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) ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2024 2023 Assets ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 131,121 ​ $ 186,727 Marketable securities ​ ​ 337,600 ​ ​ 154,890 Receivable from collaboration partner ​ ​ — ​ ​ 10,000 Prepaid expenses and other current assets ​ ​ 8,048 ​ ​ 3,960 Total current assets ​ ​ 476,769 ​ ​ 355,577 Marketable securities - noncurrent ​ ​ 114,560 ​ ​ — Property and equipment, net ​ ​ 2,468 ​ ​ 1,195 Restricted cash - noncurrent ​ ​ 225 ​ ​ 225 Operating lease right-of-use asset ​ ​ 9,835 ​ ​ 954 Total assets ​ $ 603,857 ​ $ 357,951 Liabilities and Stockholders’ Equity ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ Accounts payable ​ $ 3,049 ​ $ 772 Payable to collaboration partner ​ ​ — ​ ​ 3 Accrued expenses and other payables ​ ​ 20,739 ​ ​ 19,358 Deferred revenue ​ ​ 19,696 ​ ​ — Income taxes payable ​ ​ 1,049 ​ ​ — Operating lease liability ​ ​ 45 ​ ​ 1,141 Total current liabilities ​ ​ 44,578 ​ ​ 21,274 Deferred revenue - noncurrent ​ ​ 16,509 ​ ​ — Operating lease liability - noncurrent ​ ​ 10,855 ​ ​ — Total liabilities ​ ​ 71,942 ​ ​ 21,274 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, 180,000,000 and 90,000,000 shares authorized as of September 30, 2024 and December 31, 2023 , respectively; 59,521,903 and 57,708,613 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively ​ ​ 1 ​ ​ 1 Additional paid-in capital ​ ​ 1,002,774 ​ ​ 952,491 Accumulated other comprehensive income (loss) ​ ​ 1,336 ​ ​ ( 105 ) Accumulated deficit ​ ​ ( 472,196 ) ​ ​ ( 615,710 ) Total stockholders’ equity ​ ​ 531,915 ​ ​ 336,677 Total liabilities and stockholders’ equity ​ $ 603,857 ​ $ 357,951 ​ 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 ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2024 2023 2024 2023 License and collaboration revenue ​ $ 4,675 ​ $ — ​ $ 263,795 ​ $ — Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ ​ 35,970 ​ ​ 30,664 ​ ​ 103,224 ​ ​ 91,262 General and administrative ​ 10,158 ​ 7,662 ​ 34,508 ​ 25,439 Total operating expenses ​ 46,128 ​ 38,326 ​ 137,732 ​ 116,701 Income (loss) from operations ​ ( 41,453 ) ​ ( 38,326 ) ​ 126,063 ​ ( 116,701 ) Interest income ​ 7,682 ​ 4,252 ​ 19,462 ​ ​ 10,656 Other income (expense), net ​ ​ 141 ​ ​ ( 31 ) ​ ​ 219 ​ ​ ( 245 ) Income (loss) before income tax benefit (expense) ​ ​ ( 33,630 ) ​ ​ ( 34,105 ) ​ ​ 145,744 ​ ​ ( 106,290 ) Income tax benefit (expense) ​ ​ 420 ​ ​ — ​ ​ ( 2,230 ) ​ ​ — Net income (loss) ​ $ ( 33,210 ) ​ $ ( 34,105 ) ​ $ 143,514 ​ $ ( 106,290 ) Net income (loss) per share, basic ​ $ ( 0.54 ) ​ $ ( 0.58 ) ​ $ 2.34 ​ $ ( 1.91 ) Net income (loss) per share, diluted ​ $ ( 0.54 ) ​ $ ( 0.58 ) ​ $ 2.22 ​ $ ( 1.91 ) Weighted-average shares used to compute net income (loss) per share, basic ​ 61,767,934 59,182,899 ​ 61,311,310 55,542,543 Weighted-average shares used to compute net income (loss) per share, diluted ​ 61,767,934 59,182,899 ​ 64,611,941 55,542,543 ​ 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 Income (Loss ) (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2024 2023 2024 2023 Net income (loss) ​ $ ( 33,210 ) ​ $ ( 34,105 ) ​ $ 143,514 ​ $ ( 106,290 ) Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gain (loss) on marketable securities ​ ​ 1,585 ​ ​ 28 ​ ​ 1,441 ​ ​ ( 5 ) Gain on translation of foreign operations ​ — ​ — ​ — ​ 194 Comprehensive income (loss) ​ $ ( 31,625 ) ​ $ ( 34,077 ) ​ $ 144,955 ​ $ ( 106,101 ) ​ 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 ​ Income (Loss) ​ Deficit ​ Equity Three months ended September 30, 2024 Shares Amount ​ ​ ​ ​ ​ ​ ​ Balance at June 30, 2024 58,762,063 $ 1 ​ $ 980,558 $ ( 249 ) ​ $ ( 438,986 ) $ 541,324 Issuance of common stock under equity incentive and employee stock purchase plans ​ 759,840 — ​ 12,051 — ​ — 12,051 Stock-based compensation expense — — ​ 10,165 — ​ — 10,165 Other comprehensive income (loss) — — ​ — 1,585 ​ — 1,585 Net income (loss) — — ​ — — ​ ( 33,210 ) ( 33,210 ) Balance at September 30, 2024 59,521,903 $ 1 ​ $ 1,002,774 $ 1,336 ​ $ ( 472,196 ) $ 531,915 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ Total ​ ​ Common ​ Paid-In ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ ​ Stock ​ Capital ​ Income (Loss) ​ Deficit ​ Equity Three months ended September 30, 2023 Shares Amount ​ ​ ​ ​ ​ ​ ​ Balance at June 30, 2023 ​ 57,494,185 $ 1 ​ $ 903,205 $ ( 198 ) ​ $ ( 608,940 ) $ 294,068 Exercise of Warrants in exchange for issuance of Pre-funded Warrants ​ — ​ ​ — ​ ​ 33,813 ​ ​ — ​ ​ — ​ ​ 33,813 Issuance of common stock upon exercise of Warrants ​ 44,748 ​ ​ — ​ ​ 559 ​ ​ — ​ ​ — ​ ​ 559 Issuance of common stock under equity incentive and employee stock purchase plans ​ 108,543 — ​ 1,021 — ​ — 1,021 Stock-based compensation expense — — ​ 6,765 — ​ — 6,765 Other comprehensive income (loss) — — ​ — 28 ​ — 28 Net income (loss) — — ​ — — ​ ( 34,105 ) ( 34,105 ) Balance at September 30, 2023 57,647,476 $ 1 ​ $ 945,363 $ ( 170 ) ​ $ ( 643,045 ) $ 302,149 ​ 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 (continued) (Unaudited) (In thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ Total ​ ​ Common ​ Paid-In ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ ​ Stock ​ Capital ​ Income (Loss) ​ Deficit ​ Equity Nine months ended September 30, 2024 Shares Amount ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2023 57,708,613 $ 1 ​ $ 952,491 $ ( 105 ) ​ $ ( 615,710 ) $ 336,677 Issuance of common stock under equity incentive and employee stock purchase plans ​ 1,749,094 ​ ​ — ​ ​ 22,422 ​ ​ — ​ ​ — ​ ​ 22,422 Shares withheld for net settlement of tax withholding upon vesting of restricted stock units ​ ( 20,793 ) ​ ​ — ​ ​ ( 600 ) ​ ​ — ​ ​ — ​ ​ ( 600 ) Issuance of common stock upon exercise of Pre-Funded Warrants ​ 84,989 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ — Stock-based compensation expense — — ​ 28,461 — ​ — 28,461 Other comprehensive income (loss) — — ​ — 1,441 ​ — 1,441 Net income (loss) — — ​ — — ​ 143,514 143,514 Balance at September 30, 2024 59,521,903 $ 1 ​ $ 1,002,774 $ 1,336 ​ $ ( 472,196 ) $ 531,915 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ Total ​ ​ Common ​ Paid-In ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ ​ Stock ​ Capital ​ Income (Loss) ​ Deficit ​ Equity Nine months ended September 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 Exercise of Warrants in exchange for issuance of Pre-funded Warrants ​ — ​ ​ — ​ ​ 33,813 ​ ​ — ​ ​ — ​ ​ 33,813 Issuance of common stock upon exercise of Warrants ​ 44,748 ​ ​ — ​ ​ 559 ​ ​ — ​ ​ — ​ ​ 559 Issuance of common stock under equity incentive and employee stock purchase plans 796,240 — ​ 4,255 — ​ — 4,255 Shares withheld for net settlement of tax withholding upon vesting of restricted stock units ​ ( 31,963 ) ​ ​ — ​ ​ ( 769 ) ​ ​ — ​ ​ — ​ ​ ( 769 ) Stock-based compensation expense — — ​ 22,692 — ​ — 22,692 Other comprehensive income (loss) — — ​ — 189 ​ — 189 Net income (loss) — — ​ — — ​ ( 106,290 ) ( 106,290 ) Balance at September 30, 2023 57,647,476 $ 1 ​ $ 945,363 $ ( 170 ) ​ $ ( 643,045 ) $ 302,149 ​ 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) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ 2024 2023 Cash Flows from Operating Activities ​ ​ ​ Net income (loss) ​ $ 143,514 ​ $ ( 106,290 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: ​ ​ ​ ​ ​ ​ Stock-based compensation ​ ​ 28,461 ​ ​ 22,692 Operating lease right-of-use asset amortization ​ ​ 1,651 ​ ​ 1,751 Depreciation ​ ​ 708 ​ ​ 729 Accretion of discount on marketable securities ​ ​ ( 6,115 ) ​ ​ ( 3,221 ) Other ​ ​ — ​ ​ 194 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Receivable from collaboration partner ​ ​ 10,000 ​ ​ 10 Prepaid expenses and other assets ​ ​ ( 4,088 ) ​ ​ 1,582 Accounts payable ​ ​ 2,272 ​ ​ ( 2,271 ) Payable to collaboration partner ​ ​ ( 3 ) ​ ​ ( 66 ) Accrued expenses and other payables ​ ​ 1,061 ​ ​ ( 259 ) Income taxes payable ​ ​ 1,049 ​ ​ — Deferred revenue ​ ​ 36,205 ​ ​ — Operating lease liability ​ ​ ( 1,385 ) ​ ​ ( 2,047 ) Net cash provided by (used in) operating activities ​ ​ 213,330 ​ ​ ( 87,196 ) Cash Flows from Investing Activities ​ ​ ​ ​ ​ ​ Purchase of marketable securities ​ ​ ( 507,293 ) ​ ​ ( 93,077 ) Proceeds from maturities of marketable securities ​ ​ 217,580 ​ ​ 115,696 Purchases of property and equipment ​ ​ ( 1,045 ) ​ ​ ( 590 ) Net cash (used in) provided by investing activities ​ ​ ( 290,758 ) ​ ​ 22,029 Cash Flows from Financing Activities ​ ​ ​ ​ ​ ​ Proceeds from exercise of Warrants in exchange for issuance of Pre-Funded Warrants ​ ​ — ​ ​ 33,813 Proceeds from issuance of common stock upon exercise of Warrants ​ ​ — ​ ​ 559 Proceeds from issuance of common stock upon exercise of stock options and purchases under employee stock purchase plan ​ ​ 22,422 ​ ​ 4,255 Tax withholding payments related to net settlement of restricted stock units ​ ​ ( 600 ) ​ ​ ( 769 ) Proceeds from public offering of common stock, net of issuance costs ​ ​ — ​ ​ 107,790 Proceeds from at-the-market offering, net of issuance costs ​ ​ — ​ ​ 24,302 Net cash provided by financing activities ​ ​ 21,822 ​ ​ 169,950 Net increase (decrease) in cash, cash equivalents and restricted cash ​ ​ ( 55,606 ) ​ ​ 104,783 Cash, cash equivalents and restricted cash, beginning of period ​ 186,952 ​ 125,969 Cash, cash equivalents and restricted cash, end of period ​ $ 131,346 ​ $ 230,752 Supplemental Disclosure of Non-Cash Financing and Investing Information: ​ ​ ​ ​ ​ ​ Right-of-use asset obtained in exchange for lease obligation ​ $ 10,511 ​ $ — Leasehold improvements obtained under tenant improvement allowance ​ $ 613 ​ $ — Purchases of property and equipment in accounts payable and accrued liabilities ​ $ 325 ​ $ 3 ​ 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 a late-stage development biopharmaceutical company with two peptide-based new chemical entities: rusfertide and JNJ-2113. The Company’s clinical programs fall into two broad categories of diseases: (i) hematology and blood disorders, and (ii) inflammatory and immunomodulatory diseases. Rusfertide, a mimetic of the natural hormone hepcidin, is in Phase 3 development for the rare blood disorder polycythemia vera (“PV”). Rusfertide is being co-developed and co-commercialized with Takeda Pharmaceuticals USA, Inc. (“Takeda”) pursuant to a worldwide collaboration and license agreement entered into in 2024 (the “Takeda Collaboration Agreement”), with the Company remaining primarily responsible for development through Phase 3 and the New Drug Application (“NDA”) filing. JNJ-2113 is an oral Interleukin-23 receptor (“IL-23R”) antagonist licensed to J&J Innovative Medicines (“JNJ”), formerly Janssen Biotech, and is in Phase 3 development for psoriasis and nearing completion of Phase 2b development for ulcerative colitis (“UC”). Following JNJ-2113’s joint discovery by the Company and JNJ scientists pursuant to the companies’ IL-23R collaboration, the Company was primarily responsible for the development of JNJ-2113 through Phase 1, with JNJ assuming responsibility for development in Phase 2 and beyond. The Company also has a number of pre-clinical stage oral discovery programs addressing validated targets, including IL-17, hepcidin mimetic and anti-obesity programs. The Company is headquartered in Newark, California and has one wholly owned subsidiary, Protagonist Pty Limited (“Protagonist Australia”), located in Brisbane, Queensland, Australia. Operating Segments 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 September 30, 2024, the Company had cash, cash equivalents and marketable securities of $ 583.3 million. The Company has incurred cumulative net losses from inception through September 30, 2024 of $ 472.2 million. The Company’s ultimate success depends upon the outcome of its research and development and collaboration activities. The Company may incur additional losses in the future as it continues the development of rusfertide through Phase 3 development and a potential NDA filing and invests in its pre-clinical discovery programs and may 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. 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”), the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and applicable rules and regulations of the Securities and Exchange Commission (“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 September 30, 2024 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 7 Table of Contents 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 nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future period. 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, 2023 included in the Company’s Annual Report on Form 10-K, filed with the SEC on February 27, 2024. 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 assumptions used to determine standalone selling price utilized to allocate the transaction price between distinct performance obligations, assumptions used to recognize revenue over time for certain performance obligations for which a cost-based input method is used as the measure of progress and estimates of whether contingent consideration should be included in the transaction price at each reporting period. 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 may 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 geopolitical instability, inflationary pressures, high interest rates, a recessionary environment, domestic and global monetary and fiscal policy and other factors. 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 filing date of this Quarterly Report on Form 10-Q. 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 consisted of (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ 2024 2023 Cash and cash equivalents ​ $ 131,121 ​ $ 230,527 Restricted cash - noncurrent ​ 225 ​ 225 Total cash reported on condensed consolidated statements of cash flows ​ $ 131,346 ​ $ 230,752 ​ 8 Table of Contents Stock-Based Compensation Expense ​ The Company has granted stock options, restricted stock units (“RSUs”) and performance share units (“PSUs”). ​ Stock-based compensation expense associated with stock options is based on the estimated grant date fair value using the Black-Scholes valuation model, which requires the use of subjective assumptions related to expected stock price volatility, option term, risk-free interest rate and dividend yield. The Company recognizes compensation expense over the vesting period of the awards that are ultimately expected to vest. ​ Stock-based compensation expense associated with RSUs is based on the fair value of the Company’s common stock on the grant date, which equals the closing market price of the Company’s common stock on the grant date. For RSUs, the Company recognizes compensation expense over the vesting period of the awards that are ultimately expected to vest. PSUs allow the recipients of such awards to earn fully vested shares of the Company’s common stock upon the achievement of pre-established performance objectives. 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 market price of the Company’s common stock on the grant date and is recognized when the performance objective is expected to be achieved. The Company evaluates the probability of achieving the performance criteria on a quarterly basis. The cumulative effect on current and prior periods of a change in the estimated number of PSUs expected to be earned is recognized as compensation expense or as reduction of previously recognized compensation expense in the period of the revised estimate. ​ The Company recognizes forfeitures of stock-based awards as they occur. ​ Total stock-based compensation expense was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2024 2023 2024 2023 Research and development ​ $ 5,212 ​ $ 3,780 ​ $ 15,597 ​ $ 13,171 General and administrative ​ 4,953 ​ 2,985 ​ 12,864 ​ 9,521 Total stock-based compensation expense ​ $ 10,165 ​ $ 6,765 ​ $ 28,461 ​ $ 22,692 ​ Significant Accounting Policies ​ Collaborative Arrangements ​ The Company analyzes its collaborative arrangements to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards, and therefore are within the scope of Accounting Standards Codification Topic 808 - Collaborative Arrangements (“Topic 808”). For collaborative arrangements that contain multiple elements, the Company determines which units of account are deemed to be within the scope of Topic 808 and which units of account are more reflective of a vendor-customer relationship, and therefore are within the scope of Accounting Standards Codification Topic 606 – Revenue from Contracts with Customers (“Topic 606”). For units of account that are accounted for pursuant to Topic 808, an appropriate recognition method is determined and applied consistently, either by analogy to appropriate accounting literature or by applying a reasonable accounting policy election. For collaborative arrangements that are within the scope of Topic 808, the Company evaluates the income statement classification for presentation of amounts due to or owed from other participants associated with multiple units of account in a collaborative arrangement based on the nature of each activity. Payments or reimbursements that are the result of a collaborative relationship instead of a customer relationship, such as co-development and co-commercialization activities, are recorded as increases or decreases to research and development expense or general and administrative expense, as appropriate. ​ Except as described above, there have been no other material changes to the Company’s significant accounting policies during the nine months ended September 30, 2024, as compared to those disclosed in Note 2. Summary of 9 Table of Contents Significant Accounting Policies included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. ​ Recently Adopted Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplified accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 also removed certain settlement conditions that were required for equity-linked contracts to qualify for the derivative scope exception, and it simplified the diluted earnings per share calculation in certain areas. ASU 2020 - 06 was effective for the Company beginning on January 1, 2024. The Company adopted ASU 2020-06 effective January 1, 2024. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements or related disclosures. Recently Issued Accounting Pronouncements Not Yet Adopted as of September 30, 2024 ​ In November 2023, the FASB issued Accounting Standards Update No. 2023-07 Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires public entities to disclose incremental segment information on an annual and interim basis. ASU 2023-07 requires all public entities, including public entities with a single reportable segment, to provide one or more measures of segment profit or loss used by the chief operating decision maker to allocate resources and assess performance. Additionally, the guidance requires disclosures of significant segment expenses and other segment items as well as incremental qualitative disclosures. ASU 2023-07 is effective for the Company for fiscal years beginning on January 1, 2024, and interim periods within fiscal years beginning on January 1, 2025. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements or related disclosures. ​ In December 2023, the FASB issued Accounting Standards Update No. 2023-09 Income Taxes (Topic 740) – Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires public business entities to disclose specific categories in the income tax rate reconciliation annually and provide additional information for reconciling items that meet a qualitative threshold. ASU 2023-09 also requires that entities disclose annually additional information about income taxes paid and disaggregated information for certain items. ASU 2023-09 is effective for the Company beginning on January 1, 2025. The Company does not expect the adoption of this guidance to have a material impact on its financial position, results of operations or cash flows. ​ In November 2024, the FASB issued Accounting Standards Update No. 2024-03 Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires detailed disclosures about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement. ASU 2024-03 is effective for the Company or fiscal years beginning on January 1, 2027, and for interim periods within fiscal years beginning om January 1, 2028. Early adoption is permitted. The guidance may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of ASU 2024-03 or (2) retrospectively to all prior periods presented in the financial statements. The Company does not expect the adoption of this guidance to have a material effect on its consolidated financial statements and continues to evaluate disclosure presentation alternatives. ​ Note 3. License and Collaboration Agreements Takeda Collaboration Agreement In January 2024, the Company entered into the Takeda Collaboration Agreement, which became effective in March 2024. 10 Table of Contents Pursuant to the Takeda Collaboration Agreement, the Company and Takeda are jointly developing and commercializing rusfertide and potentially other specified second-generation injectable hepcidin mimetic compounds (the “Licensed Products”) in the United States (the “Profit-Share Territory”). Takeda is solely and exclusively responsible for the development and commercialization of the Licensed Products in all other countries (the “Takeda Territory”). The Company and Takeda share the costs of the development, manufacture and commercialization activities for the Licensed Products in the Profit-Share Territory, provided that (i) the Company leads, and is solely responsible for its costs associated with, completion of the ongoing Phase 3 VERIFY program evaluating rusfertide for the treatment of PV as well as associated U.S. regulatory activities; (ii) Takeda leads, and is solely responsible for its costs associated with, pre-commercialization activities related to rusfertide in the Profit-Share Territory; and (iii) Takeda leads commercialization of rusfertide in the Profit-Share Territory, with the Company holding an option to co-detail. Takeda is solely responsible for all costs for the development, manufacture and commercialization of the Licensed Products in the Takeda Territory. The Company granted Takeda a non-transferable, sublicensable and, except for certain specified exceptions, exclusive license to certain intellectual property of the Company to exercise its rights and perform its obligations under the Takeda Collaboration Agreement. ​ The Company received a one-time, non-refundable upfront payment of $ 300.0 million in April 2024. In addition, the Company is eligible to receive additional worldwide development, regulatory and commercial milestone payments for rusfertide of up to $ 330.0 million, and tiered royalties from 10 % to 17 % on net sales of the Licensed Products in the Takeda Territory. The Company and Takeda also share equally in profits and losses ( 50 % to the Company and 50 % to Takeda) for Licensed Products in the Profit-Share Territory. Takeda will book sales of the Licensed Products globally. ​ The Company has the right to opt-out entirely of profit- and loss-sharing in the Profit-Share Territory for rusfertide and all other Licensed Products (the “Full Opt-out Right”) (i) during the 90-day period beginning 120 days after the filing of an NDA with the U.S. Food and Drug Administration (“FDA”) for rusfertide for PV (the “Initial Opt-out Period”); and (ii) for convenience without receipt of the Opt-out Payment (as defined below) (generally following the Initial Opt-out Period). In addition, if the Company does not exercise the Full Opt-out Right, the Company may opt-out of any Licensed Product other than rusfertide on a Licensed Product-by-Licensed Product basis (each, a “Partial Opt-out Right” and either the Full Opt-out Right or a Partial Opt-out right being an “Opt-out Right”). Following the Company’s exercise of an Opt-out Right, the Company has agreed to transition applicable development and commercial activities to Takeda, and Takeda has agreed to assume sole operational and financial responsibility for such activities in the United States. The Takeda Collaboration Agreement provides for aggregate development, regulatory and commercial milestone payments from Takeda to the Company for rusfertide of up to $ 975 million if the Company exercises the Full Opt-out Right. In addition to these milestone payments, in the event the Company exercises the Full Opt-out Right during the Initial Opt-out Period, the Company will receive: (i) a $ 200 million payment following its exercise of the Full Opt-out Right; and (ii) an additional $ 200 million payment following FDA approval of the NDA for rusfertide for PV (together, the “Opt-out Payment”). If the Company exercises an Opt-out Right, Takeda has agreed to pay the Company royalties of 14 % to 29 % on worldwide net sales of the Licensed Products with respect to which the Company has exercised an Opt-out Right. Upcoming potential development and regulatory milestones under the Takeda Collaboration Agreement include: ● $ 25.0 million upon successful achievement of the primary endpoint in the Phase 3 VERIFY clinical trial for rusfertide in PV; and ● $ 50.0 million upon FDA approval of an NDA for rusfertide in PV (or $ 75.0 million if the Company exercises the Full Opt-out Right). The Company evaluated the Takeda Collaboration Agreement and concluded that it has elements that are within the scope of Topic 606 and Topic 808. As of the effective date of the Takeda Collaboration Agreement, the Company identified two distinct performance obligations: (i) the rusfertide license delivered upon the effectiveness of 11 Table of Contents the Takeda Collaboration Agreement and (ii) certain development services to be provided prior to the Initial Opt-out Period, including the Company’s responsibilities to complete the VERIFY Phase 3 clinical trial in PV and to file an NDA with the FDA upon successful completion of the VERIFY trial and associated manufacturing services. The Company determined that the initial transaction price totaled $ 300.0 million, comprised of the upfront payment. The Company has excluded any future estimated milestones or royalties from this transaction price to date, all of which are either currently constrained or subject to the sales-and usage-based royalty exception. As part of the Company’s evaluation of this variable consideration constraint, it determined that the potential payments are contingent upon developmental and regulatory milestones that are uncertain and are highly susceptible to factors outside of its control. The Company allocated $ 254.1 million of the initial transaction price to the license and $ 45.9 million to the development services based upon the relative standalone selling price of each performance obligation. The estimate of standalone selling price for the license was determined based on discounted cash flows for the expected development and commercialization of rusfertide and includes assumptions for forecasted revenues, development timelines and expenses, discount rates, and probabilities of technical and regulatory success. The estimate of standalone selling price for the development services was determined based on forecasted costs and expenses over the expected development period. For the license of rusfertide, the Company determined that Takeda could benefit from the license at the time the license was granted and therefore, the related performance obligation was satisfied at a point in time. ​ The amount allocated to the license, which represents functional intellectual property that was transferred at a point in time, was satisfied upon transfer of the license to Takeda. The amount allocated to development services will be recognized over time based on a measure of the Company’s efforts toward satisfying the performance obligation relative to the total expected efforts or inputs to satisfy the performance obligation (e.g., costs incurred compared to total budget). The Company recognized $ 9.7 million of revenue allocated to development services with respect to the period from the effective date of the contract through September 30, 2024. ​ The Company determined that the Takeda Collaboration Agreement met the definition of a collaborative arrangement under Topic 808. Both parties are active participants in directing and carrying out the development of the Licensed Products and both are exposed to the significant risk and rewards related to the commercial success of the Products. If the Company does not exercise an Opt-out Right (“Company Opt-in”), the Company and Takeda would co-detail the Licensed Products in the U.S. and share in the economic results through a profit-sharing structure. The Company determined that development costs subsequent to the Company Opt-in date are within the scope of Topic 808, which does not provide recognition and measurement guidance. As such, the Company determined that Accounting Standards Codification Topic 730 – Research and Development was appropriate to analogize to based on the cost-sharing provisions of the agreement. The Company concluded that payments to or reimbursements from Takeda related to these services will be accounted for as an increase to or reduction of research and development expense, respectively. ​ JNJ License and Collaboration Agreement ​ On July 27, 2021, the Company entered into an Amended and Restated License and Collaboration Agreement with JNJ, formerly Janssen Biotech, Inc., which amended and restated the License and Collaboration Agreement, effective July 13, 2017, by and between the Company and JNJ, as amended by the first amendment, effective May 7, 2019 (together, the “JNJ License and Collaboration Agreement”). During the fourth quarter of 2023, the Company earned a $ 50.0 million milestone payment in connection with the dosing of a third patient in the ICONIC-TOTAL Phase 3 clinical trial of JNJ-2113 in patients with moderate-to-severe psoriasis and a $ 10.0 million milestone payment upon t he dosing of the third patient in the ANTHEM Phase 2b trial moderately-to-severely active UC. The Company has earned a total of $ 172.5 million in non-refundable payments from JNJ from inception in 2017 through September 30, 2024. ​ The JNJ License and Collaboration Agreement relates to the development, manufacture and commercialization of oral IL-23 receptor antagonist drug candidates and enables JNJ to develop collaboration compounds for multiple indications. Under the JNJ License and Collaboration Agreement, JNJ is required to use commercially reasonable efforts to develop at least one collaboration compound for at least two indications. ​ 12 Table of Contents Upcoming potential development and regulatory milestones include: ● $ 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 an NDA for a second-generation compound with the FDA; ● $ 50.0 million upon FDA approval of an NDA for a second-generation compound; 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. Pursuant to the agreement, the Company is eligible to receive future sales milestone payments and tiered royalties on net product sales at percentages ranging from 6 % to 10 %. Revenue Recognition For the three months ended September 30, 2024, the Company recognized license and collaboration revenue of $ 4.7 million related to the Takeda Collaboration Agreement transaction price for development services provided by the Company during the period based on the cost-based input method. For the nine months ended September 30, 2024, the Company recognized license and collaboration revenue of $ 263.8 million related to the Takeda Collaboration Agreement transaction price, including $ 254.1 million allocated to the rusfertide license delivered to Takeda upon effectiveness of the agreement in March 2024 and $ 9.7 million for development services provided by the Company during the period based on the cost-based input method. For the three and nine months ended September 30, 2023, no license and collaboration revenue was recognized. The remaining unrecognized transaction price amount of $ 36.2 million related to the Takeda Collaboration Agreement was recorded as deferred revenue on the Company’s condensed consolidated balance sheet as of September 30, 2024 and will be recognized over time based on a measure of the Company’s efforts toward satisfying the performance obligation relative to the total expected efforts or inputs to satisfy the performance obligation (e.g. costs incurred compared to total budget). For the three months ended September 30, 2024, the Company recognized $ 4.7 million of revenue that was included in the deferred revenue liability balance at the beginning of the period. For the nine months ended September 30, 2024 and the three and nine months ended September 30, 2023, the Company did no t recognize revenue from any amounts included in the deferred revenue liability balance at the beginning of each period. None of the costs to obtain or fulfill the contracts 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. 13 Table of Contents 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. The following tables present the fair value of the Company’s financial assets determined using the inputs defined above (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 ​ Level 1 Level 2 Level 3 Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 32,623 ​ $ — ​ $ — $ 32,623 Certificates of deposit ​ — ​ ​ 15,271 ​ — 15,271 U.S. Treasury and agency securities ​ ​ — ​ ​ 241,787 ​ ​ — ​ ​ 241,787 Commercial paper ​ — ​ ​ 169,249 ​ — 169,249 Corporate debt securities ​ ​ — ​ ​ 116,528 ​ ​ — ​ ​ 116,528 Total financial assets ​ $ 32,623 ​ $ 542,835 $ — $ 575,458 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ Level 1 Level 2 Level 3 Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 19,212 ​ $ — ​ $ — $ 19,212 Certificates of deposit ​ — ​ ​ 13,004 ​ — 13,004 U.S. Treasury and agency securities ​ ​ — ​ ​ 145,085 ​ ​ — ​ ​ 145,085 Commercial paper ​ — ​ 130,296 ​ — 130,296 Corporate debt securities ​ — ​ 7,672 — 7,672 Total financial assets ​ $ 19,212 ​ $ 296,057 $ — $ 315,269 ​ The Company’s certificates of deposit, U.S. Treasury and agency securities, including U.S. Treasury bills, commercial paper and corporate debt securities 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. 14 Table of Contents Note 5. Cash Equivalents and Marketable Securities ​ Cash equivalents and marketable securities consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 ​ ​ Amortized ​ Gross Unrealized ​ ​ Cost Gains Losses Fair Value Money market funds ​ $ 32,623 ​ $ — ​ $ — ​ $ 32,623 Certificates of deposit ​ ​ 15,222 ​ ​ 49 ​ — ​ 15,271 U.S. Treasury and agency securities ​ ​ 240,780 ​ ​ 1,048 ​ ​ ( 41 ) ​ ​ 241,787 Commercial paper ​ 169,156 ​ ​ 97 ​ ​ ( 4 ) ​ 169,249 Corporate debt securities ​ ​ 116,230 ​ ​ 310 ​ ​ ( 12 ) ​ ​ 116,528 Total cash equivalents and marketable securities ​ $ 574,011 ​ $ 1,504 $ ( 57 ) ​ $ 575,458 Classified as: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash equivalents ​ ​ ​ ​ ​ ​ ​ $ 123,298 Marketable securities - current ​ ​ ​ ​ ​ ​ ​ 337,600 Marketable securities - noncurrent ​ ​ ​ ​ ​ ​ ​ 114,560 Total cash equivalents and marketable securities ​ ​ ​ ​ ​ ​ ​ $ 575,458 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ Amortized ​ Gross Unrealized ​ ​ Cost Gains Losses Fair Value Money market funds ​ $ 19,212 ​ $ — $ — ​ $ 19,212 Certificates of deposit ​ ​ 12,998 ​ ​ 6 ​ ​ — ​ 13,004 U.S. Treasury and agency securities ​ ​ 145,024 ​ ​ 63 ​ ​ ( 2 ) ​ ​ 145,085 Commercial paper ​ 130,351 ​ 5 ( 60 ) ​ 130,296 Corporate debt securities ​ ​ 7,678 ​ — ( 6 ) ​ 7,672 Total cash equivalents and marketable securities ​ $ 315,263 ​ $ 74 $ ( 68 ) ​ $ 315,269 Classified as: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash equivalents ​ ​ ​ ​ ​ ​ ​ $ 160,379 Marketable securities - current ​ ​ ​ ​ ​ ​ ​ 154,890 Total cash equivalents and marketable securities ​ ​ ​ ​ ​ ​ ​ $ 315,269 ​ All of the Company’s marketable securities are classified as available-for-sale. Current marketable securities of $ 337.6 million and $ 154.9 million held as of September 30, 2024 and December 31, 2023, respectively, had contractual maturities of less than one year . Noncurrent marketable securities of $ 114.6 million held as of September 30, 2024 had contractual maturities of at least one year but no more than two years . 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, were due to credit-related factors and determined that there were no credit-related losses to be recognized as of September 30, 2024. ​ 15 Table of Contents Note 6. Balance Sheet Components Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ ​ 2024 ​ 2023 Prepaid clinical and research related expenses ​ $ 3,775 ​ $ 649 Prepaid insurance ​ ​ 217 ​ ​ 1,410 Prepaid licenses ​ ​ 599 ​ ​ 529 Other prepaid expenses ​ 788 ​ 1,040 Other receivable ​ ​ 2,669 ​ ​ 332 Prepaid expenses and other current assets ​ $ 8,048 ​ $ 3,960 ​ Property and Equipment, Net ​ Property and equipment, net consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ ​ 2024 ​ 2023 Laboratory equipment ​ $ 6,224 ​ $ 5,323 Furniture and computer equipment ​ 1,403 ​ 1,143 Leasehold improvements ​ 1,769 ​ 963 Total property and equipment ​ 9,396 ​ 7,429 Accumulated depreciation ​ ( 6,928 ) ​ ( 6,234 ) Property and equipment, net ​ $ 2,468 ​ $ 1,195 ​ Accrued Expenses and Other Payables ​ Accrued expenses and other payables consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2024 ​ 2023 Accrued clinical and research related expenses ​ $ 11,619 ​ $ 11,841 Accrued employee related expenses ​ 8,155 ​ 6,786 Accrued professional service fees ​ ​ 846 ​ ​ 632 Other ​ 119 ​ 99 Total accrued expenses and other payables ​ $ 20,739 ​ $ 19,358 ​ ​ ​ ​ 16 Table of Contents Note 7. Lease The Company applies Accounting Standards Codification Topic 842 -- Leases to recognize leases with terms of more than 12 months on the balance sheet. The Company has elected to account for each separate lease component and non-lease components as one single component for all lease assets. Leases with terms of 12 months or less are not recorded on the balance sheet, and the related lease expenses are recognized on a straight-line basis over the lease term. On May 6, 2024, the Company amended its facility lease agreement dated as of March 6, 2017 (the “Amended Lease”) to extend the lease term for its existing office and laboratory space from one to 66 months and lease 17,698 rentable square feet of additional office space, all located in Newark, California. The Company began occupying the additional space under the Amended Lease on July 1, 2024. The Amended Lease, which expires in November 2029, provides for an agreed-upon period of rent abatement and a tenant improvement allowance of $ 1.8 million. No additional security deposit was required pursuant to the Amended Lease, and the Company is responsible for its proportional share of operating expenses and tax obligations. As a result of this amendment, the Company recorded an initial right-of-use asset and related liability of $ 10.5 million. Balance sheet information related to the Company’s operating lease consisted of the following (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, Operating Leases: ​ 2024 ​ 2023 Operating lease right-of-use asset ​ $ 9,835 ​ $ 954 ​ ​ ​ ​ ​ ​ ​ Operating lease liability - current ​ $ 45 ​ $ 1,141 Operating lease liability - noncurrent ​ ​ 10,855 ​ ​ — Total operating lease liabilities ​ $ 10,900 ​ $ 1,141 ​ ​ ​ ​ ​ ​ ​ Weighted-average remaining lease term (years) ​ ​ 5.2 ​ ​ 0.4 Weighted-average discount rate ​ ​ 5.7 % ​ ​ 10.4 % ​ ​ ​ ​ ​ ​ ​ The tenant improvement allowance under the Amended Lease represents a fixed amount that the Company is reasonably certain to use. As such, it is reflected in the determination of the operating lease liability as of the lease commencement date. ​ Other information related to the Company’s operating lease consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2024 ​ 2023 2024 ​ 2023 Operating lease cost ​ $ 757 ​ $ 584 ​ $ 2,079 ​ $ 1,751 Short-term rent expense ​ ​ — ​ ​ — ​ ​ 51 ​ ​ — Less: Sublease income ​ ​ — ​ ​ ( 35 ) ​ ​ ( 34 ) ​ ​ ( 114 ) Total lease expense ​ $ 757 ​ $ 549 ​ $ 2,096 ​ $ 1,637 ​ Supplemental cash flow information consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ 2024 ​ 2023 Operating cash flow used by operating leases ​ $ ( 1,385 ) ​ $ ( 2,047 ) New operating lease asset obtained in exchange for operating lease liability ​ $ ( 10,511 ) ​ $ — ​ 17 Table of Contents Future minimum lease payments required under lease obligations as of September 30, 2024 consisted of the following (in thousands): ​ ​ ​ ​ Year Ending December 31: Amount Remainder of 2024 ​ $ 223 2025 ​ ​ 1,121 2026 ​ ​ 2,786 2027 ​ ​ 2,881 2028 ​ ​ 2,983 Thereafter ​ 2,825 Total future minimum lease payments ​ ​ 12,819 Less: Imputed interest ​ ​ ( 1,919 ) Present value of lease liabilities ​ $ 10,900 ​ ​ Note 8. Stockholders’ Equity Shares of Common Stock Authorized for Issuance At the Company’s 2024 Annual Meeting of Stockholders held on June 20, 2024, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to increase the number of authorized shares of the Company’s common stock from 90,000,000 to 180,000,000 , which also has the effect of increasing the total number of authorized shares from 100,000,000 to 190,000,000 (the “Amendment”). On June 21, 2024, the Company filed a Certificate of Amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the Amendment, which became effective immediately upon such filing. Public Offering 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 $ 107.8 million. ATM Offering In August 2022, the Company entered into an Open Market Sale Agreement SM , pursuant to which the Company may offer and sell up to $ 100.0 million 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 three and nine months ended September 30, 2024. During the nine months ended September 30, 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 September 30, 2023. Pre-Funded Warrants 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”). Warrants to purchase 1,375,000 shares of the Company’s common stock had an exercise price of $ 10.00 per share and Warrants to purchase 1,375,000 shares of the Company’s common stock had an exercise price of $ 15.00 per share. 18 Table of Contents In August 2023, prior to the expiration of the Warrants, the Company entered into certain agreements with the Investors and their affiliates under which the Company agreed to allow the Warrants to be exercised in exchange for pre-funded warrants representing the same number of Warrant Shares underlying the Warrants with an exercise price of $ 0.001 per share (the “Pre-Funded Warrants”). Subsequent to the execution of the agreements and prior to the expiration of the Warrants, all outstanding Warrants were exercised for gross proceeds of $ 34.4 million in exchange for 44,748 shares of the Company’s common stock and Pre-Funded Warrants to purchase 2,705,252 shares of common stock (subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Pre-Funded Warrants) with an exercise price of $ 0.001 per share. The Pre-Funded Warrants will expire upon the day they are exercised in full. The Pre-Funded Warrants are exercisable at any time prior to expiration except that the Pre-Funded Warrants cannot be exercised by the Investors if, after giving effect thereto, the Investors would beneficially own more than 9.99 % of the Company’s common stock, subject to certain exceptions. The common stock and Pre-Funded Warrants met the criteria for equity classification and the net proceeds from the transaction were recorded as a credit to additional paid-in capital. In accordance with Accounting Standards Codification Topic 260, Earnings Per Share , outstanding Pre-Funded Warrants are included in the computation of basic net loss per share because the exercise price is negligible, and they are fully vested and exercisable after the original issuance date. No Pre-Funded warrants were exercised during the three months ended September 30, 2024. During the nine months ended September 30, 2024, Pre-Funded Warrants to purchase 84,992 shares were net exercised, resulting in the issuance of 84,989 shares of common stock. No Pre-Funded Warrants were exercised during the three and nine months ended September 2023. As of September 30, 2024, Pre-Funded Warrants to purchase 2,620,260 shares were outstanding. Note 9. Income Taxes The Company recorded an income tax benefit of $ 0.4 million and income tax expense of $ 2.2 million for the three and nine months ended September 30, 2024, respectively. No income tax provision was recorded for the three and nine months ended September 30, 2023. The difference in tax expense as compared to the prior year was primarily due to taxable income for the nine months ended September 30, 2024 resulting from the recognition of revenue in connection with the Takeda Collaboration Agreement. The tax provision for the three and nine months ended September 30, 2024 was determined using an estimated annual effective tax rate, adjusted for discrete items, if any. Based on the available objective evidence during the three and nine months ended September 30, 2024, the Company believes it is more likely than not that its net deferred tax assets may not be realized. The primary difference between the effective tax rate and the statutory tax rate relates to the Company’s change in valuation allowance. Note 10. Net Income (Loss) per Share The computation of basic net income (loss) per share of common stock is based on the weighted-average number of shares of common stock outstanding during each period. The computation of diluted net income (loss) per share of common stock is based on the weighted-average number of shares of common stock outstanding during the period plus, when their effect is dilutive, incremental shares consisting of shares subject to stock options, RSUs, PSUs, the Company’s employee stock purchase plan (“ESPP”), and warrants. In accordance with Accounting Standards Codification Topic 260, Earnings Per Share , 2,620,260 outstanding Pre-Funded Warrants were included in the computation of weighted-average shares of common stock, basic for the three and nine months ended September 30, 2024 because the exercise price was negligible, and they were fully vested and exercisable after the original issuance date. In periods when the Company has net income, the dilutive effect of all potentially outstanding shares is computed using the treasury stock method. In periods in which the Company reports a net loss, all common stock equivalents are deemed anti-dilutive such that basic net loss per share of common stock and diluted net loss per share of common stock are equal. ​ 19 Table of Contents The following table reconciles the numerator and denominator used to calculate diluted net income (loss) per share of common stock (in thousands, except share and per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2024 2023 2024 2023 Numerator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ ( 33,210 ) ​ $ ( 34,105 ) ​ $ 143,514 ​ $ ( 106,290 ) Denominator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average shares of common stock, basic ​ 61,767,934 ​ 59,182,899 ​ 61,311,310 55,542,543 Dilutive effect of common stock equivalents ​ — ​ — ​ 3,300,631 — Weighted-average shares of common stock, dilutive ​ ​ 61,767,934 ​ ​ 59,182,899 ​ ​ 64,611,941 ​ ​ 55,542,543 Net income (loss) per share of common stock ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic net income (loss) per share of common stock ​ $ ( 0.54 ) ​ $ ( 0.58 ) ​ $ 2.34 $ ( 1.91 ) Diluted net income (loss) per share of common stock ​ $ ( 0.54 ) ​ $ ( 0.58 ) ​ $ 2.22 ​ $ ( 1.91 ) ​ Approximately 9.2 million potentially dilutive shares of common stock (consisting of shares subject to outstanding stock options, RSUs, PSUs, and under the ESPP) were excluded from the diluted net loss per share of common stock computation for the three months ended September 30, 2024 due to the Company’s net loss for the period. Approximately 3.2 million potentially dilutive shares of common stock (consisting of shares subject to outstanding stock options, RSUs, and under the ESPP) were excluded from the diluted net income per share of common stock computations for the nine months ended September 30, 2024 because their effect was anti-dilutive. Approximately 8.9 million potentially dilutive shares of common stock (consisting of shares subject to outstanding stock options, RSUs, PSUs, under the ESPP and warrants) were excluded from the diluted net loss per share of common stock computations for the three and nine months ended September 30, 2023 due to the Company’s net losses for these periods. ​ ​ 20 Table of Contents