal, state or local authorities, or that we determine are in the best interests of our employees and other third parties with whom we do business.

At this point, the extent to which the COVID-19 pandemic may affect our business, operations and clinical development timelines and plans, including the resulting impact on our expenditures and capital needs, remains uncertain and is subject to change.

We have considered potential impacts arising from the COVID-19 pandemic and have not experienced any material disruption to our operations to date.

Support Services Agreement with COI Pharmaceuticals, Inc.

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The 2021 Support Services Agreement outlines the terms of the services provided by COI to us, as well as the fees and expenses charged for such services.

The initial term of the Support Services Agreement expires in January 2022.

The agreement will continue to renew for additional one-year renewal periods until terminated by the parties.

Either party may terminate the agreement with 30 days written notice.

The 2021 Support Services Agreement was renewed in January 2022 and will continue to renew for additional one-year renewal periods until terminated by the parties.

Either party may terminate the 2021 Support Services Agreement with 30 days written notice.

Our Research Collaboration with Merck

In December 2020, we entered into a research collaboration and exclusive license agreement with Merck to develop TRACTr product candidates that are distinct from those in our internally developed pipeline.

Merck has the right to select up to two collaboration targets (each a Collaboration Target) related to next generation T cell engager immunotherapies for the treatment of cancer.

Merck selected one of the Collaboration Targets upon execution of the agreement and has a specified period of time to select the second Collaboration Target.

Merck selected one of the Collaboration Targets upon execution of the agreement and selected the second Collaboration Target in May 2022.

Merck will receive an exclusive worldwide license for each selected target and intellectual property from the collaboration.

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To date, we have not generated any revenues from the commercial sale of any products, and we do not expect to generate revenues from the commercial sale of any products for the foreseeable future, if ever.

We did not recognize any revenues under our December 2020 collaboration with Merck through December 31, 2020 since we had not completed any substantive research services required by that agreement.

We began recognizing revenue under this agreement in 2021.

We recognized $1.6 million and $0.4 million of revenue under the Merck Agreement for the three months ended March 31, 2022 and 2021, respectively.

Research and Development

To date, our research and development expenses have related primarily to development of our TRACTr and TRACIr platforms, discovery efforts, preclinical studies and other preclinical activities related to lead discovery and optimization of development candidates under our TRACTr and TRACIr platforms.

To date, our research and development expenses have related primarily to direct and indirect expenses in connection with the development of our TRACTr and TRACIr platforms, discovery efforts, preclinical studies and other preclinical activities related to lead discovery and optimization of development candidates under our TRACTr and TRACIr platforms.

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 include:

salaries and employee-related costs, including stock-based compensation for those individuals involved in research and development efforts;

Our direct research and development expenses include :

external research and development expenses incurred under agreements with CROs and consultants to conduct our preclinical studies;

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laboratory equipment, materials and supplies.

facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent, maintenance of facilities, insurance, equipment and other supplies.

Our indirect research and development expenses include:

salaries and employee-related costs, including recruiting fees and stock-based compensation for those individuals involved in research and development efforts;

maintenance of facilities and equipment, software license fees, depreciation;

allocated facilities and equipment-related expenses, which include rent, utilities, insu rance, and office supplies.

Certain research and development expenses as listed above include amounts paid to COI.

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Interest income consists of interest income on our cash and cash equivalents and short-term investments.

Interest Expense –

Related Parties

Interest expense consists of coupon interest of 8% per annum on our convertible promissory notes that converted in June 2020.

Change in Fair Value of Convertible Promissory Notes –

Related Parties

We issued convertible promissory notes in 2019 and 2020 for which we have elected the fair value option.

Until their conversion into Series Seed 2 convertible preferred stock in June 2020, we adjusted the carrying value of our convertible promissory notes to their estimated fair value at each reporting date, with the increases in fair value of the convertible promissory notes recorded as increase in fair value of convertible promissory notes in our statements of operations and comprehensive loss.

We estimated the fair value of our convertible promissory notes using a scenario-based analysis that estimated the fair value of the convertible promissory notes based on the probability-weighted present value of expected future investment returns, considering possible outcomes available to the noteholders.

