What changed in this filing

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Item 1. Financial Statements

2022-08-09 compared with 2022-05-12 · 69 added, 73 removed, 270 unchanged (34% of the section changed)

26 unchanged sentences

Preferred stock, $ 0.0001 par value;

5,000,000 shares authorized, no shares issued or outstanding at March 31, 2022 and December 31, 2021

5,000,000 shares authorized, no shares issued or outstanding at June 30, 2022 and December 31, 2021

Common stock, $ 0.0001 par value;

200,000,000 shares authorized at March 31, 2022 and December 31, 2021;

27,471,607 shares issued and 27,376,473 shares outstanding at March 31, 2022;

200,000,000 shares authorized at June 30, 2022 and December 31, 2021;

27,471,607 shares issued and 27,391,834 shares outstanding at June 30, 2022;

27,468,950 shares issued and 27,358,375 shares outstanding at December 31, 2021

7 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating expenses

26 unchanged sentences

Balance at March 31, 2021

Vesting of restricted common stock

Exercise of stock options

Equity-based compensation expense

Balance at June 30, 2021

Preferred Stock

9 unchanged sentences

Balance at March 31, 2022

Vesting of restricted common stock

Equity-based compensation expense

Balance at June 30, 2022

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

3 unchanged sentences

Equity-based compensation expense

Loss on disposal of property and equipment

Change in fair value of warrant and derivative liabilities

10 unchanged sentences

Cash flows from financing activities:

Repayments of debt principal

Payments of finance lease

17 unchanged sentences

Xilio Therapeutics, Inc.

(“Xilio” or the “Company”), incorporated in Delaware in June 2020, is a clinical-stage biotechnology company focused on harnessing the immune system to achieve deep and durable clinical responses to improve the lives of patients with cancer.

The Company’s headquarters are based in Waltham, Massachusetts.

(“Xilio” or the “Company”) is a clinical-stage biotechnology company focused on harnessing the immune system to achieve deep and durable clinical responses to improve the lives of patients with cancer.

The Company was incorporated in Delaware in June 2020, and its headquarters are based in Waltham, Massachusetts.

Initial Public Offering

On October 26, 2021, the Company completed its initial public offering (“IPO”) of common stock, in which it issued and sold an aggregate of 7,353,000 shares at a public offering price of $ 16.00 per share.

On November 1, 2021, the Company issued and sold an additional 766,106 shares of common stock at a public offering price of $ 16.00 per share pursuant to the partial exercise by the underwriters of their option to purchase additional shares.

The Company received aggregate gross proceeds of $ 129.9 million or aggregate net proceeds of $ 116.4 million from its IPO, including the partial exercise of the underwriters’ option, after deducting underwriting discounts and commissions and offering expenses payable by the Company.

In connection with the IPO, the Company effected a 1-for-9.5 reverse stock split of the Company’s issued and outstanding shares of common stock.

The reverse stock split was effective on October 15, 2021.

Accordingly, all share and per share amounts of common stock for all periods presented in these condensed consolidated financial statements and related notes have been retroactively adjusted to give effect to the reverse stock split.

Upon the closing of the IPO, all shares of the Company’s then outstanding preferred stock automatically converted into an aggregate of 18,398,248 shares of common stock (see Note 8).

In the fourth quarter of 2021, the Company completed its initial public offering (“IPO”) of common stock, in which it issued and sold an aggregate of 8,119,106 shares of its common stock, including 766,106 shares pursuant to the partial exercise by the underwriters of their option to purchase additional shares, at a public offering price of $ 16.00 per share.

The Company received approximately $ 116.4 million in net proceeds, after deducting underwriting discounts and commissions and offering expenses payable by the Company.

Liquidity and Capital Resources

Since inception, the Company has devoted substantially all of its financial resources and efforts to research and development activities.

Since its inception, the Company has devoted substantially all of its financial resources and efforts to research and development activities.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including but not limited to, risks associated with the successful research, development and manufacturing of product candidates, and, if approved, any products, obtaining regulatory approvals for product candidates, and, if approved, commercialization of any products, protection and enforcement of intellectual property and proprietary technology, development by third parties of potentially competitive products or product candidates, compliance with governmental regulations, and the ability to secure additional capital to fund operations.

2 unchanged sentences

Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from product sales.

As of March 31, 2022, the Company had cash and cash equivalents of $ 177.0 million.

The Company expects that its cash and cash equivalents will be sufficient to meet its projected operating requirements and capital expenditures for at least twelve months from the date of issuance of these condensed consolidated financial statements.

The Company expects to continue to generate negative cash flows from operations and net losses for the foreseeable future and will need additional capital in the future to support its continuing operations and growth strategy as it continues to invest significantly in research and development of its product candidates, including preclinical and clinical testing and manufacturing process

As of June 30, 2022, the Company had cash and cash equivalents of $ 159.4 million.

The Company believes that its existing cash and cash equivalents will be sufficient to enable the Company to fund its operating expenses and capital expenditure requirements into the first half of 2024, which is at least twelve months from the date of issuance of these condensed consolidated financial statements.

To date, the Company has primarily funded its operations with proceeds from the sale of convertible preferred units and convertible preferred stock, a debt financing and the IPO.

12 unchanged sentences

The Company may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of its initial public offering or such earlier time that it is no longer an emerging growth company.

In connection with its IPO, the Company effected a 1-for-9.5 reverse stock split of the Company’s issued and outstanding shares of common stock.

The reverse stock split was effective on October 15, 2021.

Principles of Consolidation

7 unchanged sentences

Unaudited Interim Condensed Consolidated Financial Information

The accompanying condensed consolidated balance sheet as of March 31, 2022, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2022 and 2021, the statements of cash flows for the three months ended March 31, 2022 and 2021 and the condensed consolidated statements of convertible preferred stock and stockholders’ equity (deficit) for the three months ended March 31, 2022 and 2021 are unaudited.

The financial data and other information contained in the notes thereto as of and for the three months ended March 31, 2022 and 2021

are also unaudited.

The accompanying condensed consolidated financial statements are unaudited.

The financial data and other information contained in these notes are also unaudited.

The condensed consolidated balance sheet data as of December 31, 2021 was derived from the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements, and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of March 31, 2022, the results of its operations for the three months ended March 31, 2022 and 2021 and cash flows for the three months ended March 31, 2022 and 2021.

normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of June 30, 2022, the results of its operations for the three and six months ended June 30, 2022 and 2021 and cash flows for the six months ended June 30, 2022 and 2021.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2021, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The results for the three months ended March 31, 2022 are not necessarily indicative of results to be expected for the year ended December 31, 2022, or any other interim periods, or any future year or period.

The results for the three and six months ended June 30, 2022 are not necessarily indicative of results to be expected for the year ended December 31, 2022, or any other interim periods, or any future year or period.

Use of Estimates

30 unchanged sentences

Total financial assets

During the three months ended March 31, 2022 and March 31, 2021, the Company did not hold any investments and there were no transfers between Level 1, Level 2, and Level 3.

During the six months ended June 30, 2022 and 2021, the Company did not hold any investments and there were no transfers between Level 1, Level 2, and Level 3.

Property and Equipment, Net

Property and equipment, net consists of the following as of March 31, 2022 and December 31, 2021:

Property and equipment, net consists of the following as of June 30, 2022 and December 31, 2021:

Laboratory equipment

6 unchanged sentences

Property and equipment, net

The Company incurred depreciation and amortization expense related to property and equipment, net of $ 0.4 million for each of the three months ended March 31, 2022 and 2021, respectively.

The Company incurred depreciation and amortization expense related to property and equipment of $ 0.8 million and $ 0.7 million for the six months ended June 30, 2022 and 2021, respectively.

Accrued Expenses

Accrued expenses consist of the following as of March 31, 2022 and December 31, 2021:

Accrued expenses consist of the following as of June 30, 2022 and December 31, 2021:

External research and development

3 unchanged sentences

Loan and Security Agreement

Initial Loan Agreement

In November 2019, the Company entered into a loan and security agreement with Pacific Western Bank (“PacWest”), as amended by a first amendment, dated March 12, 2021, and a second amendment, dated May 10, 2021 (the “Initial Loan Agreement”).

Pursuant to the Initial Loan Agreement, the Company borrowed $ 10.0 million under a term loan.

Interest on the outstanding initial loan balance accrued at a variable annual rate equal to the greater of (i) the prime rate, as defined in the Initial Loan Agreement, plus 0.25 % or (ii) 5.00 %.

The Company was required to make interest only payments on the loan on a monthly basis through May 21, 2021.

Subsequent to the interest-only period, the Company was required to make equal monthly payments of principal plus interest until the scheduled loan maturity on November 21, 2023.

In addition, under the Initial Loan Agreement, the Company was obligated to pay a one-time $ 0.5 million fee to PacWest upon the occurrence of specified liquidation events, including an initial public offering.

The fee represented a derivative instrument that the Company bifurcated from the debt arrangement and carried at fair value with any changes in such fair value recorded to other income (expense), net in the Company’s consolidated statements of operations and comprehensive loss.

Upon the closing of the loan, the fair value of the debt derivative liability was $ 0.4 million that, together with certain legal and other fees incurred by the Company and associated with the Initial Loan Agreement, was recognized as a debt discount and reflected as a reduction in the carrying value of the debt.

The debt discount has been accreted and recognized as additional interest expense over the term of the Initial Loan Agreement using the effective interest method.

Amended Loan Agreement

On September 17, 2021, the Company entered into a third amendment (the “Third Amendment”) to the Initial Loan Agreement (as amended, and together with the Initial Loan Agreement, the “Loan Agreement”), pursuant to which the Company borrowed $ 10.0 million under a new term loan and used the proceeds of such new term loan to repay the outstanding balance on the prior term loan.

In addition, as a result of the amendment, prior to December 31, 2022, the Company has the ability to request one or more additional term loans in an aggregate principal amount of $ 10.0 million.

In November 2019, the Company entered into a loan and security agreement with Pacific Western Bank (“PacWest”), as amended (the “Loan Agreement”), pursuant to which the Company borrowed $ 10.0 million under a term loan and has the ability to request one or more additional term loans in an aggregate principal amount of $ 10.0 million prior to December 31, 2022.

Interest on amounts outstanding under the Loan Agreement accrue at a variable annual rate equal to the greater of (i) the prime rate plus 0.25 % or (ii) 4.75 %.

As a result of the Third Amendment, the Company is required to make interest-only payments on any outstanding balances through December 31, 2022.

Subsequent to the interest-only period, the Company will be required to make equal monthly payments of principal plus interest until the loan matures on June 30, 2024.

In addition, as a result of the Third Amendment, the one-time fee the Company was obligated to pay to PacWest upon the occurrence of specified liquidation events, including an initial public offering, was increased from $ 0.5 million to an amount between $ 0.8 million and $ 1.0 million, depending on the timing and occurrence of specified events, including the closing of the IPO.

The Company paid the one-time fee of $ 0.8 million to PacWest in October 2021 upon the closing of the IPO.

As a result of the Third Amendment, the Company is also obligated to pay PacWest a fee of 1.0 % of the aggregate principal amounts then outstanding if any term loans are repaid prior to September 17, 2022, which is approximately one year from the date of the Third Amendment.

Using the net present value method, the Company concluded the amendment should be accounted for as a debt modification as the present value of the remaining cash flows of the amended term loan are not substantially different from the present value of the remaining cash flows of the initial term loan.

As of June 30, 2022 the interest rate on the term loan is 5.0 %.

The Company is required to make interest-only payments on any outstanding balances through December 31, 2022.

Subsequent to the interest-only period, the Company will be required to make equal monthly payments of principal plus interest until the term loan matures on June 30, 2024.

In addition, under the Loan Agreement, the Company paid a one-time success fee of $ 0.8 million to PacWest in October 2021 upon the closing of the IPO.

The Company is also obligated to pay PacWest a fee of 1.0 % of the aggregate principal amounts then outstanding if any term loans are repaid prior to September 17, 2022.

The Loan Agreement contains customary representations, warranties and covenants and also includes customary terms covering events of default, including payment defaults, breaches of covenants, a change of control provision and occurrence of a material adverse effect.

2 unchanged sentences

Upon the occurrence and continuation of an event of default, a default interest rate of an additional 5 % per annum may be applied to the outstanding loan balance, and the administrative agent, collateral agent, and lender may declare all outstanding obligations immediately due and payable and exercise all of their rights and remedies as set forth in the Loan Agreement and under applicable law.

As of March 31, 2022, the Company was in compliance with all covenants under the Loan Agreement.

The Company has the following minimum aggregate future loan payments under the Loan Agreement at March 31, 2022:

As of June 30, 2022, the Company was in compliance with all covenants under the Loan Agreement.

The Company has the following minimum aggregate future loan payments under the Loan Agreement as of June 30, 2022:

Total future principal payments

1 unchanged sentence

Total notes payable

The Company recognized $ 0.2 million of interest expense related to the Loan Agreement during each of the three months ended March 31, 2022 and 2021, respectively, which is reflected in other expense, net on the consolidated statements of operations and comprehensive loss.

The Company recognized $ 0.3 million of interest expense related to the Loan Agreement during each of the six months ended June 30, 2022 and 2021, respectively, which is reflected in other expense, net on the condensed consolidated statements of operations and comprehensive loss.

Commitments and Contingencies

4 unchanged sentences

The Company is obligated to pay its portion of real estate taxes and costs related to the premises, including costs of operations, maintenance, repair, replacement, and management of the leased premises, which it began paying simultaneous with the rent commencement date in March 2020.

As of March 31, 2022, the Company has a letter of credit for the benefit of its landlord in the amount of $ 1.6 million, collateralized by a money market fund, which is classified as restricted cash on the condensed consolidated balance sheets.

As of June 30, 2022, the Company has a letter of credit for the benefit of its landlord in the amount of $ 1.6 million, collateralized by a money market fund, which is classified as restricted cash on the condensed consolidated balance sheets.

Preferred Stock and Common Stock

Undesignated Preferred Stock

As of March 31, 2022 and December 31, 2021, the Company’s certificate of incorporation, as amended, authorized the Company to issue up to 5,000,000 shares of undesignated preferred stock at $ 0.0001 par value per share.

As of June 30, 2022 and December 31, 2021, the Company’s certificate of incorporation, as amended, authorized the Company to issue up to 5,000,000 shares of undesignated preferred stock at $ 0.0001 par value per share.

Convertible Preferred Stock

Upon the closing of the IPO in October 2021, all shares of the Company’s then outstanding preferred stock automatically converted into an aggregate of 18,398,248 shares of common stock.

As of March 31, 2022 and December 31, 2021, the Company’s certificate of incorporation, as amended, authorized the Company to issue up to 200,000,000 shares of common stock, $ 0.0001 par value per share.

As of June 30, 2022 and December 31, 2021, the Company’s certificate of incorporation, as amended, authorized the Company to issue up to 200,000,000 shares of common stock, $ 0.0001 par value per share.

Shares Reserved for Future Issuance

As of March 31, 2022 and December 31, 2021, the Company had reserved shares of common stock for future issuance, including under the Company’s 2020 Stock Incentive Plan (as amended, the “2020 Plan”), 2021 Stock Incentive Plan (the “2021 Plan”) and 2021 Employee Stock Purchase Plan (the “2021 ESPP”) as follows:

As of June 30, 2022 and December 31, 2021, the Company had reserved shares of common stock for future issuance, including under the Company’s 2020 Stock Incentive Plan (as amended, the “2020 Plan”), 2021 Stock Incentive Plan (the “2021 Plan”) and 2021 Employee Stock Purchase Plan (the “2021 ESPP”) as follows:

Shares of common stock reserved for exercise of a warrant

14 unchanged sentences

The number of shares of the Company’s common stock initially reserved for issuance under the 2021 Plan was the sum of (1) 2,654,828 ;

plus (2) the number of shares (up to 3,967,038 shares) as is equal to the sum of (x) the number of shares of the Company’s common

stock reserved for issuance under the 2020 Plan that remained available for grant under the 2020 Plan immediately prior to the effectiveness of the Registration Statement and (y) the number of shares of the Company’s common stock subject to outstanding awards whether granted under the 2020 Plan or outside of the 2020 Plan which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by us at their original issuance price pursuant to a contractual repurchase right and that, prior to the effectiveness of the 2021 Plan, would have become available for issuance under the 2020 Plan;

plus (2) the number of shares (up to 3,967,038 shares) as is equal to the sum of (x) the number of shares of the Company’s common stock reserved for issuance under the 2020 Plan that remained available for grant under the 2020 Plan immediately prior to the effectiveness of the Registration Statement and (y) the number of shares of the Company’s common stock subject to outstanding awards whether granted under the 2020 Plan or outside of the 2020 Plan which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by us at their original issuance price pursuant to a contractual repurchase right and that, prior to the effectiveness of the 2021 Plan, would have become available for issuance under the 2020 Plan;

plus (3) an annual increase, to be added on the first day of each fiscal year, beginning with the fiscal year, commencing on January 1, 2022 and continuing until, and including, January 1, 2031, equal to the lesser of (i) 5 % of the number of shares of the Company’s common stock outstanding on the first day of such fiscal year and (ii) the number of shares of common stock determined by the Company’s board of directors (the “Evergreen Provision”).

Effective January 1, 2022, the number of shares reserved for issuance under the 2021 Plan increased by 1,373,447 shares in accordance with the Evergreen Provision.

As of March 31, 2022, there were 2,860,745 shares available for future issuance under the 2021 Plan.

As of June 30, 2022, there were 2,628,110 shares available for future issuance under the 2021 Plan.

2021 Employee Stock Purchase Plan

3 unchanged sentences

Effective January 1, 2022, the number of shares reserved for issuance under the 2021 ESPP increased by 274,689 shares in accordance with the ESPP Evergreen Provision.

As of March 31, 2022, no offering periods have commenced under the 2021 ESPP.

As of June 30, 2022, no offering periods have commenced under the 2021 ESPP.

Equity-Based Compensation Expense

During the three months ended March 31, 2022 and 2021, the Company recorded compensation expense related to stock options and restricted common stock for employees and non-employees, which was allocated as follows in the condensed consolidated statements of operations and comprehensive loss:

Three Months Ended March 31,

During the three and six months ended June 30, 2022 and 2021, the Company recorded compensation expense related to stock options and restricted common stock for employees and non-employees, which was allocated as follows in the condensed consolidated statements of operations and comprehensive loss:

Three Months Ended June 30,

Six Months Ended June 30,

Research and development expense

1 unchanged sentence

Total equity-based compensation expense

For the three and six months ended June 30, 2022, general and administrative equity-based compensation expense includes $ 0.6 million in non-recurring compensation expense resulting from the modification of previously issued stock options.

Stock Options

5 unchanged sentences

Cancelled/forfeited

Outstanding as of March 31, 2022

Exercisable as of March 31, 2022

Vested and expected to vest as of March 31, 2022

Using the Black-Scholes option pricing model, the weighted average fair value of options granted to employees and directors during the three months ended March 31, 2022 and 2021 was $ 8.83 and $ 4.32 , respectively.

The following assumptions were used in determining the fair value of options granted to employees the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

Outstanding as of June 30, 2022

Exercisable as of June 30, 2022

Vested and expected to vest as of June 30, 2022

Using the Black-Scholes option pricing model, the weighted average fair value of options granted to employees and directors during the six months ended June 30, 2022 and 2021 was $ 6.56 and $ 4.71 , respectively.

The following assumptions were used in determining the fair value of options granted during the six months ended June 30, 2022 and 2021:

Six Months Ended June 30,

Risk-free interest rate

4 unchanged sentences

81.06 – 85.26

The achievement of the performance conditions underlying outstanding performance-based awards was not probable as of March 31, 2022;

The achievement of the performance conditions underlying outstanding performance-based awards was not probable as of June 30, 2022;

therefore, no compensation expense was recorded for these awards.

As of March 31, 2022, total unrecognized compensation costs related to performance-based awards was less than $ 0.1 million.

As of March 31, 2022, total unrecognized compensation cost related to unvested stock options, excluding performance-based awards, was approximately $ 25.4 million, which is expected to be recognized over a weighted-average period of 3.04 years.

As of June 30, 2022, total unrecognized compensation costs related to performance-based awards was less than $ 0.1 million.

As of June 30, 2022, total unrecognized compensation cost related to unvested stock options, excluding performance-based awards, was approximately $ 22.6 million, which is expected to be recognized over a weighted-average period of 2.92 years.

Restricted Stock

3 unchanged sentences

Canceled/Forfeited

Unvested as of March 31, 2022

Unvested as of June 30, 2022

In June 2020, the Company granted 552,546 shares of common stock underlying restricted stock awards, and the Company has not subsequently granted any additional restricted stock awards.

During the three months ended March 31, 2022, the aggregate fair value of the restricted stock awards that vested was $ 0.2 million.

As of March 31, 2022, total unrecognized compensation cost related to unvested restricted stock awards was approximately $ 0.6 million, which is expected to be recognized over a weighted-average period of 1.57 years.

The Company did no t record a provision or benefit for income taxes during the three months ended March 31, 2022 and 2021.

During the six months ended June 30, 2022, the aggregate fair value of the restricted stock awards that vested was $ 0.2 million.

As of June 30, 2022, total unrecognized compensation cost related to unvested restricted stock awards was approximately $ 0.5 million, which is expected to be recognized over a weighted-average period of 1.34 years.

The Company did no t record a provision or benefit for income taxes during the six months ended June 30, 2022 and 2021.

The Company continues to maintain a full valuation allowance against all of its deferred tax assets.

4 unchanged sentences

The following table sets forth the outstanding shares of common stock equivalents, presented based on amounts outstanding at each period end, that were excluded from the calculation of diluted net loss per share attributable to common stockholders during each period because including them would have been anti-dilutive:

Three Months Ended

Six Months Ended

Convertible preferred stock

3 unchanged sentences

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 1. Financial Statements