Janux Therapeutics(JANX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures Item 1. Financial Statements This section presents Janux Therapeutics, Inc.'s unaudited condensed financial statements, including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, statements of cash flows, and accompanying notes. It highlights the company's financial position, performance, cash movements, and significant accounting policies and commitments Condensed Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity at specific points in time | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Assets | $1,032,212 | $1,061,516 | | Cash and cash equivalents | $52,446 | $430,605 | | Short-term investments | $943,565 | $594,568 | | Total Stockholders' Equity | $990,516 | $1,022,781 | Unaudited Condensed Statements of Operations and Comprehensive Loss This section outlines the company's financial performance, including revenues, expenses, and net loss over specific reporting periods | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | Collaboration revenue | $0 | $8,897 | | Research and development | $34,664 | $14,898 | | General and administrative | $10,454 | $7,821 | | Net loss | $(33,858) | $(5,959) | | Net loss per common share, basic and diluted | $(0.55) | $(0.11) | | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | Collaboration revenue | $0 | $10,149 | | Research and development | $59,719 | $28,968 | | General and administrative | $20,296 | $15,164 | | Net loss | $(57,366) | $(20,719) | | Net loss per common share, basic and diluted | $(0.93) | $(0.40) | Unaudited Condensed Statements of Stockholders' Equity This section details changes in the company's equity accounts, reflecting transactions with owners and comprehensive loss | Metric | December 31, 2024 (in thousands) | June 30, 2025 (in thousands) | | :--- | :--- | :--- | | Total Stockholders' Equity | $1,022,781 | $990,516 | | Accumulated Deficit | $(237,757) | $(295,123) | | Stock-based compensation (Six Months Ended June 30, 2025) | N/A | $21,662 | | Stock-based compensation (Six Months Ended June 30, 2024) | N/A | $11,382 | Unaudited Condensed Statements of Cash Flows This section reports the cash generated and used by the company across operating, investing, and financing activities | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(40,837) | $(24,858) | | Net cash used in investing activities | $(338,830) | $(304,621) | | Net cash provided by financing activities | $1,508 | $324,936 | | Net decrease in cash, cash equivalents and restricted cash | $(378,159) | $(4,543) | | Cash, cash equivalents and restricted cash – end of period | $53,262 | $15,478 | Notes to Unaudited Condensed Financial Statements This section provides detailed explanations of the company's significant accounting policies, financial statement line items, and commitments 1. Organization and Summary of Significant Accounting Policies This section describes the company's business and outlines the key accounting principles applied in preparing the financial statements - Janux Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing novel immunotherapies using its proprietary TRACTr and TRACIr platforms[22] - The company has incurred net losses and negative cash flows from operations since inception, with an accumulated deficit of $295.1 million as of June 30, 2025, and expects to incur substantial operating losses for the next several years[23] - Operations have been funded primarily through convertible notes, preferred stock, IPO, common stock/warrant offerings, stock option exercises, and a collaboration agreement[23] | Fair Value Measurement Category | Total (in thousands) | Level 1 (in thousands) | Level 2 (in thousands) | | :--- | :--- | :--- | :--- | | As of June 30, 2025: | | | | | Money market funds | $40,900 | $40,900 | $0 | | U.S. Treasury securities | $72,156 | $72,156 | $0 | | U.S. agency bonds | $332,077 | $0 | $332,077 | | Corporate debt securities | $305,317 | $0 | $305,317 | | Commercial paper | $234,015 | $0 | $234,015 | | Restricted cash (money market account) | $816 | $816 | $0 | | Total assets measured at fair value | $985,281 | $113,872 | $871,409 | - The company recognizes revenue using a five-step approach, allocating transaction price to distinct performance obligations and recognizing revenue as control is transferred. Variable consideration for development and regulatory milestones is included if a significant revenue reversal is not probable[46][51][52] - All research and development costs are expensed in the period incurred[58] - Stock-based compensation expense for equity awards (stock options, RSUs, ESPP rights) is recognized on a straight-line basis over the requisite service or offering period[61] - The company operates as a single operating segment focused on the research and development of novel immunotherapies[63] - The company is evaluating ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures) but does not expect to early adopt them[67][68] 2. Balance Sheet Details This section provides disaggregated information for specific balance sheet accounts, such as prepaid expenses, property and equipment, and accrued expenses | Prepaid expenses and other current assets | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Interest receivable | $5,691 | $5,381 | | Prepaid research and development | $2,241 | $2,354 | | Other prepaid expenses | $1,610 | $758 | | Total | $9,542 | $8,493 | | Property and equipment, net | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Laboratory equipment | $9,226 | $8,360 | | Furniture and fixtures | $792 | $792 | | Computer equipment and software | $658 | $658 | | Assets not placed in service | $24 | $6 | | Less: accumulated depreciation | $(6,012) | $(4,952) | | Property and equipment, net | $4,688 | $4,864 | | Accrued expenses | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Accrued research and development | $13,097 | $6,200 | | Accrued compensation | $2,345 | $4,566 | | Other accrued expenses | $587 | $918 | | Total | $16,029 | $11,684 | 3. Commitments and Contingencies This section details the company's contractual obligations, lease agreements, and potential legal liabilities - The company has a cell line license agreement with WuXi Biologics, requiring low single-digit royalty payments on net sales if third-party manufacturers are used, or a one-time buyout option ranging from low single-digit millions to $15.0 million[72][73] - An operating lease for office and laboratory space (Torrey Plaza Lease) commenced on April 1, 2022, with a 130-month term and total minimum lease payments of $29.8 million as of June 30, 2025[75][80] - Restricted cash of $0.8 million secures a standby letter of credit related to the Torrey Plaza Lease[79] - The company is not currently party to any material legal proceedings[81] 4. Stockholders' Equity This section provides details on common stock, equity offerings, stock option activity, and stock-based compensation - As of June 30, 2025, $150.0 million of common stock remained available for sale under an 'at the market offering' program[82] - In March 2024, the company closed an underwritten offering yielding $320.1 million in net proceeds from common stock and pre-funded warrants[85] - In December 2024, another underwritten offering generated $377.9 million in net proceeds from common stock and pre-funded warrants[87] - Pre-funded common stock warrants are equity classified and accounted for as a component of additional paid-in capital[88][89] | Stock Option Activity | Number of Options (thousands) | Weighted Average Exercise Price | | :--- | :--- | :--- | | Outstanding at December 31, 2024 | 8,873 | $12.81 | | Granted (Six Months Ended June 30, 2025) | 1,633 | $47.69 | | Exercised (Six Months Ended June 30, 2025) | (141) | $7.66 | | Forfeited or cancelled (Six Months Ended June 30, 2025) | (156) | $41.60 | | Outstanding at June 30, 2025 | 10,210 | $18.02 | - Total unrecognized stock-based compensation cost was $75.9 million for options (expected over ~2.5 years), $30.9 million for RSUs (expected over ~3.4 years), and $0.9 million for ESPP (expected over ~1.5 years) as of June 30, 2025[93][99][100] | Stock-Based Compensation Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Research and development | $5,489 | $2,324 | | General and administrative | $5,471 | $3,433 | | Total | $10,960 | $5,757 | | Stock-Based Compensation Expense (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Research and development | $10,688 | $4,508 | | General and administrative | $10,974 | $6,874 | | Total | $21,662 | $11,382 | - As of June 30, 2025, 21,840,366 shares of common stock were reserved for future issuance[103] 5. Research Collaboration and Exclusive License Agreement This section describes the terms and financial implications of the company's collaboration agreement with Merck - The company entered into an exclusive research collaboration and license agreement with Merck in December 2020 for up to two collaboration targets related to T cell engager immunotherapies for cancer treatment[104] - The company is eligible to receive up to $142.5 million per Collaboration Target in development and regulatory milestones ($285.0 million collectively), plus up to $350.0 million for each licensed product for commercial milestones, and tiered royalties on net sales[104] - No revenue was recognized from the Merck Agreement for the three and six months ended June 30, 2025, as the company's research performance obligations were completed as of June 30, 2025[106] 6. Subsequent Events This section discloses significant events that occurred after the balance sheet date but before the financial statements were issued - In August 2025, a developmental milestone related to the First Collaboration Target under the Merck Agreement was achieved, obligating Merck to pay the company a $10.0 million milestone payment[107] 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 and operational results. It details the company's clinical-stage pipeline, significant net losses, funding requirements, and the impact of macroeconomic factors. Key financial changes include increased R&D expenses and the absence of collaboration revenue in the current period Overview This section introduces the company's business, clinical pipeline, financial performance, and future funding outlook - Janux Therapeutics is a clinical-stage biopharmaceutical company developing novel immunotherapies using its TRACTr, TRACIr, and Adaptive Immune Response Modulator (ARM) platforms[109] - Lead clinical candidates include JANX007 (PSMA-TRACTr for mCRPC) and JANX008 (EGFR-TRACTr for multiple solid cancers), both in Phase 1 clinical trials[109] - JANX007 showed meaningful PSA drops, anti-tumor activity, and a favorable safety profile in interim clinical data (December 2024, May 2025), supporting Phase 1b expansion studies[109] - JANX008 