Replimune Group, Inc. 10-Q

Item 1. Financial Statements. REPLIMUNE GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share amounts) (Unaudited) December 31, 2023 March 31, 2023 Assets Current assets: Cash and cash equivalents $ 97,672 $ 146,590 Short-term investments 368,679 436,796 Research and development incentives receivable 4,295 2,939 Prepaid expenses and other current assets 8,518 6,278 Total current assets 479,164 592,603 Property, plant and equipment, net 9,473 7,479 Restricted cash 1,636 1,636 Right-to-use asset - operating leases 4,813 5,208 Right-to-use asset - financing leases 37,844 39,665 Total assets $ 532,930 $ 646,591 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 3,903 $ 5,364 Accrued expenses and other current liabilities 30,886 24,704 Operating lease liabilities, current 1,163 1,118 Financing lease liabilities, current 2,698 2,639 Total current liabilities 38,650 33,825 Operating lease liabilities, non-current 3,955 4,389 Financing lease liabilities, non-current 23,561 23,965 Long term debt, net of discount 44,434 28,648 Other liabilities, non-current 793 472 Total liabilities $ 111,393 $ 91,299 Commitments and contingencies (Note 14) Stockholders' equity Common stock, $ 0.001 par value; 150,000,000 shares authorized as of December 31, 2023 and March 31, 2023; 61,387,786 and 56,676,313 shares issued and outstanding as of December 31, 2023 and March 31, 2023, respectively 61 57 Additional paid-in capital 1,062,949 1,034,994 Accumulated deficit ( 646,207 ) ( 485,488 ) Accumulated other comprehensive income 4,734 5,729 Total stockholders' equity 421,537 555,292 Total liabilities and stockholders' equity $ 532,930 $ 646,591 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of Conte nts REPLIMUNE GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except share and per share amounts) (Unaudited) Three Months Ended December 31, Nine Months Ended December 31, 2023 2022 2023 2022 Operating expenses: Research and development $ 42,847 $ 30,261 $ 132,384 $ 88,573 Selling, general and administrative 13,693 11,369 43,633 35,512 Total operating expenses 56,540 41,630 176,017 124,085 Loss from operations ( 56,540 ) ( 41,630 ) ( 176,017 ) ( 124,085 ) Other income (expense): Research and development incentives 415 607 1,251 2,032 Investment income 5,686 2,675 17,922 4,130 Interest expense on finance lease liability ( 540 ) ( 548 ) ( 1,626 ) ( 1,650 ) Interest expense on debt obligations ( 1,012 ) ( 941 ) ( 3,083 ) ( 941 ) Other income (expense) 1,344 147 1,307 ( 4,531 ) Total other income (expense), net 5,893 1,940 15,771 ( 960 ) Loss before income taxes $ ( 50,647 ) $ ( 39,690 ) $ ( 160,246 ) $ ( 125,045 ) Income tax provision 473 $ — $ 473 $ — Net loss $ ( 51,120 ) $ ( 39,690 ) $ ( 160,719 ) $ ( 125,045 ) Net loss per common share, basic and diluted $ ( 0.77 ) $ ( 0.69 ) $ ( 2.42 ) $ ( 2.25 ) Weighted average common shares outstanding, basic and diluted 66,645,691 57,857,132 66,532,488 55,618,052 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Conte nts REPLIMUNE GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Amounts in thousands) (Unaudited) Three Months Ended December 31, Nine Months Ended December 31, 2023 2022 2023 2022 Net loss $ ( 51,120 ) $ ( 39,690 ) $ ( 160,719 ) $ ( 125,045 ) Other comprehensive loss: Foreign currency translation (loss) gain ( 1,288 ) 158 ( 1,285 ) 4,225 Net unrealized gain on short-term investments, net of tax of $ 0 534 650 290 487 Comprehensive loss $ ( 51,874 ) $ ( 38,882 ) $ ( 161,714 ) $ ( 120,333 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Conte nts REPLIMUNE GROUP, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Amounts in thousands, except share amounts) (Unaudited) Common stock Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Total stockholders’ equity Shares Amount Balances as of March 31, 2023 56,676,313 $ 57 $ 1,034,994 $ ( 485,488 ) $ 5,729 $ 555,292 Foreign currency translation adjustment — — — — ( 1,305 ) ( 1,305 ) Unrealized loss on short-term investments — — — — ( 458 ) ( 458 ) Exercise of pre-funded warrants 1,922,655 — — — — — Exercise of stock options 96,146 — 1,209 — — 1,209 Vesting of RSUs 281,211 — — — — — Stock-based compensation expense — — 8,846 — — 8,846 Net loss — — — ( 49,555 ) — ( 49,555 ) Balances as of June 30, 2023 58,976,325 57 1,045,049 ( 535,043 ) 3,966 514,029 Foreign currency translation adjustment — — — — 1,308 1,308 Unrealized gain on short-term investments — — — — 214 214 Exercise of stock options 67,210 1 549 — — 550 Vesting of RSUs 15,808 1 — — — 1 Stock-based compensation expense — — 9,114 — — 9,114 Net loss — — — ( 60,044 ) — ( 60,044 ) Balances as of September 30, 2023 59,059,343 59 1,054,712 ( 595,087 ) 5,488 465,172 Foreign currency translation adjustment — — — — ( 1,288 ) ( 1,288 ) Unrealized gain on short-term investments — — — — 534 534 Exercise of pre-funded warrants 2,279,967 2 ( 4 ) — — ( 2 ) Vesting of RSUs 48,476 — — — — — Stock-based compensation expense — — 8,241 — — 8,241 Net loss — — — ( 51,120 ) — ( 51,120 ) Balances as of December 31, 2023 61,387,786 $ 61 $ 1,062,949 $ ( 646,207 ) $ 4,734 $ 421,537 Balances as of March 31, 2022 47,338,660 $ 47 $ 723,359 $ ( 311,204 ) $ ( 973 ) $ 411,229 Issuance of common stock through ATM sales, net of offering costs 1,686,438 2 31,035 — — 31,037 Foreign currency translation adjustment — — — — 1,737 1,737 Unrealized loss on short-term investments — — — — ( 244 ) ( 244 ) Exercise of stock options 124,028 — 1,562 — — 1,562 Vesting of RSUs 149,341 — — — — — Stock-based compensation expense — — 7,194 — — 7,194 Net loss — — — ( 42,253 ) — ( 42,253 ) Balances as of June 30, 2022 49,298,467 49 763,150 ( 353,457 ) 520 410,262 Issuance of common stock through ATM sales, net of offering costs 340,000 1 6,400 — — 6,401 Foreign currency translation adjustment — — — — 2,330 2,330 Unrealized gain on short-term investments — — — — 81 81 Exercise of stock options 88,252 — 1,108 — — 1,108 Vesting of RSUs 12,688 — — Stock-based compensation expense — — 6,992 — — 6,992 Net loss — — — ( 43,102 ) — ( 43,102 ) Balances as of September 30, 2022 49,739,407 50 777,650 ( 396,559 ) 2,931 384,072 Issuance of prefunded warrants to purchase common stock — — 92,778 — — 92,778 Issuance of common stock, net of issuance costs and underwriter fees 6,810,658 7 149,847 — — 149,854 Foreign currency translation adjustment — — — — 158 158 Unrealized gain on short-term investments — — — — 650 650 Exercise of stock options 60,921 — 500 — — 500 Vesting of RSUs 22,013 — — — Stock-based compensation expense — — 7,023 — — 7,023 Net loss — — — ( 39,690 ) — ( 39,690 ) Balances as of December 31, 2022 56,632,999 $ 57 $ 1,027,798 $ ( 436,249 ) $ 3,739 $ 595,345 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of Conte nts REPLIMUNE GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited) Nine Months Ended December 31, 2023 2022 Cash flows from operating activities: Net loss $ ( 160,719 ) $ ( 125,045 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 26,201 21,209 Depreciation 1,950 1,919 Net amortization of premiums and discounts on short-term investments ( 9,515 ) ( 1,782 ) Noncash interest expense 786 235 Unrealized foreign currency transaction (gains) losses ( 1,307 ) — Changes in operating assets and liabilities: Research and development incentives receivable ( 1,249 ) 812 Prepaid expenses and other current assets ( 2,211 ) ( 396 ) Operating lease, right-of-use-asset 437 382 Finance lease, right-of-use-asset 1,821 1,821 Accounts payable ( 1,505 ) 357 Accrued expenses and other current liabilities 6,123 5,625 Operating lease liabilities ( 433 ) ( 391 ) Other non-current liabilities 320 — Net cash used in operating activities ( 139,301 ) ( 95,254 ) Cash flows from investing activities: Purchases of property, plant and equipment and software capitalization ( 3,922 ) ( 2,019 ) Purchase of short-term investments ( 381,115 ) ( 433,911 ) Proceeds from sales and maturities