What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-06 compared with 2024-08-07 · 46 added, 52 removed, 176 unchanged (36% of the section changed)

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In February 2024 we announced updated interim clinical data for JANX007 which displayed meaningful PSA drops, a favorable safety profile, low-grade CRS, and PK, consistent with the TRACTr mechanism-of-action.

Our second clinical candidate, JANX008, is an epidermal growth factor receptor or EGFR-TRACTr and is being studied in a Phase 1 clinical trial for the treatment of multiple solid cancers including colorectal cancer, squamous cell carcinoma of the head and neck, non-small cell lung cancer, and renal cell carcinoma.

The first patient for this trial was dosed in April 2023 and in February 2024 we announced positive early data JANX008 that displayed anti-tumor activity in multiple tumor types with low-grade CRS and predominantly low-grade TRAEs.

Our second clinical candidate, JANX008, is an epidermal growth factor receptor or EGFR-TRACTr and is being studied in a Phase 1 clinical trial for the treatment of multiple solid cancers including colorectal carcinoma, squamous cell carcinoma of the head and neck, non-small cell lung cancer, renal cell carcinoma, small cell lung cancer, pancreatic ductal adenocarcinoma and triple-negative breast cancer.

The first patient for this trial was dosed in April 2023 and in February 2024 we announced positive early data for JANX008 that displayed anti-tumor activity in multiple tumor types with low-grade CRS and predominantly low-grade TRAEs.

We are also generating a number of unnamed TRACTr and TRACIr programs for potential future development, some of which are at development candidate stage or later.

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

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 were $48.8 million and $46.5 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, we had an accumulated deficit of $217.5 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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In return, we are eligible to receive up to $500.5 million per target in upfront and milestone payments, plus royalties on sales of the products derived from the collaboration.

Merck provides research funding under the collaboration.

Merck provided research funding under the collaboration through August 2024, after which our research services for both collaboration targets were completed.

Risks and Uncertainties

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

We recognized $10.6 million and $5.6 million of revenue under the Merck Agreement for the nine months ended September 30, 2024 and 2023, respectively.

Research and Development

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Results of Operations

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

Three Months Ended June 30,

(in thousands)

Comparison of the Three Months Ended September 30, 2024 and 2023 (in thousands)

Three Months Ended September 30,

Collaboration revenue

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Collaboration Revenue

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.

Collaboration revenues were $0.4 million and $2.5 million for the three months ended September 30, 2024 and 2023, respectively.

The decrease of $2.1 million was primarily due to the completion of our research activities under the Merck Agreement in August 2024.

Research and Development Expense

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)

The following table summarizes our direct and indirect research and development expenses for the three months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30,

Direct costs:

3 unchanged sentences

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.

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

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

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.

Research and development expenses were $18.6 million and $11.9 million for the three months ended September 30, 2024 and 2023, respectively.

The increase of $6.7 million was primarily due to increases in direct costs related to the development of JANX007 of $2.9 million, direct costs related to the development of JANX008 of $0.7 million, preclinical stage programs and other direct unallocated costs of $1.4 million and indirect costs of $1.7 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)

General and administrative expenses were $17.7 million and $6.4 million for the three months ended September 30, 2024 and 2023, respectively.

The increase of $11.3 million was primarily due to increases in stock-based compensation of $10.0 million, consulting and professional fees of $0.9 million and other general and administrative expenses of $0.4 million.

Other income was $7.8 million and $4.2 million for the three months ended September 30, 2024 and 2023, respectively.

The increase of $3.6 million was due to an increased cash and cash equivalents balance resulting in increased interest income.

Comparison of the Nine Months Ended September 30, 2024 and 2023 (in thousands)

Nine Months Ended September 30,

Collaboration revenue

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Collaboration Revenue

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

Collaboration revenues were $10.6 million and $5.6 million for the nine months ended September 30, 2024 and 2023, respectively.

The increase of $5.0 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)

The following table summarizes our direct and indirect research and development expenses for the nine months ended September 30, 2024 and 2023 (in thousands):

Nine Months Ended September 30,

Direct costs:

3 unchanged sentences

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.

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 nine months ended September 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 $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.

Research and development expenses were $47.6 million and $42.7 million for the nine months ended September 30, 2024 and 2023, respectively.

The increase of $4.9 million was primarily due to increases in direct costs related to the development of JANX007 of $4.4 million, direct costs related to the development of JANX008 of $0.4 million and indirect costs of $2.3 million, offset by decreases in preclinical stage programs and other direct unallocated costs of $2.4 million.

General and Administrative Expense

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 $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.

General and administrative expenses were $32.8 million and $19.8 million for the nine months ended September 30, 2024 and 2023, respectively.

The increase of $13.0 million was primarily due to increases in stock-based compensation of $10.7 million, consulting and professional fees of $1.4 million and other general and administrative expenses of $0.9 million.

Other income was $21.0 million and $10.3 million for the nine months ended September 30, 2024 and 2023, respectively.

The increase of $10.7 million was due to an increased cash and cash equivalents balance 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 June 30, 2024, we had cash, cash equivalents, restricted cash and short-term investments of $647.1 million.

As of September 30, 2024, we had cash, cash equivalents, restricted cash and short-term investments of $658.8 million.

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

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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.

As of September 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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In March 2024, we closed an underwritten offering of 5,397,301 shares of our common stock and pre-funded warrants to purchase 1,935,483 shares of common stock.

The shares of common stock were sold at a price of $46.50 per share and the pre-funded

common stock warrants were sold at a price of $46.499 per pre-funded common stock warrant, resulting in gross proceeds of $341.0 million.

The shares of common stock were sold at a price of $46.50 per share and the pre-funded common stock warrants were sold at a price of $46.499 per pre-funded common stock warrant, resulting in gross proceeds of $341.0 million.

Fees related to the offering included underwriting discounts, commissions, and offering expenses in the aggregate amount of $20.9 million, resulting in net proceeds of $320.1 million.

The following summarizes our cash flows for the periods indicated:

Six Months Ended June 30,

(in thousands)

The following summarizes our cash flows for the periods indicated (in thousands):

Nine Months Ended September 30,

Net cash provided by (used in):

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Operating Activities

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.

Net cash used in operating activities of $27.1 million for the nine months ended September 30, 2024 was primarily due to our net loss of $48.8 million and a change in operating assets and liabilities and other non-cash charges of $5.1 million, adjusted for $26.8 million of stock-based compensation expense.

Net cash used in operating activities of $40.7 million for the nine months ended September 30, 2023 was primarily due to our net loss of $46.5 million and a change in operating assets and liabilities and other non-cash charges of $9.7 million, adjusted for $15.5 million of stock-based compensation expense.

Investing Activities

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.

Net cash used in investing activities of $291.9 million for the nine months ended September 30, 2024 was primarily due to $291.6 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 $52.3 million for the nine months ended September 30, 2023 was primarily due to $51.0 million of net purchases of short-term investments and by our purchase of property and equipment, primarily consisting of laboratory equipment of $1.3 million.

Financing Activities

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.

Net cash provided by financing activities of $326.6 million for the nine months ended September 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 (ESPP) of $6.5 million.

Net cash provided by financing activities of $58.7 million for the nine months ended September 30, 2023 was primarily due to proceeds from the issuance of common stock and pre-funded common stock warrants, net of issuance costs, of $56.5 million, and exercises of common stock options and from shares issued under our ESPP of $2.2 million.

Funding Requirements

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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.

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

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 2. Management’s Discussion and Analysis