What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-02-12 compared with 2024-11-12 · 109 added, 94 removed, 325 unchanged (38% of the section changed)

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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.

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.

The anti-PD1 failed melanoma cohort from the IGNYTE clinical trial includes 140 patients who received RP1 plus nivolumab after confirmed progression while being treated with at least 8 weeks of prior anti-PD1 therapy (+/- anti-CTLA-4).

Our leading clinical trial of RP1 is our IGNYTE trial, a multi-cohort 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 in anti-PD-1 failed cutaneous melanoma.

The anti-PD1 failed melanoma cohort from the IGNYTE clinical trial includes 140 patients who received RP1 plus nivolumab.

The primary analysis by independent central review was triggered once all patients had been followed for at least 12 months.

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Data presented at ESMO showed activity across all subgroups, including patients who had prior anti-PD1 and anti-CTLA-4 treatment had an ORR of 27.7% and patients who had primary resistance to anti-PD1 had an ORR of 35.9% by modified RECIST v1.1.

In November 2024, we announced submission of a biologics license application (BLA) to the FDA for RP1 (vusolimogene oderparepvec) in combination with nivolumab for the treatment of adult patients with advanced melanoma who have previously received an anti-PD1 containing regimen and that the FDA has granted Breakthrough Therapy designation to RP1 in combination with nivolumab in the same setting.

The submission was made under the Accelerated Approval pathway.

We recently announced the FDA accepted our BLA and granted priority review with a Prescription Drug User Fee Act goal date of July 22, 2025.

Following a Type C meeting with the 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, or the IGNYTE-3 trial, was agreed.

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

In May 2024, we reported completing a successful Type C meeting with the FDA that confirmed alignment on our Chemistry, Manufacturing and Controls, or CMC, plans to support an IGNYTE anti-PD1 failed melanoma BLA submission.

In August 2024, we announced the dosing of the first patient in our IGNYTE-3 trial and in September 2024, we announced completion of a successful pre-BLA meeting with the FDA that supports our plans to submit a BLA for RP1 for the treatment of anti-PD1 failed melanoma under the accelerated approval pathway before the end of the year.

In August 2024, we announced the dosing of the first patient in our IGNYTE-3 trial and enrollment in the IGNYTE-3 trial continues.

This trial is planned to have over 100 sites globally and will assess RP1 in combination with nivolumab in patients with advanced melanoma who have progressed on anti-PD-1 and anti-CTLA-4 therapies or are ineligible for anti-CTLA-4 treatment.

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 cutaneous squamous cell carcinoma, or CSCC, Merkel cell carcinoma, or MCC, basal cell carcinoma, and angiosarcoma in this cohort.

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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.

and in particular in patients with metastatic uveal melanoma (MUM).

In November 2023, we presented updated data from a cohort of MUM 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% (5 of 17 patients;

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There were no grade 4 or 5 TRAEs.

In June 2024, we presented that the disease control rate for this cohort of patients was 58.8%.

We are initiating our registration-directed study of RP2 in metastatic uveal melanoma in patients who are immune checkpoints inhibitor-naïve.

In June 2024, we presented that the disease control rate for this cohort of MUM patients was 58.8%.

We have initiated and are enrolling patients in a registration-directed study of RP2 in MUM patients who are immune checkpoints inhibitor-naïve.

The study is a randomized trial of RP2 in combination with nivolumab vs.

ipilimumab and nivolumab, or nivolumab for those ineligible for ipilimumab and we anticipate dosing initiation in the first quarter of 2025.

ipilimumab and nivolumab, or nivolumab for those ineligible for ipilimumab.

The Company continues its signal finding trial of RP2 in combination with atezolizumab and bevacizumab in the 2L setting of patients with hepatocellular carcinoma (HCC) in collaboration with Roche.

This Phase 2 clinical trial is currently open for enrollment and is actively screening patients.

This Phase 2 clinical trial is currently open and enrollment has begun.

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

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

Since our initial public offering, or IPO, on July 20, 2018, we have raised an aggregate of approximately $945.7 million in net proceeds to fund our operations, of which $101.2 million was from our IPO, $706.0 million was from four separate follow-on offerings, or the Public Offerings, that we closed in November 2019, June 2020, October 2020 and December 2022, respectively, $96.7 million was from our private investment in a public entity in June 2024, and $41.9 million was from at-the-market offerings.

Since our initial public offering, or IPO, on July 20, 2018, we have raised an aggregate of approximately $1,101.8 million in net proceeds to fund our operations, of which $101.2 million was from our IPO, $862.0 million was from four separate follow-on offerings, or the Public Offerings, that we closed in November 2019, June 2020, October 2020, December 2022, and November 2024, respectively, $96.7 million was from our private investment in a public entity in June 2024, and $41.9 million was from at-the-market offerings.

We sold 7,407,936 shares of common stock in our IPO, an aggregate of 28,968,857 shares of our common stock and pre-funded warrants to purchase 13,330,422 shares of common stock in the Public Offerings, 5,668,937 shares of our common stock and pre-funded warrants to purchase 5,669,578 shares of common stock through our private investment in a public entity in June 2024, and 2,313,997 shares of common stock through our at-the-market facilities.

Our net losses were $53.1 million and $60.0 million for the three months ended September 30, 2024 and 2023, respectively and $106.8 million and $109.6 million for the six months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, we had an accumulated deficit of $808.1 million.

Our net losses were $66.3 million and $51.1 million for the three months ended December 31, 2024 and 2023, respectively and $173.2 million and $160.7 million for the nine months ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, we had an accumulated deficit of $874.4 million.

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

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

As of September 30, 2024, we had cash and cash equivalents and short-term investments of $432.1 million.

As of December 31, 2024, we had cash and cash equivalents and short-term investments of $536.5 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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Components of our results of operations

To date, we have not generated any revenue from product sales as we do not have any approved products and do not expect to generate any revenue from the sale of products in the near future.

To date, we have not generated any revenue from product sales as we do not have any approved products and we can not be certain we will generate any revenue from the sale of products in the future.

If our development efforts for RP1 or any other product candidates that we may develop in the future are successful and result in regulatory approval, or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from those collaborations or license agreements.

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Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our consolidated financial statements as prepaid or accrued research and development expenses.

Our direct external research and development expenses are tracked on a program-by-program basis and consist of costs, such as fees paid to consultants, contractors, CMOs, and CROs in connection with our preclinical and clinical development activities.

Direct research and development costs, consisting of costs, such as fees paid to consultants, contractors, CMOs and CROs in connection with our preclinical and clinical development activities, are tracked by study.

Additional costs, consisting primarily of our initial manufacturing costs, including materials, supplies, depreciation and facility costs, are allocated at a program level, based upon manufacturing runs, as the drug product can be utilized across multiple studies for any particular program.

Additional costs to label, package and distribute the drug product is then directly allocated to the specific studies when incurred, as that drug product has then been assigned to a particular study.

In the event our additional future or ongoing study costs become meaningful to investors, we will present those costs by study.

We do not allocate personnel costs, costs associated with our discovery efforts, laboratory supplies or other indirect costs, to specific product development programs because these costs are deployed across multiple product development programs and, as such, are not separately classified.

Non-employee costs associated with our manufacturing facility including depreciation, amortization and facility costs are appropriately allocated to development programs based on the percentage of time spent per program.

Research and development activities are central to our business model.

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

During the three and six months ended September 30, 2024 and 2023, the Company recorded no income tax benefits for the net operating losses incurred in the United Kingdom in each period due to its uncertainty of realizing a benefit from those items.

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

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

For the six months ended September 30, 2024 and 2023, the Company excluded the United Kingdom from the calculation of the AETR as the Company anticipates an ordinary loss in this jurisdiction for which no tax benefit can be recognized.

For the nine months ended December 31, 2024 and 2023, the Company excluded the United Kingdom from the calculation of the AETR as the Company anticipates an ordinary loss in this jurisdiction for which no tax benefit can be recognized.

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

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

As a result, as of September 30, 2024 and March 31, 2024, the Company has recorded a full valuation allowance against its net deferred tax assets.

As a result, as of December 31, 2024 and March 31, 2024, 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, 2024 and 2023

The following chart summarizes our results of operations for the three months ended September 30, 2024 and 2023:

Comparison of the three months ended December 31, 2024 and 2023

The following chart summarizes our results of operations for the three months ended December 31, 2024 and 2023:

Three Months Ended

September 30,

2024 2023 Change

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Interest expense on debt obligations (1,450) (1,012) (438)

Other income (expense) 2,028 (1,409) 3,437

Other (expense) income (3,281) 1,344 (4,625)

Total other income (expense), net 254 5,893 (5,639)

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Research and development expenses

Research and development expenses for the three months ended September 30, 2024 were $43.4 million, compared to $49.1 million for the three months ended September 30, 2023.

The following table summarizes our research and development expenses for the three months ended September 30, 2024 and 2023:

Research and development expenses for the three months ended December 31, 2024 were $48.0 million, compared to $42.8 million for the three months ended December 31, 2023.

The following table summarizes our research and development expenses for the three months ended December 31, 2024 and 2023:

Three Months Ended

September 30,

2024 2023 Change

Direct research and development expenses by program

RP1 11,351 16,623 (5,272)

RP1 program costs by study:

IGNYTE 3,226 3,490 (264)

ARTACUS 1,787 1,547 240

CERPASS 1,611 3,460 (1,849)

IGNYTE-3 2,375 1,483 892

Other RP1 study costs 1,590 2,545 (955)

Total RP1 costs 10,589 12,525 (1,936)

RP2 4,409 2,308 2,101

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Total research and development expenses $ 48,004 $ 42,847 $ 5,157

The overall decrease of $5.7 million in total research and development expenses was driven by a decrease of $9.4 million in direct research costs as a result of the wind down of the CERPASS and IGNYTE phase II studies, as well as the Company's reprioritization spending during the first half of the fiscal year.

More specifically, the decrease of $5.3 million in costs related to RP1 is the result of decreased enrollment as patients come off the CERPASS and IGNYTE phase II studies, whereas the Company has not yet ramped up costs for IGNYTE phase III.

The decrease of $3.0 million in costs related to RP3 is a reflection of the deprioritization of development efforts on this product candidate, which the Company began to taper in the second half of the prior fiscal year.

Spending for RP2 decreased by approximately $1.1 million primarily as a result of allocated costs which were focused on both RP1 and RP2 in the prior year that are not allocated directly to trials in the current year, as the manufacturing team was focused on pre-approval inspections and BLA preparedness.

Moreover, the increase of approximately $3.7 million in our unallocated expenses is driven by a $3.6 million increase in other costs attributable to increased facility costs, consultants and medical affairs, some of which were previously allocated to RP1 and RP2.

As noted above, during the second quarter, these costs were not allocated directly to trials, as the manufacturing team was focused on pre-approval inspections and BLA preparedness.

The overall increase of $5.2 million in total research and development expenses was driven by an increase of approximately $6.7 million in our unallocated expenses which is driven by a $3.7 million increase in personnel related costs, as well as a $3.0 million increase in other costs primarily attributable to increased consultants and facility costs.

The decrease of $1.5 million in direct research costs is primarily a result of the wind down of the CERPASS study and completion of enrollment in the IGNYTE advanced melanoma cohort, as well as the Company's reprioritization spending during the current fiscal year.

More specifically, the decrease of $1.9 million in costs related to RP1 is the result of decreased enrollment as patients come off the CERPASS study and the IGNYTE advanced melanoma cohort.

In addition, the decrease of $1.7 million in costs related to RP3 is a reflection of the deprioritization of development efforts on this product candidate, which the Company began to taper in the second half of the prior fiscal year.

These decreases are partially offset by an increase in spending on RP2 of $2.1 million as the Company began to ramp up costs for the MUM study.

Selling, general and administrative expenses

Selling, general and administrative expenses were $15.5 million for the three months ended September 30, 2024, compared to $14.7 million for the three months ended September 30, 2023.

The increase of $0.7 million is primarily the result of an increase of $0.5 million in personnel related costs, including an increase of $0.6 million in payroll and fringe benefits, slightly offset by a $0.1 million decrease in stock compensation.

The increase in personnel related costs during the quarter was driven by additional hiring in our selling, general and administrative functions, focusing on additional pre-launch planning and initial build of the Company's commercial infrastructure.

Selling, general and administrative expenses were $18.0 million for the three months ended December 31, 2024, compared to $13.7 million for the three months ended December 31, 2023.

The increase of $4.3 million is primarily the result of an increase of $3.0 million in sales and marketing costs as the Company prepares for its first potential commercial launch of RP1.

In addition, there is an increase of $1.7 million in personnel related costs, including an increase of $2.1 million in payroll and fringe benefits, slightly offset by a $0.4 million decrease in stock-based compensation expense.

The increase in personnel related costs during the quarter was driven by additional hiring in our selling, general and administrative functions, focusing on additional pre-launch planning and continued building of the Company's commercial infrastructure.

Consulting costs during the quarter are down year over year by approximately $1.4 million in selling, general and administrative functions as a result of hiring more full time employees in the current year.

Total other income (expense), net

Other income (expense), net was $5.9 million for the three months ended September 30, 2024, compared to a net income of $3.6 million for the three months ended September 30, 2023.

The net change of $2.3 million is primarily attributable to a decrease in expense of $3.4 million in the current quarter 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 is somewhat offset by a decrease in investment income of approximately $0.7 million as a result of a lower investment balance year over year.

Other income (expense), net was $0.3 million for the three months ended December 31, 2024, compared to income of $5.9 million for the three months ended December 31, 2023.

The net change of $5.6 million is primarily attributable to an increase in expense of $4.6 million in the current quarter 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.

In addition, investment income decreased by approximately $0.5 million year over year and the interest expense on debt obligations increased by approximately $0.4 million, as the Company drew down an additional $15.0 million under the Loan Agreement at the end of December 2023.

Income tax provision

The income tax provision for the three months ended September 30, 2024 and September 30, 2023, was $0.0 million and $(0.2) million, respectively.

There was no income tax provision booked during the three months ended September 30, 2024 as a result of a forecasted U.S.

loss for the year.

The income tax provision booked for the three months ended September 30, 2023 was primarily due to forecasted U.S.

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

Comparison of the six months ended September 30, 2024 and 2023

The following chart summarizes our results of operations for the six months ended September 30, 2024 and 2023:

Six Months Ended

September 30,

During the three and nine months ended December 31, 2024 and 2023, the Company recorded no income tax benefits for the net operating losses incurred in the United Kingdom in each period due to its uncertainty of realizing a benefit from those items.

During the three and nine months ended December 31, 2024, the Company recorded $0.6 million of an income tax provision in the United States related to uncertain tax positions.

During the three and nine months ended December 31, 2023, the Company recorded an income tax provision of $0.5 million, which was primarily due to forecasted United States taxable income for the year that was not fully offset by available net operating loss carryforwards.

Comparison of the nine months ended December 31, 2024 and 2023

The following chart summarizes our results of operations for the nine months ended December 31, 2024 and 2023:

Nine Months Ended

2024 2023 Change

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Interest expense on debt obligations (4,314) (3,083) (1,231)

Other income (expense) 2,433 (35) 2,468

Other (expense) income (850) 1,307 (2,157)

Total other income (expense), net 9,707 15,771 (6,064)

Loss before income taxes $ (172,592) $ (160,246) $ (12,346)

Income tax provision $ 575 $ 473 $ 102

Net loss $ (173,167) $ (160,719) $ (12,448)

Research and development expenses

Research and development expenses for the six months ended September 30, 2024 were $86,420, compared to $89.5 million for the six months ended September 30, 2023.

The following table summarizes our research and development expenses for the six months ended September 30, 2024 and 2023:

Six Months Ended September 30,

Research and development expenses for the nine months ended December 31, 2024 were $135.5 million, compared to $132.4 million for the nine months ended December 31, 2023.

The following table summarizes our research and development expenses for the nine months ended December 31, 2024 and 2023:

Nine Months Ended December 31,

2024 2023 Change

Direct research and development expenses by program

RP1 23,010 28,919 (5,909)

RP1 program costs by study:

IGNYTE 10,831 11,775 (944)

ARTACUS 5,211 4,433 778

CERPASS 5,573 13,530 (7,957)

IGNYTE-3 4,909 1,496 3,413

Other RP1 study costs 7,075 10,210 (3,135)

Total RP1 costs 33,599 41,444 (7,845)

RP2 8,322 6,489 1,833

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Total research and development expenses $ 135,472 $ 132,384 $ 3,088

The total decrease of $3.1 million in research and development expenses was driven by a decrease of approximately $11.9 million in our direct research and development costs as a result of a decrease of $5.9 million in RP1 as a result of the wind down of the CERPASS and IGNYTE phase II studies, as a result of declining enrollment in the CERPASS and IGNYTE phase II studies as these studies wind down, whereas the Company has not yet ramped up costs for the IGNYTE phase III study.

In addition, in the first half of the prior year, the Company incurred costs related to manufacturing batches for RP1, as well as significant costs in the areas of CROs, investigators and imaging costs in preparation of the primary data release and potential BLA filing, which did not recur in the current year.

The decrease of $5.7 million in RP3 is a reflection of the deprioritization of development efforts on this product candidate, which the Company began to taper in the second half of the prior fiscal year.

The increase in unallocated expenses is $8.7 million, including $4.8 million in other costs and $3.9 million in other personnel-related costs.

The increase in other costs is driven primarily by an increase in consulting costs, facility costs and medical affairs, combined with additional allocated expenses which were focused on both RP1 and RP2 in the prior year that are not allocated directly to trials in the current year as a result of manufacturing's focus on BLA preparedness and pre-approval inspections.

The increase in personnel-related costs is attributable to a $3.3 million increase in payroll and fringe benefits and a stock-based compensation increase of $0.6 million.

The total increase of $3.1 million in research and development expenses was driven by an increase of $16.4 million in unallocated expenses, partially offset by a decrease of $13.4 million in our direct research and development costs.

The increase in unallocated expenses includes $9.0 million in personnel-related costs and $7.4 million in other costs.

The increase in personnel-related costs is attributable to a $5.6 million increase in payroll and fringe benefits as well as a $3.4 million increase in stock-based compensation expense.

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

The increase in other costs is driven primarily by an increase in consulting costs, medical affairs and facility costs.

The decrease of approximately $13.4 million in our direct research and development costs primarily relates to a decrease of $7.8 million in RP1 as a result of declining enrollment and the wind down of the CERPASS study and completion of enrollment in the IGNYTE advanced melanoma cohort, combined with a decrease of $7.3 million related to RP3 as a result of the deprioritization of development efforts on this product candidate, which the Company began to taper in the second half of the prior fiscal year.

These decreases are slightly offset by an increase in setup costs and Clinical Research Organization ("CRO"), costs for RP2 as the Company began to ramp up costs for the MUM study.

In addition, in the prior year, the Company incurred costs related to manufacturing batches for RP1, as well as significant costs related to the CERPASS trial in the areas of CROs, investigators and imaging costs in preparation of the primary data release, which did not recur in the current year.

Selling, general and administrative expenses

Selling, general and administrative expenses were $29.9 million for the six months ended September 30, 2024, compared to $29.9 million for the six months ended September 30, 2023.

Sales, general and administrative costs are relatively flat year over year with an overall decrease of $0.1 million.

This overall decrease includes an increase of $1.8 million in sales and marketing and consulting costs, offset by a decrease of $1.4 million in facility, recruitment and other variable costs and a decrease of $0.3 million in personnel related costs, driven by lower stock prices decreasing stock-based compensation on a year over year basis.

Selling, general and administrative expenses were $46.8 million for the nine months ended December 31, 2024, compared to $43.6 million for the nine months ended December 31, 2023.

The increase of approximately $3.2 million in sales, general and administrative costs is driven by an increase of $4.3 million in sales and marketing costs related to promotional materials, market access and insights and analytics, as the Company prepares for a potential commercial launch of RP1.

Total other income (expense), net

Other income (expense), net was $9.5 million for the six months ended September 30, 2024, compared to a net income of $9.9 million for the six months ended September 30, 2023.

The net change of $0.4 million is primarily attributable to a decrease in expense of $2.5 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, offset by a decrease in investment income of $2.1 million as a result of a lower investment balance year over year, and an increase in interest expense on debt obligations in the amount of $0.8 million as a result of a higher debt balance during the current year vs.

the first half of the prior year as the additional draw down occurred during the third quarter of the prior year.

Other income, net was $9.7 million for the nine months ended December 31, 2024, compared to income of $15.8 million for the nine months ended December 31, 2023.

The net change of $6.1 million is primarily attributable to a decrease in investment income of $2.7 million as a result of the cash and investment balance being lower throughout the year as compared to the prior year due to normal cash burn, as well as an increase in expense of $2.2 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.

Additionally, there is an increase in interest expense on debt obligations in the amount of $1.2 million as a result of a higher debt balance during the current year vs.

the prior year as there was an additional draw under the Loan Agreement during the end of the third quarter of the prior year.

Liquidity and capital resources

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

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

We have not yet commercialized any of our product candidates, which are in various phases of preclinical and clinical development, and we can not predict when we may generate revenue from sales of any products, if at all.

Sources of liquidity

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

Through September 30, 2024, we had received net proceeds of $945.7 million through the sale of shares of common stock and pre-funded warrants exercisable for common stock in public offerings, a private investment in a public entity, 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 September 30, 2024, we had cash and cash equivalents and short-term investments of $432.1 million.

Through December 31, 2024, we had received net proceeds of $1,101.8 million through the sale of shares of common stock and pre-funded warrants exercisable for common stock in public offerings, a private investment in a public entity, 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, 2024, we had cash and cash equivalents and short-term investments of $536.5 million.

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

Six Months Ended September 30,

Nine Months Ended December 31,

(Amounts in thousands)

Net cash used in operating activities $ (138,519) $ (139,301)

Net cash provided by investing activities

Net cash (used in) provided by investing activities

(16,096) 74,000

1 unchanged sentence

Effect of exchange rate changes on cash and cash equivalents (125) (30)

Net decrease in cash and cash equivalents $ 39,042 $ (70,594)

Net increase (decrease) in cash and cash equivalents $ 97,788 $ (48,918)

Operating activities

During the six months ended September 30, 2024, net cash used in operating activities was $87.8 million, primarily resulting from our net loss of $106.8 million partially offset by non-cash charges of $12.9 million, which primarily consist of stock-based compensation expense of $18.1 million, somewhat offset by net amortization of premiums and discounts on short-term investments of $5.2 million, and an increase in cash of $6.1 million related to changes in our operating assets and

Changes in our operating assets and liabilities for the six months ended September 30, 2024 consisted primarily of a $5.8 million increase in accounts payable, a $2.8 million decrease in accrued expenses and other current liabilities, a $2.2 million decrease in research and development incentives receivable from the United Kingdom government due to the timing and amount of our qualifying expenditures, and a net $1.2 million change in operating and financing right-of-use assets and lease liabilities.

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 nine months ended December 31, 2024, net cash used in operating activities was $138.5 million, primarily resulting from our net loss of $173.2 million partially offset by non-cash charges of $24.4 million, which primarily consist of stock-based compensation expense of $26.8 million, somewhat offset by net amortization of premiums and discounts on short-term investments of $7.0 million, and an increase in cash of $10.2 million related to changes in our operating assets and liabilities.

Changes in our operating assets and liabilities for the nine months ended December 31, 2024 consisted primarily of a $4.7 million increase in accounts payable, a $2.5 million increase in accrued expenses and other current liabilities, a $1.9 million decrease in research and development incentives receivable from the United Kingdom government due to the timing and amount of our qualifying expenditures, and a net $1.8 million change in operating and financing right-of-use assets and lease liabilities.

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 $160.7 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.

Investing activities

During the six months ended September 30, 2024, net cash provided by investing activities was $30.2 million, consisting of $228.9 million in proceeds from sales and maturities of short-term investments, partially offset by $194.9 million in purchases of available for sale securities, and $3.8 million in purchases of property, plant and equipment and capitalized software.

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 nine months ended December 31, 2024, net cash used in investing activities was $16.1 million, consisting of $332.0 million in purchases of available for sale securities and $5.6 million in purchases of property, plant and equipment and capitalized software, partially offset by $321.4 million in proceeds from sales and maturities of short-term investments.

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.

Financing Activities

During the six months ended September 30, 2024, net cash provided by financing activities was $96.6 million, consisting primarily of $96.7 million in proceeds from the Company's private investment in a public entity in June 2024.

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 nine months ended December 31, 2024, net cash provided by financing activities was $252.5 million, consisting primarily of $252.7 million in proceeds from the Company's private investment in a public entity in June 2024 as well as the Company's November 2024 public offering.

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.

Funding requirements

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

As of September 30, 2024, we had cash and cash equivalents and short-term investments of $432.1 million.

Based on our current operating plan, we believe that our existing cash, cash equivalents and short-term investments as of September 30, 2024, will enable us to fund operations into the second half of 2026 which includes scale up for the commercialization of RP1 in skin cancers and for working capital and general corporate purposes.

As of December 31, 2024, we had cash and cash equivalents and short-term investments of $536.5 million.

Based on our current operating plan, we believe that our existing cash, cash equivalents and short-term investments as of December 31, 2024, will enable us to fund operations into the fourth quarter of 2026 which includes scale up for the potential commercialization of RP1 in skin cancers and for working capital and general corporate purposes and excludes any potential revenue.

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

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

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

Our future capital requirements

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

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

In addition, our product candidates, if approved, may not achieve commercial success.

Our commercial revenues, if any, will be derived from sales of therapies that we do not expect to be commercially available for many years, if ever.

Our commercial revenues, if any, will be derived from sales of therapies that we can not be certain will become commercially available.

Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.

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Contractual obligations and commitments

During the six months ended September 30, 2024, 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, 2024, which was filed with the SEC on May 16, 2024.

During the nine months ended December 31, 2024, 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, 2024, which was filed with the SEC on May 16, 2024.

Collaborations

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Pursuant to the agreement, BMS is providing to us, at no cost, nivolumab, its anti-PD-1 therapy, for use in combination with RP1 in our ongoing Phase 1/2 clinical trial.

Under the agreement, we will sponsor, fund and conduct the clinical trial in accordance with an

agreed-upon protocol.

Under the agreement, we will sponsor, fund and conduct the clinical trial in accordance with an agreed-upon protocol.

BMS granted us a non-exclusive, non-transferrable, royalty-free license (with a right to sublicense) under its intellectual property to use nivolumab in the clinical trial and has agreed to supply nivolumab, at no cost to us, for use in the clinical trial.

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Roche will also supply atezolizumab and bevacizumab for 2L HCC and 3L CRC combined with RP2.

We have retained the responsibility of operating the clinical trials as well as retaining all the rights to the development and

commercialization of our product candidates.

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

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

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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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We have, to date, only issued stock-based awards with service-based vesting conditions and record the expense for these awards using the straight-line method.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the expected stock price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and our expected dividend yield.

expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and our expected dividend yield.

See Note 10 to our consolidated financial statements appearing elsewhere in this Quarterly Report for more information.

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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