# Neumora Therapeutics, Inc.: Form 10-Q for the period ended Sep 30, 2023

- Company: [Neumora Therapeutics, Inc.](/companies/nmra.md) (CIK 1885522)
- Form: 10-Q
- Filed: 2023-11-01
- Accepted by EDGAR: Nov 1, 2023, 16:05 ET
- Period: 2023-09-30
- Accession: 0000950170-23-057424
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1885522/000095017023057424/nmra-20230930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1885522/000095017023057424/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2023-07-01 to 2023-09-30 | $41.6m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2023-01-01 to 2023-09-30 | $103.9m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | −$56.9m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | −$138.1m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | −$53.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | −$127.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | −$1.14 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | −$3.59 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | −$1.14 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | −$3.59 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 46,691,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 35,428,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | −$111.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $73.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-09-30 | $412.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $525.7m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $544.7m | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $29.1m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $32.1m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-09-30 | $512.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 43,483 characters.

*The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and notes thereto and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our final prospectus filed with the Securities and Exchange Commission (SEC) pursuant to Rule 424(b) under the Securities Act of 1933, as amended (Securities Act) on September 18, 2023 (Prospectus) that forms a part of the Company’s Registration Statement on Form S-1 (File No. 333-274229). This discussion and analysis contains forward-looking statements based upon current beliefs, plans, and expectations related to future events and our future performance that involves risks, uncertainties, and assumptions, such as statements regarding our intentions, plans, objectives, and expectations for our business. Our actual results and the timing of selected events could differ materially from those discussed in the forward-looking statements as a result of several factors including those set forth in the section titled “Risk Factors.” See also the section titled “Special Note Regarding Forward-Looking Statements”.*

### Overview

We are a clinical-stage biopharmaceutical company founded to confront the global brain disease crisis by taking a fundamentally different approach to the way treatments for brain diseases are developed. We have rapidly scaled our therapeutic pipeline, which currently consists of seven clinical and preclinical neuroscience programs that target novel mechanisms of action for a broad range of underserved neuropsychiatric disorders and neurodegenerative diseases. We expect to continue to progress the development of our pipeline with the planned initiation of multiple clinical trials across our programs over the next 12 to 18 months, which supports numerous anticipated data readouts. Our most advanced product candidate, navacaprant (NMRA-140), is a novel once-daily oral kappa opioid receptor (KOR) antagonist that is being developed for the treatment of major depressive disorder (MDD), which we believe has the potential to provide significant advantages relative to the standard of care, if approved. We have initiated a pivotal Phase 3 program for navacaprant monotherapy in patients with moderate to severe MDD and anticipate releasing topline results for the KOASTAL-1 study in the second half of 2024.

As shown in the table below, our current pipeline comprises seven programs, three of which are expected to be in clinical development by year-end 2023 and four of which are in preclinical development.

We were incorporated in November 2019 and commenced operations thereafter. To date, we have focused primarily on building our organization, acquiring technologies and companies, developing our precision neuroscience approach, identifying and developing potential product candidates, executing clinical and preclinical studies, organizing and staffing our company, business planning, establishing our intellectual property portfolio, raising capital and providing general and administrative support for these operations. We do not have any products approved for sale, we have not generated any revenue from the sale of products, and we do not expect to generate revenue from the sale of our product candidates until we complete clinical development, submit regulatory filings, and receive approvals from the applicable regulatory bodies for such product candidates, if ever.

In September 2023, we completed our initial public offering (IPO) pursuant to which we issued and sold an aggregate of 14,710,000 shares of our common stock at a price to the public of $17.00 per share. We received aggregate net proceeds of $226.6 million after deducting underwriting discounts and commissions of $17.5 million and other offering expenses of $6.0 million. As of September 30, 2023, we had $519.5 million in cash, cash equivalents and marketable securities. Based upon our current operating plan, we believe that our existing cash, cash equivalents and marketable securities, will enable us to fund our operating expenses and capital expenditure requirements through at least the next 12 months following the issuance of the condensed consolidated financial statements.

