IN8bio(INAB) - 2021 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION Presents IN8bio's unaudited financial statements and management's analysis of financial condition and operations Item 1. Condensed Financial Statements (Unaudited) This section presents IN8bio, Inc.'s unaudited condensed financial statements, including the Balance Sheets, Statements of Operations, Statements of Convertible Preferred Stock, Common Stock and Stockholders' Deficit, and Statements of Cash Flows, along with detailed notes explaining the company's organization, accounting policies, and specific financial line items Condensed Balance Sheets Presents the company's financial position with assets, liabilities, and equity at specific dates Condensed Balance Sheets (In thousands) | | June 30, 2021 (unaudited) | December 31, 2020 (Note 2) | | :------------------------------------------ | :-------------------------- | :-------------------------- | | Assets | | | | Cash | $11,999 | $17,994 | | Total Current Assets | $12,167 | $18,144 | | Total Non-Current Assets | $5,397 | $2,766 | | Total Assets | $17,564 | $20,910 | | Liabilities, Convertible Preferred Stock and Stockholders' Deficit | | | | Total Current Liabilities | $2,773 | $2,572 | | Total Liabilities | $3,903 | $2,589 | | Convertible preferred stock, Series A | $34,900 | $34,900 | | Total Stockholders' Deficit | $(21,239) | $(16,579) | | Total Liabilities, Convertible Preferred Stock and Stockholders' Deficit | $17,564 | $20,910 | Condensed Statements of Operations Details the company's revenues, expenses, and net loss over specific reporting periods Condensed Statements of Operations (In thousands, except share and per share data) | Operating expenses: | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Research and development | $2,064 | $1,784 | $3,310 | $2,836 | | General and administrative | $986 | $1,090 | $2,103 | $1,729 | | Total operating expenses | $3,050 | $2,874 | $5,413 | $4,565 | | Loss from operations | $(3,050) | $(2,874) | $(5,413) | $(4,565) | | Net loss | $(3,050) | $(2,874) | $(5,413) | $(4,565) | | Net loss attributable to common stockholders | $(3,765) | $(3,178) | $(6,834) | $(5,129) | | Net loss per share – basic and diluted | $(1.00) | $(0.92) | $(1.82) | $(1.52) | | Weighted-average shares | 3,764,488 | 3,462,182 | 3,764,488 | 3,383,774 | Condensed Statements of Convertible Preferred Stock, Common Stock and Stockholders' Deficit Outlines changes in equity, including preferred stock, common stock, and accumulated deficit - The company's accumulated deficit increased from $(18,038) thousand at December 31, 2020, to $(23,451) thousand at June 30, 2021, primarily due to net losses incurred during the period[16] - Stock-based compensation expense contributed to an increase in additional paid-in capital, totaling $361 thousand for the three months ended March 31, 2021, and $392 thousand for the three months ended June 30, 2021[16] Condensed Statements of Cash Flows Summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Statements of Cash Flows (In thousands) | | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(4,968) | $(3,284) | | Net cash used in investing activities | — | — | | Net cash (used in) provided by financing activities | $(1,027) | $5,854 | | Net (decrease) increase in cash and restricted cash | $(5,995) | $2,570 | | Cash and restricted cash at beginning of period | $17,994 | $610 | | Cash and restricted cash at end of period | $11,999 | $3,180 | Notes to Condensed Financial Statements Provides detailed explanations and disclosures for the financial statements 1. Organization and Nature of Operations Describes the company's business, financial condition, and future funding needs - IN8bio, Inc. is a clinical-stage biopharmaceutical company focused on gamma-delta T cell therapies for cancer, with lead candidates INB-200 (glioblastoma) and INB-100 (leukemia) in Phase 1 clinical trials[22] - The company has incurred recurring losses and negative operating cash flows since inception, with net losses of $5.4 million and $4.6 million for the six months ended June 30, 2021 and 2020, respectively, and an accumulated deficit of $23.5 million as of June 30, 2021[25] - Post-period, the company completed an IPO on August 3, 2021, raising $32.6 million in net proceeds, which, combined with existing cash, is expected to fund operations for at least 12 months[26][27] 2. Summary of Significant Accounting Policies Outlines the key accounting principles and methods used in preparing the financial statements - The company adopted ASC 842 (Leases) effective January 1, 2021, recognizing $1.7 million in total lease liabilities and $1.8 million in total right-of-use assets on the balance