PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed financial statements for Q1 2020 show a net income of $9.7 million, a significant improvement from a $6.2 million net loss in the prior year, primarily due to $22.4 million revenue from the terminated Eli Lilly agreement [Condensed Balance Sheets](index=3&type=section&id=Condensed%20Balance%20Sheets) Condensed Balance Sheets (in thousands) | Financial Metric | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $28,907 | $34,091 | | Marketable securities | $293,191 | $300,514 | | Total current assets | $326,664 | $339,995 | | Total assets | $343,472 | $356,168 | | **Liabilities & Equity** | | | | Total current liabilities | $8,152 | $15,042 | | Total liabilities | $11,715 | $34,684 | | Total stockholders' equity | $331,757 | $321,484 | - Total assets decreased from **$356.2 million** at the end of 2019 to **$343.5 million** as of March 31, 2020, while total liabilities significantly reduced from **$34.7 million** to **$11.7 million**, primarily due to deferred revenue recognition[9](index=9&type=chunk) [Condensed Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Condensed Statements of Operations and Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended March 31, 2020 (in thousands) | Three Months Ended March 31, 2019 (in thousands) | | :--- | :--- | :--- | | Revenue | $22,378 | $1,357 | | Research and development | $10,578 | $6,513 | | General and administrative | $3,588 | $1,659 | | **Income (loss) from operations** | **$8,212** | **($6,815)** | | **Net income (loss)** | **$9,733** | **($6,155)** | | **Diluted EPS** | **$0.33** | **($4.46)** | - The company reported a **net income of $9.7 million** for Q1 2020, a significant turnaround from a **net loss of $6.2 million** in Q1 2019, driven by a substantial increase in revenue from a research and development arrangement[11](index=11&type=chunk) [Condensed Statements of Cash Flows](index=6&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Condensed Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2020 (in thousands) | Three Months Ended March 31, 2019 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | ($10,594) | ($7,080) | | Net cash provided by (used in) investing activities | $5,373 | ($935) | | Net cash used in (provided by) financing activities | ($240) | $2,970 | | **Net decrease in cash, cash equivalents and restricted cash** | **($5,461)** | **($5,045)** | - Net cash used in operating activities increased to **$10.6 million** in Q1 2020 from **$7.1 million** in Q1 2019, resulting in a **net decrease of $5.5 million** in total cash, cash equivalents, and restricted cash for the quarter[16](index=16&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 entity focused on discovering and developing immunomedicines for cancer and other immune-related diseases utilizing its proprietary FIND-IO platform[17](index=17&type=chunk) - The research and development collaboration agreement with Eli Lilly and Company was terminated without cause, leading to the recognition of all remaining deferred revenue, totaling **$22.4 million**, in Q1 2020[36](index=36&type=chunk)[37](index=37&type=chunk) - The COVID-19 pandemic has slowed enrollment in the Phase 2 portion of the NC318 clinical trial and temporarily delayed the initiation of a Phase 2 combination trial for NC318 and a Phase 1/2 trial for NC410[53](index=53&type=chunk) - Stock-based compensation expense for Q1 2020 was **$1.008 million**, an increase from **$0.383 million** in Q1 2019[44](index=44&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses clinical-stage operations, highlighting COVID-19's impact on trial delays, a Q1 2020 net income of $9.7 million due to the Lilly Agreement termination, increased operating expenses, and a belief that **$322.1 million** in cash is sufficient for the next 12 months [Overview](index=18&type=section&id=Overview) - NextCure is a clinical-stage biopharmaceutical company developing first-in-class immunomedicines for cancer and other immune-related diseases utilizing its proprietary FIND-IO platform[58](index=58&type=chunk) - The COVID-19 pandemic has caused significant disruptions, slowing patient enrollment for the Phase 2 trial of NC318 and temporarily delaying other planned trials for NC318 and NC410[59](index=59&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) - The company's lead product candidate, NC318, targeting Siglec-15 (S15), is in a Phase 1/2 clinical trial, and its second candidate, NC410, received IND acceptance from the FDA in Q1 2020[62](index=62&type=chunk)[63](index=63&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Results of Operations (in thousands) | Metric (in thousands) | Q1 2020 | Q1 2019 | Change | | :--- | :--- | :--- | :--- | | Revenue | $22,378 | $1,357 | $21,021 | | Research and development | $10,578 | $6,513 | $4,065 | | General and administrative | $3,588 | $1,659 | $1,929 | | **Net income (loss)** | **$9,733** | **($6,155)** | **$15,888** | - Revenue increased by **$21.0 million** due to the recognition