Praxis(PRAX) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis of Praxis Precision Medicines, Inc Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements of Praxis Precision Medicines, Inc. for the periods ended June 30, 2024, and December 31, 2023 (balance sheets) or June 30, 2024 and 2023 (statements of operations, comprehensive loss, stockholders' equity, and cash flows) Condensed Consolidated Balance Sheets This section presents the company's financial position, including assets, liabilities, and equity, as of specific dates Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :----- | :--------------------------- | :------------------------------- | | Total Assets | $441,063 | $87,948 | | Total Liabilities | $21,963 | $18,279 | | Total Stockholders' Equity | $419,100 | $69,669 | | Cash and Cash Equivalents | $145,143 | $81,300 | | Marketable Securities (Current & Long-term) | $288,688 | $0 | Condensed Consolidated Statements of Operations This section details the company's revenues, expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Collaboration Revenue | $357 | $781 | $788 | $1,464 | | Research and Development Expenses | $27,260 | $25,614 | $54,244 | $51,118 | | General and Administrative Expenses | $10,585 | $10,127 | $25,918 | $23,397 | | Total Operating Expenses | $37,845 | $35,741 | $80,162 | $74,515 | | Loss from Operations | $(37,488) | $(34,960) | $(79,374) | $(73,051) | | Other Income, Net | $4,811 | $648 | $7,144 | $1,284 | | Net Loss | $(32,677) | $(34,312) | $(72,230) | $(71,767) | | Net Loss Per Share (Basic & Diluted) | $(1.74) | $(7.38) | $(4.41) | $(17.51) | | Weighted Average Common Shares Outstanding | 18,824,479 | 4,649,371 | 16,364,421 | 4,097,833 | Condensed Consolidated Statements of Comprehensive Loss This section presents the company's net loss and other comprehensive income or loss components for the reporting periods Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Loss | $(32,677) | $(34,312) | $(72,230) | $(71,767) | | Change in unrealized gain (loss) on marketable securities, net of tax | $(74) | $19 | $(71) | $173 | | Comprehensive Loss | $(32,751) | $(34,293) | $(72,301) | $(71,594) | Condensed Consolidated Statements of Stockholders' Equity This section outlines changes in the company's equity accounts, including common shares and accumulated deficit, over time Condensed Consolidated Statements of Stockholders' Equity (in thousands, except share data) | Metric | December 31, 2023 (in thousands) | June 30, 2024 (in thousands) | | :----- | :---------------- | :------------ | | Common Shares Outstanding | 8,791,877 | 17,755,506 | | Additional Paid-In Capital | $723,577 | $1,145,308 | | Accumulated Deficit | $(653,921) | $(726,151) | | Total Stockholders' Equity | $69,669 | $419,100 | Condensed Consolidated Statements of Cash Flows This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :----------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(48,135) | $(64,060) | | Net cash (used in) provided by investing activities | $(287,142) | $39,000 | | Net cash provided by financing activities | $399,120 | $87,745 | | Net increase in cash, cash equivalents and restricted cash | $63,843 | $62,685 | | Cash, cash equivalents and restricted cash, end of period | $145,559 | $124,716 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures regarding the accounting policies, significant estimates, and specific financial statement line items, offering crucial context for understanding the company's financial position and performance 1. Nature of the Business This section describes Praxis's core business as a clinical-stage biopharmaceutical company developing therapies for CNS disorders and its financial status - Praxis is a clinical-stage biopharmaceutical company developing therapies for CNS disorders, including genetic epilepsies, using two proprietary platforms: Cerebrum™ (small molecule) and Solidus™ (ASO)[21] - Key clinical-stage product candidates and their development status: - Ulixacaltamide (Cerebrum™): Two Phase 3 Essential3 clinical trials for essential tremor are ongoing, with interim analysis expected in Q4 2024 and topline results shortly thereafter - PRAX-628: Positive PPR study results in Q1 2024; plans to initiate four studies, including an observational study in Q3 2024 and three efficacy studies (first open-label in H2 2024, double-blind in Q4 2024, third in H1 2025) - Relutrigine (PRAX-562): Phase 2 EMBOLD study (SCN2A-DEE and SCN8A-DEE cohorts) initiated in Q1 2023, with topline results expected in Q3 2024 - Elsunersen (Solidus™): Part 1 EMBRAVE study results shared in Q4 2023; initiated first arm of global confirmatory study in Brazil, with further pivotal phase expansion planned for later in 2024[21] - The company has incurred recurring losses since inception, with a net loss of $72.2 million for the six months