of short-term investments 459,037 316,180 Net cash provided by investing activities 74,000 ( 119,750 ) Cash flows from financing activities: Proceeds from issuance of common stock, net of underwriting fees and discounts — 150,102 Proceeds from issuance of prefunded warrants to purchase common stock, net of underwriting fees and discounts — 92,778 Proceeds from issuance of common stock through ATM sales, net of offering costs — 37,438 Proceeds from long-term debt 15,000 30,000 Payment of debt issuance costs — ( 1,846 ) Principal payment of finance lease obligation ( 345 ) ( 262 ) Proceeds from exercise of stock options 1,758 3,170 Net cash provided by financing activities 16,413 311,380 Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 30 ) 4,343 Net (decrease) increase in cash, cash equivalents and restricted cash ( 48,918 ) 100,719 Cash, cash equivalents and restricted cash at beginning of period 148,226 107,584 Cash, cash equivalents and restricted cash at end of period $ 99,308 $ 208,303 Supplemental disclosure of cash flow information: Cash paid during the period for interest 2,036 — Cash paid for income taxes 300 — Supplemental disclosure of non-cash investing and financing activities: Common stock issuance costs included in accrued expenses — 249 Purchases of property and equipment included in accounts payable 127 19 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Table of Conte nts REPLIMUNE GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except share and per share amounts) (Unaudited) 1. Nature of the business Replimune Group, Inc. (the “Company”) is a clinical-stage biotechnology company with the mission to transform cancer treatment by pioneering the development of a novel portfolio of oncolytic immunotherapies. The Company's proprietary oncolytic immunotherapy product candidates are designed and intended to maximally activate the immune system against cancer. Replimune Group, Inc., whose predecessor was founded in 2015, is the parent company of its wholly owned, direct and indirect subsidiaries: Replimune Limited (“Replimune UK”); Replimune, Inc. (“Replimune US”); Replimune Securities Corporation; and Replimune (Ireland) Limited. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, third-party intellectual property, compliance with government regulations and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance and reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales. The Company's proprietary oncolytic immunotherapy product candidates, the RPx product candidates, are based on a novel, engineered strain of herpes simplex virus 1, or HSV-1, backbone with added payloads intended to maximize immunogenic cell death and the induction of a systemic anti-tumor immune response. The Company currently has three RPx product candidates, RP1, RP2 and RP3. RP1 is currently under development in multiple clinical trials, the most advanced being the anti-PD1 failed melanoma cohort of the IGNYTE clinical trial. RP2 is currently in clinical development with planning underway for a potentially registration enabling clinical trial in uveal melanoma. As reported in December 2023, our randomized, controlled Phase-2 clinical trial of RP1 with cutaneous squamous cell carcinoma, referred to as CERPASS or the CERPASS trial, did not meet either of the two primary endpoints and development efforts on RP3 have been deprioritized. Basis of presentation The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. The Company has incurred recurring losses since its inception, including net losses of $ 51.1 million and $ 39.7 million for the three months ended December 31, 2023 and 2022, respectively, and net losses of $ 160.7 million and $ 125.0 million for the nine months ended December 31, 2023 and 2022, respectively. In addition, as of December 31, 2023, the Company had an accumulated deficit of $ 646.2 million. The Company expects to continue to generate operating losses for the foreseeable future. As of the issuance date of these consolidated financial statements, the Company expects that its cash and cash equivalents and short-term investments will be sufficient to fund its operating expenses and capital expenditure requirements through at least 12 months from the issuance of these consolidated financial statements. 2. Summary of significant accounting policies Principles of consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and include the accounts of the Company and its direct and indirect wholly owned subsidiaries, Replimune UK, Replimune US, Replimune Securities Corporation and Replimune (Ireland) Limited after elimination of all intercompany accounts and transactions. Use of estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the 8 Table of Conte nts accrual for research and development expenses and the valuation of stock-based awards. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Unaudited interim financial information The accompanying consolidated balance sheet as of December 31, 2023, the consolidated statements of operations, of comprehensive loss and of stockholders’ equity for the three and nine months ended December 31, 2023 and 2022 and the consolidated statements of cash flows for the nine months ended December 31, 2023 and 2022 are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of December 31, 2023 and the results of its operations for the three and nine months ended December 31, 2023 and 2022 and its cash flows for the nine months ended December 31, 2023 and 2022. The financial data and other information disclosed in these consolidated notes related to the three and nine months ended December 31, 2023 and 2022 are unaudited. The results for the three and nine months ended December 31, 2023 are not necessarily indicative of results to be expected for the year ending March 31, 2024, any other interim periods or any future year or period. The financial information included herein should be read in conjunction with the financial statements and notes in the Company's Annual Report on Form 10-K for the year ended March 31, 2023, which was filed with the Securities and Exchange Commission on May 18, 2023 (the "Annual Report"). During the three and nine months ended December 31, 2023, there have been no changes to the Company’s significant accounting policies as described in the Annual Report. 3. Fair value of financial assets and liabilities The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis: Fair Value Measurements as of December 31, 2023 Using: Level 1 Level 2 Level 3 Total Cash equivalents Money market funds $ — $ 63,715 $ — $ 63,715 Short-term investments US Government Agency bonds — 216,058 — 216,058 US Treasury bonds — 152,621 — 152,621 $ — $ 432,394 $ — $ 432,394 Fair Value Measurements as of March 31, 2023 Using: Level 1 Level 2 Level 3 Total Cash equivalents Money market funds $ — $ 121,455 $ — $ 121,455 Short-term investments US Government Agency bonds — 240,355 — 240,355 US Treasury bonds — 196,441 — 196,441 $ — $ 558,251 $ — $ 558,251 The underlying securities in the money market funds held by the Company are all government backed securities. During the three and nine months ended December 31, 2023 and 2022, there were no transfers between levels. Valuation of cash equivalents and short-term investments 9 Table of Conte nts Money market funds, U.S. Government Agency bonds and U.S. Treasury bonds were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 2 measurement within the fair value hierarchy. Cash equivalents consisted of money market funds at December 31, 2023 and money market funds at March 31, 2023. 