# PMV Pharmaceuticals, Inc.: Form 10-Q for the period ended Jun 30, 2023

- Company: [PMV Pharmaceuticals, Inc.](/companies/pmvp.md) (CIK 1699382)
- Form: 10-Q
- Filed: 2023-08-09
- Accepted by EDGAR: Aug 9, 2023, 12:01 ET
- Period: 2023-06-30
- Accession: 0000950170-23-040153
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1699382/000095017023040153/pmvp-20230630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1699382/000095017023040153/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2023-04-01 to 2023-06-30 | $13.8m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2023-01-01 to 2023-06-30 | $28.9m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-04-01 to 2023-06-30 | −$20.1m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2023-01-01 to 2023-06-30 | −$41.6m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-04-01 to 2023-06-30 | $4.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2023-01-01 to 2023-06-30 | $4.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-04-01 to 2023-06-30 | −$17.4m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-01-01 to 2023-06-30 | −$36.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-04-01 to 2023-06-30 | −$0.38 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-01-01 to 2023-06-30 | −$0.80 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-04-01 to 2023-06-30 | −$0.38 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-01-01 to 2023-06-30 | −$0.80 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-04-01 to 2023-06-30 | 45,813,132 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-01-01 to 2023-06-30 | 45,793,355 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-01-01 to 2023-06-30 | −$27.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2023-01-01 to 2023-06-30 | $721.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-06-30 | $68.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-06-30 | $190.4m | us-gaap:AssetsCurrent |
| Total assets | at 2023-06-30 | $242.2m | us-gaap:Assets |
| Current liabilities | at 2023-06-30 | $11.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-06-30 | $24.4m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-06-30 | $217.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 34,039 characters.

*You should read the following discussion of our financial condition and results of operations in conjunction with our unaudited financial statements and the related notes and other financial information included in this Quarterly Report on Form 10-Q and our audited financial statements and notes thereto as of and for the years ended December 31, 2022 and 2021 and the related “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including “Contractual Obligations and Commitments” and “Critical Accounting Policies and Estimates,” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission, or the SEC, on March 1, 2023. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our” refer to PMV Pharmaceuticals, Inc.*

*In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including but not limited to those set forth under the captions “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as updated by our subsequent filings under the Securities Exchange Act of 1934, as amended. Furthermore, past operating results are not necessarily indicative of results that may occur in future periods.*

### Overview

We are a precision oncology company pioneering the discovery and development of small molecule, tumor-agnostic therapies targeting p53. p53 is a well-defined tumor suppressor protein known as the “guardian of the genome,” and normal, or wild-type, p53 has the ability to eliminate cancer cells. However, mutant p53 proteins can be misfolded and lose their wild-type tumor suppressing function. These p53 mutations are found in approximately half of all cancers. The field of p53 biology was established by our co-founder Dr. Arnold Levine when he discovered the p53 protein in 1979. We have leveraged more than four decades of research experience and developed unique insights into p53 to create a precision oncology platform designed to generate selective, small molecule, tumor-agnostic therapies that structurally correct specific mutant p53 proteins to restore their wild-type function. We are deploying our precision oncology platform to target the top ten most frequent, or hotspot, p53 mutations that are collectively associated with approximately 10-15% of all cancers. In addition, we are expanding the utilization of our platform to target other p53-related cancers.

Since our formation in March 2013, we have devoted substantially all of our time and efforts to performing research and development activities and raising capital. We are not profitable and have incurred losses in each year since our inception. Our net losses were $73.3 million and $57.8 million for the years ended December 31, 2022 and 2021, respectively. During the three and six months ended June 30, 2023, the Company incurred net losses of $17.4 million and $36.6 million, respectively. As of June 30, 2023, we had an accumulated deficit of $277.6 million. We do not currently have any product candidates approved for sale, and we continue to incur significant research and development and general administrative expenses related to our operations. We initiated a Phase 1/2 clinical trial in October 2020 for our lead product candidate, PC14586. In October 2020, we were granted FDA Fast Track Designation of PC14586 for the treatment of patients with locally advanced or metastatic solid tumors that have a p53 Y220C mutation. We dosed our first patient in this clinical trial in the fourth quarter of 2020. In June 2022, we presented our initial Phase 1 clinical data for PC14586. In July 2023, we concluded our End-of-Phase 1 FDA meeting with alignment on the Recommended Phase 2 Dose and key elements of the single arm, Phase 2 registrational portion of the PYNNACLE study. We plan to initiate the single arm, Phase 2 portion of the PYNNACLE study in early 2024.

We expect that our operating expenses will increase significantly as we advance our product candidates through preclinical and clinical development, seek regulatory approval, and prepare for and, if approved, proceed to commercialization; acquire, discover, validate, and develop additional product candidates; obtain, maintain, protect, and enforce our intellectual property portfolio; and hire additional personnel. Furthermore, we have incurred and will continue to incur additional costs associated with operating as a public company that we did not experience as a private company. We expect to continue to incur significant losses for the foreseeable future.

Our ability to generate product revenue will depend on the successful development, regulatory approval, and eventual commercialization of one or more of our product candidates. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through private or public equity or debt financings, collaborative, or other arrangements with corporate sources, or through other sources of financing. Adequate funding may not be available to us on acceptable 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, scale back or discontinue the development and commercialization of our product candidates.

We plan to continue to use third-party service providers, including clinical research organizations, or CROs, and contract manufacturing organization, or CMOs, to carry out our preclinical and clinical development and to manufacture and supply the materials to be used during the development and commercialization of our product candidates. We do not currently have a sales force.

### Components of Results of Operations

### Revenue

To date, we have not generated any revenue from any sources, including from product sales, and we do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all.

### Operating Expenses

### Research and Development Expenses

Our research and development expenses consist primarily of costs incurred to conduct research, such as the discovery and development of our product candidates as well as the development of future product candidates. Research and development expenses include personnel costs, including stock-based compensation expense, third-party contractor services, laboratory materials and supplies, and depreciation and maintenance of research equipment. We expense research and development costs as they are incurred.

As we are at a very early stage of development, we do not allocate our costs by product candidate or development program, as a significant amount of research and development expenses include compensation costs, materials, supplies, depreciation on and maintenance of research equipment, and the cost of services provided by outside contractors, which are not tracked by product candidate or development program. In particular, with respect to internal costs, several of our departments support multiple product candidate research and development programs, and therefore the costs cannot be allocated to a particular product candidate or development program. Substantially all of our research and development costs are associated with our lead product candidate, PC14586. We initiated a Phase 1/2 clinical trial in October 2020 for our lead product candidate, PC14586. In October 2020, we were granted FDA Fast Track Designation of PC14586 for the treatment of patients with locally advanced or metastatic solid tumors that have a p53 Y220C mutation. We dosed our first patient in this clinical trial in the fourth quarter of 2020. In June 2022, we presented our initial Phase 1 clinical data for PC14586 at the 2022 ASCO Annual Meeting.

We expect our research and development expenses to increase substantially in absolute dollars in the future as we advance our product candidates into and through clinical trials and pursue regulatory approval of our product candidates. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidates may be affected by a variety of factors including: the safety and efficacy of our product candidates, early clinical data, investment in our clinical program, the ability of any future collaborators to successfully develop our licensed product candidates, competition, manufacturing capability, and commercial viability. We may never succeed in achieving regulatory approval for any of our product candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects.

### General and Administrative Expenses

General and administrative expenses include personnel costs, expenses for outside professional services and other allocated expenses. Personnel costs consist of salaries, bonuses, benefits, and stock-based compensation. Outside professional services consist of legal, accounting and audit services and other consulting fees. Allocated expenses consist of rent expense related to our office and research and development facilities. We have incurred additional expenses as a public company, including expenses related to compliance with the rules and regulations of the SEC, and those of any national securities exchange on which our securities are traded, additional insurance expenses, investor relations activities and other administrative and professional services. We have increased our headcount significantly to support our operations as a public company. We also expect to increase our general and administrative expenses as we advance our product candidates through preclinical research and development, manufacturing, clinical development, and commercialization.

### Interest Income, Net

Interest income, net primarily consists of interest income from our interest-bearing cash, cash equivalents and short-term marketable securities and interest costs related to amortization of premiums and discounts on short-term marketable securities.

### Results of Operations

### Comparison of the Three Months ended June 30, 2023 and 2022.

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

| Statement of operations data: Operating expenses: | Three Months Ended June 30, 2023 (Unaudited) | 2022 (Unaudited) | Change |
| --- | ---: | ---: | ---: |
| Research and development | $13,843 | $11,462 | $2,381 |
| General and administrative | 6,279 | 6,423 | (144) |
| Total operating expenses | 20,122 | 17,885 | 2,237 |
| Loss from operations | (20,122) | (17,885) | (2,237) |
| Other income (expense): |  |  |  |
| Interest income, net | 2,696 | 604 | 2,092 |
| Other income (expense), net | (6) | (31) | 25 |
| Total other income (expense) | 2,690 | 573 | 2,117 |
| Loss before provision (benefit) for income taxes | (17,432) | (17,312) | (120) |
| Provision (benefit) for income taxes | 4 | (2) | 6 |
| Net loss | $(17,436) | $(17,310) | $(126) |

### Research and Development Expenses

The following table summarizes our research and development expenses incurred during the periods indicated (in thousands):

| Statement of operations data: | Three Months Ended June 30, 2023 (Unaudited) | 2022 (Unaudited) | Change |
| --- | ---: | ---: | ---: |
| Research | $1,909 | $1,706 | $203 |
| Development | 7,450 | 6,495 | 955 |
| Personnel related | 3,109 | 2,453 | 656 |
| Stock-based compensation | 1,375 | 808 | 567 |
| Total | $13,843 | $11,462 | $2,381 |

Research and development expenses were $13.8 million for the three months ended June 30, 2023, compared to $11.5 million for the three months ended June 30, 2022. The increase of $2.3 million, compared to the three months ended June 30, 2022, was primarily due to the following:

- $0.2 million increase in research expenses, largely driven by increased contractual research organization costs;
- $0.9 million increase in development expenses associated with advancing our lead product candidate, PC14586, through the Phase 1/2 clinical trial; and
- $1.2 million increase in expenses for personnel related costs and stock-based compensation, primarily driven by increased headcount.

### General and Administrative Expenses

General and administrative expenses were $6.3 million for the three months ended June 30, 2023, compared to $6.4 million for the three months ended June 30, 2022. The decrease of $0.1 million, compared to the three months ended June 30, 2022, was primarily due to following:

- $0.1 million decrease in insurance expenses

### Interest Income, Net

Interest income, net primarily consists of interest income from our interest-bearing cash, cash equivalents and marketable securities and interest costs related to amortization of premiums and discounts on marketable securities. Interest income, net was $2.7 million for the three months ended June 30, 2023. The increase of $2.1 million compared to the three months ended June 30, 2022, is driven by increased interest rates from cash and investments in marketable securities and U.S treasuries during the three months ended June 30, 2023.

### Comparison of the Six Months ended June 30, 2023 and 2022.

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

| Statement of operations data: Operating expenses: | Six Months Ended June 30, 2023 (Unaudited) | 2022 (Unaudited) | Change |
| --- | ---: | ---: | ---: |
| Research and development | $28,916 | $23,297 | $5,619 |
| General and administrative | 12,686 | 13,206 | (520) |
| Total operating expenses | 41,602 | 36,503 | 5,099 |
| Loss from operations | (41,602) | (36,503) | (5,099) |
| Other income (expense): |  |  |  |
| Interest income, net | 5,022 | 832 | 4,190 |
| Other income (expense), net | 20 | (72) | 92 |
| Total other income | 5,042 | 760 | 4,282 |
| Loss before provision (benefit) for income taxes | (36,560) | (35,743) | (817) |
| Provision (benefit) for income taxes | 4 | — | 4 |
| Net loss | $(36,564) | $(35,743) | $(821) |

### Research and Development Expenses

The following table summarizes our research and development expenses incurred during the periods indicated (in thousands):

| Statement of operations data: | Six Months Ended June 30, 2023 (Unaudited) | 2022 (Unaudited) | Change |
| --- | ---: | ---: | ---: |
| Research | $3,446 | $3,983 | $(537) |
| Development | 16,288 | 13,142 | 3,146 |
| Personnel related | 6,543 | 4,716 | 1,827 |
| Stock-based compensation | 2,639 | 1,456 | 1,183 |
| Total | $28,916 | $23,297 | $5,619 |

Research and development expenses were $28.9 million for the six months ended June 30, 2023, compared to $23.3 million for the six months ended June 30, 2022. The increase of $5.6 million, compared to the six months ended June 30, 2022, was primarily due to the following:

- $0.6 million decrease in research expenses, largely driven by decreased contractual research organization costs;
- $3.2 million increase in development expenses associated with advancing our lead product candidate, PC14586, through the Phase 1/2 clinical trial; and
- $3.0 million increase in expenses for personnel related costs and stock-based compensation, primarily driven by increased headcount.

### General and Administrative Expenses

General and administrative expenses were $12.7 million for the six months ended June 30, 2023, compared to $13.2 million for the six months ended June 30, 2022. The decrease of $0.5 million, compared to the six months ended June 30, 2022, was primarily due to following:

- $0.5 million decrease due to facility related costs allocated to research as our new laboratory building in Princeton, New Jersey began operations.

### Interest Income, Net

Interest income, net primarily consists of interest income from our interest-bearing cash, cash equivalents and marketable securities and interest costs related to amortization of premiums and discounts on marketable securities. Interest income, net was $5.0 million for the six months ended June 30, 2023. The increase of $4.2 million compared to the six months ended June 30, 2022, is driven by increased interest rates from cash and investments in marketable securities and U.S treasuries during the three months ended June 30, 2023.

### Liquidity and Capital Resources

Our financial condition is summarized as follows:

| Financial assets: | As of June 30, 2023 | As of December 31, 2022 | Change |
| --- | ---: | ---: | ---: |
| Cash and cash equivalents | $68,209 | $108,297 | $(40,088) |
| Marketable securities - current | 118,878 | 132,757 | (13,879) |
| Marketable securities - noncurrent | 31,757 | 2,495 | 29,262 |
| Total financial assets | $218,844 | $243,549 | $(24,705) |
| Working capital: |  |  |  |
| Current assets | $190,413 | $247,006 | $(56,593) |
| Current liabilities | 11,447 | 10,832 | 615 |
| Total working capital | $178,966 | $236,174 | $(57,208) |

### Sources of Liquidity

Since our inception, we have not generated any revenue from any product sales or any other sources and have incurred significant operating losses and negative cash flows from our operations. We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales of any product candidates for several years, if at all. As of June 30, 2023, we had cash, cash equivalents, and marketable securities of $218.8 million and an accumulated deficit of $277.6 million. In September 2020, we completed an IPO of 13,529,750 shares of our common stock, which includes the exercise in full by the underwriters of their option to purchase 1,764,750 additional shares of common stock, at a public offering price of $18.00 per share for aggregate gross proceeds of $243.5 million. We received $223.2 million in net proceeds after deducting underwriting discounts and commissions and other offering expenses payable by us.

We have a shelf registration statement on Form S-3 on file with the SEC, which registers the offering, issuance, and sale of up to $200 million of various equity and debt securities and up to $150 million of common stock pursuant to our at-the-market equity offering program, dated October 4, 2021, or the ATM program. During the three months ended June 30, 2023, we sold 344,358 shares of common stock under our ATM program at a weighted average price of $6.07 per share for $2.0 million in proceeds, net of fees. As of June 30, 2023, we have approximately $148.0 million remaining in gross proceeds available for future issuances of common stock under the ATM Program.

### Contractual Obligations and Commitments

We enter into contracts in the normal course of business with CROs and other vendors to assist in the performance of our research and development activities and other services and products for operating purposes. These contracts generally provide for termination on notice, and therefore are cancelable contracts and not included in the table of contractual obligations and commitments.

In January 2021, we signed a lease for 50,581 square feet of office and laboratory space at One Research Way in Princeton, New Jersey. That lease term extends through 2032, has a five-year extension option, and is intended to replace our two existing facilities. Amounts related to future lease payments as of June 30, 2023, totaled $18.0 million, with $1.8 million to be paid within the next 12 months.

### Plan of Operation and Future Funding Requirements

We use our capital resources primarily to fund operating expenses, mainly research and development expenditures. We plan to increase our research and development expenses for the foreseeable future as we continue the preclinical and clinical development of our product candidates. At this time, due to the inherently unpredictable nature of preclinical and clinical development and given the early stage of our product candidates, we cannot reasonably estimate the costs we will incur and the timelines that will be required to complete development, obtain marketing approval and commercialize our current product candidates or any future product candidates, if at all. For the same reasons, we are also unable to predict when, if ever, we will generate revenue from product sales or whether, or when, if ever, we may achieve profitability. Clinical and preclinical development timelines, the probability of success, and development costs can differ materially from expectations. In addition, we cannot forecast which product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.

Due to our significant research and development expenditures, we have generated substantial operating losses in each period since inception. We have incurred an accumulated deficit of $277.6 million through June 30, 2023. We expect to incur substantial additional losses in the future as we expand our research and development activities. For the six months ended June 30, 2023 and 2022, our cash operating expenditures were $27.9 million and $31.7 million, respectively. We expect to increase our investment in operations in the remainder of 2023 and 2024. Based on our research and development plans, we expect that our cash, cash equivalents and marketable securities as of June 30, 2023 will be sufficient to fund our operations at least through 2024.

We have based this estimate on assumptions that may prove to be wrong, however, and we could use our capital resources sooner than we expect.

The timing and amount of our operating expenditures will depend largely on:

- the timing and progress of preclinical and clinical development activities;
- the number and scope of preclinical and clinical programs we decide to pursue;
- the timing and amount of milestone payments we may receive under any future collaboration agreements;
- our ability to maintain future licenses and research and development programs and to establish new collaboration and/or in-licensing arrangements;
- the costs involved in prosecuting and enforcing patent and other intellectual property claims;
- the cost and timing of regulatory approvals; and
- our efforts to build out our new office and laboratory headquarters, enhance operational systems and hire additional personnel, including personnel to support development of our product candidates and satisfy our obligations as a public company.

Until such time, if ever, as we can generate substantial revenue from product sales, we expect to fund our operations and capital funding needs through equity and/or debt financing. We may also consider entering into collaboration arrangements or selectively partnering for clinical development and commercialization. The sale of additional equity would result in additional dilution to our stockholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations or our ability to incur additional indebtedness or pay dividends, among other items. If we raise additional funds through governmental funding, collaborations, strategic partnerships and alliances or marketing, distribution, 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 grant licenses on terms that may not be favorable to us. If we are not able to secure adequate additional funding, we may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, and/or suspend or curtail planned programs. Any of these actions could materially and adversely affect our business, financial condition, results of operations and prospects.

### Cash Flows

The following table summarizes our cash flows for the period indicated (in thousands):

|  | Six Months Ended June 30, 2023 (Unaudited) | 2022 (Unaudited) |
| --- | ---: | ---: |
| Cash used in operating activities | $(27,913) | $(31,677) |
| Cash used in investing activities | (14,318) | (54,104) |
| Cash provided by financing activities | 2,143 | 404 |
| Net (decrease) increase in cash and cash equivalents | $(40,088) | $(85,377) |

### Operating Activities

Net cash used in operating activities for the six months ended June 30, 2023, was $27.9 million, which consisted primarily of net loss of $36.6 million partially offset by non-cash charges of $4.8 million. Changes in our net operating assets increased operating cash by $3.9 million. The non-cash charges primarily consisted of stock-based compensation of $6.1 million, accretion of premiums on marketable securities of $1.7 million, depreciation of $0.5 million, and non-cash lease income of $0.2 million. The change in our net operating assets and liabilities was primarily due to a decrease in prepaid expenses and other assets, and an increase in outstanding payables and accrued expenses.

Net cash used in operating activities for the six months ended June 30, 2022, was $31.7 million, which consisted primarily of net loss of $35.7 million partially offset by non-cash charges of $5.1 million. Changes in our net operating assets decreased operating cash by $1.0 million. The non-cash charges primarily consisted of stock-based compensation of $4.7 million, depreciation and amortization of $0.3 million, and non-cash lease expense of $0.2 million. The change in our net operating assets and liabilities was primarily due to an increase in prepaid expenses and other assets, a decrease in accrued expenses, a decrease in outstanding payables, and a decrease in operating lease right of use assets and liabilities driven by a cash reimbursement of $1.6 million for the buildout of the new office building in Princeton, New Jersey.

### Investing Activities

Our investing activities used $14.3 million of cash during the six months ended June 30, 2023, which consisted primarily of purchases of marketable securities of $129.6 million, along with purchase of property and equipment of $0.7 million, partially offset by maturities of marketable securities of $116.0 million.

Our investing activities used $54.1 million of cash during the six months ended June 30, 2022, which consisted primarily of purchases of marketable securities of $149.2 million, along with purchase of property and equipment of $4.3 million partially offset by maturities of marketable securities of $99.4 million.

### Financing Activities

Our financing activities provided $2.1 million of cash during the six months ended June 30, 2023. This consisted of $2.0 million of common stock issued under our ATM program, net of issuance costs, and $0.1 million of proceeds from the exercise of stock options.

Our financing activities provided $0.4 million of cash during the six months ended June 30, 2022, which consisted primarily of proceeds from the exercise of stock options and issuance of common stock under the 2020 ESPP.

### Critical Accounting Policies and Significant Judgments and Estimates

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the amounts reported in those financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates.

We believe that the accounting policies described below involve a high degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our financial condition and results of our operations. During the six-month period ended June 30, 2023, there were no material changes to our critical accounting policies from those described in our audited financial statements for the year ended December 31, 2022, included in our Annual Report on Form 10-K filed with the SEC on March 1, 2023, except as noted below.

### Research and Development Costs, Accrued Research and Development Costs and Related Prepaid Expenses

Research and development costs are expensed as incurred. Research and development expenses consist principally of personnel costs, including salaries, stock-based compensation and benefits for employees, third-party license fees and other operational costs related to our research and development activities, including sourcing of raw materials and manufacturing of our product candidates, allocated facility-related expenses and external costs of outside vendors, and other direct and indirect costs. Non-refundable research and development advance payments are deferred and capitalized. The capitalized amounts are expensed as the related goods are delivered or services are performed.

As part of the process of preparing our financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with our applicable personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs. The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met; however, some require advance payments. We make estimates of our accrued expenses as of each balance sheet date in the financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of the estimates with the service providers and make adjustments if necessary. Examples of estimated accrued research and development expenses include fees paid to:

- vendors, including research laboratories, in connection with preclinical development activities;
- CROs and investigative sites in connection with preclinical studies and clinical trials; and
- CMOs in connection with drug substance and drug product formulation of preclinical studies and clinical trial materials.

We base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple research institutions and CROs that supply, conduct and manage preclinical studies and clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or the prepaid expense accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses.

### Stock-Based Compensation

We measure all stock options and other stock-based awards granted to our employees, directors, consultants, and other non-employee service providers based on the fair value on the date of the grant. Compensation expense related to awards to employees and directors with service-based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is typically the vesting term.

We classify stock-based compensation expense in our statement of operations in the same way the award recipient’s payroll costs are classified or in which the award recipients’ service payments are classified.

We use the Black-Scholes option pricing model to estimate the fair value of stock options on the date of grant. Using the Black-Scholes option pricing model requires management to make significant assumptions and judgments. We determined these assumptions for the Black-Scholes option-pricing model.

Expected volatility was derived from the average historical stock volatility of our common stock over a period equivalent to the expected term of the stock-based awards if data was available, and over the longest period for which trading activity is available if data matching the expected term was unavailable.

### Recent Accounting Pronouncements

For a description of recent accounting pronouncements, see Note 2 of the notes to our unaudited condensed financial statements for the six months ended June 30, 2023 included elsewhere in this Quarterly Report on Form 10-Q.

## Market risk

As filed, 849 characters.

We are exposed to market risks in the ordinary course of our business. These risks primarily relate to interest rate risks.

We had cash, cash equivalents, and marketable securities of $218.8 million and restricted cash of $0.8 million as of June 30, 2023. The Company’s cash equivalents consist of interest-bearing U.S. treasury securities, money market funds, and corporate debt securities. Our exposure due to changes in interest rates is not material due to the nature and amount of our money-market funds and short-term marketable securities.

We are not currently exposed to significant market risk related to changes in foreign currency exchange rates; however, we may contract with foreign vendors that are located outside the United States in the future. This may subject us to fluctuations in foreign currency exchange rates in the future.

## Controls and procedures

As filed, 1,639 characters.

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our Securities Exchange Act of 1934, as amended reports is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

We carry out a variety of ongoing procedures, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, to evaluate the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2023.

There have not been any changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 758 characters.

There have been no material changes to the Company’s risk factors as set forth in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on March 1, 2023, as supplemented by our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. You should carefully review and consider the information regarding certain factors which could materially affect our business, financial condition or future results set forth under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on March 1, 2023 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, as filed with the SEC on May 10, 2023.

Filed Aug 9, 2023.
Source: SEC EDGAR, the filing index for accession 0000950170-23-040153. Last ingested by Listed: Oct 24, 2026, 15:15 ET. No prices; not investment advice.