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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 September 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: 001-40544

AEROVATE THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware

83-1377888

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

930 Winter Street, Suite M-500

Waltham, MA

02451

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (617) 443-2400

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

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on which registered

Common stock, par value $0.0001 per share

AVTE

The Nasdaq Global Market

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

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

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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

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

As of November 8, 2024, the registrant had 28,874,513 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

Page

PART I.

FINANCIAL INFORMATION

6

Item 1.

Financial Statements (Unaudited)

6

Condensed Consolidated Balance Sheets

6

Condensed Consolidated Statements of Operations and Comprehensive Loss

7

Condensed Consolidated Statements of Stockholders’ Equity

8

Condensed Consolidated Statements of Cash Flows

10

Notes to Unaudited Condensed Consolidated Financial Statements

11

Item 2.

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

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

31

PART II.

OTHER INFORMATION

32

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

63

Item 3.

Defaults Upon Senior Securities

63

Item 4.

Mine Safety Disclosures

63

Item 5.

Other Information

63

Item 6.

Exhibits

64

Signatures

66

2

SUMMARY OF THE MATERIAL AND OTHER RISKS ASSOCIATED WITH OUR BUSINESS

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

We may not be successful in consummating the Merger.
If we are successful in completing the Merger, we may be exposed to other operational and financial risks.
If the Merger is not completed, our board of directors may pursue a dissolution and liquidation. In such event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such liquidation and the amount of cash that will need to be reserved for commitments and contingent liabilities.
Failure to complete the Merger may result in either Jade or us paying a termination fee to the other party and could harm our common stock price and the future business and operations of each company.
Some of Jade’s and our executive officers and directors have interests in the Merger that are different from yours.
We are a biopharmaceutical company with a limited operating history.
We have incurred significant operating losses since our inception and anticipate that we will continue to incur losses for the foreseeable future. We may never achieve or maintain profitability.
We have no products approved for commercial sale and have not generated any revenue from product sales.
The results of earlier studies and trials may not be predictive of future trial results.
We have six issued U.S. patents and many pending patent applications with respect to AV-101, however, we have begun the process of abandoning our patent estate and we are no longer prosecuting our patent applications. Further, we can provide no assurance that any of our future patent applications will result in issued patents. If we cannot protect our patent rights or our other proprietary rights, others may develop products similar or identical to ours, and we may not be able to compete effectively in our market or successfully commercialize any product candidates we may develop.  
We may be unable to obtain regulatory approval under applicable regulatory requirements. The denial or delay of any such approval would delay commercialization of any product candidates and adversely impact our potential to generate revenue, our business and our results of operations.
Unfavorable global economic or political conditions could adversely affect our business, financial condition or results of operations.

The material and other risks summarized above should be read together with the text of the full risk factors below and in the other information set forth in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and the related notes, as well as in other documents that we file with the U.S. Securities and Exchange Commission, or the SEC. If any such material and other risks and uncertainties actually occur, our business, prospects, financial condition and results of operations could be materially and adversely affected. The risks summarized above or described in full under Item 1A of this Quarterly Report on Form 10-Q are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial may also materially adversely affect our business, prospects, financial condition and results of operations.

3

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains express or implied forward-looking statements that are based on our management’s belief and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

anticipated expenses and cost savings in connection with our discontinuation of development of AV-101;
the proposed merger with Jade Biosciences, Inc., and related transactions;
estimates of our future expenses, revenues, capital requirements and our needs for additional financing;
our expectations for clinical and regulatory development plans;
our expectations regarding our ability to obtain and maintain intellectual property protection for any product candidates we may develop;  
our ability to identify products, product candidates or technologies with significant commercial potential that are consistent with our commercial objectives;
the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates, including the projected terms of patent protection;
potential regulatory developments in the United States and foreign countries;
developments relating to our competitors and our industry, including the impact of government laws and regulations;
our ability to retain key management personnel in order to operate our business following announcement of our workforce reduction plan and the proposed merger with Jade Biosciences, Inc., and related transactions;
our ability to obtain additional funding for our operations, if needed, should we decide to pursue development of other product candidates; and  
other risks and uncertainties, including those listed under the section titled “Risk Factors.”

In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed above under “Summary of the Material Risks Associated with Our Business” and under the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the Securities and Exchange Commission, or the SEC, as exhibits hereto completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements.

4

The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business and the markets for our product candidates. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data from our own internal estimates and research as well as from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources. While we are not aware of any misstatements regarding any third-party information presented in this Quarterly Report on Form 10-Q, their estimates, in particular as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties and are subject to change based on various factors, including those discussed under the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.

5

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements.

Aerovate Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share amounts)

September 30, 

December 31, 

    

2024

    

2023

 

Assets

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

31,115

$

23,491

Short-term investments

 

57,615

 

98,948

Prepaid expenses and other current assets

 

1,875

 

1,793

Total current assets

 

90,605

 

124,232

Property and equipment, net

 

14

 

288

Operating lease right-of-use assets

 

259

 

614

Other long-term assets

 

81

 

2,284

Total assets

$

90,959

$

127,418

Liabilities and Stockholders’ Equity

Current liabilities:

 

  

 

  

Accounts payable

$

908

$

2,396

Accrued and other current liabilities

 

8,948

 

14,821

Operating lease liabilities

 

459

 

420

Total current liabilities

 

10,315

 

17,637

Operating lease liabilities, net of current portion

 

81

 

255

Other liabilities

 

70

 

70

Total liabilities

 

10,466

 

17,962

Commitments and contingencies (Note 5)

 

  

 

  

Stockholders’ equity:

 

  

 

  

Preferred stock, $0.0001 par value; 10,000,000 shares authorized as of September 30, 2024 and December 31, 2023, respectively; no shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Common stock, $0.0001 par value; 150,000,000 shares authorized at September 30, 2024 and December 31, 2023, respectively; 28,867,711 and 27,762,703 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

 

3

 

3

Additional paid-in capital

 

307,888

 

272,640

Accumulated other comprehensive gain

 

224

 

237

Accumulated deficit

 

(227,622)

 

(163,424)

Total stockholders’ equity

 

80,493

 

109,456

Total liabilities and stockholders’ equity

$

90,959

$

127,418

See accompanying notes to unaudited interim condensed consolidated financial statements.

6

Aerovate Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share amounts)

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2024

    

2023

    

2024

    

2023

 

Operating expenses:

 

  

 

  

 

  

 

  

Research and development

$

10,328

$

16,884

$

51,656

$

46,406

General and administrative

 

7,082

 

4,484

 

16,537

 

12,937

Total operating expenses

 

17,410

 

21,368

 

68,193

 

59,343

Loss from operations

 

(17,410)

(21,368)

 

(68,193)

 

(59,343)

Other income (expense):

 

  

 

  

 

  

 

  

Interest income

 

1,183

 

1,804

 

4,014

 

4,236

Other expense:

 

(10)

 

1

 

(19)

 

(1)

Total other income

 

1,173

 

1,805

 

3,995

 

4,235

Net loss

$

(16,237)

$

(19,563)

$

(64,198)

$

(55,108)

Comprehensive loss:

 

  

 

  

 

  

 

  

Net loss

$

(16,237)

$

(19,563)

$

(64,198)

$

(55,108)

Other comprehensive loss:

 

  

 

  

 

  

 

  

Unrealized (loss) gain on securities

 

307

 

(22)

 

(13)

 

243

Comprehensive loss

$

(15,930)

$

(19,585)

$

(64,211)

$

(54,865)

Net loss per share, basic and diluted

$

(0.56)

$

(0.71)

$

(2.25)

$

(2.13)

Weighted-average shares of common stock outstanding, basic and diluted

 

28,863,327

 

27,640,542

 

28,572,338

 

25,872,118

See accompanying notes to unaudited interim condensed consolidated financial statements.

7

Aerovate Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)

 

 

 

Accumulated

 

 

 

Additional

 

Other

 

Total

 

Common Stock

 

Paid-In

 

Comprehensive

 

Accumulated

 

Stockholders’

  

Shares

  

Amount

  

Capital

  

Gain/(Loss)

  

Deficit

  

Equity

Balance at December 31, 2023

 

27,762,703

$

3

$

272,640

$

237

$

(163,424)

$

109,456

Unrealized loss on investments

 

 

 

 

(270)

 

 

(270)

Issuance of common stock upon exercise of stock options

133,282

704

704

Vesting of restricted stock units

2,776

Stock based compensation

 

 

 

4,200

 

 

 

4,200

Net loss

 

 

 

 

 

(23,186)

 

(23,186)

Balance at March 31, 2024

 

27,898,761

$

3

$

277,544

$

(33)

$

(186,610)

$

90,904

Unrealized loss on investments

 

(50)

 

(50)

Issuance of common stock in connection with ATM, net

800,000

23,635

23,635

Issuance of common stock upon exercise of stock options

 

119,239

511

 

511

Issuance of common stock under ESPP

34,034

308

308

Vesting of restricted stock units

2,716

Stock based compensation

3,865

3,865

Net loss

 

(24,775)

 

(24,775)

Balance at June 30, 2024

 

28,854,750

$

3

$

305,863

$

(83)

$

(211,385)

$

94,398

Unrealized gain on investments

307

307

Issuance of common stock upon exercise of stock options

12,961

22

22

Stock based compensation

2,003

2,003

Net loss

(16,237)

(16,237)

Balance at September 30, 2024

28,867,711

$

3

$

307,888

$

224

$

(227,622)

$

80,493

8

 

 

Accumulated

 

 

 

 

Additional

Other

 

 

Total

 

Common Stock

 

Paid-In

Comprehensive

 

Accumulated

 

Stockholders’

  

Shares

  

Amount

  

Capital

  

Gain/(Loss)

  

Deficit

  

Equity

Balance at December 31, 2022

24,722,974

$

2

$

215,110

$

(466)

$

(87,903)

$

126,743

Unrealized gain on investments

 

 

 

 

265

 

 

265

Issuance of common stock upon exercise of stock options

93,966

223

223

Stock based compensation

 

 

 

2,384

 

 

 

2,384

Net loss

 

 

 

 

 

(16,520)

 

(16,520)

Balance at March 31, 2023

 

24,816,940

$

2

$

217,717

$

(201)

$

(104,423)

$

113,095

Unrealized loss on investments

(22)

(22)

Issuance of common stock in connection with ATM, net

2,662,721

1

44,282

44,283

Issuance of common stock upon exercise of stock options

106,756

333

333

Issuance of common stock under ESPP

13,866

228

228

Vesting of restricted stock units

815

Stock based compensation

 

 

 

3,034

 

 

 

3,034

Net loss

 

 

 

 

 

(19,025)

 

(19,025)

Balance at June 30, 2023

 

27,601,098

$

3

$

265,594

$

(223)

$

(123,448)

$

141,926

Unrealized gain on investments

 

 

 

 

28

 

 

28

Issuance of common stock upon exercise of stock options

46,777

95

95

Vesting of restricted stock units

5,312

Stock based compensation

 

 

 

3,237

 

 

 

3,237

Net loss

 

 

 

 

 

(19,563)

 

(19,563)

Balance at September 30, 2023

 

27,653,187

$

3

$

268,926

$

(195)

$

(143,011)

$

125,723

See accompanying notes to unaudited interim condensed consolidated financial statements.

9

Aerovate Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

Nine months ended September 30, 

    

2024

    

2023

 

Cash flow from operating activities:

 

  

 

  

 

Net loss

$

(64,198)

$

(55,108)

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

 

  

 

  

Stock-based compensation expense

 

10,068

 

8,655

Depreciation and amortization expense

 

274

 

68

Accretion of discounts and amortization of premiums on investments, net

 

(1,912)

 

(2,118)

Changes in operating assets and liabilities:

 

  

 

  

Prepaid expenses and other current assets

 

(82)

 

(128)

Other long-term assets

 

789

 

(70)

Accounts payable

 

(1,488)

 

880

Accrued and other liabilities

 

(4,152)

 

5,948

Operating lease assets and liabilities, net

 

220

 

9

Other liabilities

 

332

 

(114)

Net cash used in operating activities

$

(60,149)

$

(41,978)

Cash flow from investing activities:

 

  

 

  

Purchases of short-term investments

(19,683)

(96,194)

Maturities of short-term investments

62,583

102,500

Purchases of property and equipment

 

 

(78)

Net cash provided by investing activities

$

42,900

$

6,228

Cash flow from financing activities:

 

  

 

  

Proceeds from sale of common stock in connection with ATM, net

 

23,635

 

44,888

Payments for offering costs

(307)

(234)

Proceeds from issuance of common stock under ESPP

308

228

Proceeds from issuance of common stock upon exercise of stock options

 

1,237

 

651

Net cash provided by financing activities

$

24,873

$

45,533

Net increase in cash and cash equivalents

 

7,624

 

9,783

Cash and cash equivalents at the beginning of the year

 

23,491

 

22,397

Cash and cash equivalents at the end of the period

$

31,115

$

32,180

Supplemental disclosure of noncash investing and financing activities:

 

  

 

  

Right-of-use asset obtained in exchange for operating lease liability

$

206

$

Purchases of property and equipment in accounts payable and accrued liabilities

$

$

64

See accompanying notes to unaudited interim condensed consolidated financial statements.

10

AEROVATE THERAPEUTICS, INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) ORGANIZATION AND NATURE OF OPERATIONS

(a) Organization and Nature of Operations

Aerovate Therapeutics Inc. (“Aerovate” or the “Company”) was incorporated in the state of Delaware in July 2018, and is headquartered in Waltham, Massachusetts. The Company has a wholly owned subsidiary, Aerovate Securities Corporation. The Company is a biopharmaceutical company. The Company’s initial focus was on advancing AV-101, the Company’s dry powder inhaled formulation of imatinib for the treatment of pulmonary arterial hypertension (“PAH”). However, in June 2024, the Company announced negative results from the Phase 2b portion of its global Phase 2b/Phase 3 trial of AV-101 in adults with PAH, and, as a result, the Company decided to halt enrollment and shut down the Phase 3 portion of the Phase 2b/Phase 3 trial as well as the long-term extension study. In June 2024, the Company announced a corporate restructuring and in July 2024, the Company engaged Wedbush PacGrow as the Company’s exclusive strategic financial advisor to assist in the process of exploring strategic alternatives, including but not limited to an acquisition, merger, reverse merger, business combination, liquidation or other transaction.

On October 30, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Caribbean Merger Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub I”), Caribbean Merger Sub II, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (“Merger Sub II” and together with Merger Sub I, the “Merger Subs”), and Jade Biosciences, Inc., a Delaware corporation (“Jade”), pursuant to which, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, among other things, Merger Sub I will merge with and into Jade, with Jade surviving the merger as the surviving corporation (the “First Merger”), and as part of the same overall transaction, Jade will merge with and into Merger Sub II, with Merger Sub II continuing as a wholly owned subsidiary of the Company and the surviving corporation of the merger (the “Second Merger” and together with the First Merger, the “Merger”). In addition, in connection with the closing of the Merger (the “Closing”), the Company expects to declare a cash dividend to its pre-Merger stockholders of approximately $65.0 million in the aggregate (the “Cash Dividend”), provided such amount is subject to adjustment as set forth in the Merger Agreement. The Merger was approved by the Company’s board of directors (the “Board”), and the Board resolved to recommend approval of the Merger Agreement to the Company’s stockholders. The Closing is subject to approval by the stockholders of the Company and Jade as well as other customary closing conditions, including the effectiveness of a registration statement filed with the U.S. Securities and Exchange Commission (“SEC”) in connection with the transaction. If the Merger is completed, the business of Jade will continue as the business of the combined company.

(b) At-the-Market Offering

On April 5, 2023, the Company entered into an ATM Equity OfferingSM Sales Agreement (the “Sales Agreement”) with BofA Securities, Inc., or the Agent, pursuant to which the Company can sell, from time to time, at its option, up to an aggregate of $75.0 million of shares of its common stock, through the Agent, as its sales agent. As of September 30, 2024, 3,462,721 shares have been sold under the Sales Agreement, generating $67.9 million of net proceeds after deducting commissions to the Agent and other offering costs. As of the date of this Quarterly Report on Form 10-Q, up to $6.0 million of shares of the Company’s common stock remain available for sale from time to time under the Sales Agreement.

(c) Liquidity and Management Plans

Since inception, the Company has devoted substantially all of its resources to research and development activities, business planning, establishing and maintaining its intellectual property portfolio, hiring personnel, raising capital, and providing general and administrative support for these operations and has not realized revenues from its planned principal operations. The Company has incurred losses and negative cash flows from operations since

11

inception. As of September 30, 2024, the Company had cash and cash equivalents and short-term investments of $88.7 million.

Management believes that the Company’s current cash and cash equivalents and short-term 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 while it explores strategic alternatives.

(2) BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States of America for interim financial information and pursuant to Article 10 of Regulation S-X of the Securities Act of 1933, as amended (the Securities Act). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These unaudited condensed consolidated 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.

The results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results expected for the full fiscal year or any subsequent interim period. The condensed consolidated 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 GAAP for complete financial statements. Because all of the disclosures required by GAAP for complete financial statements are not included herein, these unaudited condensed consolidated 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. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

(b) Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Reported amounts and note disclosures reflect the overall economic conditions that are most likely to occur and anticipated measures management intends to take. Actual results could differ materially from those estimates. Accounting estimates and management judgements reflected in the consolidated financial statements include: normal recurring accruals, including the accrual for research and development expenses, stock-based compensation, fair value of investments, and operating lease right-of-use assets and lease liabilities. Estimates and assumptions are reviewed quarterly. Any revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

(c) Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period, without consideration of potential dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the sum of the weighted average number of common shares 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 have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per

12

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.

The following table summarizes the Company’s net loss per share (in thousands, except share and per share amounts):

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2024

    

2023

    

2024

    

2023

Numerator:

 

  

 

  

 

  

 

  

Net loss

$

(16,237)

$

(19,563)

$

(64,198)

$

(55,108)

Net loss attributable to common stockholders

$

(16,237)

$

(19,563)

$

(64,198)

$

(55,108)

Denominator:

 

  

 

  

 

  

 

  

Weighted-average common stock outstanding, basic and diluted

 

28,863,327

 

27,640,542

 

28,572,338

 

25,872,118

Net loss per share, basic and diluted

$

(0.56)

$

(0.71)

$

(2.25)

$

(2.13)

Potentially dilutive securities not included in the calculation of diluted net loss per share attributable to common stockholders because to do so would have had an anti-dilutive effect are as follows (in common stock equivalent shares):

As of September 30, 

    

2024

    

2023

Options to purchase common stock

 

3,714,104

 

5,236,832

Unvested restricted stock units

25,754

 

3,714,104

 

5,262,586

(d) Recently Issued and Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses on an interim and annual basis. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Entities must adopt the changes to the segment reporting guidance on a retrospective basis, and early adoption is permitted. The Company does not anticipate this ASU to materially impact our consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. The standard is effective for fiscal years beginning after December 15, 2024, and interim periods in fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact the adoption of this standard may have on its consolidated financial statements and related disclosures, and does not anticipate this ASU to materially impact our consolidated financial statements and related disclosures.

13

(3) FAIR VALUE OF FINANCIAL INSTRUMENTS

The following tables summarize the Company’s financial assets measured at fair value on a recurring basis and their respective input levels based on the fair value hierarchy (in thousands):

Fair Value Measurements Using

Quoted Prices in

Active Markets

Significant Other

Significant

for Identical

Observable

Unobservable

September 30, 

Assets

Inputs

Inputs

    

2024

    

(Level 1)

    

(Level 2)

    

(level 3)

Assets:

  

  

  

  

Cash equivalents

 

  

 

  

 

  

 

  

Money market funds

$

28,265

$

28,265

$

$

Total cash equivalents

 

28,265

 

28,265

 

 

Short-term investments

 

  

 

  

 

  

 

  

Agency bonds

 

27,168

 

 

27,168

 

Corporate debt securities

11,926

11,926

Commercial paper

9,443

9,443

U.S. Treasury bills

 

9,078

 

9,078

Total short-term investments

 

57,615

 

9,078

 

48,537

 

Total fair value of assets

$

85,880

$

37,343

$

48,537

$

Fair Value Measurements Using

 

 

Quoted Prices in

 

 

Active Markets

 

Significant Other

Significant

 

 

for Identical

 

Observable

Unobservable

 

December 31, 

 

Assets

 

Inputs

Inputs

    

2023

    

(Level 1)

    

(Level 2)

    

(level 3)

Assets:

Cash equivalents

Money market funds

$

19,787

$

19,787

$

$

Total cash equivalents

 

19,787

 

19,787

 

 

Short-term investments

 

  

 

  

 

  

 

  

Agency bonds

42,255

42,255

Commercial paper

 

38,386

 

 

38,386

 

U.S. Treasury bills

 

10,362

 

10,362

 

 

Corporate debt securities

 

7,945

 

 

7,945

 

Total short-term investments

 

98,948

 

10,362

 

88,586

 

Total fair value of assets

$

118,735

$

30,149

$

88,586

$

Cash Equivalents and Short-Term Investments

Financial assets measured at fair value on a recurring basis consist of the Company’s cash equivalents and short-term investments. Cash equivalents consisted of money market funds and commercial paper, and short-term investments consisted of U.S. Treasury bills, agency bonds, corporate debt securities, and commercial paper. The Company obtains pricing information from its investment manager and generally determines the fair value of investment securities using standard observable inputs, including reported trades, broker/dealer quotes, and bids and/or offers.

14

The following tables summarize the Company’s short-term investments (in thousands):

As of September 30, 2024