of all deferred revenue from the terminated Lilly Agreement[90](index=90&type=chunk) - R&D expenses rose by **$4.1 million**, primarily due to a **$1.7 million** increase in lab supplies and services for NC318, NC410, and other programs, and a **$1.4 million** increase in personnel costs[91](index=91&type=chunk) - G&A expenses increased by **$1.9 million**, driven by higher professional fees, insurance, and personnel costs associated with operating as a public company[92](index=92&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) - As of March 31, 2020, the company held **$322.1 million** in cash, cash equivalents, and marketable securities (excluding restricted cash)[72](index=72&type=chunk) - Management believes that existing cash, cash equivalents, and marketable securities are sufficient to fund planned operations for at least the next 12 months[72](index=72&type=chunk)[95](index=95&type=chunk) - The company has primarily financed operations through public offerings, private placements of preferred stock, and the upfront payment from the Lilly Agreement[94](index=94&type=chunk) Cash Flow Activity (in thousands) | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($10,594) | ($7,080) | | Net cash provided by (used in) investing activities | $5,373 | ($935) | | Net cash used in (provided by) financing activities | ($240) | $2,970 | [Quantitative and Qualitative Disclosures about Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is not required to provide this information as it qualifies as a smaller reporting company - As a smaller reporting company, NextCure is not required to provide the information requested by this item[111](index=111&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated disclosure controls as of March 31, 2020, concluding their effectiveness, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2020, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[112](index=112&type=chunk) - No changes in internal control over financial reporting occurred during Q1 2020 that materially affected, or are reasonably likely to materially affect, internal controls[113](index=113&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings expected to have a material adverse effect on its business - The company is not currently involved in any litigation or legal proceedings that management believes would have a material adverse effect on the business[114](index=114&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) This section highlights significant business risks, emphasizing the ongoing and potential future impacts of the COVID-19 pandemic, including clinical trial delays, supply chain disruptions, and overall economic uncertainty - The COVID-19 pandemic has caused a slowdown in patient enrollment for the Phase 2 trial of NC318 and has delayed the initiation of other planned clinical trials for NC318 and NC410[116](index=116&type=chunk) - The pandemic could continue to adversely affect business operations, including interruptions to the supply chain, site closures, and difficulties in adhering to trial protocols, potentially impacting financial position and results[116](index=116&type=chunk)[117](index=117&type=chunk) - The company depends on third-party suppliers for key materials, and any supply interruption, potentially exacerbated by COVID-19, could materially harm its ability to manufacture product candidates and delay development[119](index=119&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the period - None[120](index=120&type=chunk) [Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the period - None[121](index=121&type=chunk) [Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[122](index=122&type=chunk) [Other Information](index=32&type=section&id=Item%205.%20Other%20Information) There is no other information to report for the period - None[123](index=123&type=chunk) [Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section provides an index of the exhibits filed as part of the Quarterly Report, including officer certifications and XBRL data files - The report includes an exhibit index listing certifications pursuant to the Sarbanes-Oxley Act and XBRL-related documents[124](index=124&type=chunk)[126](index=126&type=chunk)

Part I [Business Overview](index=5&type=section&id=Item%201.%20Business) NextCure is a clinical-stage biopharmaceutical company developing first-in-class immunomedicines for cancer and immune-related diseases, leveraging its FIND-IO platform and in-house manufacturing [Company and Strategy](index=5&type=section&id=Overview) NextCure is a clinical-stage biopharmaceutical company focused on developing novel immunomedicines for cancer and other diseases, advancing lead candidates and leveraging its FIND-IO platform - The company primarily focuses on developing first-in-class immunomedicines for cancer patients unresponsive to existing therapies[18](index=18&type=chunk) - Key strategic elements include advancing lead candidates NC318 and NC410, leveraging the FIND-IO platform, utilizing in-house cGMP manufacturing, and exploring non-oncology opportunities[33](index=33&type=chunk)[38](index=38&type=chunk) [Product Pipeline](index=9&type=section&id=Our%20Pipeline) NextCure's pipeline features lead candidates NC318 (S15) and NC410 (LAIR-1) in clinical development, alongside preclinical programs from its FIND-IO platform Clinical Pipeline Status | Product Candidate | Target | Indication | Development Phase | | :--- | :--- | :--- | :--- | | **NC318** | S15 | Advanced/Metastatic Solid Tumors | Phase 1/2 (Phase 2 enrolling) | | **NC410** | LAIR-1 | Advanced/Metastatic Solid Tumors | Phase 1/2 (Planned Q2 2020) | - NC318 Phase 1 preliminary data demonstrated a **complete response** and a **partial response** in NSCLC patients, advancing to Phase 2 in October 2019[19](index=19&type=chunk)[62](index=62&type=chunk) - The FDA accepted the IND for NC410 in Q1 2020, with a Phase 1/2 trial planned for Q2 2020 in advanced or metastatic solid tumors[20](index=20&type=chunk)[76](index=76&type=chunk) - The company is pursuing preclinical antibodies targeting a novel B7-family member, another immune modulator, and additional LAIR-1 monoclonal antibodies[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) [FIND-IO Discovery Platform](index=28&type=section&id=Our%20FIND-IO%20Discovery%20Engine) The FIND-IO platform is NextCure's proprietary function-based screening engine for identifying novel immune-modulating targets, expanding into non-oncology areas like autoimmunity - FIND-IO is a function-based screening platform identifying novel cell surface molecular interactions that drive functional immune responses[42](index=42&type=chunk)[99](index=99&type=chunk) - The platform integrates gene libraries, various immune and non-immune cell types, and functional outputs to identify new immune modulators[100](index=100&type=chunk) - The company is expanding the platform beyond oncology to discover targets in autoimmunity and inflammation via the new FIND-AI platform[108](index=108&type=chunk) [Collaboration Agreements](index=30&type=section&id=Our%20Collaboration%20Agreements) NextCure holds an exclusive license and sponsored research agreement with Yale University, while its collaboration with Eli Lilly was terminated in March 2020 - The company holds an exclusive, worldwide license from Yale University for S15 patents, requiring milestone payments up to **$2.975 million** per product and low single-digit royalties[109](index=109&type=chunk)[110](index=110&type=chunk) - A Sponsored Research Agreement with Yale provides up to **$12.4 million** in funding for new immunomedicine target discovery, expiring December 31, 2020[111](index=111&type=chunk) - The collaboration agreement with Eli Lilly, including a **$25.0 million** upfront payment and **$15.0 million** equity investment, was terminated by Lilly effective March 3, 2020[112](index=112&type=chunk) [Manufacturing](index=32&type=section&id=Manufacturing) NextCure operates its own cGMP-compliant manufacturing facility with 1,000-liter capacity, producing drug supply for preclinical and clinical trials, including NC318 - The company operates a dedicated, state-of-the-art cGMP manufacturing facility with an initial capacity of **1,000 liters**[113](index=113&type=chunk) - This facility manufactures drug supply for all preclinical studies and the NC318 Phase 1/2 clinical trial[113](index=113&type=chunk) [Intellectual Property](index=34&type=section&id=Intellectual%20Property) NextCure protects its intellectual property through patent applications for NC318/NC410, an exclusive license from Yale for S15, and trade secret protection for FIND-IO - As of year-end 2019, the company has **18 pending foreign** and **2 pending U.S. patent applications** for NC318 and NC410, expected to expire starting in 2037 if issued[119](index=119&type=chunk) - The company holds an exclusive license from Yale for S15 patents, expected to expire no earlier than 2036 if issued[120](index=120&type=chunk) - The FIND-IO platform is protected as a trade secret via confidentiality and invention assignment agreements[122](index=122&type=chunk) [Government Regulation](index=36&type=section&id=Government%20Regulation) NextCure's product candidates are regulated as biologics by the FDA and international authorities, requiring extensive preclinical and clinical development, ongoing post-approval compliance, and adherence to healthcare laws - Product candidates are regulated as biologics in the U.S., requiring extensive preclinical and clinical testing before BLA submission to the FDA[126](index=126&type=chunk)[128](index=128&type=chunk) - Post-approval, the company must comply with ongoing FDA regulations, including cGMP, adverse event reporting, and potential REMS requirements[165](index=165&type=chunk)[303](index=303&type=chunk) - The business is subject to healthcare laws including the federal Anti-Kickback Statute, False Claims Act, and HIPAA, regulating relationships with providers and payors[196](index=196&type=chunk)[335](index=335&type=chunk) - Commercial success depends on coverage and reimbursement from third-party payors like Medicare, Medicaid, and private insurers, subject to pricing pressures and healthcare reform[193](index=193&type=chunk)[317](index=317&type=chunk)[325](index=325&type=chunk) [Risk Factors](index=60&type=page&id=Item%201A.%20Risk%20Factors) The company faces significant financial, development, regulatory, commercial, operational, and global health risks, including a history of losses and reliance on unproven candidates - **Financial Risks:** The company has a history of significant net losses, including **$33.7 million in 2019**, and will require substantial additional financing to continue operations[211](index=211&type=chunk) - **Development & Regulatory Risks:** Clinical development is lengthy and uncertain, with the FIND-IO platform unproven and product candidates like NC318 and NC410 facing trial failure or non-approval risks[228](index=228&type=chunk)[241](index=241&type=chunk)[258](index=258&type=chunk) - **Commercial & Competition Risks:** Approved products may not achieve market acceptance, and the company faces intense competition from large, well-funded pharmaceutical companies[292](index=292&type=chunk)[416](index=416&type=chunk) - **Operational Risks:** The company has limited manufacturing experience, relies on third parties for key services and collaborations, and is highly dependent on key personnel[344](index=344&type=chunk)[396](index=396&type=chunk)[412](index=412&type=chunk) - **Global Health Risks:** The novel coronavirus outbreak could disrupt business operations, including clinical trial recruitment and supply chains[437](index=437&type=chunk) [Properties](index=82&type=section&id=Item%202.%20Properties) The company's headquarters, lab, and manufacturing facilities are located in Beltsville, Maryland, under leases expiring in 2025 and 2030 - The company's headquarters, lab, and manufacturing facilities are located in Beltsville, Maryland, under leases expiring in **2025** and **2030**[464](index=464&type=chunk) [Legal Proceedings](index=83&type=section&id=Item%203.%20Legal%20Proceedings) As of the report date, NextCure is not a party to any material legal proceedings - The company is not currently a party to any material legal proceedings[466](index=466&type=chunk) Part II [Market for Common Equity and Related Matters](index=83&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) NextCure's common stock trades on Nasdaq under "NXTC", the company has never paid dividends, and its May 2019 IPO raised approximately $76.9 million - Common stock is traded on the Nasdaq Global Select Market under the symbol **"NXTC"**[468](index=468&type=chunk) - The company has never declared dividends and does not plan to in the foreseeable future[469](index=469&type=chunk) - The May 2019 IPO generated net proceeds of approximately **$76.9 million**[470](index=470&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=83&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) For 2019, NextCure reported a net loss of $33.7 million, with increased R&D and G&A expenses, holding $334.6 million in cash expected to fund operations into mid-2023, following the Lilly agreement termination [Results of Operations](index=87&type=section&id=Results%20of%20Operations) In 2019, revenue was $6.3 million from the Lilly Agreement, while R&D expenses increased by $14.4 million and G&A expenses by $6.2 million, leading to a higher net loss Results of Operations (in thousands) | | Year Ended Dec 31, 2019 | Year Ended Dec 31, 2018 | Change | | :--- | :--- | :--- | :--- | | Revenue from research and development arrangement | $6,347 | $0 | $6,347 | | Research and development | $34,216 | $19,787 | $14,429 | | General and administrative | $9,613 | $3,409 | $6,204 | | **Loss from operations** | **($37,482)** | **($23,196)** | **($14,286)** | | Other income, net | $3,745 | $397 | $3,348 | | **Net loss** | **($33,737)** | **($22,799)** | **($10,938)** | - The **$14.4 million** increase in R&D expenses was driven by a **$4.4 million** increase in lab supplies, a **$4.1 million** increase in personnel costs, and a **$3.0 million** increase in NC318 clinical research costs[505](index=505&type=chunk) - The **$6.2 million** increase in G&A expenses was primarily due to a **$2.8 million** increase in professional fees and a **$1.2 million** increase in insurance expenses as a public company[507](index=507&type=chunk) [Liquidity and Capital Resources](index=88&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2019, NextCure held $334.6 million in cash and marketable securities, bolstered by 2019 offerings, expected to fund operations into mid-2023, with net cash used in operations at $35.6 million - As of December 31, 2019, the company held **$334.6 million** in cash, cash equivalents, and marketable securities[486](index=486&type=chunk)[510](index=510&type=chunk) - The company raised approximately **$237.8 million** in net proceeds from its IPO and a follow-on public offering in 2019[509](index=509&type=chunk) - Management expects the current cash position to fund planned operations into the first half of **2023**[486](index=486&type=chunk)[510](index=510&type=chunk) Cash Flow Summary (in thousands) | | Year Ended Dec 31, 2019 | Year Ended Dec 31, 2018 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(35,623) | $7,992 | | Net cash used in investing activities | $(303,923) | $(3,063) | | Net cash provided by financing activities | $243,043 | $121,417 | [Financial Statements and Supplementary Data](index=94&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The audited financial statements for 2019 and 2018 are presented, showing a 2019 net loss of $33.7 million, total assets of $356.2 million, and notes detailing key accounting policies and events Balance Sheet Highlights (in thousands) | | Dec 31, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $34,091 | $135,173 | | Marketable securities | $300,514 | $0 | | **Total Assets** | **$356,168** | **$147,628** | | Total current liabilities | $15,042 | $10,298 | | Deferred revenue, non-current | $15,950 | $21,736 | | **Total Liabilities** | **$34,684** | **$32,349** | | **Total Stockholders' Equity (Deficit)** | **$321,484** | **($46,944)** | - Upon the IPO closing in May 2019, all outstanding convertible preferred stock automatically converted into **15,560,569 shares** of common stock[563](index=563&type=chunk) - Subsequent Event: Lilly terminated the Lilly Agreement effective March 3, 2020, with the remaining **$22.4 million** in deferred revenue to be recognized in Q1 2020[695](index=695&type=chunk)[696](index=696&type=chunk) Part III [Directors, Executive Compensation, and Corporate Governance](index=119&type=section&id=Item%2010%2C%2011%2C%2012%2C%2013%2C%2014) Information on directors, executive compensation, security ownership, and corporate governance is incorporated by reference from the forthcoming 2020 Proxy Statement - Information regarding directors, executive compensation, security ownership, and other governance matters is incorporated by reference from the forthcoming **2020 Proxy Statement**[703](index=703&type=chunk)[704](index=704&type=chunk)[705](index=705&type=chunk)[706](index=706&type=chunk)[707](index=707&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=120&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section provides an index of all exhibits filed with the 10-K, including financial statements, corporate governance documents, and material agreements - This section contains the index of all exhibits filed with the **10-K**, including corporate governance documents, material agreements, and required certifications[711](index=711&type=chunk)[713](index=713&type=chunk)

MARCH 2020 Next@ure Next-Generation Immunomedicines Forward-Looking Statements To the extent that statements contained in this presentation are not descriptions of historical facts, they may be deemed to be forward-looking statements under the Private Securities Litigation Reform Act of 1995. Words such as "may," "will," "expect," "anticipate," "intend," " "near-term," "future" and similar expressions, as well as other words and expressions referencing future events, conditions, or circumstances, are intend ...

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 September 30, 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 jurisdictio ...

Pipeline and Programs - NC318 (targeting Siglec-15) Phase 1/2 topline data is expected in Q4 2019[6], with Phase 1 initiated in October 2018[23] - NC410 (LAIR-1) IND filing is expected in Q1 2020[6], designed to promote T cell function and dendritic cell activity[58] - Multiple discovery and research programs are underway, with the first IND filing anticipated in early 2021[20] - The FIND-IO platform aims for its first IND filing in late 2022[20] Financial and Partnerships - An oncology partnership with Eli Lilly includes $40 million upfront and equity[7] - NextCure has a strong balance sheet to deliver on objectives[7] NC318 Details - NC318 targets tumors and macrophages by blocking S15-induced immunosuppression[23] - Phase 1 trial of NC318 had 21 subjects dosed as of March 31, 2019, with the 4th dose cohort open[54] - In the NC318 Phase 1 trial, there was 1 confirmed partial response, 6 stable diseases, and 6 progressive diseases[55] - S15 and PD-L1 expression generally do not overlap in NSCLC tumors, suggesting NC318 as a potential treatment for PD-1/PD-L1 non-responders[34] NC410 Details - NC410 is a decoy human fusion protein targeting the TME, specifically Leukocyte Associated Immunoglobulin-like Receptor-1 (LAIR-1)[58] - NC410 is designed to prevent immune suppression caused by LAIR-1, promoting T cell function and dendritic cell activation[62, 63] FIND-IO Platform - The FIND-IO platform is a functional, integrated discovery engine for immuno-oncology[76] - Lilly–NextCure partnership to validate platform and approach includes $25 million upfront and $15 million equity investment[86]

[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 ...