sheet[31][36] - Deferred offering costs related to the IPO were $3.4 million as of June 30, 2021, and $2.4 million as of December 31, 2020, to be offset against IPO proceeds[37] - The company is evaluating the impact of ASU No. 2019-12, Simplifying the Accounting for Income Taxes, effective for annual periods beginning after December 15, 2021[38] 3. Property and Equipment, Net Details the company's tangible assets, their depreciation, and net book value Property and Equipment, Net (In thousands) | | June 30, 2021 | December 31, 2020 | | :-------------------------- | :-------------- | :---------------- | | Machinery and equipment | $443 | $443 | | Less accumulated depreciation | $(301) | $(257) | | Property and equipment, net | $142 | $186 | - Depreciation expense was $22 thousand for both three-month periods ended June 30, 2021 and 2020, and $44 thousand for both six-month periods ended June 30, 2021 and 2020[39] 4. Accrued Expenses and Other Current Liabilities Presents a breakdown of short-term financial obligations owed by the company Accrued Expenses and Other Current Liabilities (In thousands) | | June 31, 2021 | December 31, 2020 | | :------------------------------------------ | :-------------- | :---------------- | | Accrued offering costs | $806 | $876 | | Accrued clinical trials | $300 | $376 | | Accrued compensation | $340 | $400 | | Accrued other | $39 | $126 | | Total accrued expenses and other current liabilities | $1,485 | $1,778 | 5. Debt Describes the company's borrowing arrangements and repayment status - In April 2020, the Company received a $0.2 million loan under the Paycheck Protection Program (PPP) at a 1.0% annual interest rate, maturing April 16, 2022[41] - The entire loan amount was used for qualifying expenses, and the loan was repaid in full in August 2021[42][44] 6. Convertible Preferred Stock Details the characteristics and accounting treatment of the company's convertible preferred stock - As of June 30, 2021, the company had 9,993,727 shares of Series A convertible preferred stock issued and outstanding, with a total of $35.0 million raised through Series A financing[46] - Series A Preferred Stock accrues cumulative dividends at $0.2866 per share per annum and has a liquidation preference of $3.5833 per share plus accrued unpaid dividends[48][49] - The Series A Preferred Stock is convertible into common stock and is classified as temporary equity due to its redeemability upon a deemed liquidation event not solely in the company's control[54][56] 7. Common Stock Provides information on the company's authorized and outstanding common stock - The company has 50,700,000 authorized shares of common stock, with 3,764,488 shares issued and outstanding as of June 30, 2021 and December 31, 2021[60] 8. Stock-Based Compensation Reports on the expenses and outstanding options related to equity compensation plans - Under the 2018 Equity Incentive Plan, 1,552,290 stock options were outstanding at June 30, 2021, with a weighted-average exercise price of $5.20[63] Stock-Based Compensation Expense (In thousands) | | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Research and development | $180 | $17 | $348 | $33 | | General and administrative | $212 | $3 | $405 | $5 | | Total stock-based compensation expense | $392 | $20 | $753 | $38 | - As of June 30, 2021, unrecognized stock-based compensation cost was $4.7 million, expected to be recognized over a weighted-average period of 3.0 years[66] 9. License Agreements Details the company's intellectual property licensing arrangements and associated obligations - The company holds exclusive worldwide licenses from Emory University, Children's Healthcare of Atlanta, Inc., and UAB Research Foundation for immunotherapy-related patents and know-how concerning gamma-delta T cells[67][72] - Under these agreements, the company is obligated to pay development milestones (up to $1.4 million each), tiered running royalties on net sales, annual minimum royalties, and a share of sublicense payments[68][74] - An antidilution provision with UABRF, requiring the company to maintain UABRF's 2.5% ownership until $20.0 million in investment was raised, was settled in August 2020 after $35.0 million in gross proceeds from Series A Preferred Stock issuance[77][78] 10. Income Taxes Explains the company's income tax position, including deferred tax assets and valuation allowances - No provision for income taxes was recorded for the three and six months ended June 30, 2021 and 2020, due to recurring losses[79] - A full valuation allowance has been established against federal and state deferred tax assets, primarily net operating loss carryforwards and R&D credits, as their realization is not considered more likely than not[80] 11. Net Loss Per Share Calculates the net loss attributable to common stockholders on a per-share basis Net Loss Per Share Attributable to Common Stockholders (In thousands, except share and per share amounts) | | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net loss | $(3,050) | $(2,874) | $(5,413) | $(4,565) | | Cumulative dividends on convertible preferred stock | $(715) | $(304) | $(1,421) | $(564) | | Net loss attributable to common stockholders | $(3,765) | $(3,178) | $(6,834) | $(5,129) | | Net loss per share—basic and diluted | $(1.00) | $(0.92) | $(1.82) | $(1.52) | | Weighted-average number of shares | 3,764,488 | 3,462,182 | 3,764,488 | 3,383,774 | - Potentially dilutive securities, including convertible preferred stock and stock options, were excluded from diluted net loss per share calculation as their effect was anti-dilutive due to the net loss[81][82] 12. Commitments and Contingencies Discloses the company's contractual obligations and potential liabilities - The company has commitments to intellectual property licensors based on clinical research, regulatory, financial, and sales milestones, along with a single-digit royalty on commercial sales globally[83] 13. Leases Provides details on the company's lease arrangements, including finance and operating leases - As of June 30, 2021, the company had equipment leases (financing leases) and operating leases for office and laboratory space in Birmingham, Alabama[84][85][87][90] Total Lease Cost (In thousands) | Lease Cost | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Amortization of finance right-of-use assets | $138 | $250 | | Interest on finance lease liabilities | $25 | $46 | | Operating lease cost | $53 | $105 | | Short-term lease cost | $134 | $249 | | Variable lease cost | — | — | | Total lease cost | $350 | $650 | Undiscounted Cash Flows to Lease Liabilities at June 30, 2021 (In thousands) | | Financing Leases | Operating Leases | | :-------------------------- | :--------------- | :--------------- | | Remainder of 2021 | $327 | $105 | | 2022 | $435 | $216 | | 2023 | $253 | $223 | | 2024 | $30 | $230 | | 2025 | — | $237 | | Thereafter | — | $41 | | Total lease payment | $1,045 | $1,052 | | Less: interest | $96 | $219 | | Total lease liability | $949 | $833 | 14. Subsequent Events Reports on significant events that occurred after the balance sheet date - On August 3, 2021, the company completed its IPO, issuing 4,000,000 shares of common stock at $10.00 per share, generating $32.6 million in net proceeds after expenses[93] - All outstanding Series A convertible preferred stock converted into 10,990,065 shares of common stock in connection with the IPO[94] - The 2020 Equity Incentive Plan and 2020 Employee Stock Purchase Plan became effective on July 29, 2021, reserving 4,200,000 and 200,000 shares, respectively, with automatic annual increases[95][96] - In September 2021, the company entered into a new operating lease for office space in New York ($0.3 million annually) and a build-to-suit lease agreement for labs in Birmingham, Alabama ($4.0 million threshold)[97][98] - The PPP loan of $0.2 million was repaid in full in August 2021[99] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides an overview of IN8bio's business as a clinical-stage biopharmaceutical company, detailing its financial condition, results of operations, and future outlook. It highlights significant operating losses, the need for additional funding, recent clinical trial progress, and the impact of the COVID-19 pandemic on its business Overview Provides a high-level summary of the company's business, financial performance, and strategic direction - IN8bio is a clinical-stage biopharmaceutical company developing gamma-delta T cell therapies for cancer, with lead candidates INB-200 (glioblastoma) and INB-100 (leukemia) in Phase 1 clinical trials[102] - The company has incurred significant operating losses since inception, with net losses of $5.4 million and $4.6 million for the six months ended June 30, 2021 and 2020, respectively, and an accumulated deficit of $23.5 million as of June 30, 2021[104] - Post-IPO, the company expects its $12.0 million cash as of June 30, 2021, plus $32.6 million net proceeds from the IPO, to fund operations for at least 12 months[109] Recent Business Highlights Summarizes key achievements and developments in the company's clinical programs and research - Presented in vitro activity data for INB-300 (DeltEx DRI CAR-T cells) against GBM at AACR 2021, showing enhanced binding to tumor cells and survival with chemotherapy[113] - Presented Phase 1 clinical trial data for INB-200 in newly diagnosed GBM at ASCO 2021, showing good tolerability with no DLTs; initial results from second and third cohorts expected in 2022[111][113] - Completed dosing of the first cohort of INB-100 (allogeneic gamma-delta T cells) in leukemia patients undergoing HSCT, with no severe adverse reactions or DLTs; initial results expected in 2022 and topline results in 2023[111][113] Impact of COVID-19 Discusses the effects of the COVID-19 pandemic on the company's operations and financial condition - The COVID-19 pandemic has impacted and may continue to impact clinical sites, startup activities, third-party manufacturing, supply chains, and the ability to timely initiate, enroll, and complete clinical trials[114] - The extent of the pandemic's impact on operations, financial condition, and liquidity remains uncertain and depends on future developments[114] Components of Our Results of Operations Explains the primary drivers of the company's revenues and expenses - The company has not generated any revenue since inception and does not expect to in the foreseeable future, relying on product sales or collaboration/license agreements post-regulatory approval[115] - Research and development expenses are expensed as incurred and are expected to increase substantially as product candidates advance through clinical development[116][117] - General and administrative expenses are expected to increase due to organizational growth, increased headcount, and costs associated with operating as a public company[118][119] - No income tax benefits have been recorded due to recurring net losses and the belief that net operating loss carryforwards and tax credits will not be realized[120] Results of Operations Analyzes the company's financial performance over specific periods, focusing on key expense categories Operating Expenses (Three Months Ended June 30, in thousands) | (in thousands) | 2021 | 2020 | Change | | :-------------------------- | :--- | :--- | :----- | | Research and development | $2,064 | $1,784 | $280 | | General and administrative | $986 | $1,090 | $(104) | | Total operating expenses | $3,050 | $2,874 | $176 | | Net loss | $(3,050) | $(2,874) | $(176) | - Research and development expenses increased by $0.3 million for the three months ended June 30, 2021, primarily due to increased third-party costs for the INB-200 clinical trial and personnel-related costs[122] Operating Expenses (Six Months Ended June 30, in thousands) | (in thousands) | 2021 | 2020 | Change | | :-------------------------- | :--- | :--- | :----- | | Research and development | $3,310 | $2,836 | $474 | | General and administrative | $2,103 | $1,729 | $374 | | Total operating expenses | $5,413 | $4,565 | $848 | | Net loss | $(5,413) | $(4,565) | $(848) | - General and administrative expenses increased by $0.4 million for the six months ended June 30, 2021, mainly due to increased personnel costs, including stock-based compensation, in anticipation of becoming a public company[127] Liquidity and Capital Resources Assesses the company's ability to meet its financial obligations and fund future operations - The company has funded operations primarily through equity sales, raising $35.6 million gross proceeds through June 30, 2021, and an additional $32.6 million net proceeds from its August 2021 IPO[128] - As of June 30, 2021, cash was $12.0 million, with net losses of $5.5 million and $4.6 million for the six months ended June 30, 2021 and 2020, respectively, and an accumulated deficit of $23.5 million[129] Cash Flow Summary (Six Months Ended June 30, in thousands) | (in thousands) | 2021 | 2020 | | :------------------------------------------ | :----- | :----- | | Net cash used in operating activities | $(4,968) | $(3,284) | | Net cash used in investing activities | — | — | | Net cash (used in) provided by financing activities | $(1,027) | $5,854 | | Net (decrease) increase in cash | $(5,995) | $2,570 | - Cash used in operating activities increased to $5.0 million in 2021 from $3.3 million in 2020, driven by higher net loss and changes in operating assets/liabilities, partially offset by non-cash charges[131][134] - Cash used in financing activities was $1.0 million in 2021 due to deferred IPO costs, compared to $5.9 million provided in 2020 from Series A preferred stock issuance[135] - Future funding requirements are substantial and depend on clinical trial progress, regulatory approvals, manufacturing, commercialization, intellectual property costs, and potential collaborations[136][137] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, IN8bio, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[153] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that IN8bio's disclosure controls and procedures were effective as of June 30, 2021, providing reasonable assurance for timely and accurate reporting. The company is not yet required to evaluate internal control over financial reporting due to its status as a newly public company - As of June 30, 2021, the company's disclosure controls and procedures were effective to provide reasonable assurance that required information was recorded, processed, summarized, and reported timely[155] - Due to a transition period for newly public companies, management is not yet required to evaluate the effectiveness of internal control over financial reporting until after the filing of the Annual Report on Form 10-K for the year ending December 31, 2021[156] PART II—OTHER INFORMATION Provides additional information beyond financial statements, including legal proceedings, risk factors, and other disclosures Item 1. Legal Proceedings IN8bio, Inc. is not currently a party to any material legal proceedings and is unaware of any pending or threatened legal actions that could significantly impact its business, operating results, or financial condition - The company is not currently involved in any material legal proceedings and is unaware of any pending or threatened legal actions that could have a material adverse effect on its business[159] Item 1A. Risk Factors This section outlines significant risks associated with investing in IN8bio, Inc., covering financial position, product development, manufacturing, intellectual property, business operations, regulatory compliance, and common stock ownership. Key risks include substantial operating losses, the need for additional funding, uncertainties in clinical development and regulatory approval for novel cell therapies, manufacturing complexities, intellectual property challenges, and potential impacts from the COVID-19 pandemic Summary of Selected Risk Factors Associated with Our Business Summarizes the primary risks that could materially affect the company's business, financial condition, and future prospects - The company has incurred significant operating losses and expects to continue doing so, with no products approved for commercial sale and a limited operating history[161] - Substantial additional funding is required, and the business is dependent on the successful clinical development, regulatory approval, and commercialization of its novel gamma-delta T cell product candidates[161] - Risks include difficulties in patient enrollment for clinical trials, the impact of the COVID-19 pandemic, reliance on single third-party suppliers for critical manufacturing components, and the complexity of manufacturing processes[161] - Intellectual property licensing and protection are critical, with risks of breach of license agreements or inability to obtain/maintain patent protection[161] Risks Related to Our Financial Position and Capital Needs Details the financial challenges and capital requirements facing the company, including ongoing losses and funding needs - The company has incurred significant operating losses ($8.6 million in 2020, $5.4 million for H1 2021) and expects increasing losses as it advances product candidates and operates as a public company[162][164] - Achieving profitability depends on successful development, regulatory approval, and commercialization of products, which is a lengthy, expensive, and uncertain process[163][165] - Substantial additional funding is required, and the inability to raise capital on favorable terms could force delays, reductions, or termination of development programs[169][171] Risks Related to the Development of Our Product Candidates Outlines the inherent uncertainties and challenges in the clinical development and regulatory approval of the company's therapies - Business success is dependent on successful clinical development, regulatory approval, and commercialization of gamma-delta T cell product candidates, which are in early stages and may never be commercialized[172] - Novel cell therapy approaches, including genetic modification and DeltEx DRI gamma-delta T cells, are unproven and present significant challenges in development, manufacturing, and commercialization[184][185][187] - Difficulties in patient enrollment for clinical trials, especially for rare disorders or elderly populations, could delay or adversely affect clinical development activities[202][203] - 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[205][207] - The ongoing COVID-19 pandemic continues to adversely impact clinical trials, supply chains, and business development activities, potentially causing delays, patient enrollment issues, and financial market disruptions[211][212][215][216] Risks Related to Manufacturing and Our Dependence on Third Parties Addresses the complexities and risks associated with manufacturing cell therapies and relying on external suppliers - The manufacturing process for genetically engineered human cells is complex, highly regulated, and susceptible to product loss, failure, or variation due to logistical issues, manufacturing errors, or contamination[237][238][239][240] - Reliance on third parties for manufacturing product candidates entails risks such as inability to meet specifications, procure sufficient capacity, comply with cGMP, or maintain quality control[243][244][248] - The company is dependent on a single third-party supplier for its automated manufacturing device and lentiviral vectors, which are critical for INB-200 and INB-100, posing risks of supply delays or hindrance[253][254] - Future clinical trials and commercialization depend on updated and validated protocols for commercial-scale expansion and manufacturing of gamma-delta T cells, which has not yet been fully developed[258][259] Risks Related to Our Intellectual Property Covers the challenges and potential threats to the company's patents, licenses, and trade secrets - Breach of license agreements with UABRF, CHOA, and Emory University could lead to loss of intellectual property rights for INB-200 and INB-100, terminating product development and commercialization efforts[270][271][273] - Inability to obtain and maintain broad patent protection for product candidates and technology could allow competitors to commercialize similar products, adversely affecting the company's ability to commercialize its own[275][276][280] - Third parties may initiate legal proceedings alleging infringement, misappropriation, or violation of their intellectual property rights, leading to expensive litigation, potential damages, or the need for licenses on unfavorable terms[286][288][289] - Reliance on third parties requires sharing trade secrets, increasing the risk of discovery, misappropriation, or unauthorized disclosure by competitors, which could harm the company's competitive position[304][307] Risks Related to Our Business Operations, Employee Matters and Managing Growth Addresses operational challenges, human capital risks, and the complexities of scaling the company's business - The company is highly dependent on its co-founders, William Ho (CEO) and Dr. Lawrence Lamb (CSO), and the loss of their services or inability to recruit and retain key personnel could harm the business[313][314] - Planned organizational expansion, including increased employees and scope of operations, may lead to difficulties in managing growth, potentially disrupting business plans[316] - Strategic collaborations may not materialize or may require relinquishing important rights and control over product candidates, impacting development and commercialization[317] - Internal computer systems or those of collaborators are vulnerable to security breaches, which could disrupt product development, business operations, and lead to significant legal liability[318][319][320] - The ability to use net operating losses (NOLs) to offset future taxable income may be limited by ownership changes (Section 382) and changes in tax laws (Tax Act, CARES Act), potentially accelerating or increasing state taxes[321][322][323] - The business is exposed to product liability risks inherent in testing, manufacturing, marketing, and selling biopharmaceutical products, which could lead to expensive litigation, substantial damages, and harm to reputation[325][326][329] Risks Related to Commercialization and Regulatory Compliance Examines the challenges in bringing products to market, including regulatory hurdles, market acceptance, and healthcare policy changes - Even if product candidates receive regulatory approvals, they will remain subject to ongoing regulatory oversight for manufacturing, labeling, promotion, and safety, with potential for restrictions or withdrawal of approval for non-compliance[330][331][332] - Market acceptance by physicians, patients, and third-party payors is not guaranteed, and failure to achieve adequate acceptance could prevent significant product revenue and profitability[337][338] - Inability to establish internal sales and marketing capabilities or secure third-party agreements could hinder successful commercialization of approved product candidates[340][341] - Obtaining regulatory approval outside the United States is not assured and involves additional risks, including different regulatory requirements, reduced intellectual property protection, and economic/political instability[342][343] - Relationships with healthcare professionals and payors are subject to federal and state healthcare fraud and abuse laws, with potential for substantial penalties for non-compliance[345][346] - Coverage and adequate reimbursement for product candidates may not be available from third-party payors, making profitable sales difficult if approved[347][348][350] - Healthcare legislative reforms, such as the ACA and measures to reduce drug pricing, could negatively impact the business by limiting reimbursement or increasing pricing pressures[351][352][355][356] - Failures to comply with evolving data protection, privacy, and security laws (e.g., HIPAA, GDPR, CCPA) could result in negative publicity, investigations, penalties, and damage to reputation[358][359][360][362][366] Risks Related to the Ownership of Our Common Stock Discusses factors that could affect the market price and liquidity of the company's common stock - A public market for common stock may not develop or be liquid enough, potentially hindering sales or capital raising efforts[367] - The market price of common stock is likely to be volatile due to various factors, including clinical trial results, competitive developments, regulatory changes, and market conditions[368][369] - Concentration of ownership among executive officers, directors, and principal stockholders (68.7% as of June 30, 2021, post-IPO) may prevent new investors from influencing significant corporate decisions[371] - Raising additional capital through equity or convertible debt may dilute existing stockholders' ownership, and debt financing could impose restrictive covenants[372] - No cash dividends are anticipated in the foreseeable future, making capital appreciation the sole source of gain for investors[374] - Provisions in corporate charter documents and Delaware law (Section 203 DGCL) could make an acquisition more difficult and prevent attempts to replace current management[376][377] - The exclusive forum provision in the amended certificate of incorporation designates the Delaware Court of Chancery for state actions and federal district courts for Securities Act claims, potentially limiting stockholders' choice of forum[378][379][380] General Risk Factors Covers broader risks applicable to public companies, including analyst coverage, public company costs, and internal controls - Lack of research coverage by industry or financial analysts, or unfavorable reports, could negatively impact stock price and trading volume[381] - Operating as a public company incurs increased costs and requires substantial management time for compliance with SEC and Nasdaq requirements, including Sarbanes-Oxley Act Section 404[382][383] - Failure to maintain an effective system of internal control over financial reporting could lead to inaccurate financial reports, fraud, and loss of investor confidence[385][386] - Disclosure controls and procedures, despite being well-conceived, may not prevent or detect all errors or acts of fraud due to inherent limitations[387] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section confirms no unregistered sales of equity securities occurred. It details the net proceeds from the August 2021 IPO and states that the planned use of proceeds remains unchanged, with funds currently invested in cash equivalents - No unregistered sales of equity securities occurred during the reported period[388] - The company completed its IPO on August 3, 2021, selling 4,000,000 shares at $10.00 per share, receiving $32.6 million in net proceeds after deducting $7.4 million in underwriting discounts and offering costs[389] - There has been no material change in the planned use of IPO proceeds, which are currently invested in cash equivalents and other marketable securities[391][392] Item 3. Defaults Upon Senior Securities This item is not applicable to IN8bio, Inc. for the reporting period - This item is not applicable[394] Item 4. Mine Safety Disclosures This item is not applicable to IN8bio, Inc. for the reporting period - This item is not applicable[395] Item 5. Other Information This item is not applicable to IN8bio, Inc. for the reporting period - This item is not applicable[396] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including corporate governance documents, stock certificates, an investors' rights agreement, and certifications from the principal executive and financial officers - Exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, Form of Common Stock Certificate, and an Investors' Rights Agreement[397] - Certifications from the Principal Executive Officer and Principal Financial Officer are included pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350[397] Signatures Confirms the official signing and submission of the report by authorized officers - The report is signed by William Ho, Chief Executive Officer, and Patrick McCall, Chief Financial Officer, on September 10, 2021[399]