What changed in this filing

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Item 1. Financial Statements

2023-05-09 compared with 2022-11-10 · 209 added, 305 removed, 563 unchanged (48% of the section changed)

3 unchanged sentences

(in thousands, except share and par value data)

September 30,

Current assets:

24 unchanged sentences

10,000,000 at

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

March 31, 2023 and December 31, 2022, respectively;

no shares issued

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

and outstanding at March 31, 2023 and December 31, 2022

Common stock, $ 0.001 par value;

1 unchanged sentence

200,000,000 at

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

March 31, 2023 and December 31, 2022, respectively;

issued shares –

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

and 41,684,666 at March 31, 2023 and December 31, 2022, respectively;

shares –

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

41,802,807 and 41,616,260 at March 31, 2023 and December 31, 2022,

Additional paid-in capital

8 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Collaboration revenue

Operating expenses:

Research and development (includes related party

amounts of $ 134 , $ 416 , $ 539 and $ 1,325 , respectively)

General and administrative (includes related party

amounts of $ 21 , $ 62 , $ 85 and $ 265 , respectively)

Research and development

General and administrative

Total operating expenses

11 unchanged sentences

Janux Therapeutics, Inc.

Unaudited Condensed Statements of Conv ertible Preferred Stock and Stockholders’

Equity (Deficit)

For the Nine Months Ended September 30, 2022 and 2021

Unaudited Condensed Statements of Stockholders’

For the Three Months Ended March 31, 2023 and 2022

(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 available-for-sale securities, net

Balance at September 30, 2022

Convertible Preferred Stock

Unrealized gain on available-for-sale securities, net

Balance at March 31, 2023

Comprehensive

1 unchanged sentence

Balance at December 31, 2021

Issuance of Series A convertible preferred stock, net of

$ 278 of issuance costs

Issuance of Series B convertible preferred stock, net of

$ 175 of issuance costs

Conversion of convertible preferred stock to common stock

in connection with initial public offering

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

Exercise of common stock options

1 unchanged sentence

Stock-based compensation

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

Balance at September 30, 2021

See accompanying notes.

Janux Therapeutics, Inc.

Unaudited Condensed Statements of Convertible Preferred Stock and Stockholders’

Equity (Deficit)

For the Three Months Ended September 30, 2022 and 2021

(in thousands, except share data)

Comprehensive

Stockholders’

Balance at June 30, 2022

Vesting of restricted shares

Stock-based compensation

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

Balance at September 30, 2022

Convertible Preferred Stock

Comprehensive

Stockholders’

Balance at June 30, 2021

Vesting of restricted shares

Stock-based compensation

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

Balance at September 30, 2021

Unrealized loss on available-for-sale securities, net

Balance at March 31, 2022

See accompanying notes.

2 unchanged sentences

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities

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

Loss on disposal of assets

Stock-based compensation

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

Accretion of discounts on investments, net

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses and other current assets (includes related party amounts of $ 0 and $( 36 ), respectively)

Prepaid expenses and other current assets

Other long-term assets

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

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

Accounts payable

Accrued expenses

Deferred revenue

7 unchanged sentences

Cash flows from financing activities

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

Proceeds from initial public offering, net of issuance costs

Net cash provided by financing activities

Net increase in cash, cash equivalents and restricted cash

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

Cash, cash equivalents and restricted cash –

3 unchanged sentences

Supplemental disclosure of noncash investing and financing activities

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

Operating lease liabilities arising from right-of-use assets

See accompanying notes.

6 unchanged sentences

Liquidity and Capital Resources

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 .

From its inception through March 31, 2023, 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 $ 127.9 million as of March 31, 2023 .

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 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.

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.

Any of these actions could materially harm the Company’s business, results of operations and future prospects.

There can be no assurance that such financing will be available or will be at terms acceptable to the Company.

There can be no assurance that such financing will be available or will be at terms acceptable to the Company, especially in light of the COVID-19 pandemic and other public health crises, current financial conditions within the banking industry, including the effects of recent failures of financial institutions and liquidity levels, as well as recent or anticipated changes in interest rates and the inflationary macro environment.

Management believes the Company has sufficient capital to fund its operation for at least 12 months from the issuance date of these unaudited condensed financial statements.

Unaudited Interim Financial Information

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.

The unaudited condensed financial statements as of March 31, 2023, and for the three months ended March 31, 2023 and 2022, 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.

7 unchanged sentences

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

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

The Company continues to use the best information available to update its accounting estimates.

Actual results may differ materially and adversely from these estimates.

25 unchanged sentences

Observable Inputs

As of September 30, 2022:

As of March 31, 2023:

Cash equivalents:

3 unchanged sentences

Treasury securities

agency discount notes

Asset-backed securities

Corporate debt securities

Commercial paper

16 unchanged sentences

Money market funds

Commercial paper

Total cash equivalents

1 unchanged sentence

Treasury securities

agency discount notes

Corporate debt securities

11 unchanged sentences

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

4 unchanged sentences

Treasury securities, U.S.

agency bonds, corporate debt securities and commercial paper.

agency bonds, U.S.

agency discount notes, asset-backed securities, corporate debt securities and commercial paper, all of which are highly rated by Moody’s, S&P, and Fitch.

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.

1 unchanged sentence

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

equity (deficit) until realized.

equity until realized.

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

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

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

The Company records an allowance for

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

credit losses when unrealized losses are due to credit-related factors.

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

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

As of September 30, 2022

As of March 31, 2023

Treasury securities

agency discount notes

Asset-backed securities

Corporate debt securities

Commercial paper

1 unchanged sentence

Treasury securities

agency discount notes

Corporate debt securities

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

The amortized cost and estimated fair value in the tables above exclu de $ 0.7 million and $ 0.7 million o f accrued interest receivable as of March 31, 2023 and December 31, 2022, respectively.

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

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

As of September 30, 2022

As of March 31, 2023

Due in 1 Year or Less

1 unchanged sentence

Treasury securities

agency discount notes

Asset-backed securities

Corporate debt securities

Commercial paper

3 unchanged sentences

Treasury securities

agency discount notes

Corporate debt securities

Commercial paper

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.

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)

As of March 31, 2023 , 38 out of 48 of our available-for-sale debt securities were in an aggregate gross unrealized loss position.

The Company relies on both qualitative and quantitative factors to determine whether the unrealized loss for each available-for-sale debt security at any balance sheet date is due to a credit loss.

Qualitative factors may include a credit downgrade, severity of the decline in fair value below amortized cost and other adverse conditions related specifically to the security, as well as the intent to sell the security, or whether the Company will “more likely than not”

be required to sell the security before recovery of its amortized cost basis.

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 and does not intend to sell any securities prior to maturity.

No allowance for credit losses has been recorded as of March 31, 2023 or December 31, 2022.

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, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

As of March 31, 2023

Less Than 12 Months

1 unchanged sentence

Treasury securities

Asset-backed securities

Corporate debt 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

As of December 31, 2022

Less Than 12 Months

12 Months or Longer

Treasury securities

Corporate debt securities

Commercial paper

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and short-term investments.

The Company maintains deposits in a federally insured financial institution in excess of federally insured limits.

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.

The Company invests its cash reserves in money market funds or available-for-sale debt securities in accordance with its investment policy.

The Company’s investment policy includes guidelines on acceptable investment securities, limits interest-bearing security investments to certain types of debt and money market instruments issued by the U.S.

government and institutions with investment grade credit ratings and places restrictions on maturities and concentration by asset class and issuer in order to maintain appropriate diversification.

In accordance with the Company’s policies, the Company monitors exposure with its counterparties.

The Company also maintains deposits in federally insured financial institutions in excess of federally insured limits.

The Company has not experienced any losses in such account and management believes that the Company is not exposed to significant credit risk.

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 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.

As of March 31, 2023, and December 31, 2022, all of the Company’s accounts receivable, if any, relate to a single customer.

For the three months ended March 31, 2023 , all of the Company’s revenue related to a single customer.

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

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

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.

9 unchanged sentences

If a significant financing component exists, the transaction price is adjusted for the time value of money.

If an element of variability exists, the Company must estimate the consideration it expects to receive and uses that amount as the basis for recognizing revenue as the product or the service is transferred to the customer.

If an element of variability exists, the Company must estimate the consideration it expects to receive and uses that amount as the basis for recognizing revenue as the

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

product or the service is transferred to the customer.

There are two methods for determining the amount of variable consideration:

14 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

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.

2 unchanged sentences

The only component of other comprehensive loss is unrealized gain (loss) on available-for-sale securities.

Comprehensive losses have been reflected in the statements of operations and comprehensive loss and as a separate component in the statements of convertible preferred stock and stockholders’

equity (deficit).

Comprehensive losses have been reflected in the statements of operations and comprehensive loss and as a separate component in the statements of stockholders’

Net Loss Per Share

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 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.

The Company has excluded weighted-average unvested shares of 49,457 shares and 307,765 shares from the weighted-average number of common shares outstanding for the three months ended March 31, 2023 and 2022, respectively.

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

1 unchanged sentence

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

September 30,

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Common stock options

4 unchanged sentences

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

September 30,

Laboratory equipment

6 unchanged sentences

Accrued liabilities consist of the following (in thousands):

September 30,

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

Accrued compensation

Accrued research and development

Other accrued liabilities

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Accrued liabilities

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’

1 unchanged sentence

Operating Leases

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

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

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

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

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

5 unchanged sentences

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 September 30, 2022 are as follows (in thousands):

Janux Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements–(Continued)

Future minimum noncancelable operating lease payments as of March 31, 2023 are as follows (in thousands):

2023 (remaining)

1 unchanged sentence

Imputed interest

Lease incentives

Total operating lease liabilities

1 unchanged sentence

Operating lease liabilities, net of current portion

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.

The Torrey Plaza lease had a remaining lease term of 9.8 years and a discount rate of 8 % as of March 31, 2023.

Operating lease expense included in the measurement of lease liabilities for the three months ended March 31, 2023 was $ 0.9 million.

Cash paid for amounts included in the measurement of lease liabilities for the three months ended March 31, 2023 was $ 0.3 million.

Operating lease expense and cash paid for amounts included in the measurement of lease liabilities for the three months ended March 31, 2022 were immaterial.

Contingencies

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

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

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

As of March 31, 2023 , the Company is not currently party to any material legal proceedings.

Related Party Transactions

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

In January 2021, the Company entered into a Support Services Agreement (the "2021 Support Services Agreement") with COI Pharmaceuticals, Inc.

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

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.

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

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

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

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

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

The 2021 Support Services Agreement was most recently renewed in January 2023 and will continue to renew for additional one-year renewal periods until terminated by the parties.

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

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

Three 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’

Equity (Deficit)

Convertible Preferred Stock

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

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

Initial Public Offering

In June 2021, the Company completed its IPO selling 13,110,000 shares its common stock at $ 17.00 per share.

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

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

Operating expense recognized by the Company under the 2021 Support Services Agreement for the three months ended March 31, 2023 was immaterial.

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

Three Months Ended March 31, 2022

Research and development

General and administrative

Stockholders’

Shelf Registration Statement

In August 2022, the Company filed a shelf registration statement (File No.

333-266720), which was declared effective in September 2022.

The shelf registration statement provides the Company with the ability to offer up to $ 400.0 million of certain securities, including shares of its common stock, from time to time.

The specific terms of any offering under the shelf registration statement are established at the time of such offering.

Additionally, in August 2022, the Company entered into an Open Market Sale Agreement SM (“Sale Agreement”) with Jefferies LLC (“Jefferies”) to sell shares of common stock, from time to time, through an “at the market offering”

program having an aggregate offering price of up to $ 100.0 million through which Jefferies would act as sales agent.

As of March 31, 2023, $ 100.0 million of common stock remained available for sale under the Sale Agreement.

On May 5, 2023 , the Company delivered written notice to Jefferies of its decision to terminate the Sale Agreement, which termination was effective immediately on the date of delivery.

2017 Equity Incentive Plan

13 unchanged sentences

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

In addition, the number of shares of common stock available for issuance under the 2021 Plan 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 September 30, 2022, there were 6,407,967 shares authorized for issuance under the 2021 Plan, inclusive of shares added from 2017 Plan cancellations.

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 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, 2023 , there were 8,759,876 shares authorized for issuance under the 2021 Plan, inclusive of shares added from 2017 Plan cancellations.

Janux Therapeutics, Inc.

6 unchanged sentences

Forfeited or cancelled

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:

Nine Months Ended

September 30,

Balance at March 31, 2023

Vested and expected to vest at March 31, 2023

Exercisable at March 31, 2023

The weighted-average grant date fair value per share of option grants for the three months ended March 31, 2023 and 2022 was $ 10.21 , and $ 14.02 , respectively.

The total intrinsic value of stock options exercised for the three months ended March 31, 2023 and 2022 was $ 1.5 million and $ 0.1 million, respectively.

As of March 31, 2023 , total unrecognized stock-based compensation cost associated with option grants was $ 52.7 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 the Plans were as follows:

Three Months Ended

Risk-free interest rate

3 unchanged sentences

84 % –

83 % –

Expected term (in years)

22 unchanged sentences

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;

automatically increases on January 1 of each calendar year 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 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.

For the three months ended March 31, 2023 and 2022, stock-based compensation expense related to the ESPP was immaterial.

As of March 31, 2023 , total unrecognized stock-based compensation expense related to the ESPP was $ 1.0 million, which is expected to be recognized over a remaining weighted-average period of approximately 1.4 years.

Stock-Based Compensation Expense

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Three Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

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Balance at December 31, 2022

Early exercised shares

Vested shares

Balance at September 30, 2022

Balance at March 31, 2023

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance consists of the following:

September 30,

Common stock options outstanding

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Research Collaboration and Exclusive License Agreement

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

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

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

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

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

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

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

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

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

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.

(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 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, 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.

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.

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 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 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.

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 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

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.

The Company recognized $ 2.0 million and $ 1.6 million of revenue under the Merck Agreement for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023 , aggregate deferred revenue related to the Merck Agreement was $ 6.3 million, $ 4.9 million of which was classified as current.

The Company had $ 0.8 million and $ 0 of accounts receivable outstanding as of March 31, 2023 and December 31, 2022, 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 for the Second Collaboration Target.

The performance obligations related to the First Collaboration Target were completed as of March 31, 2023.

As it relates to the Second Collaboration Target, the Company estimates the remaining term of the research services, over which revenue will be recognized, to be 1.4 years as of March 31, 2023.

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

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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).

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.

In October 2022, the first patient was dosed with our PSMA-TRACTr (JANX007) in our 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.

In April 2023, the first patient was dosed with our EGFR-TRACTr (JANX008) in our first-in-human Phase 1 clinical trial in patients with advanced or metastatic solid tumors including colorectal cancer, squamous cell carcinoma of the head and neck, non-small cell lung cancer, and renal cell carcinoma.

For our TROP2-TRACTr we expect to select a development candidate in 2023.

We are also applying our proprietary technology to develop a TRACIr costimulatory bispecific product candidate (JANX009) 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.

We expect to submit an Investigational New Drug application (IND) for this product candidate in 2023.

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

We 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.

To date, we have devoted substantially all of our resources to organizing and staffing our company, business planning, business development, raising capital, developing and optimizing our technology platform, identifying potential product candidates, undertaking research and preclinical studies for our lead programs, establishing and enhancing our intellectual property portfolio and providing general and administrative support for these operations.

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

To date, we have devoted substantially all of our resources to organizing and staffing our company, business planning, business development, raising capital, developing and optimizing our technology platform, identifying potential product candidates, undertaking research and development for our lead programs, establishing and enhancing our intellectual property portfolio and providing general and administrative support for these operations.

All of our product candidates and research programs other than JANX007 and JANX008 are in preclinical development, and none have been approved for commercial sale.

We have never generated any revenue from product sales and have incurred net losses each year since we commenced operations.

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 IPO and sold 13,110,000 shares of our common stock at $17.00 per share.

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

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

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

Our net losses were $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.

Our net losses were $17.5 million and $13.4 million for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, we had an accumulated deficit of $127.9 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 clinical and preclinical studies and our expenditures on other research and development activities and the timing of any revenue recognition under our collaboration agreement with Merck.

We expect our expenses and operating losses will increase substantially and that we will continue to incur significant losses for the foreseeable future as we conduct our ongoing and planned research and development activities and conduct preclinical studies and clinical trials, hire additional personnel, protect our intellectual property and incur additional costs associated with being a public company.

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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 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.

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.

Support Services Agreement with COI Pharmaceuticals, Inc.

In January 2021, we entered into a Support Services Agreement (the 2021 Support Services Agreement) with COI Pharmaceuticals, Inc.

(COI), pursuant to which COI provides certain services to us, including general administrative services and facilities support services, and provides us with supplies and equipment, laboratory facilities, and office space.

The amounts paid to COI include support service fees or mark-ups of up to 5%.

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

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

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

Based on our current operating plan, we believe that our existing cash and cash equivalents and short-term investments, will be sufficient to meet our anticipated cash requirements through at least the next 12 months, following the date of this Quarterly Report.

Our Research Collaboration with Merck

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

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

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

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

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Merck provides research funding under the collaboration.

Risks and Uncertainties

Global economic and business activities continue to face widespread macroeconomic uncertainties, including those associated with the COVID-19 pandemic and other public health crises, bank failures, inflation and monetary supply shifts, recession risks and potential disruptions from the ongoing Russia-Ukraine conflict and related sanctions.

For example, in 2023, the Federal Deposit Insurance Corporation took control and was appointed receiver of certain financial institutions.

If other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition.

Inflation generally affects us by increasing our salaries and fees paid to third-party contract service providers.

We have considered potential impacts arising from the risks and uncertainties as described above and have not experienced any material disruption to our operations to date.

Support Services Agreement with COI Pharmaceuticals, Inc.

In January 2021, we entered into a Support Services Agreement (the 2021 Support Services Agreement) with COI Pharmaceuticals Inc.

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

The amounts paid to COI include support service fees or mark-ups of up to 5%.

The 2021 Support Services Agreement was most recently renewed in January 2023 and will continue to renew for additional one-year renewal periods until terminated by the parties.

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

Financial Operations Overview

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

We recognized $2.0 million and $1.6 million of revenue under the Merck Agreement for the three months ended March 31, 2023 and 2022, respectively.

Research and Development

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

To date, our research and development expenses have related primarily to direct and indirect expenses in connection with the development of our TRACTr and TRACIr platforms, discovery efforts and preclinical and clinical development of our product candidates.

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

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We anticipate that our research and development expenses will substantially increase for the foreseeable future as we continue the development of our TRACTr and TRACIr platforms and the discovery and development of product candidates under our TRACTr and TRACIr platforms.

We cannot determine with certainty the timing of initiation, the duration or the completion costs of future clinical trials and preclinical studies of product candidates due to the inherently unpredictable nature of preclinical and clinical development.

We cannot determine with certainty the timing of initiation, the duration or the completion costs of clinical trials and preclinical studies of product candidates due to the inherently unpredictable nature of preclinical and clinical development.

Preclinical and clinical development timelines, the probability of success and development costs can differ materially from expectations.

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Our general and administrative expenses include amounts paid to COI for certain back-office and administrative support services, including facilities support.

We anticipate that our general and administrative expenses will substantially increase for the foreseeable future as we continue to increase our general and administrative headcount to support our continued research and development activities and, if any of our product candidates receive marketing approval, commercialization activities.

We anticipate that our general and administrative expenses will increase for the foreseeable future as we continue to increase our general and administrative headcount to support our continued research and development activities and, if any of our product candidates receive marketing approval, commercialization activities.

We also anticipate increased expenses associated with operating as a public company, including expenses related to audit, legal, regulatory, and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs.

Interest Income

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

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

Results of Operations

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

Three Months Ended September 30,

(in thousands)

Collaboration revenue

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income:

Interest income

Total other income

Collaboration Revenue

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 September 30, 2022 and 2021:

Three Months Ended September 30,

(in thousands)

Direct costs:

Preclinical stage programs and other direct unallocated costs

Total direct costs

Indirect costs

Total research and development expenses

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 $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 $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,

Comparison of the Three Months Ended March 31, 2023 and 2022

Three Months Ended March 31,

(in thousands)

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Loss from operations

Other income:

Interest income

Total other income

Collaboration Revenue

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

Collaboration revenues were $2.0 million and $1.6 million for the three months ended March 31, 2023 and 2022, respectively.

The increase of $0.4 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 nine months ended September 30, 2022 and 2021:

Nine Months Ended September 30,

The following table summarizes our direct and indirect research and development expenses for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

(in thousands)

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Total research and development expenses

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

IND applications for JANX007 and JANX008 were cleared by the U.S.

Food and Drug Administration (FDA) in May 2022 and January 2023, respectively.

As a result, we have separated direct costs for the development of JANX007 and JANX008 from preclinical stage programs and other direct unallocated costs for the three months ended March 31, 2023 and 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 $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.

These changes 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 $15.9 million and $10.2 million for the three months ended March 31, 2023 and 2022, respectively.

The increase of $5.7 million was primarily due to increases in indirect costs of $3.1 million, preclinical stage programs and other unallocated direct costs of $2.9 million and direct costs related to JANX007 of $0.6 million, offset by decreases in direct costs related to JANX008 of $0.9 million.

The increase in indirect costs was primarily due to personnel costs of $1.2 million, stock-based compensation expense of $0.7 million, and facilities and other costs of $1.2 million as operations grew in support of program advances.

General and Administrative Expense

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.

General and administrative expenses were $6.5 million and $4.9 million for the three months ended March 31, 2023 and 2022, respectively.

The increase of $1.6 million was primarily due to increases in stock-based compensation of $0.8 million and personnel and facilities related costs of $0.8 million.

Other income was $2.8 million and $0.1 million for the three months ended March 31, 2023 and 2022, respectively.

The increase of $2.7 million was due to the impact of increases in interest rates on our debt securities, resulting in increased interest income.

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

As of March 31, 2023, we had cash, cash equivalents, restricted cash and short-term investments of $317.7 million.

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

In August 2022, we filed a shelf registration statement (File No.

333-266720), which was declared effective in September 2022.

The shelf registration statement provides us with the ability to offer up to $400.0 million of certain securities, including shares of our common stock, from time to time.

The specific terms of any offering under the shelf registration statement are established at the time of such offering.

Additionally, in August 2022, we entered into an Open Market Sale Agreement SM (Sale Agreement) with Jefferies LLC (Jefferies) to sell shares of our common stock, from time to time, through an “at the market offering”

program having an aggregate offering price of up to $100.0 million through which Jefferies would act as sales agent.

As of March 31, 2023, $100.0 million of common stock remained available for sale under the Sale Agreement.

On May 5, 2023, we delivered written notice to Jefferies of our decision to terminate the Sale Agreement, which termination was effective immediately on the date of delivery.

The following summarizes our cash flows for the periods indicated:

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

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Operating Activities

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.

Net cash used in operating activities of $13.9 million for the three months ended March 31, 2023 was primarily due to our net loss of $17.5 million and a change in operating assets and liabilities and other non-cash charges of $1.9 million, adjusted for $5.5 million of stock-based compensation expense.

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

Investing Activities

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.

Net cash used in investing activities of $8.7 million for the three months ended March 31, 2023 was primarily due to $8.4 million of net purchases of short-term investments and our purchase of property and equipment, primarily consisting of laboratory equipment of $0.3 million.

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.

Financing Activities

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.

Net cash provided by financing activities of $1.6 million for the three months ended March 31, 2023 was due to proceeds from stock option exercises.

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

Funding Requirements

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

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

We have based this estimate

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

Additionally, the process of testing product candidates in clinical trials is costly, and the timing of progress and expenses in these trials is uncertain.

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

the number and characteristics of clinical programs that we pursue;

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If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.

Contractual Obligations

Material Cash Commitments and Requirements

Contractual Obligations and Commitments

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

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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 (Buyout Option).

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 —

The royalty obligations will remain in

effect during the term of the Cell Line License Agreement so long as we have not exercised the Buyout Option.

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

Note 3 —

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of this Quarterly Report for additional information.

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.

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 commenced in July 2022.

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contained in our Annual Report on Form 10-K, filed with the SEC on March 10, 2023.

There have not been any material changes to the critical accounting policies discussed therein during the three months ended September 30, 2022.

There have not been any material changes to the critical accounting policies discussed therein during the three months ended March 31, 2023.

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