What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-07 compared with 2023-08-03 · 133 added, 80 removed, 317 unchanged (40% of the section changed)

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We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

We are a clinical-stage biotechnology company committed to applying our leading expertise in the field of oncolytic immunotherapy to transform the lives of cancer patients through our novel tumor-directed oncolytic immunotherapies.

Our proprietary tumor-directed oncolytic immunotherapy product candidates are designed and intended to maximally activate the immune system against cancer.

Our proprietary oncolytic immunotherapy product candidates are designed and intended to maximally activate the immune system against cancer.

Oncolytic immunotherapy is an emerging drug class, which we intend to establish as the second cornerstone of immune-based cancer treatments, alongside checkpoint blockade.

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No changes were made to the protocol as a result of the meeting.

Topline data from the CERPASS trial is now expected to be announced in early Q4 2023, updated from Q3 2023, as a result of the independent review read rate tracking behind projections.

Assuming positive primary analysis data is generated, including demonstrating overall clinical benefit, we continue to expect to make a Biologics License Application submission for RP1 in Q1/Q2 2024, with the potential to combine the filings for both the CERPASS clinical trial and the IGNYTE anti-PD-1 failed melanoma cohort.

The independent review process is expected to complete shortly triggering a defined timeline to data release in early December.

Assuming positive primary analysis data is generated, including demonstrating overall clinical benefit, we continue to expect to make a Biologics License Application submission for RP1 in Q2 2024.

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.

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The FDA also indicated that a randomized confirmatory trial would also be needed as is required under the accelerated approval pathway.

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

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

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The updated data also showed overall response rate (ORR) of 37.4%, with clinically meaningful activity across the range of anti-PD1 failed cutaneous melanoma settings enrolled, including in patients with moderate-high tumor burden and visceral disease.

We remain on track to announce snapshot data for all patients (N=141) in Q4 2023 by which point all patients will have had at least 6 months follow up.

The data snapshot for all 141 patients with a minimum of 6 months follow-up will be evaluated for the potential to align a dual launch with CERPASS, assuming both indications for RP1 are timely approved, however, the per protocol primary analysis continues to be expected 12 months after enrollment of the last patient, March 2024.

We remain on track to announce snapshot data for all patients (N=140) in early December 2023 by which point all patients will have had at least 6 months follow up and at which time we also expect to present the design of a confirmatory study agreed with the FDA to support the potential approval of RP1 in anti-PD1 failed melanoma via the accelerated approval pathway.

Planning for the confirmatory study is underway to ensure it has commenced ahead of any BLA submission.

The per protocol primary analysis will take place 12 months post the last patient enrolled and, accordingly, we plan to submit a BLA in Q3 2024.

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.

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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 skin cancers beyond melanoma.

Recruitment remains ongoing, with a data update expected from the first 30 patients with at least 6 months follow up in early Q4 2023.

Recruitment remains ongoing, with a data update expected from the first 30 patients with at least 6 months follow up in December 2023.

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).

currently enrolling up to 65 patients in the ARTACUS trial to assess the safety and efficacy of RP1 in liver, kidney, heart, lung, and hematopoietic cell transplant patients transplant recipients with skin cancers.

Enrollment in this clinical trial had been impacted by COVID-19, as the patient population is severely immune-compromised and considered very high risk, however, more recently we have seen enrollment increase in the ARTACUS trial.

As reported at the American Transplant Congress (ATC) Meeting in June 2023, the data demonstrated an ORR of 27.3%, with all responders achieving confirmed CR.

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

In November 2023 we presented initial data

from the ARTACUS clinical trial of RP1 monotherapy in solid organ transplant recipients with skin cancers at the Society for Immunotherapy of Cancer’s (SITC) 38th Annual Meeting.

The data included 23 evaluable patients with CSCC (n=20) and Merkel cell carcinoma (n=3), demonstrating an overall response rate (ORR) of 34.5% and a confirmed complete response rate of 21% (CR).

RP1 monotherapy was well tolerated in these patients and the safety profile was similar to that observed in our other RP1 clinical trials in patients who are not immune suppressed.

No immune-mediated adverse events or evidence of allograft rejection were observed.

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.

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.

More recently, at ASCO in June 2023, we reported 17 patients have received RP2 as monotherapy (N=3) or in combination with nivolumab (N=14), completing enrollment of uveal melanoma patients in the Phase 1b trial.

Four of the 14 evaluable patients had responded to treatment (28.6%), including metastatic tumors in the liver and bone.

The final three of 17 patients remained on treatment, but had insufficient follow-up data to determine response outcome as of the cut-off date.

Three of the four responses are ongoing at 9, 12 and 21 months, including for patients with liver and bone metastases, with the fourth patient having progressed at 15 months.

We plan to present updated data from this cohort of metastatic uveal melanoma patients during a Plenary Session at the 20th Annual International Society for Melanoma Research Congress on November 8, 2023.

Enrollment continues in our clinical trial designed to evaluate RP3 alone and combined with anti-PD-1 therapy in advanced solid tumor patients, focusing on enrolling patients with gastro-intestinal cancers, breast cancer, lung cancer and head and neck cancer.

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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.

Enrollment in the Phase 1 programs with both RP2 and RP3 are expected to materially complete in Q3 2023.

Any additional Phase 2 development programs not already announced which are driven by data from the full Phase 1 data and other opportunistic considerations are expected to be disclosed by year-end 2023.

We continue to plan for, and are initiating, our previously announced Phase 2 development program for RP2 and/or RP3.

As previously announced, our initial signal finding single arm Phase 2 clinical trials are planned in the following tumor types:

Enrollment in the Phase 1 program with both RP2 and RP3 is materially complete.

Any additional Phase 2 development programs not already announced which are driven by data from the full Phase 1 data and other opportunistic considerations are expected to be announced in early 2024.

We continue to plan for, and are initiating and conducting, our previously announced Phase 2 development program for RP2 and/or RP3.

As previously announced, our initial signal finding single arm Phase 2 clinical trials are addressing the following tumor types:

squamous cell carcinoma of the head and neck, or SCCHN, locally advanced and recurrent/metastatic;

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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 Holding AG, or Roche.

Our signal finding studies in SCCHN are being developed in combination with nivolumab under our collaboration agreement with BMS.

Our signal finding studies in SCCHN are planned to be developed in combination with nivolumab under our collaboration agreement with BMS.

– In CRC, we have initiated the clinical trial investigating two signal finding cohorts of 30 patients each in collaboration with Roche.

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.

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

We believe 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.

– In HCC, two signal finding cohorts of 15 patients each will be enrolled in collaboration with Roche.

The first cohort will enroll 1L patients treated with 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.

This clinical trial is expected to initiate this quarter.

The first cohort will enroll 2L patients treated with standard of care, or SOC, atezolizumab combined with bevacizumab and RP3, and the second cohort will enroll 2L patients treated with atezolizumab combined with bevacizumab and RP2.

This clinical trial has recently initiated.

– In SCCHN, the trial 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 therapy.

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 therapy.

The second, signal finding cohort, will enroll 30 patients with recurrent or metastatic SCCHN with low PD-L1 levels (CPS<20) who will be treated with chemotherapy, nivolumab and RP3.

Due to the global shortage of cisplatin and carboplatin, initiation of this study is currently on hold until sufficient supplies of these agents are available.

Due to the global shortage of cisplatin and carboplatin, initiation of this study has been on hold.

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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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 $49.6 million and $42.3 million for the three months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, we had an accumulated deficit of $535.0 million.

Our net losses were $60.0 million and $43.1 million for the three months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, we had an accumulated deficit of $595.1 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 June 30, 2023, we had cash and cash equivalents and short-term investments of $539.1 million.

As of September 30, 2023, we had cash and cash equivalents and short-term investments of $496.8 million.

Based on our current operating plan, w e 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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Interest expense on finance lease liability consists of amortization of finance charges under our financing lease.

Other income (expense), net

Other (expense) income, net

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

During the three months ended June 30, 2023 and 2022, the Company recorded no income tax benefits for the net operating losses incurred in the United Kingdom in each period due to its uncertainty of realizing a benefit from those items.

During the three months ended June 30, 2023, the Company recorded a tax expense of $0.2 million primarily related to the Company’s interest income in the United States, partially offset by discrete share-based compensation items.

During the six months ended September 30, 2023 and 2022, the Company has not recorded any income tax provision (benefit) for the losses we incurred based upon the weight of available evidence, that it is more likely than not that the Company’s losses will not be realized.

The Company’s tax provision and the resulting effective tax rate for interim periods is determined based upon its estimated annual effective tax rate (“AETR”), adjusted for the effect of discrete items arising in that quarter.

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In each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual tax rate changes, a cumulative adjustment is made in that quarter.

For the three months ended June 30, 2023 and 2022, the Company excluded the United Kingdom from the calculation of the AETR as the Company anticipates an ordinary loss in this jurisdiction for which no tax benefit can be recognized.

The Company has evaluated the positive and negative evidence bearing upon its ability to realize its deferred tax assets both in the United States and United Kingdom, which primarily consist of net operating loss carryforwards.

The Company has considered its history of cumulative net losses, estimated future taxable income and prudent and feasible tax planning strategies and has concluded that it is more likely than not that the Company will not realize the benefits of its deferred tax assets.

As a result, as of June 30, 2023 and March 31, 2023, the Company has recorded a full valuation allowance against its net deferred tax assets.

The Company has considered its history of cumulative net losses, estimated future taxable income as well as prudent and feasible tax planning strategies and has concluded that it is more likely than not that the Company will not realize the benefits of its deferred tax assets.

As a result, as of September 30, 2023 and March 31, 2023, the Company has recorded a full valuation allowance against its net deferred tax assets.

Results of operations

Comparison of the three months ended June 30, 2023 and 2022

The following chart summarizes our results of operations for the three months ended June 30, 2023 and 2022:

Comparison of the three months ended September 30, 2023 and 2022

The following chart summarizes our results of operations for the three months ended September 30, 2023 and 2022:

Three Months Ended

September 30,

2023 2022 Change

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Interest expense on debt obligations (955) — (955)

Other income (expense) 1,374 (2,019) 3,393

Other (expense) income (1,409) (2,659) 1,250

Total other income (expense), net 3,586 (1,523) 5,109

Loss before income taxes $ (60,245) $ (43,102) $ (17,143)

Income tax provision $ 201 $ — $ 201

Income tax (benefit) $ (201) $ — $ (201)

Net loss $ (60,044) $ (43,102) $ (16,942)

Research and development expenses

Research and development expenses for the three months ended June 30, 2023 were $40.4 million, compared to $29.5 million for the three months ended June 30, 2022.

The following table summarizes our research and development expenses for the three months ended June 30, 2023 and 2022:

Research and development expenses for the three months ended September 30, 2023 were $49.1 million, compared to $28.8 million for the three months ended September 30, 2022.

The following table summarizes our research and development expenses for the three months ended September 30, 2023 and 2022:

Three Months Ended

September 30,

2023 2022 Change

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Total research and development expenses $ 49,101 $ 28,834 $ 20,267

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 $1.1 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.

Additionally, during the quarter, the Company focused on RP1 drug substance batches and saw increased clinical development expenses, including primarily data management costs, CRO costs and investigator costs, related to preparation of primary data release and a potential BLA filing.

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.

In addition, during the second quarter, the Company focused approximately two-thirds of

manufacturing efforts on RP1 drug product fills.

Clinical development expenses increased versus the prior year in preparation of primary data release and a potential BLA filing.

More specifically, CRO and investigator costs, as well as RP1 imaging costs, account for approximately $7.8 million of the increase in clinical development costs year over year.

In addition, the changes in our direct research and development expenses between our product candidates is primarily associated with 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.

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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 June 30, 2023 and 2022 included stock-based compensation expense of $3.3 million and $2.6 million, respectively.

Furthermore, the change in other expenses is primarily driven by an increase of approximately $0.3 million in consulting costs across our platform and a $0.3 million increase in medical affairs costs.

Personnel related costs for the three months ended September 30, 2023 and 2022 included stock-based compensation expense of $4.4 million and $2.5 million, respectively.

Furthermore, the change in other expenses is primarily driven by an increase of approximately $0.4 million in consulting costs, a $0.4 million increase in conferences and exhibitions, and a $0.2 million net increase in operating and lab supplies during the quarter as compared to the prior year.

These costs are somewhat offset by a decrease in other variable costs of $0.3 million.

These changes are in line with increased overall clinical development costs and clinical trial activities.

Selling, general and administrative expenses

Selling, general and administrative expenses were $15.2 million for the three months ended June 30, 2023, compared to $11.4 million for the three months ended June 30, 2022.

Selling, general and administrative expenses were $14.7 million for the three months ended September 30, 2023, compared to $12.7 million for the three months ended September 30, 2022.

The increase of $2.0 million is primarily the result of an increase of $1.1 million in personnel related costs, including a stock-based compensation increase of $0.2 million, and an increase of $0.9 million in payroll and fringe benefits.

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.

Additionally, there is an increase of $1.3 million in other variable costs which is driven by approximately $0.9 million in external spend increases in building and preparation for sales and marketing programs, and market research.

Additionally, there is a net increase of $0.9 million in sales and marketing and other variable costs, which is driven by external spend increases in building and preparation for sales and marketing programs, and market research.

Total other income (expense), net

Other net income was $6.3 million for the three months ended June 30, 2023, compared to a net expense of $1.4 million for the three months ended June 30, 2022.

Other net income was $3.6 million for the three months ended September 30, 2023, compared to a net expense of $1.5 million for the three months ended September 30, 2022.

The net change of $5.1 million is primarily attributable to an increase in investment income of $4.9 million as a result of higher interest rates during the quarter, as well as a decrease in expense of $1.2 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 $1.0 million on debt obligations related to the Hercules Loan Agreement which we did not incur in the prior year.

Income tax (benefit) provision

The income tax (benefit) for the three months ended September 30, 2023 was $0.2 million compared to $0.0 million for the three months ended September 30, 2022.

The income tax (benefit) booked during the three months ended September 30, 2023 directly offsets the income tax provision booked during the three months ended June 30, 2023 primarily due to a decrease in forecasted income in the United States.

The Company has not recorded any income tax provision (benefit) for the losses incurred based upon the weight of available evidence, that it is more likely than not that our losses will not be realized.

Comparison of the six months ended September 30, 2023 and 2022

The following chart summarizes our results of operations for the six months ended September 30, 2023 and 2022:

Six Months Ended

September 30,

2023 2022 Change

(Amounts in thousands)

Operating expenses:

Research and development $ 89,538 $ 58,312 $ 31,226

Selling, general and administrative 29,941 24,143 5,798

Total operating expenses 119,479 82,455 37,024

Loss from operations (119,479) (82,455) (37,024)

Other income (expense):

Research and development incentives 836 1,425 (589)

Investment income 12,235 1,455 10,780

Interest expense on finance lease liability (1,086) (1,102) 16

Interest expense on debt obligations (2,070) — (2,070)

Other (expense) income (35) (4,678) 4,643

Total other income (expense), net 9,880 (2,900) 12,780

Loss before income taxes (109,599) (85,355) (24,244)

Income tax provision — — —

Income tax provision for the three months ended June 30, 2023 was $0.2 million compared to $0.0 million for the three months ended June 30, 2022.

The income tax provision is primarily attributable to related to the Company’s interest income in the United States, partially offset by discrete share-based compensation items.

Net loss $ (109,599) $ (85,355) $ (24,244)

Research and development expenses

Six Months Ended September 30,

2023 2022 Change

Direct research and development expenses by program:

RP1 28,919 15,492 13,427

RP2 4,181 2,420 1,761

RP3 8,096 7,490 606

Unallocated research and development expenses:

Personnel related (including stock-based compensation) 38,704 25,000 13,704

Other 9,638 7,910 1,728

Total research and development expenses $ 89,538 $ 58,312 $ 31,226

Research and development expenses for the six months ended September 30, 2023 were $89.5 million, compared to $58.3 million for the six months ended September 30, 2022.

The increase of $31.2 million was due to an increase of approximately $15.8 million in direct research costs related to our ongoing clinical trials for RP1, RP2 and RP3.

During the first half of the year, the Company focused on drug substance batches for RP1, as well as drug product fills for RP1 and RP2.

Furthermore, clinical development costs continued to increase over the prior year primarily in the areas of CRO costs, investigator costs, and RP1 imaging costs, making up for approximately $10.5 million of the increase in development expenses.

The increases in development expenses are being driven by costs related to preparation of primary data release and a potential BLA filing.

In addition, there is an increase of approximately $15.4 million in unallocated research and development costs, mainly attributable to a $13.7 million in personnel-related costs, including a $11.1 million increase in payroll and fringe benefits and a stock-based compensation increase of $2.6 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, 2023 and 2022 included stock-based compensation expense of $7.7 million and $5.1 million, respectively.

Selling, general and administrative expenses

Selling, general and administrative expenses were $29.9 million for the six months ended September 30, 2023, compared to $24.1 million for the six months ended September 30, 2022.

The increase of $5.8 million is primarily the result of an increase of $3.8 million in personnel related costs, including a stock-based compensation increase of $1.2 million, and an increase of $2.7 million in payroll and fringe benefits.

The increase in personnel related costs was driven by the continued hiring of personnel within our selling, general and administrative functions, specifically focusing on commercial planning and building of the Company's initial commercial infrastructure.

Personnel related costs for the six months ended September 30, 2023 and 2022 included stock-based compensation expense of $10.2 million and $9.0 million, respectively.

Total other income (expense), net

Other income (expense) was $9.9 million for the six months ended September 30, 2023, compared to $(2.9) million for the six months ended September 30, 2022.

The net change of $12.8 million is primarily attributable to an increase in investment income of approximately $10.8 million as a result of higher interest rates during the first half of the year as compared to the prior year, as well as a decrease in expense of approximately $4.6 million 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.

These increases in income are partially offset by approximately $2.1 million in expense for debt obligations related to the Hercules Loan Agreement which we did not incur during the first six months in the prior year.

Liquidity and capital resources

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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 June 30, 2023, 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 net $27.8 million from our incurrence of debt under the term loan agreement with Hercules.

As of June 30, 2023, we had cash and cash equivalents and short-term investments of $539.1 million.

Through September 30, 2023, we had received net proceeds of $935.9 million through the sale of shares of common stock and pre-funded warrants exercisable for common stock in public offerings and at-the-market offerings, as well as net $27.8 million from our incurrence of debt under the term loan agreement with Hercules.

As of September 30, 2023, we had cash and cash equivalents and short-term investments of $496.8 million.

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

Three Months Ended June 30, 2023

Six Months Ended September 30, 2023

(Amounts in thousands)

Net cash used in operating activities $ (92,178) $ (66,665)

Net cash used in investing activities 7,361 5,315

Net cash provided by investing activities

Net cash provided by financing activities 1,543 39,945

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Operating activities

During the three months ended June 30, 2023, net cash used in operating activities was $48.6 million, primarily resulting from our net loss of $49.6 million, partially offset by non-cash charges of $4.3 million, which primarily consist of stock-based compensation expense of $8.8 million, and a decrease in cash of $3.4 million related to changes in our operating assets and liabilities.

Changes in our operating assets and liabilities for the three months ended June 30, 2023 consisted primarily of a $1.2 million decrease in accrued expenses and other current liabilities, a $1.6 million decrease in prepaid expenses and other current assets, a net $0.6 million change in operating and financing right-of-use assets and lease liabilities, a $0.8 million decrease in accounts payable, and a $0.4 million decrease in research and development incentives receivable from the United Kingdom government due to the timing and amount of our qualifying expenditures.

During the three months ended June 30, 2022, net cash used in operating activities was $33.5 million, primarily resulting from our net loss of $42.3 million, partially offset by non-cash charges of $8.1 million, primarily consisting of stock-based compensation expense of $7.2 million, and an increase in cash of $0.7 million related to changes in our operating assets and liabilities.

Changes in our operating assets and liabilities for the three months ended June 30, 2022 consisted primarily of a $1.1 million decrease in accrued expenses and other current liabilities, a $0.9 million increase in accounts payable, a $0.9 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 $0.6 million change in operating and financing right-of-use assets and lease liabilities, and as well as a $1.2 million increase in prepaid expenses and other current assets.

During the six months ended September 30, 2023, net cash used in operating activities was $92.2 million, primarily resulting from our net loss of $109.6 million, partially offset by non-cash charges of $13.3 million, which primarily consist of

stock-based compensation expense of $18.0 million, somewhat offset by net amortization of premiums and discounts on short-term investments of $6.5 million, and an increase in cash of $4.1 million related to changes in our operating assets and liabilities.

Changes in our operating assets and liabilities for the six months ended September 30, 2023 consisted primarily of a $7.0 million increase in accrued expenses and other current liabilities, a $2.2 million increase in prepaid expenses and other current assets, a net $1.2 million change in operating and financing right-of-use assets and lease liabilities, a $1.0 million decrease in accounts payable, and a $0.8 million increase in research and development incentives receivable from the United Kingdom government due to the timing and amount of our qualifying expenditures.

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.

Investing activities

During the three months ended June 30, 2023, net cash provided by investing activities was $7.4 million, consisting of $177.1 million in proceeds from sales and maturities of short-term investments, partially offset by $169.3 million in purchases of available for sale securities, and $0.4 million in purchases of property, plant and equipment.

During the Three Months Ended June 30, 2022, net cash provided by investing activities was $5.3 million, consisting of $67.0 million in proceeds from sales and maturities of short-term investments, partially offset by $60.6 million in purchases of available for sale securities and $1.1 million in purchases of property, plant and equipment.

During the six months ended September 30, 2023, net cash provided by investing activities was $20.0 million, consisting of $303.5 million in proceeds from sales and maturities of short-term investments, partially offset by $281.2 million in purchases of available for sale securities, and $2.2 million in purchases of property, plant and equipment and capitalized software.

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.

Financing Activities

During the three months ended June 30, 2023, net cash provided by financing activities was $1.1 million, consisting primarily of $1.2 million in proceeds from the exercise of stock options.

During the Three Months Ended June 30, 2022, net cash provided by financing activities was $32.5 million, consisting of primarily $31.0 million from the issuance of common stock through ATM sales, as well as approximately $1.6 million in proceeds from the exercise of stock options.

During the six months ended September 30, 2023, net cash provided by financing activities was $1.5 million, consisting primarily of $1.8 million in proceeds from the exercise of stock options.

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.

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 June 30, 2023, we had cash and cash equivalents and short-term investments of $539.1 million.

Based on our current operating plan, we believe that our existing cash, cash equivalents and short-term investments as of June 30, 2023, will enable us to fund operations into the second half of 2025.

As of September 30, 2023, we had cash and cash equivalents and short-term investments of $496.8 million.

Based on our current operating plan, we believe that our existing cash, cash equivalents and short-term investments as of September 30, 2023, will enable us to fund operations into the second half of 2025.

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.

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.”

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

Developing novel biopharmaceutical products, including conducting preclinical studies and clinical trials, is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval for any product candidates or generate revenue from the sale of any products for which we may obtain marketing approval.

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Contractual obligations and commitments

During the three months ended June 30, 2023, 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, 2023, which was filed with the SEC on May 18, 2023.

During the three months ended September 30, 2023, 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, 2023, which was filed with the SEC on May 18, 2023.

Collaborations

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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.

Under the agreement, the companies will collaborate in two 30 patient cohort signal finding studies in third-line, or 3L, CRC and in two 15 patient cohort signal finding studies in second-line, or 2L, 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 2L HCC and 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.

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Under the agreement, the companies will collaborate in a signal finding study in which Incyte will initiate and sponsor a clinical trial of INCB99280 (oral PD-L1 inhibitor) and RP1 in approximately 40 patients with unresectable, high risk CSCC in the neoadjuvant setting.

Under the terms of the agreement, Replimune will supply Incyte with RP1 for the study and share costs of the study equally with Incyte.

Under the terms of the agreement, we will supply Incyte with RP1 for the study and share costs of the study equally with Incyte.

The agreement may be terminated by either party upon (i) a material breach not reasonably cured within thirty (30) days;

(ii) by Replimune upon the inappropriate or unsafe use of the RP1 product candidate;

(iii) the discontinuation of development of its clinical drug candidate;

(iv) the unethical or illegal business practices of the other party;

or (v) if the parties have not agreed on the protocol or budget within ninety (90) days of the effective date of the agreement.

(ii) the discontinuation of development of its clinical drug candidate;

(iii) the unethical or illegal business practices of the other party;

or (iv) if the parties have not agreed on the protocol or budget within ninety (90) days of the effective date of the agreement.

In addition, the Company may terminate the agreement upon the inappropriate or unsafe use of the RP1 product candidate.

Critical accounting policies and estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States.

The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assets

and liabilities in our consolidated financial statements.

We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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We base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple CMOs and CROs that supply, conduct and manage preclinical studies and clinical trials on our behalf.

The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows.

The financial terms of these agreements are subject to negotiation, vary from contract to

contract and may result in uneven payment flows.

There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense.

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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