Results of Operations

Comparison of the Three Months Ended September 30, 2021 and 2020

Three Months Ended September 30,

(in thousands)

Collaboration revenue

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expense):

Interest income

Total other income (expense)

Collaboration Revenue

We began recognizing revenue from our December 2020 collaboration with Merck in 2021 when we began to provide the research services required under the agreement.

We did not generate any collaboration revenue for the three months ended September 30, 2020.

Research and Development Expense

Research and development expenses were $8.4 million and $0.8 million for the three months ended September 30, 2021 and 2020, respectively.

The increase of $7.6 million was primarily due to increases related to the development of our platform technologies and programs of $5.0 million, stock-based compensation expense of $1.1 million, and other research and development expenses of $1.5 million, as operations grew in support of program advances.

General and Administrative Expense

General and administrative expenses were $3.6 million and $0.4 million for the three months ended September 30, 2021 and 2020, respectively.

The increase of $3.2 million was primarily due to increases in stock-based compensation of $1.4 million, personnel and facilities costs of $0.7 million, and other general and administrative expenses of $1.1 million, as we now operate as a public company.

Other Income (Expense)

Other expenses of $0.1 million for the three months ended September 30, 2021 consisted of interest income on our cash and cash equivalents and short-term investments.

Comparison of the Nine Months Ended September 30, 2021 and 2020

Nine Months Ended September 30,

Comparison of the Three Months Ended March 31, 2022 and 2021

Three Months Ended March 31,

(in thousands)

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Loss from operations

Other income (expense):

Other income:

Interest income

Interest expense –

related parties

Change in fair value of convertible promissory notes –

related parties

Total other income (expense)

Total other income

Collaboration Revenue

We began recognizing revenue from our December 2020 collaboration with Merck in 2021 when we began to provide the research services required under the agreement.

We did not generate any collaboration revenue for the nine months ended September 30, 2020.

Collaboration revenues were $1.6 million and $0.4 million for the three months ended March 31, 2022 and 2021, respectively.

The increase of $1.2 million was due to an increase in full-time equivalent hours incurred in the performance of research services required under the Merck Agreement.

Research and Development Expense

Research and development expenses were $15.1 million and $2.1 million for the nine months ended September 30, 2021 and 2020, respectively.

Research and development expenses were $10.2 million and $1.9 million for the three months ended March 31, 2022 and 2021, respectively.

The increase of $8.3 million was primarily due to increases related to the development of our platform technologies and programs of $4.4 million, personnel and facilities costs of $1.5 million, stock-based compensation expense of $1.6 million, and other research and development expenses of $0.8 million, as operations grew in support of program advances.

The following table summarizes our research and development expenses by direct and indirect expenses for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

(in thousands)

Direct costs (1)

Indirect costs

Total research and development expenses

(1) In future periods when clinical trial expenses are incurred, external costs will be broken out between our clinical programs and our preclinical programs.

General and Administrative Expense

General and administrative expenses were $6.4 million and $1.1 million for the nine months ended September 30, 2021 and 2020, respectively.

General and administrative expenses were $4.9 million and $0.7 million for the three months ended March 31, 2022 and 2021, respectively.

The increase of $4.2 million was primarily due to increases in stock-based compensation of $2.2 million, personnel and facilities costs of $0.6 million, and other general and administrative expenses of $1.4 million, as we now operate as a public company.

Other Income (Expense)

Other income of $0.2 million for the nine months ended September 30, 2021 consisted of interest income on our cash and cash equivalents and short-term investments.

Other expense of $1.9 million for the nine months ended September 30, 2020 consisted of a $1.7 million increase in the fair value of our convertible promissory notes and $0.2 million of interest expense on our convertible promissory notes.

Other income of $0.1 million for the three months ended March 31, 2022 consisted of interest income on our cash and cash equivalents and short-term investments.

Liquidity and Capital Resources

We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future.

In March and April of 2021 we sold convertible preferred stock resulting in aggregate net proceeds of $180.5 million.

In June 2021, we completed our IPO and sold 13,110,000 shares of our common stock at $17.00 per share.

Proceeds from our IPO, net of underwriting discounts and commissions and other offering costs, were $204.1 million.

All outstanding shares of our convertible preferred stock converted into common stock in connection with our IPO.

As of September 30, 2021, we had cash and cash equivalents and short-term investments of $387.5 million.

We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses and negative cash flows for the foreseeable future.

As of March 31, 2022, we had cash, cash equivalents, restricted cash and

short-term investments of $362.0 million.

Inclusive in this amount is $0.8 million of restricted cash that is not available for current use.

The following summarizes our cash flows for the periods indicated:

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

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Financing activities

Net increase (decrease) in cash and cash equivalents

Net increase in cash, cash equivalents and restricted cash

Operating Activities

Net cash used in operating activities was $6.5 million for the nine months ended September 30, 2021 and net cash used in operating activities was $2.7 million for the nine months ended September 30, 2020.

The net cash used in operating activities for the nine months ended September 30, 2021 was primarily due to our net loss of $19.3 million, adjusted for $4.0 million of stock-based compensation expense and a change in operating assets and liabilities of $8.8 million.

The net cash used in operating activities for the nine months ended September 30, 2020 was primarily due to our net loss of $5.1 million, adjusted for a $1.7 million noncash charge related to an increase in the fair value of convertible promissory notes, $0.2 million of noncash interest and a $0.5 million change in operating assets and liabilities.

Net cash used in operating activities was $11.5 million for the three months ended March 31, 2022, and was primarily due to our net loss of $13.4 million, adjusted for $4.0 million of stock-based compensation expense and a change in operating assets and liabilities and other non-cash charges of $2.1 million.

Net cash provided by operating activities was $5.6 million for the three months ended March 31, 2021, and was primarily due to our net loss of $2.3 million, adjusted for $0.1 million of stock-based compensation expense and a change in operating assets and liabilities and other non-cash charges of $7.7 million, primarily related to the collection of $8.0 million of accounts receivable related to our collaboration with Merck.

Investing Activities

Net cash used in investing activities was $348.3 million for the nine months ended September 30, 2021 due to our purchase of short-term investments, net of maturities of $348.0 million and our purchase of property and equipment of $0.3 million.

We had no cash flows from investing activities for the nine months ended September 30, 2020.

Net cash provided by investing activities of $31.1 million for the three months ended March 31, 2022 was primarily due to $32.1 million of net maturities of short-term investments offset by our purchase of property and equipment, primarily consisting of laboratory equipment of $1.0 million.

Net cash used by investing activities of $0.2 million for the three months ended March 31, 2021 was primarily due to our purchase of property and equipment, primarily consisting of laboratory equipment.

Financing Activities

Net cash provided by financing activities of $386.4 million for the nine months ended September 30, 2021 primarily consisted of $204.2 million of net proceeds from our initial public offering, $180.5 million of net proceeds from our preferred stock sales and $1.7 million of proceeds from stock option exercises.

Net cash provided by financing activities of $7.0 million for the nine months ended September 30, 2020 primarily consisted of $2.5 million of net proceeds from the issuance of convertible promissory notes and $4.5 million of net proceeds from the issuance of convertible preferred stock.

Net cash provided by financing activities for the three months ended March 31, 2022 was immaterial.

Net cash provided by financing activities of $57.5 million for the three months ended March 31, 2021 was primarily due to $56.0 million of proceeds from the issuance of Series A convertible preferred stock, $1.6 million of proceeds from the exercise of stock options and $0.1 million for the payment of offering costs related to our initial public offering.

Funding Requirements

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Our future capital requirements will depend on many factors, including:

the initiation, trial design, progress, timing, costs and results of drug discovery, preclinical studies and clinical trials of our product candidates, and in particular the IND-enabling studies and planned future clinical trials for PSMA-TRACTr, EGFR-TRACTr, TROP2-TRACTr and TRACIr costimulatory bispecific;

the initiation, trial design, progress, timing, costs and results of drug discovery, preclinical studies and clinical trials of our product candidates, and in particular the IND-enabling studies and planned future clinical trials for JANX007, JANX008, TROP2-TRACTr and TRACIr costimulatory bispecific;

the number and characteristics of clinical programs that we pursue;

the outcome, timing and costs of seeking FDA, European Medicines Agency (EMA) and any other regulatory approvals for any future drug candidates;

the outcome, timing and costs of seeking U.S.

Food and Drug Administration (FDA), European Medicines Agency (EMA) and any other regulatory approvals for any future drug candidates;

the costs of manufacturing our product candidates;

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Contractual Obligations

In August 2021, we entered into a noncancelable agreement to lease office space in San Diego, California ( Ocean Air Drive Lease ) with aggregate payments of approximately $0.3 million over the lease term.

According to accounting standards, the Ocean Air Drive Lease commenced in September 2021 and has a term of 14 months.

Material Cash Commitments and Requirements

In April 2021, we entered into a cell line license agreement (Cell Line License Agreement) with WuXi Biologics (Hong Kong) Limited (WuXi Biologics).

According to the terms of the Cell Line License Agreement, if we do not engage WuXi Biologics or its affiliates to manufacture the therapeutic products produced through the use of the cell line licensed by WuXi Biologics under the Cell Line License Agreement (WuXi Biologics Licensed Products) for our commercial supplies, we are required to make royalty payments to WuXi Biologics in an amount equal to a low single-digit percentage of specified portions of net sales of WuXi Biologics Licensed Products manufactured by a third-party manufacturer.

We have the right (but not the obligation) to buy out our remaining royalty obligations with respect to each WuXi Biologics Licensed Product by paying WuXi Biologics a one-time payment in an amount ranging from low single digit million dollars to a maximum of $15.0 million.

The royalty obligations will remain in effect during the term of the Cell Line License Agreement so long as we have not exercised the Buyout Option.

See the section within Item 1 of Part I, “Notes to Condensed Financial Statements —

Note 3 —

Commitments and Contingencies”

of this Quarterly Report for additional information.

In October 2021, we entered into a noncancelable agreement to lease office and laboratory space in San Diego, California (Torrey Plaza Lease) with aggregate payments of approximately $38.0 million over the 126-month term of the lease.

The Torrey Plaza Lease is expected to commence in July 2022.

As required under the terms of the lease, in October 2021 the Company entered into a letter of credit in the amount of $0.8 million, to be classified as restricted cash, which is subject to draw down by the landlord upon certain events of breach or default by the Company.

The letter of credit amount is subject to a 50% reduction subject to certain conditions on or following the date that is 54 months following the lease commencement date.

The lease provides that the landlord shall provide an allowance of up to $10.6 million to fund the costs of the design, permitting and construction of permanently affixed improvements to the premises.

See the section within Item 1 of Part I, “Notes to Condensed Financial Statements —

Note 3 —

Commitments and Contingencies”

of this Quarterly Report for additional information.

We enter into contracts in the normal course of business with various third parties for preclinical research studies and testing, manufacturing and other services and products for operating purposes.

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The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities in our financial statements.

On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, accruals for research and development expenses, stock-based

compensation and fair value measurements.

On an ongoing basis, we evaluate our estimates and judgments, including those related to estimates to complete the performance obligations and the estimated transaction price for collaboration revenue s, accruals for research and development expenses and estimates used in valuing our equity awards for stock-based compensation expense.

We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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of this Quarterly Report and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations —

Critical Accounting Policies and Significant Judgments and Estimates”

contained in the Prospectus.

There have not been any material changes to the critical accounting policies discussed therein during the three months ended September 30, 2021.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Critical Accounting Policies and Estimates”

contained in our Annual Report on Form 10-K, filed with the SEC on March 18, 2022 .

There have not been any material changes to the critical accounting policies discussed therein during the three months ended March 31, 2022.

Quantitative and Qualitative Disclosures About Market Risk.

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

What changed 10-Q

Item 1. Financial Statements