4. Short-term investments As of December 31, 2023 and March 31, 2023, the Company's available-for-sale investments by type consisted of the following: December 31, 2023 Amortized cost Gross unrealized gains Gross unrealized losses Credit Losses Fair value US Government agency bonds $ 215,974 $ 188 $ ( 104 ) $ — $ 216,058 US Treasury bonds 152,478 153 ( 10 ) — 152,621 Total $ 368,452 $ 341 $ ( 114 ) $ — $ 368,679 March 31, 2023 Amortized cost Gross unrealized gains Gross unrealized losses Credit Losses Fair value US Government agency bonds 240,371 187 ( 203 ) $ — 240,355 US Treasury bonds 196,488 77 ( 124 ) — 196,441 Total $ 436,859 $ 264 $ ( 327 ) $ — $ 436,796 As of December 31, 2023, available-for-sale securities consisted of investments that mature within one year. As of March 31, 2023, available-for-sale securities consisted of investments that mature within one year, with the exception of certain U.S. Government agency bonds and U.S. Treasury bonds which had maturities between one and two years and an aggregate fair value of $ 15.1 million. 5. Property, plant and equipment, net Property, plant and equipment, net consisted of the following: December 31, 2023 March 31, 2023 Office equipment $ 1,464 $ 1,240 Computer equipment 1,975 1,806 Plant and laboratory equipment 10,309 9,186 Leasehold improvements 1,880 1,706 Capitalized software 1,991 — Construction in progress 1,046 783 Total property, plant and equipment 18,665 14,721 Less: Accumulated depreciation ( 9,192 ) ( 7,242 ) Property, plant and equipment, net $ 9,473 $ 7,479 Depreciation expense was $ 0.7 million and $ 2.0 million for the three and nine months ended December 31, 2023 and $ 0.7 million and $ 1.9 million for the three and nine months ended December 31, 2022, respectively. Depreciation expense is recorded within research and development and selling, general and administrative expenses in the consolidated statement of operations. 6. Accrued expenses and other current liabilities Accrued expenses and other current liabilities consisted of the following: 10 Table of Conte nts December 31, 2023 March 31, 2023 Accrued research and development costs $ 16,521 $ 11,261 Accrued compensation and benefits costs 10,195 9,909 Accrued professional fees 609 540 Other 3,561 2,994 Total accrued expenses and other current liabilities $ 30,886 $ 24,704 7 Debt On October 6, 2022, the Company entered into a Loan and Security Agreement (the “Loan Agreement”), with Hercules Capital, Inc., as administrative agent, collateral agent and as a lender (“Hercules”). Pursuant to the Loan Agreement, the Company can borrow term loans in an aggregate maximum principal amount of up to $ 200.0 million under multiple tranches (the “Term Loan Facility”). Under the Loan Agreement, the Company borrowed an initial amount of $ 30.0 million on the closing date, and at the Company's sole option, could have drawn, but did not draw, down an additional $ 30.0 million on or prior to September 30, 2023. The Company can also draw as additional term loan advances in an aggregate principal amount of up to $ 115.0 million during the term of the Term Loan Facility subject to achievement of specified performance milestones, and two additional term loan advances up to an aggregate principal amount of $ 25.0 million subject to certain terms and conditions, on or prior to the end of the interest-only period. The Company intends to use the proceeds of the Term Loan Facility for working capital and general corporate purposes. The Loan Agreement was subsequently amended (the "Amendment") on June 28, 2023 pursuant to which the Company agreed to draw an initial term loan advance in an aggregate principal amount not less than $ 30.0 million, provided that the aggregate amount of the term loan advances made under tranche 1 do not exceed $ 30.0 million, which reflects a decrease of $ 30 million from the $ 60.0 million in the original Loan Agreement for tranche 1. The total amount of the Loan Agreement, as well as the outstanding balance of the loan, is unchanged, but the option to borrow an additional $ 30.0 million moved from tranche 1 to tranche 2. Therefore, the Amendment provides that the Company can draw down an additional $ 45.0 million on or prior to December 31, 2023, which includes the $ 30.0 million that was moved from tranche 1 to tranche 2, and the $ 15.0 million in the original Loan Agreement for tranche 2. The impact of this amendment is not a modification, as it does not relate to outstanding debt, but is rather an amendment that provides for a future potential benefit. There is no material impact to the financial statements as a result of the Amendment. A second amendment was made to the Loan Agreement (the "Second Amendment") on December 22, 2023 pursuant to which the Company agreed to draw a term loan advance in an aggregate principal amount not less than $ 15.0 million, provided that the aggregate amount of the term loan advances made under tranche 2 do not exceed $ 15.0 million on or prior to December 31, 2023, which reflects a decrease of $ 30.0 million from the $ 45.0 million per the Amendment noted above. In addition, the third loan tranche advance under the Second Amendment was increased from $ 25.0 million to $ 30.0 million and the availability of the tranche was extended until March 31, 2025, the fourth tranche advance was increased from $ 35.0 million to $ 50.0 million and the availability of the tranche was extended until March 31, 2026, and the fifth tranche advance was increased from $ 40.0 million to $ 50.0 million and the availability of the tranche was extended until September 15, 2026, subject to the terms and conditions of the Loan Agreement. The total aggregate maximum principal amount to be drawn under the Loan Agreement remains as up to $ 200.0 million. The Company evaluated the Second Amendment as a modification under appropriate accounting guidance, and based on our analysis and the immaterial change in cash flows on current outstanding debt, it was determined that there was no material accounting impact. Upon closing of the Second Amendment, the Company drew down the tranche 2 amount of $ 15.0 million. The Term Loan Facility will mature on October 1, 2027 (the “Maturity Date”). The outstanding principal balance of the Term Loan Facility bears interest payable in cash at a floating rate per annum equal to the greater of (i) 7.25 % and (ii) the sum of the Prime Rate (which is capped at 7.25 %) and 1.75 %. Accrued interest is payable monthly following the funding of each term loan advance. In addition, the principal balance of the Term Loan Facility will bear “payment-in-kind” interest at the rate of 1.50 % (“PIK Interest”), which PIK Interest will be added to the outstanding principal balance of the Term Loan Facility on each interest payment date. Borrowings under the Loan Agreement are repayable in monthly interest-only payments through September 2026. After the interest-only payment period, borrowings under the Loan Agreement are repayable in equal monthly payments of principal and accrued interest until October 2027. At the Company's option, the Company may prepay all or a portion of the outstanding borrowings, subject to a prepayment fee of 3.0 % of the principal amount if prepayment had occurred during the 12 months following the closing date, 2.0 % after 12 months following the closing date but prior to 36 months following the closing date, and 1.0 % thereafter. 11 Table of Conte nts The Loan Agreement contains customary facility fees, events of default and representations, warranties and affirmative and negative covenants, including a financial covenant requiring the Company to maintain unrestricted cash in an amount not less than 35 % of the aggregate outstanding secured obligations under the Loan Agreement in accounts subject to a control agreement in favor of the Agent (the “Unrestricted Cash”) at all times commencing on January 1, 2024. In addition, the Loan Agreement also contains a financial covenant that beginning on the later of (i) July 1, 2024 and (ii) the date on which the aggregate outstanding principal amount of the Term Loan Facility is equal to or greater than $ 100.0 million, the Company is required to satisfy one of the following requirements: (1) achieve a minimum amount of trailing three-month net product revenue tested on a monthly basis, (2) maintain a market capitalization in excess of $ 1.2 billion and Unrestricted Cash in an amount no less than 50 % of the outstanding amount under the Term Loan Facility, or (3) maintain Unrestricted Cash in an amount no less than 85 % of the outstanding amount under the Term Loan Facility. The Company paid a $ 0.5 million facility charge and incurred debt issuance costs of $ 1.5 million upon closing of the Loan Agreement. The Loan Agreement also provides for a final payment, payable upon maturity or the repayment of the obligations in full or in part (on a pro rata basis), equal to 4.95 % of the aggregate principal amount of Term Loans advanced to the Company and repaid on such date, which is being accrued on the Company's consolidated balance sheet. The amount accrued for the final payment is $ 0.4 million as of December 31, 2023 and $ 0.2 million as of March 31, 2023. Unamortized debt issuance costs are recorded as a reduction of the carrying amount on the term loan and amortized as interest expense using the effective-interest method. In addition, unamortized deferred financing costs related to the Company's right to borrow additional amounts from Hercules in the future were recorded in other assets and amortized to interest expense over the relevant draw period on a straight-line basis. As a result of the Amendment, the Company recorded $ 0.1 million of the remaining unamortized deferred financing costs related to the Tranche 1 delayed draw to interest expense as of December 31, 2023. Interest expense for the three months and nine months ended December 31, 2023 was $ 1.0 million and $ 3.1 million. The summary of obligations under the term loan as of December 31, 2023 and March 31, 2023 consisted of the following (in thousands): December 31, 2023 March 31, 2023 Principal loan balance $ 45,576 $ 30,222 Facility charge and diligence fee ( 281 ) ( 315 ) Unamortized issuance costs ( 1,255 ) ( 1,410 ) Accumulated end of term fee 394 151 Long term debt, net $ 44,434 $ 28,648 The annual principal payments due under the Loan Agreement as of December 31, 2023 and March 31, 2023 were as follows: December 31, 2023 March 31, 2023 2024 — — 2025 — — 2026 — — 2027 20,145 13,438 Thereafter 27,769 18,701 Total $ 47,914 $ 32,139 The table of future payments of long-term debt excludes the end of term charge of $ 2.2 million, which is due upon the maturity of the loan 8 Stockholders’ equity Common stock As of December 31, 2023 and March 31, 2023, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue up to 150,000,000 shares of common stock, par value $ 0.001 per share. 12 Table of Conte nts The Company had reserved for common stock for the exercise of outstanding stock options and the vesting of restricted stock units, the number of shares remaining available for grant under the Company’s 2018 Omnibus Incentive Compensation Plan and the Company’s Employee Stock Purchase Plan (see Note 10) and the exercise of the outstanding warrants to purchase shares of common stock as follows: December 31, 2023 March 31, 2023 Stock options, issued and outstanding 8,833,069 7,454,828 Restricted stock units 2,040,997 1,351,280 Stock options and restricted stock units, future issuance 2,487,540 2,209,597 Employee stock purchase plan, available for future grants 2,738,208 2,076,603 Pre-IPO warrants to purchase common stock 497,344 497,344 Pre-funded warrants 5,281,616 9,484,238 Total shares of common stock reserved for future issuance 21,878,774 23,073,890 Undesignated preferred stock As of December 31, 2023, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue up to 10,000,000 shares of undesignated preferred stock, par value $ 0.001 per share. There were no undesignated preferred shares issued or outstanding as of December 31, 2023. ATM program On August 11, 2020, the Company and the SVB Leerink LLC (the "Agent") entered into a sales agreement, which was subsequently amended on October 21, 2020 (as amended, the “2020 Sales Agreement”), pursuant to which the Company could sell, from time to time, at its option, up to an aggregate of $ 62.5 million of shares of the Company’s common stock, $ 0.001 par value per share, through the Agent, as the Company’s sales agent. During the three months ended June 30, 2022 the Company settled transactions that occurred pursuant to the 2020 Sales Agreement, whereby the Company issued and sold an aggregate of 1,686,438 shares of its common stock, resulting in gross proceeds of $ 32.0 million, before deducting fees of $ 1.0 million. On June 23, 2022, the 2020 Sales Agreement was terminated by the execution by the Company and the Agent of a new sales agreement (the “2022 Sales Agreement”). Under the 2022 Sales Agreement, the Company could sell, from time to time, at its option, up to an aggregate of $ 100.0 million of shares of the Company’s common stock, $ 0.001 par value per share, through the Agent, as the Company’s sales agent. During the three and nine months ended December 31, 2022, pursuant to the 2022 Sales Agreement, the Company issued and sold an aggregate of 340,000 shares of its common stock, resulting in gross proceeds of $ 6.7 million, before deducting fees of $ 0.3 million. On August 3, 2023, the 2022 Sales Agreement was terminated by the execution by the Company and Leerink Partners LLC (formerly known as SVB Securities LLC) (the "Current Agent") of a new sales agreement (the "2023 Sales Agreement"). Under the 2023 Sales Agreement, the Company may sell, from time to time, at its option, up to an aggregate of $ 250.0 million of share of the Company's common stock, $ 0.001 par value shares (the "Shares"), through the Current Agent, as the Company's sales agent. Any Shares to be offered and sold under the 2023 Sales Agreement will be issued and sold (i) by methods deemed to be an “at the market offering” (“ATM”) as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, or if authorized by the Company, in negotiated transactions or block trades, and (ii) pursuant to an automatically effective registration statement on Form S-3 filed by the Company with the Securities and Exchange Commission on August 3, 2023 for an offering of various securities, including shares of the Company’s common stock, preferred stock, debt securities, warrants and/or units for sale to the public in one or more public offerings. Subject to the terms of the 2023 Sales Agreement, the Current Agent will use reasonable efforts to sell the Shares from time to time, based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company will pay the Current Agent a commission of up to 3.0 % of the gross proceeds from the sale of the Shares. The Company has also agreed to provide the Current Agent with customary indemnification rights. 13 Table of Conte nts During the three and nine months ended December 31, 2023, the Company did not issue or sell any shares under the 2023 Sales Agreement. The Company cannot provide any assurances that it will issue any additional Shares pursuant to the 2023 Sales Agreement. Equity offerings In December 2022, the Company completed a public offering of (a) 6,810,658 shares of the Company’s common stock, inclusive of the underwriters 30-day option to purchase up to an additional 1,436,172 shares of the Company’s common stock, at a public offering price of $ 23.50 per share and (b) pre-funded warrants to purchase 4,200,000 shares of the Company’s common stock at a public offering price of $ 23.4999 per warrant. The Company received aggregate net proceeds of approximately $ 242.6 million after deducting underwriting discounts, commissions and other offering expenses payable by the Company of approximately $ 16.1 million. 9 Pre-funded Warrants The pre-funded warrants described above are exercisable at any time after the date of issuance. Unless otherwise modified by a holder of a pre-funded warrant, no holder may exercise a pre-funded warrant if such holder, together with its affiliates, would beneficially own more than 9.99 % of the number of shares of the Company’s common stock outstanding immediately after giving effect to such exercise. A holder of a pre-funded warrant may increase or decrease this percentage up to 19.99 % by providing at least 61 days’ prior notice to the Company. The 5,281,616 shares of the Company's common stock underlying the above-described pre-funded warrants are not included in the number of issued and outstanding shares of the Company’s common stock outstanding as reported on the consolidated balance sheet, though they are included in the Company's annual pool increase calculation as well as the weighted average outstanding common stock in the calculation of basic and diluted net loss per share, as described below in Note 11. During the nine months ended December 31, 2023, a holder of the Company's pre-funded warrants exercised 4,202,622 of its pre-funded warrants and the Company issued 4,202,622 shares of common stock in exchange thereof. 10 Stock-based compensation Stock-based compensation expense Stock-based compensation expense was classified in the consolidated statements of operations as follows: Three Months Ended December 31, Nine Months Ended December 31, 2023 2022 2023 2022 Research and development $ 3,784 $ 2,600 $ 11,529 $ 7,743 Selling, general and administrative 4,457 4,423 14,672 13,466 $ 8,241 $ 7,023 $ 26,201 $ 21,209 The following table summarizes stock-based compensation expense by award type for the three and nine months ended December 31, 2023 and 2022: Three Months Ended December 31, Nine Months Ended December 31, 2023 2022 2023 2022 Stock options $ 5,245 $ 4,811 $ 16,546 $ 14,815 Restricted stock units 2,996 2,212 9,655 6,394 $ 8,241 $ 7,023 $ 26,201 $ 21,209 2015 Enterprise Mana gement Incentive Share Option Plan The 2015 Enterprise Management Incentive Share Option Plan of Replimune UK (the “2015 Plan”) provided for Replimune UK to grant incentive stock options, non-statutory stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. Incentive stock options were granted under the 2015 Plan only to the Company’s employees, 14 Table of Conte nts including officers and directors who were also employees. Non-statutory stock options were granted under the 2015 Plan to employees, members of the board of directors, outside advisors and consultants of the Company. 2017 Equity Compensation Plan In July 2017, in conjunction with reorganization by Replimune Limited, pursuant to which each shareholder thereof exchanged their outstanding shares in Replimune Limited for shares in Replimune Group, Inc., on a one -for-one basis (the "Reorganization"), the 2015 Plan was terminated, and all awards were cancelled with replacement awards issued under the 2017 Equity Compensation Plan (the “2017 Plan”). Subsequent to the Reorganization, no additional grants have been or will be made under the 2015 Plan and any outstanding awards under the 2015 Plan have continued, and will continue with their original terms. The Company concluded that the cancellation of the 2015 Plan and issuance of replacement awards under the 2017 Plan was a modification with no change in the material rights and preferences and therefore no recorded change in the fair value of each respective award. The Company’s 2017 Plan provides for the Company to grant incentive stock options or non-statutory stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. Incentive stock options were granted under the 2017 Plan only to the Company’s employees, including officers and directors who were also employees. Restricted stock awards and non-statutory stock options were granted under the 2017 Plan to employees, officers, members of the board of directors, advisors and consultants of the Company. The maximum number of common shares that may be issued under the 2017 Plan was 2,659,885 , of which no ne remained available for future grants as of December 31, 2023. Shares with respect to which awards have expired, terminated, surrendered or cancelled under the 2017 Plan without having been fully exercised will be available for future awards under the 2018 Plan referenced below. In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for the grant of awards. 2018 Omnibus Incentive Compensation Plan On July 9, 2018, the Company’s board of directors adopted, and the Company’s stockholders approved the 2018 Omnibus Incentive Compensation Plan (the “2018 Plan”), which became effective immediately prior to the effectiveness of the registration statement filed in connection with the Company’s initial public offering. The 2018 Plan provides for the issuance of incentive stock options, non-qualified stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. The number of shares of common stock initially reserved for issuance under the 2018 Plan is 3,617,968 shares. If any options or stock appreciation rights, including outstanding options and stock appreciation rights granted under the 2017 Plan (up to 2,520,247 shares), terminate, expire, or are canceled, forfeited, exchanged, or surrendered without having been exercised, or if any stock awards, stock units or other stock-based awards, including outstanding awards granted under the 2017 Plan, are forfeited, terminated, or otherwise not paid in full in shares of common stock, the shares of the Company’s common stock subject to such grants will be available for purposes of the 2018 Plan. The number of shares reserved for issuance under the 2018 Plan will increase automatically on the first day of each April equal to 4.0 % of the total number of shares of common stock outstanding on the last trading day in the immediately preceding fiscal year, which includes for these purposes, the 9,484,238 shares issuable upon exercise of those pre-funded warrants as of March 31, 2023, as described in Note 9 to these consolidated financial statements, or such lesser amount as determined by the Board. On April 1, 2023, the number of shares reserved for issuance under the 2018 Plan automatically increased by 2,646,422 shares pursuant to the terms of the 2018 Plan and based on total number of shares of common stock outstanding on March 31, 2023. As of December 31, 2023, 2,487,540 shares remained available for future grants under the 2018 Plan. The 2015 Plan, the 2017 Plan and the 2018 Plan are administered by the board of directors or, at the discretion of the board of directors, by a committee of the board of directors. However, the board of directors shall administer and approve all grants made to non-employee directors. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, except that the exercise price per share of incentive stock options may not be less than 100 % of the fair market value of the common stock on the date of grant (or 110 % of fair value in the case of an award granted to employees who hold more than 10% of the total combined voting power of all classes of stock at the time of grant) and the term of stock options may not be greater than five years for an incentive stock option granted to a 10% stockholder and greater than ten years for all other options granted. Stock options awarded under both plans expire ten years after the grant date, unless the board of directors sets a shorter term. Vesting periods for the plans are determined at the discretion of the board of directors. Incentive stock options granted to employees and non-statutory options granted to employees, officers, members of the board of directors, advisors, and consultants of the Company typically vest over four years . In 2021 the board of directors initiated the award of restricted stock units ("RSUs"), under the 2018 Plan in addition to stock option awards available as part of the Company's equity incentive for employees, officers, advisors and consultants of the Company. The RSUs typically vest over four approximately equal annual installments with the first such installment occurring on a designated vesting date that is 15 Table of Conte nts approximately on the one-year anniversary of the date of grant and the subsequent installments occurring on the subsequent three annual anniversaries of the designated vesting date. Employee Stock Purchase Plan On July 9, 2018, the Company’s board of directors adopted and the Company’s stockholders approved the Employee Stock Purchase Plan (the “ESPP”), which became effective immediately prior to the effectiveness of the registration statement that was filed in connection with the Company’s IPO. The total shares of common stock initially reserved for issuance under the ESPP is 348,612 shares. In addition, as of the first trading day of each fiscal year during the term of the ESPP (excluding any extensions), an additional number of shares of the Company’s common stock equal to 1 % of the total number of shares outstanding on the last trading day in the immediately preceding fiscal year, which includes for these purposes, the 9,484,238 shares issuable upon exercise of those pre-funded warrants described in Note 9 to these consolidated financial statements, or 697,224 shares, whichever is less (or such lesser amount as determined by the Company’s board of directors) will be added to the number of shares authorized under the ESPP. In accordance with the terms of the ESPP, on April 1, 2023, the number of shares reserved for issuance under the ESPP automatically increased by 661,605 , for a total of 2,738,208 shares reserved for the ESPP. If the total number of shares of common stock to be purchased pursuant to outstanding purchase rights on any particular date exceed the number of shares then available for issuance under the ESPP, then the plan administrator will allocate the available shares pro-rata and refund any excess payroll deductions or other contributions to participants. The Company’s ESPP is not currently active. Out-of-Plan Inducement Grants In May 2021, the Company granted an equity award to a newly hired executive as a material inducement to enter into employment with the Company. The grant constitutes an "employment inducement grant" in accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules and was issued outside of the 2018 Plan and each of the other stock incentive plans described above. The inducement grant included a nonqualified stock option to purchase up to 125,000 shares of the Company's common stock, as well as a restricted stock unit grant representing 88,333 shares of the Company's common stock. These stock option and restricted stock unit inducement grants have terms and conditions consistent with those set forth under the 2018 Plan and vest under the same respective vesting schedules as stock option and restricted stock unit awards granted under the 2018 Plan. The inducement grant is included in the stock option and RSU award tables below. In December 2022, the Company granted an equity award to a newly hired executive as a material inducement to enter into employment with the Company. The grant constitutes an "employment inducement grant" in accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules and was issued outside of the 2018 Plan and each of the other stock incentive plans described above. The inducement grant included a nonqualified stock option to purchase up to 82,500 shares of the Company's common stock, as well as a restricted stock unit grant representing 55,000 shares of the Company's common stock. These stock option and restricted stock unit inducement grants have terms and conditions consistent with those set forth under the 2018 Plan and vest under the same respective vesting schedules as stock option and restricted stock unit awards granted under the 2018 Plan. The inducement grant is included in the stock option and RSU award tables below. In September 2023, the Company granted an equity award to a newly hired executive as a material inducement to enter into employment with the Company. The grant constitutes an "employment inducement grant" in accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules and was issued outside of the 2018 Plan and each of the other stock incentive plans described above. The inducement grant included a nonqualified stock option to purchase up to 125,000 shares of the Company's common stock, as well as a restricted stock unit grant representing 83,330 shares of the Company's common stock. These stock option and restricted stock unit inducement grants have terms and conditions consistent with those set forth under the 2018 Plan and vest under the same respective vesting schedules as stock option and restricted stock unit awards granted under the 2018 Plan. The inducement grant is included in the stock option and RSU award tables below. Stock option valuation The fair value of stock option grants is estimated using the Black-Scholes option-pricing model. As the Company has limited company-specific historical and implied volatility information, the expected stock volatility is based on a combination of Replimune volatility and the historical volatility of a publicly traded set of peer companies. For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected 16 Table of Conte nts dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. The following table presents, on a weighted-average basis, the assumptions that the Company used to determine the grant-date fair value of stock options granted to employees and directors: Three Months Ended December 31, Nine Months Ended December 31, 2023 2022 2023 2022 Risk-free interest rate 4.55 % 3.93 % 3.72 % 2.78 % Expected term (in years) 6.1 6.1 6.0 6.0 Expected volatility 72.5 % 73.7 % 73.9 % 75.3 % Expected dividend yield 0 % 0 % 0 % 0 % Stock options The following table summarizes the Company’s stock option activity: Number of Shares Weighted Average Exercise Price Weighted Average Contractual Term (Years) Aggregate Intrinsic Value Outstanding as of March 31, 2023 7,454,828 $ 17.24 6.88 $ 31,244 Granted 2,132,151 $ 17.92 Exercised ( 163,356 ) $ 10.76 Cancelled ( 590,554 ) $ 21.70 Outstanding as of December 31, 2023 8,833,069 $ 17.23 6.67 $ 6,040 Options exercisable as of December 31, 2023 5,521,235 $ 15.46 5.42 $ 6,039 Options vested and expected to vest as of December 31, 2023 8,833,069 $ 17.23 6.67 $ 6,040 As of December 31, 2023, there was $ 38.6 million of unrecognized compensation cost related to unvested common stock options, which is expected to be recognized over a weighted average period of 2.5 years. The weighted average grant-date fair value of stock options granted during the nine months ended December 31, 2023 and 2022 was $ 12.08 and $ 12.64 , respectively. The aggregate intrinsic value of stock options exercised during the nine months ended December 31, 2023 was $ 1.3 million. Restricted stock units A summary of the changes in the Company's RSUs during the nine months ended December 31, 2023 is as follows: Number of Restricted Shares Weighted Average Grant Date Fair Value Outstanding as of March 31, 2023 1,351,280 24.38 Granted 1,261,601 17.93 Vested ( 345,495 ) 25.38 Cancelled ( 226,389 ) 21.23 Outstanding as of December 31, 2023 2,040,997 20.57 As of December 31, 2023, there was $ 33.9 million of unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized over a weighted average period of 2.8 years. 17 Table of Conte nts 11 Net loss per share Basic and diluted net loss per share attributable to common stockholders was calculated as follows: Three Months Ended December 31, Nine Months Ended December 31, 2023 2022 2023 2022 Numerator: Net loss $ ( 51,120 ) $ ( 39,690 ) $ ( 160,719 ) $ ( 125,045 ) Denominator: Weighted average common shares outstanding, basic and diluted 66,645,691 57,857,132 66,532,488 55,618,052 Net loss per share, basic and diluted $ ( 0.77 ) $ ( 0.69 ) $ ( 2.42 ) $ ( 2.25 ) The 5,281,616 shares of the Company's common stock issuable upon exercise of Pre-Funded Warrants described in Note 9 to these consolidated financial statements are included as outstanding common stock in the calculation of basic and diluted net loss per share. The Company’s potentially dilutive securities, which include stock options and warrants to purchase shares of common stock that resulted from the conversion of warrants to purchase shares of series seed preferred stock existing before the Company's IPO, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect: Three and Nine Months Ended December 31, 2023 2022 Options to purchase common stock 8,833,069 7,510,458 Unvested restricted stock units 2,040,997 1,353,745 Warrants to purchase common stock 497,344 497,344 11,371,410 9,361,547 12 Significant agreements Agreement with Bristol-Myers Squibb Company In February 2018, the Company entered into an agreement with Bristol-Myers Squibb Company (“BMS”). Pursuant to the agreement, BMS will provide to the Company, at no cost, a compound for use in the Company’s ongoing clinical trial of RP1. Under the agreement, the Company will sponsor, fund and conduct the clinical trial in accordance with an agreed-upon protocol. BMS granted the Company a non-exclusive, non-transferrable, royalty-free license (with a right to sublicense) under its intellectual property to its compound in the clinical trial and agreed to supply its compound, at no cost to the Company, for use in the clinical trial. In January 2020, this agreement was expanded to cover an additional cohort of 125 patients with anti-PD-1 failed melanoma. Unless earlier terminated, the agreement will remain in effect until (i) the completion of the clinical trial, (ii) all related clinical trial data have been delivered to both parties and (iii) the completion of any statistical analyses and bioanalyses contemplated by the clinical trial protocol or any analysis otherwise agreed upon by the parties. The agreement may be terminated by either party (x) in the event of an uncured material breach by the other party, (y) in the event the other party is insolvent or in bankruptcy proceedings or (z) for safety reasons. Upon termination, the licenses granted to the Company to use BMS’s compound in the clinical trial will terminate. 18 Table of Conte nts In April 2019, the Company entered into a separate agreement with BMS on terms similar to the terms set forth in the agreement described above, pursuant to which BMS will provide to the Company, at no cost, nivolumab for use in the Company’s Phase 1 clinical trial of RP2 in combination with nivolumab. Agreement with Regeneron Pharmaceuticals, Inc . In May 2018, the Company entered into an agreement with Regeneron Pharmaceuticals, Inc. (“Regeneron”). The Company and Regeneron are each independently developing compounds for the treatment of certain tumor types. Pursuant to the agreement, the Company agreed to undertake one or more clinical trials with Regeneron for the administration of our product candidates in combination with cemiplimab, an anti-PD-1 therapy developed by Regeneron, across multiple solid tumor types. The first of which, agreed in June 2018, is our ongoing Phase 2 clinical trial testing RP1 in combination with cemiplimab versus cemiplimab alone in patients with CSCC. Each clinical trial will be conducted pursuant to an agreed study plan which, among other things, will identify the name of the sponsor and which party will manage the particular study, and include the protocol, the budget and a schedule of clinical obligations. The first study plan related to Phase 2 clinical trial in CSCC has been agreed. Pursuant to the terms of the agreement, each party granted the other party a non-exclusive license under its respective intellectual property and agreed to contribute the necessary resources needed to fulfill its respective obligations, in each case, under the terms of the agreed-upon or to-be agreed upon study plans. Development costs of a particular clinical trial will be split equally. The agreement contains representations, warranties, undertakings and indemnities customary for a transaction of this nature. The agreement also contains certain time-based covenants that restrict us from entering into a third-party arrangement with respect to the use of our product candidates in combination with an anti-PD-1 therapy and that restrict Regeneron from entering into a third-party arrangement with respect to the use of cemiplimab in combination with an HSV-1 virus, in each case, for the treatment of a tumor type that is the subject of a clinical trial to which the covenants apply. Unless otherwise mutually agreed in a future study plan, these covenants are only applicable to our ongoing Phase 2 clinical trial in CSCC. The agreement may be terminated by either party if (i) there is no active study plan for which a final study report has not been completed and the parties have not entered into a study plan for an additional clinical trial within a period of time after the delivery of the most recent final study report or (ii) in the event of a material breach. The agreement with Regeneron is accounted for under ASC 808, Collaborative Arrangements (“ASC 808”), as both parties are active participants and each party pays its own compound costs and shares equally in development costs in accordance with and up to the amount in the agreed upon first study plan. The Company will account for costs incurred as part of the study, including costs to supply compounds for use in the study, as research and development expenses within the consolidated statement of operations. The Company will recognize any amounts received from Regeneron in connection with this agreement as an offset to research and development expense within the consolidated statement of operations. In July 2022, Regeneron informed the Company that the costs of the study have reached the initial budget for the initial study plan of June 2018 and that Regeneron's reimbursement of CERPASS study costs to the Company have completed in the period ending June 30, 2022 in relation to the initial study budget. As a result of this notice from, and the ongoing communications with, Regeneron, we have not recorded any cost-sharing reimbursements from Regeneron in prepaid expenses and other current assets in the consolidated balance sheet or as an offset to research and development expense within the consolidated statement of operations since Regeneron informed us that Regeneron’s reimbursement of CERPASS study costs have completed. The Company does not expect any further reimbursements from Regeneron related to the initial study plan of June 2018. The Company did no t record any costs as an offset to research and development expenses during the nine months ended December 31, 2023, and recorded $ 1.1 million during the nine months ended December 31, 2022. During the nine months ended December 31, 2023 and 2022, the Company received payments under the terms of the agreement from Regeneron of $ 0.0 million and $ 3.1 million, respectively. No receivables from Regeneron were booked in connection with this agreement as of December 31, 2023 or March 31, 2023. 13 Collaboration and other arrangements Roche 19 Table of Conte nts In December 2022, the Company announced that it had entered into a Master Clinical Trial Collaboration and Supply Agreement with Roche in relation to its 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 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. The Company has retained the responsibility of operating the clinical trials as well as retaining all the rights to the development and commercialization of the Company's product candidates. The agreement may be terminated by either party upon sixty ( 60 ) days prior written notice to the other party. The agreement with Roche is accounted for under ASC 808, Collaborative Arrangements (“ASC 808”), as both parties are active participants and each party pays its own compound costs and shares equally in development costs in accordance with and up to the amount in the agreed upon first study plan. The Company will account for costs incurred as part of the study, including costs to supply compounds for use in the study, as research and development expenses within the consolidated statement of operations. The Company will recognize any amounts received from Roche in connection with this agreement as an offset to research and development expense within the consolidated statement of operations. During the three and nine months ended December 31, 2023 and 2022, the Company did not make any payments to Roche under the terms of the agreement. The Company recorded $ 0.8 million and $ 2.6 million as an offset to research and development expenses during the three and nine months ended December 31, 2023, respectively. The Company did no t record any costs as an offset to research and development expenses during the three and nine months ended December 31, 2022. During the nine months ended December 31, 2023 and 2022, the Company received payments under the terms of the agreement from Roche of $ 1.7 million and $ 0.0 million , respectively. As of December 31, 2023 and March 31, 2023, the Company recorded $ 1.8 million and $ 0.9 million as receivables from Roche in connection with this agreement, respectively. Incyte In July 2023, the Company entered into a Clinical Trial Collaboration and Supply Agreement with Incyte Corporation, or Incyte. 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, the Company 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) 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. During the three and nine months ended December 31, 2023, the Company did not make any payments to, or receive any payments from, Inctye under the terms of the agreement. Additionally, no costs were recorded to research and development expenses during the three and nine months ended December 31, 2023 related to this agreement. Amgen In August 2023 the Company entered into a Settlement Agreement with Amgen and mutually agreed to terminate the Company's challenges to Amgen's patents. In connection with the Settlement Agreement, the Company entered into a License and Covenant Agreement with Amgen in which the Company agreed to pay Amgen low single-digit royalty payments on net sales of its products that, but for the license, could be found to infringe a valid Amgen patent on a country-by-country and product-by-product basis. 14 Commitments and contingencies Leases The table below presents the lease-related costs which are included in the consolidated statements of operations for the three and nine months ended December 31, 2023 and 2022: 20 Table of Conte nts Three Months Ended December 31, Nine Months Ended December 31, 2023 2022 2023 2022 Lease cost Finance lease costs: Amortization of right-to-use asset $ 607 $ 607 $ 1,821 $ 1,821 Interest on lease liabilities 540 548 1,626 1,650 Operating lease costs 279 252 840 763 Total lease cost $ 1,426 $ 1,407 $ 4,287 $ 4,234 The following table summarizes the classification of lease costs in the consolidated statement of operations for the three and nine months ended December 31, 2023 and 2022 as follows: Three Months Ended December 31, Nine Months Ended December 31, 2023 2022 2023 2022 Finance Lease Costs Research and development $ 607 $ 518 $ 1,821 $ 1,553 Selling, general and administrative — 89 — 268 Other income (expense) 540 548 1,626 1,650 Operating Lease Costs Research and development 224 103 681 316 Selling, general and administrative 55 149 159 447 Total lease cost $ 1,426 $ 1,407 $ 4,287 $ 4,234 The following table summarizes the maturity of the Company's lease liabilities on an undiscounted cash flow basis and a reconciliation to the operating and financing lease liabilities recognized on its balance sheet as of December 31, 2023: December 31, 2023 Operating leases Financing lease Total 2024 (remaining three months) $ 289 $ 668 $ 957 2025 1,166 2,718 3,884 2026 1,175 2,799 3,974 2027 1,141 2,883 4,024 2028 1,089 2,969 4,058 Thereafter 1,936 35,053 36,989 Total lease payments 6,796 47,090 53,886 Less: interest 1,678 20,831 22,509 Total lease liabilities $ 5,118 $ 26,259 $ 31,377 The following table provides lease disclosure as of December 31, 2023 and March 31, 2023: 21 Table of Conte nts December 31, 2023 March 31, 2023 Leases Right-to-use operating lease asset $ 4,813 $ 5,208 Right-to-use finance lease asset 37,844 39,665 Total lease assets $ 42,657 $ 44,873 Operating lease liabilities, current $ 1,163 $ 1,118 Finance lease liabilities, current 2,698 2,639 Operating lease liabilities, non-current 3,955 4,389 Finance lease liabilities, non-current 23,561 23,965 Total lease liabilities $ 31,377 $ 32,111 The following table provides lease disclosure for the nine months ended December 31, 2023 and 2022: Nine Months Ended December 31, 2023 2022 Other information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 724 $ 717 Operating cash flows from finance leases $ 1,626 $ 1,651 Financing cash flows from finance leases $ 345 $ 262 Right-to-use asset obtained in exchange for new operating lease liabilities $ — $ — Weighted-average remaining lease term - operating leases 5.9 years 6.9 years Weighted-average remaining lease term - financing leases 15.6 years 16.6 years Weighted-average discount rate - operating leases 10.3 % 10.0 % Weighted-average discount rate - financing leases 8.3 % 8.3 % The variable lease costs and short-term lease costs were insignificant for the three and nine months ended December 31, 2023 and 2022. Manufacturing commitments The Company has entered into an agreement with a contract manufacturing organization to provide clinical trial products. As of December 31, 2023 and March 31, 2023, the Company had committed to minimum payments under these arrangements totaling $ 0.9 million and $ 1.0 million, respectively. Indemnification agreements In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its executive management team and its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not aware of any claims under indemnification arrangements, and therefore it has not accrued any liabilities related to such obligations in its consolidated financial statements as of December 31, 2023 or March 31, 2023. Legal proceedings 22 Table of Conte nts The Company is not a party to any litigation and does not have contingency reserves established for any litigation liabilities. 15 Income taxes The Company’s income tax provision and effective tax rate for the three months ended December 31, 2023 was $ 0.5 million and 0.9 %, respectively. The Company’s income tax provision and effective tax rate for the three months ended December 31, 2022 was $ 0.0 million and 0.0 %, respectively. The income tax provision and effective tax rate for the three 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 carryforward s . The Company's income tax provision and effective tax rate for the nine months ended December 31, 2023 was $ 0.5 million and 0.3 %, respectively. The Company’s income tax provision and effective tax rate for the nine months ended December 31, 2022 was $ 0.0 million and 0.0 %, respectively. The income tax provision and effective tax rate for 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. 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, future reversals of existing taxable temporary differences, estimated future taxable income and prudent 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. 16 Geographic information The Company operates in two geographic regions: the United States (Massachusetts) and the United Kingdom (Oxfordshire). Information about the Company’s long-lived assets held in different geographic regions is presented in the tables below: December 31, 2023 March 31, 2023 United States $ 7,853 $ 5,836 United Kingdom 1,620 1,643 $ 9,473 $ 7,479 23 Table of Conte nts