What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-07 compared with 2024-05-08 · 68 added, 33 removed, 160 unchanged (39% of the section changed)

24 unchanged sentences

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

Our net losses were $14.8 million and $17.5 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, we had an accumulated deficit of $183.5 million.

Our net losses were $20.7 million and $35.0 million for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, we had an accumulated deficit of $189.5 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.

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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.

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 operating expenses and capital expenditure requirements through at least the next 12 months, following the date of this Quarterly Report.

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

Our Research Collaboration with Merck

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

We recognized $1.3 million and $2.0 million of revenue under the Merck Agreement for the three months ended March 31, 2024 and 2023, respectively.

We recognized $10.1 million and $3.1 million of revenue under the Merck Agreement for the six months ended June 30, 2024 and 2023, respectively.

Research and Development

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Results of Operations

Comparison of the Three Months Ended March 31, 2024 and 2023

Three Months Ended March 31,

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

Three Months Ended June 30,

(in thousands)

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Collaboration Revenue

Collaboration revenues were $1.3 million and $2.0 million for the three months ended March 31, 2024 and 2023, respectively.

The decrease of $0.7 million was primarily due to a decrease in full-time equivalent hours incurred in the performance of research services required under the Merck Agreement.

Collaboration revenues were $8.9 million and $1.1 million for the three months ended June 30, 2024 and 2023, respectively.

The increase of $7.8 million was primarily due to the achievement of a developmental milestone related to the First Collaboration Target under the Merck Agreement in June 2024.

Research and Development Expense

The following table summarizes our direct and indirect research and development expenses for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

The following table summarizes our direct and indirect research and development expenses for the three months ended June 30, 2024 and 2023:

Three Months Ended June 30,

(in thousands)

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Total research and development expenses

IND applications for JANX007 and JANX008 were cleared by the 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 June 30, 2024 and 2023.

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

Research and development expenses were $14.9 million and $14.9 million for the three months ended June 30, 2024 and 2023, respectively.

Fluctuations during the period consisted of increases in direct costs related to the development of JANX007 of $0.4 million and indirect costs of $0.4 million, offset by decreases in preclinical stage programs and other direct unallocated costs of $0.6 million and direct costs related to the development of JANX008 of $0.2 million.

General and Administrative Expense

General and administrative expenses were $7.8 million and $6.9 million for the three months ended June 30, 2024 and 2023, respectively.

The increase of $0.9 million was primarily due to increases in stock-based compensation of $0.4 million, personnel and facilities related costs of $0.2 million and other general and administrative expenses of $0.3 million.

Other income was $7.9 million and $3.2 million for the three months ended June 30, 2024 and 2023, respectively.

The increase of $4.7 million was due to an increased cash and cash equivalents balance and the impact of increases in interest rates on our debt securities, resulting in increased interest income.

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

Six Months Ended June 30,

(in thousands)

Collaboration revenue

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Collaboration Revenue

Collaboration revenues were $10.1 million and $3.1 million for the six months ended June 30, 2024 and 2023, respectively.

The increase of $7.0 million was primarily due to the achievement of a developmental milestone related to the First Collaboration Target under the Merck Agreement in June 2024 offset by a decrease 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, 2024 and 2023:

Six Months Ended June 30,

(in thousands)

Direct costs:

Preclinical stage programs and other direct unallocated costs

Total direct costs

Indirect costs

Total research and development expenses

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 six months ended June 30, 2024 and 2023.

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

Research and development expenses were $14.1 million and $15.9 million for the three months ended March 31, 2024 and 2023, respectively.

The decrease of $1.8 million was primarily due to decreases in preclinical stage programs and other direct unallocated costs of $3.2 million, offset by increases in direct costs related to the development of JANX007 of $1.1 million and indirect costs of $0.3 million.

Research and development expenses were $29.0 million and $30.8 million for the six months ended June 30, 2024 and 2023, respectively.

The decrease of $1.8 million was primarily due to decreases in preclinical stage programs and other direct unallocated costs of $3.8 million and direct costs related to the development of JANX008 of $0.3 million offset by increases in direct costs related to the development of JANX007 of $1.6 million and indirect costs of $0.7 million.

General and Administrative Expense

General and administrative expenses were $7.3 million and $6.5 million for the three months ended March 31, 2024 and 2023, respectively.

General and administrative expenses were $15.2 million and $13.3 million for the six months ended June 30, 2024 and 2023, respectively.

The increase of $1.9 million was primarily due to increases in stock-based compensation of $0.7 million, personnel and facilities related costs of $0.5 million and other general and administrative expenses of $0.7 million.

Other income was $5.4 million and $2.8 million for the three months ended March 31, 2024 and 2023, respectively.

Other income was $13.3 million and $6.1 million for the six months ended June 30, 2024 and 2023, respectively.

The increase of $7.2 million was due to an increased cash and cash equivalents balance and the impact of increases in interest rates on our debt securities, resulting in increased interest income.

1 unchanged sentence

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

As of March 31, 2024, we had cash, cash equivalents, restricted cash and short-term investments of $652.6 million.

As of June 30, 2024, we had cash, cash equivalents, restricted cash and short-term investments of $647.1 million.

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

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(BofA) 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 $150.0 million through which BofA would act as sales agent.

As of March 31, 2024, $150.0 million of common stock remained available for sale under the Sale Agreement.

In February 2024, we delivered written notice to BofA that we were suspending and terminating the prospectus related to the shares of our common stock issuable pursuant to the terms of the Sale Agreement.

As a result, we will not make any sales of its securities pursuant to the Sale Agreement, unless and until a new prospectus, prospectus supplement, or a new registration statement relating to the shares of our common stock is filed.

Other than the termination of the prospectus, the Sale Agreement remains in full force and effect.

In May 2024, we filed a shelf registration statement on Form S-3 which included a new prospectus which covers the offering, issuance and sale of up to a maximum aggregate offering price of $150.0 million of our common under the Sale Agreement.

As of June 30, 2024, $150.0 million of common stock remained available for sale under the Sale Agreement.

In July 2023, we closed an underwritten offering of 4,153,717 shares of our common stock and pre-funded warrants to purchase 583,483 shares of common stock.

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The following summarizes our cash flows for the periods indicated:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

3 unchanged sentences

Financing activities

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

Net decrease in cash, cash equivalents and restricted cash

Operating Activities

Net cash used in operating activities of $14.8 million for the three months ended March 31, 2024 was primarily due to our net loss of $14.8 million and a change in operating assets and liabilities and other non-cash charges of $5.6 million, adjusted for $5.6 million of stock-based compensation expense.

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 $24.9 million for the six months ended June 30, 2024 was primarily due to our net loss of $20.7 million and a change in operating assets and liabilities and other non-cash charges of $15.5 million, adjusted for $11.3 million of stock-based compensation expense.

Net cash used in operating activities of $29.0 million for the six months ended June 30, 2023 was primarily due to our net loss of $35.0 million and a change in operating assets and liabilities and other non-cash charges of $5.0 million, adjusted for $11.0 million of stock-based compensation expense.

Investing Activities

Net cash used in investing activities of $113.7 million for the three months ended March 31, 2024 was primarily due to $113.5 million of net purchases of short-term investments and by our purchase of property and equipment of $0.2 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 by our purchase of property and equipment of $0.3 million.

Net cash used in investing activities of $304.6 million for the six months ended June 30, 2024 was primarily due to $304.3 million of net purchases of short-term investments and by our purchase of property and equipment of $0.3 million.

Net cash provided by investing activities of $9.1 million for the six months ended June 30, 2023 was primarily due to $10.0 million of net maturities of short-term investments offset by our purchase of property and equipment, primarily consisting of laboratory equipment of $0.9 million.

Financing Activities

Net cash provided by financing activities of $322.2 million for the three months ended March 31, 2024 was primarily due to proceeds from the issuance of common stock and pre-funded common stock warrants, net of issuance costs, of $320.5 million, and exercises of common stock options of $1.7 million.

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 of $324.9 million for the six months ended June 30, 2024 was primarily due to proceeds from the issuance of common stock and pre-funded common stock warrants, net of issuance costs, of $320.1 million and proceeds from stock option exercises and shares issued under our employee stock purchase plan of $4.8 million.

Net cash provided by financing activities of $2.1 million for the six months ended June 30, 2023 was primarily due to proceeds from stock option exercises and proceeds from shares issued under our employee stock purchase plan.

Funding Requirements

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.

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

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

• the effects of the disruptions to and volatility in the credit and financial markets in the United States and worldwide resulting from geopolitical and macroeconomic conditions, including the military conflict in Ukraine and Russia, the war in the Middle East, epidemics and bank failures;

• the costs of operating as a public company.

9 unchanged sentences

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

See the section within Item 1 of Part I, “Notes to Condensed Financial Statements — Note 3 — Commitments and Contingencies” of this Quarterly Report for additional information.

See the section within Item 1 of Part I, “Notes to Unaudited Condensed Financial Statements — Note 3 — Commitments and Contingencies” of this Quarterly Report for additional information.

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

The Torrey Plaza Lease commenced in July 2022.

See the section within Item 1 of Part I, “Notes to Condensed Financial Statements — Note 3 — Commitments and Contingencies” of this Quarterly Report for additional information.

See the section within Item 1 of Part I, “Notes to Unaudited Condensed Financial Statements — Note 3 — Commitments and Contingencies” of this Quarterly Report for additional information.

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

1 unchanged sentence

Payments due upon cancellation consist only of payments for services provided or expenses incurred, including non-cancellable obligations of our service providers, up to the date of cancellation.

Smaller Reporting Company, Emerging Growth Company and Non-Accelerated Filer status

We are an “emerging growth company” as defined in the Jumpstart our Business Startups Act of 2012 (JOBS Act), and are also a “smaller reporting company” as defined in the Exchange Act.

Accordingly, we have the ability to take advantage of several scaled disclosure accommodations in accordance with smaller reporting company and emerging growth company rules as defined by the SEC.

We will remain an emerging growth company, smaller reporting company and non-accelerated filer until December 31, 2024, after which time we will become a large accelerated filer.

We will need to reassess, as of June 30, 2025, whether we continue to qualify as a large accelerated filer for filings beyond the fiscal year ending December 31, 2025 and annually on June 30th thereafter.

Critical Accounting Policies and Estimates

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Our critical accounting policies are those accounting principles generally accepted in the United States that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles.

For a description of our critical accounting policies, see Item 1 of Part I, “Notes to Condensed Financial Statements — Note 1 — Organization and Summary of Significant Accounting Policies” of this Quarterly Report and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” contained in our Annual Report on Form 10-K, filed with the SEC on March 8, 2024.

There have not been any material changes to the critical accounting policies discussed therein during the three months ended March 31, 2024.

For a description of our critical accounting policies, see Item 1 of Part I, “Notes to Unaudited Condensed Financial Statements — Note 1 — Organization and Summary of Significant Accounting Policies” of this Quarterly Report and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” contained in our Annual Report on Form 10-K, filed with the SEC on March 8, 2024.

There have not been any material changes to the critical accounting policies discussed therein during the six months ended June 30, 2024.

Quantitative and Qualitative Disclosures About Market Risk.

1 unchanged sentence

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis