What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-02-09 compared with 2022-11-03 · 112 added, 90 removed, 320 unchanged (39% of the section changed)

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trial evaluating RP1 in combination with cemiplimab, an anti-PD-1 therapy developed by Regeneron, versus cemiplimab alone.

Regeneron has granted to us a non-exclusive royalty-free license to cemiplimab for use in this trial, is supplying cemiplimab at no cost and funded one-half of the clinical trial costs up to the amount agreed in the first study plan.

CERPASS enrolled 211 patients with locally advanced or metastatic CSCC who are naïve to anti-PD1 therapy.

Topline primary analysis data from the CERPASS trial is expected to be released in the first half of 2023.

The CERPASS trial will evaluate complete response, or CR rate, and overall response rate, or ORR, as its two primary efficacy endpoints as assessed by independent review, as well as duration of response, progression-free survival, or PFS, and overall survival, or OS, as secondary endpoints.

Regeneron has granted to us a non-exclusive royalty-free license to cemiplimab for use in this trial, is funding one-half of the clinical trial costs up to the amount agreed in the first study plan, and is supplying cemiplimab at no cost.

We are currently in communication with Regeneron regarding receiving Regeneron's acknowledgement of the sharing of the study costs according to the current budget that superseded that of the initial study plan and initial budget.

The CERPASS protocol evaluates complete response, or CR rate, and overall response rate, or ORR, as its two primary efficacy endpoints as assessed by independent review, as well as duration of response, progression-free survival, or PFS, and overall survival, or OS, as secondary endpoints.

In February 2023, we received a response from the FDA following submission of our draft statistical analysis plan in September 2022, which raised a number of points and recommendations requiring further discussion.

We intend to respond promptly to the FDA’s points and recommendations and to engage in any necessary dialog to address the points raised.

Topline data from the CERPASS trial is now expected to be announced in Q3 2023, due primarily to the decision to trigger the primary analysis at 40 weeks from last patient in, or LPI, rather than the minimum follow up of 27 weeks post LPI in accordance with the statistical analysis plan.

This is to allow for responses to be documented and confirmed, including per protocol response confirmation biopsies to be taken, before central reviews take place.

This decision also took account of the time required to process patient data to and through central review.

If the CERPASS trial generates compelling clinical data demonstrating the benefits of the combined treatment, we believe the data could support a filing with regulatory authorities seeking marketing approval.

We continue our collaboration with Bristol Myers Squibb Company, or BMS, under which BMS has granted us a non-exclusive, royalty-free license to, and is supplying at no cost, its anti-PD-1 therapy, nivolumab, for use in combination with RP1 in a multi-cohort Phase 1/2 clinical trial which is referred to herein as IGNYTE, or the IGNYTE trial.

There are four tumor specific cohorts currently enrolling in the IGNYTE trial including a registration directed Phase 2 expansion cohort enrolling 125 patients with anti-PD-1 failed cutaneous melanoma who are being treated with RP1 in combination with nivolumab.

The additional three cohorts are in non-melanoma skin cancers, or NMSC, which includes patients with both naïve and anti-PD-1 failed disease, in anti-PD-1 failed microsatellite instability high, or MSI-H/dMMR tumors, and in anti-PD(L)-1 failed non-small cell lung cancer, or NSCLC.

The leading tumor specific cohort in the IGNYTE trial is our registration directed Phase 2 expansion cohort enrolling 125 patients with anti-PD-1 failed cutaneous melanoma who are being treated with RP1 in combination with nivolumab.

We are also continuing enrollment into the cohorts of patients with anti-PD-1 failed non-melanoma skin cancers, or NMSC, which includes patients with both naïve and anti-PD-1 failed disease, including CSCC.

We initiated the registration directed Phase 2 expansion cohort in the IGNYTE trial enrolling 125 patients with anti-PD-1 failed cutaneous melanoma after completing enrollment in a prior Phase 2 cohort in the same clinical trial of approximately 30 patients with melanoma, which demonstrated the tolerability and clinical activity of the combination of RP1 and nivolumab in patients with melanoma, including those who had failed prior anti-PD-1 when given alone or in combination with CTLA-4 blockade.

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The design of the confirmatory trial is intended to be discussed with the FDA prior to a BLA submission.

In March 2022, we released updated data showing that RP1 combined with nivolumab continues to demonstrate deep and durable responses in patients with melanoma, including a 37.5% overall response rate in anti-PD-1 failed disease.

We recently reported that we have completed enrollment of the first 75 patients in this cohort of the IGNYTE trial and we continue to expect to release a data snapshot from these patients with six months follow-up in late 2022.

The data snapshot from these first 75 patients will be investigator assessed as compared to the primary endpoint of ORR for all patients in this cohort which is to be assessed by central review.

In order to document sufficient durability of response, an important secondary endpoint of the study, the primary analysis upon which a filing is intended to be made, is expected to be triggered 12 months following the last patient being enrolled.

We continue to enroll patients in our three additional IGNYTE Phase-2 cohorts under our collaboration with BMS in which we are evaluating RP1 in combination with nivolumab.

In December 2022, we reported data from the first 75 patients with at least six months follow-up.

The data snapshot based on investigator response showed a 20% CR rate and a 36% ORR with activity across all disease stages and strong durability.

In January, we competed target enrollment of 125 patients with patients in screening at that time continuing to be enrolled.

Enrollment is expected to complete this month with a final total study size of approximately 140 patients.

The primary analysis is expected in Q1 2024, 12 months after enrollment of the last patient.

We continue to enroll patients in our additional IGNYTE Phase-2 cohorts under our collaboration with BMS in which we are evaluating RP1 in combination with nivolumab.

In NMSC, enrollment in the anti-PD-1 naïve NMSC cohort has completed, included patients with cutaneous squamous cell carcinoma, or CSCC, basal cell carcinoma, or BCC, merkel cell carcinoma, or MCC, and angiosarcoma.

Updated data from the CSCC patients in the anti-PD-1 naïve NMSC cohort, presented in March 2022, continued to show nearly half of the patients achieving a complete response and nearly 65% achieving a complete or partial response.

We are currently enrolling 30 patients in an extension of the NMSC cohort of RP1 in combination with nivolumab in NMSC patients who have failed prior treatment with anti-PD(L)-1.

In March 2022, we reported initial data from this extension cohort where responses had been observed in anti-PD(L)-1 failed CSCC, MCC and angiosarcoma tumors.

We are currently enrolling an extension of the NMSC cohort of RP1 in combination with nivolumab in NMSC patients who have failed prior treatment with anti-PD(L)-1.

In March 2022, we reported initial data (N=12) from this extension cohort where responses had been observed in anti-PD(L)-1 failed CSCC, MCC and angiosarcoma tumors.

We believe the activity of RP1 combined with nivolumab in this anti-PD(L)-1 failed cohort represents a new potential therapeutic option for these patients and supports the broad potential for RP1 in anti-PD(L)-1 failed disease beyond melanoma.

Recruitment remains ongoing into the cohorts of patients with anti-PD1 failed NMSC, including CSCC, anti-PD1 failed NSCLC, and anti-PD1 failed MSI-H/dMMR cancers, with a data update expected in the first half of 2023.

Recruitment remains ongoing, with a data update expected in Q3 2023 in at least 30 patients with a minimum of six months follow-up.

We also have open for enrollment a Phase 1b/2 clinical trial of single agent RP1 in solid organ transplant recipients with skin cancers, including CSCC, which is referred to herein as ARTACUS or the ARTACUS trial, which we believe to be potentially registrational (in its own right or, subject to discussion with regulatory authorities, following enrollment of additional patients, including as a potential label expansion after an initial approval of RP1 in a different indication).

We are currently enrolling up to 65 patients in the ARTACUS trial to assess the safety and efficacy of RP1 in liver and kidney transplant recipients with skin cancers.

Enrollment in this clinical trial has been impacted by COVID-19, as the patient population is severely immune-compromised and considered very high risk.

Even though the patient numbers are currently small, as reported in March 2022, we have observed responses in these patients with RP1as monotherapy with a similar safety

profile to that observed in our other RP1 clinical trials in patients who are not immune suppressed.

Enrollment continues in the ARTACUS trial and we expect to provide a data update in the first half of 2023.

In addition to these ongoing trials with RP1, we are developing a protocol for testing RP1 along and combined with an anti-PD1 therapy for the neoadjuvant treatment of CSCC.

Enrollment in this clinical trial has been impacted by COVID-19, as the patient

population is severely immune-compromised and considered very high risk.

Even though the patient numbers are currently small, as reported in March 2022, we have observed responses in these patients with RP1as monotherapy with a similar safety profile to that observed in our other RP1 clinical trials in patients who are not immune suppressed.

Enrollment continues in the ARTACUS trial and we expect to provide a data update in Q3 2023.

In addition to these ongoing trials with RP1, we are currently evaluating all strategic opportunities for RP1 in skin cancers, including the setting for the confirmatory clinical trial in melanoma which is expected to be required to support a potential accelerated approval of RP1 in anti-PD1 failed melanoma.

We are also developing additional product candidates, RP2 and RP3, that have been further engineered to enhance anti-tumor immune responses and are intended to address additional tumor types, including traditionally less immune responsive tumor types.

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In the second half of 2021, we reported full enrollment in the initial 30 patient combination with nivolumab part of the Phase 1 clinical trial following which a protocol amendment was made to expand this clinical trial to enroll additional patients who are required to have specific tumor types of interest, including gastro-intestinal cancers, breast cancer, lung cancer, head and neck cancer and uveal melanoma, rather than any type of tumor as were eligible for the initial 30 patient group.

We have obtained clearance from the Medicines and Healthcare products Regulatory Agency in the United Kingdom to enter clinical development with RP3 and in December 2020 we initiated dosing in this clinical trial.

This Phase 1 clinical trial is designed to evaluate RP3 alone and combined with anti-PD-1 therapy in advanced solid tumor patients.

In December 2022, we reported that of 14 patients with uveal melanoma for which sufficient follow-up was available for assessment, 4 patients had achieved a response.

A data update from our RP2 expansion trial is expected in H2 2023.

In December 2020, we initiated dosing in a Phase 1 clinical trial designed to evaluate RP3 alone and combined with anti-PD-1 therapy in advanced solid tumor patients.

In March 2022, we reported initial data from the single agent monotherapy cohort of RP3 in superficial and deep tumors exploring two dose levels of RP3, including injections into deep tumors.

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This cohort is focusing on enrolling patients with gastro-intestinal cancers, breast cancer, lung cancer and head and neck cancer.

We intend to initiate a Phase 2 development plan for RP2 and/or RP3 to target a range of tumor types with un-met need, including where liver tumors are common and in patients with early disease where the objective of treatment would be to increase the proportion of patients achieving cure.

In December 2022, the Company presented data from its Phase 1 trial of RP3 in combination with nivolumab (N=5) in patients with multiple soft tissue sarcomas including in leiomyosarcoma, osteosarcoma, chondrosarcoma, and epithelioid sarcomas who have all failed standard of care.

At the data cut-off date, 3 of 5 patients had sufficient follow-up for response assessment, and all three were responding to therapy in settings with no viable alternative treatment option, indicating the potential utility of RP3 in treating this difficult to treat tumor type.

A data update from this RP3 trial is expected in H2 2023.

We are working to initiate a Phase 2 development plan for RP2 and/or RP3 to target a range of tumor types with un-met need, including where liver tumors are common and in patients with early disease where the objective of treatment would be to increase the proportion of patients achieving cure.

This includes the development of RP2 and/or RP3 in combination with the current standard of care, including immunotherapy, chemotherapy and radiation, and in settings following the current standard of care.

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and colorectal cancer, or CRC, third line;

with additional signal finding studies intended to follow.

We now expect to initiate this Phase 2 development work in the first half of 2023.

We expect to provide an update on our RP2 and RP3 programs before year-end 2022.

with additional studies in other tumor types intended to follow.

As we announced in December 2022, our signal finding studies in HCC and CRC are being developed in combination with atezolizumab and bevacizumab under a supply and cost share clinical collaboration arrangement with Roche.

In HCC we plan to conduct two signal finding cohorts of 30 patients.

The first cohort will enroll 1L patients treated with standard of care, or SOC, atezolizumab combined with bevacizumab and RP3, and the second cohort will enroll patients who have progressed on 1L immunotherapy (including atezolizumab/bevacizumab), and will be treated with atezolizumab combined with bevacizumab and RP3.

In CRC, we plan to conduct two signal finding cohorts of 30 patients.

The first cohort will enroll 3L patients to be treated with atezolizumab combined with bevacizumab and RP2 and the second cohort with atezolizumab and bevacizumab and RP3.

Replimune believes that data with both RP2 and RP3 in CRC will allow the comparative efficacy of RP2 and RP3 to be evaluated in a particularly difficult to treat patient population.

We are on track to initiate this Phase 2

development work around mid-year 2023.

In addition, the study in SCCHN will be conducted under our collaboration with BMS.

This study is intended to include two cohorts of patients, the first with locally advanced disease is planned to enroll approximately 100 patients randomized 1:1 to either SOC chemotherapy combined with radiation, or SOC combined with RP3 followed by adjuvant nivolumab, and the second cohort of approximately 30 patients with recurrent or metastatic SCCHN with low PD-L1 levels (CPS<20) who will be treated with chemotherapy, nivolumab and RP3.

RP1, RP2 and RP3 are administered by direct injection into solid tumors, guided either visually or by ultrasound, computerized tomography, or CT, or other imaging methods.

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Since our inception, we have devoted substantially all of our resources to developing our proprietary RPx platform, building our intellectual property portfolio, conducting research and development of our product candidates, business planning, raising capital and providing general and administrative support for our operations.

To date, we have incurred significant

operating losses and we have financed our operations primarily with proceeds from the sale of equity securities and to a lesser extent, the proceeds from the issuance of debt securities.

To date, we have incurred significant operating losses and we have financed our operations primarily with proceeds from the sale of equity securities and to a lesser extent, the proceeds from the issuance of debt securities.

Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more of our product candidates.

We do not have any products approved for sale and have not generated any revenue from product sales.

Since our initial public offering, or IPO, on July 20, 2018, we have raised an aggregate of approximately $606.5 million in net proceeds to fund our operations, of which $101.2 million was from our IPO, $463.4 million was from three separate follow-on offerings, or the Public Offerings, that we closed in November 2019, June 2020 and October 2020, respectively, and $41.9 million was from at-the-market offerings.

Since our initial public offering, or IPO, on July 20, 2018, we have raised an aggregate of approximately $849.1 million in net proceeds to fund our operations, of which $101.2 million was from our IPO, $706.0 million was from four separate follow-on offerings, or the Public Offerings, that we closed in November 2019, June 2020, October 2020 and December 2022, respectively, and $41.9 million was from at-the-market offerings.

We sold 7,407,936 shares of common stock in our IPO, an aggregate of 20,430,480 shares of our common stock and pre-funded warrants to purchase 9,484,238 shares of common stock in the Public Offerings, and 2,313,997 shares of common stock through our at-the-market facilities.

Our net losses were $43.1 million and $29.4 million for the three months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, we had an accumulated deficit of $396.6 million.

Our net losses were $39.7 million and $29.7 million for the three months ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, we had an accumulated deficit of $436.2 million.

These losses have resulted primarily from costs incurred in connection with research and development activities and general and administrative costs associated with our operations.

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If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

As of September 30, 2022, we had cash and cash equivalents and short-term investments of $371.8 million.

As of December 31, 2022, we had cash and cash equivalents and short-term investments of $616.4 million.

We believe that our existing cash and cash equivalents and short-term investments will enable us to fund our operating expenses and capital expenditure requirements through at least 12 months from the issuance of the consolidated financial statements included in this Quarterly Report.

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Investment income consists of income earned on our cash and cash equivalents and short-term investments.

Interest expense on debt obligations

Interest expense on debt obligations consists of the amortization of debt discount and cash paid for interest under the loan agreement with Hercules.

Interest expense on finance lease liability

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Other income (expense), net consists primarily of realized and unrealized foreign currency transaction gains and losses.

Since our inception and through September 30, 2022, we have not recorded any income tax benefits for the net losses we incurred in each jurisdiction in which we operate, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards will not be realized.

Since our inception and through December 31, 2022, we have not recorded any income tax benefits for the net losses we incurred in each jurisdiction in which we operate, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards will not be realized.

Results of operations

Comparison of the three months ended September 30, 2022 and 2021

The following chart summarizes our results of operations for the three months ended September 30, 2022 and 2021:

Comparison of the three months ended December 31, 2022 and 2021

The following chart summarizes our results of operations for the three months ended December 31, 2022 and 2021:

Three Months Ended

September 30,

2022 2021 Change

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Research and development $ 30,261 $ 19,353 $ 10,908

General and administrative 12,745 9,345 3,400

Selling, general and administrative 11,369 10,345 1,024

Total operating expenses 41,630 29,698 11,932

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Interest expense on finance lease liability (548) (555) 7

Other (expense) income (2,659) (356) (2,303)

Interest expense on debt obligations (941) — (941)

Other income (expense) 147 (241) 388

Total other income (expense), net 1,940 24 1,916

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Research and development expenses

Research and development expenses for the three months ended September 30, 2022 were $28.8 million, compared to $19.9 million for the three months ended September 30, 2021.

The following table summarizes our research and development expenses for the three months ended September 30, 2022 and 2021:

Research and development expenses for the three months ended December 31, 2022 were $30.3 million, compared to $19.4 million for the three months ended December 31, 2021.

The following table summarizes our research and development expenses for the three months ended December 31, 2022 and 2021:

Three Months Ended

September 30,

2022 2021 Change

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The change in our direct research and development expenses between our product candidates is associated with technology transfer, process development, qualification and comparability of our in-house manufactured materials compared to our third-party manufactured materials in readiness for utilizing our product candidates made at our in-house manufacturing facility in our clinical development programs and preparation for potential commercial manufacture, if approved.

The increase in RP1 is primarily the result of an increase in our number of clinical trial sites and patient enrollment as compared to the prior year, and reduction of $1.6 million of costs sharing in the CERPASS trial from Regeneron during the current period as discussed in Note 10 to the consolidated financial statements appearing elsewhere in this Quarterly Report.

During the three months ended September 30, 2022, manufacturing increased its focused on the technology transfer and process development of RP3, which is the driver of the change in RP2 and RP3 program costs year over year.

The increase of $4.6 million in our unallocated expenses was due primarily to a $3.5 million increase in personnel-related costs, including a $3.2 million increase in payroll and fringe benefits and a stock-based compensation increase of $0.3 million.

The increase in RP1 is primarily the result of an increase in our number of clinical trial sites and patient enrollment as compared to the prior year, and a reduction of $1.9 million of costs sharing in the CERPASS trial from Regeneron during the current period as discussed in Note 12 to the consolidated financial statements appearing elsewhere in this Quarterly Report.

During the three months ended December 31, 2022, manufacturing shifted focus from technology transfer and consistency batches for RP2 and RP3 to validation batches for RP1, which is the driver of the change in program costs year over year.

The increase of $5.7 million in our unallocated expenses was due to a $3.9 million increase in personnel-related costs and $1.7 million increase in other expenses.

The increase in personnel-related costs included a $3.2 million increase in payroll and fringe benefits and a stock-based compensation increase of $0.8 million.

The increase in personnel-related costs largely reflected the hiring of additional personnel in our research and development functions as we continue to expand the development plan in multiple indications.

Personnel related costs for the three months ended September 30, 2022 and 2021 included stock-based compensation expense of $2.5 million and $2.2 million, respectively.

Personnel related costs for the three months ended December 31, 2022 and 2021 included stock-based compensation expense of $2.6 million and $1.8 million, respectively.

Furthermore, the change in other expenses is primarily driven by an increase of approximately $0.6 million in consulting costs across our platform and a $0.5 million increase in facility, depreciation and amortization costs.

Selling, general and administrative expenses

Selling, general and administrative expenses were $12.7 million for the three months ended September 30, 2022, compared to $9.3 million for the three months ended September 30, 2021.

Selling, general and administrative expenses were $11.4 million for the three months ended December 31, 2022, compared to $10.3 million for the three months ended December 31, 2021.

The increase of $1.0 million is primarily the result of an increase of $1.0 million in personnel related costs, including a stock-based compensation increase of $0.3 million, and an increase of $0.7 million in payroll and fringe benefits.

The increase in personnel related costs was driven by the continued hiring of additional personnel in our general and administrative functions, including the addition of commercial personnel associated with pre-launch commercial planning and initial build of the Company's commercial infrastructure, which accounts for approximately $0.3 million of the increase.

In addition, there is an increase of approximately $1.4 million related to outside services and external expenses related to commercial planning and initial commercial activities compared to prior year, as we expand our operations.

Total other (expense) income, net

Other net expense was $1.5 million for the three months ended September 30, 2022, compared to $0.1 million for the three months ended September 30, 2021.

The net change of $1.4 million is primarily attributable to an increase in expense of $2.3 million in the current year compared to the prior year due to exchange rate fluctuations related to the changes in foreign exchange rates of the British Pound Sterling to the United States Dollar, specifically on intercompany and other non-functional currency transactions.

This increased expense is somewhat offset by an increase in investment income of approximately $1.0 million.

Comparison of the six months ended September 30, 2022 and 2021

The following chart summarizes our results of operations for the six months ended September 30, 2022 and 2021:

Six Months Ended

September 30,

The increase in personnel related costs was driven by the continued hiring of additional personnel in our selling, general and administrative functions, focusing on additional pre-launch planning and initial build of the Company's commercial infrastructure, which accounts for approximately $0.3 million of the increase.

Total other income (expense), net

Other net expense was $1.9 million for the three months ended December 31, 2022, compared to $24 thousand for the three months ended December 31, 2021.

The net change of $1.9 million is primarily attributable to an increase in investment income of $2.6 million as a result of higher interest rates during the quarter combined with increased securities in our portfolio quarter over quarter from the proceeds of the December 2022 stock offering, as well as a decrease in expense of $0.4 million in the current year compared to the prior year due to exchange rate fluctuations related to the changes in foreign exchange rates of the British Pound Sterling to the United States Dollar, specifically on intercompany and other non-functional currency transactions.

This income is partially offset by an increase in interest expense of approximately $0.9 million on debt obligations related to the Hercules Loan Agreement which was entered into during the quarter.

Comparison of the nine months ended December 31, 2022 and 2021

The following chart summarizes our results of operations for the nine months ended December 31, 2022 and 2021:

Nine Months Ended

2022 2021 Change

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Research and development $ 88,573 $ 57,809 $ 30,764

General and administrative 24,143 18,172 5,971

Selling, general and administrative 35,512 28,517 6,995

Total operating expenses 124,085 86,326 37,759

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Interest expense on finance lease liability (1,650) (1,670) 20

Interest expense on debt obligations (941) — (941)

Other (expense) income (4,531) (849) (3,682)

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Research and development expenses

Six Months Ended September 30,

Nine Months Ended

2022 2021 Change

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Total research and development expenses $ 88,573 $ 57,809 $ 30,764

Research and development expenses for the six months ended September 30, 2022 were $58.3 million, compared to $38.5 million for the six months ended September 30, 2021.

The increase of $19.9 million was due primarily to an increase of approximately $10.2 million in direct research costs related to our ongoing clinical trials for RP1, RP2 and RP3, as well as approximately $9.7 million in unallocated research and development costs.

Research and development expenses for the nine months ended December 31, 2022 were $88.6 million, compared to $57.8 million for the nine months ended December 31, 2021.

The increase of $30.8 million was due primarily to an increase of approximately $15.4 million in direct research costs related to our ongoing clinical trials for RP1, RP2 and RP3, as well as an additional $15.4 million in unallocated research and development costs.

The change in our research and development expense between our product candidates is associated with technology transfer and process development underway in readiness for bringing our manufacturing facility online to support our clinical development and prepare for commercial launch.

Furthermore, the increase in RP1 is primarily the result of an increase in our number of clinical trial sites and patient enrollment as compared to the prior year, as well as a $1.8 million reduction of cost sharing in the CERPASS trial from Regeneron during the six months ended September 30, 2022 as discussed in Note 10 to the consolidated financial statements appearing elsewhere in this Quarterly Report.

In addition, manufacturing continued to advance the RP2 and RP3 technology transfer and studies necessary to qualify the in-house manufactured RP2 and RP3 product candidates for use in clinical trials during the six months ended September 30, 2022, as well as continued clinical trial development of our product candidates.

Furthermore, the increase in RP1 is primarily the result of an increase in our number of clinical trial sites and patient enrollment as compared to the prior year, as well as a $3.7 million reduction of cost sharing in the CERPASS trial from Regeneron during the nine months ended December 31, 2022 as discussed in Note 12 to the consolidated financial statements appearing elsewhere in this Quarterly Report.

In addition, manufacturing focused on the advancement of the RP2 and RP3 technology transfer and studies necessary to qualify the in-house manufactured RP2 and RP3 product candidates for use in clinical trials during the first two quarters, with a shifted focus to validation batches for RP1 during the third quarter, as well as continued clinical trial development of our product candidates during the nine months ended December 31, 2022.

The increase in unallocated research and development costs is mainly attributable to a $10.7 million increase in personnel-related costs, including a $9.4 million increase in payroll and fringe benefits and a stock-based compensation increase of $1.2 million.

The increase in personnel-related costs largely reflected the hiring of additional personnel in our research and development functions as we expanded the development plan in multiple indications.

Personnel related costs for the six months ended September 30, 2022 and 2021 included stock-based compensation expense of $5.1 million and $4.7 million, respectively.

Personnel related costs for the nine months ended December 31, 2022 and 2021 included stock-based compensation expense of $7.7 million and $6.5 million, respectively.

In addition to the increase in personnel-related costs, other expenses increased by $4.7 million.

change is primarily due to an increase of $1.5 million in consulting costs across our platform, with remaining increases in costs related to facilities, depreciation and amortization, and general variable costs.

Selling, general and administrative expenses

Selling, general and administrative expenses were $24.1 million for the six months ended September 30, 2022, compared to $18.2 million for the six months ended September 30, 2021.

Selling, general and administrative expenses were $35.5 million for the nine months ended December 31, 2022, compared to $28.5 million for the nine months ended December 31, 2021.

The increase of $7.0 million is primarily the result of an increase of $3.5 million in personnel related costs, including a stock-based compensation increase of $1.5 million, and an increase of $2.0 million in payroll and fringe benefits.

The increase in personnel related costs was driven by the hiring of additional personnel, including the initial expenses related to commercial personnel associated with pre-launch commercial planning and initial build of our commercial infrastructure.

Personnel related costs for the six months ended September 30, 2022 and 2021 included stock-based compensation expense of $9.0 million and $7.9 million, respectively.

Personnel related costs for the nine months ended December 31, 2022 and 2021 included stock-based compensation expense of $13.5 million and $12.0 million, respectively.

Total other (expense) income, net

Other net expense was $2.9 million for the six months ended September 30, 2022, compared to $37.8 thousand for the six months ended September 30, 2021.

Other net expense was $0.9 million for the nine months ended December 31, 2022, compared to a net expense of $13.8 thousand for the nine months ended December 31, 2021.

The net change of $0.9 million is primarily driven by increases in expense of $3.7 million in the current year compared to the prior year due to exchange rate fluctuations related to the changes in foreign exchange rates of the British Pound Sterling to the United States Dollar, specifically on intercompany and other non-functional currency transactions.

This increase in expense is somewhat offset by an increase in investment income of approximately $1.3 million compared to the prior year.

Additionally, there is a year over year increase in interest expense of approximately $0.9 million on debt obligations related to the Hercules Loan Agreement which was entered into during the third quarter This increase in expense is somewhat offset by an increase in investment income of approximately $3.9 million compared to the prior year.

Liquidity and capital resources

Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations.

We have not yet commercialized any of our product candidates, which are

in various phases of preclinical and clinical development, and we do not expect to generate revenue from sales of any products for the foreseeable future, if at all.

We have not yet commercialized any of our product candidates, which are in various phases of preclinical and clinical development, and we do not expect to generate revenue from sales of any products for the foreseeable future, if at all.

Sources of liquidity

To date, we have financed our operations primarily with proceeds from the sale of equity securities and, to a lesser extent, proceeds from borrowing under a secured loan facility.

Through September 30, 2022, we had received net proceeds of $693.3 million through the sale of shares of common stock and warrants exercisable for common stock in public offerings and at-the-market offerings.

As of September 30, 2022, we had cash and cash equivalents and short-term investments of $371.8 million.

On June 23, 2022, in connection with our entry into a new sales agreement with the SVB Securities LLC, or the Agent, we and the Agent mutually agreed to terminate a previous sales agreement.

Under the new sales agreement, we may sell, from time to time, at our option, up to an aggregate of $100 million of shares of our common stock by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, or if authorized by us, in negotiated transactions or block trade, in each case, pursuant to a registration statement on Form S-3 filed by us with the Securities and Exchange Commission on June 23, 2022.

Through December 31, 2022, we had received net proceeds of $935.9 million through the sale of shares of common stock and warrants exercisable for common stock in public offerings and at-the-market offerings, as well as $30.0 million from our incurrence of debt under the term loan agreement with Hercules.

As of December 31, 2022, we had cash and cash equivalents and short-term investments of $616.4 million.

The following table summarizes our cash flows for each of the periods presented:

Six Months Ended September 30, 2022

Nine Months Ended December 31, 2022

(Amounts in thousands)

Net cash used in operating activities $ (95,254) $ (59,623)

Net cash provided by investing activities 5,351 15,940

Net cash used in investing activities (119,750) 2,520

Net cash provided by financing activities 311,380 6,239

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Operating activities

During the six months ended September 30, 2022, net cash used in operating activities was $66.7 million, primarily resulting from our net loss of $85.4 million, partially offset by non-cash charges of $15.3 million, primarily consisting of stock-based compensation expense of $14.2 million, and an increase in cash of $3.4 million related to changes in our operating assets and liabilities.

Changes in our operating assets and liabilities for the six months ended September 30, 2022 consisted primarily of a $2.8 million increase in accrued expenses and other current liabilities, a $1.4 million increase in research and development incentives receivable from the United Kingdom government due to the timing and amount of our qualifying expenditures, a net $1.2 million change in operating and financing right-of-use assets and lease liabilities, a $0.7 million increase in accounts payable, as well as a $0.2 million decrease in prepaid expenses and other current assets.

During the six months ended September 30, 2021, net cash used in operating activities was $41.3 million, primarily resulting from our net loss of $56.7 million, partially offset by an increase in non-cash charges of $14.9 million, primarily consisting of an increase in stock-based compensation expense of $7.3 million, and an increase in cash of $0.5 million related to changes in our operating assets and liabilities.

Net cash used by our changes in our operating assets and liabilities for the six months ended September 30, 2021 consisted primarily of a $1.5 million increase in research and development incentives receivable from the United Kingdom government due to the timing and amount of our qualifying expenditures, a $1.3 million increase in prepaid expenses and other current assets, a $1.3 million increase in accrued expenses and other current liabilities, and a net $1.2 million change in operating and financing right-of-use assets and lease liabilities.

During the nine months ended December 31, 2022, net cash used in operating activities was $95.3 million, primarily resulting from our net loss of $125.0 million, partially offset by non-cash charges of $21.6 million, primarily consisting of stock-based compensation expense of $21.2 million, and an increase in cash of $8.2 million related to changes in our operating assets and liabilities.

Changes in our operating assets and liabilities for the nine months ended December 31, 2022 consisted primarily of a $5.6 million increase in accrued expenses and other current liabilities, a $0.8 million decrease in research and development incentives receivable from the United Kingdom government due to the timing and amount of our qualifying expenditures, a net $1.8 million change in operating and financing right-of-use assets and lease liabilities, a $0.4 million decrease in accounts payable, as well as a $0.4 million increase in prepaid expenses and other current assets.

During the nine months ended December 31, 2021, net cash used in operating activities was $59.6 million, primarily resulting from our net loss of $86.3 million, partially offset by an increase in non-cash charges of $21.9 million, primarily consisting of an increase in stock-based compensation expense of $18.5 million, and an increase in cash of $4.8 million related to changes in our operating assets and liabilities.

Changes in our operating assets and liabilities for the nine months ended December 31, 2021 consisted primarily of a $2.0 million increase accrued expenses and other current liabilities, a net $1.8 million change in operating and financing right-of-use assets and lease liabilities, a $1.2 million increase in accounts payable and a $0.7 million decrease in research and development incentives receivable from the United Kingdom government due to the timing and amount of our qualifying expenditures, as well as a $0.9 million increase in prepaid expenses and other current assets.

Investing activities

During the six months ended September 30, 2022, net cash provided by investing activities was $5.4 million, consisting of $200.5 million in proceeds from sales and maturities of short-term investments, partially offset by $193.7 million in purchases of available for sale securities and $1.5 million in purchases of property, plant and equipment.

During the six months ended September 30, 2021, net cash provided by investing activities was $15.9 million, consisting of $128.0 million in proceeds from sales and maturities of short-term investments, partially offset by $111.4 million in purchases of available for sale securities and $0.7 million in purchases of property, plant and equipment.

During the nine months ended December 31, 2022, net cash used in investing activities was $119.8 million, consisting of $433.9 million in purchases of available for sale securities, partially offset by $316.2 million in proceeds from sales and maturities of short-term investments, and $2.0 million in purchases of property, plant and equipment.

During the nine months ended December 31, 2021, net cash provided by investing activities was $2.5 million, consisting of $196.3 million in proceeds from sales and maturities of short-term investments, partially offset by $192.5 million in purchases of available for sale securities and $1.2 million in purchases of property, plant and equipment.

Financing Activities

During the six months ended September 30, 2022, net cash provided by financing activities was $39.9 million, consisting primarily of $37.4 million from the issuance of common stock through sales under our at-the-market facilities, as well as approximately $2.7 million in proceeds from the exercise of stock options.

During the six months ended September 30, 2021, net cash provided by financing activities was $2.3 million, consisting of primarily $2.4 million in proceeds from the exercise of stock options.

During the nine months ended December 31, 2022, net cash provided by financing activities was $311.4 million, consisting primarily of $150.1 million in proceeds from the issuance of common stock, $92.8 million from the issuance of pre-funded warrants to purchase common stock, $37.4 million from the issuance of common stock through sales under our at-the-market facilities, $30.0 million in proceeds from the issuance of debt under the Hercules Loan Agreement, as well as approximately $3.2 million in proceeds from the exercise of stock options.

During the nine months ended December 31, 2021, net cash provided by financing activities was $6.2 million, consisting of primarily $6.4 million in proceeds from the exercise of stock options.

Funding requirements

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• add operational, financial and management information systems and personnel, including personnel to support our research and development programs, any future commercialization efforts and operations as a public company.

As of September 30, 2022, we had cash and cash equivalents and short-term investments of $371.8 million.

As of December 31, 2022, we had cash and cash equivalents and short-term investments of $616.4 million.

In addition, in October 2022, the Company completed a $200 million non-dilutive debt financing with Hercules Capital, Inc.

We believe that our existing cash, cash equivalents and short-term investments as of September 30, 2022, together with unrestricted proceeds available to be drawn under the Hercules Term Loan Facility, will enable us to fund our operations into calendar 2025, inclusive of the costs of funding commercial infrastructure and running a confirmatory clinical trial to support a potential filing for FDA approval in anti-PD1 failed melanoma under the accelerated approval pathway.

We believe that our existing cash, cash equivalents and short-term investments as of December 31, 2022, together with unrestricted proceeds available to be drawn under the Hercules Term Loan Facility, will enable us to fund our operations into the second half of 2025, inclusive of the costs of funding commercial infrastructure and running a confirmatory clinical trial to support a potential filing for FDA approval in anti-PD1 failed melanoma under the accelerated approval pathway.

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

Refer to Note 13, subsequent events, of the "Notes to Condensed Consolidated Financial Statements" contained in Part I, Item I of this Quarterly Report on Form 10-Q for additional details of the agreement with Hercules.

Because of the numerous risks and uncertainties associated with the development of RP1 and other product candidates and programs, and because the extent to which we may enter into collaborations with third parties for development of our product candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating

expenses associated with completing the research and development of our product candidates.

Our future capital requirements will depend on many factors, including those described in this section and above under “—Operating expenses—Research and development expenses.”

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Contractual obligations and commitments

During the three months ended September 30, 2022, there were no material changes to our contractual obligations and commitments from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments” in our Annual Report on Form 10-K for the year ended March 31, 2022, which was filed with the SEC on May 20, 2021.

During the three months ended December 31, 2022, there were no material changes to our contractual obligations and commitments from those described under the heading “Management’s Discussion and Analysis of Financial Condition and

Results of Operations—Contractual Obligations and Commitments” in our Annual Report on Form 10-K for the year ended March 31, 2022, which was filed with the SEC on May 20, 2021.

Collaborations

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In July 2022, Regeneron informed the Company that the costs of the study have reached the initial budget for the initial study plan of June 2018 and that Regeneron's reimbursement of CERPASS study costs to the Company have completed in the period ending June 30, 2022 in relation to the initial study budget.

The Company and Regeneron are in communication regarding receiving Regeneron's acknowledgement of the sharing of the study costs according to the current budget that superseded that of the initial study plan and initial budget.

As a result of this notice from, and the ongoing communications with, Regeneron, we have not recorded any cost-sharing reimbursements from Regeneron in prepaid expenses and other current assets in the consolidated balance sheet or as an offset to research and development expense within the consolidated statement of operations since Regeneron informed us that Regeneron’s reimbursement of CERPASS study costs have completed.

The Company does not expect any further reimbursements from Regeneron related to the initial study plan of June 2018.

The agreement contains representations, warranties, undertakings and indemnities customary for a transaction of this nature.

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The agreement may be terminated by either party if (i) there is no active study plan for which a final study report has not been completed and the parties have not entered into a study plan for an additional clinical trial within a period of time after the delivery of the most recent final study report or (ii) in the event of a material breach.

In December 2022, we announced entering into a Master Clinical Trial Collaboration and Supply Agreement with Roche in relation to our RP2 and RP3 programs in colorectal cancer, or CRC, and hepatocellular carcinoma, or HCC.

Under the agreement, the companies will collaborate in 30 patient cohort signal finding studies in third-line, or 3L, CRC and in first- and second-line, or 1L and 2L, respectively, HCC.

Under the terms of the agreement, the companies will share costs and Roche will supply its currently approved drugs, atezolizumab and bevacizumab for 2L HCC and 3L CRC combined with RP3.

Roche will also supply atezolizumab and bevacizumab for 1L HCC combined with RP3, and for 3L CRC combined with RP2.

We have retained the responsibility of operating the clinical trials as well as retaining all the rights to the development and commercialization of our product candidates.

The agreement may be terminated by either party upon sixty (60) days prior written notice to the other party.

Critical accounting policies and estimates

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If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or the amount of prepaid expenses accordingly.

Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period.

Although we do not expect our estimates to be materially different from amounts actually

incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period.

To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis