What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-02-12 · 106 added, 184 removed, 250 unchanged (54% of the section changed)

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We believe that the bundling of multiple approaches for the treatment of cancer into single therapies will increase clinical efficacy and simplify the development path of our product candidates, while also improving patient outcomes.

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

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

Our proprietary RPx platform is 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 induce a systemic anti-tumor immune response.

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

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

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Although our fiscal year ends March 31 st , our programs and program updates are reported on a calendar year basis.

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 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.

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, assuming approval of our product candidates by the U.S.

Food and Drug Administration, or the FDA, and similar applicable foreign regulatory agencies.

Our leading clinical trial of RP1 is referred to as the IGNYTE trial, which is 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-PD-1 failed melanoma cohort from the IGNYTE trial includes 140 patients who received RP1 in combination with nivolumab.

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

The topline results showed the overall response rate, or ORR, was 33.6% by modified RECIST 1.1 criteria, the primary endpoint as defined in the protocol, and 32.9% by RECIST 1.1 criteria, an additional analysis requested by the U.S.

Food and Drug Administration, or FDA.

Responses from baseline were highly durable with 85% of responses lasting more than 12 months.

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

In September 2024, we presented the independently reviewed data from the IGNYTE clinical trial, including key secondary endpoints and subgroup analyses as a late-breaking abstract during an oral session at the European Society for Medical Oncology, or ESMO.

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.

In November 2024, we announced submission of a biologics license application, or 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-PD-1 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 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.

The FDA accepted our BLA and granted priority review with a Prescription Drug User Fee Act, or PDUFA, goal date of July 22, 2025.

On July 21, 2025 the FDA issued a complete response letter, or CRL, for the RP1 BLA for the treatment of advanced melanoma.

The FDA states in the CRL that it is unable to approve the application in its present form and that the IGNYTE trial is not considered to be an adequate and well-controlled clinical investigation that provides substantial evidence of effectiveness, including contribution of components.

Furthermore, the FDA said the trial cannot be adequately interpreted due to the heterogeneity of the patient population.

We plan to interact with the FDA in an attempt to find a path forward, including potentially pursuing a Type A meeting with the FDA, for the timely accelerated approval of RP1 in combination with nivolumab for the treatment of adult patients with advanced melanoma who have previously received an anti-PD-1 containing regimen.

If we are unable to reach a timely and mutually agreeable path forward with the FDA with respect to the scope, design, implementation and timing for the potential approval for RP1 in combination with nivolumab for the treatment of adult patients with advanced melanoma who have previously received an anti-PD-1 containing regimen, we might not be able to continue the development of RP1 for this indication, if at all, and it may require us to implement a restructuring plan and review the priorities across the RPx portfolio.

In August 2024, we announced the dosing of the first patient in the IGNYTE-3 trial, or the I-3 trial, a confirmatory study design concept consisting of a 2-arm randomized Phase 3 clinical trial with physician's choice of treatment as a comparator arm in anti-PD-1 failed melanoma patients.

With over 100 sites planned globally and an expectation to enroll 400 patients, the I-3 trial 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.

We continue to enroll patients in the I-3 trial.

In our non-melanoma skin cancer, or NMSC, cohort of the IGNYTE 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, or BCC, and angiosarcoma in this cohort.

The data showed that treatment with RP1 in combination with nivolumab led to an ORR of 30% which is consistent with data from the anti-PD-1 failed melanoma cohort with approximately one-third of patients responding and 60% demonstrating clinical benefit.

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Enrollment remains open in this cohort.

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

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

In November 2023 we presented initial data from the ARTACUS clinical trial of RP1 monotherapy in solid organ transplant recipients with skin cancers at the Society for Immunotherapy of Cancer’s (SITC) 38th Annual Meeting.

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

Furthering development of RP1, we have open for enrollment a Phase 1b/2 clinical trial of single agent RP1 in solid organ transplant recipients with skin cancers, including CSCC, which we refer to as the ARTACUS trial.

We believe that the ARTACUS trial will be potentially registrational (in its own right or, subject to discussion with regulatory authorities, following enrollment of additional patients, including as a potential label expansion after an initial approval of RP1 in a different indication).

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

In November 2023 we presented initial data from the ARTACUS trial of RP1 monotherapy in solid organ transplant recipients with skin cancers at the Society for Immunotherapy of Cancer’s, or SITC, 38th Annual Meeting.

The data included 23 evaluable patients with CSCC (n=20) and MCC (n=3), demonstrating an ORR of 34.5% and a complete response, or CR, of 21%.

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

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

No immune-mediated adverse events or evidence of allograft rejection were observed to result from RP1.

This data was also presented during oral presentation at the American Association of Cancer Research 2024 Annual Meeting in April 2024.

We continue to enroll patients into this trial.

As previously reported, the CERPASS clinical trial of RP1 in patients with CSCC continues as planned to assess duration of response, or DOR, progression free survival and overall survival with greater maturity.

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

We continue to enroll patients into the ARTACUS trial.

As previously reported, our clinical trial of RP1 in patients with CSCC, which we refer to as the CERPASS trial, continues as planned to follow patients that were dosed in the trial.

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

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

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

We 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 metastatic uveal melanoma (MUM).

We continue the development of our product candidate RP2 with the goal of moving beyond skin cancers and aiming to treat the more prevalent tumor types commonly found in liver and lung metastasis and including those involving primary liver cancer.

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.

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

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

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

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

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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.

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 and enrollment has begun.

We have initiated and are enrolling patients in a registration-directed study, or the REVEAL study, of RP2 in mUM patients who are immune checkpoints inhibitor-naive.

The REVEAL study is a randomized, phase 2/3 open label study to investigate the efficacy and safety of RP2 in combination with nivolunab vs.

ipilimumab in combination with nivolunab in immune checkpoint inhibitor naive adult patients with metastatic uveal melanoma.

We continue our signal finding trial of RP2 in combination with atezolizumab and bevacizumab in the 2L setting of patients with hepatocellular carcinoma, or HCC, in collaboration with Roche.

This Phase 2 clinical trial is currently open and enrollment is underway.

We anticipate releasing preliminary HCC data in the first half of 2026.

We are also planning to open a cohort in our RP2 study to enroll patients with biliary tract cancer, or BTC, and dose RP2 in combination with durvalumab.

This cohort is expected to enroll the first patient in the second half of 2025.

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

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

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

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

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

Since our initial public offering, or IPO, on July 20, 2018, we have raised an aggregate of approximately $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.

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 $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.

Our net losses were $86.7 million and $53.8 million for the three months ended June 30, 2025 and 2024, respectively.

As of June 30, 2025, we had an accumulated deficit of $1,035.3 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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We anticipate that our expenses and capital requirements will fluctuate from period to period depending upon the Company's development programs and priorities.

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

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

We expect to continue to incur costs and expenses in the future and our expenses may increase if and as we:

• continue to conduct our current and future clinical trials;

• further preclinical development of our platform;

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

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

• maintain, expand, protect and defend our intellectual property portfolio;

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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 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.

As of June 30, 2025, we had cash and cash equivalents and short-term investments of $403.3 million.

Based on our current operating plan including the commercialization of RP1 in the near term, 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.

See “—Liquidity and capital resources” and “Risk factors—Risks related to our financial position and need for additional capital.”

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Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts and the development of our product candidates, and include:

• expenses incurred under agreements with third parties, including clinical research organizations, or CROs, that conduct research, preclinical activities and clinical trials on our behalf as well as contract manufacturing organizations, or CMOs, that manufacture our product candidates for use in our preclinical and clinical trials;

• expenses incurred under agreements with third parties, including clinical research organizations, or CROs, that conduct research, preclinical activities and clinical trials on our behalf as well as contract manufacturing organizations, or CMOs, that manufacture raw materials and supplies for our product candidates and their manufacturing, packaging and labeling;

• salaries, benefits and other related costs, including stock-based compensation expense, for personnel engaged in research and development functions;

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Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

We expect that our research and development expenses will continue to increase for the foreseeable future as we continue enrollment and initiate additional clinical trials and continue to discover and develop additional product candidates.

The successful development and commercialization of our product candidates is highly uncertain.

We expect that our research and development expenses will continue to increase for the foreseeable future as we continue enrollment in, and the initiation of, additional clinical trials, as well as the

continued discovery and development of additional product candidates.

However, if we determine that the continued development of RP1 is not viable, our outlook and plans may be uncertain and the impact on our research and development expenses will also be uncertain.

At this time the ability to fund and successfully develop, and commercialize, if approved, our product candidates is highly uncertain.

This is due to the numerous risks and uncertainties associated with product development and commercialization, including the following:

• the scope, rate of progress, expense and results of our ongoing clinical trials, as well as future clinical trials or other product candidates and other research and development activities that we may conduct;

• to what extent we are able to reach a mutually agreeable path forward with the FDA with respect to the scope, design, implementation and timing of an approval for RP1 (vusolimogene oderparepvec) in combination with nivolumab for the treatment of adult patients with advanced melanoma who have previously received an anti-PD-1 containing regimen the scope, rate of progress, expense and results of our ongoing clinical trials, as well as future clinical trials or other product candidates and other research and development activities that we may conduct;

• the number and scope of preclinical and clinical programs we decide to pursue;

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• our ability to maintain, expand, protect and defend our rights in our intellectual property portfolio;

• the commercialization of our product candidates, if and when approved;

• the commercialization of our product candidates, if and when approved and the timing of such approval;

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

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• competition with other products;

• significant and changing government regulation and regulatory guidance.

• significant and changing government regulation and regulatory guidance and the views and implementation of such regulation and guidance from the leadership of the applicable regulatory agencies.

A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate.

For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, or if we experience significant trial delays due to patient enrollment or other reasons, we could be required to expend significant additional financial resources and time on the completion of clinical development.

For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, to modify the clinical design of any of our clinical trials as contemplated in the CRL or otherwise, if we experience significant trial delays due to patient enrollment or other reasons, we could be required to expend significant additional financial resources and time on the completion of clinical development.

We may never succeed in obtaining regulatory approval for any of our product candidates.

Selling, general and administrative expenses

Selling, general and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, corporate, commercial and business development and administrative functions.

Selling, general and administrative expenses also include professional fees for legal, patent, accounting, auditing, tax and consulting services, pre-commercial planning, travel expenses, and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.

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and investor and public relations costs.

If we determine that the continued development of RP1 is not viable, we expect that our selling, general and administrative expenses will decrease but to what extent we are uncertain.

Other income (expense), net

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Interest expense on finance lease liability consists of amortization of finance charges under our financing lease.

Other income (expense), net

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

Other income (expense)

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

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 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.

For the three months ended June 30, 2025 and 2024, the Company excluded the United States and 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 December 31, 2024 and March 31, 2024, the Company has recorded a full valuation allowance against its net deferred tax assets.

As a result, as of June 30, 2025 and March 31, 2025, the Company has recorded a full valuation allowance against its net deferred tax assets.

Results of operations

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:

Comparison of the three months ended June 30, 2025 and 2024

The following chart summarizes our results of operations for the three months ended June 30, 2025 and 2024:

Three Months Ended

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Interest expense on debt obligations (1,475) (1,426) (49)

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

Other income (expense) 591 406 185

Total other income (expense), net 3,729 3,595 134

Loss before income taxes $ (65,765) $ (50,647) $ (15,118)

Income tax provision $ 575 $ 473 $ 102

Net loss $ (86,693) $ (53,772) $ (32,921)

Research and development expenses

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:

Research and development expenses for the three months ended June 30, 2025 were $57.8 million, compared to $43.0 million for the three months ended June 30, 2024.

The following table summarizes our research and development expenses for the three months ended June 30, 2025 and 2024:

Three Months Ended

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Total research and development expenses $ 57,843 $ 42,972 $ 14,871

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.

The overall increase of $14.9 million in total research and development expenses was driven by an increase of approximately $9.6 million in our unallocated expenses which is comprised of a $5.5 million increase in personnel related costs, as well as a $4.1 million increase in other costs primarily attributable to increased medical affairs and consulting costs.

The increase of $5.2 million in direct research costs is primarily driven by an increase of $4.0 million in costs related to the IGNYTE-3 confirmatory study, which ramped up activity in the second half of fiscal 2025.

In addition, the increase of $1.8 million in spending on RP2 is primarily attributable to an increase of approximately $1.6 million in costs related to the REVEAL study which began enrollment in the prior fiscal year.

Selling, general and administrative expenses

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.

Selling, general and administrative expenses were $32.6 million for the three months ended June 30, 2025, compared to $14.4 million for the three months ended June 30, 2024.

The increase of $18.2 million is primarily the result of an increase of $9.0 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 $7.2 million in personnel related costs, including an increase of $8.4 million in payroll and fringe benefits, slightly offset by a $1.2 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 $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

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

(Amounts in thousands)

Operating expenses:

Research and development $ 135,472 $ 132,384 $ 3,088

Selling, general and administrative 46,827 $ 43,633 3,194

Total operating expenses 182,299 176,017 6,282

Loss from operations (182,299) (176,017) (6,282)

Other income (expense):

Research and development incentives 1,222 1,251 (29)

Investment income 15,243 17,922 (2,679)

Interest expense on finance lease liability (1,594) (1,626) 32

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

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

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

Total other income (expense), net

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

Other income (expense), net was $3.7 million for the three months ended June 30, 2025, compared to income of $3.6 million for the three months ended June 30, 2024.

Total other income (expense), net is relatively consistent year over year, with a net change of $0.1 million.

The change is primarily attributable to a decrease in expense of $0.2 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 was somewhat offset by an increase in interest expense on debt obligations.

Income tax provision

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

Research and development expenses

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 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

RP3 3,856 11,196 (7,340)

Unallocated research and development expenses:

Personnel related (including stock-based compensation) 67,712 58,698 9,014

Other 21,983 14,557 7,426

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

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 $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, 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.

During the three months ended June 30, 2025 and 2024, the Company did not record an income tax provision for the three months ended June 30, 2025 or 2024 as a result of a forecasted United States and United Kingdom losses for the respective years.

Liquidity and capital resources

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

Through 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.

Through June 30, 2025, 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 June 30, 2025, we had cash and cash equivalents and short-term investments of $403.3 million.

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

Nine Months Ended December 31,

Three Months Ended June 30,

(Amounts in thousands)

Net cash used in operating activities $ (77,016) $ (49,167)

Net cash (used in) provided by investing activities

Net cash provided by investing activities

65,048 29,766

Net cash provided by financing activities 252,528 16,413

Net cash (used in) provided by financing activities (158) 96,637

Effect of exchange rate changes on cash and cash equivalents (1,616) (35)

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

Net (decrease) increase in cash and cash equivalents $ (13,742) $ 77,201

Operating activities

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.

During the three months ended June 30, 2025, net cash used in operating activities was $77.0 million, primarily resulting from our net loss of $86.7 million partially offset by non-cash charges of $10.1 million, which primarily consist of stock-based compensation expense of $8.8 million and depreciation and amortization of $1.7 million, somewhat offset by net amortization of premiums and discounts on short-term investments of $1.3 million, and a decrease in cash of $0.4 million related to changes in our operating assets and liabilities.