ended June 30, 2024, and an accumulated deficit of $726.2 million[25] - Cash, cash equivalents, and marketable securities of $433.8 million as of June 30, 2024, are expected to fund its operating expenditures and capital expenditure requirements for at least one year from the date of issuance of these condensed consolidated financial statements[26] 2. Summary of Significant Accounting Policies This section outlines the key accounting principles and methods used in preparing the financial statements, including the impact of a reverse stock split - The company effected a 1-for-15 reverse stock split on November 28, 2023, retroactively adjusting all share and per share amounts in the report[28][29] - Investments in debt instruments are classified as available-for-sale, reported at fair value, with unrealized gains/losses in accumulated other comprehensive loss[31] - Basic and diluted net loss per share are the same due to recurring net losses, as potentially dilutive securities would be anti-dilutive[35][36] - Recent accounting pronouncements (ASU 2023-07 on Segment Reporting and ASU 2023-09 on Income Tax Disclosures) are expected to impact disclosures only, with no material impact on financial position or results of operations[37] 3. Cash Equivalents and Marketable Securities This section details the composition and fair value of the company's cash equivalents and marketable securities portfolio Investment Portfolio as of June 30, 2024 (in thousands) | Category | Cost (in thousands) | Gross Unrealized Gains (in thousands) | Gross Unrealized Losses (in thousands) | Estimated Fair Value (in thousands) | | :------- | :--- | :--------------------- | :---------------------- | :------------------- | | Cash equivalents | $53,347 | $0 | $(2) | $53,345 | | Available-for-sale marketable securities | $285,057 | $0 | $(69) | $284,688 | | Total | $342,104 | $0 | $(71) | $342,033 | - As of June 30, 2024, the company had 119 securities with a total fair market value of $227.0 million in an unrealized loss position, primarily due to changes in market interest rates, which are considered temporary[39] Contractual Maturities of Marketable Securities (in thousands) | Maturity Period | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------- | :------------ | :---------------- | | Within one year | $224,961 | $0 | | After one year through five years | $81,952 | $0 | | Total | $306,913 | $0 | 4. Fair Value Measurements This section provides a breakdown of assets measured at fair value, categorized by the inputs used in their valuation Fair Value Measurements as of June 30, 2024 (in thousands) | Asset Category | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :------------- | :------ | :------ | :------ | :---- | | Money market funds | $35,120 | $0 | $0 | $35,120 | | Debt securities issued by U.S. government agencies | $8,980 | $0 | $0 | $8,980 | | Corporate debt securities | $0 | $4,270 | $0 | $4,270 | | Commercial paper | $0 | $4,975 | $0 | $4,975 | | Available-for-sale marketable securities: | | | | | | Debt securities issued by U.S. government agencies | $178,087 | $0 | $0 | $178,087 | | Corporate debt securities | $0 | $88,055 | $0 | $88,055 | | Commercial paper | $0 | $14,488 | $0 | $14,488 | | Other debt securities | $0 | $8,058 | $0 | $8,058 | | Total | $222,187 | $119,846 | $0 | $342,033 | 5. Accrued Expenses This section presents a detailed breakdown of the company's accrued liabilities, including research and development and personnel-related expenses Accrued Expenses (in thousands) | Category | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | | :------- | :------------ | :---------------- | :----- | | Accrued external research and development expenses | $7,353 | $2,957 | +$4,396 | | Accrued personnel-related expenses | $2,064 | $3,716 | -$1,652 | | Accrued other expenses | $641 | $743 | -$102 | | Total accrued expenses | $10,058 | $7,416 | +$2,642 | 6. Commitments and Contingencies This section discloses the company's contractual obligations and potential liabilities, such as operating leases and legal matters - The company has an operating sublease for office space in Boston, MA, expiring January 31, 2026, with annual rent increases of approximately 2%. A letter of credit for the security deposit is secured by restricted cash[46] 7. Collaboration and License Agreements This section details the terms and financial impact of the company's key collaboration and licensing agreements with partners like UCB and Tenacia - UCB Option and License Agreement (December 2022): - Focus: Discovery of small molecule therapeutics for KCNT1-related epilepsies - Upfront Payment: $5.0 million - Potential Milestones: Up to $98.5 million in success-based development and commercialization milestones, plus tiered royalties on net sales - Revenue Recognition: $0.4 million (Q2 2024) and $0.8 million (YTD Q2 2024) recognized as collaboration revenue - Deferred Revenue: $1.8 million as of June 30, 2024 ($1.2 million current)[47] - Tenacia Collaboration and License Agreement (January 2024): - Focus: Exclusive license for development and commercialization of ulixacaltamide in China, Hong Kong, Macau, and Taiwan - Upfront Payment: $5.0 million cash (net of tax) - Potential Milestones: Up to $264.0 million in success-based development and commercialization milestones, plus tiered royalties on net sales - Stock Purchase: Issued 443,253 common shares to BCPE (Tenacia's related party) for $10.0 million at a 20% premium over 30-day VWAP - Financial Impact: The fair value of issued equity ($17.3 million) exceeded proceeds, resulting in a $2.5 million negative revenue recorded as R&D expense in Q1 2024. No revenue recognized from the arrangement in Q2 2024[49] 8. Common Stock and Preferred Stock This section provides information on the company's equity structure, including common stock issuances, reverse stock splits, and shares reserved for future issuance - A 1-for-15 reverse stock split was effective November 28, 2023, reclassifying outstanding common stock and retroactively adjusting share amounts[50][51] - As of June 30, 2024, 17,755,506 common shares were issued and outstanding, compared to 8,791,877 as of December 31, 2023[9] - Follow-On Public Offerings: - June 2023: Raised $63.4 million net proceeds from common stock and pre-funded warrants. All pre-funded warrants exercised via cashless exercise by June 30, 2024[53][54] - January 2024: Raised $161.6 million net proceeds from common stock and pre-funded warrants. 152,145 pre-funded warrants exercised via cashless exercise by June 30, 2024; 904,580 remain outstanding[55] - April 2024: Raised $216.0 million net proceeds from common stock and pre-funded warrants. None of the pre-funded warrants had been exercised as of June 30, 2024[56] Shares Reserved for Future Issuance | Category | June 30, 2024 | December 31, 2023 | | :------- | :------------ | :---------------- | | Outstanding stock options | 1,134,459 | 666,163 | | Pre-funded warrants (Jan 2024) | 904,580 | — | | Pre-funded warrants (Apr 2024) | 221,238 | — | | 2020 Stock Option and Incentive Plan | 936,662 | 148,264 | | 2020 Employee Stock Purchase Plan | 115,883 | 53,111 | | 2024 Inducement Plan | 112,249 | — | | Restricted stock units | 101,462 | 47,145 | | Total | 3,526,533 | 1,384,683 | 9. Stock-Based Compensation This section details the company's stock-based compensation plans and the associated expense recognized in the financial statements - Total unrecognized compensation cost for unvested restricted stock units was $6.8 million as of June 30, 2024, to be recognized over a weighted-average period of 2.28 years[64] - Total unrecognized compensation cost related to unvested stock options was $22.0 million as of June 30, 2024, expected to be recognized over a weighted-average period of 1.76 years[66] Stock-Based Compensation Expense Allocation (in thousands) | Category | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $2,060 | $1,918 | $7,658 | $4,141 | | General and administrative | $3,818 | $3,857 | $12,695 | $9,227 | | Total | $5,878 | $5,775 | $20,353 | $13,368 | 10. Net Loss per Share This section explains the calculation of basic and diluted net loss per share, considering potentially dilutive securities - Potentially dilutive common shares (stock options, unvested restricted stock units, ESPP shares) were excluded from diluted net loss per share calculation because their inclusion would be anti-dilutive due to net losses[68] - Common shares issuable upon exercise of pre-funded warrants are included in the calculation of basic weighted average common shares outstanding from their issuance date, as they are issuable for little to no consideration without vesting conditions[68] 11. Related Party Transactions This section discloses transactions and agreements with related parties, such as RogCon Inc - The company has a Cooperation and License Agreement with RogCon Inc. (a related party, with a founder becoming the company's General Counsel in June 2020) for SCN2A gene mutation-related epilepsy and neurodevelopmental disorders[69][70] - The company reimburses RogCon for out-of-pocket R&D costs, which were not material during the periods presented[70] 12. Subsequent Events This section reports on significant events that occurred after the balance sheet date but before the financial statements were issued - No subsequent events requiring disclosure have occurred between the balance sheet date (June 30, 2024) and the issuance of the condensed consolidated financial statements[71] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, results of operations, and liquidity, offering a narrative analysis of the financial statements and forward-looking insights into