Janux Therapeutics(JANX) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The unaudited condensed financial statements for the period ended September 30, 2022, reflect a decrease in total assets to $375.8 million, a significant increase in total liabilities to $44.2 million due to new operating lease liabilities, and a net loss of $47.0 million for the nine months, leading to an accumulated deficit of $94.4 million and $31.0 million in net cash used in operating activities Condensed Balance Sheets As of September 30, 2022, Janux Therapeutics had total assets of $375.8 million, a slight decrease from $379.8 million at the end of 2021, with total liabilities increasing to $44.2 million from $13.5 million, primarily due to new operating lease liabilities, resulting in stockholders' equity decreasing to $331.5 million Condensed Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 (unaudited) | Dec 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $64,752 | $35,582 | | Short-term investments | $274,008 | $339,383 | | Total current assets | $344,330 | $377,019 | | Total assets | $375,756 | $379,824 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $16,335 | $12,797 | | Operating lease liabilities, net | $24,092 | $0 | | Total liabilities | $44,243 | $13,497 | | Accumulated deficit | $(94,405) | $(47,411) | | Total stockholders' equity | $331,513 | $366,327 | | Total liabilities and stockholders' equity | $375,756 | $379,824 | Unaudited Condensed Statements of Operations and Comprehensive Loss For the third quarter of 2022, the company reported collaboration revenue of $1.8 million and a net loss of $16.7 million, increasing to a net loss of $47.0 million for the nine months ended September 30, 2022, primarily due to higher research and development and general and administrative expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $1,813 | $1,159 | $5,767 | $2,021 | | Research and development | $13,737 | $8,406 | $38,007 | $15,068 | | General and administrative | $6,098 | $3,656 | $16,585 | $6,392 | | Loss from operations | $(18,022) | $(10,903) | $(48,825) | $(19,439) | | Net loss | $(16,696) | $(10,766) | $(46,994) | $(19,256) | | Net loss per share | $(0.40) | $(0.26) | $(1.13) | $(1.10) | Unaudited Condensed Statements of Cash Flows For the nine months ended September 30, 2022, net cash used in operating activities significantly increased to $31.0 million, while net cash provided by investing activities was $59.9 million due to maturities of short-term investments, contrasting with minimal cash from financing activities compared to the prior year's IPO proceeds Cash Flow Summary for the Nine Months Ended September 30 (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(31,009) | $(6,495) | | Net cash provided by (used in) investing activities | $59,870 | $(348,289) | | Net cash provided by financing activities | $309 | $386,360 | | Net increase in cash, cash equivalents and restricted cash | $29,170 | $31,576 | Notes to Unaudited Condensed Financial Statements The notes detail the company's accounting policies, its status as a clinical-stage biopharmaceutical company with an accumulated deficit of $94.4 million, and management's belief in sufficient capital for the next 12 months, alongside specifics on the Merck collaboration and other commitments - The company is a clinical-stage biopharmaceutical company developing immunotherapies using its proprietary TRACTr and TRACIr platforms[18] - Management believes the company has sufficient capital to fund operations for at least 12 months from the report's issuance date, despite a history of net losses and an accumulated deficit of $94.4 million[19] - Under the Merck Agreement, Janux recognized $1.8 million and $5.8 million in revenue for the three and nine months ended September 30, 2022, respectively, with aggregate deferred revenue related to the agreement totaling $9.7 million as of this date[103] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's clinical-stage biopharmaceutical focus, progress on lead programs like JANX007 and JANX008, and the increased net loss of $47.0 million for the nine months ended September 30, 2022, driven by higher R&D and G&A expenses, while affirming sufficient capital for at least the next 12 months - Janux is a clinical-stage company with lead programs targeting PSMA (JANX007), EGFR (JANX008), and TROP2, with the first patient dosed with JANX007 in a Phase 1 trial in October 2022, and an interim update expected in the second half of 2023[106] Comparison of Operations for the Nine Months Ended September 30 (in thousands) | Metric | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Collaboration revenue | $5,767 | $2,021 | $3,746 | | Research and development | $38,007 | $15,068 | $22,939 | | General and administrative | $16,585 | $6,392 | $10,193 | | Net loss | $(46,994) | $(19,256) | $(27,738) | - The $22.9 million increase in R&D expenses for the nine months ended Sep 30, 2022, was primarily driven by a $12.3 million increase in preclinical program costs and an $11.2 million increase in indirect costs, including personnel, stock-based compensation, and facilities[133] - As of September 30, 2022, the company had $339.6 million in cash, cash equivalents, restricted cash, and short-term investments, which is believed to be sufficient to fund operations for at least the next 12 months[137][142] Item 3. Quantitative and Qualitative Disclosures About Market Risk This item is not applicable as the company qualifies as a smaller reporting company - Disclosure about market risk is not applicable as the company is a smaller reporting company[150] Item 4. Controls and Procedures Management, including the CEO and Acting CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2022, with no material changes in internal control over financial reporting during the most recent quarter - Management concluded that as of the end of the period covered by the report, the company's disclosure controls and procedures were effective[151] - No changes occurred in the company's internal control over financial reporting during the most recent quarter that have materially affected, or are reasonably likely to materially affect, internal controls[152] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reports that it is not currently a party to any material legal proceedings - As of the filing date, the company is not a party to any material legal proceedings[154] Item 1A. Risk Factors This section outlines significant risks to the company's business, including a limited operating history with substantial net losses, the ongoing need for additional capital, the early stage of its product candidates, reliance on third parties for trials and manufacturing, and challenges in intellectual property protection and regulatory approval - The company has a limited operating history, has incurred net losses since inception, and anticipates continued significant losses, potentially meaning it may never achieve or sustain profitability[157][159] - All product candidates except JANX007 are in preclinical or discovery stages, and the company has no history of conducting human clinical trials, making development lengthy, expensive, and uncertain[157][169] - The company relies on third parties for conducting clinical trials and manufacturing, which poses risks if these parties do not perform their duties satisfactorily[157][212] - Failure to obtain and maintain sufficient intellectual property protection for its platform technologies and product candidates could allow competitors to develop similar products, adversely affecting commercialization[157][306] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company details its June 2021 Initial Public Offering (IPO), where it sold 13,110,000 shares at $17.00 per share, generating net proceeds of approximately $204.2 million, none of which have been used as of September 30, 2022 - In its June 2021 IPO, the company sold 13,110,000 shares at $17.00 per share, raising gross proceeds of $222.9 million and net proceeds of approximately $204.2 million[417] - As of September 30, 2022, none of the IPO proceeds have been used and are invested in U.S. Treasury securities, corporate debt, and commercial paper in line with the company's investment policy[418] Item 5. Other Information On November 8, 2022, Dr. Shahram Salek-Ardakani resigned as Chief Scientific Officer and entered into a 12-month consulting agreement with the company for a monthly fee of $33,333.33 - Shahram Salek-Ardakani, Ph.D. resigned as Chief Scientific Officer on November 8, 2022, and entered into a 12-month consulting agreement with the company[419] Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents, material agreements, and officer certifications - Lists all exhibits filed with the Form 10-Q, including corporate governance documents, material agreements, and officer certifications required by the Sarbanes-Oxley Act[422]