TScan Therapeutics(TCRX) - 2025 Q2 - Quarterly Report

Special Note Regarding Forward-Looking Statements This section highlights forward-looking statements, subject to substantial risks and uncertainties - This report contains forward-looking statements involving substantial risks and uncertainties, identifiable by words like 'expect,' 'plan,' 'anticipate,' or 'potential'[5][6] - Forward-looking statements cover anticipated use of cash, product candidate characteristics, preclinical/clinical trial timing and results, regulatory approvals, commercialization plans, market size estimates, manufacturing capabilities, expenses, competition, growth strategies, personnel, partnerships, regulatory requirements, intellectual property, and economic factors[7] - Actual results may differ materially due to known and unknown risks, uncertainties, and assumptions, particularly those described in the 'Risk Factors' section'[8] Risk Factor Summary This summary outlines key risks impacting the company's business and financial prospects - The company's business operations are subject to numerous risks that could materially and adversely affect its business, financial condition, results of operations, and future growth prospects[14] - Key risk categories include business and industry, product candidate development, manufacturing, government regulation, intellectual property, reliance on third parties, employee matters and growth management, common stock and public company status, and general risk factors[14][15][17] PART I. FINANCIAL INFORMATION This section presents the company's unaudited financial statements and management's financial analysis Item 1. Financial Statements (Unaudited) This section presents the company's unaudited consolidated financial statements and accompanying notes Condensed Consolidated Balance Sheets This section presents the company's condensed consolidated balance sheets, showing assets, liabilities, and equity | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------- | :----------------------------- | | Cash and cash equivalents | $169,394 | $178,689 | | Marketable securities | $48,651 | $111,421 | | Total current assets | $221,130 | $292,722 | | Total assets | $298,561 | $371,118 | | Total current liabilities | $31,322 | $35,956 | | Total liabilities | $121,847 | $130,148 | | Total stockholders' equity | $176,714 | $240,970 | | Accumulated deficit | $(446,175) | $(375,096) | - Total assets decreased by $72.557 million from December 31, 2024, to June 30, 2025, primarily due to a reduction in marketable securities and cash and cash equivalents[22] - Total stockholders' equity decreased by $64.256 million, driven by an increased accumulated deficit[22] Condensed Consolidated Statements of Operations This section presents the company's condensed consolidated statements of operations for recent interim periods | Category | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------- | :-------------------------------------- | :------------------------------------ | :------------------------------------ | | Collaboration and license revenue | $3,076 | $536 | $5,247 | $1,102 | | Research and development | $32,634 | $26,877 | $62,422 | $51,734 | | General and administrative | $9,095 | $7,773 | $17,728 | $14,855 | | Total operating expenses | $41,729 | $34,650 | $80,150 | $66,589 | | Loss from operations | $(38,653) | $(34,114) | $(74,903) | $(65,487) | | Net loss | $(36,952) | $(31,661) | $(71,079) | $(61,803) | | Net loss per share, basic and diluted | $(0.28) | $(0.28) | $(0.55) | $(0.59) | - Collaboration and license revenue increased significantly for both the three-month period (from $536 thousand to $3.076 million) and six-month period (from $1.102 million to $5.247 million) year-over-year[25] - Net loss increased to ($36.952) million for the three months ended June 30, 2025, from ($31.661) million in the prior year, and to ($71.079) million for the six months ended June 30, 2025, from ($61.803) million in the prior year, primarily due to increased operating expenses[25] Condensed Consolidated Statements of Stockholders' Equity This section presents the company's condensed consolidated statements of stockholders' equity | Category | Balances at March 31, 2024 (in thousands) | Balances at June 30, 2024 (in thousands) | Balances at March 31, 2025 (in thousands) | Balances at June 30, 2025 (in thousands) | | :-------------------------------- | :-------------------------------------- | :------------------------------------- | :-------------------------------------- | :------------------------------------- | | Common Stock Shares | 43,628,149 | 48,656,158 | 52,314,039 | 52,471,405 | | Additional Paid-In Capital | $400,701 | $564,615 | $619,423 | $622,887 | | Accumulated Deficit | $(277,739) | $(309,400) | $(409,223) | $(446,175) | | Total Stockholders' Equity | $122,967 | $255,221 | $210,202 | $176,714 | - Total stockholders' equity decreased from $240.970 million at January 1, 2025, to $176.714 million at June 30, 2025, primarily due to a net loss of $71.079 million[28] - Additional paid-in capital increased by $6.878 million during the six months ended June 30, 2025, mainly from stock-based compensation expense and ESPP plan issuance[28] Condensed Consolidated Statements of Cash Flows This section presents the company's condensed consolidated statements of cash flows | Category | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------ | :------------------------------------ | :------------------------------------ | | Net cash used in operating activities | $(70,853) | $(55,492) | | Net cash provided by investing activities | $61,967 | $2,447 | | Net cash provided by (used in) financing activities | $(409) | $161,845 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(9,295) | $108,800 | | Cash, cash equivalents, and restricted cash - end of period | $174,425 | $247,190 | - Net cash used in operating activities increased to $70.853 million for the six months ended June 30, 2025, from $55.492 million in the prior year[31] - Net cash provided by investing activities significantly increased to $61.967 million in 2025 from $2.447 million in 2024, primarily due to marketable securities maturities[31] - Net cash from financing activities shifted from providing $161.845 million in 2024 to using $409 thousand in 2025, reflecting reduced equity offerings[31] Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed notes to the unaudited condensed consolidated financial statements 1. Nature of Business and Basis of Presentation This note describes TScan Therapeutics' business as a clinical-stage biotech and its accounting basis - TScan Therapeutics, Inc. is a clinical-stage biotechnology company developing TCR-T therapy product candidates for the treatment of cancer[34] - The company has incurred recurring net losses, including $71.1 million for the six months ended June 30, 2025, and has an accumulated deficit of $446.2 million[37] - Existing cash, cash equivalents, and marketable securities are expected to fund operations for at least the next 12 months from the date of financial statements issuance[37] - The company qualifies as an "emerging growth company" and has elected to use the extended transition period for complying with new or revised accounting standards[38] 2. Summary of Significant Accounting Policies This note summarizes the company's accounting policies and evaluation of new pronouncements - The accounting policies for interim financial reporting are consistent with those in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[40] - The company is evaluating the impact of ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," effective for annual periods beginning after December 15, 2024[41] - The company is evaluating the potential impact of ASU No. 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures," effective for annual periods beginning after December 15, 2026[43] 3. Fair Value Measurements This note details the fair value measurements of the company's financial assets, primarily cash equivalents and marketable securities | Asset Category | June 30, 2025 (Level 1) | December 31, 2024 (Level 1) | | :----------------------------- | :---------------------- | :-------------------------- | | Cash equivalents – money market funds | $162,200 | $169,744 | | Cash equivalents - government securities | $2,993 | - | | Marketable securities – government securities | $48,651 | $111,421 | | Total financial assets | $213,844 | $281,165 | - Money market funds and government securities are valued based on quoted market prices, representing a Level 1 measurement within the fair value hierarchy[44] 4. Accrued Expenses and Other Current Liabilities This note explains the composition and changes in accrued expenses and other current liabilities | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :--------------------------- | :----------------------------- | | Accrued research and development | $7,054 | $6,735 | | Accrued employee compensation and benefits | $3,662 | $6,845 | | Accrued consulting and professional services | $1,534 | $1,473 | | Accrued legal services and license fee | $357 | $281 | | Other | $190 | $76 | | Total accrued expenses and other current liabilities | $12,797 | $15,410 | - Accrued employee compensation and benefits decreased by $3.183 million from December 31, 2024, to June 30, 2025[46] 5. Stockholders' Equity This note details the company's equity offerings and changes in stockholders' equity - On May 16, 2023, the company entered into an "at-the-market" (ATM) sales agreement for up to $75.0 million of voting common stock, with no sales to date[47] - On April 24, 2024, an underwritten public offering generated approximately $161.4 million in aggregate net proceeds from common stock and pre-funded warrants[49] - On December 27, 2024, a registered direct offering of pre-funded warrants generated approximately $30.0 million in gross proceeds[50] - As of June 30, 2025, no Pre-Funded Warrants have been exercised[51] 6. Collaboration and License Agreements This note describes the company's collaboration and license agreements, including the Amgen agreement - On May 8, 2023, TScan Therapeutics entered a Collaboration Agreement with Amgen Inc. to identify antigens recognized by T cells in patients with Crohn's disease[52] - The agreement included an upfront payment of $30.0 million, collected in July 2023, and eligibility for over $500.0 million in success-based milestone payments and tiered single-digit royalties[53] - Revenue associated with the Amgen Agreement is recognized over the estimated three-year research term using an input method based on costs incurred[56] | Period | 2025 (in thousands) | 2024 (in thousands) | | :------------------- | :------------------ | :------------------ | | Three Months Ended June 30, | $3,076 | $536 | | Six Months Ended June 30, | $5,247 | $1,102 | 7. Commitments and Contingencies This note outlines the company's lease commitments, license agreements, and royalty obligations - The