business strategies and risks Overview This section provides a high-level summary of Praxis's business, clinical programs, financial performance, and liquidity outlook - Praxis is a clinical-stage biopharmaceutical company translating genetic epilepsy insights into therapies for CNS disorders, leveraging Cerebrum™ (small molecule) and Solidus™ (ASO) platforms[74] - Key clinical program updates: - Ulixacaltamide (Cerebrum™): Phase 3 Essential3 trials for essential tremor ongoing; interim analysis Q4 2024, topline results shortly after - PRAX-628: Positive PPR study results in Q1 2024; plans for observational study in Q3 2024 and three efficacy studies (first open-label H2 2024, double-blind Q4 2024, third H1 2025) - Relutrigine (PRAX-562): Phase 2 EMBOLD study (SCN2A-DEE and SCN8A-DEE) topline results expected Q3 2024 - Elsunersen (Solidus™): Part 1 EMBRAVE study results shared Q4 2023; global confirmatory study initiated in Brazil, with pivotal phase expansion later in 2024[74] - The company has incurred recurring operating losses, with a net loss of $72.2 million for the six months ended June 30, 2024, and an accumulated deficit of $726.2 million. Significant R&D expenses and operating losses are expected to continue[77] - Cash, cash equivalents, and marketable securities of $433.8 million as of June 30, 2024, are projected to be sufficient to fund operating expenditures and capital expenditure requirements into 2027[80] Reverse Stock Split This section explains the details and impact of the 1-for-15 reverse stock split implemented by the company - A 1-for-15 reverse stock split became effective on November 28, 2023, reclassifying every 15 shares of common stock into one. Fractional shares were settled with cash payments[81][82] Financial Operations Overview This section provides a high-level overview of the company's revenue, operating expenses (research and development, general and administrative), other income, and income taxes, setting the stage for the detailed results of operations analysis Revenue This section details the company's collaboration revenue, noting the absence of product sales and expected future trends - No revenue from product sales since inception; not expected for several years[83] Collaboration Revenue (in thousands) | Period | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) | | :----- | :--- | :--- | :----- | | Three Months Ended June 30 | $357 | $781 | -$424 | | Six Months Ended June 30 | $788 | $1,464 | -$676 | Operating Expenses This section provides an overview of the company's research and development and general and administrative expenses Research and Development Expenses This section details the components and trends of the company's research and development expenditures by platform and category - R&D expenses include personnel, third-party agreements (CROs, consultants), regulatory compliance, manufacturing materials, and allocated overhead[84] - The company uses a "virtual" R&D model, relying heavily on external consultants, collaborators, and CROs[75][76] Research and Development Expenses by Platform (in thousands) | Category | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Change (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | Change (in thousands) | | :------- | :------------------------------- | :------------------------------- | :----- | :----------------------------- | :----------------------------- | :----- | | Cerebrum™ | $14,967 | $6,890 | +$8,077 | $27,752 | $18,025 | +$9,727 | | Solidus™ | $1,680 | $9,922 | -$8,242 | $2,870 | $13,524 | -$10,654 | | Personnel-related | $8,450 | $6,778 | +$1,672 | $19,402 | $14,904 | +$4,498 | | Other indirect | $2,163 | $2,024 | +$139 | $4,220 | $4,665 | -$445 | | Total R&D | $27,260 | $25,614 | +$1,646 | $54,244 | $51,118 | +$3,126 | General and Administrative Expense This section outlines the components and expected future trends of the company's general and administrative expenses - G&A expenses include personnel costs, legal and professional fees, commercial-related costs, insurance, and facility expenses[91] - G&A expenses are expected to increase due to headcount growth, support for R&D, potential commercialization, and IP-related expenses[92] Other Income This section describes the primary sources of the company's other income, net, mainly interest income - Other income, net, primarily consists of interest income from cash, cash equivalents, and marketable securities, and amortization of investment premiums and discounts[93] Income Taxes This section explains the company's income tax position, noting the absence of tax benefits due to recurring losses - No U.S. federal or state income tax benefits recorded due to recurring net losses and uncertainty of benefit realization[94] - No income tax provision recognized for the three and six months ended June 30, 2024 and 2023[94] Results of Operations This section provides a detailed comparison of the company's financial performance for the three and six months ended June 30, 2024, versus the corresponding periods in 2023, analyzing changes in collaboration revenue, operating expenses (R&D, G&A), and other income Comparison of the Three Months Ended June 30, 2024 and 2023 This section analyzes the financial performance changes for the three-month periods, focusing on revenue, expenses, and net loss drivers Key Financial Changes (Three Months Ended June 30, 2024 vs. 2023) (in thousands) | Metric | Change (in thousands) | Primary Driver | | :----- | :----- | :------------- | | Collaboration Revenue | -$424 | Decrease in UCB agreement revenue | | Research and Development Expenses | +$1,646 | +$8.1M in Cerebrum™ (ulixacaltamide Phase 3), -$8.2M in Solidus™ (prior year Ionis milestone), +$1.7M in personnel costs | | General and Administrative Expenses | +$458 | Increased personnel-related costs | | Loss from Operations | -$2,528 | Increased operating expenses | | Other Income, Net | +$4,163 | Increased interest income | | Net Loss | +$1,635 | Higher other income offsetting increased operating loss | Comparison of the Six Months Ended June 30, 2024 and 2023 This section analyzes the financial performance changes for the six-month periods, focusing on revenue, expenses, and net loss drivers Key Financial Changes (Six Months Ended June 30, 2024 vs. 2023) (in thousands) | Metric | Change (in thousands) | Primary Driver | | :----- | :----- | :------------- | | Collaboration Revenue | -$676 | Decrease in UCB agreement revenue | | Research and Development Expenses | +$3,126 | +$9.7M in Cerebrum™ (ulixacaltamide Phase 3), -$10.7M in Solidus™ (prior year Ionis milestone), +$4.5M in personnel costs | | General and Administrative Expenses | +$2,521 | +$3.7M in personnel costs (stock-based comp), -$1.1M in professional expenses | | Loss from Operations | -$6,323 | Increased operating expenses | | Other Income, Net | +$5,860 | Increased interest income | | Net Loss | -$463 | Higher other income offsetting increased operating loss | Liquidity and Capital Resources This section discusses the company's historical funding sources, current cash position, and future funding requirements. It highlights significant losses, reliance on equity financing, and the expectation that current capital will fund operations into 2027, while acknowledging the need for substantial additional funds for long-term objectives Sources of Liquidity This section identifies the company's historical and current sources of funding, primarily equity issuances and cash on hand - Since inception through June 30, 2024, the company raised $1.0 billion in aggregate cash proceeds primarily from equity issuances[107] - As of June 30, 2024, cash, cash equivalents, and marketable securities totaled $433.8 million[107] - Recent public offerings: - June 2023: $63.4 million net proceeds[109] - January 2024: $161.6 million net proceeds[111] - April 2024: $216.0 million net proceeds[113] Cash Flows This section provides a summary and analysis of the company's cash flows from operating, investing, and financing activities Cash Flow Summary (Six Months Ended June 30) (in thousands) | Activity | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) | | :------- | :--- | :--- | :----- | | Operating Activities | $(48,135) | $(64,060) | +$15,925 | | Investing Activities | $(287,142) | $39,000 | -$326,142 | | Financing Activities | $399,120 | $87,745 | +$311,375 | | Net Increase in Cash | $63,843 | $62,685 | +$1,158 | - Operating Activities (6M 2024): Net cash used was $48.1 million, primarily due to a $72.2 million net loss, partially offset by $2.2 million in working capital changes and $21.9 million in non-cash charges (mainly stock-based compensation)[115] - Investing Activities (6M 2024): Net cash used was $287.1 million, primarily for purchases of marketable securities, partially offset by maturities. (In 6M 2023, $39.0 million was provided by maturities)[117] - Financing Activities (6M 2024): Net cash provided was $399.1 million, mainly from January and April 2024 public offerings, at-the-market offerings, and the Tenacia collaboration[118] Plan of Operation and Future Funding Requirements This section outlines the company's expected future expenses, funding needs, and strategies for securing additional capital - Expenses are expected to increase substantially due to advancing preclinical activities and clinical trials, leading to continued operating losses and negative operating cash flows[119] - Current cash, cash equivalents, and marketable securities ($433.8 million as of June 30, 2024) are expected to fund operating expenses and capital expenditure requirements into 2027[120] - Substantial additional funds will be required to achieve business objectives, with no committed external sources currently available. Market volatility could impact capital access[122][123] - Future funding may involve equity/convertible debt (dilution), debt financing (covenants, warrants), or collaborations (relinquishing rights). Failure to raise funds could lead to delays or termination of development programs[123][124] Critical Accounting Policies and Significant Judgments and Estimates This section confirms no material changes to critical accounting policies from the prior annual report, except as noted - No material changes to critical accounting policies and significant judgments/estimates from the 2023 Annual Report on Form 10-K, except as noted in Note 2 of the condensed consolidated financial statements[126] Recently Issued Accounting Pronouncements This section states that recently issued accounting standards are not expected to materially impact the financial statements or operations - Recently issued accounting standards, other than those in Note 2, are not expected to have a material impact on the condensed consolidated financial statements or current operations[127] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risk primarily related to changes in interest rates, affecting its cash, cash equivalents, and marketable securities. However, due to the low-risk profile of its investment portfolio, a 100 basis point change in market interest rates is not expected to have a material impact on its financial position or results of operations - Primary market risk exposure is interest rate sensitivity, affecting cash, cash equivalents, and marketable securities[128] - Due to the low-risk profile of the investment portfolio, a 100 basis point change in market interest rates is not expected to have a material impact on financial position or results of operations[128] Item 4. Controls and Procedures This section addresses the effectiveness of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting Management's Evaluation of Our Disclosure Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2024 - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2024[130] Changes in Internal Control Over Financial Reporting No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2024 - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2024[131] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other miscellaneous disclosures relevant to the company's operations Item 1. Legal Proceedings As of the report date, the company is not party to any material legal matters or claims, though it may encounter such in the ordinary course of business. The outcome of future legal matters cannot be predicted, and they could adversely impact the company - As of the report date, the company is not party to any material legal matters or claims[133] - Future legal matters, though unpredictable, could adversely impact the company due to defense/settlement costs and diversion of management resources[133] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes to the risk factors previously disclosed in the 2023 Annual Report on Form 10-K[134] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not make any sales of unregistered equity securities during the three months ended June 30, 2024 - No sales of unregistered equity securities occurred during the three months ended June 30, 2024[135] Item 3. Defaults Upon Senior Securities This section confirms that the item regarding defaults upon senior securities is not applicable to the company - Not applicable[135] Item 4. Mine Safety Disclosures This section confirms that the item regarding mine safety disclosures is not applicable to the company - Not applicable[136] Item 5. Other Information This section reports no disclosure in lieu of Form 8-K, no material changes to director nominee recommendation procedures, and no Rule 10b5-1 trading arrangements adopted or terminated by directors or officers during the quarter - No disclosure in lieu of Form 8-K[137] - No material changes to procedures for security holders to recommend board nominees[137] - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements adopted or terminated by directors or officers during Q2 2024[137] Item 6. Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including organizational documents, warrant forms, compensation policies, and certifications - The report includes various exhibits such as the Amended and Restated Certificate of Incorporation, Bylaws, Forms of Pre-funded Warrants, Non-Employee Director Compensation Policy, and certifications (31.1, 31.2, 32.1)[139] SIGNATURES This section provides the official signatures of the company's Chief Executive Officer and Chief Financial Officer, certifying the report - The report is signed by Marcio Souza (Chief Executive Officer and Director) and Timothy Kelly (Chief Financial Officer) on August 13, 2024[141]