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Item 7. Management’s Discussion and Analysis

2024-02-27 compared with 2023-03-09 · 85 added, 140 removed, 166 unchanged (58% of the section changed)

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes appearing elsewhere in this Annual Report.

This discussion and analysis contains forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intention, beliefs and projections.

Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth in the section titled “Risk Factors” under Part I, Item 1A and elsewhere in this Annual Report.

See “Special Note Regarding Forward-Looking Statements” in this Annual Report.

In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “should,” “will” or the negative of these terms or other similar expressions.

The following discussion and analysis is intended to provide material information around events and uncertainties known to management relevant to an assessment of the financial condition and results of operations of the Company and should therefore be read in conjunction with our audited Financial Statements and the accompanying Notes to Financial Statements and other disclosures included in this Annual Report on Form 10-K (including the disclosures under Part I, Item 1A.

Risk Factors) where other material events and uncertainties not otherwise discussed below are disclosed.

Certain amounts and percentages herein may not sum or recalculate due to rounding.

The following discussion and analysis does not address certain items regarding the year ended December 31, 2021.

Discussion and analysis of 2021 and year-to-year comparisons between 2022 and 2021 that are not included in this Report can be found in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2022 Annual Report on Form 10-K filed with the U.S.

Securities and Exchange Commission (“SEC on March 9, 2023”).

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject.

These statements are based upon information available to us as of the date of this Annual Report on Form 10-K, and while we believe such information forms a reasonable basis for such statements, such information may be limited or

incomplete, and our statements should not be read to indicate we have conducted exhaustive inquiry into, or review of, all potentially available relevant information.

These statements are based upon information available to us as of the date of this Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate we have conducted exhaustive inquiry into, or review of, all potentially available relevant information.

These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

We are a clinical stage biopharmaceutical company focused on discovering and developing novel therapies for the treatment of fibrosis and related diseases.

We are a late stage biopharmaceutical company focused on discovering and developing novel therapies for the treatment of fibrosis and related diseases.

Our initial focus is on treating fibrosis by inhibiting integrin-mediated activation of TGF-β.

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Our wholly-owned lead product candidate, bexotegrast (PLN-74809), is an oral, small molecule, dual selective inhibitor of αvß6 and αvß1 integrins that we are developing for the treatment of idiopathic pulmonary fibrosis, or IPF, and primary sclerosing cholangitis, or PSC.

We are currently conducting three Phase 2a trials in our lead indications:

two in IPF and one in PSC.

We announced positive interim data from our first Phase 2a INTEGRIS-IPF trial in July 2022 and January 2023.

We expect to release final data from the INTEGRIS-IPF trial in the second quarter of 2023.

We have also developed a second product candidate, PLN-1474, a Phase 2-ready oral, small molecule selective inhibitor of αvß1 for the treatment of advanced liver fibrosis associated with nonalcoholic steatohepatitis, or NASH.

We are currently conducting a Phase 2b trial in IPF and a Phase 2a trial in PSC.

We announced positive data from our Phase 2a INTEGRIS-IPF trial in May 2023.

We are currently conducting BEACON-IPF, a 52-week, randomized, double-blind, placebo-controlled Phase 2b trial in patients with IPF.

We announced positive interim data from our Phase 2a INTEGRIS-PSC trial in September 2023 and February 2024.

We expect to release final data from the INTEGRIS-PSC trial in mid-2024.

In January 2023, we received FDA clearance of investigational new drug application, or IND, for our third clinical program to date, PLN-101095, a dual inhibitor of integrins αvß8 and αvß1 for the treatment of solid tumors that are resistant to immune checkpoint inhibitors.

We are currently dosing the third of five dose cohorts in a Phase 1 open label dose-escalation trial of PLN-101095 as monotherapy and in combination with pembrolizumab in patients with solid tumors that are resistant to immune checkpoint inhibitors.

We expect to release preliminary data from the trial in late 2024.

Our fourth program to date, PLN-101325, in development for treatment of muscular dystrophies, including Duchenne muscular dystrophy.

PLN-101325 is a monoclonal antibody designed to act as an allosteric agonist of integrin α7ß1.

We expect to file with regulators for first-in-human studies in the first quarter of 2024.

We have developed PLN-1474, a Phase 2-ready oral, small molecule selective inhibitor of αvß1 for the treatment of advanced liver fibrosis associated with nonalcoholic steatohepatitis, or NASH.

PLN-1474 was licensed to Novartis in 2019, and as part of a broad strategic realignment, Novartis has discontinued clinical development in NASH and, as a result, discontinued development of PLN-1474.

In February 2023, Novartis returned global rights to PLN-1474 to Pliant.

In December 2022, we filed an investigational new drug (IND) application for our third clinical program, PLN-101095, a dual inhibitor of integrins αvß8 and αvß1 for the treatment of solid tumors resistant to immune checkpoint inhibitors.

In January 2023, we received FDA clearance for our IND and expect to initiate a Phase 1 trial of PLN-101095 in the second quarter of 2023.

In addition to our clinical programs, we are currently advancing a preclinical integrin-based program targeting muscular dystrophies.

Recent Highlights

Bexotegrast Highlights

• INTEGRIS-IPF Phase 2a clinical data from bexotegrast 320 mg dose at 12-weeks showed bexotegrast was well tolerated and demonstrated statistically significant forced vital capacity (FVC) increase in patients with idiopathic pulmonary fibrosis (IPF).

Bexotegrast at 320 mg was well tolerated with no drug-related severe or serious adverse events and showed dose-proportional increases in plasma concentrations, consistent with prior studies.

Exploratory efficacy endpoints demonstrated strong treatment effects on FVC, Quantitative Lung Fibrosis (QLF) imaging and biomarkers over 12 weeks.

In addition, no bexotegrast-treated patients experienced disease progression as defined by FVC percent predicted (FVCpp) decline of greater than or equal to 10%, a risk factor associated with increased mortality in IPF patients.

• INTEGRIS-IPF Phase 2a trial on track for final 24-week data readout from the bexotegrast 320 mg dose group in the second quarter of 2023.

This randomized, double-blind, placebo-controlled trial is evaluating bexotegrast at a once-daily dose of 320 mg administered for at least six months and up to 48 weeks in approximately 28 patients with IPF.

The trial will evaluate primary and secondary endpoints of safety, tolerability, and pharmacokinetics.

Exploratory efficacy endpoints will include effect on FVC and QLF, as well as serum biomarkers.

• INTEGRIS-PSC topline Phase 2a data expected in the third quarter of 2023.

This 12-week randomized, dose-ranging, double-blind, placebo-controlled trial is evaluating the safety, tolerability, and pharmacokinetics of bexotegrast in primary sclerosing cholangitis (PSC) patients.

The trial is also evaluating exploratory efficacy endpoints including fibrosis biomarkers such as PRO-C3 and enhanced liver fibrosis (ELF), changes in alkaline phosphatase (ALP), and liver imaging.

• EMA Orphan Drug designation received for bexotegrast for the treatment of IPF.

European Medicines Agency’s (EMA’s) Orphan Drug designation is designed to encourage the development of new treatments for rare conditions.

The benefits of Orphan Drug

designation include trial design assistance, a centralized EU approval process, and 10 years of market exclusivity.

Bexotegrast received Orphan Drug designation from the United States Food and Drug Administration (FDA) in 2018.

Early-Stage Development Programs

• IND open for PLN-101095 for the treatment of solid tumors resistant to immune checkpoint inhibitors.

In January 2023, the U.S.

Food and Drug Administration (FDA) cleared the company’s Investigational New Drug (IND) application for PLN-101095, an oral, small molecule, dual selective inhibitor of αvβ8 and αvβ1 integrins.

Initiation of a Phase 1 trial of PLN-101095 in patients with solid tumors that are resistant to immune checkpoint inhibitors is expected in the second quarter of 2023.

• Muscular dystrophy program progressing through IND enabling activities.

IND submission for this program is expected in 2023.

Corporate Highlights

• Closing of underwritten public offering of $287.5 million in common stock.

The Company closed a public offering in January 2023, yielding $269.9 million in net proceeds to the Company, which included the underwriter’s exercise in full of their option to purchase additional shares.

Pliant intends to use the net proceeds from the offering, together with its existing cash, cash equivalents and investments, to develop its ongoing and future preclinical and clinical programs including bexotegrast and PLN-101095, further develop its integrin targeting platform, to fund working capital, operating expenses and capital expenditures, and for other general corporate purposes.

• Appointment of Lily Cheung as Chief Human Resources Officer.

Cheung brings over 25 years of Human Resources experience across the technology and biopharmaceutical industries, including more than 15 years of commercial-stage experience.

• Appointments of Darren Cline and Thomas McCourt to the Company’s Board of Directors.

Cline and Mr.

McCourt each bring over 30 years of strategic and operational experience in building commercial organizations to the Company.

Cline currently serves as Chief Executive Officer and President of Epygenix Therapeutics.

McCourt currently serves as Chief Executive Officer of Ironwood Pharmaceuticals.

• Work has completed under the Novartis collaboration.

During the three-year term of the collaboration, Pliant achieved successful validation of a novel integrin receptor as a potential next generation target for treatment of fibrotic diseases and is in the process of developing candidates against the target.

As part of a broad strategic realignment, Novartis has discontinued clinical development in NASH.

As a result, Novartis has terminated development of PLN-1474, an inhibitor of αvβ1 targeting NASH-associated advanced liver fibrosis, which they licensed in 2019 and returned global rights to Pliant.

PLN-1474 is a phase 2-ready asset, having shown a favorable safety and pharmacokinetic profile in Phase 1 trials.

2023 Anticipated Milestones

• 24-week data from the 320 mg dose group of the INTEGRIS-IPF Phase 2a trial in patients with IPF is expected in the second quarter of 2023.

• Initiation of a Phase 2b trial of bexotegrast in patients with IPF is expected in mid-2023.

• Initiation of a Phase 1 trial of PLN-101095 in patients with solid tumors resistant to immune checkpoint inhibitors is expected in the second quarter of 2023.

• Topline data from the 40, 80 and 160 mg dose groups of the INTEGRIS-PSC Phase 2a trial in patients with PSC is expected in the third quarter of 2023.

• Positive safety and efficacy data from 320 mg dose cohort of INTEGRIS-PSC Phase 2a trial in patients with primary sclerosing cholangitis (PSC).

At a once-daily dose of 320 mg, bexotegrast was well tolerated over 12 weeks of treatment with no drug-related severe or serious adverse events.

At the 320 mg dose, bexotegrast reduced both Enhanced Liver Fibrosis (ELF) scores and PRO-C3 levels and showed improvements in hepatocyte function and bile flow by contrast MRI imaging relative to placebo at Week 12.

Twenty-four-week data from the 320 mg dose group is expected in mid-2024.

• Enrollment continues in BEACON-IPF, a Phase 2b trial of bexotegrast in patients with idiopathic pulmonary fibrosis ( IPF).

BEACON-IPF is a 52-week, multinational, randomized, dose-ranging, double-blind, placebo-controlled trial evaluating bexotegrast at once-daily doses of 160 mg or 320 mg.

BEACON-IPF is expected to enroll approximately 270 patients with IPF.

Pipeline Programs

• Phase 1 trial of PLN-101095 in solid tumors is enrolling.

This is a Phase 1 open label trial of PLN-101095, an oral, small molecule, dual selective inhibitor of αvβ8 and αvβ1 integrins designed to block TGF-β activation in the tumor microenvironment.

The trial is currently dosing the third of five planned dose cohorts in a Phase 1 open label dose-escalation trial of PLN-101095 as monotherapy and in combination with pembrolizumab in patients with solid tumors that are resistant to immune checkpoint inhibitors.

Preliminary data is expected in late 2024.

• Muscular dystrophy program on track for regulatory filing in the first quarter of 2024.

PLN-101325 is a monoclonal antibody designed to act as an allosteric agonist of integrin α7β1.

Filing for first-in-human clinical studies in Duchenne muscular dystrophy (DMD) is expected in the first quarter of 2024.

Since inception, we have had significant operating losses.

Our net loss was $161.3 million, $123.3 million and $97.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.

As of December 31, 2022, we had an accumulated deficit of $338.4 million and cash, cash equivalents and short-term investments of $331.2 million.

We expect to continue to incur net losses for the foreseeable future, and we expect our research and development expenses,

general and administrative expenses, and capital expenditures will increase in connection with our ongoing activities, as we:

As of December 31, 2023, we had an accumulated deficit of $499.7 million and cash, cash equivalents, restricted cash and short-term investments of $495.7 million.

We expect to continue to incur net losses for the foreseeable future, and we expect our research and development expenses, general and administrative expenses, and capital expenditures will increase in connection with our ongoing activities, as we:

• perform research and development activities to identify and develop product candidates;

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• invest in or in-license other technologies or product candidates.

COVID-19 Pandemic

The novel coronavirus, or COVID-19, continues to spread throughout the United States and worldwide.

We have been, and in the future could be, materially and adversely affected by the risks, or the public perception of the risks, related to an epidemic, pandemic, outbreak, or other public health crisis, such as the outbreak of COVID-19.

While difficult to predict or quantify the overall impact of the pandemic to our operations, among other things, our clinical trials have experienced delays, and may experience additional delays in the future, extending the timelines and increasing the overall costs to finish the clinical trials, as our fixed costs are not substantially reduced while the clinical trials are delayed.

The ultimate extent of the impact of any epidemic, pandemic, outbreak, or other public health crisis on our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of such epidemic, pandemic, outbreak, or other public health crisis and actions taken to contain or prevent the further spread, among others.

Accordingly, we cannot predict the extent to which our business, financial condition and results of operations have been and will be affected.

We remain focused on maintaining a strong balance sheet, liquidity and financial flexibility and continue to monitor developments as we deal with the continued disruptions and uncertainties from a business and financial perspective relating to COVID-19.

Financial Operations Overview

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Our revenue to date is derived from a Collaboration and License Agreement with Novartis, or the "Novartis Agreement," that was executed in 2019.

The Novartis Agreement is for the development and commercialization of PLN-1474 and up to three additional integrin research targets.

The Novartis Agreement was for the development and commercialization of PLN-1474 and up to three additional integrin research targets.

Under the terms of the Novartis Agreement, we received an upfront license fee payment of $50.0 million for the worldwide, exclusive license to PLN-1474 and an additional $29.0 million upon the achievement of specified research and development milestones.

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In February 2023, Novartis issued a termination notice for the collaboration and license agreement, and returned global rights to Pliant for PLN-1474.

Upon termination, we are no longer eligible to receive additional milestone or royalty payments under the arrangement, however, we will continue to earn research and development services revenues, up to $20.0 million and up to $18.4 million for the research and development activities associated with PLN-1474 and integrin research targets, respectively.

As of December 31, 2022, we estimate an additional $1.4 million of aggregate research and development funding remains available for use under the arrangement.

Revenues for the years ended December 31, 2022 and 2021 were $9.7 million and $7.6 million, respectively.

Following termination of the Novartis Agreement, we were no longer eligible to receive additional milestone or royalty payments under the arrangement, however, we continued to earn research and development services revenues through the effective termination date of April 18, 2023.

Revenues for the years ended December 31, 2023, 2022 and 2021 were $1.6 million, $9.7 million and $7.6 million respectively.

Operating Expenses

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Year Ended December 31,

2023 2022 2021

Employee-related expenses $ 46,605 $ 30,316 $ 20,730

Outside and consulting services for preclinical studies and research and development activities by third party contract organizations 15,948 25,402 15,674

25,402 15,674

Clinical trials expenses 49,252 26,032 29,263

Depreciation of lab equipment and costs of equipment and supplies 5,588 5,859 5,968

Technology and intellectual property licenses 85 33

Facilities and other allocated expenses

10,326 9,242 5,880

Technology and intellectual property licenses

Total research and development expenses $ 127,797 $ 96,936 $ 77,548

We expense all research and development costs in the periods in which they are incurred.

We do not allocate our internal costs by product candidates or by preclinical programs as these are in early stages of development.

We do not allocate our internal costs by product candidates or by preclinical programs.

Additionally, although external third-party costs are allocable between product candidates and programs, we do not perform this allocation.

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Interest and Other Income (Expense), net

Our interest and other income (expense), net consists of interest income earned on cash and cash equivalents, money market funds and short-term investments, realized gains and losses on investments.

Our interest and other income (expense), net consists of interest, accretion income and amortization expense on cash, cash equivalents and short-term investments, and realized gains and losses on short-term investments.

Interest Expense

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Interest and other income (expense), net 24,076 4,670 19,406 415.5 %

Interest expense (791) — (791) NM

Interest expense (1,267) (791) (476) 60.2 %

Net loss $ (161,336) $ (123,321) $ (38,015) 30.8 %

_________________________

Results not meaningful

Revenue was $9.7 million and $7.6 million for the years ended December 31, 2022 and 2021, respectively.

The increase of $2.1 million was primarily due to the recognition of a $4.0 million milestone payment in the second quarter of 2022 as Novartis exercised their right to opt-in to a research program and secured an exclusive license to compounds associated with an integrin research target.

This increase was partially offset by a decrease in research and development services revenues associated with PLN-1474 given our most significant contribution to the development plan concluded upon transfer of the IND to Novartis in the first quarter of 2021.

We expect our revenue to be derived from the Novartis Agreement for remainder of the term of our collaboration for which we received a termination notice in February 2023.

Unless we enter into additional contracts with customers, we do not expect to generate revenues beyond the second quarter of 2023.

Revenue decreased by $8.1 million due to decreased research and development services resulting from the termination of the Novartis Agreement.

Research and Development Expenses

Research and development expenses were $96.9 million and $77.5 million for the years ended December 31, 2022 and 2021, respectively.

The increase of $19.4 million was primarily due to:

• $9.6 million increase in employee-related costs owing to the increase in our research and development workforce and stock-based compensation;

• $9.7 million increase in outside and consulting services for preclinical studies and research and development activities by third party contract organizations for the advancement of our preclinical programs;

• $3.2 million decrease in clinical trial expenses largely due to decreased expenses associated with Phase 1 clinical trials, partially offset by an increase in expenses for our Phase 2 trials of bexotegrast.

The increase in research and development expenses of $30.9 million was primarily due to:

• $16.3 million increase in employee-related costs, including stock-based compensation, driven by an increase in our research and development workforce;

• $9.5 million decrease in outside and consulting services for preclinical studies which is largely attributable to decreased preclinical spend related to PLN-101095 as we initiated a phase 1 clinical trial during the second quarter of 2023, and an overall decrease in research and development activities as we prioritize bexotegrast clinical development;

• $23.2 million increase in clinical trial expenses largely due to continued development of bexotegrast, in particular our Phase 2b trial in patients with IPF, as well as the initiation of our phase 1 trial of PLN-101095 in solid tumors during the second quarter of 2023;

• $0.3 million decrease in depreciation of lab equipment and costs of equipment and supplies;

• $0.1 million increase in technology and intellectual property licenses;

• $1.1 million increase in facilities and other allocated expenses.

General and Administrative Expenses

General and administrative expenses was $39.9 million and $27.6 million for the years ended December 31, 2022 and 2021, respectively.

The increase of $12.4 million was primarily due to a $9.1 million increase in employee-related costs, including stock-based compensation, and a $3.3 million increase in legal, accounting and other professional services.

