-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One) | |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
(Address of principal executive offices) | (Zip code) |
Registrant’s telephone number, including area code: (
Former name, former address and former fiscal year, if changed since last report: N/A
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or any emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ |
Smaller reporting company | |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 12, 2024,
CORVUS PHARMACEUTICALS, INC.
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2024
TABLE OF CONTENTS
2
PART I - FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements
CORVUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
September 30, | December 31, | |||||
| 2024 |
| 2023 | |||
Assets |
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Current assets: |
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Cash and cash equivalents | $ | | $ | | ||
Marketable securities |
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Accounts receivable - related party |
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Prepaid and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use asset | | | ||||
Investment in Angel Pharmaceuticals | | | ||||
Other assets | | | ||||
Total assets | $ | | $ | | ||
Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable | $ | | $ | | ||
Operating lease liability | | | ||||
Accrued and other liabilities |
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Warrant liability | | — | ||||
Total current liabilities |
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Total liabilities |
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Commitments and contingencies (Note 14) |
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Stockholders’ equity: |
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Preferred stock: $ | — | — | ||||
Common stock: $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
| ( |
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Accumulated deficit |
| ( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
CORVUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except share and per share data)
(unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 |
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Operating expenses: |
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Research and development | $ | | $ | | $ | | $ | | |||||
General and administrative |
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Total operating expenses |
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Loss from operations |
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Interest income and other expense, net |
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Change in fair value of warrant liability | ( | — | ( | — | |||||||||
Sublease income - related party | — | — | — | | |||||||||
Loss before equity method investment | ( | ( | ( | ( | |||||||||
Loss from equity method investment | ( | ( | ( | ( | |||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||
Net loss per share, basic and diluted | ( | ( | ( | ( | |||||||||
Shares used to compute net loss per share, basic and diluted |
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Other comprehensive loss: |
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Unrealized gain on marketable securities |
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Cumulative foreign currency translation adjustment |
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Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
CORVUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)
Nine Months Ended September 30, 2024 | |||||||||||||||||
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| Accumulated |
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Additional | Other | Total | |||||||||||||||
Common Stock | Paid-in | Comprehensive | Accumulated | Stockholders’ | |||||||||||||
| Shares |
| Amount |
| Capital |
| Income |
| Deficit |
| Equity | ||||||
Balance at December 31, 2023 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Stock-based compensation expense | — | — | | — | — | | |||||||||||
Unrealized loss on marketable securities | — | — | — | ( | — | ( | |||||||||||
Foreign currency translation adjustment | — | — | — | ( | — | ( | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Balance at March 31, 2024 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Common stock issued in connection with registered direct offering, net | | | | — | — | | |||||||||||
Pre-funded warrants issued in connection with registered direct offering, net | — | — | | — | — | | |||||||||||
Stock-based compensation expense | — | — | | — | — | | |||||||||||
Unrealized loss on marketable securities | — | — | — | | — | | |||||||||||
Foreign currency translation adjustment | — | — | — | ( | — | ( | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Balance at June 30, 2024 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Common stock issued on exercise of stock options | | — | | — | — | | |||||||||||
Stock-based compensation expense | — | — | | — | — | | |||||||||||
Unrealized gain on marketable securities | — | — | — | | — | | |||||||||||
Foreign currency translation adjustment | — | — | — | | — | | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Balance at September 30, 2024 | | $ | | $ | | $ | ( | $ | ( | $ | |
Nine Months Ended September 30, 2023 | |||||||||||||||||
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Additional | Other | Total | |||||||||||||||
Common Stock | Paid-in | Comprehensive | Accumulated | Stockholders’ | |||||||||||||
| Shares |
| Amount |
| Capital |
| Income |
| Deficit |
| Equity | ||||||
Balance at December 31, 2022 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Common stock issued on exercise of stock options | | — | | — | — | | |||||||||||
Stock-based compensation expense | — | — | | — | — | | |||||||||||
Unrealized gain on marketable securities | — | — | — | | — | | |||||||||||
Foreign currency translation adjustment | — | — | — | | — | | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Balance at March 31, 2023 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Stock-based compensation expense | — | — | | — | — | | |||||||||||
Unrealized loss on marketable securities | — | — | — | ( | — | ( | |||||||||||
Foreign currency translation adjustment | — | — | — | ( | — | ( | |||||||||||
