What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-09 · 68 added, 51 removed, 288 unchanged (29% of the section changed)

3 unchanged sentences

(In thousands, except share and per share data)

September 30,

Current assets

21 unchanged sentences

Preferred stock, $ 0.0001 par value;

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

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

Common stock, $ 0.0001 par value;

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;

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

27,471,607 shares issued and 27,407,149 shares outstanding at September 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses

3 unchanged sentences

Loss from operations

Other expense, net

Total other expense, net

Other income (expense), net

Total other income (expense), net

Net loss and comprehensive loss

22 unchanged sentences

Balance at June 30, 2021

Vesting of restricted common stock

Exercise of stock options

Equity-based compensation expense

Balance at September 30, 2021

Preferred Stock

12 unchanged sentences

Balance at June 30, 2022

Vesting of restricted common stock

Equity-based compensation expense

Balance at September 30, 2022

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

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

17 unchanged sentences

Repayments of debt principal

Proceeds from debt issuance, net of issuance costs

Payments of finance lease

10 unchanged sentences

Deferred offering costs included in accounts payable or accrued expenses

Recognition of derivative liability in connection with long-term debt facility

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

9 unchanged sentences

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.

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

Liquidity and Capital Resources

4 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 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.

As of September 30, 2022, the Company had cash and cash equivalents of $ 139.1 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 second quarter of 2024, which is 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 development.

18 unchanged sentences

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries:

Xilio Therapeutics LLC, Xilio Concerto LLC, Xilio Development, Inc.

and Xilio Securities Corporation, which is a Massachusetts subsidiary created to buy, sell and hold securities.

Xilio Development, Inc., a Delaware corporation and Xilio Securities Corporation, a Massachusetts corporation, created to buy, sell and hold securities.

Effective as of September 30, 2022, the Company’s wholly owned subsidiaries, Xilio Therapeutics, LLC and Xilio Concerto, LLC, were merged with and into Xilio Development, Inc., with Xilio Development, Inc.

as the surviving corporation.

All intercompany accounts and transactions have been eliminated in consolidation.

6 unchanged sentences

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.

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.

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 September 30, 2022, the results of its operations for the three and nine months ended September 30, 2022 and 2021 and cash flows for the nine months ended September 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 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.

The results for the three and nine months ended September 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

10 unchanged sentences

Cash, cash equivalents and restricted cash consists of the following:

September 30,

Cash and cash equivalents

7 unchanged sentences

In August 2020, the FASB issued ASU No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470 - 20) and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815 - 40) (“ASU 2020-06”), which reduces the number of accounting models for convertible debt instruments and convertible preferred stock as well as amends the derivatives scope exception for contracts in an entity’s own equity.

derivatives scope exception for contracts in an entity’s own equity.

The Company adopted ASU 2020-06 as of January 1, 2022, and the adoption did not have a material effect on its condensed consolidated financial statements and related disclosures.

2 unchanged sentences

The fair value of these assets was determined as follows:

September 30,

Financial assets:

4 unchanged sentences

Total financial assets

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.

During the nine months ended September 30, 2022 and 2021, 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 June 30, 2022 and December 31, 2021:

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

September 30,

Laboratory equipment

6 unchanged sentences

Property and equipment, net

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.

The Company incurred depreciation and amortization expense related to property and equipment of $ 1.3 million and $ 1.0 million for the nine months ended September 30, 2022 and 2021, respectively.

Accrued Expenses

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

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

September 30,

External research and development

5 unchanged sentences

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

As of September 30, 2022 the interest rate on the term loan is 6.5 %.

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

1 unchanged sentence

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 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:

As of September 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 September 30, 2022:

Total future principal payments

1 unchanged sentence

Total notes payable

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.

The Company recognized $ 0.5 million of interest expense related to the Loan Agreement during each of the nine months ended September 30, 2022 and 2021, respectively, which is reflected in other income (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 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.

As of September 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 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.

As of September 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 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.

As of September 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 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:

As of September 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:

September 30,

Shares of common stock reserved for exercise of a warrant

17 unchanged sentences

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

As of September 30, 2022, there were 2,809,865 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 June 30, 2022, no offering periods have commenced under the 2021 ESPP.

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

Equity-Based Compensation Expense

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,

During the three and nine months ended September 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 September 30,

Nine Months Ended September 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.

For the nine months ended September 30, 2022 and 2021, general and administrative equity-based compensation expense includes $ 0.6 million and $ 0.2 million, respectively, in non-recurring compensation expense resulting from the modification of previously issued stock options.

Stock Options

5 unchanged sentences

Cancelled/forfeited

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,

Outstanding as of September 30, 2022

Exercisable as of September 30, 2022

Vested and expected to vest as of September 30, 2022

Using the Black-Scholes option pricing model, the weighted average fair value of options granted to employees and directors during the nine months ended September 30, 2022 and 2021 was $ 5.88 and $ 5.16 , respectively.

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

Nine Months Ended September 30,

Risk-free interest rate

4 unchanged sentences

80.60 – 85.26

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

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

therefore, no compensation expense was recorded for these awards.

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.

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

As of September 30, 2022, total unrecognized compensation cost related to unvested stock options, excluding performance-based awards, was approximately $ 18.4 million, which is expected to be recognized over a weighted-average period of 2.76 years.

Restricted Stock

3 unchanged sentences

Canceled/Forfeited

Unvested as of June 30, 2022

Unvested as of September 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 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.

During the nine months ended September 30, 2022, the aggregate fair value of the restricted stock awards that vested was $ 0.3 million.

As of September 30, 2022, total unrecognized compensation cost related to unvested restricted stock awards was approximately $ 0.4 million, which is expected to be recognized over a weighted-average period of 1.13 years.

The Company did no t record a provision or benefit for income taxes during the nine months ended September 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:

Six Months Ended

Nine Months Ended

September 30,

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