company leases office space under non-cancelable operating lease agreements, with no material changes during the period[59] - TScan holds a worldwide exclusive license to its foundational TargetScan technology from Brigham and Women's Hospital, which includes fees for development milestones and various royalties on future product sales[60] - A royalty agreement with one of its founders mandates a 1% royalty of net sales for products covered by specific patents, payable in perpetuity for a defined period[61] 8. Loan and Security Agreements This note details the company's debt agreements, including the termination of K2HV and new SVB loan - On December 20, 2024, the K2HV Loan Agreement was terminated, with $15.0 million in remaining principal, a $1.8 million exit fee, and a $0.3 million prepayment fee repaid[63] - A new Loan and Security Agreement with Silicon Valley Bank (SVB) was entered into on December 20, 2024, providing up to $52.5 million, with a first tranche of $32.5 million fully funded[65] - The SVB term loans mature on September 1, 2029, with monthly interest-only payments until September 30, 2027, contingent on achieving certain financial and clinical milestones[66] | Period | Interest Expense (in thousands) | | :------------------- | :------------------------------ | | Three Months Ended June 30, 2025 | $689 | | Three Months Ended June 30, 2024 | $952 | | Six Months Ended June 30, 2025 | $1,368 | | Six Months Ended June 30, 2024 | $1,911 | | Year | Future Principal Payments (in thousands) | | :--- | :------------------------------------- | | 2027 | $4,063 | | 2028 | $16,250 | | 2029 | $12,187 | | Total principal payments | $32,500 | 9. Segment Reporting This note states the company operates as a single segment focused on TCR-T therapy development - The company manages its operations as a single segment, focused on the development of TCR-T therapy product candidates for cancer[72] - The Chief Operating Decision Maker (CODM) assesses performance by reviewing GAAP net loss and significant expenses by function, along with annual budget variances[73] 10. Net Loss Per Share This note provides the calculation of basic and diluted net loss per share | Period | Net Loss Per Share (basic and diluted) | | :------------------------------------------------ | :------------------------------------- | | Three Months Ended June 30, 2025 | $(0.28) | | Three Months Ended June 30, 2024 | $(0.28) | | Six Months Ended June 30, 2025 | $(0.55) | | Six Months Ended June 30, 2024 | $(0.59) | - 73,087,945 shares of common stock issuable upon exercise of Pre-Funded Warrants are included as outstanding common stock in the calculation of basic and diluted net loss per share[76] | Anti-Dilutive Potential Common Shares | June 30, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------ | | Options to purchase common stock | 17,917,902 | 12,804,957 | | Common stock issuable upon conversion of K2HV Loan Agreement | - | 6,269,592 | | Potential shares issuable under the ESPP | 109,984 | 69,617 | | Total | 18,027,886 | 19,144,166 | 11. Subsequent Event This note describes the enactment of the OBBBA tax act and its potential impact on the company - The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, introducing significant changes to U.S. tax law, including mandatory research and development capitalization[78] - The company is currently analyzing the impact of these changes, awaiting regulations and guidance from the Department of Treasury[78] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of the company's financial condition, operations, and future outlook Overview This overview describes TScan Therapeutics' business, financial performance, and future funding needs - TScan Therapeutics is a clinical-stage biotechnology company focused on developing TCR-T therapies for hematologic and solid tumor malignancies, utilizing its ImmunoBank and proprietary platform technologies[81][83] - The company's lead product candidate, TSC-101, is in a Phase 1 clinical study for AML, MDS, and ALL patients undergoing allogeneic HCT[82] - TScan reported net losses of $71.1 million for the six months ended June 30, 2025, and has an accumulated deficit of $446.2 million since inception[85] - The company expects to incur significant expenses and increasing operating losses, requiring substantial additional funding to advance its product candidates and build commercial capabilities[85][87] Results of Operations This section analyzes the company's financial performance, highlighting revenue and expense trends Three months ended June 30, 2025 and 2024 This section compares financial results for the three months ended June 30, 2025 and 2024 | Category | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | | Collaboration and license revenue | $3,076 | $536 | $2,540 | | Research and development | $32,634 | $26,877 | $5,757 | | General and administrative | $9,095 | $7,773 | $1,322 | | Total operating expenses | $41,729 | $34,650 | $7,079 | | Loss from operations | $(38,653) | $(34,114) | $(4,539) | | Net loss | $(36,952) | $(31,661) | $(5,291) | - Research and development expenses increased by $5.8 million, primarily due to a $3.8 million increase in laboratory supplies, research materials, and studies, and a $1.7 million increase in facility-related expenses[92] - General and administrative expenses increased by $1.3 million, mainly due to a $0.7 million increase in personnel expenses from additional headcount[94] Six months ended June 30, 2025 and 2024 This section compares financial results for the six months ended June 30, 2025 and 2024 | Category | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | | Collaboration and license revenue | $5,247 | $1,102 | $4,145 | | Research and development | $62,422 | $51,734 | $10,688 | | General and administrative | $17,728 | $14,855 | $2,873 | | Total operating expenses | $80,150 | $66,589 | $13,561 | | Loss from operations | $(74,903) | $(65,487) | $(9,416) | | Net loss | $(71,079) | $(61,803) | $(9,276) | - Research and development expenses increased by $10.7 million, primarily due to a $6.0 million increase in laboratory supplies, research materials, and studies, and a $3.4 million increase in facility-related expenses[99] - General and administrative expenses increased by $2.9 million, mainly due to a $1.1 million increase in personnel expenses and a $0.3 million increase in legal and professional fees[100] Liquidity and Capital Resources This section discusses the company's funding sources, capital requirements, and cash flow activities Sources of Liquidity This section details the company's sources of liquidity, including equity offerings and collaboration agreements - The company received a $30.0 million upfront payment in July 2023 from the Amgen Collaboration Agreement[102] - An underwritten public offering in April 2024 generated approximately $161.4 million in net proceeds from common stock and pre-funded warrants[105] - A registered direct offering in December 2024 generated approximately $30.0 million in gross proceeds from pre-funded warrants[107] - As of June 30, 2025, the company had $218.0 million in cash, cash equivalents, and marketable securities (excluding $5.0 million restricted cash)[108] Funding requirements This section outlines the company's anticipated funding needs for R&D, clinical trials, and commercialization efforts - The company expects expenses to increase substantially for research and development, preclinical/clinical development, manufacturing, regulatory approvals, and commercialization[109] - Existing cash, cash equivalents, and marketable securities are believed to fund the current operating plan into the first quarter of 2027[110] - Substantial additional funding will be required through equity offerings, debt financings, collaborations, or other arrangements, which may dilute ownership or impose restrictions[111] - Failure to raise additional funds could lead to delays, reductions, or termination of research, product development, or commercialization efforts[111] Cash Flows This section summarizes the company's cash flow activities from operations, investing, and financing | Category | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------ | :------------------------------------ | :------------------------------------ | | Net cash used in operating activities | $(70,853) | $(55,492) | | Net cash provided by investing activities | $61,967 | $2,447 | | Net cash provided by (used in) financing activities | $(409) | $161,845 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(9,295) | $108,800 | - Net cash used in operating activities for the six months ended June 30, 2025, was $70.9 million, primarily driven by the net loss of $71.1 million[118] - Net cash provided by investing activities was $62.0 million for the six months ended June 30, 2025, mainly from maturities of marketable securities[120] - Net cash used in financing activities was $0.4 million for the six months ended June 30, 2025, compared to $161.8 million provided in the prior year, reflecting reduced equity proceeds[121][122] Critical Accounting Policies and Estimates This section confirms no material changes to the company's critical accounting policies and estimates - There have been no material changes to the company's critical accounting policies and estimates from those disclosed in its Annual Report on Form 10-K filed on March 5, 2025[125] Emerging Growth Company and Smaller Reporting Company Status This section explains the company's status as an emerging growth and smaller reporting company - The company qualifies as an "emerging growth company" under the JOBS Act and has elected the extended transition period for complying with new or revised accounting standards[126] - The company is also a "smaller reporting company," which allows for reduced disclosure obligations, including auditor attestation requirements and executive compensation details[127] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, TScan Therapeutics is not required to provide market risk disclosures - As a "smaller reporting company," TScan Therapeutics is not required to provide quantitative and qualitative disclosures about market risk[128] Item 4. Controls and Procedures This section details management's evaluation of disclosure controls and internal control over financial reporting Evaluation of Disclosure Controls and Procedures Management evaluated the effectiveness of disclosure controls and procedures, concluding they were effective - Management, under the supervision of the Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025[129] - Based on the evaluation, disclosure controls and procedures were concluded to be effective at the reasonable assurance level[129] Changes in Internal Control over Financial Reporting No material changes in internal control over financial reporting occurred during the period - No change in internal control over financial reporting occurred during the period ended June 30, 2025, that materially affected, or