Changes in our operating assets and liabilities for the three months ended June 30, 2025 consisted primarily of a $5.5 million decrease in accrued expenses and other current liabilities, offset by a $3.8 million increase in accounts payable, and a $1.6 million decrease in research and development incentives receivable from the United Kingdom government due to the timing and amount of our qualifying expenditures.

During the three months ended June 30, 2024, net cash used in operating activities was $49.2 million, primarily resulting from our net loss of $53.8 million partially offset by non-cash charges of $7.4 million, which primarily consist of stock-based compensation expense of $9.5 million, somewhat offset by net amortization of premiums and discounts on short-term investments of $2.8 million, and an increase in cash of $2.8 million related to changes in our operating assets and liabilities.

Changes in our operating assets and liabilities for the three months ended June 30, 2024 consisted primarily of a $3.2 million decrease in accrued expenses and other current liabilities, a $1.8 million increase in prepaid expenses and other current assets, a $1.6 million decrease in accounts payable, and a $0.4 million decrease in research and development incentives receivable from the United Kingdom government due to the timing and amount of our qualifying expenditures.

Investing activities

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.

During the three months ended June 30, 2025, net cash provided by investing activities was $65.0 million, consisting of $105.4 million in proceeds from sales and maturities of short-term investments, partially offset by $37.6 million in purchases of available for sale securities and $2.7 million in purchases of property, plant and equipment and capitalized software.

During the three months ended June 30, 2024, net cash provided by investing activities was $29.8 million, consisting of $136.9 million in proceeds from sales and maturities of short-term investments, partially offset by $105.5 million in purchases of available for sale securities, and $1.7 million in purchases of property, plant and equipment and capitalized software.

Financing Activities

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.

During the three months ended June 30, 2025, net cash used in financing activities was $0.2 million, relating to principal payments of the Company's financing lease obligation.

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

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 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.

Following discussions with the FDA related to the CRL, we may determine that the continued development of RP1 is not viable.

If we determine that the continued development of RP1 is not viable, our outlook and plans may be uncertain and the impact on our research and development expenses will also be uncertain.

As of June 30, 2025, we had cash and cash equivalents and short-term investments of $403.3 million.

Based on our current operating plan, we believe that our existing cash, cash equivalents and short-term investments as of June 30, 2025, will enable us to fund operations into the fourth quarter of 2026 which includes 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, including the assumption that the development of RP1 will remain viable, and we could utilize our available capital resources sooner than we expect.

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

Our future capital requirements

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

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

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

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Contractual obligations and commitments

During the 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.

During the three months ended June 30, 2025, 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, 2025, which was filed with the SEC on May 22, 2025.

Collaborations

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In April 2019, we 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, at no cost to us, nivolumab for use in our Phase 1 clinical trial of RP2 in combination with nivolumab.

In May 2018, we entered into a Master Clinical Trial Collaboration and Supply Agreement with Regeneron.

Pursuant to the agreement we 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 the 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 of their respective intellectual property and agreed to contribute the necessary resources needed to fulfill their respective obligations, in each case, under the terms of agreed study plans.

Development costs of an agreed study plan will be split equally.

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 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.

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

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

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

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.

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

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

Following our re-prioritization of our product development portfolio in December 2023, we have agreed with Roche to terminate the CRC collaboration and pursue the 2L cohort in HCC with RP2 only.

Roche has continued to supply its currently approved drugs, atezolizumab and bevacizumab for the 2L cohort in HCC but is not sharing costs following our re-prioritization.

Under the terms of the initial agreement we 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 days prior written notice to the other party.

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

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

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

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

(ii) 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.

On July 30, 2024, Incyte announced it has discontinued further development of its oral small molecule PD-L1 inhibitor, which was the intended study drug in the Company's planned collaboration with Incyte.

On August 1, 2024, the Company received notice of termination of the Clinical Trial Collaboration and Supply Agreement from Incyte.

Critical accounting policies and estimates

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This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs.

The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met;

of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met;

however, some require advanced payments.

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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.

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.

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.

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