10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission File Number: 001-40287

 

IKENA ONCOLOGY, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

81-1697316

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer
Identification No.)

645 Summer Street, Suite 101

Boston, MA

 

02210

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (857) 273-8343

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.001 per share

 

IKNA

 

The Nasdaq Global Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of May 1, 2024, the registrant had 48,258,111 shares of common stock, $0.001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

1

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

1

Condensed Consolidated Balance Sheets

1

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

Condensed Consolidated Statements of Stockholders' Equity

3

Condensed Consolidated Statements of Cash Flows

4

Notes to Unaudited Condensed Consolidated Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

11

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

19

Item 4.

Controls and Procedures

19

PART II.

OTHER INFORMATION

20

Item 1.

Legal Proceedings

20

Item 1A.

Risk Factors

20

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

66

Item 3.

Defaults Upon Senior Securities

66

Item 4.

Mine Safety Disclosures

66

Item 5.

Other Information

66

Item 6.

Exhibits

67

Signatures

68

 

i


 

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains express or implied forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements involve risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management and expected market growth are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

the initiation, timing, progress, results, and cost of our research and development programs and our current and future nonclinical studies and clinical trials, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, and our research and development programs;
our ability and the potential to successfully manufacture our drug substances and product candidates for preclinical use, for clinical trials, and on a larger scale, for commercial use, if approved;
the ability and willingness of our third-party strategic collaborators to continue research and development activities relating to our development candidates and product candidates;
our ability to obtain funding for our operations necessary to complete further development and commercialization of our product candidates;
our ability to obtain and maintain regulatory approval of our product candidates;
our ability to commercialize our products, if approved;
the pricing and reimbursement of our product candidates, if approved;
the implementation of our business model, and strategic plans for our business and product candidates;
the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates;
estimates of our future expenses, revenue, capital requirements, and our needs for additional financing;
the potential benefits of strategic collaboration agreements, our ability to enter into strategic collaborations or arrangements, and our ability to attract collaborators with development, regulatory and commercialization expertise;
future agreements with third parties in connection with the commercialization of product candidates and any other approved product;
the size and growth potential of the markets for our product candidates, and our ability to serve those markets;
our financial performance;
the rate and degree of market acceptance of our product candidates;
regulatory developments in the United States and relevant foreign countries;
our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;
our ability to produce our products or product candidates with advantages in turnaround times or manufacturing cost;
the success of competing therapies that are or may become available;
our ability to attract and retain key scientific or management personnel;
the impact of laws and regulations;
our use of proceeds from our offerings;

ii


 

developments relating to our competitors and our industry;
the effect of pandemics, epidemics or any outbreak of an infectious disease, including mitigation efforts and economic effects, on any of the foregoing or other aspects of our business operations, including but not limited to our preclinical studies and clinical trials and any future studies or trials;
the impact of global economic and political developments on our business, including rising inflation and capital market disruptions, economic sanctions, bank failures, regional conflicts around the world, and economic slowdowns or recessions that may result from such developments which could harm our research and development efforts as well as the value of our common stock and our ability to access capital markets; and
other risks and uncertainties, including those under the caption “Risk Factors.”

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments that we may make or into which we may enter.

You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed or incorporated by reference as exhibits hereto completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

iii


 

Summary of the Material and Other Risks Associated with Our Business

Our business is subject to numerous material and other risks and uncertainties that you should be aware of in evaluating our business. These risks include, but are not limited to, the following:

We are a targeted oncology company with a limited operating history.
We have incurred significant net losses since our inception and anticipate that we will continue to incur losses for the foreseeable future.
We have no products approved for commercial sale and have not generated any revenue from product sales.
We will require additional capital to finance our operations, which may not be available on acceptable terms, or at all. If we are unable to raise capital when needed or on terms acceptable to us, we would be forced to delay, reduce or eliminate some of our product development programs or commercialization efforts.
Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.
We may not be able to successfully complete clinical trials for our targeted oncology programs or our current product candidates.
Our programs are focused on the development of oncology therapeutics for patients with genetically defined or biomarker-driven cancers, which is a rapidly evolving area of science, and the approach we are taking to discover and develop drugs is novel and may never lead to approved or marketable products.
Clinical product development involves a lengthy and expensive process, with an uncertain outcome.
Pandemics, epidemics, or any outbreak of an infectious disease, may materially and adversely affect our business and our financial results and could cause a disruption to the development of our product candidates.
We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.
If the market opportunities for our programs and product candidates are smaller than we estimate or if any regulatory approval that we obtain is based on a narrower definition of the patient population, our revenue and ability to achieve profitability will be adversely affected, possibly materially.
We rely, and expect to continue to rely, on third parties to conduct our clinical trials, as well as investigator-sponsored clinical trials of our product candidates. If these third parties do not successfully carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.
We have entered into collaborations and may enter into additional collaborations in the future, and we might not realize the anticipated benefits of such collaborations.
If we are unable to obtain and maintain patent and other intellectual property protection for our technology and product candidates or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and drugs similar or identical to ours, and our ability to successfully commercialize our technology and drugs may be impaired.
Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions.
Our future success depends on our ability to retain key executives and experienced scientists and to attract, retain and motivate qualified personnel.
The dual class structure of our common stock may limit our stockholders’ ability to influence corporate matters and may limit visibility with respect to certain transactions.

The material and other risks summarized above should be read together with the text of the full risk factors in the “Risk Factors” section and with the other information set forth in this Quarterly Report, including our consolidated financial statements and the related notes, as well as with other documents that we file with the United States Securities and Exchange Commission. If any such material and other risks and uncertainties actually occur, our business, prospects, financial condition and results of operations could be materially and adversely affected. The risks summarized above, or described in full in the “Risk Factors” section, are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial may also materially adversely affect our business, prospects, financial condition and results of operations.

iv


 

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (unaudited)

IKENA ONCOLOGY, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

March 31,
2024

 

 

December 31,
2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

52,852

 

 

$

119,894

 

Marketable securities

 

 

104,497

 

 

 

55,571

 

Prepaid expenses and other current assets

 

 

3,817

 

 

 

3,197

 

Total current assets

 

 

161,166

 

 

 

178,662

 

Property and equipment, net

 

 

864

 

 

 

2,335

 

Right-of-use asset

 

 

5,241

 

 

 

5,686

 

Deposits and other assets

 

 

5,511

 

 

 

5,409

 

Total assets

 

$

172,782

 

 

$

192,092

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,909

 

 

$

2,066

 

Accrued expenses and other current liabilities

 

 

4,817

 

 

 

8,581

 

Operating lease liability

 

 

3,443

 

 

 

3,558

 

Total current liabilities

 

 

10,169

 

 

 

14,205

 

Long-term portion of operating lease liability

 

 

6,302

 

 

 

7,180

 

Other long-term liabilities

 

 

964

 

 

 

950

 

Total liabilities

 

 

17,435

 

 

 

22,335

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value, 10,000,000 shares authorized as of March 31, 2024
   and December 31, 2023;
No shares issued and outstanding as of March 31, 2024 or
   December 31, 2023

 

 

 

 

 

 

Common stock, $0.001 par value, 150,000,000 shares authorized and 48,258,111 
   shares issued and outstanding at March 31, 2024 and December 31, 2023

 

 

48

 

 

 

48

 

Additional paid-in capital

 

 

454,143

 

 

 

452,142

 

Accumulated other comprehensive loss

 

 

(313

)

 

 

(48

)

Accumulated deficit

 

 

(298,531

)

 

 

(282,385

)

Total stockholders’ equity

 

 

155,347

 

 

 

169,757

 

Total liabilities and stockholders’ equity

 

$

172,782

 

 

$

192,092

 

 

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

1


 

IKENA ONCOLOGY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Collaboration revenue

 

$

 

 

$

5,313

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

9,645

 

 

 

15,552

 

General and administrative

 

 

5,999

 

 

 

5,276

 

Restructuring and other charges

 

 

2,582

 

 

 

 

Total operating expenses

 

 

18,226

 

 

 

20,828

 

Loss from operations

 

 

(18,226

)

 

 

(15,515

)

Other income (expense):

 

 

 

 

 

 

Investment income

 

 

2,114

 

 

 

1,296

 

Other income (expense)

 

 

(7

)

 

 

 

Total other income, net

 

 

2,107

 

 

 

1,296

 

Loss before income taxes

 

 

(16,119

)

 

 

(14,219

)

Income tax expense

 

 

(27

)

 

 

 

Net loss

 

$

(16,146

)

 

$

(14,219

)

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities

 

 

(265

)

 

 

272

 

Total comprehensive loss

 

$

(16,411

)

 

$

(13,947

)

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(0.33

)

 

$

(0.39

)

Weighted-average common shares outstanding, basic and diluted

 

 

48,258,111

 

 

 

36,257,493

 

 

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

2


 

IKENA ONCOLOGY, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance as of December 31, 2023

 

 

48,258,111

 

 

$

48

 

 

$

452,142

 

 

$

(48

)

 

$

(282,385

)

 

$

169,757

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,001

 

 

 

 

 

 

 

 

 

2,001

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(265

)

 

 

 

 

 

(265

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,146

)

 

 

(16,146

)

Balance as of March 31, 2024

 

 

48,258,111

 

 

$

48

 

 

$

454,143

 

 

$

(313

)

 

$

(298,531

)

 

$

155,347

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance as of December 31, 2022

 

 

36,257,493

 

 

$

36

 

 

$

361,915

 

 

$

(763

)

 

$

(214,219

)

 

$

146,969

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,000

 

 

 

 

 

 

 

 

 

2,000

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

272

 

 

 

 

 

 

272

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,219

)

 

 

(14,219

)

Balance as of March 31, 2023

 

 

36,257,493

 

 

$

36

 

 

$

363,915

 

 

$

(491

)

 

$

(228,438

)

 

$

135,022

 

 

 

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

3


 

IKENA ONCOLOGY, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(16,146

)

 

$

(14,219

)

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

 

 

 

 

 

 

Depreciation

 

 

219

 

 

 

231

 

Net accretion of discounts on marketable securities

 

 

(393

)

 

 

(530

)

Stock-based compensation

 

 

2,001

 

 

 

2,000

 

Non-cash operating lease expense

 

 

445

 

 

 

337

 

Loss on disposal of property and equipment

 

 

99

 

 

 

 

Impairment of assets held for sale

 

 

742

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(269

)

 

 

308

 

Deposits and other assets

 

 

(102

)

 

 

 

Accounts payable

 

 

(157

)

 

 

666

 

Accrued expenses and other current liabilities

 

 

(3,764

)

 

 

(2,919

)

Operating lease liabilities

 

 

(993

)

 

 

(345

)

Deferred revenue

 

 

 

 

 

(5,313

)

Other long-term liabilities

 

 

14

 

 

 

 

Net cash used in operating activities

 

 

(18,304

)

 

 

(19,784

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

 

 

 

(152

)

Proceeds from sale of property and equipment

 

 

60

 

 

 

 

Purchases of marketable securities

 

 

(62,298

)

 

 

(41,726

)

Proceeds from maturities of marketable securities

 

 

13,500

 

 

 

31,072

 

Net cash used in investing activities

 

 

(48,738

)

 

 

(10,806

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(67,042

)

 

 

(30,590

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

121,172

 

 

 

60,791

 

Cash, cash equivalents and restricted cash, end of period

 

$

54,130

 

 

$

30,201

 

Reconciliation of cash, cash equivalents, and restricted cash to the
   condensed consolidated balance sheets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

52,852

 

 

$

29,329

 

Restricted cash included in other assets

 

 

1,278

 

 

 

872

 

Cash, cash equivalents and restricted cash, end of period

 

$

54,130

 

 

$

30,201

 

 

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

4


 

IKENA ONCOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Nature of Business and Basis of Presentation

Ikena Oncology, Inc. (the “Company”) is a clinical stage targeted oncology company, focused on developing differentiated therapies for patients in need that target nodes of cancer growth, spread, and therapeutic resistance in the Hippo and RAS onco-signaling network. The Company’s approach in each of its programs is to target both cancer-driving targets and mechanisms of resistance to other therapies. The Company’s most advanced program, IK-930, is a selective inhibitor of the transcriptional enhanced associate domain 1 (“TEAD 1”). The TEAD transcription factors (TEAD 1-4) execute the ultimate step in the Hippo signaling pathway, a known oncogenic pathway that also drives resistance to multiple targeted and chemo therapies. The Company’s program in the RAS pathway, IK-595, is a molecular glue designed to trap MEK and RAF in an inactive complex, more completely inhibiting RAS signals than existing inhibitors. Since the Company commenced operations in 2016, it has advanced multiple product candidates into clinical development.

The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The accompanying condensed consolidated financial statements and footnotes to the financial statements have been prepared on the same basis as the most recently audited annual financial statements and, in the opinion of management, reflect all normal recurring adjustments necessary for the fair presentation of the Company’s financial position for the reported periods. The results of operations for any interim periods are not necessarily indicative of results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period. These condensed consolidated financial statements should be read in conjunction with, the Company’s audited consolidated financial statements for the year ended December 31, 2023, which were included in its Annual Report on Form 10-K that was filed with the Securities and Exchange Commission (“SEC”) on March 12, 2024.

2. Summary of Significant Accounting Policies

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such a time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that the Company no longer is an emerging growth company or affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates and judgments are based on historical information and other market-specific or various relevant assumptions, including in certain circumstances, future projections, that management believes to be reasonable under the circumstances. Actual results could differ materially from estimates. Significant estimates and assumptions reflected in these condensed consolidated financial statements include but are not limited to the accruals for research and development expenses and collaboration revenue.

Concentration of Credit Risk and of Significant Suppliers

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, and marketable securities. Cash and cash equivalents are deposited with federally insured financial institutions in the United States and may, at times, exceed federally insured limits. The Company places marketable securities with a highly rated financial institution. As of March 31, 2024, the Company has not experienced any credit related losses on its cash, cash equivalents or marketable securities.

5


 

The Company is dependent on third-party manufacturers to supply products for research and development activities in its programs. In particular, the Company relies and expects to continue to rely on a small number of manufacturers to supply it with its requirements for the active pharmaceutical ingredients and formulated drugs related to these programs. The Company’s programs could be adversely affected if a third-party manufacturer is unable to successfully carry out their contractual obligations or meet expected deadlines. If a third-party manufacturer needs to be replaced, the Company may not be able to complete its program development on its anticipated timelines and may incur additional expenses as a result.

Restricted Cash

As of each of March 31, 2024 and December 31, 2023, the Company maintained restricted cash totaling $1.3 million, held in the form of a money market account as collateral for the Company’s facility lease obligations. This balance is included within deposits and other assets on the condensed consolidated balance sheets.

Net Income (Loss) Per Share

Basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of outstanding stock options. For periods in which the Company reported a net loss, diluted net loss per common share is the same as basic net loss per common share, since dilutive common shares are not assumed to have been issued if their affect is anti-dilutive.

The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect:

 

Three Months Ended March 31,

 

 

2024

 

 

2023

 

Options to purchase common stock

 

8,696,192

 

 

 

7,646,307

 

Total

 

8,696,192

 

 

 

7,646,307

 

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial statements and disclosures.

3. Fair Value Measurements

The following tables present information about the Company’s financial assets measured or disclosed at fair value by level within the fair value hierarchy (in thousands):

 

 

March 31, 2024

 

 

Quoted Prices in Active Markets
(Level 1)

 

 

Significant Observable Inputs
(Level 2)

 

 

Significant Unobservable Inputs
(Level 3)

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

23,123

 

 

$

23,123

 

 

$

 

 

$

 

Corporate debt securities

 

 

476

 

 

 

 

 

 

476

 

 

 

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury securities

 

 

49,132

 

 

 

 

 

 

49,132

 

 

 

 

Corporate debt securities

 

 

55,365

 

 

 

 

 

 

55,365

 

 

 

 

Total assets

 

$

128,096

 

 

$

23,123

 

 

$

104,973

 

 

$

 

 

 

 

December 31, 2023

 

 

Quoted Prices in Active Markets
(Level 1)

 

 

Significant Observable Inputs
(Level 2)

 

 

Significant Unobservable Inputs
(Level 3)

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

53,613

 

 

$

53,613

 

 

$

 

 

$

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

 

55,571

 

 

 

 

 

 

55,571

 

 

 

 

Total assets

 

$

109,184

 

 

$

53,613

 

 

$

55,571

 

 

$

 

During the three months ended March 31, 2024 and 2023, there were no transfers into or out of Level 3.

6


 

4. Marketable Securities

The following tables summarize the Company's marketable securities (in thousands):

 

 

March 31, 2024

 

 

 

Amortized Cost

 

 

Gross Unrealized Gains

 

 

Gross Unrealized Losses

 

 

Fair Value

 

U.S. treasury securities

 

$

49,316

 

 

$

 

 

$

(184

)

 

$

49,132

 

Corporate debt securities

 

 

55,494

 

 

 

 

 

 

(129

)

 

 

55,365

 

Total

 

$

104,810

 

 

$

 

 

$

(313

)

 

$

104,497

 

 

 

 

December 31, 2023

 

 

 

Amortized Cost

 

 

Gross Unrealized Gains

 

 

Gross Unrealized Losses

 

 

Fair Value

 

Corporate debt securities

 

$

55,624

 

 

$

27

 

 

$

(80

)

 

$

55,571

 

Total

 

$

55,624

 

 

$

27

 

 

$

(80

)

 

$

55,571

 

In accordance with the Company's investment policy, it places investments in investment grade securities with high credit quality issuers, and generally limits the amount of credit exposure to any one issuer. The Company evaluates securities for impairment at the end of each reporting period. Factors considered include whether a decline in fair value below the amortized cost basis is due to credit-related factors or non-credit-related factors, the financial condition and near-term prospects of the issuer, and the Company’s intent and ability to hold the investment to allow for an anticipated recovery in fair value. As of March 31, 2024 and December 31, 2023, there were no allowances for credit losses recorded.

The Company classifies its investments in marketable securities as available-for-sale and as current assets as they represent the investment of funds available for current operations. The following table summarizes the fair value of the Company’s available-for-sale securities by contractual maturity (in thousands):

 

 

March 31, 2024

 

Due in one year or less

 

$

60,803

 

Due after one year through three years

 

 

43,694

 

Total

 

$

104,497

 

 

5. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

 

 

March 31, 2024

 

 

December 31, 2023

 

Employee compensation

 

$

1,589

 

 

$

3,311

 

Research and development expenses

 

 

2,263

 

 

 

3,964

 

Professional fees

 

 

919

 

 

 

1,221

 

Other

 

 

46

 

 

 

85

 

Total

 

$

4,817

 

 

$

8,581

 

 

6. Collaboration Agreement and Stock Purchase Agreement with Bristol-Myers Squibb

The Company has a 2019 collaboration agreement and associated stock purchase agreement (collectively the “Agreements”) with Celgene Corporation (acquired by Bristol-Myers Squibb), whereby the Company carried out initial research and development activities with the goal of identifying and developing drug candidates for certain cancer types. Bristol-Myers Squibb paid the Company a total of $95.0 million in aggregate upfront consideration related to the collaboration and stock purchase under the Agreements, of which $78.7 million was allocated to the collaboration. The Company was eligible to receive $50.0 million, in case of an exercise of an option with respect to IK-175, and $40.0 million, in case of an exercise of an option with respect to IK-412. Upon the exercise of the delivery of each license, the Company would have been eligible to receive up to $450 million in milestone payments, as well as a tiered royalty on worldwide sales from the high single to low teen digits.

7


 

On January 17, 2024, Bristol-Myers Squibb notified the Company of its decision not to opt-in on the IK-175 program. In addition, Bristol-Myers Squibb did not provide an opt-in exercise for the IK-412 program. As a result, the Company has regained full global rights to the IK-175 and IK-412 programs. Deferred revenue related to the collaboration had been fully recognized prior to December 31, 2023, as all obligations under the Agreements had been completed. As of March 31, 2024, all activities under the collaboration agreement have been concluded and there are no further amounts to be paid by Bristol-Myers Squibb under such agreement.

7. Stock-Based Compensation

The Company has outstanding awards under its 2016 Stock Incentive Plan, as amended (the “2016 Plan”), but is no longer granting awards under this plan. The Company’s 2021 Stock Incentive Plan (the “2021 Plan” and, together with the 2016 Plan, the “Plans”) allows the Company to make equity-based and cash-based incentive awards to officers, employees, directors and consultants. The number of shares initially reserved under the 2021 Plan was 3,119,514 shares of the Company’s common stock. Additionally, shares of the Company’s common stock subject to outstanding awards under the 2016 Plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right will be added back to the shares of common stock available for issuance under the 2021 Plan. The 2021 Plan contains an “evergreen” provision, which allows for an annual increase in the number of shares of common stock available for issuance under the 2021 Plan on the first day of each fiscal year during the period beginning in fiscal year 2022. The annual increase in the number of shares shall be equal to 4% of the number of shares of common stock outstanding on the immediately preceding December 31; or such lesser number of shares as determined by the Administrator as provided in the 2021 Plan. On January 1, 2024, the number of shares of common stock available for issuance under the 2021 Plan increased by 1,930,324 shares as a result of the automatic increase provision of the 2021 Plan. As of March 31, 2024, 3,735,648 shares of common stock remain available for future issuance under the 2021 Plan.

The vesting periods for equity awards, which generally are four years, are determined by the Company’s board of directors. The contractual term for stock option awards is ten years.

The Company recorded stock-based compensation expense in the following expense categories of its condensed consolidated statements of operations and comprehensive loss (in thousands):

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Research and development

 

$

777

 

 

$

1,072

 

General and administrative

 

 

961

 

 

 

928

 

Restructuring and other charges

 

 

263

 

 

 

 

Total

 

$

2,001

 

 

$

2,000

 

As of March 31, 2024, the total unrecognized stock-based compensation balance for outstanding awards was $8.5 million, which is expected to be recognized over a weighted average period of 2.7 years.

The following table summarizes stock option activity under the 2021 Plan for the three months ended March 31, 2024:

 

 

Number of
Options

 

 

Weighted-
Average
Exercise
Price

 

 

Weighted-
Average
Remaining
Contractual
Term (years)

 

 

Aggregate
Intrinsic
Value
(thousands)

 

Outstanding as of December 31, 2023

 

 

7,088,261

 

 

$

6.35

 

 

 

6.92

 

 

$

94

 

Granted

 

 

1,834,533

 

 

 

1.41

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

 

 

Cancelled or forfeited

 

 

(226,602

)

 

 

9.09

 

 

 

 

 

 

 

Outstanding as of March 31, 2024

 

 

8,696,192

 

 

$

5.23

 

 

 

7.51

 

 

$

96

 

Vested or expected to vest as of March 31, 2024

 

 

8,696,192

 

 

$

5.23

 

 

 

7.51

 

 

$

96

 

Options exercisable as of March 31, 2024

 

 

4,471,341

 

 

$

6.33

 

 

 

6.14

 

 

$

31

 

No options were exercised during the three months ended March 31, 2024 and 2023.

8


 

The weighted-average grant date fair value of the stock options granted during the three months ended March 31, 2024 and 2023 was $1.08 per share and $1.96 per share, respectively. The fair value of each option award granted is estimated on the date of grant using the Black-Scholes option pricing model and assumptions input into the model. The following table presents, on a weighted average basis, the assumptions used in the model to determine the grant-date fair value of stock options granted:

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Risk-free interest rate

 

 

4.17

%

 

 

3.92

%

Expected dividend yield

 

 

0

%

 

 

0

%

Expected option term (in years)

 

6.04

 

 

6.08

 

Expected stock price volatility

 

 

91.11

%

 

 

86.45

%

 

8. Commitments and Contingencies

Leases

The Company’s commitments under its leases are described in Note 15 Lease Obligations, to the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to the Company’s leases during the three months ended March 31, 2024.

In April 2024, the Company entered into sublease agreements for office and laboratory space in San Francisco, California (see Note 10).

License Agreements

UT Austin

The Company has an exclusive patent license agreement (the “UT Austin License”) entered into in 2015, to license certain technologies and intellectual property rights from the University of Texas at Austin (the “University”), an entity affiliated with a director of the Company at the time of the agreement. The UT Austin License shall remain in effect until the expiration or abandonment of the last to expire technologies and intellectual property rights. The Company shall pay License Maintenance fees annually of $40 thousand. Additionally, the Company shall make additional milestone payments to the University upon meeting certain development milestones in the aggregate of $4.7 million during the term of the UT Austin License. The Company will pay the University royalties as defined in the UT Austin License on any commercialized product sales related to the licensed technology in a percentage in the low single digits. The Company will also be responsible for reimbursing the University for certain patent-related costs incurred on its behalf. A Notice of Termination was sent by the Company in March 2024 and the UT Austin License will be terminated as of June 27, 2024, at which time all assets will be returned to the University and no further costs will be incurred by the Company in connection with the UT Austin License.

Arrys

The Company acquired in-process research and development in 2018 on an Arrys Therapeutics, Inc.’s (“Arrys”) immune-oncology candidate based on the intellectual property associated with Arrys’ AskAt License as part of the Company’s acquisition of Arrys. The AskAt License was intended to be used by the Company in its future development of therapeutic drug candidates for eventual clinical development and commercialization. The Company would have been obligated to make milestone payments to AskAt upon meeting certain development and sales milestones during the term of the AskAt License as well as royalties on any commercialized product sales related to the licensed technology. The AskAt Agreement was terminated as of March 20, 2024 and all assets were returned to AskAt. No further costs will be incurred by the Company in connection with the AskAt License.

Other Agreements

The Company is also party to various agreements, principally relating to licensed technology, that require future payments relating to milestones not met as of March 31, 2024 or royalties on future sales of specified products that have not yet occurred as of March 31, 2024.

Contingent Value Rights

In connection with the acquisition of Pionyr Immunotherapeutics, Inc. (“Pionyr”) on August 4, 2023, the Company issued one contractual contingent value right (“CVR”) to the former Pionyr stockholders for each share of Pionyr stock held at closing. The CVR entitles the holder to receive 50% of net proceeds, outside of royalties, for any potential monetization of Pionyr legacy programs within two years. The Company accounts for the CVRs as contingent liabilities. As of March 31, 2024 and December 31, 2023, the contingent consideration cannot be reasonably estimated, and the contingency was not resolved.

9


 

9. Restructuring and Other Charges

On January 17, 2024, the board of directors of the Company approved a plan to reduce the Company’s workforce by approximately 35% (the “Workforce Reduction”) and discontinue discovery efforts. The Workforce Reduction is designed to align the Company’s workforce with its strategy to focus on its clinical stage, targeted oncology programs, IK-930 and IK-595. In connection with the Workforce Reduction, the Company terminated approximately 20 employees. During the three months ended March 31, 2024, the Company recorded severance charges in connection with the Workforce Reduction, consisting of cash expenditures for employee separation costs of $1.6 million, most of which are expected to be paid by June 30, 2024, and non-cash charges of $0.3 million for the modification of certain equity awards. In March 2024, the Company committed to a plan to sell laboratory equipment related to its discovery efforts and therefore has classified the net amount of assets held for sale of $0.4 million in prepaid expenses and other current assets on the condensed consolidated balance sheet as of March 31, 2024. The assets held for sale are carried at the lower of the carrying amount or fair value, less costs to sell. The Company recorded an impairment charge of $0.7 million relating to the assets held for sale during the three months ended March 31, 2024.

The Workforce Reduction and discontinuation of discovery efforts are referred to as the “Restructuring” and were completed by March 31, 2024. The Company’s Restructuring and other charges and balance of its Restructuring liability, which was included in accrued employee compensation, consisted of the following for the three months ended March 31, 2024 (in thousands):

 

 

Three Months Ended March 31, 2024

 

 

 

Employee

 

 

 

 

 

 

 

 

 

 

 

 

Separation

 

 

Non-cash

 

 

Asset

 

 

 

 

 

 

Payments

 

 

Compensation

 

 

Impairments

 

 

Total

 

Accrued balance at December 31, 2023

 

$

 

 

$

 

 

$

 

 

$

 

Expense

 

 

1,577

 

 

 

263

 

 

 

742

 

 

 

2,582

 

Payments

 

 

(929

)

 

 

 

 

 

 

 

 

(929

)

Adjustments

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash

 

 

 

 

 

(263

)

 

 

(742

)

 

 

(1,005

)

Accrued balance at March 31, 2024

 

$

648

 

 

$

 

 

$

 

 

$

648

 

 

10. Subsequent Event

In April 2024, the Company entered into three sublease agreements with third parties for the use of office and laboratory space in San Francisco, California that the Company assumed in connection with its acquisition of Pionyr. Total fixed payments to be received by the Company under the three sublease agreements amount to $2.5 million and will be received through April 2027.

10


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K that was filed with the Securities and Exchange Commission (“SEC”) on March 12, 2024. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q includes forward-looking statements that involve risks and uncertainties, such as statements of our plans, strategies, objectives, expectations and intentions. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a clinical stage, targeted oncology company, focused on developing differentiated therapies for patients in need that target nodes of cancer growth, spread, and therapeutic resistance in the Hippo and RAS onco-signaling network. Our approach in each of our programs is to target both cancer-driving targets and mechanisms of resistance to other therapies. Our most advanced program, IK-930, is a selective inhibitor of the transcriptional enhanced associate domain 1 (“TEAD1”). The TEAD transcription factors (TEAD 1-4) execute the ultimate step in the Hippo signaling pathway, a known oncogenic pathway that also drives resistance to multiple targeted and chemo therapies. Our program in the RAS pathway, IK-595, is a molecular glue designed to trap MEK and RAF in an inactive complex, more completely inhibiting RAS signals than existing inhibitors. Since we commenced operations in 2016, we have advanced multiple product candidates into clinical development.

Our most advanced targeted oncology product candidate, IK-930, is an oral, TEAD1-selective, small molecule inhibitor of the Hippo signaling pathway. The Hippo pathway is genetically altered in approximately 10% of human cancers and is widely accepted as a prevalent driver of cancer pathogenesis and a mediator of poor outcomes for patients. In our ongoing first-in-human Phase 1 clinical trial, we are focusing on indications that provide the potential to achieve rapid proof-of-concept, such as NF2 deficient mesothelioma and solid tumors with YAP1 or TAZ gene fusions, including epithelioid hemangioendothelioma (“EHE”). Approximately 40% of mesothelioma patients are genetically deficient for the tumor suppressor NF2, with approximately an additional 25-30% having partial NF2 alterations or protein loss, and 100% of EHE patients have oncogenic YAP1 or TAZ gene fusions. In October 2021, our Investigational New Drug Application (“IND”) for IK-930 was cleared by the United States Food and Drug Administration (“FDA”) and we subsequently initiated a first-in-human Phase 1 clinical trial to evaluate the safety, tolerability, pharmacokinetics, pharmacodynamics, and preliminary antitumor activity of IK-930 as a monotherapy in patients with advanced solid tumors with or without gene alterations in the Hippo pathway. IK-930 received orphan drug designation from the FDA for the treatment of mesothelioma and EHE in March 2022 and December 2023, respectively. IK-930 was granted fast track designation from the FDA for the treatment of unresectable NF2-deficient mesothelioma in June 2022. In November 2023, we shared initial dose escalation safety data and initial anti-tumor activity data from EHE patients enrolled in the dose escalation monotherapy portion of the trial. In addition to the monotherapy approach, we plan to assess IK-930 in combination with other targeted therapies across several indications with multiple targeted therapies. Based on the role that the Hippo pathway plays in resistance to other targeted therapies, we believe that IK-930 may expand the patient populations that could benefit from therapies like epidermal growth factor (“EGFR”) inhibitors, KRAS inhibitors, and MEK inhibitors, among others. We have an established clinical collaboration with AstraZeneca for the evaluation of osimertinib in combination with IK-930 for patients with EGFR-mutant lung cancers as a cohort in the clinical program. Additional data from the monotherapy IK-930 clinical program is expected in the second half of 2024.

In addition to our work in the Hippo pathway, we have a development program targeting the RAS pathway, one of the most highly dysregulated pathways in cancer. The RAS pathway is implicated in at least half a million new cancer diagnoses each year in the United States alone. Our goal is to achieve deep and sustained responses through targeting the pathway on multiple levels and leveraging the biology of known resistance mechanisms in our therapeutic design. We nominated IK-595 as our development candidate in our RAS pathway program in November 2022. IK-595 is designed to robustly inhibit MEK-RAF by gluing MEK and the RAFs (A, B, and C) in an inactive complex, thus more completely inhibiting RAS signals than existing inhibitors. IK-595’s potential ability to complex CRAF, in particular, has been shown in preclinical models to prevent a well-recognized signaling bypass mechanism that cancer cells employ to drive therapeutic resistance to other MEK and RAF drugs in this class. In addition, trapping CRAF in an inactive complex has been shown in preclinical models to prevent the kinase independent anti-apoptotic function in RAS and RAF mutant cancers, a mechanism that cannot be addressed with first generation MEK inhibitors or pan-RAF inhibitors. We are developing IK-595 as an oral therapy, with a half-life designed to enable a pharmacokinetic profile that we believe can be potentially superior to other pathway inhibitors, with the goal of optimizing the therapeutic window for patients. We treated the first patient in the dose escalation Phase 1 study of IK-595 in December 2023.

To date, we have not had any products approved for sale and have not generated any revenue from product sales.

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On January 17, 2024, our board of directors approved a plan to reduce our workforce by approximately 35% (the “Workforce Reduction”) and discontinue discovery efforts. The Workforce Reduction is designed to align our workforce with our strategy to focus on our clinical stage, targeted oncology programs, IK-930 and IK-595. In connection with the Workforce Reduction, we terminated approximately 20 employees. In March 2024, we committed to a plan to sell laboratory equipment related to our discovery efforts and have classified the amount as assets held for sale at their fair value less costs to sell. The Workforce Reduction and discontinuation of discovery efforts are referred to as the “Restructuring” and were completed by March 31, 2024.

Financial Operations

Since inception, we have incurred significant operating losses. Our net losses were $16.1 million for the three months ended March 31, 2024 and $68.2 million for the year ended December 31, 2023. As of March 31, 2024, we had an accumulated deficit of $298.5 million. We expect to continue to incur significant expenses and operating losses for at least the next several years as we:

advance the development of our product candidate pipeline;
initiate and continue research and preclinical and clinical development of potential new product candidates;
maintain, expand and protect our intellectual property portfolio;
acquire or in-license additional product candidates and technologies;
maintain infrastructure and facilities to support the needs of our operations and research and development activities;
continue to establish agreements with clinical research organizations (“CROs”) and contract manufacturing organizations (“CMOs”) in connection with our preclinical studies and clinical trials;
require the manufacture of larger quantities of our product candidates for clinical development and potential commercialization;
seek marketing approvals for our product candidates that successfully complete clinical trials, if any;
establish a sales, marketing, and distribution infrastructure to commercialize any products for which we may obtain marketing approval; and
add operational, financial and management information systems and personnel to support our research and development programs, any future commercialization efforts, and our continued operations as a public company.

As a result, we will need substantial additional funding to support our continuing operations and pursue our strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity instruments, debt financings, or other capital sources, which may include collaborations with other companies or other strategic transactions. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, reduce or eliminate the development and commercialization of one or more of our product candidates.

We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain marketing approval for our product candidates. The lengthy process of securing marketing approvals for new drugs requires the expenditure of substantial resources. Any delay or failure to obtain regulatory approvals would materially adversely affect the development efforts of our product candidates and our business overall. Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenue from product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

Components of our Results of Operations

Revenue

We have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the foreseeable future. All of our revenue has been derived from our collaboration agreement with Celgene Corporation (acquired by Bristol-Myers Squibb) (the “Bristol-Myers Squibb Collaboration Agreement”).

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Collaboration Agreement and Stock Purchase Agreement with Bristol-Myers Squibb

In January 2019, we entered into the Bristol-Myers Squibb Collaboration Agreement with Celgene Corporation (which was acquired by Bristol-Myers Squibb in November 2019), pursuant to which Bristol-Myers Squibb could elect in its sole discretion to exclusively license rights to develop and commercialize compounds (and products and diagnostic products containing such compounds) that modulate the activity of two collaboration targets, kynurenine and AHR, excluding AHR agonists for inverse agonists, known as IK-412 and IK-175, respectively. On a program-by-program basis, through the earlier of January 2024 or the completion of a Phase 1b clinical trial for each of IK-175 and IK-412, Bristol-Myers Squibb had the exclusive option to exclusively license to develop, commercialize and manufacture the relevant product candidate worldwide. Concurrent with the execution of the Bristol-Myers Squibb Collaboration Agreement, we entered into a stock purchase agreement with Celgene Corporation (now Bristol-Myers Squibb) in November 2019 (the “Stock Purchase Agreement”), pursuant to which we issued Celgene Corporation 14,545,450 shares of Series A-1 preferred stock.

Bristol-Myers Squibb paid a total of $95.0 million in aggregate upfront consideration related to the Bristol-Myers Squibb Collaboration Agreement and Stock Purchase Agreement. The IK-412 and IK-175 programs were eligible for opt-in through early 2024. On January 17, 2024, Bristol-Myers Squibb notified us of its decision not to opt-in on the IK-175 program. In addition, Bristol-Myers Squibb did not provide an opt-in exercise for the IK-412 program. As a result, we have regained full global rights to the IK-175 and IK-412 programs. We will not invest further in the clinical development of IK-175 or IK-412 but will pursue strategic business development opportunities, including out-licensing.

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research and development activities. These efforts and costs include external research and development costs, personnel costs, consultants, supplies, license fees and facility-related expenses. We expense research and development costs as incurred. These expenses include:

employee-related expenses, including salaries, related benefits and stock-based compensation expense, for employees engaged in research and development functions;
expenses incurred under agreements with CROs, which are primarily engaged to support our clinical trials;
expenses incurred under agreements with CMOs, which are primarily engaged to provide drug substance and drug product for our preclinical research and development programs in support of clinical studies, nonclinical studies and other scientific development services;
the cost of acquiring and manufacturing nonclinical study materials, including manufacturing registration and validation batches;
facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance;
acquisition of in-process research and development assets that have no alternative future use;
costs related to compliance with quality and regulatory requirements; and
payments made under third-party licensing agreements.

Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered.

Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will increase substantially in connection with our planned clinical development activities in the future. At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the clinical development of, or obtain regulatory approval for, any of our current or future product candidates. This is due to the numerous risks and uncertainties associated with product development and commercialization, including the following:

our ability to add and retain key research and development personnel;
our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize our product candidates;

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our successful enrollment in and completion of clinical trials, including our ability to generate positive data from any such trials;
the size and cost of any future clinical trials for existing or future product candidates in our pipeline;
the costs associated with the development of any additional programs we identify in-house or acquire through collaborations and other arrangements and the success of such collaborations;
the terms and timing of any additional collaborations, license or other arrangement, including the timing of any payments thereunder;
our ability to establish and maintain agreements and operate with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if any of our product candidates are approved;
costs related to manufacturing of our product candidates or to account for any future changes in our manufacturing plans;
our ability to obtain and maintain patents, trade secret, and other intellectual property protection and regulatory exclusivity for our product candidates, both in the United States and internationally;
our ability to obtain and maintain third-party insurance coverage and adequate reimbursement for our product candidates, if and when approved;
the acceptance of our product candidates, if approved, by patients, the medical community and third-party payors;
effectively competing with other products if our product candidates are approved;
the impact of any business interruptions to our operations, including the timing and enrollment of patients in our planned clinical trials, or to those of our manufacturers, suppliers, or other vendors resulting from pandemics or similar public health crisis; and
our ability to maintain a continued acceptable safety profile for our therapies following approval.

A change in the outcome of any of these variables with respect to the development of our product candidates could significantly change the costs and timing associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any of our product candidates.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, and administrative functions. General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor and public relations, accounting, auditing, tax services, and insurance costs.

We expect general and administrative expenses to remain relatively flat in 2024 as compared to 2023. In the long term, we expect that our general and administrative expenses will increase as our organization grows in the future to support continued research and development activities and potential commercialization of our product candidates. These increases will likely include increased costs related to the hiring of additional personnel and fees for outside consultants, attorneys, and accountants, among other expenses. Additionally, we expect to incur increased expenses associated with being a public company, including costs of additional personnel, accounting, audit, legal, regulatory, and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance costs, and investor and public relations costs.

Restructuring and Other Charges

Restructuring and other charges consist primarily of costs incurred related to the Workforce Reduction approved in January 2024 and related impairment of assets held for sale.

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Results of Operations

The following table summarizes our results of operations (dollars in thousands):

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

 

$ Change

 

 

% Change

 

Collaboration revenue

 

$

 

 

$

5,313

 

 

$

(5,313

)

 

 

(100

)%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

9,645

 

 

 

15,552

 

 

 

(5,907

)

 

 

(38

)%

General and administrative

 

 

5,999

 

 

 

5,276

 

 

 

723

 

 

 

14

%

Restructuring and other charges

 

 

2,582

 

 

 

 

 

 

2,582

 

 

 

100

%

Total operating expenses

 

 

18,226

 

 

 

20,828

 

 

 

(2,602

)

 

 

(12

)%

Loss from operations

 

 

(18,226

)

 

 

(15,515

)

 

 

(2,711

)

 

 

17

%

Other income, net

 

 

2,107

 

 

 

1,296

 

 

 

811

 

 

 

63

%

Loss before income taxes

 

 

(16,119

)

 

 

(14,219

)

 

 

(1,900

)

 

 

13

%

Income tax expense

 

 

(27

)

 

 

 

 

 

(27

)

 

 

100

%

Net loss

 

$

(16,146

)

 

$

(14,219

)

 

$

(1,927

)

 

 

14

%

Collaboration Revenue

Collaboration revenue is related to the Bristol-Myers Squibb Collaboration Agreement for the IK-175 and IK-412 programs which was executed in January 2019. The decrease in revenue during the three months ended March 31, 2024, as compared to the same period in the prior year, was due to completion of research activities under the collaboration in 2023.

Research and Development Expenses

The following table summarizes our research and development expenses (dollars in thousands):

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

 

$ Change

 

 

% Change

 

Direct research and development expenses by program:

 

 

 

 

 

 

 

 

 

 

 

 

IK-930

 

$

2,458

 

 

$

2,830

 

 

$

(372

)

 

 

(13

)%

IK-595

 

 

1,664

 

 

 

1,865

 

 

 

(201

)

 

 

(11

)%

IK-175

 

 

412

 

 

 

1,269

 

 

 

(857

)

 

 

(68

)%

Discovery and other programs

 

 

(43

)

 

 

2,101

 

 

 

(2,144

)

 

 

(102

)%

Unallocated expense:

 

 

 

 

 

 

 

 

 

 

 

 

Personnel related (including stock-based compensation)

 

 

3,572

 

 

 

5,603

 

 

 

(2,031

)

 

 

(36

)%

Facility related and other

 

 

1,582

 

 

 

1,884

 

 

 

(302

)

 

 

(16

)%

Total research and development expenses

 

$

9,645

 

 

$

15,552

 

 

$

(5,907

)

 

 

(38

)%

Research and development expense decreased by $5.9 million from $15.6 million for the three months ended March 31, 2023 to $9.6 million for the three months ended March 31, 2024 primarily due to the prioritization of efforts on our clinical stage programs and timing of our clinical trials. Personnel related expenses decreased by $2.0 million primarily as a result of a decrease in headcount. Costs incurred in our discovery and other programs decreased from $2.1 million in the three months ended March 31, 2023 to $1.0 million in the three months ended March 31, 2024 due to a prioritization of advancing our clinical stage programs, which costs were fully offset by a refund of manufacturing costs and final net close-out credits from studies for Pionyr Immunotherapeutics, Inc. (“Pionyr”), which we acquired in 2023, resulting in a total net decrease in discovery and other programs of $2.1 million. Costs related to IK-175 decreased as we completed the clinical trial. Costs related to IK-930 decreased primarily due to timing of manufacturing activities. Costs related to IK-595 decreased due to a decrease in costs for IND-enabling studies as we progressed IK-595 into the clinic. These decreases were partially offset by increased clinical trial costs for IK-930 and IK-595 due to increased patient enrollment and clinical study startup for IK-595.

General and Administrative Expenses

The following table summarizes our general and administrative expenses (dollars in thousands):

 

Three Months Ended March 31,

 

 

2024

 

 

2023

 

 

$ Change

 

 

% Change

 

General and administrative

 

$

5,999

 

 

$

5,276

 

 

$

723

 

 

 

14

%

The increase in general and administrative expense of $0.7 million was primarily attributable to increased facility costs associated with the Pionyr facility, along with increases in legal and recruiting costs, partially offset by a decrease in insurance costs.

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Restructuring and Other Charges

Restructuring and other charges consist of costs relate to the Workforce Reduction and related impairment of assets held for sale. For the three months ended March 31, 2024, restructuring and other charges included employee separation costs of $1.6 million and non-cash charges for the modification of certain equity awards of $0.3 million. Restructuring and other charges also included an impairment of property and equipment held for sale of $0.7 million.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses. We have not yet commercialized any products and we do not expect to generate revenue from sales of any product candidates for several years, if ever. To date, we have financed our operations primarily through private placements of preferred stock, from upfront payments from the Bristol-Myers Squibb Collaboration Agreement, from the sale of common stock in our initial public offering (“IPO”) and underwritten registered offering of common stock (“URO”), and most recently, through the acquisition of Pionyr. As of March 31, 2024, we had cash, cash equivalents and marketable securities of $157.3 million.

Cash Flows

The following table summarizes our sources and uses of cash (in thousands):

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Net cash used in operating activities

 

$

(18,304

)

 

$

(19,784

)

Net cash used in investing activities

 

 

(48,738

)

 

 

(10,806

)

Net decrease in cash and cash equivalents and restricted cash

 

$

(67,042

)

 

$

(30,590

)

Operating Activities

Cash flows from operating activities are greatly influenced by our use of cash for operating expenses and working capital requirements to support the business. We have historically experienced negative cash flows from operating activities as we invested in developing our platform, drug discovery efforts, and related infrastructure.

 

During the three months ended March 31, 2024, operating activities used $18.3 million of cash, primarily resulting from our net loss of $16.1 million and net cash used by changes in our operating assets and liabilities of $5.3 million, partially offset by net non-cash charges of $3.1 million, which included an impairment for assets held for sale of $0.7 million. Net cash used by changes in our operating assets and liabilities for the three months ended March 31, 2024, consisted primarily of a $3.9 million decrease in accounts payable and accrued expenses and a $1.0 million decrease in operating lease liabilities.

 

During the three months ended March 31, 2023, operating activities used $19.8 million of cash, primarily resulting from our net loss of $14.2 million and net cash used by changes in our operating assets and liabilities of $7.6 million, partially offset by net non-cash charges of $2.0 million. Net cash used by changes in our operating assets and liabilities for the three months ended March 31, 2023, consisted primarily of a decrease of $5.3 million in deferred revenue and a $2.3 million net decrease in accounts payable and accrued expenses.

Investing Activities

During the three months ended March 31, 2024, net cash used in investing activities was $48.7 million, primarily due to purchases of marketable securities of $62.3 million, partially offset by the proceeds from maturities of marketable securities of $13.5 million.

During the three months ended March 31, 2023, net cash used in investing activities was $10.8 million, primarily due to purchases of marketable securities of $41.7 million, offset by the proceeds from maturities of marketable securities of $31.1 million.

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Funding Requirements

We expect to continue to incur significant expenses for the foreseeable future in connection with our ongoing activities, particularly as we continue the research and development for, initiate clinical trials for, and seek marketing approval for, our product candidates. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution. Furthermore, we expect to continue to incur additional costs associated with operating as a public company, including increased costs of accounting, audit, legal, regulatory, and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance costs, and investor and public relations costs. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce, or eliminate our research and development programs or future commercialization efforts.

As of March 31, 2024, we had cash, cash equivalents, and marketable securities of $157.3 million. We believe that our cash, cash equivalents and marketable securities as of March 31, 2024 will enable us to fund our operating expenses and capital expenditure requirements into the second half of 2026. Our belief with respect to our ability to fund operations is based on estimates that are subject to risks, uncertainties and assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Our future operating and capital requirements will depend on many factors, including:

the scope, progress, results and costs of discovery, preclinical development, laboratory testing, and clinical trials for other potential product candidates we may develop, if any;
the scope and cost to continue and execute our clinical trials for our ongoing clinical programs;
the cost of process development and technology transfer efforts to secure material for our clinical and preclinical use for our programs;
the costs, timing, and outcome of regulatory review of our product candidates;
our ability to establish and maintain collaborations on favorable terms, if at all;
the achievement of milestones or occurrence of other developments that trigger payments under any collaboration agreements we might have at such time;
the costs and timing of future commercialization activities, including product sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval;
the amount of revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval;
the costs of preparing, filing, and prosecuting patent applications, obtaining, maintaining, and enforcing our intellectual property rights, and defending intellectual property-related claims;
the in-licensing or acquisition of assets in line with our strategy;
our headcount and associated costs, as we pursue our research and development activities; and
the costs of operating as a public company.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, and licensing arrangements. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our stockholders’ ownership interests may be diluted, and the terms of these securities may include liquidation or other preferences that could adversely affect our stockholders’ rights. Any debt financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business.

If we raise funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

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On April 27, 2022, we filed a shelf registration statement on Form S-3 (“Shelf”), with the SEC, which covers the offering, issuance, and sale by us of up to an aggregate of $300.0 million of our common stock, preferred stock, debt securities, warrants and/or units of any combination thereof. We simultaneously entered into a sales agreement with Jefferies LLC, as sales agent, to provide for the issuance and sale by us of up to $100.0 million of our common stock from time to time in “at-the-market” offerings under the Shelf, which we refer to as the “ATM Program.” The Shelf was declared effective by the SEC on May 5, 2022. As of the date hereof, no sales have been made pursuant to the ATM Program.

Contractual Obligations

We have a non-cancelable operating lease agreement for our office, lab, and animal care facility space in our Boston, Massachusetts corporate headquarters. We expect the total future minimum lease payments from March 31, 2024 to lease expiration in May 2026 to be $4.0 million. Additionally, in connection with the acquisition of Pionyr, we acquired an operating lease agreement for office and lab space in San Francisco, California. The space had been vacant and in April 2024, we signed three agreements with third parties to sublease the space. We expect total future minimum lease payments from March 31, 2024 to lease expiration in April 2027 to be $6.8 million. We expect to receive fixed minimum payments of $2.5 million during this same period. Our total future minimum lease payments for each of the next five years and in total are included in Note 15 in our Annual Report on Form 10-K for the year ended December 31, 2023.

We enter into contracts in the normal course of business with CROs and CMOs for clinical trials, preclinical research studies and testing, manufacturing and other services and products for operating purposes. These contracts typically do not contain any minimum purchase commitments and are generally cancelable by us, typically upon prior notice of 30 days. Payments due upon cancelation typically consist only of payments for services provided and expenses incurred up to the date of cancelation.

We may incur potential contingent payments upon our achievement of clinical, regulatory, and commercial milestones, as applicable, or that we may be required to make royalty payments under license agreements we have entered into with various entities pursuant to which we have in-licensed certain intellectual property. Due to the uncertainty of the achievement and timing of the events requiring payment under these agreements, the amounts to be paid by us are not fixed or determinable at this time.

Critical Accounting Policies and Use of Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements during the reporting periods. These items are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience, known trends and events, and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ materially from these estimates under different assumptions or conditions. During the three months ended March 31, 2024, there were no material changes to our critical accounting policies from those described in our Annual Report on Form 10-K that was filed with the SEC on March 12, 2024.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Emerging Growth Company

In April 2012, the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) was enacted. Section 107 of the JOBS Act provides that an “emerging growth company,” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (“the Securities Act”), for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period for new or revised accounting standards during the period in which we remain an emerging growth company; however, we may adopt certain new or revised accounting standards early.

We will remain an emerging growth company until the earliest to occur of: (1) the last day of the fiscal year in which we have more than $1.235 billion in annual revenue; (2) the date we qualify as a “large accelerated filer,” with at least $700.0 million of equity securities held by non-affiliates; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) the last day of the fiscal year ending after the fifth anniversary of our IPO.

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We are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies until (1) the fiscal year following the determination that our voting and non-voting common stock held by non-affiliates is more than $250.0 million measured on the last business day of our second fiscal quarter, or (2) our annual revenues are $100.0 million or more during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is more than $700.0 million measured on the last business day of our second fiscal quarter.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this Item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives.

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2024, the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our principal executive officer and principal financial officer have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

From time to time, we may become involved in litigation or other legal proceedings. We are not currently a party to any litigation or legal proceedings that, in the opinion of our management, are probable to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on our business, financial condition, results of operations and prospects because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors.

Investing in our common stock involves a high degree of risk. In evaluating the Company and our business, careful consideration should be given the risks described below, as well as the other information in this Quarterly Report on Form 10-Q and in other documents that we file with the SEC. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and growth prospects. In such an event, the market price of our common stock could decline, and our stockholders may lose all or part of their investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.

Risks Related to Our Limited Operating History, Financial Position, and Capital Requirements

We are a targeted oncology company with a limited operating history.

We commenced operations in 2016 and are a targeted oncology company with a limited operating history. Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. Since our inception, we have devoted substantially all of our efforts to organizing and staffing our company, acquiring intellectual property, business planning, raising capital, conducting discovery, research and development activities, and providing general and administrative support for these operations. We have no products approved for commercial sale and therefore, have never generated any revenue from product sales, and we do not expect to in the foreseeable future. We have not obtained regulatory approvals for any of our product candidates, and there is no assurance that we will obtain approvals in the future. We expect to continue to incur significant expenses and operating losses over the next several years and for the foreseeable future. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

We have incurred significant net losses since our inception and anticipate that we will continue to incur losses for the foreseeable future.

Our net losses were $16.1 million for the three months ended March 31, 2024 and $68.2 million for the year ended December 31, 2023. We had an accumulated deficit of $298.5 million as of March 31, 2024. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect our research and development expenses to increase significantly in connection with the commencement and continuation of clinical trials of our product candidates. In addition, if we obtain regulatory approval for our product candidates, we will incur significant sales, marketing, and manufacturing expenses. As a public company, we will continue to incur additional costs that we did not incur as a private company. As a result, we expect to continue to incur significant and increasing operating losses for the foreseeable future. Because of the numerous risks and uncertainties associated with developing pharmaceutical products, we are unable to predict the extent of any future losses or when we will become profitable, if at all. Even if we do become profitable, we may not be able to sustain or increase our profitability on a quarterly or annual basis.

The amount of our future losses is uncertain and our quarterly and annual operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline. Our quarterly and annual operating results may fluctuate significantly in the future due to a variety of factors, many of which are outside of our control and may be difficult to predict, including the following: