UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from __________________ to __________________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
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Securities registered pursuant to Section 12(b) of the Act:
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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.
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).
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 |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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 August 1, 2024, the registrant had
Table of Contents
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Page |
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PART I. |
1 |
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Item 1. |
1 |
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1 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss |
2 |
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3 |
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4 |
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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. |
20 |
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Item 4. |
20 |
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PART II. |
21 |
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Item 1. |
21 |
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Item 1A. |
21 |
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Item 2. |
68 |
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Item 3. |
68 |
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Item 4. |
68 |
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Item 5. |
68 |
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Item 6. |
69 |
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70 |
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:
ii
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:
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
iv
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.
v
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)
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June 30, |
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December 31, |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Right-of-use asset |
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Deposits and other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Operating lease liability |
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Total current liabilities |
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Long-term portion of operating lease liability |
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Other long-term liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
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Accumulated deficit |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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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)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Collaboration revenue |
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$ |
— |
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$ |
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$ |
— |
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$ |
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Operating expenses: |
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Research and development |
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General and administrative |
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Restructuring and other charges |
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— |
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— |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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( |
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( |
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Other income (expense): |
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Investment income |
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Other income (expense) |
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( |
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( |
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Total other income, net |
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Loss before income taxes |
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( |
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( |
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( |
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( |
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Income tax expense |
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( |
) |
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— |
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( |
) |
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— |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Other comprehensive income (loss): |
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Unrealized gain (loss) on marketable securities |
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( |
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( |
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Total comprehensive loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Net loss per share: |
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Net loss per share, basic and diluted |
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$ |
( |
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$ |
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$ |
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$ |
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Weighted-average common shares outstanding, |
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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)
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-in |
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Comprehensive |
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Accumulated |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Loss |
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Deficit |
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Equity |
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Balance as of December 31, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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( |
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( |
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Balance as of March 31, 2024 |
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( |
) |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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( |
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( |
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Balance as of June 30, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-in |
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Comprehensive |
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Accumulated |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Loss |
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Deficit |
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Equity |
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Balance as of December 31, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balance as of March 31, 2023 |
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( |
) |
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( |
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Issuance of common stock for |
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— |
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— |
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Repurchase of common stock |
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( |
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— |
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( |
) |
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— |
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— |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance as of June 30, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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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)
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Six Months Ended June 30, |
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2024 |
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2023 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
) |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation |
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Net accretion of discounts on marketable securities |
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( |
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( |
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Stock-based compensation |
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Non-cash operating lease expense |
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Loss on disposal of property and equipment |
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Impairment of assets held for sale |
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— |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets |
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( |
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Deposits and other assets |
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( |
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Accounts payable |
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( |
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( |
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Accrued expenses and other current liabilities |
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( |
) |
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( |
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Operating lease liabilities |
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( |
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( |
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Deferred revenue |
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— |
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( |
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Other long-term liabilities |
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— |
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Net cash used in operating activities |
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( |
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( |
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Cash flows from investing activities: |
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Purchases of property and equipment |
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— |
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( |
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Proceeds from sale of property and equipment |
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Purchases of marketable securities |
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( |
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( |
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Proceeds from maturities of marketable securities |
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Net cash provided by (used in) investing activities |
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( |
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Cash flows from financing activities: |
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Proceeds from issuance of common stock for underwritten registered |
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— |
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Repurchase of common stock |
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— |
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( |
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Proceeds from exercise of stock options |
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— |
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Net cash provided by financing activities |
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— |
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Net increase (decrease) in cash, cash equivalents and restricted cash |
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( |
) |
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Cash, cash equivalents and restricted cash, beginning of period |
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Cash, cash equivalents and restricted cash, end of period |
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$ |
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$ |
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Reconciliation of cash, cash equivalents, and restricted cash to the |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash included in other assets |
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Cash, cash equivalents and restricted cash, end of period |
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$ |
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$ |
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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. The Company’s approach has been to target both cancer-driving targets and mechanisms of resistance to other therapies.
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 June 30, 2024, the Company has not experienced any credit related losses on its cash, cash equivalents or marketable securities.
The Company is dependent on third-party manufacturers to supply products for its research and development activities. 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 the Company’s programs. These 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.
5
Restricted Cash
As of each of June 30, 2024 and December 31, 2023, the Company maintained restricted cash totaling $
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:
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June 30, |
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2024 |
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2023 |
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Options to purchase common stock |
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Total |
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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):
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June 30, 2024 |
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Quoted Prices in Active Markets |
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Significant Observable Inputs |
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Significant Unobservable Inputs |
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Cash equivalents: |
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Money market funds |
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$ |
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$ |
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$ |
— |
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$ |
— |
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Marketable securities: |
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U.S. treasury securities |
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— |
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— |
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Corporate debt securities |
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— |
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— |
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Total assets |
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$ |
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$ |
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$ |
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$ |
— |
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December 31, 2023 |
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Quoted Prices in Active Markets |
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Significant Observable Inputs |
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Significant Unobservable Inputs |
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Cash equivalents: |
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Money market funds |
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$ |
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$ |
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$ |
— |
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$ |
— |
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Marketable securities: |
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Corporate debt securities |
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— |
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— |
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Total assets |
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$ |
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$ |
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$ |
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$ |
— |
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During the three and six months ended June 30, 2024 and 2023, there were
6
4. Marketable Securities
The following tables summarize the Company's marketable securities (in thousands):
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June 30, 2024 |
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Amortized Cost |
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Gross Unrealized Gains |
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Gross Unrealized Losses |
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Fair Value |
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U.S. treasury securities |
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$ |
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$ |
— |
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$ |
( |
) |
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$ |
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Corporate debt securities |
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( |
) |
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Total |
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$ |
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$ |
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$ |
( |
) |
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$ |
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December 31, 2023 |
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Amortized Cost |
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Gross Unrealized Gains |
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Gross Unrealized Losses |
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Fair Value |
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Corporate debt securities |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Total |
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$ |
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$ |
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$ |
( |
) |
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$ |
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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 June 30, 2024 and December 31, 2023, there were
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.
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June 30, 2024 |
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Due in one year or less |
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$ |
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Due after one year through three years |
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Total |
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$ |
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5. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
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June 30, 2024 |
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December 31, 2023 |
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Employee compensation |
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$ |
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$ |
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Research and development expenses |
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Professional fees |
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Other |
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Total |
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$ |
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$ |
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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 $
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 June 30, 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
The vesting periods for equity awards, which generally are
The Company recorded stock-based compensation expense in the following expense categories of its condensed consolidated statements of operations and comprehensive loss (in thousands):
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Research and development |
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$ |
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$ |
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$ |
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$ |
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General and administrative |
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Restructuring and other charges |
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— |
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— |
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— |
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Total |
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$ |
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$ |
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$ |
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$ |
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As of June 30, 2024, the total unrecognized stock-based compensation balance for outstanding awards was $
The following table summarizes stock option activity for the six months ended June 30, 2024:
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Number of |
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Weighted- |
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Weighted- |
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Aggregate |
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Outstanding as of December 31, 2023 |
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$ |
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$ |
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Granted |
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Exercised |
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— |
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— |
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Cancelled or forfeited |
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( |
) |
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Outstanding as of June 30, 2024 |
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$ |
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$ |
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Vested or expected to vest as of June 30, 2024 |
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$ |
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$ |
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Options exercisable as of June 30, 2024 |
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$ |
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$ |
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The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.
8
The weighted-average grant date fair value of the stock options granted during the six months ended June 30, 2024 and 2023 was $
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Risk-free interest rate |
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% |
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% |
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% |
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% |
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Expected dividend yield |
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% |
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% |
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% |
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% |
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Expected option term (in years) |
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Expected stock price volatility |
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% |
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% |
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% |
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% |
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 and six months ended June 30, 2024.
In April 2024, the Company entered into
License Agreements
UT Austin
The Company had 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 Company was required to pay License Maintenance fees annually of $
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.
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 June 30, 2024 or royalties on future sales of specified products that have not yet occurred as of June 30, 2024.
Contingent Value Rights
In connection with the acquisition of Pionyr on August 4, 2023, the Company issued
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
On May 23, 2024, the board of directors of the Company approved a plan to discontinue the clinical development of IK-930, continue clinical development of IK-595 and reduce its current workforce by approximately
In June 2024, the board of directors of the Company approved up to $
During the three and six months ended June 30, 2024, the Company recorded severance expense in connection with the May Restructuring, of $
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Three Months Ended June 30, 2024 |
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Employee |
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Related |
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Non-cash |
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Asset |
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Payments |
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Compensation |
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Impairments |
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Total |
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||||
Accrued balance at March 31, 2024 |
|
$ |
|
|
$ |
— |
|
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$ |
— |
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$ |
|
||
Expense |
|
|
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|
|
— |
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|
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— |
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|
||
Payments |
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|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Accrued balance at June 30, 2024 |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
|
Six Months Ended June 30, 2024 |
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Employee |
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Related |
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Non-cash |
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Asset |
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||||
|
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Payments |
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Compensation |
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Impairments |
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Total |
|
||||
Accrued balance at December 31, 2023 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Payments |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Non-cash |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Accrued balance at June 30, 2024 |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
10