What changed in this filing

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Item 1. Financial Statements

2024-08-08 compared with 2024-05-14 · 145 added, 94 removed, 331 unchanged (42% of the section changed)

5 unchanged sentences

Cash and cash equivalents

License agreement receivable

Prepaid expenses and other current assets

8 unchanged sentences

Accrued expenses

Deferred revenue

Deferred revenue, current portion

Operating lease liability, current portion

10 unchanged sentences

Common stock, $ 0.0001 par value;

200,000,000 shares authorized at March 31, 2024 and December 31, 2023;

34,473,486 shares issued and 34,472,646 shares outstanding at March 31, 2024;

200,000,000 shares authorized at June 30, 2024 and December 31, 2023;

43,951,922 shares issued and outstanding at June 30, 2024;

27,613,263 shares issued and 27,607,646 shares outstanding at December 31, 2023

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,

License revenue

Total revenue

Operating expenses

13 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity

For the three months ended June 30, 2024 and 2023

(In thousands, except share data)

1 unchanged sentence

Paid-In Capital

Balance at December 31, 2023

Issuance of common stock in connection with the Gilead stock purchase agreement, net of issuance costs

Balance at March 31, 2024

Issuance of common stock and prefunded warrants in connection with the Gilead stock purchase agreement, net of issuance costs

Issuance of common stock and prefunded warrants in connection with a private placement, net of issuance costs

Issuance of common stock in connection with at-the-market offerings, net of issuance costs

Issuance of common stock under employee stock purchase plan

Vesting of restricted common stock

Exercise of stock options

Stock-based compensation expense

Balance at June 30, 2024

Stockholders’

Paid-In Capital

Balance at March 31, 2023

Issuance of common stock under employee stock purchase plan

Vesting of restricted common stock

Exercise of stock options

Stock-based compensation expense

Balance at June 30, 2023

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

XILIO THERAPEUTICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

For the six months ended June 30, 2024 and 2023

(In thousands, except share data)

Stockholders’

1 unchanged sentence

Balance at December 31, 2023

Issuance of common stock and prefunded warrants in connection with the Gilead stock purchase agreement, net of issuance costs

Issuance of common stock and prefunded warrants in connection with a private placement, net of issuance costs

Issuance of common stock in connection with at-the-market offerings, net of issuance costs

Issuance of common stock under employee stock purchase plan

Vesting of restricted common stock

1 unchanged sentence

Stock-based compensation expense

Balance at March 31, 2023

Balance at June 30, 2024

Stockholders’

Paid-In Capital

Balance at December 31, 2022

Issuance of common stock under employee stock purchase plan

Vesting of restricted common stock

Exercise of stock options

Stock-based compensation expense

Balance at June 30, 2023

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:

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

1 unchanged sentence

Stock-based compensation expense

Loss on disposal of property and equipment

Changes in operating assets and liabilities:

License agreement receivable

Prepaid and other assets

4 unchanged sentences

Operating lease liability

Net cash used in operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

4 unchanged sentences

Payments of finance lease

Proceeds from issuance of common stock under the Gilead stock purchase agreement, net of issuance costs

Proceeds from issuance of common stock under employee stock purchase plan

Proceeds from exercise of stock options

Proceeds from issuance of common stock and prefunded warrants in connection with the Gilead stock purchase agreement, net of issuance costs

Proceeds from issuance of common stock and prefunded warrants in connection with a private placement, net of issuance costs

Proceeds from issuance of common stock in connection with at-the-market offerings, net of issuance costs

Net cash provided by (used in) financing activities

Decrease in cash, cash equivalents and restricted cash

Increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

19 unchanged sentences

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

As of March 31, 2024, the Company had an accumulated deficit of $ 342.7 million and has incurred significant operating losses, including net losses of $ 17.2 million and $ 22.6 million for the three months ended March 31, 2024 and 2023, respectively.

As of June 30, 2024, the Company had an accumulated deficit of $ 356.6 million and has incurred significant operating losses, including net losses of $ 31.1 million and $ 42.0 million for the six months ended June 30, 2024 and 2023, respectively.

The Company expects its operating losses and negative operating cash flows to continue for the foreseeable future as it continues to advance its product candidates through clinical trials, maintains the infrastructure necessary to support these activities and continues to incur costs associated with operating as a public company.

As of March 31, 2024, the Company had cash and cash equivalents of $ 34.0 million.

Based on its current operating plans, the Company anticipates that its existing cash and cash equivalents as of March 31, 2024, together with the $ 30.0 million upfront payment received in April 2024 under the exclusive license agreement with Gilead Sciences, Inc.

(“Gilead”) and approximately $ 14.6 million in aggregate gross proceeds received in April 2024 from private placements with certain existing investors and Gilead, will be sufficient to fund the Company’s operating expenses and capital expenditure requirements into the second quarter of 2025.

As of June 30, 2024, the Company had cash and cash equivalents of $ 74.9 million.

Based on its current operating plans, the Company anticipates that its existing cash and cash equivalents as of June 30, 2024 will be sufficient to fund the Company’s operating expenses and capital expenditure requirements into the second quarter of 2025.

However, the Company has based this estimate on assumptions that may prove to be wrong, and the Company could exhaust its available capital resources sooner than it anticipates.

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GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”).

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S.

Certain information

and footnote disclosures normally included in financial statements prepared in accordance with U.S.

GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations.

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The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements.

In the opinion of the Company’s management, the unaudited interim condensed consolidated financial statements contain all adjustments which are necessary to present fairly the Company’s financial position as of March 31, 2024 and the results of its operations for the three months ended March 31, 2024 and 2023 and cash flows for the three months ended March 31, 2024 and 2023.

In the opinion of the Company’s management, the unaudited interim condensed consolidated financial statements contain all adjustments which are necessary to present fairly the Company’s financial position as of June 30, 2024 and the results of its operations for the three and six months ended June 30, 2024 and 2023 and cash flows for the six months ended June 30, 2024 and 2023.

Such adjustments are of a normal and recurring nature.

The results for the three months ended March 31, 2024 are not necessarily indicative of the results for the year ending December 31, 2024 or for any future period.

The results for the three and six months ended June 30, 2024 are not necessarily indicative of the results for the year ending December 31, 2024 or for any future period.

Principles of Consolidation

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The preparation of financial statements in accordance with GAAP requires management to make estimates and judgments that may affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the date of the financial statements and the related reporting of expenses during the reporting period.

Management considers many factors in selecting appropriate financial accounting policies and controls and in developing the estimates and assumptions that are used in the preparation of these consolidated financial statements.

Factors that may affect estimates include expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends.

The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates.

Significant estimates of accounting reflected in these consolidated financial statements include, but are not limited to, estimates related to revenue recognition, accrued expenses, the valuation of stock-based compensation, including stock options and restricted common stock, useful life of long-lived assets and income taxes.

Significant estimates of accounting reflected in these condensed consolidated financial statements include, but are not limited to, estimates related to revenue recognition, accrued expenses, the valuation of stock-based compensation, including stock options and restricted common stock, useful life of long-lived assets and income taxes.

Actual results could differ from those estimates.

1 unchanged sentence

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”).

candidates and performs research, development and other services in connection with such arrangements.

The Company has entered into, and may in the future enter into, collaboration and licensing agreements that are within the scope of ASC 606, under which the Company has granted licenses to certain of the Company’s product candidates and performs research, development and other services in connection with such arrangements.

The terms of these arrangements may include payment of one or more of the following:

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Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

To determine the appropriate amount of revenue to be recognized for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:

To determine the appropriate amount of revenue to be recognized for arrangements that the Company determines are within

the scope of ASC 606, the Company performs the following five steps:

(i) identification of the contract with the customer;

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The Company must develop assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract.

The Company utilizes key

assumptions to determine the standalone selling price, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs.

The Company utilizes key assumptions to determine the standalone selling price, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs.

Variable consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated are consistent with the amounts the Company would expect to receive for the satisfaction of each performance obligation.

● Milestone Payments.

At the inception of each arrangement that includes development or regulatory milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method.

At the inception of each arrangement that includes development or regulatory milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and

estimates the amount to be included in the transaction price using the most likely amount method.

If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price.

23 unchanged sentences

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker.

The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods

within fiscal years beginning after December 15, 2024.

The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

4 unchanged sentences

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign).

Improvements to Income Tax Disclosures (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific

categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign).

ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes.

4 unchanged sentences

Property and Equipment, Net

Property and equipment, net consists of the following as of March 31, 2024 and December 31, 2023:

Property and equipment, net consists of the following as of June 30, 2024 and December 31, 2023:

Laboratory equipment

6 unchanged sentences

Property and equipment, net

The Company recognized depreciation and amortization expense related to property and equipment of $ 0.4 million and $ 0.5 million for the three months ended March 31, 2024 and 2023, respectively.

The Company recognized depreciation and amortization expense related to property and equipment of $ 0.8 million and $ 0.9 million for the six months ended June 30, 2024 and 2023, respectively.

Accrued Expenses and Restructuring

Accrued expenses consist of the following as of March 31, 2024 and December 31, 2023:

Accrued expenses consist of the following as of June 30, 2024 and December 31, 2023:

External research and development

4 unchanged sentences

In March 2024, the Company’s board of directors approved a strategic portfolio reprioritization and workforce reduction.

As part of the workforce reduction, the Company recognized restructuring charges of $ 0.9 million during the three months ended March 31, 2024, primarily related to employee severance and benefits continuation.

As part of the workforce reduction, the Company recognized restructuring charges of $ 1.0 million during the six months ended June 30, 2024, primarily related to employee severance, benefits continuation and outplacement service costs.

The workforce reduction was completed in April 2024.

The Company did no t make any payments related to the restructuring during the three months ended March 31, 2024.

All employee severance and benefits continuation payments are expected to be completed by the end of the third quarter of 2024.

The following table summarizes the accrued restructuring liability activity for the Company’s workforce reduction for the three months ended March 31, 2024:

The Company made payments of $ 0.7 million related to the restructuring during the six months ended June 30, 2024.

All employee severance, benefits continuation and outplacement service cost payments are expected to be completed by the end of the third quarter of 2024.

The following table summarizes the accrued restructuring liability activity for the Company’s workforce reduction for the six months ended June 30, 2024:

Severance and

2 unchanged sentences

Restructuring charges

Accrued restructuring liability as of March 31, 2024

Restructuring payments

Accrued restructuring liability as of June 30, 2024

Loan and Security Agreement

In November 2019, the Company’s wholly owned subsidiary, Xilio Development, Inc.

(“Xilio Development”), entered into a loan and security agreement (as amended and restated in May 2023, the “Loan Agreement”) with Pacific Western Bank (“PacWest”), with the Company as a guarantor.

Under the Loan Agreement, in November 2019, Xilio Development borrowed $ 10.0 million under a term loan.

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

In the first quarter of 2024, Xilio Development repaid all amounts outstanding under the Loan Agreement, and PacWest released all security interests in Xilio Development’s and its affiliates’ assets.

The Company recognized $ 0.1 million and $ 0.2 million of interest expense related to the Loan Agreement for the three months ended March 31, 2024 and 2023, respectively, which is reflected in other income, net on the condensed consolidated statements of operations and comprehensive loss.

The Company recognized $ 0.1 million and $ 0.4 million of interest expense related to the Loan Agreement for the six months ended June 30, 2024 and 2023, respectively, which is reflected in other income, net on the condensed consolidated statements of operations and comprehensive loss.

Collaboration and License Agreements

License Agreement with Gilead Sciences, Inc.

In March 2024, Xilio Development entered into a license agreement with Gilead, pursuant to which it granted Gilead an exclusive global license to develop and commercialize XTX301, the Company’s tumor-activated IL-12 product candidate, and specified other molecules directed to IL-12.

In March 2024, Xilio Development entered into a license agreement with Gilead Sciences, Inc (“Gilead”), pursuant to which it granted Gilead an exclusive global license to develop and commercialize XTX301, the Company’s tumor-activated IL-12 product candidate, and specified other molecules directed to IL-12.

Xilio Development is responsible for conducting clinical development for XTX301 in the ongoing Phase 1 clinical trial through an initial planned Phase 2 dose expansion clinical trial.

1 unchanged sentence

In connection with the execution of the license agreement, in March 2024, the Company also entered into a stock purchase agreement with Gilead.

Under the stock purchase agreement, Gilead agreed to purchase up to an aggregate of $ 25.0 million in the Company’s common stock (or at Gilead’s election, prefunded warrants in lieu of shares of common stock) in an initial private placement in connection with the execution of the license agreement and in up to three additional private placements through March 2025 at a predetermined mechanism for the purchase price per share, at all times subject to Gilead not being deemed the beneficial owner of greater than 19.9 % of the Company’s common stock upon the closing of the applicable private placement.

Under the stock purchase agreement, Gilead agreed to purchase up to an aggregate of $ 25.0 million of the Company’s common stock (or at Gilead’s election, prefunded warrants in lieu of shares of common stock) in an initial private placement in connection with the execution of the license agreement and in up to three additional private placements through March 2025 at a predetermined mechanism for the purchase price per share, at all times subject to Gilead not being deemed the beneficial owner of greater than 19.9 % of the Company’s common stock upon the closing of the applicable private placement.

In March 2024, the Company initially issued and sold 6,860,223 shares of common stock to Gilead at a purchase price of $ 1.97 per share and received approximately $ 13.5 million in aggregate gross proceeds.

Upon execution of the agreements, the Company was entitled to receive approximately $ 43.5 million in upfront payments, including an upfront cash payment of $ 30.0 million under the license agreement and an initial equity investment by Gilead of approximately $ 13.5 million under the stock purchase agreement.

Upon execution of the agreements, the Company was also eligible to receive up to $ 604.0 million in additional contingent payments, which include (i) approximately $ 11.5 million in proceeds from up to three additional private placements, (ii) the $ 75.0 million transition fee and (iii) up to $ 517.5 million in specified development, regulatory and sales-based milestones.

Prior to the potential transition fee, up to $ 29.0 million of the total additional contingent payments are related to the potential additional private placements and a near-

term development milestone.

In April 2024, the Company exercised its right to a first additional private placement with Gilead and issued and sold an additional 485,250 shares of its common stock at a purchase price of $ 0.76 per share and prefunded warrants to purchase up to an aggregate of 3,882,450 shares of its common stock at a purchase price of $ 0.7599 per prefunded warrant.

The prefunded warrants are exercisable any time at an exercise price of $ 0.0001 per share, subject to Gilead not being deemed a beneficial owner of greater than 19.9 % of the Company’s common stock upon the exercise of the prefunded warrants.

The Company received approximately $ 3.3 million in aggregate gross proceeds from the additional private placement with Gilead.

As of June 30, 2024, the Company has received approximately $ 46.8 million in payments under the Gilead agreements, consisting of the $ 30.0 million upfront cash payment under the license agreement and approximately $ 16.8 million in gross proceeds from private placements under the stock purchase agreement.

As of June 30, 2024, the Company is eligible to receive up to $ 600.7 million in additional contingent payments, which consist of (i) approximately $ 8.2 million in proceeds from up to two additional private placements, (ii) the $ 75.0 million transition fee and (iii) up to $ 517.5 million in specified development, regulatory and sales-based milestones.

Prior to the potential transition fee, up to $ 25.7 million of the total additional contingent payments are related to the potential additional private placements and a near-term development milestone.

In addition, the Company is eligible to receive tiered royalties ranging from high single digits to mid-teens on annual global net product sales.

8 unchanged sentences

Accordingly, the Company concluded that there is a single identified combined performance obligation consisting of the exclusive license and the development services.

For the purposes of ASC 606, the transaction price of the license agreement at the outset of the arrangement was determined to be $ 39.1 million, which consisted of the upfront cash payment of $ 30.0 million under the license agreement and the $ 9.1 million premium on the sale of common stock to Gilead in the initial private placement, which was allocated to the single combined performance obligation.

For purposes of ASC 606, the transaction price of the license agreement at the outset of the arrangement was determined to be $ 39.1 million, which consisted of the upfront cash payment of $ 30.0 million under the license agreement and the $ 9.1 million premium on the sale of common stock to Gilead in the initial private placement, which was allocated to the single combined performance obligation.

The Company used the most likely amount method to estimate variable consideration.

All contingent payments have been fully constrained at contract inception, as the achievement of the milestones underlying such contingent payments is uncertain and highly susceptible to factors outside of the Company’s control.

Accordingly, all such contingent payments were excluded from the transaction price.

The Company anticipates that it will reevaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur and may adjust the transaction price as necessary.

All contingent payments are fully constrained as of June 30, 2024, as the achievement of the milestones underlying such contingent payments is uncertain and highly susceptible to factors outside of the Company’s control.

Accordingly, all such contingent payments are excluded from the transaction price.

The Company reevaluates the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur and may adjust the transaction price as necessary.

Sales-based royalties, including milestone payments based on the level of sales, were also excluded from the transaction price, as the license is deemed to be the predominant item to which the royalties relate.

The Company plans to recognize such revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Revenue associated with the combined performance obligation will be recognized as services are provided as control is transferred over time.

Revenue associated with the combined performance obligation is recognized as services are provided as control is transferred over time.

The Company measures progress based on the amount of costs incurred relative to the total costs expected to fulfill the combined performance obligation.

In management’s judgment, this input method is the best measure of progress towards satisfying the combined performance obligation and reflects a faithful depiction of the transfer of goods and services.

Under the terms of the license agreement, the $ 30.0 million upfront payment was paid by Gilead in April 2024.

Accordingly, as of March 31, 2024, the Company recorded a receivable from Gilead for such amount.

As of March 31, 2024, no revenue has been recognized under the license agreement or the stock purchase agreement.

The Company recorded deferred revenue of $ 39.1 million for the transaction price as of March 31, 2024, of which $ 21.7 million was recorded as a current liability on the Company’s condensed consolidated balance sheets as of March 31, 2024.

During the three and six months ended June 30, 2024, the Company recognized license revenue of $ 2.4 million under the license agreement and the stock purchase agreement.

As of June 30, 2024, the Company recorded deferred revenue of

$ 36.7 million, of which $ 26.5 million was recorded as a current liability on the Company’s condensed consolidated balance sheet as of June 30, 2024.

Summary of Contract Assets and Liabilities

The following table presents changes in the balances of the Company's contract liabilities:

Deferred revenue as of December 31, 2023

License revenue recognized

Deferred revenue as of June 30, 2024

Clinical Trial Collaboration with F.

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Hoffmann-La Roche Ltd.

(“Roche”) entered into a clinical trial collaboration (the “Roche Clinical Collaboration”) pursuant to a clinical supply agreement to evaluate XTX101 in combination with atezolizumab (Tecentriq®) in a Phase 1/2 clinical trial consisting of a Phase 1 dose escalation portion assessing the combination in patients with advanced solid tumors and a planned Phase 2 portion assessing the combination in patients with microsatellite stable colorectal cancer.

(“Roche”) entered into a clinical trial collaboration (the “Roche Clinical Collaboration”) pursuant to a clinical supply agreement to evaluate XTX101 in combination with atezolizumab (Tecentriq®) in a Phase 1/2 clinical trial consisting of Phase 1 dose escalation assessing the combination in patients with advanced solid tumors and Phase 2 assessing the combination in patients with microsatellite stable colorectal cancer.

Under the clinical supply agreement, the Company is eligible to receive specified cost-sharing payments from Roche, and each company will supply its respective anti-cancer agent to support the Phase 1/2 clinical trial.

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Therefore, the Company applied a reasonable, rational, and consistently applied accounting policy election to record the cost-sharing payments from the Roche Clinical Collaboration as a reduction of research and development expenses in the condensed consolidated statements of operations and comprehensive loss for the period in which a study development event is achieved.

During the three months ended March 31, 2024, the Company recognized a reduction of research and development expenses of $ 2.0 million.

As of March 31, 2024, $ 2.0 million of earned but unpaid cost-sharing payments were included in prepaid expenses and other current assets of the Company’s condensed consolidated balance sheets.

During the three months ended June 30, 2024, the Company did not recognize a reduction of research and development expenses under the Roche Clinical Collaboration.

During the six months ended June 30, 2024, the Company recognized a reduction of research and development expenses of $ 2.0 million under the Roche Clinical Collaboration.

Commitments and Contingencies

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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, 2024 and December 31, 2023, the Company had a letter of credit for the benefit of its landlord in the amount of $ 1.6 million, collateralized by a money market account, which is recorded as restricted cash on the condensed consolidated balance sheets.

As of June 30, 2024 and December 31, 2023, the Company had a letter of credit for the benefit of its landlord in the amount of $ 1.6 million and $ 1.6 million, respectively, collateralized by a money market account, which is recorded as restricted cash on the condensed consolidated balance sheets.

Preferred Stock and Common Stock

Undesignated Preferred Stock

As of March 31, 2024 and December 31, 2023, 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 March 31, 2024 and December 31, 2023, there were no shares of preferred stock issued or outstanding.

As of March 31, 2024 and December 31, 2023, the Company is authorized to issue up to 200,000,000 shares of common stock, $ 0.0001 par value per share under its certificate of incorporation, as amended.

As of June 30, 2024 and December 31, 2023, 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, 2024 and December 31, 2023, there were no shares of preferred stock issued or outstanding.

As of June 30, 2024 and December 31, 2023, the Company is authorized to issue up to 200,000,000 shares of common stock, $ 0.0001 par value per share under its certificate of incorporation, as amended.

Private Placement

In March 2024, the Company entered into a securities purchase agreement with certain existing accredited investors pursuant to which the Company issued and sold an aggregate of 1,953,125 shares of its common stock at a purchase price of $ 0.64 per share and, in lieu of shares of the Company’s common stock, prefunded warrants to purchase up to an aggregate of 15,627,441 shares of its common stock at a purchase price of $ 0.6399 per prefunded warrant, through a private placement.

The prefunded warrants are exercisable any time at an exercise price of $ 0.0001 per share.

The private placement closed in April 2024.

The Company received aggregate gross proceeds of $ 11.3 million from the private placement, before deducting placement agent fees and expenses payable by the Company.

The shares of common stock issued and sold in the private placement were registered for resale pursuant to the Company’s registration statement on Form S-3 filed with the SEC on April 30, 2024, which became effective on May 6, 2024.

Sales Agreement

In November 2022, the Company filed a universal shelf registration statement on Form S-3 with the SEC to register for sale up to $ 250,000,000 of its common stock, preferred stock, debt securities, units and warrants, which the Company may issue and sell from time to time in one or more offerings, which became effective on November 18, 2022 (333-268264).

In November 2022, the Company also entered into a sales agreement (the “Sales Agreement”) with Cowen and Company LLC, under which the Company may issue and sell shares of its common stock at prevailing market prices from time to time, having an aggregate offering price of up to $ 75.0 million, subject to the terms and conditions of the Sales Agreement.

Issuances or sales of common stock pursuant to the Sales Agreement are made under the Form S-3 and the corresponding prospectus related to the Sales Agreement, as supplemented by a prospectus supplement filed on April 15, 2024.

During the three and six months ended June 30, 2024, the Company issued and sold 7,000,000 shares of its common stock pursuant to the Sales Agreement at a weighted average price of $ 1.00 per share for aggregate gross proceeds of $ 7.0 million, before deducting commissions.

Shares Reserved for Future Issuance

The Company has reserved for future issuances the following shares of common stock as of March 31, 2024 and December 31, 2023:

Stock options

The Company has reserved for future issuances the following shares of common stock as of June 30, 2024 and December 31, 2023:

Stock options and unvested restricted stock units

Employee stock purchase plan

Prefunded warrants

Total shares reserved for future issuance

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On January 1, 2024, the number of shares reserved for issuance under the 2021 Plan automatically increased by 1,380,663 shares.

As of March 31, 2024, there were 2,550,749 shares available for future issuance under the 2021 Plan.

As of June 30, 2024, there were 2,134,645 shares of common stock available for future issuance under the 2021 Plan.

2022 Inducement Plan

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An aggregate of 275,000 shares of the Company’s common stock has been reserved for issuance under the 2022 Inducement Plan.

As of March 31, 2024, there were 220,000 shares available for future issuance under the 2022 Inducement Plan.

As of June 30, 2024, there were 220,000 shares of common stock available for future issuance under the 2022 Inducement Plan.

2021 Employee Stock Purchase Plan

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The 2021 ESPP provides that the number of shares of common stock reserved for issuance under the 2021 ESPP will be cumulatively increased on January 1 of each calendar year by 1 % of the number of shares of the Company’s common stock outstanding on such date or such lesser amount determined by the Company’s board of directors (up to a maximum increase of 584,062 shares of common stock per year).

1, 2024, the number of shares reserved for issuance under the 2021 ESPP was increased by 276,132 shares.

The Company did not issue shares under the 2021 ESPP during the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, there were 977,376 shares available for future issuance under the 2021 ESPP.

On January 1, 2024, the number of shares reserved for issuance under the 2021 ESPP was increased by 276,132 shares.

During the six months ended June 30, 2024 and 2023, the Company issued 38,998 shares of common stock and 68,929 shares of common stock under the 2021 ESPP, respectively.

As of June 30, 2024, there were 938,378 shares of common stock available for future issuance under the 2021 ESPP.

Stock-Based Compensation Expense

During the three months ended March 31, 2024 and 2023, the Company recorded compensation expense related to stock options, restricted stock units and restricted common stock for employees and non-employees and share purchases under the 2021 ESPP for 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, 2024 and 2023, the Company recorded compensation expense related to stock options, restricted stock units and restricted common stock for employees and non-employees and share purchases under the 2021 ESPP for 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

8 unchanged sentences

Cancelled/forfeited

Outstanding as of March 31, 2024

Exercisable as of March 31, 2024

( 1,244,143 )

Outstanding as of June 30, 2024

Exercisable as of June 30, 2024

(1) The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock as of the end of the period.

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, 2024 and 2023 was $ 0.41 and $ 1.95 , respectively.

The following assumptions were used in determining the fair value of options granted during the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

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, 2024 and 2023 was $ 0.68 and $ 1.96 , respectively.

The following assumptions were used in determining the fair value of options granted during the six months ended June 30 2024 and 2023:

Six Months Ended June 30,

Risk-free interest rate

2 unchanged sentences

Expected volatility

As of March 31, 2024, the Company had unrecognized stock-based compensation expense of $ 10.6 million related to stock options issued to employees and directors, which is expected to be recognized over a weighted-average period of 2.0 years.

As of June 30, 2024, the Company had unrecognized stock-based compensation expense of $ 8.5 million related to stock options issued to employees and directors, which is expected to be recognized over a weighted-average period of 2.1 years.

Restricted Stock Units

5 unchanged sentences

Unvested as of December 31, 2023

Unvested as of March 31, 2024

For the three months ended March 31, 2024, the Company recognized less than $ 0.1 million of stock-based compensation expense related to these awards.

As of March 31, 2024, the Company had unrecognized stock-based compensation expense of $ 0.2 million related to these restricted stock units, which is expected to be recognized over 3.8 years.

Unvested as of June 30, 2024

For the six months ended June 30, 2024, the Company recognized less than $ 0.1 million of stock-based compensation expense related to these awards.

As of June 30, 2024, the Company had unrecognized stock-based compensation expense of $ 0.1 million related to these restricted stock units, which is expected to be recognized over 3.5 years.

Restricted Common Stock

2 unchanged sentences

Unvested as of December 31, 2023

Unvested as of March 31, 2024

Unvested as of June 30, 2024

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.

The aggregate fair value of the restricted stock awards that vested during the three months ended March 31, 2024 and 2023 was less than $ 0.1 million.

The aggregate fair value of the restricted stock awards that vested during the six months ended June 30, 2024 and 2023 was less than $ 0.1 million.

Net Loss Per Share

The Company calculates basic net loss per share by dividing net loss by the weighted average number of shares of common stock outstanding.

The weighted average number of shares of common stock used in the basic and diluted net loss per share calculation includes the prefunded warrants issued in connection with the Company’s private placements with certain existing investors and Gilead, as the prefunded warrants are exercisable at any time for nominal cash consideration.

As of June 30, 2024, no prefunded warrants have been exercised and 19,509,891 prefunded warrants are outstanding.

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

Unvested restricted common stock

3 unchanged sentences

Total common stock equivalents

Subsequent Events

Private Placement

On March 28, 2024, the Company entered into a securities purchase agreement with certain existing accredited investors pursuant to which the Company issued and sold an aggregate of 1,953,125 shares of its common stock at a purchase price of $ 0.64 per share and, in lieu of shares of the Company’s common stock, prefunded warrants to purchase up to an aggregate of 15,627,441 shares of its common stock at a purchase price of $ 0.6399 per prefunded warrant, through a private placement.

The private placement closed on April 2, 2024.

The Company received aggregate gross proceeds of approximately $ 11.3 million from the private placement, before deducting placement agent fees and expenses payable by the Company.

Gilead Additional Equity Investment

On April 3, 2024, pursuant to the terms of the Company’s stock purchase agreement with Gilead, the Company exercised its right to the first of up to three additional private placements with Gilead and issued and sold 485,250 shares of its common stock at a purchase price of $ 0.76 per share and prefunded warrants to purchase up to an aggregate of 3,882,450 shares of its common stock at a purchase price of $ 0.7599 per prefunded warrant.

The Company received aggregate gross proceeds of approximately $ 3.3 million from the additional private placement with Gilead.

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