What changed in this filing

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Item 1. Financial Statements

2022-08-09 compared with 2022-05-10 · 240 added, 135 removed, 603 unchanged (38% of the section changed)

21 unchanged sentences

Deferred revenue, net of current portion

Operating lease liabilities, net of current portion

Total liabilities

4 unchanged sentences

10,000,000 at

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

June 30, 2022 and December 31, 2021, respectively;

no shares issued

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

and outstanding at June 30, 2022 and December 31, 2021

Common stock, $ 0.001 par value;

1 unchanged sentence

200,000,000 at

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

June 30, 2022 and December 31, 2021, respectively;

issued shares –

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

and 41,622,962 at June 30, 2022 and December 31, 2021, respectively;

shares –

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

41,501,269 and 41,243,137 at June 30, 2022 and December 31, 2021,

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

Collaboration revenue

10 unchanged sentences

Other comprehensive loss:

Unrealized loss on available-for-sale securities, net

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

Comprehensive loss

6 unchanged sentences

Equity (Deficit)

For the Three Months Ended March 31, 2022 and 2021

For the Six Months Ended June 30, 2022 and 2021

(in thousands, except share data)

3 unchanged sentences

Exercise of common stock options

Shares issued under employee stock purchase plan

Vesting of restricted shares

Stock-based compensation

Unrealized gain (loss) on investment securities

Balance at March 31, 2022

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

Balance at June 30, 2022

Convertible Preferred Stock

Comprehensive

Stockholders’

Balance at December 31, 2020

Issuance of Series A convertible preferred stock,

net of $ 278 of issuance costs

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

1 unchanged sentence

Stock-based compensation

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

Balance at June 30, 2021

See accompanying notes.

Janux Therapeutics, Inc.

Unaudited Condensed Statements of Convertible Preferred Stock and Stockholders’

Equity (Deficit)

For the Three Months Ended June 30, 2022 and 2021

(in thousands, except share data)

Comprehensive

Stockholders’

Balance at March 31, 2022

Exercise of common stock options

Shares issued under employee stock purchase plan

Vesting of restricted shares

Stock-based compensation

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

Balance at June 30, 2022

Convertible Preferred Stock

Comprehensive

Stockholders’

Balance at March 31, 2021

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

Vesting of restricted shares

Stock-based compensation

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

Balance at June 30, 2021

See accompanying notes.

2 unchanged sentences

(in thousands)

Three Months Ended

Six 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

8 unchanged sentences

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

Net cash (used in) provided by operating activities

Net cash used in operating activities

Cash flows from investing activities

5 unchanged sentences

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 and employee stock purchase plan

Payment of initial public offering costs

Proceeds from initial public offering, net of issuance costs

Net cash provided by financing activities

4 unchanged sentences

Supplemental disclosure of noncash investing and financing activities

Unpaid fixed asset additions

Conversion of convertible preferred stock in connection with initial public offering

Unpaid property and equipment

Vesting of restricted common stock

Unpaid equity issuance costs

Unrealized loss on short-term investments

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

Operating lease liabilities arising from right-of-use assets

See accompanying notes.

4 unchanged sentences

(the “Company”) was incorporated in the State of Delaware in June 2017 and is based in San Diego, California.

The Company is a preclinical stage biopharmaceutical company developing a broad pipeline of novel immunotherapies by applying its proprietary technology to its Tumor Activated T Cell Engager ("TRACTr") and Tumor Activated Immunomodulator ("TRACIr") platforms to better treat patients suffering from cancer.

Forward Stock Split

In June 2021, the Company’s board of directors and stockholders approved an amendment to the Company’s certificate of incorporation to effect a forward split of shares of the Company’s common stock on a one-for- 1.281 basis, which was effected on June 4, 2021 (the “Forward Stock Split”).

The number of authorized shares and the par values of the common stock and convertible preferred stock were not adjusted as a result of the Forward Stock Split.

The accompanying financial statements and notes to the financial statements give retroactive effect to the Forward Stock Split for all periods presented .

The Company is a clinical stage biopharmaceutical company developing a broad pipeline of novel immunotherapies by applying its proprietary technology to its Tumor Activated T Cell Engager ("TRACTr") and Tumor Activated Immunomodulator ("TRACIr") platforms to better treat patients suffering from cancer.

Liquidity and Capital Resources

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 .

From its inception through June 30, 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 clinical and preclinical assets.

The Company has incurred net losses and negative cash flows from operations since inception and had an accumulated deficit of $ 77.7 million as of June 30, 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.

3 unchanged sentences

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.

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

The unaudited condensed financial statements as of June 30, 2022, and for the three and six months ended June 30, 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.

5 unchanged sentences

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.

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

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.

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 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.

1 unchanged sentence

Actual results may differ materially and adversely from these estimates.

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Fair Value Measurements

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Observable Inputs

As of March 31, 2022:

As of June 30, 2022:

Cash equivalents:

Money market funds

Commercial paper

Total cash equivalents

41 unchanged sentences

Short-term investments consist of U.S.

treasury securities, corporate debt securities and commercial paper.

treasury securities, U.S.

agency bonds, 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 investment securities as current assets.

8 unchanged sentences

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

As of March 31, 2022

As of June 30, 2022

Treasury securities

4 unchanged sentences

Commercial paper

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.

The amortized cost and estimated fair value in the table above exclude s $ 0.3 million and $ 0.2 million o f accrued interest receivable as of June 30, 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 March 31, 2022

As of June 30, 2022

Due in 1 Year or Less

1 unchanged sentence

Treasury securities

Corporate debt securities

Commercial paper

5 unchanged sentences

Commercial paper

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

As of June 30, 2022 , 38 out of 41 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.

No allowance for credit losses has been recorded as of June 30, 2022 or December 31, 2021.

Additionally, no realized gains or losses on sales of short-term investments were recorded for the three and six months ended June 30, 2022 or June 30, 2021.

Concentrations of Risk

7 unchanged sentences

financial condition and generally does not require collateral.

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.

As of June 30, 2022, and December 31, 2021, all of the Company’s accounts receivable, if any, relate to a single customer.

For the three and six months ended June 30, 2022 and June 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 (“IBR”) based on the information available at the lease commencement date in determining the present value of lease payments.

The IBR is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

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’s operating leases are subject to additional variable charges, including common area maintenance, property taxes, property insurance and other variable costs.

Given the variable nature of such costs, they are recognized as expense as incurred.

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.

The Company has elected to recognize lease incentives, such as tenant improvement allowances, at the lease commencement date as a reduction to the ROU asset and lease liabilities balance until paid to it by the lessor to the extent that the lease provides a specified fixed or maximum level of reimbursement and the Company is reasonably certain to incur reimbursable costs at least equaling such amounts.

Revenue Recognition

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If a promise to transfer a product or a service is not separately identifiable from other promises in the contract, such promises should be combined into a single performance obligation.

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

The transaction price is the amount of consideration the Company is entitled to receive in exchange for the transfer of control of a product or a service to a customer.

12 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

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

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 reflected in the accompanying balance sheets as prepaid expenses.

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

12 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 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.

The Company has excluded weighted-average unvested shares of 197,515 shares, 589,054 shares, 252,335 shar es and 447,465 shares from the weighted-average number of common shares outstanding for the three months ended June 30, 2022 and 2021 and six months ended June 30, 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.

For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding as inclusion of the potentially dilutive securities would be anti-dilutive.

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

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):

Convertible preferred stock outstanding

Common stock options

10 unchanged sentences

Property and equipment, net

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Accrued liabilities consist of the following (in thousands):

6 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 (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’

4 unchanged sentences

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

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

The Cell Line License Agreement will continue indefinitely unless terminated (i) by the Company upon three months’

5 unchanged sentences

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

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):

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

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

According to accounting standards, the Torrey Plaza Lease commenced on April 1, 2022 and has a term of 130 months from the commencement date.

The lease provides an option to extend the term of the lease for a period of 5 years beyond the initial term, which the Company is not reasonably certain to exercise and therefore was not considered in determining the ROU assets and lease liabilities balance.

As required under the terms of the Torrey Plaza 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 contractual lease commencement date.

Future minimum noncancelable operating lease payments (incentives) as of June 30, 2022 are as follows (in thousands):

2022 (remaining)

Total minimum lease payments

Imputed interest

Lease incentives

Total operating lease liabilities

1 unchanged sentence

Operating lease liabilities, net of current portion

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):

The Company’s operating leases had a weighted-average remaining lease term of 10.5 years as of June 30, 2022 , and a weighted-average discount rate of 8 % as of June 30, 2022.

Operating lease expense included in the measurement of lease liabilities for three and six months ended June 30, 2022 was $ 0.9 million and $ 1.0 million, respectively.

Cash paid for amounts included in the measurement of lease liabilities for three and six months ended June 30, 2022 was immaterial.

No operating lease expense was recorded during the three and six months ended June 30, 2021 as the Company had no operating leases that had commenced during that period.

Contingencies

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

COI is a shared service company that provides certain back-office and administrative and research and development support services, including facilities support, to the portfolio companies of Avalon Ventures, a stockholder of the Company.

COI is a shared service company that provides certain back-office and administrative and research and development

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

support services, including facilities support, to the portfolio companies of Avalon Ventures, a stockholder of the Company.

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

5 unchanged sentences

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)

Expense recognized by the Company under the 2017 Support Services Agreement and the 2021 Support Services Agreement for the three and six months ended June 30, 2022 and 2021 was as follows (in thousands):

Three Months Ended

Six Months Ended

Research and development

17 unchanged sentences

2021 Equity Incentive Plan

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

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

6 unchanged sentences

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)

As of June 30, 2022, there were 6,407,967 shares authorized for issuance under the 2021 Plan, inclusive of shares added from 2017 Plan cancellations.

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

4 unchanged sentences

Forfeited or cancelled

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.

Balance at June 30, 2022

Vested and expected to vest at June 30, 2022

Exercisable at June 30, 2022

The weighted-average grant date fair value per share of option grants for the six months ended June 30, 2022 and 2021 was $ 12.65 and $ 6.45 , respectively.

The total intrinsic value of stock options exercised for the six months ended June 30, 2022 and 2021 was $ 0.1 mil lion and $ 1.0 million, respectively.

As of June 30, 2022, total unrecognized stock-based compensation cost associated with option grants was $ 51.7 million, which is expected to be recognized over a remaining weighted-average period of approximately 2.9 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:

Three Months Ended

Six Months Ended

Risk-free interest rate

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81 % –

83 % –

Expected term (in years)

8 unchanged sentences

The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available.

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Expected term .

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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;

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

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.

For the three and six months ended June 30, 2022, stock-based compensation expense related to t he ESPP was $ 0.2 million and $ 0.3 million, re spectively.

Stock-based compensation expense related to the ESPP for the three and six months ended June 30, 2021 was immaterial.

As of June 30, 2022, total unrecognized stock-based compensation expense related to the ESPP was $ 0.9 millio n, which is expected to be recognized over a remaining weighted-average period of approximately 1.9 years.

Stock-Based Compensation Expense

1 unchanged sentence

Three Months Ended

Six Months Ended

Research and development

6 unchanged sentences

Vested shares

Balance at March 31, 2022

Balance at June 30, 2022

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Common Stock Reserved for Future Issuance

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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.

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

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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 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 up to 3 % of eligible employees’

compensation.

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

Subsequent Events

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.

The Company concluded that Merck represented a customer and has accounted for the initial units of account in accordance with FASB’s Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”).

As it relates to Merck's option to select a Second Collaboration Target, the Company concluded that this option represented a customer option to purchase additional goods or services that is not a material right and, therefore, is accounted for as a separate contract and separate performance obligation upon exercise of the option during the three months ended June 30, 2022 to purchase the additional goods or services.

The Company identified its performance obligations under the Merck Agreement and each Collaboration Target as the grant to Merck of an exclusive license to certain of its intellectual property subject to certain conditions, its conduct of research services and the Company’s participation in a joint research committee.

The Company determined that these performance obligations should be accounted for as one combined performance obligation for each Collaboration Target since they are not distinct.

The Company also determined that the combined performance obligation for each Collaboration Target is transferred over the expected term of the conduct of the research services.

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

In accordance with ASC 606, the Company determined that the transaction price under the Merck Agreement for the First Collaboration Target is $ 11.4 million, consisting of the upfront, non-refundable and non-creditable payment of $ 8.0 million and the aggregate estimated reimbursable research program funding for the First Collaboration Target of $ 3.4 million.

The transaction price for the Second Collaboration Target will include the non-refundable and non-creditable payment of $ 8.0 million received upon Merck’s selection, and the aggregate estimated reimbursable research program funding.

No significant work was performed related to the Second Collaboration Target as of June 30, 2022.

The Company concluded that there was not a significant financing component under the Merck Agreement.

With respect to the remaining variable consideration within the Merck Agreement, including milestone and royalty payments, the Company determined that as of June 30, 2022 these payments were probable of significant revenue reversal as their achievement is highly dependent on factors outside the Company’s control.

Therefore, this aggregate consideration has been fully constrained and is therefore not included in the transaction price.

At the end of each subsequent reporting period, the Company will re-evaluate the probability of achievement of each milestone and any related constraint, and if necessary, adjust its estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis, which would affect the reported amount of revenues in the period of adjustment.

The aggregate amount of the transaction price allocated to the performance obligations that were unsatisfied (or partially unsatisfied) as of June 30, 2022 was $ 1.1 million for the First Collaboration Target.

Consideration received for each Collaboration Target is recorded as deferred revenue and recognized as revenue over time in conjunction with the Company’s conduct of research services as the research services are the primary component of the combined performance obligations for each Collaboration Target.

Revenue associated with the upfront payment and research program funding for each Collaboration Target is recognized based on actual total full-time equivalent employees (“FTEs”) utilized as a percentage of total FTEs expected to be utilized over the expected term of conduct of the research services performed for each respective Collaboration Target.

The Company estimates the remaining term of these research services, over which revenue will be recognized, to be 0.8 years for the First Collaboration Target and 2.2 years for the Second Collaboration Target as of June 30, 2022.

The Company recognized $ 2.4 million, $ 0.5 million, $ 4.0 million, and $ 0.9 million of revenue under the Merck Agreement for the three months ended June 30, 2022 and 2021 and six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022 , aggregate deferred revenue related to the Merck Agreement was $ 10.7 million, $ 5.4 million of which was classified as current.

The Company did no t have an accounts receivable balance outstanding as of June 30, 2022 and December 31, 2021, respectively.

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

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

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

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).

We recently submitted and received FDA clearance for 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.

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We do not have any products approved for sale and have not generated any revenue from product sales.

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.

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 (IPO) 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.

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 $204.2 million.

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

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 were $30.3 million and $8.5 million for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, we had an accumulated deficit of $77.7 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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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.

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

In return, we are eligible to receive up to $500.5 million per target in upfront and milestone payments, plus royalties on sales of the products derived 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 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.

We recognized $4.0 million and $0.9 million of revenue under the Merck Agreement for the six months ended June 30, 2022 and 2021, respectively.

Research and Development

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Our direct research and development expenses include:

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

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

license fees;

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

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

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

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

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Results of Operations

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

Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2022 and 2021

Three Months Ended June 30,

(in thousands)

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Collaboration Revenue

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

Collaboration revenues were $2.4 million and $0.5 million for the three months ended June 30, 2022 and 2021, respectively.

The increase of $1.9 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 $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,

The following table summarizes our direct and indirect research and development expenses for the three months ended June 30, 2022 and 2021:

Three Months Ended June 30,

(in thousands)

Direct costs:

Preclinical costs

Total direct costs

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.

An investigational new drug application for JANX007 was cleared by the FDA in the second quarter of 2022.

As a result, we have separated direct costs for the development of JANX007 from preclinical programs for the period ended June 30, 2022 and, for comparability purposes, the period ended June 30, 2021.

This change in presentation had no effect on net loss, total research and development expenses, stockholders' equity, or cash flows as previously reported.

Research and development expenses were $14.1 million and $4.7 million for the three months ended June 30, 2022 and 2021, respectively.

The increase of $9.4 million was primarily due to increases in direct costs related to our preclinical programs of $5.4 million, personnel costs of $1.7 million, stock-based compensation expense of $1.4 million, and facilities and related costs of $0.9 million, as operations grew in support of program advances, including commencement of the Torrey Plaza lease.

General and Administrative Expense

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 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.

General and administrative expenses were $5.5 million and $2.0 million for the three months ended June 30, 2022 and 2021, respectively.

The increase of $3.5 million was primarily due to increases in stock-based compensation of $1.8 million, personnel and facilities related costs of $0.7 million, and other general and administrative expenses of $1.0 million, as we now operate as a public company.

Other income of $0.4 million for the three months ended June 30, 2022 consisted of interest income on our cash and cash equivalents and short-term investments.

Other income for the three months ended June 30, 2021 was immaterial.

Comparison of the Six Months Ended June 30, 2022 and 2021

Six Months Ended June 30,

(in thousands)

Collaboration revenue

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income:

Interest income

Total other income

Collaboration Revenue

Collaboration revenues were $4.0 million and $0.9 million for the six months ended June 30, 2022 and 2021, respectively.

The increase of $3.1 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

The following table summarizes our direct and indirect research and development expenses for the six months ended June 30, 2022 and 2021:

Six Months Ended June 30,

(in thousands)

Direct costs:

Preclinical costs

Total direct costs

Indirect costs

Total research and development expenses

An investigational new drug application for JANX007 was cleared by the FDA in the second quarter of 2022.

This change in presentation had no effect on net loss, total research and development expenses, stockholders' equity, or cash flows as previously reported.

Research and development expenses were $24.3 million and $6.7 million for the six months ended June 30, 2022 and 2021, respectively.

The increase of $17.6 million was primarily due to increases in direct costs related to the development of JANX007 of $0.4 million, direct costs related to the development of our preclinical programs of $9.5 million, personnel costs of $3.4 million, stock-based compensation expense of $3.0 million, and facilities and other costs of $1.3 million, as operations grew in support of program advances, including commencement of the Torrey Plaza lease.

General and Administrative Expense

General and administrative expenses were $10.5 million and $2.7 million for the six months ended June 30, 2022 and 2021, respectively.

The increase of $7.8 million was primarily due to increases in stock-based compensation of $4.0 million, personnel and facilities related costs of $1.5 million, and other general and administrative expenses of $2.3 million, as we now operate as a public company.

Other income of $0.5 million for the six months ended June 30, 2022 consisted of interest income on our cash and cash equivalents and short-term investments.

Other income for the six months ended June 30, 2021 was immaterial.

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 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.

As of June 30, 2022, we had cash, cash equivalents, restricted cash and short-term investments of $355.1 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:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

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Operating Activities

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.

Net cash used in operating activities of $17.6 million for the six months ended June 30, 2022 was primarily due to our net loss of $30.3 million, adjusted for $8.4 million of stock-based compensation expense and a change in operating assets and liabilities and other non-cash charges of $4.3 million.

Net cash used in operating activities of $0.6 million for the six months ended June 30, 2021 was primarily due to our net loss of $8.5 million, adjusted for $1.4 million of noncash charges and a change in operating assets and liabilities of $6.5 million.

Investing Activities

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.

Net cash provided by investing activities of $40.1 million for the six months ended June 30, 2022 was primarily due to $42.0 million of net maturities of short-term investments offset by our purchase of property and equipment, primarily consisting of laboratory equipment of $1.9 million.

Net cash used in investing activities of $142.7 million for the six months ended June 30, 2021 was primarily due to our purchase of short-term investments of $142.5 million and our purchase of property and equipment of $0.2 million.

Financing Activities

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.

Net cash provided by financing activities of $0.3 million for the six months ended June 30, 2022 was primarily due to proceeds from shares issued under our employee stock purchase plan.

Net cash provided by financing activities of $387.2 million for the six months ended June 30, 2021 was primarily due to $205.0 million of net proceeds from our IPO, $180.5 million of net proceeds from our preferred stock sales and $1.7 million of proceeds from stock option exercises.

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 JANX007, JANX008, 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 planned clinical trial for JANX007 and the IND-enabling studies and planned future clinical trials for JANX008, TROP2-TRACTr and TRACIr costimulatory bispecific;

the number and characteristics of clinical programs that we pursue;

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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.

The Torrey Plaza Lease commenced in July 2022.

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

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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.

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

These contracts provide for termination upon notice.

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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 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.

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 revenues, 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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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.

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