falseQ2--12-3100017874000001787400nktx:DevelopmentAndRegulatoryApprovalMilestonesMembernktx:ResearchCollaborationAgreementMember2024-01-012024-06-300001787400us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMemberus-gaap:ShortTermInvestmentsMember2023-12-310001787400nktx:ComputersAndSoftwareMember2024-06-300001787400us-gaap:GeneralAndAdministrativeExpenseMember2024-01-012024-06-300001787400us-gaap:RetainedEarningsMember2024-04-012024-06-300001787400us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-06-300001787400nktx:ThirdAmendmentMember2021-01-012021-01-310001787400us-gaap:RestrictedStockUnitsRSUMember2024-06-300001787400us-gaap:AdditionalPaidInCapitalMember2024-06-300001787400us-gaap:RetainedEarningsMember2024-01-012024-03-310001787400us-gaap:CommonStockMember2023-03-310001787400us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-04-012024-06-300001787400us-gaap:AdditionalPaidInCapitalMember2023-03-310001787400us-gaap:CommonStockMember2024-03-310001787400us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-06-300001787400us-gaap:ConstructionInProgressMember2023-12-3100017874002023-01-012023-06-300001787400us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-06-300001787400us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001787400nktx:NKCellProductsMembernktx:ResearchCollaborationAgreementMember2021-05-052021-05-050001787400us-gaap:CashEquivalentsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMember2024-06-300001787400nktx:AgreementWithFinancialInstitutionMember2024-06-300001787400us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300001787400us-gaap:RetainedEarningsMember2023-06-300001787400us-gaap:AdditionalPaidInCapitalMember2024-04-012024-06-300001787400srt:MinimumMembernktx:AgreementWithFinancialInstitutionMember2024-01-012024-06-300001787400us-gaap:CommonStockMember2024-06-300001787400us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001787400nktx:PreFundedWarrantMemberus-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001787400nktx:InitialLeaseAgreementMember2018-05-012018-05-3100017874002023-12-310001787400nktx:DevelopmentAndRegulatoryApprovalMilestonesMembernktx:ResearchCollaborationAgreementMember2024-06-300001787400us-gaap:RetainedEarningsMember2023-01-012023-03-310001787400nktx:ResearchEquipmentMember2023-12-310001787400nktx:ThirdAmendmentMember2024-01-012024-06-300001787400nktx:PreFundedWarrantMember2024-01-012024-03-310001787400us-gaap:CashEquivalentsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2024-06-300001787400us-gaap:FairValueInputsLevel2Member2023-12-310001787400nktx:TwoThousandTwentyPerformanceIncentivePlanMember2024-06-300001787400us-gaap:ResearchAndDevelopmentExpenseMember2023-04-012023-06-300001787400nktx:DevelopmentAndRegulatoryApprovalMilestonesMembernktx:ResearchCollaborationAgreementMember2024-04-012024-06-300001787400nktx:LongTermInvestmentsMember2024-06-3000017874002021-07-3100017874002024-01-012024-06-300001787400us-gaap:FurnitureAndFixturesMember2023-12-310001787400srt:MinimumMembernktx:NKCellProductsMembernktx:ResearchCollaborationAgreementMember2021-05-052021-05-050001787400nktx:DevelopmentAndRegulatoryApprovalMilestonesMembernktx:ResearchCollaborationAgreementMembernktx:SpecifiedTaMember2024-01-012024-06-300001787400us-gaap:GeneralAndAdministrativeExpenseMember2024-04-012024-06-3000017874002023-01-012023-12-310001787400us-gaap:AdditionalPaidInCapitalMember2024-03-310001787400us-gaap:ShortTermInvestmentsMember2024-06-3000017874002024-01-012024-03-310001787400us-gaap:RetainedEarningsMember2024-03-310001787400us-gaap:GeneralAndAdministrativeExpenseMember2023-04-012023-06-300001787400us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Membernktx:LongTermInvestmentsMember2024-06-300001787400us-gaap:CommonStockMember2023-12-310001787400us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-12-310001787400nktx:SaleOfCommonStockAndPreFundedWarrantsMembernktx:PreFundedWarrantMember2024-03-310001787400nktx:InitialLeaseAgreementMember2021-10-012021-10-310001787400us-gaap:AdditionalPaidInCapitalMember2022-12-310001787400nktx:ResearchEquipmentMember2024-06-300001787400us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-06-300001787400us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2024-06-300001787400us-gaap:CommonStockMember2023-01-012023-03-310001787400nktx:InitialLeaseAgreementMember2020-05-012020-05-310001787400us-gaap:RestrictedStockUnitsRSUMember2023-12-310001787400us-gaap:FairValueInputsLevel2Member2024-06-300001787400us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-300001787400nktx:DevelopmentAndRegulatoryApprovalMilestonesMembernktx:ResearchCollaborationAgreementMember2023-01-012023-06-300001787400us-gaap:RetainedEarningsMember2023-04-012023-06-3000017874002024-03-310001787400us-gaap:FairValueInputsLevel2Membernktx:LongTermInvestmentsMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2024-06-300001787400us-gaap:CommonStockMember2023-04-012023-06-300001787400us-gaap:ResearchAndDevelopmentExpenseMember2024-04-012024-06-300001787400us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001787400us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:ShortTermInvestmentsMember2024-06-300001787400us-gaap:RetainedEarningsMember2024-06-300001787400us-gaap:CommonStockMembernktx:PreFundedWarrantMember2024-01-012024-03-310001787400us-gaap:ShortTermInvestmentsMember2023-12-310001787400us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001787400us-gaap:CommonStockMember2022-12-310001787400nktx:TwoThousandTwentyPerformanceIncentivePlanMember2024-01-012024-06-300001787400nktx:CorporateOfficeAndLaboratorySpaceMembernktx:InitialLeaseAgreementMember2018-05-3100017874002023-06-012023-06-300001787400us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-06-3000017874002023-03-310001787400us-gaap:CashEquivalentsMemberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2024-06-300001787400nktx:SaleOfCommonStockAndPreFundedWarrantsMember2024-03-310001787400nktx:DevelopmentAndRegulatoryApprovalMilestonesMembernktx:ResearchCollaborationAgreementMember2023-04-012023-06-300001787400us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001787400nktx:CorporateOfficeAndLaboratorySpaceMembernktx:InitialLeaseAgreementMember2024-01-012024-06-300001787400us-gaap:RetainedEarningsMember2023-03-310001787400us-gaap:RetainedEarningsMember2022-12-310001787400nktx:CorporateOfficeAndLaboratorySpaceMembernktx:InitialLeaseAgreementMember2018-05-012018-05-310001787400nktx:CommonStockOptionsMember2024-01-012024-06-300001787400nktx:AccruedAndOtherCurrentLiabilitiesMemberus-gaap:EmployeeStockMember2024-01-012024-06-300001787400srt:MaximumMembernktx:AgreementWithFinancialInstitutionMember2024-01-012024-06-3000017874002023-01-012023-03-310001787400us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-3100017874002024-06-3000017874002024-06-120001787400us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMember2023-12-310001787400us-gaap:CommonStockMember2024-01-012024-03-310001787400us-gaap:LeaseholdImprovementsMember2023-12-310001787400us-gaap:FurnitureAndFixturesMember2024-06-300001787400us-gaap:CashEquivalentsMember2024-06-300001787400us-gaap:AdditionalPaidInCapitalMember2023-12-310001787400us-gaap:EmployeeStockMember2024-06-300001787400us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310001787400us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-300001787400us-gaap:CashEquivalentsMemberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2023-12-310001787400us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMemberus-gaap:ShortTermInvestmentsMember2024-06-300001787400nktx:SaleOfCommonStockAndPreFundedWarrantsMember2024-03-012024-03-310001787400us-gaap:CommonStockMember2024-04-012024-06-300001787400us-gaap:LeaseholdImprovementsMember2024-06-300001787400us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-06-300001787400us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2023-12-310001787400us-gaap:CommonStockMember2023-06-300001787400us-gaap:ConstructionInProgressMember2024-06-300001787400us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-3100017874002024-06-130001787400nktx:ComputersAndSoftwareMember2023-12-3100017874002023-06-300001787400us-gaap:AdditionalPaidInCapitalMember2023-06-3000017874002023-04-012023-06-300001787400us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-06-300001787400us-gaap:RetainedEarningsMember2023-12-310001787400nktx:CommonStockOptionsMember2023-01-012023-06-3000017874002022-12-310001787400us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMember2024-06-300001787400us-gaap:EmployeeStockMember2024-01-012024-06-300001787400us-gaap:ResearchAndDevelopmentExpenseMember2024-01-012024-06-3000017874002024-04-012024-06-300001787400us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:ShortTermInvestmentsMember2023-12-3100017874002024-08-09nktx:CrisprCas9xbrli:purexbrli:sharesiso4217:USDnktx:Segment
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
|
|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2024
OR
|
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-39370
Nkarta, Inc.
(Exact Name of Registrant as Specified in its Charter)
|
|
Delaware |
47-4515206 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
1150 Veterans Boulevard South San Francisco, CA |
94080 |
(Address of principal executive offices) |
(Zip Code) |
(925) 407-1049
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
|
|
|
|
|
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
Common Stock, $0.0001 par value per share |
|
NKTX |
|
Nasdaq Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
|
|
|
|
|
|
Large accelerated filer |
|
☐ |
|
Accelerated filer |
|
☐ |
|
|
|
|
Non-accelerated filer |
|
☒ |
|
Smaller reporting company |
|
☒ |
|
|
|
|
|
|
|
Emerging growth company |
|
☒ |
|
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of August 9, 2024, the registrant had 70,558,754 shares of common stock, par value $0.0001 per share, outstanding.
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, and the information incorporated herein by reference, particularly in the sections captioned “Risk Factors” under Part II, Item 1A, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part I, Item 2, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “predict,” “project,” “potential,” “should,” “will,” or “would,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. In addition, these statements are based on our management’s beliefs and assumptions and on information currently available to our management as of the date of this Quarterly Report on Form 10-Q. While we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. You should read the sections titled “Risk Factor Summary” below and “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements, which such factors may be updated or supplemented from time to time by subsequent reports we file with the Securities and Exchange Commission.
Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
You should read this Quarterly Report on Form 10-Q, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
RISK FACTOR SUMMARY
Below is a summary of material factors that make an investment in our common stock speculative or risky. Importantly, this summary does not address all the risks and uncertainties that we face. Additional discussion of the risks and uncertainties summarized in this risk factor summary, as well as other risks and uncertainties that we face, can be found under Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q. The below summary is qualified in its entirety by the more complete discussion of such risks and uncertainties. You should consider carefully the risks and uncertainties described under Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q as part of your evaluation of an investment in our common stock.
•We have a limited operating history and do not have any products approved for sale.
•We have incurred significant losses since our inception and we expect to continue to incur significant losses for the foreseeable future.
•We have never generated revenue from product sales and may never achieve or maintain profitability.
•We will require additional capital, which, if available, may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our product candidates.
•Our business depends upon the success of our CAR NK-cell technology platform.
•Utilizing CAR NK cells represents a novel therapeutic approach, and we must overcome significant challenges in order to develop, commercialize and manufacture our product candidates.
•Certain aspects of the function and production of CAR NK cells are currently unknown or poorly understood, and may only become known through further preclinical testing and clinical trials. Any potential re-engineering required may result in delays and additional expense.
•Clinical development involves a lengthy and expensive process with an uncertain outcome, and we may encounter substantial delays due to a variety of reasons outside our control.
•Our business is highly dependent on the clinical success of our product candidates, and on the clinical success of NKX019, in particular, and we may fail to develop NKX019 and/or our other product candidates successfully or be unable to obtain regulatory approval for them.
•Clinical data supporting the effectiveness of CD19-targeted cell therapies against autoimmune disease are limited, and CD19-targeted CAR NK-cell therapies, such as NKX019, may not provide the same, or any, therapeutic benefit against lupus nephritis or other autoimmune diseases, or be competitive with respect to other CD19-targeted therapies for the treatment of autoimmune disease.
•Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be delayed, made more difficult or rendered impossible by multiple factors outside our control.
•Our preclinical pipeline programs may experience delays or may never advance to clinical trials, which would adversely affect our ability to obtain regulatory approvals or commercialize these programs on a timely basis or at all.
•The results of preclinical studies and early-stage clinical trials may not be predictive of future results. Interim, “topline” and preliminary data from our clinical trials may differ materially from the final data. Initial success in any clinical trials may not be indicative of results obtained when these trials are completed or in later stage trials.
•If any of our product candidates, or any competing product candidates, demonstrate relevant, serious adverse events, we may be required to halt or delay further clinical development.
•If we fail to compete effectively with academic institutions and other biopharmaceutical companies that develop similar or alternatives to cellular immunotherapy product candidates, our business will be materially adversely affected.
•We have entered into a research collaboration with CRISPR Therapeutics regarding certain product candidates, and we may enter into additional collaborations with third parties to develop or commercialize other product candidates. Our prospects with respect to those product candidates will depend in significant part on the success of those collaborations, and we may not realize the benefits of such collaborations.
•Our manufacturing process is novel and complex, and we may encounter difficulties in production, or difficulties with internal manufacturing, which would delay or prevent our ability to provide a sufficient supply of our product candidates for clinical trials or our products for patients, if approved.
•We rely on third parties to manufacture certain materials for use in the production of our product candidates, or may rely on third parties to manufacture certain of our product candidates in the future, which increases the risk that we will not have sufficient quantities of such materials or product candidates, or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.
•We are reliant on a sole supplier for certain steps of our manufacturing process.
•Delays in commissioning and receiving regulatory approvals for our manufacturing facilities could delay our development plans and thereby limit our ability to develop our product candidates and generate revenues.
•If our license agreement with National University of Singapore and St. Jude Children’s Research Hospital, Inc. is terminated, we could lose our rights to key components enabling our NK-cell engineering platform.
•If any patent protection we obtain is not sufficiently robust, our competitors could develop and commercialize products and technology similar or identical to ours.
•If any of our product candidates are approved for marketing and commercialization and we have not developed or secured marketing, sales and distribution capabilities, either internally or from third parties, we will be unable to successfully commercialize such products and may not be able to generate product revenue.
•Our product candidates, including NKX019, could be subject to regulatory limitations following approval, if and when such approval is granted.
•The market price for our common stock may be volatile, which could contribute to the loss of all or part of your investment.
•Concentration of ownership of our shares of common stock among our existing executive officers, directors and principal stockholders may prevent new investors from influencing significant corporate decisions.
•Computer system interruptions or security breaches of our information systems could significantly disrupt our product development programs and our ability to operate our business.
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
NKARTA, INC.
CONDENSED BALANCE SHEETS
(Unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
June 30,
2024 |
|
|
December 31,
2023 |
|
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
120,398 |
|
|
$ |
31,040 |
|
Short-term investments |
|
|
204,423 |
|
|
|
217,149 |
|
Prepaid expenses and other current assets |
|
|
6,978 |
|
|
|
4,882 |
|
Total current assets |
|
|
331,799 |
|
|
|
253,071 |
|
Long-term investments |
|
|
99,086 |
|
|
|
— |
|
Restricted cash |
|
|
2,743 |
|
|
|
2,743 |
|
Property and equipment, net |
|
|
77,551 |
|
|
|
79,326 |
|
Operating lease right-of-use assets |
|
|
39,374 |
|
|
|
39,949 |
|
Other long-term assets |
|
|
3,533 |
|
|
|
3,796 |
|
Total assets |
|
$ |
554,086 |
|
|
$ |
378,885 |
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
3,764 |
|
|
$ |
3,665 |
|
Operating lease liabilities, current portion |
|
|
5,532 |
|
|
|
6,069 |
|
Accrued and other current liabilities |
|
|
11,565 |
|
|
|
13,596 |
|
Total current liabilities |
|
|
20,861 |
|
|
|
23,330 |
|
Operating lease liabilities, net of current portion |
|
|
80,041 |
|
|
|
82,270 |
|
Total liabilities |
|
|
100,902 |
|
|
|
105,600 |
|
Commitments and contingencies (Note 7) |
|
|
— |
|
|
|
— |
|
Stockholders’ equity |
|
|
|
|
|
|
Common stock, $0.0001 par value; 200,000,000 shares
authorized as of June 30, 2024; 70,558,546 and 49,181,295 shares
issued and outstanding at June 30, 2024 and December 31, 2023, respectively |
|
|
7 |
|
|
|
5 |
|
Additional paid-in capital |
|
|
943,385 |
|
|
|
708,706 |
|
Accumulated other comprehensive (loss) income |
|
|
(263 |
) |
|
|
8 |
|
Accumulated deficit |
|
|
(489,945 |
) |
|
|
(435,434 |
) |
Total stockholders’ equity |
|
|
453,184 |
|
|
|
273,285 |
|
Total liabilities and stockholders’ equity |
|
$ |
554,086 |
|
|
$ |
378,885 |
|
The accompanying notes are an integral part of these condensed financial statements.
NKARTA, INC.
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited, in thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
|
Six Months Ended
June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
23,130 |
|
|
$ |
25,122 |
|
|
$ |
48,367 |
|
|
$ |
51,257 |
|
General and administrative |
|
|
7,585 |
|
|
|
11,736 |
|
|
|
15,110 |
|
|
|
19,914 |
|
Total operating expenses |
|
|
30,715 |
|
|
|
36,858 |
|
|
|
63,477 |
|
|
|
71,171 |
|
Loss from operations |
|
|
(30,715 |
) |
|
|
(36,858 |
) |
|
|
(63,477 |
) |
|
|
(71,171 |
) |
Other income, net: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
5,724 |
|
|
|
3,570 |
|
|
|
8,970 |
|
|
|
7,035 |
|
Other (expense) income, net |
|
|
(2 |
) |
|
|
1 |
|
|
|
(4 |
) |
|
|
34 |
|
Total other income, net |
|
|
5,722 |
|
|
|
3,571 |
|
|
|
8,966 |
|
|
|
7,069 |
|
Net loss |
|
$ |
(24,993 |
) |
|
$ |
(33,287 |
) |
|
$ |
(54,511 |
) |
|
$ |
(64,102 |
) |
Other comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized (loss) gain on investments |
|
|
(136 |
) |
|
|
(427 |
) |
|
|
(271 |
) |
|
|
78 |
|
Comprehensive loss |
|
$ |
(25,129 |
) |
|
$ |
(33,714 |
) |
|
$ |
(54,782 |
) |
|
$ |
(64,024 |
) |
Net loss per share, basic and diluted |
|
$ |
(0.34 |
) |
|
$ |
(0.68 |
) |
|
$ |
(0.88 |
) |
|
$ |
(1.31 |
) |
Weighted average shares used to compute net loss
per share, basic and diluted |
|
|
73,494,523 |
|
|
|
48,970,391 |
|
|
|
62,088,495 |
|
|
|
48,946,018 |
|
The accompanying notes are an integral part of these condensed financial statements.
NKARTA, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional
Paid-in |
|
|
Accumulated
Other
Comprehensive |
|
|
Accumulated |
|
|
Total
Stockholders' |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Gain/(Loss) |
|
|
Deficit |
|
|
Equity |
|
Balance, December 31, 2023 |
|
49,181,295 |
|
|
$ |
5 |
|
|
$ |
708,706 |
|
|
$ |
8 |
|
|
$ |
(435,434 |
) |
|
$ |
273,285 |
|
Issuance of common stock and pre-funded
warrants, net of issuance costs of $15,027 |
|
21,010,000 |
|
|
|
2 |
|
|
|
225,071 |
|
|
|
— |
|
|
|
— |
|
|
|
225,073 |
|
Issuance of common stock
upon exercise of stock
options |
|
128,671 |
|
|
|
— |
|
|
|
578 |
|
|
|
— |
|
|
|
— |
|
|
|
578 |
|
Issuance of common stock
upon vesting of restricted stock units |
|
133,595 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Share-based compensation
expense |
|
— |
|
|
|
— |
|
|
|
4,368 |
|
|
|
— |
|
|
|
— |
|
|
|
4,368 |
|
Unrealized loss on
investments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(135 |
) |
|
|
— |
|
|
|
(135 |
) |
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(29,518 |
) |
|
|
(29,518 |
) |
Balance, March 31, 2024 |
|
70,453,561 |
|
|
$ |
7 |
|
|
$ |
938,723 |
|
|
$ |
(127 |
) |
|
$ |
(464,952 |
) |
|
$ |
473,651 |
|
Issuance of common stock
upon exercise of stock
options |
|
14,382 |
|
|
|
— |
|
|
|
90 |
|
|
|
— |
|
|
|
— |
|
|
|
90 |
|
Issuance of common stock
upon vesting of restricted stock units |
|
22,072 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Common stock issued under
employee stock purchase plan |
|
68,531 |
|
|
|
— |
|
|
|
158 |
|
|
|
— |
|
|
|
— |
|
|
|
158 |
|
Share-based compensation
expense |
|
— |
|
|
|
— |
|
|
|
4,414 |
|
|
|
— |
|
|
|
— |
|
|
|
4,414 |
|
Unrealized loss on
investments |
|
— |
|
|
|
— |
|
|
|
|
|
|
(136 |
) |
|
|
— |
|
|
|
(136 |
) |
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(24,993 |
) |
|
|
(24,993 |
) |
Balance, June 30, 2024 |
|
70,558,546 |
|
|
$ |
7 |
|
|
$ |
943,385 |
|
|
$ |
(263 |
) |
|
$ |
(489,945 |
) |
|
$ |
453,184 |
|
NKARTA, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional
Paid-in |
|
|
Accumulated
Other
Comprehensive |
|
|
Accumulated |
|
|
Total
Stockholders' |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Gain/(Loss) |
|
|
Deficit |
|
|
Equity |
|
Balance, December 31, 2022 |
|
48,877,806 |
|
|
$ |
5 |
|
|
$ |
690,814 |
|
|
$ |
(679 |
) |
|
$ |
(317,933 |
) |
|
$ |
372,207 |
|
Vesting of shares of common
stock subject to repurchase |
|
395 |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
Issuance of common stock
upon exercise of stock
options |
|
253 |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Issuance of common stock
upon vesting of restricted stock units |
|
50,469 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Share-based compensation
expense |
|
— |
|
|
|
— |
|
|
|
4,746 |
|
|
|
— |
|
|
|
— |
|
|
|
4,746 |
|
Unrealized gain on
investments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
505 |
|
|
|
— |
|
|
|
505 |
|
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(30,815 |
) |
|
|
(30,815 |
) |
Balance, March 31, 2023 |
|
48,928,923 |
|
|
$ |
5 |
|
|
$ |
695,563 |
|
|
$ |
(174 |
) |
|
$ |
(348,748 |
) |
|
$ |
346,646 |
|
Vesting of shares of common
stock subject to repurchase |
|
113 |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Issuance of common stock
upon exercise of stock
options |
|
5,892 |
|
|
|
— |
|
|
|
21 |
|
|
|
— |
|
|
|
— |
|
|
|
21 |
|
Issuance of common stock
upon vesting of restricted stock units |
|
28,074 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
common stock issued under
employee stock purchase plan |
|
95,232 |
|
|
|
— |
|
|
|
374 |
|
|
|
— |
|
|
|
— |
|
|
|
374 |
|
Share-based compensation
expense |
|
— |
|
|
|
— |
|
|
|
4,650 |
|
|
|
— |
|
|
|
— |
|
|
|
4,650 |
|
Unrealized loss on
investments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(427 |
) |
|
|
— |
|
|
|
(427 |
) |
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(33,287 |
) |
|
|
(33,287 |
) |
Balance, June 30, 2023 |
|
49,058,234 |
|
|
$ |
5 |
|
|
$ |
700,609 |
|
|
$ |
(601 |
) |
|
$ |
(382,035 |
) |
|
$ |
317,978 |
|
The accompanying notes are an integral part of these condensed financial statements.
NKARTA, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, |
|
|
|
2024 |
|
|
2023 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(54,511 |
) |
|
$ |
(64,102 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Share-based compensation expense |
|
|
8,782 |
|
|
|
9,396 |
|
Depreciation and amortization |
|
|
4,517 |
|
|
|
1,636 |
|
Accretion and amortization of premiums and discounts on investments, net |
|
|
(3,021 |
) |
|
|
(4,511 |
) |
Realized gain on investments |
|
|
— |
|
|
|
(34 |
) |
Impairment of right-of-use assets |
|
|
— |
|
|
|
4,100 |
|
Non-cash lease expense |
|
|
1,154 |
|
|
|
1,100 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Prepaid expenses and other assets |
|
|
(1,833 |
) |
|
|
663 |
|
Operating lease liabilities |
|
|
(3,345 |
) |
|
|
7,143 |
|
Accounts payable and accrued and other liabilities |
|
|
(2,143 |
) |
|
|
2,078 |
|
Net cash used in operating activities |
|
|
(50,400 |
) |
|
|
(42,531 |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(2,529 |
) |
|
|
(15,151 |
) |
Purchases of investments |
|
|
(214,311 |
) |
|
|
(157,486 |
) |
Maturities of investments |
|
|
130,700 |
|
|
|
206,395 |
|
Net cash (used in) provided by investing activities |
|
|
(86,140 |
) |
|
|
33,758 |
|
Cash flows from financing activities: |
|
|
|
|
|
|
Proceeds from stock option exercises |
|
|
667 |
|
|
|
22 |
|
Proceeds from ESPP purchases |
|
|
158 |
|
|
|
374 |
|
Proceeds from issuance of common stock and pre-funded warrants, net of issuance costs |
|
|
225,073 |
|
|
|
— |
|
Net cash provided by financing activities |
|
|
225,898 |
|
|
|
396 |
|
Net increase (decrease) in cash and cash equivalents |
|
|
89,358 |
|
|
|
(8,377 |
) |
Cash, cash equivalents, and restricted cash beginning of period |
|
|
33,783 |
|
|
|
40,237 |
|
Cash, cash equivalents, and restricted cash end of period |
|
$ |
123,141 |
|
|
$ |
31,860 |
|
Reconciliation of cash, cash equivalents and restricted cash to the balance sheet: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
120,398 |
|
|
$ |
29,117 |
|
Restricted cash |
|
|
2,743 |
|
|
|
2,743 |
|
Total cash, cash equivalents and restricted cash |
|
$ |
123,141 |
|
|
$ |
31,860 |
|
Supplemental disclosures of non-cash investing activities: |
|
|
|
|
|
|
Right-of-use assets obtained in exchange for operating lease liabilities resulting from
new leases |
|
$ |
579 |
|
|
$ |
431 |
|
Stock issuance costs included in accrued and other current liabilities |
|
$ |
4 |
|
|
$ |
— |
|
Acquisitions of property and equipment in accounts payable and accrued and other current liabilities |
|
$ |
213 |
|
|
$ |
690 |
|
The accompanying notes are an integral part of these condensed financial statements.
NKARTA, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Organization and Description of Business
Description of the Business
Nkarta, Inc. ("Nkarta" or the "Company") was incorporated in the State of Delaware in July 2015. The Company is a biopharmaceutical company developing engineered natural killer ("NK") cell therapies to treat autoimmune disease and cancer. The Company is focused on leveraging the natural potent power of NK cells to identify and kill abnormal cells and recruit adaptive immune effectors to generate responses that are specific and durable. Nkarta is combining its NK-cell expansion platform technology with proprietary cell engineering technologies to generate an abundant supply of NK cells, engineer enhanced NK-cell recognition of therapeutic targets, and improve persistence for sustained activity in the body. Nkarta’s goal is to develop off-the-shelf NK-cell therapy product candidates to improve outcomes for patients. The Company’s operations are based in South San Francisco, California, and it operates in one segment.
Liquidity and Management Plans
The accompanying unaudited condensed financial statements have been prepared assuming that the Company will continue as a going concern. Since inception, the Company has devoted substantially all of its efforts to organizing and staffing, business planning, raising capital, conducting preclinical studies and initiating clinical studies, and has not realized substantial revenues from its planned principal operations. In addition, the Company has a limited operating history, has incurred operating losses since inception and expects that it will continue to incur net losses into the foreseeable future as it continues its research and development activities. As of June 30, 2024, the Company had an accumulated deficit of $489.9 million and cash, cash equivalents, restricted cash and investments of $426.7 million.
Management plans to continue to incur substantial costs in order to conduct research and development activities for which additional capital will be needed. The Company intends to raise such capital through debt or equity financings or other arrangements, as it has primarily done to date to fund its operations. Management believes that the Company’s current cash, cash equivalents, restricted cash and investments will provide sufficient funds to enable the Company to meet its obligations for at least twelve months from the filing date of this report.
2. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023 have been prepared in accordance with U.S. generally accepted accounting principle ("U.S. GAAP") for interim financial information and pursuant to Article 10 of Regulation S-X of the Securities Act, as amended. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed financial statements include only normal and recurring adjustments that the Company believes are necessary to fairly state the Company’s financial position and the results of its operations and cash flows for the periods presented.
The results for the three and six months ended June 30, 2024 are not necessarily indicative of the results expected for the full year or any subsequent interim period. The condensed balance sheet as of December 31, 2023 has been derived from the audited financial statements at that date but does not include all disclosures required by U.S. GAAP for complete financial statements. Because all of the disclosures required by U.S. GAAP for complete financial statements are not included herein, these unaudited condensed financial statements and the notes accompanying them should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2023, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed by the Company with the SEC on March 21, 2024.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to preclinical studies and clinical trial accruals, fair value of assets and liabilities, impairment of assets, leases, share-based compensation and income taxes. Management bases its estimates on historical experience, knowledge of current events and actions it may undertake in the future that management believes to be reasonable under the circumstances. Actual results may differ from these estimates and assumptions.
Net Loss Per Share
Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares and pre-funded warrants outstanding for the period, without consideration of potential dilutive securities. Pre-funded warrants are considered outstanding for the purposes of computing basic and diluted net loss per share because shares may be issued for little or no additional consideration and are fully vested and exercisable after the original issuance date of the pre-funded warrants. Diluted net loss per share is computed by dividing the net loss by the sum of the weighted average number of common shares and pre-funded warrants plus the potential dilutive effects of potential dilutive securities outstanding during the period. Potential dilutive securities are excluded from diluted earnings or loss per share if the effect of such inclusion is antidilutive. The Company’s potentially dilutive securities, which include unvested common stock, outstanding stock options and restricted stock units under the Company’s equity incentive plans, have been excluded from the computation of diluted net loss per share as they would be antidilutive to the net loss per share. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.
Long-Lived Asset Impairment
The Company assesses the impairment of long-lived assets whenever events or changes in business circumstances indicate that the carrying amounts of the asset or group of assets may not be fully recoverable. In the case of property and equipment and right-of-use assets for the Company's leases, the Company determines whether there has been an impairment by comparing the carrying value of the group of assets to the anticipated undiscounted net future cash flows associated with the group of assets. If such cash flows are less than the carrying value, the Company writes down the group of assets to its fair value, which may be measured as anticipated net cash flows associated with the group of assets, discounted at a rate that the Company believes a market participant would utilize to reflect the risks associated with the cash flows, such as credit risk. See Note 6 for additional information regarding the prior year impairment charge the Company recorded in connection with its leased facilities.
Recent Accounting Pronouncements
In November 2023, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an interim and annual basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal periods beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. The Company is currently evaluating the impact of the guidance on the financial statements and disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 will be effective for us in the annual period beginning January 1, 2025, though early adoption is permitted. The Company is currently evaluating the presentational effect that ASU 2023-09 will have on its financial statements.
In August 2020, the FASB issued ASU No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 740-20) and Derivative and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for the Company beginning on January 1, 2024. The adoption of ASU 2020-06 does not have a material impact on the financial position, results of operations or cash flows of the Company.
There were no other significant updates to the recently issued accounting standards other than as disclosed herewith. Although there are several other new accounting pronouncements issued or proposed by the FASB, the Company does not believe any of those accounting pronouncements have had or will have a material impact on its financial position or operating results.
3. Net Loss Per Share
The following tables summarize the computation of the basic and diluted net loss per share (in thousands except share and per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
|
Six Months Ended
June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(24,993 |
) |
|
$ |
(33,287 |
) |
|
$ |
(54,511 |
) |
|
$ |
(64,102 |
) |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
70,494,492 |
|
|
|
48,970,457 |
|
|
|
60,506,061 |
|
|
|
48,946,131 |
|
Less: weighted average unvested common stock
issued upon early exercise of common stock options |
|
|
— |
|
|
|
(66 |
) |
|
|
— |
|
|
|
(113 |
) |
Add: weighted average of common stock
to be issued upon exercise of pre-funded warrants |
|
|
3,000,031 |
|
|
|
— |
|
|
|
1,582,434 |
|
|
|
— |
|
Weighted average shares used to compute net loss
per share, basic and diluted |
|
|
73,494,523 |
|
|
|
48,970,391 |
|
|
|
62,088,495 |
|
|
|
48,946,018 |
|
Net loss per share, basic and diluted |
|
$ |
(0.34 |
) |
|
$ |
(0.68 |
) |
|
$ |
(0.88 |
) |
|
$ |
(1.31 |
) |
The following table summarizes the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their inclusion would be antidilutive:
|
|
|
|
|
|
|
|
|
|
|
As of June 30, |
|
|
|
2024 |
|
|
2023 |
|
Common stock options |
|
|
8,420,275 |
|
|
|
6,757,829 |
|
Restricted stock units |
|
|
1,191,529 |
|
|
|
716,956 |
|
|
|
|
9,611,804 |
|
|
|
7,474,785 |
|
4. Fair Value of Financial Instruments
The following tables summarize the Company's financial instruments measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2024 |
|
|
|
Valuation Hierarchy |
|
Amortized
Cost |
|
|
Unrealized
Losses |
|
|
Unrealized
Gains |
|
|
Estimated
Fair Value |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
Level 1 |
|
$ |
47,038 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
47,038 |
|
Commercial paper |
|
Level 2 |
|
|
23,033 |
|
|
|
— |
|
|
|
— |
|
|
|
23,033 |
|
U.S. Government securities |
|
Level 2 |
|
|
49,757 |
|
|
|
— |
|
|
|
|
|
|
49,757 |
|
Total Cash equivalents |
|
|
|
|
119,828 |
|
|
|
— |
|
|
|
— |
|
|
|
119,828 |
|
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities |
|
Level 2 |
|
$ |
77,693 |
|
|
$ |
(62 |
) |
|
$ |
7 |
|
|
$ |
77,638 |
|
Commercial paper |
|
Level 2 |
|
|
17,436 |
|
|
|
(2 |
) |
|
|
— |
|
|
|
17,434 |
|
U.S. Government securities |
|
Level 2 |
|
|
109,444 |
|
|
|
(94 |
) |
|
|
1 |
|
|
|
109,351 |
|
Total short-term investments |
|
|
|
|
204,573 |
|
|
|
(158 |
) |
|
|
8 |
|
|
|
204,423 |
|
Long-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities |
|
Level 2 |
|
$ |
83,757 |
|
|
$ |
(99 |
) |
|
$ |
2 |
|
|
$ |
83,660 |
|
U.S. Government securities |
|
Level 2 |
|
|
15,442 |
|
|
|
(16 |
) |
|
|
— |
|
|
$ |
15,426 |
|
Total long-term investments |
|
|
|
|
99,199 |
|
|
|
(115 |
) |
|
|
2 |
|
|
|
99,086 |
|
Total |
|
|
|
$ |
423,600 |
|
|
$ |
(273 |
) |
|
$ |
10 |
|
|
$ |
423,337 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
|
|
|
Valuation Hierarchy |
|
Amortized
Cost |
|
|
Unrealized
Losses |
|
|
Unrealized
Gains |
|
|
Estimated
Fair Value |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
Level 1 |
|
$ |
30,751 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
30,751 |
|
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities |
|
Level 2 |
|
$ |
40,602 |
|
|
$ |
(11 |
) |
|
$ |
18 |
|
|
$ |
40,609 |
|
Commercial paper |
|
Level 2 |
|
|
38,198 |
|
|
|
(2 |
) |
|
|
1 |
|
|
|
38,197 |
|
U.S. Government securities |
|
Level 2 |
|
|
138,341 |
|
|
|
(56 |
) |
|
|
58 |
|
|
|
138,343 |
|
Total short-term investments |
|
|
|
|
217,141 |
|
|
|
(69 |
) |
|
|
77 |
|
|
|
217,149 |
|
Total |
|
|
|
$ |
247,892 |
|
|
$ |
(69 |
) |
|
$ |
77 |
|
|
$ |
247,900 |
|
Investments are classified as Level 1 within the fair value hierarchy if their quoted prices are available in active markets for identical securities. Investments in money market funds of $47.0 million and $30.8 million as of June 30, 2024 and December 31, 2023, respectively, were classified as Level 1 instruments and were included in cash equivalents.
Investments in corporate debt securities, commercial paper and U.S. Government securities are valued using Level 2 inputs. Level 2 securities are initially valued at the transaction price and subsequently valued and reported upon utilizing inputs other than quoted prices that are observable either directly or indirectly, such as quotes from third-party pricing vendors. Fair values determined by Level 2 inputs, which utilize data points that are observable such as quoted prices, interest rates and yield curves, require the exercise of judgment and use of estimates, that if changed, could significantly affect the Company’s financial position and results of operations. The marketable securities of $376.3 million and $217.1 million as of June 30, 2024 and December 31, 2023, respectively, were classified as Level 2 instruments. Accrued interest receivable related to investments was $2.1 million and $1.2 million as of June 30, 2024 and December 31, 2023, respectively, and included as part of prepaid expenses and other current assets in the condensed balance sheets.
The Company has classified its investment securities as current and non-current assets on the condensed balance sheets based on each security's contractual maturity date, and all investment securities are accounted for as available-for-sale because these investment securities are considered available for use in operations.
The Company considers whether unrealized losses have resulted from a credit loss or other factors. The unrealized losses on the Company’s available-for-sale securities as of June 30, 2024 and December 31, 2023 were caused by fluctuations in market value and
interest rates as a result of the economic environment and not credit risk. The Company concluded that an allowance for credit losses was unnecessary as of June 30, 2024 and December 31, 2023. It is neither management’s intention to sell nor is it more likely than not that the Company will be required to sell these investments prior to recovery of their cost basis or recovery of fair value. Unrealized gains and losses are included in accumulated other comprehensive loss.
There was no realized gain or loss on available-for-sale securities for the six months ended June 30, 2024. During the six months ended June 30, 2023, there were immaterial realized gains recognized on available-for-sale securities sold in the period. The Company uses the specific identification method to determine the cost basis of investments sold.
5. Balance Sheet Components
Property and Equipment, Net
Property and equipment, net is comprised of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
June 30,
2024 |
|
|
December 31,
2023 |
|
Leasehold improvements |
|
$ |
66,618 |
|
|
$ |
66,618 |
|
Furniture and fixtures |
|
|
745 |
|
|
|
745 |
|
Research equipment |
|
|
15,797 |
|
|
|
14,298 |
|
Computers and software |
|
|
404 |
|
|
|
404 |
|
Construction in progress |
|
|
10,197 |
|
|
|
8,954 |
|
Total property and equipment, gross |
|
|
93,761 |
|
|
|
91,019 |
|
Less accumulated depreciation and amortization |
|
|
(16,210 |
) |
|
|
(11,693 |
) |
Total property and equipment, net |
|
$ |
77,551 |
|
|
$ |
79,326 |
|
Depreciation and amortization expense was $2.3 million and $4.5 million for the three and six months ended June 30, 2024, and $0.8 million and $1.6 million for the three and six months ended June 30, 2023.
Accrued and Other Current Liabilities
Accrued other current liabilities are comprised of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
June 30,
2024 |
|
|
December 31,
2023 |
|
Accrued compensation |
|
$ |
4,918 |
|
|
$ |
6,722 |
|
Accrued research and development costs |
|
|
5,532 |
|
|
|
5,845 |
|
Accrued property and equipment |
|
|
243 |
|
|
|
174 |
|
Other accrued and current liabilities |
|
|
872 |
|
|
|
855 |
|
Total accrued and other liabilities |
|
$ |
11,565 |
|
|
$ |
13,596 |
|
6. Leases
The Company has operating leases for its current corporate offices, laboratories, manufacturing facilities, and dedicated space in a vivarium in South San Francisco, California. Rent expense was $2.6 million and $5.3 million for the three and six months ended June 30, 2024, respectively and $2.7 million and $5.5 million for the three and six months ended June 30, 2023, respectively. The total cash paid for the six months ended June 30, 2024 for operating leases included in the operating cash flows was $7.6 million, inclusive of $7.3 million of rent payments and $0.3 million of tenant improvement allowance repayment, as compared to net cash received of $2.8 million for the six months ended June 30, 2023, comprised of $7.8 million cash received for the tenant improvement allowance reimbursement less $5.0 million of rent payment. The weighted average remaining lease term was 9.3 years for the corporate office, laboratory space leases, and additional facility as of June 30, 2024. The weighted average discount rate was 9.7% as of June 30, 2024.
Initial Lease Agreement
In May 2018, the Company entered into a lease agreement for corporate office and laboratory space located in South San Francisco, California with an expiration date in May 2025 (the "Initial Lease Agreement"). In April 2019, the Company executed the first amendment to the Initial Lease Agreement for additional corporate space, laboratory space and manufacturing capabilities. In May 2020, the Company executed the second amendment to the Initial Lease Agreement for additional corporate space and laboratory space in the same building. The lease for this additional space commenced in January 2021. In January 2021, the Company signed a third amendment to the Initial Lease Agreement for additional space in the same building. The lease amendment for this additional
space commenced in April 2021 and expired in March 2024. In October 2021, the Company signed a fourth amendment to the Initial Lease Agreement for additional space in the same building, that commenced in April 2022. All space leased under the Initial Lease Agreement, together with the first amendment, second amendment, and fourth amendment to the Initial Lease Agreement, has a lease term through July 31, 2030, with an option to extend the lease for an additional seven-year term. This lease extension option was not considered in the right-of-use assets or the lease liability as the Company did not consider it reasonably certain the option would be exercised.
Additional Lease Agreement
In July 2021, the Company entered into an additional lease agreement for corporate office, manufacturing and laboratory space located in South San Francisco, California with an expiration date approximately twelve years after the lease commencement date (as amended from time to time, the "Additional Lease Agreement"). The lease for this additional space and the Company's obligation to pay rent commenced in January 2022. In addition to base rent, the Company is responsible for payment of direct expenses, which include operating, insurance and tax expenses. The Additional Lease Agreement provided for certain tenant improvement allowances that were fully utilized and reimbursed to the Company, and an additional tenant improvement allowance to be utilized at the option of the Company. In June 2023, the Company entered into an amendment to utilize the additional tenant improvement allowance of $4.4 million and under this amendment the Company is required to repay the tenant improvement costs in equal monthly payments at an annual rate of 8.5% over the remainder of the lease term starting in July 2023.
Maturities of operating lease liabilities under existing operating leases as of June 30, 2024 were as follows (in thousands):
|
|
|
|
|
Year ending December 31, |
|
Amount |
|
2024 (remaining six months) |
|
$ |
6,554 |
|
2025 |
|
|
13,403 |
|
2026 |
|
|
13,462 |
|
2027 |
|
|
13,912 |
|
2028 |
|
|
|