What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-02-08 compared with 2023-11-07 · 123 added, 144 removed, 306 unchanged (47% of the section changed)

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Our proprietary RPx platform is based on a novel, engineered strain of herpes simplex virus 1, or HSV-1, backbone with payloads added to maximize immunogenic cell death and the induction of a systemic anti-tumor immune response.

The RPx platform has a dual local and systemic mechanism of action, or MOA, consisting of direct selective virus-mediated killing of the tumor resulting in the release of tumor-derived antigens and altering of the tumor microenvironment to ignite a strong and durable systemic response.

This MOA is expected to be synergistic with most established and experimental cancer treatment modalities, and, with an attractive safety profile the RPx platform is expected to have the versatility to be developed alone or combined with a variety of other treatment options.

The RPx platform is intended to have unique dual local and systemic activity consisting of direct selective virus-mediated killing of the tumor resulting in the release of tumor-derived antigens and altering of the tumor microenvironment to ignite a strong and durable systemic response.

Our product candidates are expected to be synergistic with most established and experimental cancer treatment modalities, and, with an attractive safety profile the RPx platform is expected to have the versatility to be developed alone or combined with a variety of other treatment options.

We currently have three RPx product candidates in our development pipeline, RP1 (vusolimogene oderparepvec), our lead product candidate, RP2 and RP3.

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We are conducting a number of clinical trials of RP1, both as a monotherapy and in combination with anti-PD-1 therapy, with a focus on establishing a major skin cancer franchise.

We have completed enrolling patients in a randomized, controlled Phase-2 clinical trial of RP1 with cutaneous squamous cell carcinoma, or CSCC, RP1’s lead indication, which is referred to herein as CERPASS or the CERPASS trial, under an agreement with our partner Regeneron Pharmaceuticals, Inc.,

or Regeneron.

CERPASS is a registration directed clinical 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.

An additional 20 patients were also dosed with RP1 made at our in-house manufacturing facility.

The CERPASS protocol evaluates complete response, or CR rate, and overall response rate, or ORR, as its two independent 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.

As previously reported, we met with the FDA in the first quarter and discussed the rationale for the changes to the study design we made in 2020 reducing the study size from 240 to 180 patients and adding CR as a dual independent primary endpoint (the study subsequently over enrolled with 211 patients randomized, as reported in November 2022).

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

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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Our leading clinical trial of RP1 is our IGNYTE trial, a multi-cohort Phase 1/2 clinical trial being conducted in 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.

The leading tumor specific cohort in the IGNYTE trial is our registration directed Phase 2 expansion cohort enrolling 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.

In March 2021, we held a Type B meeting with the FDA to discuss the design of the 125 patient expansion cohort in the IGNYTE trial.

In this meeting, the FDA expressed that while a randomized controlled clinical trial would always be preferred for registration purpose, that in this patient population with no clear standard of care, if the clinical data is sufficiently compelling then the data could be considered for submission by the FDA under the accelerated approval pathway.

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

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 2023, we completed target enrollment of 125 patients with patients in screening at that time continuing to be enrolled.

We completed enrollment in this cohort in March 2023, ultimately enrolling 140 patients.

In June 2023, further updated data from the initial 75 patients was presented at the American Society of Clinical Oncology, or ASCO, showing RP1 combined with nivolumab continued to demonstrate deep and durable responses with a well-tolerated safety profile and no progression in responding patients since the prior data snapshot.

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=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.

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 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 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 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).

In December 2023, we reported the full data set of 156 patients (140 patients from the registration-directed expansion cohort and 16 anti-PD1 failed cutaneous melanoma patients from the prior phase 2 cohort) with an overall response rate (ORR) of 31.4% and a complete response rate (CR) of 12%.

RP1 combined with nivolumab continues to be well-tolerated, with mainly Grade 1-2 “on target” side effects, observed.

Following a Type C meeting with the U.S.

Food and Drug Administration (FDA), a confirmatory study design concept consisting of a 2-arm randomized trial with physician’s choice of treatment as a comparator arm in anti-PD1 failed melanoma patients was agreed.

The FDA requested that the Phase 3 confirmatory trial be underway at the time of a BLA submission under the accelerated approval pathway.

The FDA also indicated that all patients should be followed for at least 12 months and have undergone central review by RECIST v1.1.

A BLA submission for RP1 in combination with nivolumab in anti-PD1 failed melanoma is planned for 2H 2024.

In our non-melanoma skin cancer, or NMSC, cohort of the IGNYTE clinical trial, we provided a data update in December 2023 from the first 30 patients with at least 6 months of follow up including patients with CSCC, Merkel cell carcinoma (MCC), basal cell carcinoma, and angiosarcoma in this cohort.

The data showed that treatment with RP1 in combination with nivolumab led to an ORR of 30% which is consistent with data from the anti-PD1 failed melanoma cohort with approximately one-third of patients responding and 60% demonstrating clinical benefit.

The combination of RP1 and nivolumab was well tolerated in this patient population with a safety profile consistent with the overall experience seen with this treatment regimen to date.

Furthering development of our RP1 clinical candidate, we 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, 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).

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 ORR of 34.5% and a CR of 21%.

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.

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.

As reported in December, our randomized, controlled Phase-2 clinical trial of RP1 with cutaneous squamous cell carcinoma, or CSCC, referred to as CERPASS or the CERPASS trial, under agreement with our partner Regeneron did not meet either of the two primary endpoints.

RP1 in combination with cemiplimab increased the CRR versus cemiplimab alone (38.1% vs.

25%, p=0.040), which was just short of the required threshold for statistical significance in this study.

Notably, among the 83 patients with locally advanced disease, the complete response rate in the RP1 plus cemiplimab group was 48.1% versus 22.6% in the cemiplimab only group.

The ORR was comparable between the two study groups (52.5% for RP1 plus cemiplimab vs.

51.4% for cemiplimab alone, p=0.692).

RP1 in com-bination with cemiplimab also increased duration of response (DOR) as compared to cemiplimab alone.

The trial will continue as planned to assess DOR, progression free survival (PFS) and overall survival (OS) with greater maturity.

We are also developing or have been 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.

In addition to the expression of GALV-GP R(-) and human GM-CSF as in RP1, RP2 has been engineered to express an antibody-like molecule intended to block the activity of CTLA-4, a protein that inhibits the full activation of an immune response, including to tumors.

RP3 has been engineered with the intent to further stimulate an anti-tumor immune response through activation of immune co-stimulatory pathways through the additional expression of the ligands for CD40 and 4-1BBL, as well as anti-CTLA-4 and GALV-GP R(-), but without the expression of GM-CSF.

We initiated a Phase-1 clinical trial of RP2 alone and in combination with nivolumab in the second half of 2019.

This clinical trial is also being conducted as part of our collaboration with BMS, under which BMS has granted us a non-exclusive, royalty-free license to, and will supply at no cost, nivolumab, for use in combination with RP2.

We have presented data from the single agent RP2 portion of this clinical trial that showed deep and durable responses, including demonstration of tumor response in uninjected lesions and in patients with difficult to treat advanced cancers.

We believe that this data supports the hypothesis that anti-CTLA-4 delivered intra-tumorally through oncolytic virus replication, with accompanying antigen release and presentation, can provide potent anti-tumor effects.

We have also presented combination data from both the clinical trial that showed compelling activity in patients with immune insensitive tumors and with anti-PD-1 failed disease.

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 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.

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.

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;

hepatocellular carcinoma, or HCC, both first and second line;

and colorectal cancer, or CRC, third line;

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 Holding AG, or Roche.

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 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 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.

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 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.

We continue the development of our clinical candidate RP2 with a focus on establishing a rare cancer franchise.

Notably, as previously reported, from our Phase-1 clinical trial of RP2 alone and in combination with nivolumab, we have seen durable responses from a monotherapy cohort in a variety of difficult to treat tumors as well as in combination with anti-PD1 and in particular in patients with uveal melanoma.

In November 2023, we presented updated data from a cohort of metastatic uveal melanoma patients during a Plenary Session at the 20th Annual International Society for Melanoma Research Congress.

The updated data showed RP2 led to an ORR of 29.4 percent (5 of 17 patients;

one of the responding patients was treated with RP2 monotherapy and four of the responding patients were treated with RP2 combined with nivolumab), including responses in patients with liver, lung, and bone metastases.

The median DOR at the data cutoff was 11.47 months (range of 2.78 to 21.22 with responses ongoing).

Nearly all patients (15 of 17, 88.2%) in the study had progressed on or after immunotherapy with 12 of 17 patients (70.6%) having previously received both anti-PD1 and anti-CTLA-4 therapies, including four of the responding

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RP2 was generally well tolerated both as monotherapy and in combination with nivolumab with no additive adverse events observed.

The most common grade 1 or 2 treatment related adverse events (TRAEs) overall in both cohorts were pyrexia, chills, fatigue, hypotension and pruritis.

Six patients had grade 3 TRAEs, including two cases of hypotension.

There were no grade 4 or 5 TRAEs.

Based on the data in this population, planning is underway for a potentially registration enabling study of RP2 in advanced uveal melanoma.

As previously announced, our RP2/3 development in squamous cell carcinoma of the head and neck (SCCHN) and colorectal cancer (CRC) have been discontinued, and the development program in hepatocellular carcinoma (HCC) has been limited to the 2L setting and will use RP2 rather than RP3.

Although we have discontinued or are modifying these trials, we are continuing to treat patients who were already in screening or enrolled in these trials before the trials were discontinued.

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

We believe that direct injection maximizes virus-mediated tumor cell death, provides the most efficient delivery of virus-encoded immune activating proteins into the tumor with the goal of activating systemic immunity, and limits the systemic toxicities that could be associated with intravenous administration.

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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 $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.

Our net losses were $51.1 million and $39.7 million for the three months ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, we had an accumulated deficit of $646.2 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.

We expect to continue to incur significant expenses and increasing operating losses for at least the next several years.

We anticipate that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our product candidates, and if and as we:

We anticipate that our expenses and capital requirements will fluctuate from period to period depending upon the Company's development programs and priorities.

We expect to continue to incur costs in connection with our ongoing development activities, including further advancement of any preclinical activities and clinical trials of our product candidates across our platform, and if and as we:

• conduct our current and future clinical trials with RP1, RP2 and RP3;

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• establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval;

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• until our manufacturing facility is fully validated, continued limited manufacturing by third parties for clinical development;

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

As of December 31, 2023, we had cash and cash equivalents and short-term investments of $466.4 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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• the costs of laboratory supplies and acquiring, developing and manufacturing preclinical study and clinical trial materials;

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• costs related to compliance with regulatory requirements in connection with the development of our product candidates;

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• the acceptance of our product candidates, if approved, by patients, the medical community, and third-party payors;

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• our ability to successfully develop our product candidates for use in combination with third-party products or product candidates;

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

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.

The impact of such inclusions could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings or losses versus annual projections.

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.

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During the nine months ended December 31, 2023, the Company recorded an income tax provision of $0.5 million primarily due to forecasted U.S.

taxable income for the year that is not fully offset by available net operating loss carryforwards.

During the nine months ended December 31, 2022, the Company did not recorded any income tax provision due to losses incurred and based upon the weight of available evidence, that it is more likely than not that the Company's loses will not be realized.

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 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.

The Company has considered its history of cumulative net losses, future reversals of existing taxable temporary differences, 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 December 31, 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 September 30, 2023 and 2022

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

Comparison of the three months ended December 31, 2023 and 2022

The following chart summarizes our results of operations for the three months ended December 31, 2023 and 2022:

Three Months Ended

September 30,

2023 2022 Change

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Interest expense on debt obligations (1,012) (941) (71)

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

Other income 1,344 147 1,197

Total other income (expense), net 5,893 1,940 3,953

Loss before income taxes $ (50,647) $ (39,690) $ (10,957)

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

Income tax provision $ 473 $ — $ 473

Net loss $ (51,120) $ (39,690) $ (11,430)

Research and development expenses

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:

Research and development expenses for the three months ended December 31, 2023 were $42.8 million, compared to $30.3 million for the three months ended December 31, 2022.

The following table summarizes our research and development expenses for the three months ended December 31, 2023 and 2022:

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Three Months Ended

September 30,

2023 2022 Change

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Total research and development expenses $ 42,847 $ 30,261 $ 12,586

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.

The increase in our direct research and development expenses is primarily driven by increases in the number of clinical trial sites and patient enrollment in all of our clinical trials as compared the prior year, with CRO and investigator costs increasing by approximately $4.2 million vs.

the prior year.

In addition, during the third quarter of fiscal year 2024, the costs for RP1 increased vs.

the prior year as the Company focused on conducting the primary analysis and preparing for a potential BLA filing for CERPASS as well as the initial full data presentation for IGNYTE and an updated data presentation on the ARTACUS trial.

The Company continued to ramp up activities to develop RP2, specifically as it related to metastatic uveal melanoma patients.

The increase of $7.9 million in our unallocated expenses was due to a $6.9 million increase in personnel-related costs and $1.0 million increase in other expenses.

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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 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.

Personnel related costs for the three months ended December 31, 2023 and 2022 included stock-based compensation expense of $3.8 million and $2.6 million, respectively.

Furthermore, the change in other expenses is primarily driven by an increase of approximately $0.4 million in other outside services, a $0.4 million increase in other variable costs, a $0.3 million increase in conferences and exhibitions and a $0.1 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 consulting costs of approximately $0.2 million and a decrease of approximately $0.1 million in recruiting costs.

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 $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.

Selling, general and administrative expenses were $13.7 million for the three months ended December 31, 2023, compared to $11.4 million for the three months ended December 31, 2022.

The increase of $2.3 million is primarily the result of an increase of $1.1 million in personnel related costs and an increase of $1.0 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.

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Total other income (expense), net

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.

Other income (expense), net was $5.9 million for the three months ended December 31, 2023, compared to a net income of $1.9 million for the three months ended December 31, 2022.

The net change of $4.0 million is primarily attributable to an increase in investment income of $3.0 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,

Income tax provision

The income tax provision for the nine months ended December 31, 2023 and December 31, 2022, was $0.5 million and $0.0 million, respectively.

The income tax provision booked during the nine months ended December 31, 2023 is primarily due to forecasted U.S.

taxable income for the year that is not fully offset by available net operating loss carryforwards.

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Comparison of the nine months ended December 31, 2023 and 2022

The following chart summarizes our results of operations for the nine months ended December 31, 2023 and 2022:

Nine Months Ended

2023 2022 Change

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Interest expense on debt obligations (3,083) (941) (2,142)

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

Other income (expense) 1,307 (4,531) 5,838

Total other income (expense), net 15,771 (960) 16,731

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Research and development expenses

Six Months Ended September 30,

Nine Months Ended December 31,

2023 2022 Change

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Total research and development expenses $ 132,384 $ 88,573 $ 43,811

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.

Research and development expenses for the nine months ended December 31, 2023 were $132.4 million, compared to $88.6 million for the nine months ended December 31, 2022.

The increase of $43.8 million was due to an increase of approximately $20.4 million in direct research costs related to our ongoing clinical trials and increased patient enrollment for RP1, RP2 and RP3, including an increase of approximately $14.6 million in the areas of CRO costs, investigator costs, and RP1 imaging costs.

In addition, the costs for RP1 increased vs.

the prior year as the Company prepared the primary analysis and preparations for a potential BLA filing for CERPASS as well as the initial full data presentation for IGNYTE and an updated data presentation on the ARTACUS trial.

The Company also continued to ramp up activities to develop RP2 and RP3 throughout the nine months ended December 31, 2023 as compared to the prior year.

In addition, there is an increase of approximately $23.4 million in unallocated research and development costs, mainly attributable to a $20.7 million increase in personnel-related costs, including a $16.9 million increase in payroll and fringe benefits and a stock-based compensation increase of $3.8 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.

Personnel related costs for the nine months ended December 31, 2023 and 2022 included stock-based compensation expense of $11.5 million and $7.7 million, respectively.

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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.

Selling, general and administrative expenses were $43.6 million for the nine months ended December 31, 2023, compared to $35.5 million for the nine months ended December 31, 2022.

The increase of $8.1 million is primarily the result of an increase of $4.9 million in personnel related costs, including a stock-based compensation increase of $1.2 million, and an increase of $3.7 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.

Personnel related costs for the nine months ended December 31, 2023 and 2022 included stock-based compensation expense of $14.7 million and $13.5 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.

Other income (expense) was $15.8 million for the nine months ended December 31, 2023, compared to $(1.0) million for the nine months ended December 31, 2022.

The net change of $16.7 million is primarily attributable to an increase in investment income of approximately $13.8 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 $5.8 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.

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 entered in the third quarter of the prior year.

Income tax provision

The income tax provision for the nine months ended December 31, 2023 was $0.5 million compared to $0.0 million for the nine months ended December 31, 2022.

The income tax provision booked during the nine months ended December 31, 2023 is primarily related to the Company's interest income in the United States.

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 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.

Through December 31, 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 $42.8 million from our incurrence of debt under the term loan agreement with Hercules.

As of December 31, 2023, we had cash and cash equivalents and short-term investments of $466.4 million.

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

Six Months Ended September 30, 2023

Nine Months Ended December 31, 2023

(Amounts in thousands)

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Net cash provided by investing activities

74,000 (119,750)

Net cash provided by financing activities 16,413 311,380

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Operating activities

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.

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During the nine months ended December 31, 2023, net cash used in operating activities was $139.3 million, primarily resulting from our net loss of $160.2 million, partially offset by non-cash charges of $18.1 million, which primarily consist of stock-based compensation expense of $26.2 million, somewhat offset by net amortization of premiums and discounts on short-term investments of $9.5 million, and an increase in cash of $3.0 million related to changes in our operating assets and liabilities.

Changes in our operating assets and liabilities for the nine months ended December 31, 2023 consisted primarily of a $6.1 million increase in accrued expenses and other current liabilities, a $2.2 million increase in prepaid expenses and other current assets, a net $1.8 million change in operating and financing right-of-use assets and lease liabilities, a $1.5 million decrease in accounts payable, and a $1.2 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 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.

Investing activities

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.

During the nine months ended December 31, 2023, net cash provided by investing activities was $74.0 million, consisting of $459.0 million in proceeds from sales and maturities of short-term investments, partially offset by $381.1 million in purchases of available for sale securities, and $3.9 million in purchases of property, plant and equipment and capitalized software.

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.

Financing Activities

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.

During the nine months ended December 31, 2023, net cash provided by financing activities was $16.4 million, consisting primarily of $15.0 million in proceeds from long-term debt, as well as $1.8 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.

Funding requirements

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• seek marketing approvals for any of our product candidates that successfully complete clinical trials, if any;

Table of Conte nts

• establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval;

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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, 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.

As of December 31, 2023, we had cash and cash equivalents and short-term investments of $466.4 million.

Based on our current operating plan, we believe that our existing cash, cash equivalents and short-term investments as of December 31, 2023, will enable us to fund operations into the second half of 2026.

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

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Contractual obligations and commitments

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.

During the three months ended December 31, 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 February 2018, we entered into a Clinical Trial Collaboration and Supply Agreement with BMS.

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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 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.

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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.

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

We are in discussions with Roche about revising these agreements following our changes to our RP2 and RP3 development plans.

In July 2023, we entered into a Clinical Trial Collaboration and Supply Agreement with Incyte Corporation, or Incyte.

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• vendors related to product manufacturing and development and distribution of preclinical and clinical supplies.

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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