Since our inception, we have incurred significant net losses, which are primarily attributable to acquired intangible in-process research and development intangible asset (IPR&D) costs pursuant to our acquisitions, which occurred in 2020 and were accounted for as an acquisition of assets. We expect to continue to incur significant losses for the foreseeable future as we continue to advance the development of our product candidates and approach, and incur additional costs associated with being a public company. Our net losses were $53.0 million and $29.3 million for the three months ended September 30, 2023 and 2022, respectively. Our net losses were $127.2 million and $102.8 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, we had an accumulated deficit of $594.7 million. Our primary use of our capital resources is to fund our operating expenses, which consist primarily of expenditures related to identifying, acquiring, developing, and in-licensing our precision neuroscience approach and product candidates, and conducting preclinical studies and clinical trials, and to a lesser extent, general and administrative expenditures. Our net losses may fluctuate significantly from period to period, depending on the timing of our clinical trials and our expenditures on research and development activities.

We will need substantial additional funding to support our continuing operations and pursue our long-term business plan, including to complete the development and commercialization of our product candidates, if approved. Until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our operations through public or private equity offerings or debt financings or other capital sources, which may include strategic collaborations or other arrangements with third parties, or other sources of financing. We may not be able to raise additional capital on terms acceptable to us or at all. If we are unable to raise additional capital on acceptable terms when needed, our business, results of operations, and financial condition would be adversely affected. The amount and timing of our future funding requirements will depend on many factors including the successful advancement of our precision neuroscience approach, programs, and product candidates. Our ability to raise additional funds may also be adversely impacted by potential worsening global economic conditions and disruptions to, and volatility in, the credit and financial markets in the United States and worldwide.

### Acquisitions of Assets

We have completed various acquisitions. For details regarding our acquisitions, see Note 6 – Acquisitions of Assets to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

### Strategic License and Research and Collaboration Agreements

We have assumed license arrangements with certain third parties as a result of our acquisitions and have entered into several additional agreements with various parties. For details regarding these agreements, see Note 8 –Strategic License and Research and Collaboration Agreements to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

### Contingent Consideration

#### BlackThorn Contingent Consideration

Pursuant to the terms of the BlackThorn Merger Agreement, we are required to pay the former stockholders of BlackThorn contingent consideration (i) with respect to navacaprant, in the form of development and regulatory approval milestones of up to an aggregate amount of $365.0 million, which includes a milestone payment of $90.0 million that will become due upon dosing the first patient in the Phase 3 clinical trial for navacaprant, and sales-based milestones of up to an aggregate amount of $450.0 million and (ii) with respect to NMRA-511, in the form of development and regulatory approval milestones of up to an aggregate amount of $100.0 million, and sales-based milestones of up to an aggregate amount of $100.0 million (BlackThorn Milestones). At the Company’s sole discretion, the

BlackThorn Milestone payments may be settled in cash or shares of the Company, or a combination of both, subject to the provisions of the BlackThorn Merger Agreement, other than one development milestone in the amount of $10.0 million, which must be settled in cash. We expect to settle the $90.0 million Phase 3 navacaprant dosing milestone in the fourth quarter of 2023. None of the other BlackThorn Milestones have been achieved and no such amounts were deemed due or payable as of September 30, 2023.

In October 2023, the milestone payment of $90.0 million became due upon dosing the first patient in the Phase 3 clinical trial for navacaprant, which may be made in stock, cash or a combination of the two.

#### Vanderbilt Contingent Consideration

Pursuant to the terms of the Vanderbilt License Agreement, we are required to pay Vanderbilt contingent consideration payable in cash up to an aggregate of $42.4 million upon the achievement of specified development milestones and up to an aggregate of $380.0 million upon the achievement of commercial milestone events as well as tiered royalties at mid-single digit percentages on potential future net sales. As of September 30, 2023, none of the milestones had been achieved and no such amounts were deemed due or payable. In October 2023, we met a development milestone of $2.0 million that we expect to pay in cash in the fourth quarter of 2023.

### COVID-19 Impact

Although the World Health Organization has declared that COVID-19 no longer represents a global health emergency, the actual and perceived impact of COVID-19 and any effect on our business cannot be predicted. As a result, there can be no assurance that we will not experience additional negative impacts associated with COVID-19, which could be significant and may delay our initiation of preclinical studies and clinical trials, interrupt our supply chain, disrupt regulatory activities or have other adverse effects on our business and operations. Our focus remains on promoting measures intended to help minimize our risk of exposure to the virus for our employees, including policies that allow our employees to work remotely.

For additional details regarding the COVID-19 pandemic’s impact on our business and operations, see the section titled “Risk Factors.”

### Components of Operating Results

### Operating Expenses

#### Research and Development

Research and development expenses consist of external and internal expenses, and primarily relate to our discovery efforts and development of our precision neuroscience approach, programs, and product candidates. We account for acquired in-process research and development expenses from our strategic acquisitions, which accounts for a significant portion of our operating expenses, separately from research and development expenses.

External research and development expenses include, among others, amounts incurred with contract research organizations (CROs), contract manufacturing organizations (CMOs), preclinical testing organizations and other vendors that conduct research and development activities on our behalf. Internal research and development expenses include, among others, personnel-related costs, including salaries, benefits and stock- based compensation for employees engaged in research and development functions, laboratory supplies and other non-capital equipment utilized for in-house research, software development costs and allocated expenses including facilities costs and depreciation and amortization.

Because we are working on multiple research and development programs at any one time, we track our external expenses by the stage of program, clinical or preclinical. However, our internal expenses, including unallocated costs, employees and infrastructure are not directly tied to any one program and are deployed across multiple programs. As such, we do not track internal expenses on a specific program basis.

We expense research and development costs as incurred. Amounts recorded for external goods or services incurred for research and development activities that have not yet been invoiced are included in accrued liabilities in our condensed consolidated balance sheets and often represent estimates. We estimate accrued expenses and the related research and development expense based on the level of services performed but not yet invoiced pursuant to agreements established with our service providers, according to the progress of preclinical studies, clinical trials or related activities, and discussions with applicable personnel and service providers as to the progress or state of consummation of goods and service. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our condensed consolidated financial statements as prepaid expenses or other current assets or accrued liabilities. Nonrefundable advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered, or the services rendered.

We expect our research and development expenses to increase substantially for the foreseeable future as we incur costs to further develop our precision neuroscience approach and advance our programs and product candidates through clinical development and pursue regulatory approval of our product candidates. The process of conducting the necessary clinical and preclinical research to obtain regulatory approval is costly and time- consuming, and the successful development of our product candidates is highly uncertain. As a result of the uncertainties discussed below, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of our product candidates.

Our research and development expenses may vary significantly based on factors such as:

- per patient trial costs;
- the number of trials required for approval;
- the number of sites included in the trials;
- the countries in which the trials are conducted;
- the length of time required to enroll eligible patients;
- the number of patients that participate in the trials;
- the drop-out or discontinuation rates of patients;
- potential additional safety monitoring requested by regulatory agencies;
- the duration of patient participation in the trials and follow-up;
- the cost and timing of manufacturing our product candidates;
- the phase of development of our product candidates;
- the efficacy and safety profile of our product candidates;
- the number and scope of preclinical and IND-enabling studies;
- the effectiveness of our precision neuroscience approach at identifying target patient populations and utilizing the approach to enrich our patient population in our clinical trials;
- employee-related costs for personnel engaged in the design, development, testing and enhancement of our precision neuroscience related technology;
- the extent to which we establish additional collaboration or license agreements;
- whether we choose to partner any of our product candidates and the terms of such partnership; and
- the impact of general economic conditions, such as rising inflation and increasing interest rates.

A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any of our product candidates. We may obtain unexpected results from our preclinical studies and future clinical trials.

#### Acquired In-Process Research and Development

Acquired in-process research and development expenses consist of existing research and development projects at the time of the acquisition. Projects that qualify as IPR&D assets represent those that have not yet reached technological feasibility and have no alternative future use. Our acquisitions of assets have all included IPR&D assets that had not yet reached technological feasibility and had no alternative future use, which resulted in a write-off of these IPR&D assets to acquired in-process research and development expenses in our condensed consolidated statement of operations and comprehensive loss.

#### General and Administrative

General and administrative expenses include, among others, personnel-related costs, including salaries, benefits, and stock-based compensation for our employees in executive, finance, and other administrative functions, legal fees, professional fees incurred for accounting, audit, and tax services, recruiting costs, and other allocated expenses, including facilities costs and depreciation and amortization not included in research and development expenses. Legal fees are included within general and administrative expenses and are related to corporate and intellectual property related matters.

We expect our general and administrative expenses to increase substantially in the foreseeable future as we continue to support our research and development activities, grow our business and, if any of our product candidates receive marketing approval, commence commercialization activities. We also anticipate incurring additional expenses associated with operating as a public company, including increased expenses related to audit, legal, regulatory, and tax-related services associated with maintaining compliance with the rules and regulations of the SEC and standards applicable to public companies, additional insurance expenses, investor relations activities and other administrative and professional services.

### Other Income (Expense)

#### Interest Income

Interest income consists of interest earned on our cash equivalents and marketable securities.

#### Other Income (Expense), Net

Other income (expense), net consists primarily of changes in the fair value of our convertible preferred stock warrant liability prior to settlement in 2022.

### Results of Operations

### For the Three Months Ended September 30, 2023 and 2022

The following table summarizes our result of operations for the periods presented:

*(in thousands)*

| Operating expenses: | Three Months Ended September 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| Research and development | $41,601 | $22,549 | $19,052 |
| General and administrative | 15,263 | 8,053 | 7,210 |
| Total operating expenses | 56,864 | 30,602 | 26,262 |
| Loss from operations | (56,864) | (30,602) | (26,262) |
| Other income (expense): |  |  |  |
| Interest income | 3,838 | 1,406 | 2,432 |
| Other income (expense), net | (1) | (148) | 147 |
| Total other income | 3,837 | 1,258 | 2,579 |
| Net loss | $(53,027) | $(29,344) | $(23,683) |

30

#### Research and Development Expenses

The following table summarizes our research and development expenses by program for the periods presented:

*(in thousands)*

| Direct external program expenses: | Three Months Ended September 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| Navacaprant (NMRA-140) program | $13,861 | $2,822 | $11,039 |
| NMRA-511 program | 2,074 | 158 | 1,916 |
| Preclinical programs | 4,734 | 3,486 | 1,248 |
| Internal and unallocated expenses: |  |  |  |
| Personnel-related costs | 9,210 | 6,944 | 2,266 |
| Other costs | 11,722 | 9,139 | 2,583 |
| Total research and development expenses | $41,601 | $22,549 | $19,052 |

Research and development expenses increased by $19.1 million, or 84%, to $41.6 million for three months ended September 30, 2023 from $22.5 million for the three months ended September 30, 2022 as we ramped up our clinical and preclinical programs and related activities. Direct external program expenses increased by $14.2 million, of which $11.0 million was related to navacaprant primarily due to start-up activities for our Phase 3 clinical trials, $1.9 million was attributable to NMRA-511 primarily driven by our Phase 1 clinical trial and $1.2 million was attributable to increased research and development activities primarily related to our NMRA-266 preclinical program. Internal and unallocated expenses increased by $4.8 million, of which $2.3 million related to higher personnel-related costs, including $1.3 million related to stock-based compensation, as we grew our headcount and $2.3 million related to an increase in contracted research and consulting activities, mainly due to higher activities under our research and collaboration agreements with Amgen and with other vendors.

#### General and Administrative Expenses

General and administrative expenses increased by $7.2 million, or 90%, to $15.3 million for the three months ended September 30, 2023 from $8.1 million for the three months ended September 30, 2022 as we continued to expand our administrative functions to support our business and operate as a public company. The increase was primarily attributable to $6.3 million higher personnel-related costs, including $3.1 million related to stock-based compensation, as we grew our headcount, and $1.3 million higher legal and other professional services. The increase was partially offset by a decrease of $0.3 million related to the allocation of facilities expenses.

#### Interest Income

Interest income increased by $2.4 million, or 173%, to $3.8 million for the three months ended September 30, 2023 from $1.4 million for the three months ended September 30, 2022, which was attributable to increased interest earned on our cash equivalents and marketable securities.

#### Other Income (Expense), Net

Other income (expense), net was not material for the three months ended September 30, 2023. Other income (expense), net was $0.1 million for the three months ended September 30, 2022, which was primarily attributable to the change in fair value of our convertible preferred stock warrant liability.

### For the Nine Ended September 30, 2023 and 2022

The following table summarizes our result of operations for the periods presented:

*(in thousands)*

| Operating expenses: | Nine Months Ended September 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| Research and development | $103,855 | $68,226 | $35,629 |
| Acquired in-process research and development | — | 13,000 | (13,000) |
| General and administrative | 34,239 | 23,926 | 10,313 |
| Total operating expenses | 138,094 | 105,152 | 32,942 |
| Loss from operations | (138,094) | (105,152) | (32,942) |
| Other income (expense): |  |  |  |
| Interest income | 10,965 | 2,276 | 8,689 |
| Other income (expense), net | (66) | 118 | (184) |
| Total other income (expense) | 10,899 | 2,394 | 8,505 |
| Net loss | $(127,195) | $(102,758) | $(24,437) |

#### Research and Development Expenses

The following table summarizes our research and development expenses by program for the periods presented:

*(in thousands)*

| Direct external program expenses: | Nine Months Ended September 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| Navacaprant (NMRA-140) program | $22,554 | $7,982 | $14,572 |
| NMRA-511 program | 5,718 | 463 | 5,255 |
| Preclinical programs | 13,987 | 12,418 | 1,569 |
| Internal and unallocated expenses: |  |  |  |
| Personnel-related costs | 26,054 | 19,669 | 6,385 |
| Other costs | 35,542 | 27,694 | 7,848 |
| Total research and development expenses | $103,855 | $68,226 | $35,629 |

Research and development expenses increased by $35.6 million, or 52%, to $103.9 million for nine months ended September 30, 2023 from $68.2 million for the nine months ended September 30, 2022 as we ramped up our clinical and preclinical programs and related activities. Direct external program expenses increased by $21.4 million, of which $14.6 million was related to navacaprant primarily due to start-up activities for our Phase 3 clinical trials, $5.3 million was attributable to NMRA-511 primarily driven by our Phase 1 clinical trial and $1.6 million was attributable to increased research and development activities primarily related to our NMRA-266 preclinical program. Internal and unallocated expenses increased by $14.2 million, of which $5.6 million related to an increase in contracted research and consulting activities, mainly due to higher activities under the research and collaboration agreements with Amgen and with other vendors. The remaining increase of $8.6 million was mainly driven by $6.4 million in increased personnel-related costs, including $2.6 million related to stock-based compensation, as we grew our headcount and a $1.3 million increase in facilities-related costs mainly due to the sublease of additional premises in August 2022.

#### Acquired In-Process Research and Development Expenses

There were no in-process research and development expenses for the nine months ended September 30, 2023. Acquired in-process research and development expenses were $13.0 million for nine months ended September 30, 2022, which consisted of costs to acquire rights to IPR&D assets upon the execution of our in-license from Vanderbilt in 2022, as these assets had not yet reached technological feasibility and had no alternative future use.

#### General and Administrative Expenses

General and administrative expenses increased by $10.3 million, or 43%, to $34.2 million for the nine months ended September 30, 2023 from $23.9 million for the nine months ended September 30, 2022 as we continued to expand our administrative functions to support our business. The increase was primarily attributable to $7.1 million higher personnel-related costs, including $3.1 million related to stock-based compensation, as we grew our headcount, $2.6 million higher legal and other professional services and a $0.4 million increase in external services mainly related to medical affairs.

#### Interest Income

Interest income increased by $8.7 million, to $11.0 million for the nine months ended September 30, 2023 from $2.3 million for the nine months ended September 30, 2022, which was attributable to increased interest earned on our cash equivalents and marketable securities.

#### Other Income (Expense), Net

Other income (expense), net was not material for the three months ended September 30, 2023. Other income (expense), net was $0.1 million for the nine months ended September 30, 2022, which was primarily attributable to the change in fair value of our convertible preferred stock warrant liability.

### Liquidity and Capital Resources

### Sources of Liquidity

As of September 30, 2023, we had $519.5 million of cash, cash equivalents and marketable securities. Prior to our IPO we primarily funded our operations with the net proceeds from the sale and issuance of our convertible preferred stock and convertible promissory notes and raised gross cash proceeds of over $600 million including from the sale of convertible preferred stock, borrowings pursuant to convertible promissory notes and cash acquired in our acquisitions of assets. On September 19, 2023, we completed our IPO pursuant to which we issued and sold an aggregate of 14,710,000 shares of common stock at a price to the public of $17.00 per share. We received aggregate net proceeds of $226.6 million after deducting underwriting discounts and commissions of $17.5 million and other offering expenses of $6.0 million.

Since our inception, we have not generated any revenue from the sale of products and we have incurred significant net losses and negative cash flows from operations. Our primary use of our capital resources is to fund our operating expenses, which consist primarily of expenditures related to identifying, acquiring, developing, and in-licensing our precision neuroscience approach, programs, and product candidates, and conducting preclinical studies and clinical trials, and to a lesser extent, general and administrative expenditures. We have not yet commercialized any products and we do not expect to generate revenue from sales of any product candidates for a number of years, if ever. As of September 30, 2023, we had an accumulated deficit of $594.7 million.

### Future Funding Requirements

We expect our expenses and operating losses will increase substantially over the foreseeable future as we continue our research and development efforts, advance our product candidates through clinical and preclinical development, enhance our precision neuroscience approach and programs, expand our product pipeline, seek regulatory approval, prepare for commercialization, as well as hire additional personnel and protect our intellectual property, Furthermore, as a result of the completion of our IPO on September 19, 2023, we expect to incur additional costs associated with being a public company. We also expect to increase the size of our administrative function to support the growth of our business. Our net losses may fluctuate significantly from period to period, depending on the factors described below. We are subject to the risks typically related to the development of new products, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business. The expected increase in expenses will be driven in large part by our ongoing activities, and our future capital requirements will depend on many factors, including:

- the scope, timing, progress, costs and results of discovery, preclinical development and clinical trials for our current or future product candidates;
- the number of clinical trials required for regulatory approval of our current or future product candidates;
- the costs, timing and outcome of regulatory review of any of our current or future product candidates;
- the costs associated with acquiring or licensing additional product candidates, technologies or assets, including the timing and amount of any milestones, royalties or other payments due in connection with our acquisitions and licenses;
- the cost of manufacturing clinical and commercial supplies of our current or future product candidates;
- the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims, including any claims by third parties that we are infringing upon their intellectual property rights;
- the effectiveness of our precision neuroscience approach at identifying target patient populations and utilizing our approach to enrich our patient population in our clinical trials;
- our ability to maintain existing, and establish new, strategic collaborations or other arrangements and the financial terms of any such agreements, including the timing and amount of any future milestone, royalty or other payments due under any such agreement;
- our ability to access additional multimodal patient datasets;
- the costs and timing of future commercialization activities, including manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval;
- the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;
- expenses to attract, hire and retain skilled personnel;
- the costs of operating as a public company;
- our ability to establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third-party and government payers;
- the effect of macroeconomic trends including inflation and rising interest rates;
- addressing any potential supply chain interruptions or delays, including those related to the COVID-19 pandemic;
- the effect of competing technological and market developments; and
- the extent to which we acquire or invest in business, products and technologies.

Based upon our current operating plan, we believe that our existing cash, cash equivalents and marketable securities, will enable us to fund our operating expenses and capital expenditure requirements through at least the next 12 months following the issuance of the condensed consolidated financial statements. However, we anticipate that we will need to raise additional financing in the future to fund our operations, including the commercialization of any approved product candidates. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We may also raise additional financing on an opportunistic basis in the future. We expect to continue to expend significant resources for the foreseeable future.

To complete the development and commercialization of our product candidates, if approved, we will require substantial additional funding. Until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our operations through public or private equity offerings or debt financings or other capital sources, which may include strategic collaborations or other arrangements with third parties, or other sources of financing.

### Cash Flows

The following table summarizes our cash flows for the periods presented:

*(in thousands)*

| Net cash (used in) provided by: | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Operating activities | $(111,836) | $(84,530) |
| Investing activities | 50,710 | (159,983) |
| Financing activities | 232,417 | 88,910 |
| Net change in cash and cash equivalents and restricted cash | $171,291 | $(155,603) |

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#### Operating Activities

Net cash used in operating activities for the nine months ended September 30, 2023 was $111.8 million, which consisted of a net loss of $127.2 million, which was partially offset by $11.1 million in noncash charges and a change in our net operating assets and liabilities of $4.2 million. The noncash charges primarily consisted of $11.2 million of stock-based compensation, $2.5 million of noncash operating lease expense and $0.5 million of depreciation and amortization, partially offset by $3.1 million of net accretion of discounts on marketable securities. The change in our net operating assets and liabilities primarily resulted from and an increase of $10.0 million in accounts payable and accrued liabilities due to increased activities and the timing of our accounts payable, partially offset by an increase of $3.3 million in prepaid expenses and other current assets related to our clinical programs and collaboration with Amgen and a decrease of $2.5 million in operating lease liabilities.

Net cash used in operating activities for the nine months ended September 30, 2022 was $84.5 million, which consisted of a net loss of $102.8 million and a change in our net operating assets and liabilities of $1.8 million, which was partially offset by $20.0 million in noncash charges. Our net operating assets and liabilities primarily resulted from a decrease of $6.8 million in accounts payable and accrued liabilities due to the payment of annual bonuses and timing of our accounts payable and a decrease of $1.0 million in operating lease liabilities, partially offset by a decrease of $6.1 million in prepaid expenses and other current assets and other assets primarily related to our collaboration with Amgen. The noncash charges primarily consisted of $13.0 million of IPR&D assets acquired from Vanderbilt that were expensed to acquired in-process research and development upon acquisition because the assets had not yet reached technological feasibility and had no alternative future use, $5.5 million of stock-based compensation, $1.3 million of noncash operating lease expense and $0.4 million of depreciation and amortization, partially offset by $0.2 million of accretion of discounts on marketable securities.

#### Investing Activities

Net cash provided by investing activities for the nine months ended September 30, 2023 was $50.7 million, which primarily consisted of $139.8 million in proceeds from sales and maturities of marketable securities, partially offset by $89.0 million in purchases of marketable securities.

Net cash used in investing activities for the nine months ended September 30, 2022 was $160.0 million, which consisted of $178.3 million in purchases of marketable securities, $13.0 million of cash used to acquire IPR&D assets from Vanderbilt and $0.5 million of purchases of property and equipment primarily to support our research and development activities, partially offset by proceeds of $31.8 million from sales and maturities of marketable securities.

#### Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2023 was $232.4 million, which primarily consisted of $232.6 million in proceeds from the issuance of common stock upon the completion of our IPO, net of underwriting commissions and discounts and $2.5 million in proceeds from exercise of stock options, partially offset by $3.0 million in payments of issuance costs in connection with our IPO.

Net cash provided by financing activities for the nine months ended September 30, 2022 was $88.9 million, which consisted of $87.2 million from the issuance and sale of our Series B convertible preferred stock and $2.6 million in proceeds from the exercise of stock options, partially offset by $1.0 million in payments for offering costs.

### Contractual Obligations and Other Commitments

Our contractual obligations and commitments relate primarily to our operating leases for our office and laboratory facilities located in Massachusetts and California with noncancelable lease terms expiring between 2023 and 2025. Additionally, we have amounts due to Amgen under our September 2021 research and collaboration arrangement over the next twelve months totaling $12.5 million. See Note 8 – Strategic License and Research and Collaboration Agreements to our condensed consolidated financial statements for further information.

We have entered into a number of acquisitions of assets that are summarized in Note 6 – Acquisitions of Assets to our condensed consolidated financial statements. As part of these acquisitions of assets, we are obligated to pay cash and/or stock for future contingent payments that are dependent upon future events, and in some cases, vesting by the recipient of the contingent payment, such as our achievement of certain development, regulatory, and commercial milestones. We have also assumed license arrangements with various third parties, primarily as a result of our acquisitions, and have entered into additional agreements that are summarized in Note 8 –Strategic License and Research and Collaboration Agreements to our condensed consolidated financial statements. In accordance with these agreements, we are obligated to pay, among other items, future contingent payments that are uncertain and dependent upon future events such as our achievement of certain development, regulatory, and commercial milestones royalties, and sublicensing revenue in the future, as applicable. In October 2023, in connection with our acquisition of BlackThorn, a milestone of $90.0 million became due upon dosing the first patient in the Phase 3 clinical trial for navacaprant, which may be made in stock, cash or a combination of the two. In October 2023, in connection with our Vanderbilt License Agreement, a development milestone of $2.0 million became due, which we expect to pay in cash in the fourth quarter of 2023.

### Critical Accounting Estimates

Our management’s discussion and analysis of the financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with the U.S. generally accepted accounting principles, or GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses, and related disclosures. Our estimates are based on historical experience and on various other factors that are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting estimates from those described under in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” included in our Prospectus, except that from the effectiveness date of our registration statement on Form S-1 (File No. 333-274229), we have a publicly traded stock price and no longer require common stock valuations.

### Recent Accounting Pronouncements

See Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

### JOBS Act Accounting Smaller Reporting Company Elections

We are an “emerging growth company,” as defined in 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 those standards apply to private companies.

We have elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our condensed consolidated financial statements may or may not be comparable to companies that comply with new or revised accounting pronouncements as of public companies’ effective dates.

We are also a “smaller reporting company,” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company.

We have elected to take advantage of certain of the scaled disclosures available to smaller reporting companies, and will be able to take advantage of these scaled disclosures for so long as the market value of our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our voting and non-voting common stock held by non- affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

## Market risk

As filed, 242 characters.

We are a smaller reporting company, as defined by Rule 12b-2 under the Securities and Exchange Act of 1934, as amended (the Exchange Act) and in Item 10(f)(1) of Regulation S-K, and are not required to provide the information under this item.

## Controls and procedures

As filed, 1,387 characters.

### Evaluation of Disclosure Controls and Procedures

As of September 30, 2023, management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer, have evaluated our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities

Exchange Act of 1934, as amended, or the Exchange Act. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of September 30, 2023, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC 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 timely decisions regarding required disclosure.

### Changes in Internal Control over Financial Reporting

There are no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control financial reporting.

## Risk factors

As filed, 730 characters.

### RISK FACTORS

As of the date of this Quarterly Report on Form 10-Q, there have been no material changes from the risk factors disclosed in our Prospectus dated September 14, 2023 filed by us with the SEC pursuant to Rule 424(b)(4) under the Securities Act, relating to our registration statement on Form S-1 (File No. 333-274229). Any of these factors could result in a significant or material adverse effect on our result of operations or financial conditions. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

Filed Nov 1, 2023.
Source: SEC EDGAR, the filing index for accession 0000950170-23-057424. Last ingested by Listed: Oct 30, 2026, 16:11 ET. No prices; not investment advice.