Protagonist Therapeutics, Inc 10-Q

ITEM 1. FINANCIAL STATEMENTS PROTAGONIST THERAPEUTICS, INC. Condensed Consolidated Balance Sheets (Unaudited) (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ 2023 2022 Assets ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 235,382 ​ $ 125,744 Marketable securities ​ ​ 78,019 ​ ​ 111,611 Receivable from collaboration partner ​ ​ 39 ​ ​ 10 Prepaid expenses and other current assets ​ ​ 3,501 ​ ​ 5,712 Total current assets ​ ​ 316,941 ​ ​ 243,077 Property and equipment, net ​ ​ 1,263 ​ ​ 1,565 Restricted cash - noncurrent ​ ​ 225 ​ ​ 225 Operating lease right-of-use asset ​ ​ 2,037 ​ ​ 3,061 Total assets ​ $ 320,466 ​ $ 247,928 Liabilities and Stockholders’ Equity ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ Accounts payable ​ $ 4,573 ​ $ 3,640 Payable to collaboration partner ​ ​ 10 ​ ​ 69 Accrued expenses and other payables ​ ​ 19,369 ​ ​ 24,955 Operating lease liability - current ​ ​ 2,446 ​ ​ 2,515 Total current liabilities ​ ​ 26,398 ​ ​ 31,179 Operating lease liability - noncurrent ​ ​ — ​ ​ 1,141 Total liabilities ​ ​ 26,398 ​ ​ 32,320 Commitments and contingencies ​ ​ ​ ​ ​ ​ Stockholders’ equity: ​ ​ ​ ​ ​ ​ Preferred stock, $ 0.00001 par value, 10,000,000 shares authorized; no shares issued and outstanding ​ ​ — ​ ​ — Common stock, $ 0.00001 par value, 90,000,000 shares authorized; 57,494,185 and 49,339,252 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively ​ ​ 1 ​ ​ — Additional paid-in capital ​ ​ 903,205 ​ ​ 752,722 Accumulated other comprehensive loss ​ ​ ( 198 ) ​ ​ ( 359 ) Accumulated deficit ​ ​ ( 608,940 ) ​ ​ ( 536,755 ) Total stockholders’ equity ​ ​ 294,068 ​ ​ 215,608 Total liabilities and stockholders’ equity ​ $ 320,466 ​ $ 247,928 ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ 1 Table of Contents PROTAGONIST THERAPEUTICS, INC. Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ June 30, ​ June 30, ​ 2023 2022 2023 2022 License and collaboration revenue ​ $ — ​ $ 859 ​ $ — ​ $ 26,581 Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ ​ 33,182 ​ ​ 34,611 ​ ​ 60,598 ​ ​ 70,929 General and administrative ​ 9,172 ​ 7,691 ​ 17,777 ​ 18,206 Total operating expenses ​ 42,354 ​ 42,302 ​ 78,375 ​ 89,135 Loss from operations ​ ( 42,354 ) ​ ( 41,443 ) ​ ( 78,375 ) ​ ( 62,554 ) Interest income ​ 3,913 ​ 484 ​ 6,404 ​ ​ 652 Other expense, net ​ ​ ( 19 ) ​ ​ ( 78 ) ​ ​ ( 214 ) ​ ​ ( 65 ) Net loss ​ $ ( 38,460 ) ​ $ ( 41,037 ) ​ $ ( 72,185 ) ​ $ ( 61,967 ) Net loss per share, basic and diluted ​ $ ( 0.68 ) ​ $ ( 0.84 ) ​ $ ( 1.34 ) ​ $ ( 1.27 ) Weighted-average shares used to compute net loss per share, basic and diluted ​ 56,775,742 49,049,902 ​ 53,691,965 48,902,047 ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ 2 Table of Contents PROTAGONIST THERAPEUTICS, INC. Condensed Consolidated Statements of Comprehensive Loss (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ June 30, ​ June 30, ​ 2023 2022 2023 2022 Net loss ​ $ ( 38,460 ) ​ $ ( 41,037 ) ​ $ ( 72,185 ) ​ $ ( 61,967 ) Other comprehensive loss: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Loss) gain on translation of foreign operations ​ — ​ ( 209 ) ​ 194 ​ ( 114 ) Unrealized loss on marketable securities ​ ( 76 ) ​ ( 39 ) ​ ( 33 ) ​ ( 307 ) Comprehensive loss ​ $ ( 38,536 ) ​ $ ( 41,285 ) ​ $ ( 72,024 ) ​ $ ( 62,388 ) ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ ​ 3 Table of Contents PROTAGONIST THERAPEUTICS, INC. Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) (In thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ Total ​ ​ Common ​ Paid-In ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ ​ Stock ​ Capital ​ (Loss) Gain ​ Deficit ​ Equity Three months ended June 30, 2023 Shares Amount ​ ​ ​ ​ ​ ​ ​ Balance at March 31, 2023 51,440,503 $ 1 ​ $ 786,768 $ ( 122 ) ​ $ ( 570,480 ) $ 216,167 Issuance of common stock pursuant to public offering, net of issuance costs ​ 5,750,000 ​ ​ — ​ ​ 107,790 ​ ​ — ​ ​ — ​ ​ 107,790 Issuance of common stock under equity incentive and employee stock purchase plans 329,486 — ​ 973 — ​ — 973 Shares withheld for net settlement of tax withholding upon vesting of restricted stock units ​ ( 25,804 ) ​ ​ — ​ ​ ( 669 ) ​ ​ — ​ ​ — ​ ​ ( 669 ) Stock-based compensation expense — — ​ 8,343 — ​ — 8,343 Other comprehensive loss — — ​ — ( 76 ) ​ — ( 76 ) Net loss — — ​ — — ​ ( 38,460 ) ( 38,460 ) Balance at June 30, 2023 57,494,185 $ 1 ​ $ 903,205 $ ( 198 ) ​ $ ( 608,940 ) $ 294,068 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ Total ​ ​ Common ​ Paid-In ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ ​ Stock ​ Capital ​ (Loss) Gain ​ Deficit ​ Equity Three months ended June 30, 2022 Shares Amount ​ ​ ​ ​ ​ ​ ​ Balance at March 31, 2022 ​ 48,552,102 ​ $ — ​ $ 732,542 ​ $ ( 472 ) ​ $ ( 430,292 ) ​ $ 301,778 Issuance of common stock under equity incentive and employee stock purchase plans ​ 131,829 — ​ 655 — ​ — 655 Stock-based compensation expense — — ​ 6,805 — ​ — 6,805 Issuance costs related to prior period common stock offering ​ — — ​ ​ 25 ​ ​ — ​ — ​ ​ 25 Other comprehensive loss — — ​ — ( 248 ) ​ — ( 248 ) Net loss — — ​ — — ​ ( 41,037 ) ( 41,037 ) Balance at June 30, 2022 48,683,931 $ — ​ $ 740,027 $ ( 720 ) ​ $ ( 471,329 ) $ 267,978 ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ 4 Table of Contents PROTAGONIST THERAPEUTICS, INC. Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) (In thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ Total ​ ​ Common ​ Paid-In ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ ​ Stock ​ Capital ​ (Loss) Gain ​ Deficit ​ Equity Six months ended June 30, 2023 Shares Amount ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2022 49,339,252 $ — ​ $ 752,722 $ ( 359 ) ​ $ ( 536,755 ) $ 215,608 Issuance of common stock pursuant to public offering, net of issuance costs ​ 5,750,000 ​ ​ — ​ ​ 107,790 ​ ​ — ​ ​ — ​ ​ 107,790 Issuance of common stock pursuant to at-the-market offering, net of issuance costs ​ 1,749,199 ​ ​ 1 ​ ​ 24,301 ​ ​ — ​ ​ — ​ ​ 24,302 Issuance of common stock under equity incentive and employee stock purchase plans 687,697 — ​ 3,234 — ​ — 3,234 Shares withheld for net settlement of tax withholding upon vesting of restricted stock units ​ ( 31,963 ) ​ ​ — ​ ​ ( 769 ) ​ ​ — ​ ​ — ​ ​ ( 769 ) Stock-based compensation expense — — ​ 15,927 — ​ — 15,927 Other comprehensive gain — — ​ — 161 ​ — 161 Net loss — — ​ — — ​ ( 72,185 ) ( 72,185 ) Balance at June 30, 2023 57,494,185 $ 1 ​ $ 903,205 $ ( 198 ) ​ $ ( 608,940 ) $ 294,068 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ Total ​ ​ Common ​ Paid-In ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ ​ Stock ​ Capital ​ (Loss) Gain ​ Deficit ​ Equity Six months ended June 30, 2022 Shares Amount ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2021 ​ 47,838,330 ​ $ — ​ $ 709,682 ​ $ ( 299 ) ​ $ ( 409,362 ) ​ $ 300,021 Issuance of common stock pursuant to at-the-market offering, net of issuance costs ​ 422,367 ​ ​ — ​ ​ 14,553 ​ ​ — ​ ​ — ​ ​ 14,553 Issuance of common stock under equity incentive and employee stock purchase plans 430,960 — ​ 3,213 — ​ — 3,213 Shares withheld for net settlement of tax withholding upon vesting of restricted stock units ​ ( 7,726 ) ​ ​ — ​ ​ ( 186 ) ​ ​ — ​ ​ — ​ ​ ( 186 ) Stock-based compensation expense — — ​ 12,740 — ​ — 12,740 Issuance costs related to prior period common stock offering ​ — — ​ ​ 25 ​ ​ — ​ — ​ ​ 25 Other comprehensive loss — — ​ — ( 421 ) ​ — ( 421 ) Net loss — — ​ — — ​ ( 61,967 ) ( 61,967 ) Balance at June 30, 2022 48,683,931 $ — ​ $ 740,027 $ ( 720 ) ​ $ ( 471,329 ) $ 267,978 ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ ​ 5 Table of Contents ​ PROTAGONIST THERAPEUTICS, INC. Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended ​ ​ June 30, ​ 2023 2022 Cash Flows from Operating Activities ​ ​ ​ Net loss ​ $ ( 72,185 ) ​ $ ( 61,967 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ ​ ​ Stock-based compensation ​ ​ 15,927 ​ ​ 12,740 Operating lease right-of-use asset amortization ​ ​ 1,168 ​ ​ 1,168 (Accretion) amortization of discount/premium on marketable securities ​ ​ ( 2,215 ) ​ ​ 454 Depreciation ​ ​ 485 ​ ​ 508 Other ​ ​ 194 ​ ​ — Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Receivable from collaboration partner ​ ​ ( 29 ) ​ ​ 1,523 Prepaid expenses and other assets ​ ​ 2,211 ​ ​ ( 255 ) Accounts payable ​ ​ 933 ​ ​ ( 184 ) Payable to collaboration partner ​ ​ ( 59 ) ​ ​ ( 819 ) Accrued expenses and other payables ​ ​ ( 5,661 ) ​ ​ ( 1,553 ) Deferred revenue ​ ​ — ​ ​ ( 1,601 ) Operating lease liability ​ ​ ( 1,354 ) ​ ​ ( 1,315 ) Net cash used in operating activities ​ ​ ( 60,585 ) ​ ​ ( 51,301 ) Cash Flows from Investing Activities ​ ​ ​ ​ ​ ​ Purchase of marketable securities ​ ​ ( 34,122 ) ​ ​ ( 102,121 ) Proceeds from maturities of marketable securities ​ ​ 69,896 ​ ​ 132,942 Purchases of property and equipment ​ ​ ( 186 ) ​ ​ ( 563 ) Net cash provided by investing activities ​ ​ 35,588 ​ ​ 30,258 Cash Flows from Financing Activities ​ ​ ​ ​ ​ ​ Proceeds from public offering of common stock, net of issuance costs ​ ​ 107,868 ​ ​ — Proceeds from at-the-market offering, net of issuance costs ​ ​ 24,302 ​ ​ 14,553 Proceeds from issuance of common stock upon exercise of stock options and purchases under employee stock purchase plan ​ ​ 3,234 ​ ​ 3,213 Tax withholding payments related to net settlement of restricted stock units ​ ​ ( 769 ) ​ ​ ( 186 ) Issuance costs related to prior period common stock offering ​ ​ — ​ ​ 25 Net cash provided by financing activities ​ ​ 134,635 ​ ​ 17,605 Effect of exchange rate changes on cash, cash equivalents and restricted cash ​ ​ — ​ ​ 10 Net increase (decrease) in cash, cash equivalents and restricted cash ​ ​ 109,638 ​ ​ ( 3,428 ) Cash, cash equivalents and restricted cash, beginning of period ​ 125,969 ​ 123,890 Cash, cash equivalents and restricted cash, end of period ​ $ 235,607 ​ $ 120,462 Supplemental Disclosure of Non-Cash Financing and Investing Information: ​ ​ ​ ​ ​ ​ Purchases of property and equipment in accounts payable and accrued liabilities ​ $ 61 ​ $ 122 Issuance costs related to common stock offering included in accrued liabilities and other payables ​ $ 78 ​ $ — ​ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. ​ ​ ​ 6 Table of Contents PROTAGONIST THERAPEUTICS, INC. Notes to Unaudited Condensed Consolidated Financial Statements Note 1. Organization and Description of Business Protagonist Therapeutics, Inc. (the “Company”) is headquartered in Newark, California. The Company is a biopharmaceutical company with peptide-based new chemical entities rusfertide and JNJ-2113 (formerly PN-235) in different stages of clinical development, both derived from the Company’s proprietary technology platform. The Company’s clinical programs fall into two broad categories of diseases; (i) hematology and blood disorders, and (ii) inflammatory and immunomodulatory diseases. Protagonist Pty Limited (“Protagonist Australia”) is a wholly-owned subsidiary of the Company and is located in Brisbane, Queensland, Australia. Operating segments are components of an enterprise for which separate financial information is available and is evaluated regularly by the Chief Executive Officer, the Company’s chief operating decision maker, in deciding how to allocate resources and assessing performance. The Company operates and manages its business as one operating segment. The Company’s Chief Executive Officer reviews financial information on an aggregate basis for the purposes of allocating and evaluating financial performance. Liquidity As of June 30, 2023, the Company had cash, cash equivalents and marketable securities of $ 313.4 million. The Company has incurred net losses from operations since inception and had an accumulated deficit of $ 608.9 million as of June 30, 2023. The Company’s ultimate success depends upon the outcome of its research and development and collaboration activities. The Company expects to incur additional losses in the future and anticipates the need to raise additional capital to continue to execute its long-range business plan. Since the Company’s initial public offering in August 2016, it has financed its operations primarily through proceeds from offerings of common stock and payments received under license and collaboration agreements. Risks and Uncertainties The Company is currently operating in a period of economic uncertainty and capital markets disruption, which has been impacted by the COVID-19 pandemic, domestic and global monetary and fiscal policy, geopolitical instability, including the ongoing military conflict between Russia and Ukraine and rising tensions between China and Taiwan, a recessionary environment, historically high domestic and global inflation and of failures of banking and other financial institutions. The Company has experienced delays in its existing and planned clinical trials due to worldwide impacts related to the COVID-19 pandemic, and its future results of operations and liquidity could be adversely impacted by outbreaks of disease, epidemics and pandemics, including further delays in existing and planned clinical trials, difficulty in recruiting patients for these clinical trials, delays in manufacturing and collaboration activities and supply chain disruptions. The conflict in Ukraine has exacerbated market disruptions, including significant volatility in commodity prices as well as supply chain interruptions, and has contributed to record inflation globally. The U.S. Federal Reserve and other central banks may be unable to contain inflation through more restrictive monetary policy and inflation may increase or continue for a prolonged period of time. Inflationary factors, such as increases in the cost of clinical supplies, interest rates, overhead costs and transportation costs may adversely affect the Company’s operating results. In addition, the failure of Silicon Valley Bank and other regional banks in the United States during the first half of 2023 has given rise to uncertainty in the security of amounts in deposit accounts uninsured by the Federal Deposit Insurance Corporation. The Company continues to monitor these events and the potential impact on its business. Although the Company does not believe that inflation has had a material impact on its financial position or results of operations to date, it may be adversely affected in the future due to global monetary and fiscal policy, macroeconomic factors, supply chain constraints, the ongoing conflict between Russia and Ukraine and other factors, and such factors may lead to increases in the cost of manufacturing for and initiation of studies in the Company’s product candidates. 7 Table of Contents Note 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the condensed consolidated balance sheet as of June 30, 2023 has been derived from the Company’s unaudited consolidated financial statements at that date but does not include all of the information required by GAAP for complete consolidated financial statements. These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) that are necessary for a fair presentation of the Company’s condensed consolidated financial statements. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any future period. Effective January 1, 2023, the financial statements of Protagonist Australia use the U.S. dollar as the functional currency due to the expected nature of the ongoing operations of this subsidiary. The cumulative translation adjustment as of January 1, 2023 related to this subsidiary was not material. Prior to January 1, 2023, the financial statements of Protagonist Australia used the Australian dollar as the functional currency since the majority of expense transactions occurred in such currency. Foreign currency translation gains and losses are reported as a component of stockholders’ equity in accumulated other comprehensive loss on the condensed consolidated balance sheets. The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 15, 2023. Principles of Consolidation The accompanying unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany transactions and balances have been eliminated upon consolidation. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, accruals for research and development activities, stock-based compensation, income taxes, marketable securities and leases. Estimates related to revenue recognition include actual costs incurred versus total estimated costs of the Company’s deliverables to determine percentage of completion in addition to the application and estimates of potential revenue constraints in the determination of the transaction price under its license and collaboration agreements. Management bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to forecasted amounts and future events. Actual results could differ materially from these estimates. There has been uncertainty and disruption in the global economy and financial markets due to a number of factors, including the COVID-19 pandemic, geopolitical instability, inflationary pressures and domestic and global monetary and fiscal policy. The Company has taken into consideration any known impacts in its accounting estimates to date and is not aware of any additional specific events or circumstances that would require any additional updates to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the issuance of this report. 8 Table of Contents These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions. Cash as Reported in Condensed Consolidated Statements of Cash Flows Cash as reported in the condensed consolidated statements of cash flows includes the aggregate amounts of cash and cash equivalents and the restricted cash as presented on the condensed consolidated balance sheets. Cash as reported in the condensed consolidated statements of cash flows consists of (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ 2023 2022 Cash and cash equivalents ​ $ 235,382 ​ $ 120,237 Restricted cash - noncurrent ​ 225 ​ 225 Total cash reported on condensed consolidated statements of cash flows ​ $ 235,607 ​ $ 120,462 ​ Investment Impairment ​ As of each reporting date, the Company assesses each of its investments in available-for-sale debt securities whose fair value is below its cost basis to determine if the investment’s impairment is due to credit-related factors or noncredit-related factors. Factors considered in determining whether an impairment is credit-related include the extent to which the investment’s fair value is less than its cost basis, declines in published credit ratings, issuer default on interest or principal payments, and declines in the financial condition and near-term prospects of the issuer. Credit-related impairments on available-for-sale debt securities are recognized as an allowance for credit losses with a corresponding adjustment to other income (expense), net. The portion of the impairment that is not credit-related is recorded as a reduction of other comprehensive income (loss), net of applicable taxes. ​ The Company has elected to exclude accrued interest from both the fair value and the amortized cost basis of the available-for-sale debt securities for the purposes of identifying and measuring an impairment. The Company writes off accrued interest as a reduction of interest income when an issuer has defaulted on interest payments due on a security. ​ Significant Accounting Policies ​ Other than the change in Protagonist Australia functional currency from the Australian dollar to the U.S. dollar effective January 1, 2023 and the investment impairment policy, as discussed above, there have been no material changes to the Company’s significant accounting policies during the three and six months ended June 30, 2023 as compared to those disclosed in Note 2. Summary of Significant Accounting Policies included in our Annual Report on Form 10-K for the year ended December 31, 2022. ​ Recently Adopted Accounting Pronouncement In June 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”). The guidance requires measurement and recognition of expected credit losses for financial assets at the time financial assets are initially recognized in the financial statements. The measurement of expected credit losses is based on historical credit loss information as well as current and future economic factors. ASU 2016-13 also eliminates the concept of “other-than-temporary” impairment when evaluating available-for-sale debt securities and instead focuses on determining whether any impairment is a result of credit loss or other factors. In November 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326): Effective Dates , which delayed the mandatory effective date of ASU 2016-13 for smaller reporting companies. The Company adopted ASU 2016-13 effective January 1, 2023. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements or related disclosures. 9 Table of Contents Note 3. License and Collaboration Agreement Agreement Terms On July 27, 2021, the Company entered into an Amended and Restated License and Collaboration Agreement (the “Restated Agreement”) with Janssen Biotech, Inc., a Pennsylvania corporation (“Janssen”), which amended and restated the License and Collaboration Agreement, effective July 13, 2017, by and between the Company and Janssen (the “Original Agreement”), as amended by the first amendment, effective May 7, 2019 (the “First Amendment”). Prior to January 1, 2023, Janssen was a related party to the Company as Johnson & Johnson Innovation - JJDC, Inc. was a significant (greater than 5%) stockholder of the Company, and both companies are subsidiaries of Johnson & Johnson. Upon the effectiveness of the Original Agreement, the Company received a non-refundable, upfront cash payment of $ 50.0 million from Janssen. Upon the effectiveness of the First Amendment, the Company received a $ 25.0 million payment from Janssen in 2019. The Company received a $ 5.0 million payment triggered by the successful nomination of a second-generation oral Interleukin (“IL”)-23 receptor antagonist development compound (“second-generation compound”) during the first quarter of 2020 and received a $ 7.5 million payment triggered by the completion of data collection activities for the first Phase 1 clinical trial of a second-generation compound during the fourth quarter of 2021. The Company received a $ 25.0 million milestone payment in connection with the dosing of the third patient in the first Phase 2 clinical trial for a second-generation compound during the second quarter of 2022. The Restated Agreement relates to the development, manufacture and commercialization of oral IL-23 receptor antagonist drug candidates. The candidates nominated for initial development pursuant to the Restated Agreement included PTG-200 (JNJ-67864238), PN-232 (JNJ-75105186) and JNJ-2113 (JNJ-77242113) (formerly PN-235). PTG-200 is an oral IL-23 receptor antagonist that was in Phase 2a development for the treatment of Crohn’s disease (“CD”). During the fourth quarter of 2021, following a pre-specified interim analysis criteria, a portfolio decision was made by Janssen to stop further development of both PTG-200 and PN-232 in favor of advancing JNJ-2113, based on its superior potency and overall pharmacokinetic and pharmacodynamic profile. Janssen is primarily responsible for the conduct of all future trials, including anticipated Phase 2 and Phase 3 trials, and the Company is primarily responsible for the conduct of the second-generation Phase 1 trials. ​ The Restated Agreement enables Janssen to develop collaboration compounds for multiple indications. Under the Restated Agreement, Janssen is required to use commercially reasonable efforts to develop at least one collaboration compound for at least two indications. Upcoming potential development milestones for second-generation compounds include: ● $ 50.0 million upon the dosing of the third patient in a Phase 3 clinical trial for a second-generation compound for any indication; ● $ 115.0 million upon a Phase 3 clinical trial for a second-generation compound for any indication meeting its primary clinical endpoint; ● $ 35.0 million upon the filing of a New Drug Application (“NDA”) for a second-generation compound with the U.S. Food and Drug Administration (the “FDA”); ● $ 50.0 million upon FDA approval of an NDA for a second-generation compound; ● $ 10.0 million upon the dosing of the third patient in the first Phase 2 clinical trial for any second-generation compound for a second indication (i.e., an indication different than the indication which triggered the $ 25.0 million milestone received during the second quarter of 2022 described above); and ● $ 15.0 million upon the dosing of the third patient in a Phase 3 clinical trial for a second-generation compound for a second indication. 10 Table of Contents Pursuant to the Restated Agreement, the Company remains eligible to receive tiered royalties on net product sales at percentages ranging from six percent to ten percent. The sales milestone payments in the Original Agreement also remain the same in the Restated Agreement. Pursuant to both the Original and Restated Agreements, payments to the Company for research and development services are generally billed and collected as services are performed or assets are delivered, including research activities and Phase 1 and Phase 2 development activities. Janssen bills the Company for its share of the PTG-200 Phase 2a development costs as expenses are incurred by Janssen. Milestone payments are received after the related milestones are achieved. Janssen retains exclusive, worldwide rights to develop and commercialize IL-23 receptor antagonist compounds derived from the research collaboration conducted under the Original Agreement, or Janssen’s further research under the Restated Agreement. Any further research and development will be conducted by Janssen. The Company will have the right to co-detail (for CD and ulcerative colitis indications) up to two of the IL-23 receptor antagonist compounds under the collaboration in the U.S. market. The Restated Agreement remains in effect until the royalty obligations cease following patent and regulatory expiry, unless terminated earlier. Upon a termination of the Restated Agreement, all rights revert back to the Company, and in certain circumstances, if such termination occurs during ongoing clinical trials, Janssen would, if requested, provide certain financial and operational support to the Company for the completion of such trials. Revenue Recognition The Restated Agreement contains a single performance obligation for the development license; Phase 1 development services for PTG-200, PN-232 and JNJ-2113 (formerly PN-235); the Company’s services associated with Phase 2a development for PTG-200 in CD; the initial year of second-generation compound research services; and all other such services that the Company may perform at the request of Janssen to support the development of PTG-200 through Phase 2a and PN-232 and JNJ-2113 through Phase 1. Under the Restated Agreement, development services performed by the Company for PTG-200 beyond Phase 2a and PN-232 and JNJ-2113 beyond Phase 1 are no longer required. The contract duration is defined as the period in which parties to the contract have present enforceable rights and obligations. For revenue recognition purposes, the duration of the Restated Agreement for the identified single initial performance obligation began on the Original Agreement’s effective date of July 13, 2017 and ended upon the completion of Phase 1 clinical trials for PN-232 and JNJ-2113. Final activities related to these trials were completed as of June 30, 2022. The transaction price of the initial performance obligation under the Restated Agreement was $ 131.7 million as of June 30, 2022, an increase of $ 0.2 million from the transaction price of $ 131.5 million as of March 31, 2022. In order to determine the transaction price, the Company evaluated all payments to be received during the duration of the contract, net of development costs reimbursement expected to be payable to Janssen. The transaction price as of June 30, 2022 included $ 112.5 million of nonrefundable payments received to date, $ 17.9 million of reimbursement from Janssen for services performed for IL-23 receptor antagonist compound research costs and other services, and variable consideration consisting of $ 8.2 million of development cost reimbursement from Janssen, partially offset by $ 6.9 million of net cost reimbursement due to Janssen for services performed. The Company concluded that the variable consideration constraint was appropriately reflected in the estimated transaction price as of June 30, 2022, and that the achievement of future milestones was subject to additional development and/or regulatory uncertainty and therefore it was not probable at June 30, 2022 that a material reversal of such revenues would not occur. Janssen also opted in for certain additional services to be performed by the Company that were outside the initial performance obligation. Revenue for these additional services was recognized as these services were performed. No license and collaboration revenue was recognized for the three and six months ended June 30, 2023 because the Company completed its performance obligation under the collaboration as of June 30, 2022. For the three and six months ended June 30, 2022, the Company recognized license and collaboration revenue of $ 0.9 million and 11 Table of Contents $ 26.6 million, respectively. License and collaboration revenue for the three and six months ended June 30, 2022 was primarily related to the transaction price recognized under the Restated Agreement based on proportional performance. The following tables present changes in the Company’s contract assets and liabilities during the periods presented (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at ​ ​ ​ ​ ​ Balance at ​ ​ Beginning of ​ ​ ​ ​ ​ End of Six Months Ended June 30, 2023 Period ​ Additions Deductions Period Contract assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Receivable from collaboration partner ​ $ 10 ​ $ 41 ​ ​ ( 12 ) ​ $ 39 Contract liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payable to collaboration partner ​ $ 69 ​ $ 11 ​ ​ ( 70 ) ​ $ 10 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at ​ ​ ​ ​ ​ ​ ​ Balance at ​ ​ Beginning of ​ ​ ​ ​ ​ End of Six Months Ended June 30, 2022 Period ​ Additions Deductions Period Contract assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Receivable from collaboration partner ​ $ 1,566 ​ $ 25,165 ​ $ ( 26,688 ) ​ $ 43 Contract liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred revenue ​ $ 1,601 ​ $ 25,757 ​ $ ( 27,358 ) ​ $ — Payable to collaboration partner ​ $ 899 ​ $ 30 ​ $ ( 849 ) ​ $ 80 ​ During the three and six months ended June 30, 2022, the Company recognized revenue of $ 0.9 million from amounts included in the deferred revenue contract liability balance at the beginning of each period. None of the costs to obtain or fulfill the contract were capitalized. Note 4. Fair Value Measurements Financial assets and liabilities are recorded at fair value. The accounting guidance for fair value provides a framework for measuring fair value, clarifies the definition of fair value and expands disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows: Level 1 —Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2— Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Level 3 —Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. In determining fair value, the Company utilizes quoted market prices, broker or dealer quotations, or valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value. 12 Table of Contents The following tables present the fair value of the Company’s financial assets determined using the inputs defined above (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 ​ Level 1 Level 2 Level 3 Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 64,578 ​ $ — ​ $ — $ 64,578 Commercial paper ​ — ​ ​ 132,955 ​ — 132,955 Corporate debt securities ​ ​ — ​ ​ 6,408 ​ ​ — ​ ​ 6,408 U.S. Treasury and agency securities ​ ​ — ​ ​ 101,851 ​ ​ — ​ ​ 101,851 Total financial assets ​ $ 64,578 ​ $ 241,214 $ — $ 305,792 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ Level 1 Level 2 Level 3 Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 54,292 ​ $ — ​ $ — $ 54,292 Commercial paper ​ — ​ 110,227 ​ — 110,227 Corporate debt securities ​ — ​ 10,741 — 10,741 U.S. Treasury and agency securities ​ ​ ​ ​ ​ 57,242 ​ ​ — 57,242 Total financial assets ​ $ 54,292 ​ $ 178,210 $ — $ 232,502 ​ The Company’s commercial paper, corporate debt securities, and U.S. Treasury and agency securities, including U.S. Treasury bills, are classified as Level 2 as they were valued based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques, for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets. The carrying amount of the Company’s remaining financial assets and liabilities, including cash, receivables and payables, approximates their fair value due to their short-term nature. Note 5. Cash Equivalents and Marketable Securities ​ Cash equivalents and marketable securities consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 ​ ​ Amortized ​ Gross Unrealized ​ ​ Cost Gains Losses Fair Value Money market funds ​ $ 64,578 ​ $ — ​ $ — ​ $ 64,578 Commercial paper ​ 133,007 ​ ​ — ​ ​ ( 52 ) ​ 132,955 Corporate debt securities ​ ​ 6,422 ​ ​ — ​ ​ ( 14 ) ​ ​ 6,408 U.S. Treasury and agency securities ​ ​ 101,872 ​ ​ 22 ​ ​ ( 43 ) ​ ​ 101,851 Total cash equivalents and marketable securities ​ $ 305,879 ​ $ 22 $ ( 109 ) ​ $ 305,792 Classified as: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash equivalents ​ ​ ​ ​ ​ ​ ​ $ 227,773 Marketable securities ​ ​ ​ ​ ​ ​ ​ 78,019 Total cash equivalents and marketable securities ​ ​ ​ ​ ​ ​ ​ $ 305,792 ​ 13 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ Amortized ​ Gross Unrealized ​ ​ Cost Gains Losses Fair Value Money market funds ​ $ 54,292 ​ $ — $ — ​ $ 54,292 Commercial paper ​ 110,257 ​ — ( 30 ) ​ 110,227 Corporate debt securities ​ 10,756 ​ — ( 15 ) ​ 10,741 U.S. Treasury and agency securities ​ ​ 57,251 ​ ​ 27 ​ ​ ( 36 ) ​ ​ 57,242 Total cash equivalents and marketable securities ​ $ 232,556 ​ $ 27 $ ( 81 ) ​ $ 232,502 Classified as: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash equivalents ​ ​ ​ ​ ​ ​ ​ $ 120,891 Marketable securities ​ ​ ​ ​ ​ ​ ​ 111,611 Total cash equivalents and marketable securities ​ ​ ​ ​ ​ ​ ​ $ 232,502 ​ Marketable securities of $ 78.0 million and $ 111.6 million held at June 30, 2023 and December 31, 2022, respectively, had contractual maturities of less than one year . The Company does not intend to sell its securities that are in an unrealized loss position, and it is not more likely than not that the Company will be required to sell its securities before recovery of their amortized cost basis, which may be at maturity. There were no material realized gains or realized losses on marketable securities for the periods presented. The Company evaluated securities with unrealized losses to determine whether such losses, if any, are due to credit-related factors and determined that there were no credit-related losses to be recognized as of June 30, 2023. ​ ​ Note 6. Balance Sheet Components Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ ​ 2023 ​ 2022 Prepaid clinical and research related expenses ​ $ 796 ​ $ 2,746 Prepaid insurance ​ ​ 827 ​ ​ 1,417 Prepaid license ​ ​ 607 ​ ​ 489 Other prepaid expenses ​ 1,260 ​ 1,018 Other receivable ​ ​ 11 ​ ​ 42 Prepaid expenses and other current assets ​ $ 3,501 ​ $ 5,712 ​ Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ ​ 2023 ​ 2022 Laboratory equipment ​ $ 4,982 ​ $ 4,817 Furniture and computer equipment ​ 1,089 ​ 1,089 Leasehold improvements ​ 913 ​ 913 Total property and equipment ​ 6,984 ​ 6,819 Accumulated depreciation ​ ( 5,721 ) ​ ( 5,254 ) Property and equipment, net ​ $ 1,263 ​ $ 1,565 ​ ​ 14 Table of Contents Accrued Expenses and Other Payables Accrued expenses and other payables consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ 2023 ​ 2022 Accrued clinical and research related expenses ​ $ 14,703 ​ $ 19,109 Accrued employee related expenses ​ 3,633 ​ 4,967 Accrued professional service fees ​ ​ 868 ​ ​ 464 Other ​ 165 ​ 415 Total accrued expenses and other payables ​ $ 19,369 ​ $ 24,955 ​ ​ ​ ​ Note 7. Stockholders’ Equity In April 2023, the Company completed an underwritten public offering of 5,000,000 shares of its common stock at a public offering price of $ 20.00 per share and issued an additional 750,000 shares of common stock at a price of $ 20.00 per share following the underwriters’ exercise of their option to purchase additional shares. Net proceeds, after deducting underwriting commissions and offering costs paid by the Company, were approximately $ 107.8 million. ​ In August 2022, the Company entered into an Open Market Sale Agreement SM (the “Sales Agreement”), pursuant to which the Company may offer and sell up to $ 100.0 million of shares of common stock from time to time in “at-the-market” offerings (the “2022 ATM Facility”). There were no sales of the Company’s common stock under the 2022 ATM Facility during the year ended December 31, 2022. During the three months ended March 31, 2023, the Company sold 1,749,199 shares of its common stock under the 2022 ATM Facility for net proceeds of $ 24.3 million, after deducting issuance costs. There were no sales of the Company’s common stock under the 2022 ATM Facility during the three months ended June 30, 2023. ​ In November 2019, the Company entered into an Open Market Sale Agreement SM (the “Prior Sales Agreement”), pursuant to which the Company could offer and sell up to $ 75.0 million of shares of common stock from time to time in “at-the-market” offerings (the “2019 ATM Facility”). During the year ended December 31, 2022, the Company sold 422,367 shares of its common stock under the 2019 ATM Facility for net proceeds of $ 14.6 million, after deducting issuance costs. The Prior Sales Agreement was terminated in connection with and replaced by the Sales Agreement in August 2022. In August 2018, the Company entered into a Securities Purchase Agreement with certain accredited investors (each, an “Investor” and, collectively, the “Investors”), pursuant to which the Company sold an aggregate of 2,750,000 shares of its common stock at a price of $ 8.00 per share, for aggregate net proceeds of $ 21.7 million, after deducting offering expenses payable by the Company. In a concurrent private placement, the Company issued the Investors warrants to purchase an aggregate of 2,750,000 shares of its common stock (each, a “Warrant” and, collectively, the “Warrants”). Each Warrant is exercisable from August 8, 2018 through August 8, 2023 . Warrants to purchase 1,375,000 shares of the Company’s common stock have an exercise price of $ 10.00 per share and Warrants to purchase 1,375,000 shares of the Company’s common stock have an exercise price of $ 15.00 per share. The exercise price and number of shares of common stock issuable upon the exercise of the Warrants (the “Warrant Shares”) are subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Warrants. Under certain circumstances, the Warrants may be exercisable on a “cashless” basis. In connection with the issuance and sale of the common stock and Warrants, the Company granted the Investors certain registration rights with respect to the Warrants and the Warrant Shares. The common stock and warrants are classified as equity in accordance with Accounting Standards Codification Topic 480 , Distinguishing Liabilities from Equity (“ASC 480”) , and the net proceeds from the transaction were recorded as a credit to additional paid-in capital. As of June 30, 2023, none of the Warrants have been exercised. 15 Table of Contents Note 8. Equity Plans Equity Incentive Plan In July 2016, the Company’s Board of Directors (“the Board”) and stockholders approved the Company’s 2016 Equity Incentive Plan (the “2016 Plan”) to replace the 2007 Stock Option Plan. The 2016 Plan is administered by the Board, or a committee appointed by the Board, which determines the types of awards to be granted, including the number of shares subject to the awards, the exercise price and the vesting schedule. Awards granted under the 2016 Plan expire no later than ten years from the date of grant. As of June 30, 2023, 841,577 shares of common stock were available for issuance under the 2016 Plan. Inducement Plan In May 2018, the Board approved the Company’s 2018 Inducement Plan (as subsequently amended, the “2018 Inducement Plan”), a non-stockholder approved stock plan, under which the Company awards options and restricted stock unit awards to persons that were not previously employees or directors of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company, within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. The 2018 Inducement Plan is administered by the Board or the Compensation Committee of the Board (the “Compensation Committee”), which determines the types of awards to be granted, including the number of shares subject to the awards, the exercise price and the vesting schedule. Awards granted under the 2018 Inducement Plan expire no later than ten years from the date of grant. As of June 30, 2023, 575,961 shares of common stock were available for issuance under the 2018 Inducement Plan. Stock Options Stock option activity under the Company’s equity incentive and inducement plans is set forth below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ Weighted- ​ ​ ​ ​ ​ ​ Average ​ Average ​ ​ ​ ​ ​ ​ Exercise ​ Remaining ​ Aggregate ​ ​ Options ​ Price Per ​ Contractual ​ Intrinsic ​ Outstanding Share Life Value (1) ​ ​ ​ ​ ​ ​ ​ (years) (in millions) Balances at December 31, 2022 6,240,509 $ 19.03 ​ ​ ​ Options granted 2,262,750 ​ ​ 12.61 ​ ​ Options exercised ( 220,771 ) ​ ​ 12.27 ​ ​ ​ Options forfeited ​ ( 157,679 ) ​ ​ 26.14 ​ ​ ​ ​ ​ Balances at June 30, 2023 8,124,809 $ 17.29 ​ 7.53 ​ $ 92.2 Options exercisable – June 30, 2023 ​ 4,410,899 $ 16.81 ​ 6.33 ​ ​ 51.9 Options vested and expected to vest – June 30, 2023 ​ 8,124,809 ​ $ 17.29 7.53 ​ $ 92.2 (1) The aggregate intrinsic values were calculated as the difference between the exercise price of the options and the closing price of the Company’s common stock on June 30, 2023. The calculation excludes options with an exercise price higher than the closing price of the Company’s common stock on June 30, 2023. The estimated weighted-average grant-date fair value of common stock underlying options granted to employees during the six months ended June 30, 2023 was $ 10.40 per share. 16 Table of Contents Stock Options Valuation Assumptions The fair value of employee stock option awards was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ June 30, ​ June 30, ​ ​ 2023 ​ 2022 ​ 2023 ​ 2022 Expected term (in years) 6.08 - 6.08 5.50 - 6.08 ​ 5.27 - 6.08 5.27 - 6.08 Expected volatility 106.2 % - 107.5 % ​ 96.3 % - 99.9 % ​ 106.2 % - 107.5 % ​ 96.3 % - 99.9 % Risk-free interest rate 3.71 % - 4.04 % ​ 2.71 % - 2.93 % ​ 3.57 % - 4.04 % ​ 1.64 % - 2.93 % Dividend yield — — ​ — — ​ In determining the fair value of the options granted, the Company uses the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires judgment to determine. Expected Term —The Company’s expected term represents the period that the Company’s options granted are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term). The Company has limited historical exercise information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. Expected Volatility —Beginning January 1, 2023, the Company’s expected volatility is estimated based upon the volatility of the Company’s stock price over a period equal to the expected term of the stock option grants. For the year ended December 31, 2022, the Company’s expected volatility was estimated based upon a mix of 25 % of the average volatility for comparable publicly traded biopharmaceutical companies over a period equal to the expected term of the stock option grants and 75 % of the volatility of the Company’s stock price since its initial public offering in August 2016. Risk-Free Interest Rate —The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option. Expected Dividend —The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero . Restricted Stock Units Restricted stock unit (“RSU”) activity under the Company’s equity incentive plans is set forth below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ Number of ​ Grant Date ​ Shares Fair Value Unvested RSUs at December 31, 2022 ​ 637,436 ​ $ 19.29 Granted ​ 396,775 ​ ​ 12.17 Vested ​ ( 284,321 ) ​ ​ 14.20 Forfeited ​ ( 12,901 ) ​ ​ 16.28 Unvested RSUs at June 30, 2023 ​ 736,989 ​ $ 18.37 ​ 17 Table of Contents Performance Stock Units Performance stock unit (“PSU”) activity under the Company’s equity incentive plans is set forth below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ Number of ​ Grant Date ​ Shares Fair Value Unvested PSUs at December 31, 2022 ​ 199,500 ​ $ 14.59 Granted — ​ ​ — Vested ​ ( 114,000 ) ​ ​ 8.76 Forfeited ​ — ​ ​ — Unvested PSUs at June 30, 2023 ​ 85,500 ​ $ 23.57 ​ The terms of the PSUs provide for 100 % of shares to be earned based on the achievement of certain pre-determined performance objectives, subject to the participant’s continued employment. The PSUs will vest, if at all, upon certification by the Compensation Committee of the actual achievement of the related performance objectives, subject to specified change of control exceptions. ​ Stock-based compensation expense associated with PSUs is based on the fair value of the Company’s common stock on the grant date, which equals the closing price of the Company’s common stock on the grant date. The Company recognizes compensation expense over the vesting period of the awards that are ultimately expected to vest when the achievement of the related performance objectives becomes probable. ​ During the three and six months ended June 30, 2023, the Compensation Committee certified the actual achievement of performance objectives related to certain PSUs. As a result, recipients earned a total of 114,000 shares of common stock. The total fair market value of PSUs on vest date during the three and six months ended June 30, 2023 was $ 3.0 million. ​ The total grant date fair value of unvested PSUs outstanding as of June 30, 2023 was $ 2.0 million. As of June 30, 2023, the achievement of the related performance objectives was deemed not probable and, accordingly, no stock-based compensation for unvested PSUs has been recognized as expense as of June 30, 2023. Employee Stock Purchase Plan ​ The Company’s 2016 Employee Stock Purchase Plan (“2016 ESPP”) allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15 % of their eligible compensation. At the end of each offering period, eligible employees are able to purchase shares at 85 % of the lower of the fair market value of the Company’s common stock at the beginning of the offering period or at the end of each applicable purchase period. During the six months ended June 30, 2023, a total of 68,605 shares of common stock were issued under the 2016 ESPP, and 1,486,685 shares of common stock remained available for issuance as of June 30, 2023. Stock-Based Compensation ​ Total stock-based compensation expense was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ June 30, ​ June 30, ​ 2023 2022 2023 2022 Research and development ​ $ 4,809 ​ $ 4,106 ​ $ 9,391 ​ $ 7,432 General and administrative ​ 3,534 ​ 2,699 ​ 6,536 ​ 5,308 Total stock-based compensation expense ​ $ 8,343 ​ $ 6,805 ​ $ 15,927 ​ $ 12,740 ​ 18 Table of Contents As of June 30, 2023, total unrecognized stock-based compensation expense was approximately $ 60.7 million, which the Company expects to recognize over a weighted-average period of approximately 2.7 years. ​ Note 9. Net Loss per Share As the Company had net losses for the three and six months ended June 30, 2023 and 2022, all potential weighted average dilutive common shares were determined to be anti-dilutive. The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ June 30, ​ June 30, ​ 2023 2022 2023 2022 Numerator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 38,460 ) ​ $ ( 41,037 ) ​ $ ( 72,185 ) ​ $ ( 61,967 ) Denominator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average shares used to compute net loss per common share, basic and diluted ​ 56,775,742 ​ 49,049,902 ​ 53,691,965 48,902,047 Net loss per share, basic and diluted ​ $ ( 0.68 ) ​ $ ( 0.84 ) ​ $ ( 1.34 ) ​ $ ( 1.27 ) ​ The following outstanding shares of potentially dilutive securities have been excluded from diluted net loss per share computations for the periods presented because their inclusion would be anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ 2023 2022 Options to purchase common stock ​ 8,124,809 6,825,121 Common stock warrants ​ 2,750,000 ​ 2,750,000 Restricted stock units ​ 736,989 ​ 766,090 Performance stock units ​ 85,500 ​ 219,000 ESPP shares ​ 24,998 ​ 19,103 Total 11,722,296 10,579,314 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 19 Table of Contents