displayed positive early data with anti-tumor activity in multiple tumor types and low-grade adverse events (February 2024)[109] - The company has incurred net losses since inception, with an accumulated deficit of $295.1 million as of June 30, 2025, and expects significant losses to continue[111] - Existing cash, cash equivalents, and short-term investments are projected to fund operations for at least the next 12 months, but additional financing will be required for product development and commercialization[113] Our Research Collaboration with Merck This section details the strategic collaboration with Merck, including its scope, milestones, and revenue potential - The research collaboration and exclusive license agreement with Merck, established in December 2020, focuses on developing TRACTr product candidates for cancer[114] - Merck selected two collaboration targets, and the company's research services for both targets were completed in August 2024[114] - The company is eligible to receive up to $500.5 million per target in upfront and milestone payments, plus royalties on product sales[114] Risks and Uncertainties This section discusses the impact of broader macroeconomic and geopolitical factors on the company's operations and financial condition - The company faces widespread geopolitical and macroeconomic uncertainties, including public health crises, bank failures, inflation, and geopolitical conflicts[115] - Inflation generally increases salaries and fees paid to third-party contract service providers, though no material disruption to operations has been experienced to date[115] Financial Operations Overview This section provides a high-level summary of the company's revenue generation, research and development, general and administrative expenses, and other income Revenues This section discusses the sources and trends of the company's revenue, primarily from collaboration agreements - The company has not generated any revenues from product sales and does not expect to in the foreseeable future[116] | Revenue Source | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--- | :--- | :--- | | Collaboration revenue (Merck Agreement) | $0 | $10.1 | Research and Development This section outlines the nature and drivers of the company's R&D expenses, including clinical and preclinical development costs - Research and development expenses are recognized as incurred and primarily support the TRACTr and TRACIr platforms, discovery efforts, and preclinical/clinical development of product candidates[117] - Direct R&D expenses include external CROs, consultants, license fees, and laboratory supplies, while indirect costs cover salaries, stock-based compensation, and facility-related expenses[118][119][124] - R&D expenses are anticipated to increase substantially as development of product candidates progresses, with inherently unpredictable timelines and costs for preclinical and clinical studies[119][120] General and Administrative This section describes the components of the company's general and administrative expenses, such as personnel and professional services - General and administrative expenses primarily consist of employee-related costs (including stock-based compensation), facility costs, legal fees, and professional services[121] - These expenses are expected to increase due to growth in general and administrative headcount and costs associated with operating as a public company[121] Other Income This section explains the sources of other income, predominantly interest earned on investments - Other income is primarily derived from interest earned on the company's cash, cash equivalents, and short-term investments[122] Results of Operations This section provides a detailed comparison of the company's financial performance across different reporting periods Comparison of the Three Months Ended June 30, 2025 and 2024 This section analyzes the financial performance and key changes for the three-month period | Metric (in thousands) | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Collaboration revenue | $0 | $8,897 | $(8,897) | | Research and development | $34,664 | $14,898 | $19,766 | | General and administrative | $10,454 | $7,821 | $2,633 | | Net loss | $(33,858) | $(5,959) | $(27,899) | | Other income | $11,260 | $7,863 | $3,397 | - Collaboration revenue decreased by $8.9 million to $0 in Q2 2025 due to a developmental milestone achievement in June 2024 and completion of research activities in August 2024[125] - Research and development expenses increased by $19.8 million, primarily driven by preclinical stage programs ($10.3 million), indirect costs ($5.0 million), and direct costs for JANX007 ($4.2 million) and JANX008 ($0.3 million)[126] - General and administrative expenses increased by $2.7 million, mainly due to a $2.0 million increase in stock-based compensation[127] - Other income increased by $3.4 million due to higher cash and short-term investments, resulting in increased interest income[128] Comparison of the Six Months Ended June 30, 2025 and 2024 This section analyzes the financial performance and key changes for the six-month period | Metric (in thousands) | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Collaboration revenue | $0 | $10,149 | $(10,149) | | Research and development | $59,719 | $28,968 | $30,751 | | General and administrative | $20,296 | $15,164 | $5,132 | | Net loss | $(57,366) | $(20,719) | $(36,647) | | Other income | $22,649 | $13,264 | $9,385 | - Collaboration revenue decreased by $10.1 million to $0 in H1 2025 due to a developmental milestone achievement in June 2024 and completion of research activities in August 2024[130] - Research and development expenses increased by $30.8 million, primarily driven by preclinical stage programs ($14.9 million), indirect costs ($9.5 million), and direct costs for JANX007 ($5.8 million) and JANX008 ($0.5 million)[131] - General and administrative expenses increased by $5.1 million, mainly due to a $4.1 million increase in stock-based compensation[132] - Other income increased by $9.3 million due to higher cash and short-term investments, resulting in increased interest income[133] Liquidity and Capital Resources This section discusses the company's cash position, investment holdings, and sources and uses of cash - As of June 30, 2025, the company had $996.8 million in cash, cash equivalents, restricted cash, and short-term investments[134] - The company completed significant underwritten offerings in July 2023 (net proceeds $56.5 million), March 2024 (net proceeds $320.1 million), and December 2024 (net proceeds $377.9 million)[136][137][139] | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(40,837) | $(24,858) | | Net cash used in investing activities | $(338,830) | $(304,621) | | Net cash provided by financing activities | $1,508 | $324,936 | | Net decrease in cash, cash equivalents and restricted cash | $(378,159) | $(4,543) | - Net cash used in operating activities for H1 2025 was $40.8 million, primarily due to a net loss of $57.4 million, partially offset by $21.7 million in stock-based compensation[141] - Net cash used in investing activities for H1 2025 was $338.8 million, mainly due to $338.0 million in net purchases of short-term investments[142] - Net cash provided by financing activities for H1 2025 was $1.5 million, primarily from stock option exercises and employee stock purchase plan proceeds, offset by offering issuance costs[143] Funding Requirements This section outlines the company's future capital needs for product development and commercialization, and potential financing strategies - The company believes its existing cash, cash equivalents, and short-term investments are sufficient to meet anticipated operating expenses and capital expenditure requirements for at least the next 12 months[144] - Substantial additional funding will be required to complete the development and commercialization of product candidates[147] - Future capital requirements depend on factors such as clinical trial progress, regulatory approvals, manufacturing costs, personnel, commercialization activities, intellectual property, and macroeconomic conditions[145][149] - Potential funding sources include equity offerings, debt financings, grants, collaborations, and licensing arrangements, which may lead to stockholder dilution or restrictive covenants[147] Contractual Obligations and Commitments This section details the company's significant contractual obligations, including lease payments and license agreements - The company has a cell line license agreement with WuXi Biologics, which includes potential low single-digit royalty payments on net sales or a one-time buyout option up to $15.0 million[148] - A noncancelable operating lease for office and laboratory space (Torrey Plaza Lease) involves aggregate payments of approximately $38.0 million over a 126-month term[149] - The company also enters into various contracts for preclinical and clinical research, manufacturing, and other services, which are generally terminable upon notice with payments for services provided[151] Critical Accounting Policies and Estimates This section highlights the accounting policies that require significant judgment and estimation by management - The company's financial statements involve significant estimates and judgments, particularly for collaboration revenue, accruals for research and development expenses, stock-based compensation, and fair value measurements[152] - No material changes to the critical accounting policies were reported for the six months ended June 30, 2025[153] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section addresses the company's exposure to market risks, including interest rate risk, foreign currency exchange risk, and inflation. Management believes that a 10% change in interest rates or foreign currency exchange rates would not materially impact the financial statements as of June 30, 2025, and inflation has not had a material effect to date Interest rate risk This section assesses the company's exposure to fluctuations in interest rates on its financial instruments - The company's financial instruments, including cash, cash equivalents, and short-term investments (U.S. Treasury securities, U.S. agency bonds, corporate debt securities, and commercial paper), are subject to changes in prevailing interest rates[154] - A 10% change in interest rates is not expected to have a material effect on the fair value of the investment portfolio as of June 30, 2025[154] Foreign currency exchange risk This section evaluates the company's exposure to changes in foreign currency exchange rates - The company is not currently exposed to significant market risk related to changes in foreign currency exchange rates, but future contracts with international vendors could increase this risk[155] - A 10% change in foreign currency exchange rates is not expected to have a material effect on the financial statements as of June 30, 2025[155] Inflation This section discusses the impact of inflation on the company's operating costs and financial performance - Inflation increases the company's cost of labor and preclinical and clinical development costs[156] - Inflation did not have a material effect on the company's business, financial condition, or results of operations during the three and six months ended June 30, 2025[156] Item 4. Controls and Procedures This section reports on the effectiveness of the company's disclosure controls and procedures and any changes in internal control over financial reporting. Management concluded that disclosure controls were effective, and no material changes to internal controls occurred during the quarter Evaluation of Disclosure Controls and Procedures This section reports on management's assessment of the effectiveness of the company's disclosure controls - Management, with the participation of the Chief Executive Officer, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025[157] - It was concluded that the disclosure controls and procedures were effective at the reasonable assurance level[157] Changes in Internal Control over Financial Reporting This section reports on any material changes to the company's internal control over financial reporting - There were no changes in internal control over financial reporting during the most recent quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[158] PART II. OTHER INFORMATION This section covers legal proceedings, comprehensive risk factors, equity sales, and other miscellaneous information Item 1. Legal Proceedings This section states that the company is not currently involved in any material legal proceedings, while acknowledging the potential for future claims in the ordinary course of business - The company is not currently a party to any material legal proceedings[161] - Claims or lawsuits may arise in the ordinary course of business, which could adversely impact the company due to defense and settlement costs, and diversion of resources[161] Item 1A. Risk Factors This comprehensive section details the significant risks associated with investing in the company's common stock. It covers risks related to the company's early stage of development, financial stability, product development and regulatory approval, manufacturing, commercialization, collaborations, industry operations, government regulation, intellectual property, and the securities market Summary of Risks Associated with Our Business This section provides a high-level overview of the most significant risks impacting the company's operations and financial prospects - The company has a limited operating history, has incurred net losses since inception, and anticipates continued significant losses[163] - Additional capital will be required, and failure to raise it could delay or eliminate product development programs[163] - Most product candidates are in preclinical or discovery stages, with limited clinical trial history[163] - Reliance on third parties for clinical trials and preclinical studies poses risks if they fail to meet contractual duties or deadlines[163] - The market opportunity for product candidates may be relatively small, limited to specific patient populations[163] - High dependence on key personnel, with risks if unable to attract and retain qualified individuals[163] - International trade policies, including tariffs and trade barriers, may adversely affect business[163] - Inability to obtain and maintain sufficient intellectual property protection could allow competitors to commercialize similar products[163] - Subject to stringent and evolving data privacy and security laws, with potential for regulatory actions, litigation, and reputational harm from non-compliance[169] Risks Related to Our Limited Operating History, Financial Position and Capital Requirements This section details risks stemming from the company's early stage, historical losses, and ongoing need for capital - The company is an early-stage biopharmaceutical company with a limited operating history and has incurred net losses since inception, totaling an accumulated deficit of $295.1 million as of June 30, 2025[165] - The company expects to incur increasing operating losses for the foreseeable future and may never achieve or sustain profitability[166] - As of June 30, 2025, the company had $996.0 million in cash, cash equivalents, and short-term investments, which are estimated to fund operations for at least the next 12 months, but substantial additional capital will be needed for full product development and commercialization[168] - Raising additional capital through equity offerings may dilute stockholders, while debt financings may impose restrictive covenants. Collaborations could require relinquishing valuable rights[171] - Future capital requirements are highly dependent on the progress and costs of clinical trials, regulatory approvals, manufacturing, and market conditions[173] Risks Related to the Discovery, Development and Regulatory Approval of Our Product Candidates This section outlines the inherent uncertainties and challenges in developing and obtaining regulatory approval for novel drug candidates - Most of the company's product candidates are in preclinical or discovery stages, with JANX007 and JANX008 in Phase 1 clinical development, indicating an early stage of development with limited clinical trial experience[175] - Preclinical and clinical development is a lengthy, expensive, and uncertain process, and early-stage results are not always predictive of future success in later clinical trials or regulatory approval[178] - Clinical trials may face delays or termination due to factors such as regulatory disagreements, patient enrollment difficulties, issues with CROs, or patient safety concerns[179][183] - Product candidates are based on novel technologies, making the timing, results, and costs of development and regulatory approval difficult to predict[186] - Serious adverse events or undesirable side effects identified during development or after approval could lead to discontinuation of programs, refusal of regulatory approval, or revocation of marketing authorizations[195] - The regulatory approval process is lengthy, expensive, and uncertain, with no guarantee of obtaining approval for product candidates[201] - Even if approved, product candidates will be subject to ongoing regulatory oversight, potentially including post-marketing studies or restrictions on marketing[208] - Disruptions to government agencies like the FDA or SEC due to funding shortages or staffing cuts could delay regulatory reviews and approvals[215][218] - Limited resources necessitate prioritizing research programs, potentially causing the company to miss more profitable opportunities[220] Risks Related to Manufacturing, Commercialization and Reliance on Third Parties This section addresses risks associated with external dependencies for production, market acceptance, and sales of potential products - The company relies heavily on third parties to conduct preclinical studies, clinical trials, and manufacturing, increasing the risk of delays, increased costs, or disruptions if these third parties fail to perform or comply with regulations[224] - Manufacturing product candidates is complex and currently relies on single-source suppliers for Bulk Drug Substance (BDS), posing risks of supply limitations, quality issues, and potential trade restrictions (e.g., with WuXi Biologics in China)[227][230] - Any approved products may fail to achieve sufficient market acceptance by physicians, patients, and payors due to competition, efficacy, pricing, or reimbursement challenges[236] - Unfavorable pricing regulations or third-party coverage and reimbursement policies could make it difficult to sell product candidates profitably, with significant delays and uncertainty in obtaining adequate coverage[237] - Approved biologic products may face biosimilar competition sooner than anticipated, leading to significant pricing pressure and limited commercial opportunity[249] - The market opportunity for product candidates may be relatively small, limited to patients ineligible for or failing prior treatments, and estimates of target patient populations may be inaccurate[253] - Reliance on third parties requires sharing trade secrets, increasing the risk of discovery, misappropriation, or unauthorized disclosure by competitors[255] - The company lacks internal sales and marketing capabilities and must either develop them (expensive and time-consuming) or outsource these functions, which carries its own risks and could reduce profitability[258] - Failure to obtain regulatory approval or commercialize products outside the United States would limit the ability to realize their full market potential[261] Risks Related to Our Collaborations and Other Strategic Agreements This section discusses the risks inherent in partnerships, including potential termination, lack of control, and competition for new alliances - The existing collaboration with Merck is critical, and its termination or failure to lead to commercial products would significantly impact revenue and potentially force independent development or abandonment of product candidates[263] - Collaborators have discretion over resource allocation and may de-prioritize programs or pursue alternative technologies, potentially reducing or delaying revenue[264] - Future acquisitions, collaborations, or in-licensing arrangements carry operational and financial risks, including unknown liabilities, business disruption, and integration difficulties[267] - The company may face significant competition in seeking new collaborators and may be unable to establish partnerships on favorable terms, potentially delaying or curtailing development and commercialization plans[268][270] - Inability to obtain licenses for required third-party technology or maintain existing intellectual property rights could force abandonment of research programs or product candidates[271] Risks Related to Our Industry and Business Operations This section covers broader operational risks, including fraud, product liability, competition, personnel, and cybersecurity threats - The company is exposed to risks of fraud or misconduct by employees, investigators, consultants, and partners, which could lead to regulatory sanctions, litigation, and reputational harm[272] - Product liability claims from clinical trials or commercial sales could result in substantial liability, costs, and negative impacts on regulatory approvals and commercialization efforts[273] - High dependence on key managerial, scientific, and medical personnel, with intense competition for skilled labor in the San Diego region[277][278] - Expected expansion of development, regulatory, and operational capabilities may lead to difficulties in managing growth, potentially disrupting operations[281] - The company faces substantial competition in the immunotherapy market from larger pharmaceutical and biotechnology companies, risking obsolescence or reduced commercial opportunity[283] - The ability to use net operating loss (NOL) carryforwards may be limited by Section 382 of the Internal Revenue Code, potentially increasing future tax liability[291] - Epidemic diseases or other health crises could adversely impact clinical trials, supply chains, and business development activities, leading to operational disruptions and financial strain[292] - Unstable market and economic conditions, including bank failures and geopolitical actions, may adversely affect business, financial condition, and stock price, making financing more difficult[412] - Inflation may increase costs of clinical trials, research, and administration, potentially depleting cash faster than forecasted[413] - Compromise of internal information technology systems or sensitive information, or those of third parties, due to cyber-attacks or other security incidents could disrupt development programs, lead to regulatory investigations, litigation, and financial losses[414][416][418][422] Risks Related to Government Regulation This section details the extensive regulatory environment, including healthcare fraud laws, pricing regulations, data privacy, and international trade policies - The company's operations are subject to extensive U.S. federal and state, EU, and foreign healthcare fraud and abuse laws, including the Anti-Kickback Statute, False Claims Act, and HIPAA, with non-compliance potentially leading to substantial penalties[299] - Enacted and future legislation, such as the Affordable Care Act, Inflation Reduction Act, and OBBBA, may increase the difficulty and cost of obtaining marketing approval, restrict post-approval activities, and affect product pricing[301][302][303][304] - The regulatory landscape in the EU is changing with the Clinical Trials Regulation (CTR) and proposed revisions to pharmaceutical legislation, which could impact regulatory frameworks and exclusivity opportunities[307][308] - Brexit has altered the UK's regulatory framework, requiring separate UK marketing authorizations and potentially impacting clinical trial legislation, which could affect the company's operations in the UK[311][312][313] - The company is subject to stringent and evolving data privacy and security laws (e.g., HIPAA, CCPA, GDPR), with non-compliance risking regulatory investigations, litigation, fines, and business disruptions[317][319][320][324] - Limitations on cross-border data transfers, particularly from Europe to the United States, could materially impact business operations and lead to significant adverse consequences[325] - International trade policies, including tariffs, sanctions, and trade barriers, may adversely affect business by increasing R&D expenses, complicating supply chains, and raising legal and operational risks[329][331][332] - Failure to comply with environmental, health, and safety laws and regulations could result in fines, penalties, or substantial costs[427] Risks Related to Our Intellectual Property This section highlights risks concerning the protection, enforcement, and potential infringement of the company's patents and proprietary information - The company's success depends on obtaining and maintaining sufficient intellectual property protection (patents, know-how, confidentiality agreements) for its platform technologies and product candidates[336] - Obtaining and enforcing patents is expensive, time-consuming, and uncertain, with no assurance that pending applications will result in issued patents or provide adequate protection against competitors[337] - Geopolitical actions, such as those related to the military conflict in Ukraine and Russia, could increase uncertainties and costs for patent prosecution and maintenance, potentially leading to loss of patent rights[341] - Reliance on trade secrets and proprietary know-how carries risks, as they are difficult to protect, and disclosure or misappropriation could erode the company's competitive position[343] - The company may not identify all relevant third-party patents or may incorrectly interpret their scope or expiration, potentially hindering its ability to develop and market products[348] - Breaching obligations under license agreements (e.g., with WuXi Biologics) could result in damages or loss of rights to critical technologies[350] - The company may need to obtain licenses for third-party technology, which may not be available on commercially reasonable terms or at all, potentially forcing abandonment of related efforts[357] - Being sued for infringing third-party intellectual property rights could lead to costly and time-consuming litigation, injunctions, monetary damages, or delays in commercialization[360] - Changes in patent law in the United States and other jurisdictions could diminish the value of patents, impairing the company's ability to protect its product candidates[373] - Failure to adequately protect trademarks and trade names could hinder brand recognition and adversely affect the business[384] Risks Related to the Securities Market and Ownership of Our Common Stock This section addresses risks specific to the company's stock, including price volatility, dilution, and corporate governance provisions - The price of the company's common stock has been and may continue to be volatile, influenced by factors such as clinical trial results, regulatory developments, financial projections, and overall market conditions[387] - Principal stockholders and management own a significant percentage of outstanding capital stock, allowing them to exert significant control over matters requiring stockholder approval[389] - Future sales and issuances of common stock or rights to purchase common stock, including through equity incentive plans, could result in additional dilution of existing stockholders' ownership and cause the stock price to fall[391][392] - The company does not intend to pay dividends on its common stock, limiting returns to stock appreciation[393] - Delaware law and provisions in the company's organizational documents (e.g., classified board, ability to issue preferred stock, restrictions on stockholder action) could make a merger, tender offer, or proxy contest difficult, potentially depressing the stock price[394][396][397] - Exclusive forum provisions in the company's certificate of incorporation and bylaws designate specific courts for certain disputes, potentially limiting stockholders' ability to choose a favorable judicial forum[398] General Risk Factors This section covers overarching risks applicable to public companies, such as compliance costs, internal control failures, economic conditions, and natural disasters - Operating as a public company incurs significantly increased legal, accounting, and compliance costs, diverting management time and resources[402] - Failure to maintain an effective system of disclosure controls and internal control over financial reporting could impair the ability to produce timely and accurate financial statements or comply with regulations[404] - Future changes in financial accounting standards or tax laws could cause adverse and unexpected revenue fluctuations or negatively affect financial condition and results of operations[409][410] - Unstable market and economic conditions, including health epidemics, bank failures, and geopolitical actions, may have serious adverse consequences on the business, financial condition, and stock price[412] - Inflation may adversely affect the company by increasing costs of clinical trials, research, development, and administration, potentially accelerating cash burn[413] - Compromise of internal information technology systems or sensitive information, or those of third parties, due to cyber-attacks, ransomware, or other security incidents could lead to material disruptions, regulatory investigations, litigation, and financial losses[414][416][418][422] - The company's operations may be adversely affected by earthquakes, fires, or other natural disasters, particularly given its location in San Diego, and its business continuity plans may be inadequate[425] - The company is subject to U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations, with potential for serious consequences for violations[426] - Difficulty in protecting intellectual property rights globally due to varying national laws and enforcement challenges could adversely affect the company's competitive position[430] - Cessation or publication of inaccurate/unfavorable research by securities or industry analysts could cause the stock price and trading volume to decline[433] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's initial public offering (IPO) in June 2021, including the gross and net proceeds received. It also outlines the use of these proceeds, with a portion already expended and the remainder invested in marketable securities - The company's initial public offering (IPO) closed on June 15, 2021, with the issuance and sale of 13,110,000 shares of common stock at $17.00 per share[436] - The IPO generated gross proceeds of $222.9 million and net proceeds of approximately $204.2 million after deducting underwriting discounts and offering costs[436] - As of June 30, 2025, $64.4 million of the IPO proceeds have been used, with the balance invested in high-quality marketable securities with contractual maturity dates of up to three years[438] Item 5. Other Information This section reports on trading arrangements, specifically noting that no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the second quarter of 2025 - No director or officer adopted or terminated any Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[439] Item 6. Exhibits This section provides a list of exhibits filed as part of the Quarterly Report on Form 10-Q, including corporate governance documents, warrant forms, an employment agreement, and certifications - The exhibits include the Amended and Restated Certificate of Incorporation, Bylaws, Common Stock Certificate, Investors' Rights Agreement, various Pre-Funded Warrants, an Employment Agreement, and certifications[440] SIGNATURES This section confirms the official signing of the Quarterly Report on Form 10-Q by the authorized representative of Janux Therapeutics, Inc. SIGNATURES This section confirms the official signing of the Quarterly Report on Form 10-Q by the authorized representative of Janux Therapeutics, Inc. - The report was signed on August 7, 2025, by David Campbell, Ph.D., President and Chief Executive Officer (Principal Executive and Financial Officer) of Janux Therapeutics, Inc[445]