Janux Therapeutics(JANX) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures Item 1. Financial Statements The unaudited condensed financial statements for the period ended June 30, 2023, show a decrease in total assets to $341.5 million from $364.0 million at year-end 2022, primarily due to a reduction in cash and investments used to fund operations Condensed Balance Sheets As of June 30, 2023, total assets decreased to $341.5 million from $364.0 million, mainly due to reduced cash and investments, while total stockholders' equity fell to $299.5 million | Balance Sheet Items (in thousands) | June 30, 2023 (unaudited) | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $33,703 | $51,426 | | Short-term investments | $269,586 | $275,590 | | Total current assets | $309,302 | $332,439 | | Total assets | $341,500 | $364,010 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $17,904 | $16,507 | | Total liabilities | $42,031 | $43,270 | | Accumulated deficit | ($145,437) | ($110,470) | | Total stockholders' equity | $299,469 | $320,740 | Unaudited Condensed Statements of Operations and Comprehensive Loss For the three and six months ended June 30, 2023, the company reported net losses of $17.5 million and $35.0 million, respectively, driven by increased research and development and general administrative expenses | Statement of Operations (in thousands) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $1,057 | $2,365 | $3,105 | $3,954 | | Research and development | $14,924 | $14,086 | $30,789 | $24,270 | | General and administrative | $6,881 | $5,540 | $13,345 | $10,487 | | Loss from operations | ($20,748) | ($17,261) | ($41,029) | ($30,803) | | Interest income | $3,240 | $373 | $6,062 | $505 | | Net loss | ($17,508) | ($16,888) | ($34,967) | ($30,298) | | Net loss per share, basic and diluted | ($0.42) | ($0.41) | ($0.84) | ($0.73) | Unaudited Condensed Statements of Stockholders' Equity Stockholders' equity decreased from $320.7 million at December 31, 2022, to $299.5 million at June 30, 2023, primarily due to the $35.0 million net loss for the period | Change in Stockholders' Equity (in thousands) | Six Months Ended June 30, 2023 | | :--- | :--- | | Balance at December 31, 2022 | $320,740 | | Stock-based compensation | $10,974 | | Exercise of common stock options & ESPP | $2,108 | | Net loss | ($34,967) | | Other changes | $414 | | Balance at June 30, 2023 | $299,469 | Unaudited Condensed Statements of Cash Flows Net cash used in operating activities significantly increased to $29.0 million for the six months ended June 30, 2023, primarily due to a higher net loss, resulting in a $17.7 million overall decrease in cash | Cash Flow Summary (in thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($28,965) | ($17,595) | | Net cash provided by investing activities | $9,134 | $40,107 | | Net cash provided by financing activities | $2,108 | $309 | | Net (decrease) increase in cash | ($17,723) | $22,821 | Notes to Unaudited Condensed Financial Statements Key notes detail the company's liquidity, collaboration agreement with Merck, commitments, and equity structure, including a subsequent $56.5 million capital raise - The company is a clinical-stage biopharmaceutical firm that has incurred net losses since inception, with an accumulated deficit of $145.4 million as of June 30, 2023, but management believes it has sufficient capital for at least the next 12 months[22][23] - The company recognized $3.1 million in revenue from its collaboration with Merck for the six months ended June 30, 2023, with $5.6 million in deferred revenue remaining[95] - In July 2023, subsequent to the quarter's end, the company closed an underwritten offering of common stock and pre-funded warrants, resulting in estimated net proceeds of $56.5 million[97] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on developing its TRACTr and TRACIr platforms, with two clinical candidates in Phase 1 trials, and its strong liquidity position bolstered by a recent $56.5 million capital raise - The company is a clinical-stage biopharmaceutical firm developing tumor-activated immunotherapies, with lead candidates JANX007 and JANX008 currently in Phase 1 clinical trials[99] - As of June 30, 2023, the company had cash, cash equivalents, restricted cash, and short-term investments of $304.1 million, supplemented by a $56.5 million net capital raise in July 2023[129][133] - Management believes that existing cash, cash equivalents, and short-term investments are sufficient to meet anticipated cash requirements for at least the next 12 months from the report's filing date[104][139] Results of Operations For the first six months of 2023, collaboration revenue decreased by $0.9 million, while research and development expenses increased by $6.5 million and general and administrative expenses rose by $2.8 million, partially offset by a $5.6 million increase in other income | Financial Performance (in thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change | | :--- | :--- | :--- | :--- | | Collaboration revenue | $3,105 | $3,954 | ($849) | | Research and development | $30,789 | $24,270 | $6,519 | | General and administrative | $13,345 | $10,487 | $2,858 | | Loss from operations | ($41,029) | ($30,803) | ($10,226) | | Other income | $6,062 | $505 | $5,557 | | Net loss | ($34,967) | ($30,298) | ($4,669) | - The $6.5 million increase in R&D expenses for the six months ended June 30, 2023, was primarily due to a $4.8 million increase in indirect costs and a $1.8 million net increase in direct program costs[125] Liquidity and Capital Resources The company's principal liquidity sources are its $304.1 million in cash and investments as of June 30, 2023, further strengthened by a $56.5 million net capital raise in July 2023, with net cash used in operations at $29.0 million - The company maintains an ATM Equity Offering Sales Agreement with BofA Securities to sell up to $150.0 million of common stock, with the full amount remaining available as of June 30, 2023[132] - In July 2023, the company raised estimated net proceeds of $56.5 million from an underwritten offering of common stock and pre-funded warrants[133] | Cash Flow Summary (in thousands) | Six Months Ended June 30, 2023 | | :--- | :--- | | Net cash used in operating activities | ($28,965) | | Net cash provided by investing activities | $9,134 | | Net cash provided by financing activities | $2,108 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company has indicated that this item is not applicable as it qualifies as a smaller reporting company - Disclosure is not applicable as the company is a smaller reporting company[146] Item 4. Controls and Procedures Management, including the CEO and Acting CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2023, with no material changes in internal control over financial reporting during the quarter - The company's management concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[147] - There were no changes in internal control over financial reporting during the most recent quarter that have materially affected, or are reasonably likely to materially affect, internal controls[149] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, other information, and exhibits 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 involved in any material legal proceedings[152] Item 1A. Risk Factors The company outlines significant risks including its limited operating history, history of net losses, need for substantial additional capital, uncertain development process, reliance on third parties, and intellectual property protection challenges - The company has a limited operating history, has incurred net losses since inception, and anticipates significant future losses, with no guarantee of achieving or sustaining profitability[155][157] - The company is in the early stages of development, with most product candidates in preclinical or discovery stages, facing a lengthy, expensive, and uncertain development process with no guarantee of regulatory approval[155][167] - Key operational risks include reliance on third parties for conducting clinical trials and manufacturing, and the ability to obtain and maintain sufficient intellectual property protection for its platform technologies and product candidates[155][208][305] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the use of proceeds from the company's June 2021 Initial Public Offering (IPO), which generated gross proceeds of $222.9 million, none of which have been used as of June 30, 2023 - The company's June 2021 IPO generated gross proceeds of $222.9 million from the sale of 13,110,000 shares at $17.00 per share[412] - As of June 30, 2023, none of the IPO proceeds have been used, with funds invested in high-quality marketable securities until needed for operations[413] Item 5. Other Information The company states that no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2023 - No director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the second quarter of 2023[414] Item 6. Exhibits This section provides a list of all exhibits filed with the Quarterly Report on Form 10-Q, including the company's amended and restated certificate of incorporation, bylaws, and various officer certifications - Lists the exhibits filed with the Form 10-Q, including corporate governance documents and required SEC certifications[415]