What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-08 · 79 added, 64 removed, 249 unchanged (36% of the section changed)

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We are a clinical-stage biotechnology company discovering and developing tumor-activated immuno-oncology, or I-O, therapies with the goal of significantly improving outcomes for people living with cancer without the systemic side effects of current I-O treatments.

We are leveraging our proprietary platform to build a pipeline of novel, tumor-activated I-O molecules that are designed to optimize the therapeutic index by localizing anti-tumor activity within the tumor microenvironment, including tumor-activated cytokines and antibodies (including bispecifics) and immune cell engagers (including tumor-activated cell engagers and tumor-activated effector-enhanced cell engagers).

We are leveraging our proprietary platform to build a pipeline of novel, tumor-activated I-O molecules that are designed to optimize the therapeutic index by localizing anti-tumor activity within the tumor microenvironment, including tumor-activated cytokines, antibodies, bispecifics and immune cell engagers.

Current I-O therapies have curative potential for patients with cancer;

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To date, we have presented data across our clinical-stage programs showing initial clinical validation for each of those molecules and our tumor-activated approach.

Our most advanced clinical-stage product candidates are XTX101, an Fc-enhanced, tumor-activated, anti-CTLA-4 monoclonal antibody, or mAb, and XTX301, a tumor-activated, engineered interleukin 12, or IL-12, therapy.

We are currently focusing on rapidly advancing clinical development for XTX101 in combination with atezolizumab (Tecentriq®) through our clinical trial collaboration with F.

Hoffmann-La Roche Ltd., or Roche, and XTX301 through our exclusive license agreement with Gilead Sciences, Inc., or Gilead.

In March 2024, we announced plans to discontinue further investment in XTX202, a tumor-activated, engineered interleukin 2, or IL-2, which was being evaluated in a Phase 2 clinical trial as a monotherapy, and to explore strategic opportunities to continue to develop XTX202 in combination with other agents.

In addition to our clinical-stage product candidates, we are continuing to leverage our differentiated research platform and expertise in developing tumor-activated I-O therapies to advance preclinical development for differentiated tumor-activated bispecifics and immune cell engagers (including tumor-activated cell engagers and tumor-activated effector-enhanced cell engagers).

Our most advanced clinical-stage product candidates are vilastobart (XTX101), an Fc-enhanced, tumor-activated, anti-CTLA-4 monoclonal antibody, or mAb, and XTX301, a tumor-activated, engineered interleukin 12, or IL-12, therapy.

On November 7, 2024, we reported initial data from Phase 1C dose escalation for vilastobart in combination with atezolizumab (Tecentriq®) in patients with advanced solid tumors.

We are currently advancing clinical development for vilastobart in combination with atezolizumab in a Phase 2 clinical trial in patients with microsatellite stable colorectal cancer, or MSS CRC, under our clinical trial collaboration with F.

Hoffmann-La Roche Ltd., or Roche.

We expect to report initial Phase 2 data for vilastobart in combination with atezolizumab in approximately 20 patients with MSS CRC in the fourth quarter of 2024 and in a total of approximately 40 patients with MSS CRC in the first quarter of 2025.

We are also advancing clinical development for XTX301 in a Phase 1 clinical trial in patients with advanced solid tumors under our exclusive license agreement with Gilead Sciences, Inc., or Gilead, and plan to report safety, pharmacokinetic and pharmacodynamic data from the ongoing Phase 1 clinical trial for XTX301 in the fourth quarter of 2024.

In addition to our clinical-stage product candidates, we are continuing to leverage our differentiated research platform and expertise in developing tumor-activated I-O therapies to advance preclinical development for XTX501, our tumor-activated PD-1/IL-2, which is designed to selectively stimulate PD-1 positive antigen-experienced T cells and enhance their function and is currently advancing in initial investigational new drug application, or IND, enabling activities, and to advance preclinical programs for tumor-activated immune cell engagers.

To date, we have financed our operations primarily from proceeds raised through private placements of preferred units and convertible preferred stock, a debt financing, our initial public offering, or IPO, of common stock in October 2021, private placements of our common stock and prefunded warrants, an upfront payment under our license agreement with Gilead and our at-the-market, or ATM, offering program.

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Even if we are able to generate revenue from product sales, we may not become profitable.

Since inception, we have 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, and a net loss of $76.4 million for the year ended December

As of June 30, 2024, we had an accumulated deficit of $356.6 million.

Since inception, we have incurred significant operating losses, including net losses of $45.1 million and $58.7 million for the nine months ended September 30, 2024 and 2023, respectively, and a net loss of $76.4 million for the year ended December 31, 2023.

As of September 30, 2024, we had an accumulated deficit of $370.7 million.

We expect to continue to incur significant expenses and operating losses for the foreseeable future, particularly to the extent we:

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As a result, we will need substantial additional capital to support our continuing operations and pursue our strategy.

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

Based on our current operating plans, we anticipate that our existing cash and cash equivalents as of June 30, 2024 will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2025.

Since these amounts may not be sufficient to fund our operations for at least twelve months from the date of issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there is substantial doubt about our ability to continue as a going concern.

As of September 30, 2024, we had cash and cash equivalents of $61.3 million.

Based on our current operating plans, we anticipate that our existing cash and cash equivalents as of September 30, 2024 will be sufficient to enable us to fund our operating expenses and capital expenditure requirements through the end of the second quarter of 2025.

Since these amounts are not expected to be sufficient to fund our operations for at least twelve months from the date of issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there is substantial doubt about our ability to continue as a going concern.

For more information, refer to “—Liquidity and Capital Resources—Capital Requirements and Going Concern” below and Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

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Results of Operations

Comparison of the three months ended June 30, 2024 and 2023

The following table summarizes our results of operations for the three months ended June 30, 2024 and 2023 (in thousands):

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

The following table summarizes our results of operations for the three months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended

September 30,

License revenue

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License Revenue

We recognized $2.4 million in license revenue for the three months ended June 30, 2024 under the license agreement and stock purchase agreement that we entered into with Gilead in March 2024.

We recognized $2.3 million in license revenue for the three months ended September 30, 2024 under the license agreement and stock purchase agreement that we entered into with Gilead in March 2024.

Research and Development Expenses

The following table summarizes our research and development expenses for the three months ended June 30, 2024 and 2023 (in thousands):

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

Three Months Ended

September 30,

vilastobart (XTX101)

Other early programs and indirect research and development

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Total research and development expenses

Research and development expenses decreased by $2.0 million from $13.2 million for the three months ended June 30, 2023 to $11.2 million for the three months ended June 30, 2024.

Research and development expenses decreased by $0.3 million from $11.1 million for the three months ended September 30, 2023 to $10.8 million for the three months ended September 30, 2024.

The changes in research and development expenses were primarily due to the following:

● XTX101 costs increased by $1.6 million, primarily driven by a $1.0 million development milestone that we incurred under our CTLA-4 monoclonal antibody license agreement with WuXi Biologics (Hong Kong) Limited, or WuXi Biologics, during the three months ended June 30, 2024 and a $0.6 million increase in clinical development activities related to our ongoing Phase 1/2 clinical trial evaluating XTX101 in combination with atezolizumab;

● XTX202 costs decreased by $1.3 million, primarily driven by a decrease in clinical development activities related to our Phase 1/2 clinical trial as a result of discontinuing further investment in XTX202 as a monotherapy;

● XTX301 costs increased by $0.6 million, primarily driven by a $1.0 million increase in clinical development activities related to our ongoing Phase 1 clinical trial, partially offset by a $0.4 million decrease in manufacturing activities related to the purchase of the initial supply of clinical trial material occurring in the comparable period;

● vilastobart costs increased by $6.3 million, primarily driven by $3.5 million in aggregate development milestones that we incurred during the three months ended September 30, 2024 under our CTLA-4 monoclonal antibody license agreement with WuXi Biologics (Hong Kong) Limited, or WuXi Biologics, and our amended and restated exclusive license agreement with City of Hope, as well as a $2.0 million cost-sharing payment earned under our Roche clinical collaboration during the three months ended September 30, 2023, which was recorded as a reduction in research and development expenses;

● XTX301 costs increased by $0.4 million, primarily driven by an increase in clinical development activities related to our ongoing Phase 1 clinical trial;

● XTX202 costs decreased by $4.0 million, primarily driven by a decrease in clinical development activities as a result of discontinuing further investment in XTX202 as a monotherapy, as well as invoiced investigator costs being lower than previously estimated amounts for the three months ended September 30, 2024;

● other early programs and indirect research and development expenses decreased by $1.7 million, primarily driven by a decrease in external expenses related to preclinical research and development activities;

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General and Administrative Expenses

The following table summarizes our general and administrative expenses for the three months ended June 30, 2024 and 2023 (in thousands):

The following table summarizes our general and administrative expenses for the three months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended

September 30,

Personnel-related

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Total general and administrative expenses

General and administrative expenses decreased by $1.1 million from $6.9 million for the three months ended June 30, 2023 to $5.8 million for the three months ended June 30, 2024.

General and administrative expenses were $6.3 million for each of the three months ended September 30, 2024 and 2023.

The changes in general and administrative expenses were primarily due to the following:

● personnel-related costs decreased by $0.3 million, primarily driven by a $0.1 million decrease in salaries, bonuses and benefits due to lower general and administrative headcount and a $0.1 million decrease in stock-based compensation;

● professional and consulting fees decreased by $0.6 million, primarily driven by a $0.4 million decrease in legal fees and a $0.2 million decrease in consulting and other professional related fees;

● personnel-related costs decreased by $0.1 million, primarily driven by a $0.2 million decrease in salaries, bonuses and benefits due to lower general and administrative headcount and a $0.1 million decrease in stock-based compensation, partially offset by a $0.2 million increase in recruiting costs;

● professional and consulting fees increased by $0.2 million, primarily driven by an increase in legal fees;

● facility-related and other general and administrative expenses decreased by $0.1 million, primarily driven by lower costs related to directors’ and officers’ liability insurance and a reduction in other general and administrative expenses.

Restructuring

We recognized less than $0.1 million in restructuring expenses for the three months ended June 30, 2024, consisting of employee outplacement service costs related to the workforce reduction announced in March 2024.

We recognized a credit of $41,000 in restructuring expenses for the three months ended September 30, 2024, related to a change in estimate for costs of continuation of certain employee benefits related to the workforce reduction announced in March 2024.

Other Income, Net

Other income, net, was relatively unchanged and was $0.8 million for both the three months ended June 30, 2024 and 2023.

This was primarily due to an offsetting decrease in interest income earned on our cash and cash equivalents due to a lower average cash balance and lower interest expense on our note payable as a result of the repayment of the remaining principal under our loan agreement with PacWest in March 2024.

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

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023 (in thousands):

Six Months Ended

Other income, net, increased by $0.1 million from $0.6 million for the three months ended September 30, 2023 to $0.7 million for the three months ended September 30, 2024.

The increase in other income, net, was primarily due to lower interest expense on our note payable as a result of the repayment of the remaining principal under our loan agreement with PacWest in March 2024.

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

The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023 (in thousands):

Nine Months Ended

September 30,

License revenue

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License Revenue

We recognized $2.4 million in license revenue for the six months ended June 30, 2024 under the license agreement and stock purchase agreement that we entered into with Gilead in March 2024.

We recognized $4.6 million in license revenue for the nine months ended September 30, 2024 under the license agreement and stock purchase agreement that we entered into with Gilead in March 2024.

Research and Development Expenses

The following table summarizes our research and development expenses for the six months ended June 30, 2024 and 2023 (in thousands):

Six Months Ended

The following table summarizes our research and development expenses for the nine months ended September 30, 2024 and 2023 (in thousands):

Nine Months Ended

September 30,

vilastobart (XTX101)

Other early programs and indirect research and development

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Total research and development expenses

Research and development expenses decreased by $7.7 million from $29.3 million for the six months ended June 30, 2023 to $21.6 million for the six months ended June 30, 2024.

Research and development expenses decreased by $8.0 million from $40.4 million for the nine months ended September 30, 2023 to $32.4 million for the nine months ended September 30, 2024.

The changes in research and development expenses were primarily due to the following:

● XTX101 costs increased by $0.3 million, primarily driven by a $1.3 million increase in clinical development activities related to our ongoing Phase 1/2 clinical trial evaluating XTX101 in combination with atezolizumab and a $1.0 million development milestone that we incurred under our CTLA-4 monoclonal antibody license agreement with WuXi Biologics during the six months ended June 30, 2024, partially offset by a $2.0 million cost-sharing payment that we earned under our Roche clinical collaboration during the six months ended June 30, 2024 that was recorded as a reduction in research and development expenses;

● XTX301 costs decreased by $1.3 million, primarily driven by a $2.4 million decrease in manufacturing activities related to the purchase of the initial supply of clinical trial material occurring in the comparable period, which

was partially offset by a $1.2 million increase in clinical development activities related to our ongoing Phase 1 clinical trial;

● vilastobart costs increased by $6.7 million, primarily driven by $4.5 million in aggregate development milestones that we incurred during the nine months ended September 30, 2024 under our CTLA-4 monoclonal antibody license agreement with WuXi Biologics and our amended and restated exclusive license agreement with City of Hope and a $2.0 million increase in clinical development activities related to our ongoing Phase 1/2 clinical trial evaluating vilastobart in combination with atezolizumab;

● XTX301 costs decreased by $0.9 million, primarily driven by a $2.5 million decrease in manufacturing activities related to the purchase of the initial supply of clinical trial material occurring in the comparable period, which was partially offset by a $1.6 million increase in clinical development activities related to our ongoing Phase 1 clinical trial;

● XTX202 costs decreased by $3.9 million, primarily driven by a decrease in clinical development activities as a result of discontinuing further investment in XTX202 as a monotherapy;

● other early programs and indirect research and development expenses decreased by $6.0 million, primarily driven by a decrease in external expenses related to preclinical research and development activities;

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General and Administrative Expenses

The following table summarizes our general and administrative expenses for the six months ended June 30, 2024 and 2023 (in thousands):

Six Months Ended

The following table summarizes our general and administrative expenses for the nine months ended September 30, 2024 and 2023 (in thousands):

Nine Months Ended

September 30,

Personnel-related

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Total general and administrative expenses

General and administrative expenses decreased by $2.3 million from $14.3 million for the six months ended June 30, 2023 to $12.0 million for the six months ended June 30, 2024.

General and administrative expenses decreased by $2.3 million from $20.6 million for the nine months ended September 30, 2023 to $18.3 million for the nine months ended September 30, 2024.

The changes in general and administrative expenses were primarily due to the following:

● personnel-related costs decreased by $1.0 million, primarily driven by a $0.7 million decrease in salaries, bonuses and benefits due to lower general and administrative headcount and a $0.3 million decrease in recruiting costs;

● professional and consulting fees decreased by $1.0 million, primarily driven by a decrease in consulting and other professional related fees;

● personnel-related costs decreased by $1.1 million, primarily driven by a $1.0 million decrease in salaries, bonuses and benefits due to lower general and administrative headcount and a $0.1 million decrease in stock-based compensation;

● professional and consulting fees decreased by $0.7 million, primarily driven by a $0.9 million decrease in consulting and other professional related fees, partially offset by a $0.2 million increase in legal fees;

● facility-related and other general and administrative expenses decreased by $0.5 million, primarily driven by lower costs related to directors’ and officers’ liability insurance and a reduction in other general and administrative expenses.

Restructuring

We recognized $1.0 million in restructuring expenses for the six months ended June 30, 2024.

We recognized $0.9 million in restructuring expenses for the nine months ended September 30, 2024.

The restructuring expenses were associated with the workforce reduction announced in March 2024 and consisted of employee severance, benefits continuation and outplacement service costs.

Other Income, Net

Other income, net, decreased by $0.6 million from $1.6 million for the six months ended June 30, 2023 to $1.0 million for the six months ended June 30, 2024.

The decrease in other income, net was primarily due to a decrease in interest income earned on our cash and cash equivalents due to a lower average cash balance and lower interest expense on our note payable as a result of the repayment of the remaining principal under our loan agreement with PacWest in March 2024.

Other income, net, decreased by $0.4 million from $2.3 million for the nine months ended September 30, 2023 to $1.8 million for the nine months ended September 30, 2024.

The decrease in other income, net was primarily due to a decrease

in interest income earned on our cash and cash equivalents due to a lower average cash balance and lower interest expense on our note payable as a result of the repayment of the remaining principal under our loan agreement with PacWest in March 2024.

Liquidity and Capital Resources

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To date, we have financed our operations primarily from proceeds raised through private placements of preferred units, convertible preferred stock, common stock and prefunded warrants, a debt financing, our IPO, a license agreement and our ATM offering program.

Through June 30, 2024, we have received an aggregate of $430.5 million in gross proceeds from such transactions, including $225.5 million in gross proceeds from the sale and issuance of preferred units and convertible preferred stock, $10.0 million in gross proceeds from our debt financing with PacWest, $129.9 million in gross proceeds from our IPO, the $30.0 million upfront payment under our license agreement with Gilead, $28.1 million in gross proceeds from the sale and issuance of common stock and prefunded warrants to certain existing accredited investors and Gilead in private placements and $7.0 million in gross proceeds from the sale and issuance of common stock under our sales agreement with Cowen and Company LLC for our ATM offering program.

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

Through September 30, 2024, we have received an aggregate of $430.5 million in gross proceeds from such transactions, including $225.5 million in gross proceeds from the sale and issuance of preferred units and convertible preferred stock, $10.0 million in gross proceeds from our debt financing with PacWest, $129.9 million in gross proceeds from our IPO, the $30.0 million upfront payment under our license agreement with Gilead, $28.1 million in gross proceeds from the sale and issuance of common stock and prefunded warrants to certain existing accredited investors and Gilead in private placements and $7.0 million in gross proceeds from the sale and issuance of common stock under our sales agreement with Cowen and Company LLC for our ATM offering program.

As of September 30, 2024, we had cash and cash equivalents of $61.3 million.

In November 2022, we filed a universal shelf registration statement on Form S-3 with the SEC to register for sale up to $250.0 million of our common stock, preferred stock, debt securities, units and warrants, which we 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, we also entered into the sales agreement with Cowen and Company LLC under which we may issue and sell shares of our common stock under the Form S-3, 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.

Through June 30, 2024, we have issued and sold 7,000,000 shares of our common stock pursuant to the sales agreement for aggregate gross proceeds of $7.0 million.

However, the extent to which we use the sales agreement as a source of additional funding will depend on a number of factors, including the prevailing market price of our common stock, general market conditions, the extent to which we are able to secure funds from other sources, and whether we are then subject to limitations on our ability to use Form S-3 to sell more than one-third of the aggregate market value of our public float in the trailing 12-month period, which limitations will remain in place until such time as our public float exceeds $75 million.

In November 2022, we also entered into the sales agreement with Cowen and Company LLC under which we may issue and sell shares of our common stock under such Form S-3, 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.

During the three months ended September 30, 2024, we did not sell any shares of our common stock pursuant to the sales agreement.

The extent to which we use the sales agreement as a source of additional funding will depend on a number of factors, including the prevailing market price of our common stock, general market conditions, the extent to which we are able to secure funds from other sources, and whether we are then subject to limitations on our ability to use Form S-3 to sell more than one-third of the aggregate market value of our public float in the trailing 12-month period, which limitations will remain in place until such time as our public float exceeds $75 million.

Accordingly, we may not be able to sell additional shares under the sales agreement at prices or in amounts that we deem acceptable, and there can be no assurance that we will sell any additional shares of common stock pursuant to the sales agreement.

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The following table provides information regarding our cash flows for each period presented (in thousands):

Six Months Ended

Nine Months Ended

September 30,

Net cash provided by (used in):

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The cash used in operating activities resulted primarily from our net losses adjusted for non-cash charges, which are generally due to stock-based compensation, depreciation and amortization, as well as changes in components of operating assets and liabilities, which are generally due to increased expenses and timing of vendor payments.

During the six months ended June 30, 2024, net cash provided by operating activities of $9.5 million was primarily driven by the $39.1 million received from Gilead under the license agreement and stock purchase agreement that was recorded as deferred revenue at the outset of the arrangement and net non-cash expenses of $4.2 million, partially offset by our net loss of $31.1 million and remaining changes in operating assets and liabilities of $2.8 million.

During the six months ended June 30, 2023, net cash used in operating activities of $41.8 million was primarily driven by our net loss of $42.0 million and changes in operating assets and liabilities of $4.5 million, partially offset by net non-cash expenses of $4.7 million.

During the nine months ended September 30, 2024, net cash used in operating activities of $4.2 million was primarily driven by our net loss of $45.1 million, partially offset by changes in operating assets and liabilities of $34.8 million, which includes the $39.1 million received from Gilead under the license agreement and stock purchase agreement that was recorded as deferred revenue at the outset of the arrangement, and net non-cash expenses of $6.2 million.

During the nine months ended September 30, 2023, net cash used in operating activities of $55.2 million was primarily driven by our net loss of $58.7 million and changes in operating assets and liabilities of $3.5 million, partially offset by net non-cash expenses of $7.0 million.

Investing Activities

During the six months ended June 30, 2024 and 2023, net cash used in investing activities of less than $0.1 million and $0.5 million, respectively, consisted of purchases of property and equipment.

During the nine months ended September 30, 2024 and 2023, net cash used in investing activities consisted of purchases of property and equipment.

Financing Activities

During the six months ended June 30, 2024, net cash provided by financing activities of $21.0 million consisted of proceeds from the sale and issuance of common stock and prefunded warrants to certain existing accredited investors and Gilead in private placements and proceeds from the sale and issuance of common stock under our ATM offering program, partially offset by repayments of debt principal under our loan agreement with PacWest and payments on our finance lease for certain lab equipment.

During the six months ended June 30, 2023, net cash used in financing activities of $2.7 million consisted of repayments of debt principal under our loan agreement with PacWest and payments on our finance lease for certain lab equipment partially offset by proceeds from the issuance of common stock under our employee stock purchase plan.

During the nine months ended September 30, 2024, net cash provided by financing activities of $21.0 million consisted of proceeds from the sale and issuance of common stock and prefunded warrants to certain existing accredited investors and Gilead in private placements and proceeds from the sale and issuance of common stock under our ATM offering program, partially offset by repayments of debt principal under our loan agreement with PacWest and payments on our finance lease for certain lab equipment.

During the nine months ended September 30, 2023, net cash used in financing activities of $4.9 million consisted of repayments of debt principal and payments on our finance lease for certain lab equipment, partially offset by proceeds from the issuance of common stock under our employee stock purchase plan and the exercise of stock options.

Loan and Security Agreement

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In November 2019, we borrowed $10.0 million under a term loan pursuant to the loan agreement.

Borrowings under the loan agreement were collateralized by substantially all of the assets of Xilio Development, excluding intellectual property.

Borrowings under the loan agreement were collateralized by substantially all of the assets of Xilio

Development, excluding intellectual property.

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

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Additionally, the United States is experiencing a workforce shortage, which in turn has created a competitive wage environment that may also increase our operating costs in the future.

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

As of September 30, 2024, we had cash and cash equivalents of $61.3 million.

However, we have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we anticipate.

In addition, since these amounts may not be sufficient to fund our operations for at least twelve months from the date of issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there is substantial doubt about our ability to continue as a going concern.

In addition, since these amounts are not expected to be sufficient to fund our operations for at least twelve months from the date of issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there is substantial doubt about our ability to continue as a going concern.

Our management has developed plans to fund our operations, which primarily consist of raising additional capital through one or more of the following:

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However, there can be no assurance that we will be able to complete any such transaction on acceptable terms or otherwise, and we may be unable to obtain sufficient additional capital.

If we are not able to secure sufficient additional capital in the near term, we may in the future need to implement additional cost reduction strategies, which could include delaying, limiting, further reducing or eliminating both internal and external costs related to our operations and research and development programs.

If we are not able to secure sufficient additional capital in the near term, we will need to implement additional cost reduction strategies, which could include delaying, limiting, further reducing or eliminating both internal and external costs related to our operations and research and development programs.

In addition, if our efforts to secure sufficient additional capital in the near term are unsuccessful, we may in the future need to seek to engage in one or more other strategic alternatives, including without limitation, the sale or divestiture of some or all of our assets or proprietary technologies.

The accompanying condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business for the foreseeable future.

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Our funding requirements and timing and amount of our operating expenditures will depend on many factors, including, but not limited to:

● the scope, progress, results and costs of research and development for our current and future product candidates, including our current and planned clinical trials for our clinical-stage product candidates, XTX101 and XTX301, and ongoing preclinical development for our current and future product candidates;

● the scope, progress, results and costs of research and development for our current and future product candidates, including our current and planned clinical trials for our clinical-stage product candidates, vilastobart and XTX301, and ongoing preclinical development for our current and future product candidates;

● our ability to implement and maintain cost reduction strategies, as well as the timing of such cost reductions;

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● the extent to which we may acquire or in-license other products, product candidates, technologies or intellectual property, as well as the terms of any such arrangements;

● our ability to maintain our clinical collaboration to further develop XTX101, our Fc-enhanced tumor-activated anti-CTLA-4, in combination with atezolizumab, including the cost-sharing arrangements of such collaboration;

● the timing and amount of cost-sharing payments under our clinical collaboration with Roche for XTX101 and milestones, additional equity investments and other contingent payments under our partnership with Gilead for XTX301;

● our ability to maintain our clinical collaboration to further develop vilastobart in combination with atezolizumab, including the cost-sharing arrangements of such collaboration;

● the timing and amount of cost-sharing payments under our clinical collaboration with Roche for vilastobart and milestones, additional equity investments and other contingent payments under our partnership with Gilead for XTX301;

● the costs of maintaining our operations and continuing to operate as a public company;

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Market volatility resulting from adverse changes in domestic and international fiscal, monetary and other policies and political relations, regional or global conflicts, uncertainty around global economic conditions, instability in the financial markets, current or future pandemics, or other factors could also adversely impact our ability to access capital as and when needed.

To the extent that we raise additional capital through the sale of equity or securities convertible into or exchangeable for equity, the ownership interest of our existing stockholders may be diluted, and the terms of such securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders.

To the extent that we raise additional capital through the sale of equity or securities convertible into or exchangeable for equity, the ownership interest

of our existing stockholders may be diluted, and the terms of such securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders.

Additional debt and preferred equity, if available, may also involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends and may require that we issue additional warrants, which could potentially dilute the ownership interest of our existing stockholders.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis