[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited financial statements for June 30, 2019, show increased cash and assets from the May 2019 IPO, higher Eli Lilly revenue, and a larger net loss due to rising R&D and G&A expenses [Condensed Balance Sheets](index=3&type=section&id=Condensed%20Balance%20Sheets) Condensed Balance Sheet Highlights (in thousands) | Account | June 30, 2019 (Unaudited) | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $192,689 | $135,173 | | Total current assets | $196,521 | $135,785 | | Total assets | $213,050 | $147,628 | | **Liabilities & Equity** | | | | Total liabilities | $34,455 | $32,349 | | Total redeemable preferred stock | $0 | $162,223 | | Total stockholders' equity (deficit) | $178,595 | $(46,944) | - The **significant increase** in **cash and cash equivalents** and the shift from a **stockholders' deficit** to a **positive equity position** were primarily driven by the **net proceeds** from the company's **IPO** in May 2019[23](index=23&type=chunk)[16](index=16&type=chunk) - **All redeemable preferred stock** was **converted into common stock** upon the closing of the IPO, resulting in a **zero balance** for preferred stock as of June 30, 2019[25](index=25&type=chunk)[16](index=16&type=chunk) [Condensed Statements of Operations](index=4&type=section&id=Condensed%20Statements%20of%20Operations) Condensed Statements of Operations Highlights (in thousands) | Account | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Revenue from research and development arrangement | $1,402 | $0 | $2,759 | $0 | | Research and development expense | $7,643 | $4,434 | $14,156 | $8,644 | | General and administrative expense | $2,714 | $866 | $4,373 | $1,665 | | Loss from operations | $(8,955) | $(5,300) | $(15,770) | $(10,309) | | Net loss | $(8,221) | $(5,231) | $(14,376) | $(10,227) | | Net loss per share | $(0.61) | $(3.82) | $(1.92) | $(7.47) | - **Revenue** in 2019 was generated from the research and development arrangement with **Eli Lilly**, which commenced in January 2019[63](index=63&type=chunk) - **Operating expenses increased significantly** year-over-year, driven by **higher R&D costs** for advancing product candidates and **increased G&A expenses** related to operating as a public company[12](index=12&type=chunk)[112](index=112&type=chunk)[115](index=115&type=chunk) [Condensed Statements of Cash Flows](index=6&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Condensed Statements of Cash Flows Highlights (in thousands) | Activity | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(17,685) | $(9,760) | | Net cash used in investing activities | $(2,067) | $(853) | | Net cash provided by financing activities | $81,847 | $30,800 | | Net increase in cash, cash equivalents and restricted cash | $62,095 | $20,187 | - The **primary source of cash** in the first six months of 2019 was **$77.3 million** in **net proceeds** from the **IPO**[20](index=20&type=chunk) - **Cash used in operating activities increased** due to a **higher net loss**, reflecting **expanded research and development activities**[20](index=20&type=chunk)[123](index=123&type=chunk) [Notes to Unaudited Condensed Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Financial%20Statements) - The company is a **clinical-stage biopharmaceutical firm** focused on discovering and developing **immunomedicines** for cancer and other immune-related diseases using its proprietary **FIND-IO platform**[22](index=22&type=chunk) - On **May 13, 2019**, the company closed its **IPO**, selling **5,750,000 shares** of common stock at **$15.00 per share** for **net proceeds of approximately $77.0 million**[23](index=23&type=chunk) - The company **recognizes revenue** from its **collaboration agreement with Eli Lilly** using an **input method** based on R&D costs incurred. For the six months ended June 30, 2019, **$2.8 million in revenue** was recognized under this agreement[62](index=62&type=chunk)[63](index=63&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's clinical-stage status, lead product candidates, historical losses, and funding sources, noting increased revenue and expenses, with current cash sufficient to fund operations into the second half of 2022 [Overview](index=23&type=section&id=Overview) - NextCure is a **clinical-stage biopharmaceutical company** developing **first-in-class immunomedicines** for cancer and other immune-related diseases using its proprietary **FIND-IO discovery platform**[86](index=86&type=chunk) - The lead product candidate, **NC318**, is in a **Phase 1/2 clinical trial** for advanced or metastatic solid tumors, with Phase 1 completion expected in **Q4 2019**[87](index=87&type=chunk) - The second product candidate, **NC410**, is designed to block immune suppression mediated by LAIR-1, with an **IND submission planned for Q1 2020**[87](index=87&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Comparison of Results of Operations (in thousands) | Account | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,402 | $0 | $2,759 | $0 | | R&D Expenses | $7,643 | $4,434 | $14,156 | $8,644 | | G&A Expenses | $2,714 | $866 | $4,373 | $1,665 | | Net Loss | $(8,221) | $(5,231) | $(14,376) | $(10,227) | - **Revenue for 2019** is attributed to the recognition of upfront consideration from the **Lilly Agreement**[111](index=111&type=chunk) - The **increase in R&D expenses** for the six months ended June 30, 2019 was driven by a **$1.6 million increase in personnel costs**, **$1.5 million in clinical research costs for NC318**, and **$1.3 million in lab supplies**[114](index=114&type=chunk) - The **increase in G&A expenses** for the six months ended June 30, 2019 was primarily due to a **$1.3 million rise in professional fees** (legal, finance, audit) related to the **IPO**[116](index=116&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) - As of **June 30, 2019**, the company had **cash and cash equivalents of $192.7 million**[120](index=120&type=chunk) - The company believes its existing cash, including net proceeds from the IPO, will be **sufficient to fund planned operations into the second half of 2022**[120](index=120&type=chunk) - In **January 2019**, the company amended its **Term Loan** to **increase borrowing capacity from $1.0 million to $5.0 million**, with the **full amount outstanding** as of June 30, 2019[120](index=120&type=chunk)[121](index=121&type=chunk) Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net cash used in Operating activities | $(17,685) | $(9,760) | | Net cash used in Investing activities | $(2,067) | $(853) | | Net cash provided by Financing activities | $81,847 | $30,800 | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, NextCure is not required to provide the information requested by this item - The company is **not required** to provide quantitative and qualitative disclosures about market risk because it qualifies as a **smaller reporting company**[132](index=132&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of June 30, 2019, and concluded they were effective at a reasonable assurance level. There were no material changes in internal control over financial reporting during the quarter - Management concluded that as of June 30, 2019, the company's disclosure controls and procedures were **effective at the reasonable assurance level**[133](index=133&type=chunk) - **No changes in internal control over financial reporting** occurred during the quarter ended June 30, 2019, that materially affected, or are reasonably likely to materially affect, internal controls[134](index=134&type=chunk) [Part II. OTHER INFORMATION](index=35&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is not currently a party to any litigation or legal proceedings that are likely to have a material adverse effect on its business - As of the report date, the company is **not involved in any legal proceedings** that management believes would have a **material adverse effect** on the business[135](index=135&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) This section outlines key investment risks, including limited operating history, significant losses, dependence on early-stage product candidates and an unproven platform, regulatory uncertainties, manufacturing complexities, and reliance on third parties - The company has a history of **significant losses** (**$14.4 million** for the six months ended June 30, 2019) and expects to incur **substantial losses for the foreseeable future**, with **no products approved for commercial sale**[137](index=137&type=chunk)[138](index=138&type=chunk) - The business is **highly dependent** on advancing its lead product candidates, **NC318 and NC410**, through clinical trials and obtaining regulatory approval, which is a **lengthy, expensive, and uncertain process**[153](index=153&type=chunk)[158](index=158&type=chunk) - The company's **FIND-IO platform** for discovering and developing product candidates is **unproven** and **may not result in marketable products**[175](index=175&type=chunk) - The company has **limited manufacturing experience** and **relies on third-party CMOs** for certain elements, posing risks related to **cGMP compliance, supply chain disruptions, and scalability**[260](index=260&type=chunk)[265](index=265&type=chunk) - The company **relies on third parties like CROs** to conduct clinical trials and on **collaborators like Eli Lilly** for the development and commercialization of certain candidates, which **limits control and introduces dependency risks**[303](index=303&type=chunk)[306](index=306&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=110&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the use of proceeds from the company's Initial Public Offering (IPO) on May 13, 2019. The IPO generated net proceeds of approximately $77.0 million. As of June 30, 2019, $0.5 million was used for a payment to Yale University, with the remainder held in temporary investments pending other uses. There has been no material change in the planned use of proceeds - On **May 13, 2019**, the company closed its **IPO**, raising **net proceeds of approximately $77.0 million** after deducting underwriting discounts and offering expenses[363](index=363&type=chunk) - As of **June 30, 2019**, **$0.5 million** of the IPO proceeds were used for a payment to **Yale University**, with the rest invested temporarily. The planned use of proceeds has **not materially changed**[363](index=363&type=chunk)[364](index=364&type=chunk) [Item 3. Defaults Upon Senior Securities](index=110&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) None - There were **no defaults upon senior securities** during the period[365](index=365&type=chunk) [Item 4. Mine Safety Disclosures](index=110&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - This item is **not applicable** to the company[366](index=366&type=chunk) [Item 5. Other Information](index=110&type=section&id=Item%205.%20Other%20Information) None - There is **no other information** to report for this item[367](index=367&type=chunk) [Item 6. Exhibits](index=110&type=section&id=Item%206.%20Exhibits) This section provides an index of the exhibits filed as part of the Quarterly Report, including corporate governance documents, incentive plans, and required certifications - The report includes an **index of exhibits**, such as the **Amended and Restated Certificate of Incorporation, Bylaws, 2019 Omnibus Incentive Plan, and CEO/CFO certifications**[371](index=371&type=chunk) [Signatures](index=114&type=section&id=SIGNATURES) - The report was duly signed on **August 12, 2019**, by **Michael Richman, President and Chief Executive Officer**, and **Steven P. Cobourn, Chief Financial Officer**[376](index=376&type=chunk)[378](index=378&type=chunk)

Table of Contents 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 March 31, 2019 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 001-38905 NextCure, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of ...