is reasonably likely to materially affect, internal control over financial reporting[131] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other miscellaneous information Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceedings[133] - Involvement in legal proceedings, even in the ordinary course of business, can have an adverse impact due to defense and settlement costs, diversion of management resources, negative publicity, and reputational harm[133] Item 1A. Risk Factors This section details significant risks that could materially affect the company's business and prospects Risks Related to Our Business and Industry This section outlines risks related to the company's business model, operating history, and economic factors - The company has incurred significant net losses ($71.1 million for H1 2025, $446.2 million accumulated deficit) and expects increasing losses, requiring substantial additional funding[138][149] - Business success depends on the proprietary platform for discovering and developing TCR-T therapy product candidates, which is a novel approach to cancer treatment[140][172] - Limited operating history makes it difficult to assess future viability and successful transition from R&D to commercial activities[143][144] - Global economic uncertainty, financial market volatility, and changes in federal policies (e.g., tax laws like OBBBA) could adversely affect financing access and business operations[156][159][160] Risks Related to the Development of Our Product Candidates This section details risks associated with developing novel TCR-T therapy product candidates - Developing TCR-T therapy product candidates is a novel approach with significant challenges, including educating medical personnel, sourcing supplies, manufacturing efficiently, and managing adverse side effects[172][173] - Preclinical studies and clinical trials may fail to adequately demonstrate safety, potency, and purity, leading to delays or prevention of regulatory approval and commercialization[184][187] - Product candidates may cause undesirable side effects (e.g., GvHD, autoimmunity, immunogenicity) that could halt clinical development, require trial expansion, or limit commercial potential[207][208][210][212] - Difficulties in enrolling patients in clinical trials, due to strict eligibility criteria, competition, or patient drop-out, could delay or adversely affect clinical development activities[218][219][220] - Product candidates may target healthy cells expressing target antigens, leading to serious and potentially fatal adverse effects, or exhibit cross-reactivity to unrelated peptides[215][216] Risks Related to Manufacturing This section outlines manufacturing risks, including complexity, third-party reliance, and scaling challenges - The manufacturing and administration process for product candidates is complex and highly regulated, susceptible to product loss or failure due to logistical issues, manufacturing interruptions, contamination, and equipment failure[258][260] - The company relies on third parties for non-viral vectors and other components, and is reliant on single manufacturers/suppliers for critical raw materials and reagents, posing supply disruption risks[259][427][430] - Limited company experience in managing manufacturing facilities and scaling production could lead to cost-overruns, delays, and difficulties in maintaining quality control and regulatory compliance[264][265] - Challenges in validating the manufacturing process due to the heterogeneity of patient starting material could impact the ability to manufacture product candidates for clinical or commercial distribution[267][268] Risks Related to Government Regulation This section details regulatory risks, including approval processes, pricing, and data privacy laws - The regulatory approval pathway for novel product candidates is uncertain, complex, expensive, and lengthy, with no guarantee of licensure[269] - Delays in clinical trials can occur due to regulatory disagreements, patient enrollment difficulties, or unforeseen safety issues, harming commercial prospects and increasing costs[271][189] - Failure to obtain or maintain adequate coverage and reimbursement from governmental and private payors could limit market access and revenue generation for approved products[302][306] - The company is subject to evolving data privacy laws (e.g., GDPR, CCPA, U.S. state laws) and regulations, with non-compliance potentially leading to significant fines, litigation, and reputational harm[327][328][332][334] - Inadequate funding for regulatory agencies (FDA, SEC) or changes in leadership/policy could delay product review and approval, negatively impacting the business[315][317] Risks Related to Our Intellectual Property This section outlines risks concerning patent protection, licensing, and potential infringement claims - Success depends on obtaining and maintaining patent protection for technology and product candidates, but meaningful coverage is uncertain and competitors may design around patents[344][345][347] - Patent prosecution is complex, expensive, and inconsistent across jurisdictions, with risks of failing to identify patentable aspects or timely filing applications[350] - Issued patents may be challenged, narrowed, or invalidated by third parties through litigation or administrative proceedings, reducing protection or allowing competitors to commercialize similar products[351][352][396] - Failure to comply with obligations under license agreements could lead to termination, loss of valuable rights, and impairment of product development[356][357] - Limited foreign intellectual property rights and differing legal protections in other countries may hinder the ability to prevent infringement or marketing of competing products globally[399][400] Risks Related to Our Reliance on Third Parties This section details risks from relying on third parties for clinical trials, manufacturing, and collaborations - Reliance on third parties (independent investigators, CROs, CDMOs) for clinical trials means less direct control over conduct, timing, and data quality, potentially leading to delays or termination[410][411] - Collaborations and strategic alliances carry risks, including partners not performing as expected, diverting resources, or developing competing products, potentially delaying or terminating development[417] - Reliance on a limited number of third-party manufacturers for product candidates exposes the company to risks of manufacturing difficulties, quality issues, and supply disruptions[422][423] - The company's product candidates require specialty materials, some from single or limited suppliers, posing risks of unavailability or delays that could harm clinical or commercial manufacturing[427][430] Risks Related to Employee Matters and Managing Growth This section outlines risks related to personnel, organizational growth, and product liability - The company is highly dependent on attracting and retaining qualified managerial, scientific, and medical personnel in a competitive biotechnology market[433][434] - Future growth will require additional managerial, operational, sales, marketing, financial, and other personnel, as well as facilities, imposing significant added responsibilities on management[437] - The company faces an inherent risk of product liability from clinical testing and potential commercialization, which could result in substantial liabilities, decreased demand, and reputational harm[440][442] Risks Related to Our Common Stock and Our Status as a Public Company This section details risks concerning stock price volatility, ownership concentration, and public company status - The company's stock price is volatile and fluctuates substantially, influenced by factors such as clinical trial results, regulatory actions, and overall market conditions[446][448] - Substantial sales of common stock by directors, executive officers, and significant stockholders could lead to a decline in the stock price[451][454] - The concentration of stock ownership (approximately 25% by executive officers, directors, and affiliates) limits other stockholders' ability to influence corporate matters[455] - As an "emerging growth company" and "smaller reporting company," the company benefits from reduced reporting requirements, but this status may make its common stock less attractive to some investors[456][459] - Requirements associated with being a public company significantly increase costs and divert management attention, especially after ceasing to be an "emerging growth company"[461] - Delaware law and provisions in the company's amended and restated certificate of incorporation and bylaws could make mergers, tender offers, or proxy contests difficult, potentially depressing the stock price[469][472][473] General Risk Factors This section covers general risks including tax changes, inflation, litigation, and business disruptions - Changes in tax legislation (federal, state, local, and non-U.S.) could adversely affect the business and financial condition[475] - Rising inflation rates may result in increased operating costs, reduced liquidity, and limitations on the ability to access credit[478] - The company could be subject to securities class action litigation, which would result in substantial costs and a diversion of management's attention and resources[479] - Business disruptions from natural or man-made disasters (e.g., earthquakes, power shortages, medical epidemics) could seriously harm future revenue and financial condition[480] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered equity sales and details IPO proceeds use - No unregistered sales of equity securities occurred during the period[482] - The July 2021 IPO generated aggregate net cash proceeds of $89.6 million, and there has been no material change in the planned use of these proceeds[482] Item 3. Defaults Upon Senior Securities This item is marked as 'Not Applicable', indicating no defaults upon senior securities - This item is marked as "Not Applicable," indicating no defaults upon senior securities[483] Item 4. Mine Safety Disclosures This item is marked as 'Not Applicable', indicating no mine safety disclosures - This item is marked as "Not Applicable," indicating no mine safety disclosures[483] Item 5. Other Information This section confirms no Rule 10b5-1 trading arrangements were adopted, modified, or terminated by directors or officers - None of the company's directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[483] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including key corporate documents and certifications - Exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, certifications of the Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents[484] Signatures The report is duly signed by the Chief Executive Officer and Chief Financial Officer - The report was signed by Gavin MacBeath, Chief Executive Officer, and Jason A. Amello, Chief Financial Officer, on August 12, 2025[486]