The increase in general and administrative expenses by $18.0 million was primarily due to a $16.6 million increase in employee-related costs, including a $12.6 million increase in stock-based compensation, and increases in accounting and other professional services.

Interest and Other Income (Expense), Net

Interest and other income (expense), net was $4.7 million and $0.3 million for the years ended December 31, 2022 and 2021, respectively.

The increase of $4.4 million was due to higher average investment balances in 2022 compared to 2021 resulting from significant financing activities occurring mid-year 2022 coupled with an increase in the yield on our short-term investment portfolio.

Interest and other income (expense), net increased $19.4 million due to higher average investment balances in 2023 compared to 2022 resulting from significant financing activities occurring mid-year 2022 and the public offering in January 2023, coupled with an increase in the yield on our short-term investment portfolio.

Interest Expense

Interest expense, net was $0.8 million and zero for the years ended December 31, 2022 and 2021, respectively.

The increase of $0.8 million was due to the interest incurred from the Oxford Financing Term Loan, which was issued in the second quarter of 2022.

Interest expense increased $0.5 million during the year as our Term Loan, issued in the second quarter of 2022, was outstanding the entire year of 2023 compared to eight months in the prior year.

Liquidity and Capital Resources

As of December 31, 2022, we had cash, cash equivalents and short-term investments of $331.2 million.

Our cash, cash equivalents and short-term investments consist of U.S.

As of December 31, 2023, we had cash, cash equivalents, restricted cash and short-term investments of $495.7 million.

Our cash, cash equivalents and short-term investments consist of money market funds, U.S.

Treasury securities, U.S.

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In May 2022, as amended in October 2022, we entered into a Loan and Security Agreement (the “Oxford Loan Agreement”) with Oxford Finance LLC (or "Oxford").

Upon closing of the Oxford Loan Agreement, we drew $10.0 million and decided to forego drawing on the additional $40.0 million currently available to us.

A further $50.0 million may become available to us, $25.0 million upon the achievement of a pre-determined development milestone and $25.0 million at Oxford's discretion.

Upon closing of the Oxford Loan Agreement, we drew $10.0 million and decided to forego drawing on the additional $65.0 million that became available to us over the course of 2023 as certain conditions related to the development of bexotegrast and one of our preclinical product candidates were satisfied.

At December 31, 2023, $25.0 million remained available to us under the Oxford Loan Agreement.

In July 2022, we completed an underwritten public offering of 12,432,432 shares of common stock, including the exercise in full of the underwriters' option to purchase 1,621,621 additional shares of common stock.

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The shares were offered at a price to the public of $30.00 per share, resulting in aggregate proceeds of approximately $269.8 million, net of underwriting discounts, commissions and offering expenses.

We believe that our existing capital resources, together with the proceeds our January 2023 public offering, will be sufficient to meet our projected operating requirements into the second half of 2026.

During the third quarter of 2021, we entered into a Controlled Equity Offering SM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent, pursuant to which we may issue and sell shares of common stock in an "at-the-market" offering.

In March 2023, we filed a prospectus registering the offer and sale of up to $150.0 million of shares of common stock from time to time pursuant to the Sales Agreement.

We have not issued any shares pursuant to any at-the-market offerings, including pursuant to the Sales Agreement, but may do so at a future date.

We believe that our existing capital resources, together with the funds available to us under the Oxford Loan Agreement, will be sufficient to fund our anticipated operating expenses and capital expenditure requirements for the next 12 months and for the longer-term period into the second half of 2026.

We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

Further, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for product development and commercialization sooner than planned.

Our operations have been financed primarily through the issuance and sale of convertible preferred stock, issuance of common stock and our collaboration with Novartis.

In July 2021, we entered into a Controlled Equity Offering SM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent, pursuant to which we may issue and sell up to $150.0 million of shares of common stock from time to time.

On July 2, 2021, we filed a registration statement on Form S-3 (File No.

333-257684), as amended, which included a sales agreement prospectus registering the offer and sale of shares under the Sales Agreement (the “Sales Agreement Prospectus”).

From July 2, 2021 to January 23, 2023, no shares of common stock were sold pursuant to the Sales Agreement or the Sales Agreement Prospectus.

We terminated the Sales Agreement Prospectus on January 23, 2023 in connection with our January 2023 public offering, but the Sales Agreement remains in full force and effect.

We will not make any sales of shares of our common stock pursuant to the Sales Agreement unless and until a new sales agreement prospectus or prospectus supplement is filed.

We have not issued any shares pursuant to any at-the-market offerings, including pursuant to the Sales Agreement, but may do so at a future date.

Our operations have been financed primarily through the issuance and sale of common stock and convertible preferred stock and our collaboration with Novartis.

Funding Requirements

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• the clinical development plans we establish for these product candidates;

• the timelines of our clinical trials and the overall costs to conduct and complete the clinical trials, which may be impacted by the COVID-19 pandemic;

• the timelines of our clinical trials and the overall costs to conduct and complete the clinical trials, which may be impacted by health epidemics and pandemics, such as COVID-19;

• the number and characteristics of product candidates that we develop;

• the outcome, timing and cost of meeting regulatory requirements established by the U.S.

Food and Drug Administration, or FDA, and other comparable foreign regulatory authorities including but not limited to the European Medicines Agency (EMA), the UK Medicines and Healthcare products Regulatory Agency (MHRA);

Food and Drug Administration, or FDA, and other comparable foreign regulatory authorities including but not limited to the European Medicines Agency (EMA), the U..

Medicines and Healthcare products Regulatory Agency (MHRA);

• whether we enter into any collaboration agreements and the terms of any such agreements;

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Year Ended December 31,

2023 2022 2021

Net cash used in operating activities $ (116,361) $ (94,631) $ (75,443)

Net cash provided by (used in) investing activities (150,204) 73,699

Net cash (used in) provided by investing activities

(127,012) (150,204) 73,699

Net cash provided by financing activities 274,405 226,854 2,527

Net increase (decrease) in cash and cash equivalents $ (17,981) $ 783

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

$ 31,032 $ (17,981) $ 783

Cash Used in Operating Activities

Net cash used in operating activities was $94.6 million for the year ended December 31, 2022 compared to $75.4 million for the year ended December 31, 2021.

The increase in cash used in operating activities of $19.2 million between the year ended December 31, 2022 and 2021 was primarily due to an increase in our net loss of $26.1 million which was driven by an increase in operating expenses of $31.8 million.

Cash Provided by (Used in) Investing Activities

Net cash used in investing activities during the year ended December 31, 2022 was $150.2 million compared to net cash provided by in investing activities of $73.7 million during the year ended December 31, 2021.

The increase in cash used by investing activities of $223.9 million between the year ended December 31, 2022 and 2021 is primarily due to the investment purchases following our July 2022 public offering plus regular variation year over year regarding the timing of investment purchases versus maturities in our short-term investment portfolio.

The increase in cash used in operating activities of $21.7 million between the year ended December 31, 2023 and 2022 was primarily due to an increase in our operating expenses, notably for the continued development of bexotegrast and our other pipeline programs.

Further, revenue related receipts decreased $6.2 million as we ceased to earn research and development services revenue following the termination of the Novartis Agreement.

Cash Used in Investing Activities

The decrease in cash used in investing activities of $23.2 million between the year ended December 31, 2023 and 2022 is primarily due to the timing of purchases of short-term investments compared to related maturities during each year.

Cash Provided by Financing Activities

Net cash provided by financing activities was $226.9 million during the year ended December 31, 2022 as compared to $2.5 million during the year ended December 31, 2021.

The increase in cash provided by financing activities of $224.3 million between the year ended December 31, 2022 and 2021 is attributable to the July 2022 public offering and term loan entered into under the Oxford Loan Agreement.

The increase in cash provided by financing activities of $47.6 million between the year ended December 31, 2023 and 2022 is primarily due to net proceeds from the Company's January 2023 underwritten public offering.

Off-Balance Sheet Arrangements

During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements or holdings in any variable interest entities.

During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements or holdings in any variable interest entities other than the operating lease commitments described in Note 14 to our financial statements appearing elsewhere in this Annual Report.

Material Cash Requirements

The following table summarizes our material cash requirements as of December 31, 2022 (in thousands):

Payments Due by Period

1 Year 1 to 3

Years More Than

5 Years Total

Operating lease $ 2,836 $ 3,624 $ 0 $ — $ 6,460

Total obligations $ 2,836 $ 3,624 $ 0 $ — $ 6,460

At December 31, 2023, we had various non-cancelable operating leases for office space and equipment, which expire between December 31, 2023 and March 31, 2031.

Refer to Note 13 and Note 14 to our financial statements appearing elsewhere in this Annual Report for a discussion of material obligations and commitments.

We enter into contracts in the normal course of business with third-party contract organizations for clinical trials, non-clinical studies and testing, manufacturing and other services and products.

These contracts generally provide for termination following a certain period after notice and therefore we believe that our cancellable obligations under these agreements are not material and they are not included in the table above.

We have not included milestone or royalty payments or other contractual payment obligations in the table above if the timing and amount of such obligations are unknown or uncertain.

These contracts generally provide for termination following a certain period after notice and therefore we believe that our cancellable obligations under these agreements are not material.

Critical Accounting Polices and Estimates

18 unchanged sentences

Options are considered to be marketing offers and are to be accounted for as separate contracts when the customer elects such options, unless we determine the option provides a material right which would not be provided without entering into the contract.

The determination as to whether such options are material rights requires significant management judgment, and management considers factors such as other similar arrangements, market data and the terms of the contractual arrangement to make such conclusion.

The determination as to whether such options are material rights requires significant management judgment, and management

considers factors such as other similar arrangements, market data and the terms of the contractual arrangement to make such conclusion.

Performance obligations are promised goods or services in a contract to transfer a distinct good or service to the customer.

8 unchanged sentences

If it is probable that a significant revenue reversal would not occur, the variable consideration is included in the transaction price.

All contingent future payments, which include research, development, regulatory, and sales-based royalty payments, have not been considered in the initial analysis, as they are contingent upon option(s) being exercised or are subject to significant risk of achievement.

All contingent future payments, which include research, development, regulatory, and sales-based royalty payments, were not considered in the initial analysis, as they were contingent upon options being exercised or were subject to significant risk of achievement.

Allocation of Transaction Price

15 unchanged sentences

As actual costs become known, we adjust our estimates.

Our accrued expenses and prepaid research and development expenses are dependent, in part, upon the receipt of timely and accurate reporting from clinical research organizations, other third-party service providers and internal research and development personnel.

Our accrued expenses and prepaid research and development expenses are dependent, in part, upon the receipt of timely and accurate reporting from contract research organizations, other third-party service providers and internal research and development personnel.

If we under estimate or over-estimate the level of services performed or the costs of these services, our accrued expenses could differ from our estimates.

For the periods presented, we have experienced no material differences between our accrued expenses and actual expenses.

Emerging Growth Company Status and JOBS Act Accounting Election

Based on the market value of our common stock held by our non-affiliates as of June 30, 2021, we were considered a “large accelerated filer” on December 31, 2021 and thus lost, and will not regain, our status as an emerging growth company.

Additionally, based on the market value of our common stock held by our non-affiliates as of June 30, 2022, we were considered a "non-accelerated filer" and “smaller reporting company” on December 31, 2022, and thus will not be subject to filing deadlines applicable to "accelerated filers," nor the requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.

Recent Accounting Pronouncements

The information set forth under Note 2 to the financial statements under the caption “Recently Issued Accounting Pronouncements” is incorporated herein by reference.

Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

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-K

Item 7. Management’s Discussion and Analysis