What changed in this filing

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Item 1. Financial Statements

2022-11-10 compared with 2022-08-09 · 176 added, 151 removed, 692 unchanged (32% of the section changed)

3 unchanged sentences

(in thousands, except share and par value data)

September 30,

Current assets:

Cash and cash equivalents

Accounts receivable

Short-term investments

Prepaid expenses and other current assets (includes related party amounts of $ 13 and $ 0 , respectively)

Prepaid expenses and other current assets

Total current assets

6 unchanged sentences

Accounts payable

Accrued liabilities (includes related party amounts of $ 0 and $ 32 , respectively)

Accrued liabilities

Current portion of deferred revenue

10 unchanged sentences

10,000,000 at

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

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

no shares issued

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

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

Common stock, $ 0.001 par value;

1 unchanged sentence

200,000,000 at

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

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

issued shares –

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

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

shares –

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

41,550,704 and 41,243,137 at September 30, 2022 and December 31, 2021,

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Collaboration revenue

19 unchanged sentences

Equity (Deficit)

For the Six Months Ended June 30, 2022 and 2021

For the Nine Months Ended September 30, 2022 and 2021

(in thousands, except share data)

7 unchanged sentences

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

Balance at June 30, 2022

Balance at September 30, 2022

Convertible Preferred Stock

13 unchanged sentences

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

Balance at June 30, 2021

Balance at September 30, 2021

See accompanying notes.

2 unchanged sentences

Equity (Deficit)

For the Three Months Ended June 30, 2022 and 2021

For the Three Months Ended September 30, 2022 and 2021

(in thousands, except share data)

1 unchanged sentence

Stockholders’

Balance at March 31, 2022

Exercise of common stock options

Shares issued under employee stock purchase plan

Balance at June 30, 2022

Vesting of restricted shares

1 unchanged sentence

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

Balance at June 30, 2022

Balance at September 30, 2022

Convertible Preferred Stock

1 unchanged sentence

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

Balance at June 30, 2021

Vesting of restricted shares

1 unchanged sentence

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

Balance at June 30, 2021

Balance at September 30, 2021

See accompanying notes.

2 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities

7 unchanged sentences

Other long-term assets

Accounts payable

Accounts payable (includes related party amounts of $( 36 ) and $ 0 , respectively)

Accrued expenses (includes related party amounts of $( 16 ) and $( 544 ), respectively)

17 unchanged sentences

Cash, cash equivalents and restricted cash –

end of period

Supplemental disclosure of noncash investing and financing activities

13 unchanged sentences

Liquidity and Capital Resources

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 .

From its inception through September 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 $ 94.4 million as of September 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.

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 COVID-19 pandemic continues to evolve and has 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 the Company in the future.

4 unchanged sentences

Unaudited Interim Financial Information

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.

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

35 unchanged sentences

Observable Inputs

As of June 30, 2022:

As of September 30, 2022:

Cash equivalents:

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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):

September 30,

Cash and cash equivalents

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

As of June 30, 2022

As of September 30, 2022

Treasury securities

4 unchanged sentences

Commercial paper

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.

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 September 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 June 30, 2022

As of September 30, 2022

Due in 1 Year or Less

8 unchanged sentences

Commercial paper

As of June 30, 2022 , 38 out of 41 of our available-for-sale debt securities were in an aggregate gross unrealized loss position.

As of September 30, 2022 , 39 out of 41 o f 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 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.

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

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

The following table summarizes our available-for-sale debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded at September 30, 2022 , aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Less than 12 Months

12 Months or Longer

Treasury securities

Commercial paper

There were no a vailable-for-sale debt securities in a continuous unrealized loss position for 12 months or longer at December 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 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.

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

For the three and nine months ended September 30, 2022 and 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.

18 unchanged sentences

In doing so, the Company follows a five-step approach:

(i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) the customer obtains control of the product or service.

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

revenue when (or as) the customer obtains control of the product or service.

The Company considers the terms of a contract and all relevant facts and circumstances when applying the revenue recognition standard.

6 unchanged sentences

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.

18 unchanged sentences

Stock-Based Compensation

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.

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

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 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.

The Company has excluded weighted-average unvested shares of 136,505 shares, 477,408 shares, 213,301 shar es and 457,556 shares from the weighted-average number of common shares outstanding for the three months ended September 30, 2022 and 2021 and nine months ended September 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):

September 30,

Common stock options

4 unchanged sentences

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

September 30,

Laboratory equipment

Furniture and fixtures

Computer equipment and software

4 unchanged sentences

Accrued liabilities consist of the following (in thousands):

September 30,

Accrued compensation (including related party amounts of $ 16 and $ 32 , respectively)

1 unchanged sentence

Other accrued liabilities

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Commitments and Contingencies

8 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’

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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):

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

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

2022 (remaining)

5 unchanged sentences

Operating lease liabilities, net of current portion

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.

The Company’s operating leases had a weighted-average remaining lease term of 10.3 years as of September 30, 2022 , and a weighted-average discount rate of 8 % as of September 30, 2022.

Operating lease expense included in the measurement of lease liabilities for three and nine months ended September 30, 2022 was $ 0.9 million and $ 1.9 million, respectively.

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

Operating lease expense included in the measurement of lease liabilities and cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended September 30, 2021 were immaterial.

Contingencies

4 unchanged sentences

(“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

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.

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.

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 and six months ended June 30, 2022 and 2021 was as follows (in thousands):

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

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

General and administrative

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Convertible Preferred Stock and Stockholders’

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

As of September 30, 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):

4 unchanged sentences

Forfeited or cancelled

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.

Balance at September 30, 2022

Vested and expected to vest at September 30, 2022

Exercisable at September 30, 2022

The weighted-average grant date fair value per share of option grants for the nine months ended September 30, 2022 and 2021 was $ 12.52 and $ 7.83 , respectively.

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

As of September 30, 2022 , total unrecognized stock-based compensation cost associated with option grants was $ 47.5 million, which is expected to be recognized over a remaining weighted-average period of approximately 2.7 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:

Six Months Ended

Nine Months Ended

September 30,

Risk-free interest rate

14 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 .

9 unchanged sentences

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 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

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.

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.

For the three and nine months ended September 30, 2022, stock-based compensation expense related to t he ESPP was $ 0.2 million and $ 0.4 million, re spectively.

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

As of September 30, 2022, total unrecognized stock-based compensation expense related to the ESPP was $ 0.7 millio n, which is expected to be recognized over a remaining weighted-average period of approximately 1.7 years.

Stock-Based Compensation Expense

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

6 unchanged sentences

Vested shares

Balance at June 30, 2022

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Balance at September 30, 2022

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance consists of the following:

September 30,

Common stock options outstanding

7 unchanged sentences

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.

Following the research term, Merck will have the sole right to research, develop, manufacture, and

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

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 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.

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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.

As it relates to Merck's option to select a Second Collaboration Target, which was exercised during the nine months ended September 30, 2022, 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 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.

1 unchanged sentence

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

No significant work was performed related to the Second Collaboration Target through September 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.

With respect to the remaining variable consideration within the Merck Agreement, including milestone and royalty payments, the Company determined that as of September 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.

1 unchanged sentence

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.

The aggregate amount of the transaction price allocated to the performance obligations that were unsatisfied (or partially unsatisfied) as of September 30, 2022 was $ 2.4 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.

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Collaboration Target.

The Company estimates the remaining term of these research services, over which revenue will be recognized, to be 0.5 years for the First Collaboration Target and 1.9 years for the Second Collaboration Target as of September 30, 2022.

The Company recognized $ 1.8 million, $ 1.2 million, $ 5.8 million, and $ 2.0 million of revenue under the Merck Agreement for the three months ended September 30, 2022 and 2021 and nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022 , aggregate deferred revenue related to the Merck Agreement was $ 9.7 million, $ 5.9 million of which was classified as current.

The Company had $ 0.5 million and $ 0 of accounts receivable outstanding as of September 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.

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.

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 (Quarterly Report) and the audited financial statements and related notes thereto as of and for the year ended December 31, 2021 included in our 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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Furthermore, past operating results are not necessarily indicative of results that may occur in future periods.

We are an innovative biopharmaceutical company developing a broad pipeline of novel immunotherapies by applying our proprietary technology to our Tumor Activated T Cell Engager (TRACTr) and Tumor Activated Immunomodulator (TRACIr) platforms to better treat patients suffering from cancer.

We are an innovative clinical-stage biopharmaceutical company developing a broad pipeline of novel immunotherapies by applying our proprietary technology to our Tumor Activated T Cell Engager (TRACTr) and Tumor Activated Immunomodulator (TRACIr) platforms to better treat patients suffering from cancer.

Our initial focus is on developing a novel class of T cell engagers (TCEs), and our lead product candidates are designed to target clinically validated drug targets.

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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.

In October 2022, the first patient was dosed with our PSMA-TRACTr (JANX007) in a first-in-human Phase 1 clinical trial in patients with prostate cancer and we anticipate providing an interim clinical update from the trial in the second half of 2023.

We expect to submit an IND for our EGFR-TRACTr (JANX008) in the second half of 2022, and to select a development candidate 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 and other modalities.

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 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 selected a PD-L1xCD28 TRACIr development candidate in the fourth quarter of 2021 and we expect to submit an IND for this product candidate in 2023.

We were incorporated in June 2017.

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

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 were $47.0 million and $19.3 million for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, we had an accumulated deficit of $94.4 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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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.

The extent of the impact of the COVID-19 on our business, operations and clinical development timelines and plans remains uncertain, and will depend on certain developments, including the duration and spread of the outbreak and its impact on our CROs, third-party manufacturers, and other third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel.

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

The extent of the impact of COVID-19 on our business, operations and clinical development timelines and plans remains uncertain, and will depend on certain developments, including the impact of COVID-19 on our CROs, third-party manufacturers, and other third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel.

The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.

To the extent possible, we are conducting business as usual, with necessary or advisable modifications to employee travel and remote work.

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.

To the extent possible, we are conducting business as usual.

We will continue to actively monitor the evolving situation related to COVID-19 and may take 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.

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

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

We recognized $5.8 million and $2.0 million of revenue under the Merck Agreement for the nine months ended September 30, 2022 and 2021, respectively.

Research and Development

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Results of Operations

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

Three Months Ended June 30,

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

Three Months Ended September 30,

(in thousands)

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Collaboration Revenue

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

Collaboration revenues were $1.8 million and $1.2 million for the three months ended September 30, 2022 and 2021, respectively.

The increase of $0.6 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 three months ended June 30, 2022 and 2021:

Three Months Ended June 30,

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

Three Months Ended September 30,

(in thousands)

Direct costs:

Preclinical costs

Preclinical stage programs and other direct unallocated costs

Total direct costs

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Total research and development expenses

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.

An IND application for JANX007 was cleared by the U.S.

Food and Drug Administration (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 September 30, 2022 and, for comparability purposes, the period ended September 30, 2021.

We will further separate direct costs related to our other programs as future IND applications are cleared by the FDA.

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.

Research and development expenses were $13.7 million and $8.4 million for the three months ended September 30, 2022 and 2021, respectively.

The increase of $5.3 million was primarily due to increases in preclinical stage programs and other unallocated direct costs of $2.7 million and indirect costs of $3.6 million.

The increase in indirect costs was primarily due to personnel costs of $1.5 million, facilities and related costs of $1.2 million as operations grew in support of program advances, including commencement of the office and laboratory space lease in San Diego, California (Torrey Plaza Lease), stock-based compensation expense of $0.9 million, and offset by decreases in direct costs related to JANX007 of $1.0 million.

General and Administrative Expense

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,

General and administrative expenses were $6.1 million and $3.7 million for the three months ended September 30, 2022 and 2021, respectively.

The increase of $2.4 million was primarily due to increases in stock-based compensation of $1.1 million, personnel and facilities related costs of $0.6 million, and other general and administrative expenses of $0.7 million.

Other income of $1.3 million for the three months ended September 30, 2022 consisted of interest income on our cash and cash equivalents and short-term investments.

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

Comparison of the Nine Months Ended September 30, 2022 and 2021

Nine Months Ended September 30,

(in thousands)

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Collaboration Revenue

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

Collaboration revenues were $5.8 million and $2.0 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase of $3.8 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,

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

Nine Months Ended September 30,

(in thousands)

Direct costs:

Preclinical costs

Preclinical stage programs and other direct unallocated costs

Total direct costs

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Total research and development expenses

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

An IND application for JANX007 was cleared by the FDA in the second quarter of 2022.

We will further separate direct costs related to our other programs as future IND applications are cleared by the FDA.

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.

Research and development expenses were $38.0 million and $15.1 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase of $22.9 million was primarily due to increases in preclinical stage programs and other unallocated direct costs of $12.3 million and indirect costs of $11.2 million.

The increase in indirect costs was primarily due to personnel costs of $4.9 million, stock-based compensation expense of $3.9 million, and facilities and related costs of $2.4 million as operations grew in support of program advances, including commencement of the Torrey Plaza Lease, and offset by decreases in direct costs related to JANX007 of $0.6 million.

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.

General and administrative expenses were $16.6 million and $6.4 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase of $10.2 million was primarily due to increases in stock-based compensation of $5.1 million, personnel and facilities related costs of $2.0 million, and other general and administrative expenses of $3.1 million.

Other income of $1.8 million for the nine months ended September 30, 2022 consisted of interest income on our cash and cash equivalents and short-term investments.

Other income for the nine months ended September 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 June 30, 2022, we had cash, cash equivalents, restricted cash and short-term investments of $355.1 million.

As of September 30, 2022, we had cash, cash equivalents, restricted cash and short-term investments of $339.6 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:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

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Operating Activities

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.

Net cash used in operating activities of $31.0 million for the nine months ended September 30, 2022 was primarily due to our net loss of $47.0 million, adjusted for $13.0 million of stock-based compensation expense and a change in operating assets and liabilities and other non-cash charges of $3.0 million.

Net cash used in operating activities of $6.5 million 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.

Investing Activities

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.

Net cash provided by investing activities of $59.9 million for the nine months ended September 30, 2022 was primarily due to $64.3 million of net maturities of short-term investments offset by our purchase of property and equipment, primarily consisting of laboratory equipment of $4.4 million.

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.

Financing Activities

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.

Net cash provided by financing activities of $0.3 million for the nine months ended September 30, 2022 was primarily due to proceeds from shares issued under our 2021 Employee Stock Purchase Plan.

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 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 planned clinical trial for JANX007 and the IND-enabling studies and planned future clinical trials for 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 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;

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 outcome, timing and costs of seeking FDA, European Commission and any other comparable regulatory approvals for any future drug candidates;

the costs of manufacturing our product candidates;

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our costs associated with expanding our facilities or building out our laboratory space;

the effects of the recent disruptions to and volatility in the credit and financial markets in the United States and worldwide from the COVID-19 pandemic;

the effects of the disruptions to and volatility in the credit and financial markets in the United States and worldwide from the COVID-19 pandemic or other epidemics;

the costs of operating as a public company.

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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 —

See the section within

Item 1 of Part I, “Notes to Condensed Financial Statements —

Note 3 —

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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.

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

The Torrey Plaza Lease commenced in July 2022.

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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 June 30, 2022.

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