Issuance of common stock in connection with at-the-market offering, net | | — | | — | — | | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Balance at June 30, 2023 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Common stock issued on exercise of stock options | | — | | — | — | | |||||||||||
Stock-based compensation expense | — | — | | — | — | | |||||||||||
Unrealized gain on marketable securities | — | — | — | | — | | |||||||||||
Foreign currency translation adjustment | — | — | — | ( | — | ( | |||||||||||
Issuance of common stock in connection with at-the-market offering, net | | — | | — | — | | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Balance at September 30, 2023 | | $ | | $ | | $ | ( | $ | ( | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
CORVUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended | |||||||
September 30, | |||||||
| 2024 |
| 2023 |
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Cash flows from operating activities |
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Net loss | $ | ( | $ | ( | |||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Accretion related to marketable securities |
| ( |
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Stock-based compensation |
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Change in fair value of warrant liability |
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Loss from equity method investment |
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Changes in operating assets and liabilities: |
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Accounts receivable - related party |
| ( |
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Prepaid and other current assets |
| ( |
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Operating lease right-of-use asset | | | |||||
Other assets | ( | | |||||
Accounts payable |
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| ( | |||
Accrued and other liabilities |
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Operating lease liability | ( | ( | |||||
Net cash used in operating activities |
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Cash flows from investing activities |
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Purchases of marketable securities |
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Maturities of marketable securities |
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Purchases of property and equipment |
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Net cash (used in) provided by investing activities |
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Cash flows from financing activities |
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Proceeds from issuance of common stock, net (includes $ |
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Proceeds from issuance of pre-funded warrants, net (includes $ |
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Proceeds from issuance of common warrants (includes $ |
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Proceeds from issuance of common stock in connection with at-the-market offering, net | — | | |||||
Proceeds from exercise of common stock options |
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Net cash provided by financing activities |
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Net (decrease) increase in cash and cash equivalents |
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Cash and cash equivalents at beginning of the period |
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Cash and cash equivalents at end of the period | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
CORVUS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
1. Organization
Corvus Pharmaceuticals, Inc. (“Corvus” or the “Company”) was incorporated in Delaware on January 27, 2014 and commenced operations in November 2014. Corvus is a clinical-stage biopharmaceutical company. The Company’s operations are located in Burlingame, California, as of the filing of this Quarterly Report on Form 10-Q. In February 2025, the Company’s operations will be relocated to South San Francisco, California.
Presentation
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Corvus Biopharmaceuticals, Ltd. and Corvus Hong Kong Limited. All intercompany accounts and transactions have been eliminated from the condensed consolidated financial statements.
Initial Public Offering
On March 22, 2016, the Company’s registration statement on Form S-1 (File No. 333-208850) relating to its initial public offering (“IPO”) of its common stock was declared effective by the Securities and Exchange Commission (“SEC”) and the shares of its common stock began trading on the Nasdaq Global Market on March 23, 2016. The public offering price of the shares sold in the IPO was $
Follow-on Public Offerings
In March 2018, the Company completed a follow-on public offering in which the Company sold
In February 2021, the Company completed a follow-on public offering in which the Company sold
Registered Direct Offering
On May 6, 2024, the Company completed a registered direct offering which resulted in gross proceeds of approximately $
7
warrants have an exercise price of $
Liquidity
The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, contract manufacturer and contract research organizations, compliance with government regulations and the need to obtain additional financing to fund operations. Since commencing operations in 2014, the majority of the Company’s efforts have been focused on the research and development of soquelitinib, ciforadenant and mupadolimab. The Company believes that it will continue to expend substantial resources for the foreseeable future as it continues clinical development of, seek regulatory approval for and, if approved, prepare for the commercialization of soquelitinib, ciforadenant and mupadolimab, as well as product candidates under the Company’s other development programs. These expenditures will include costs associated with research and development, conducting preclinical studies and clinical trials, obtaining regulatory approvals, manufacturing and supply, sales and marketing and general operations. In addition, other unanticipated costs may arise. Because the outcome of any clinical trial and/or regulatory approval process is highly uncertain, the Company may not be able to accurately estimate the actual amounts necessary to successfully complete the development, regulatory approval process and commercialization of soquelitinib, ciforadenant and mupadolimab or any other product candidates.
The Company has incurred significant losses and negative cash flows from operations in all periods since inception and had an accumulated deficit of $
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company’s functional and reporting currency is the U.S. dollar, except for its investment in its equity method investee which is the Chinese renminbi (RMB). The accompanying condensed consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and discharge of liabilities in the normal course of business.
8
Unaudited Interim Financial Information
The accompanying interim condensed consolidated financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for fair statement of the condensed consolidated financial statements presented.
The condensed consolidated balance sheet as of December 31, 2023 was derived from audited financial statements, but does not include all disclosures required by GAAP. The condensed consolidated results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements and the related notes for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 19, 2024.
Use of Estimates
The preparation of the Company’s condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from such estimates.
Investments in Equity Securities
The Company uses the equity method of accounting for its equity investment if the investment provides the ability to exercise significant influence, but not control, over operating and financial policies of the investee.
The Company’s proportionate share of the net income (loss) resulting from the equity method investment is reported under the line item captioned “income (loss) from equity method investment” in the Condensed Consolidated Statements of Operations and Comprehensive Loss and the carrying value of the equity method investments is reported under the line captioned “Investment in Angel Pharmaceuticals” in the Condensed Consolidated Balance Sheets. The Company’s equity method investments are reported at cost and adjusted each period for the Company’s share of the investee’s income or loss and the foreign currency translation adjustment as applicable.
For equity method investees with a functional currency different than the Company’s reporting currency, the Company follows the guidance under ASC 830-10-15-5, pursuant to which, the foreign currency financial statements of a foreign investee accounted for by the equity method should be translated to the reporting entity's reporting currency.
The Company evaluates equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. Factors considered by the Company when reviewing an equity method investment for impairment include the length of time (duration) and the extent (severity) to which the fair value of the equity method investment has been less than cost, the investee’s financial condition and near-term prospects and the intent and ability to hold the investment for a period of time sufficient to allow for anticipated recovery. An impairment that is other-than-temporary is recognized in the period identified.
See Note 5, “Equity Method Investment,” for further information.
Concentrations of Credit Risk and Other Risks and Uncertainties
Substantially all of the Company’s cash and cash equivalents are deposited in accounts with
9
of the financial institutions and issuers. The Company has not experienced any losses on its deposits of cash, cash equivalents or marketable securities.
The Company is subject to a number of risks similar to other early stage biopharmaceutical companies, including, but not limited to, the need to obtain adequate additional funding, possible failure of preclinical testing or clinical trials, its reliance on third parties to conduct its clinical trials, the need to obtain marketing approval for its product candidates, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of the Company’s product candidates, its right to develop and commercialize its product candidates pursuant to the terms and conditions of the licenses granted to the Company, and protection of proprietary technology. If the Company does not successfully commercialize or partner any of its product candidates, it will be unable to generate product revenue or achieve profitability.
Segments
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance included in Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and Hedging ("ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether the warrants meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent reporting period end date while the warrants are outstanding.
Warrants that meet all of the criteria for equity classification are required to be recorded as a component of additional paid-in capital at the time of issuance, or when the conditions for equity classification are met, and are not remeasured. Warrants that do not meet the required criteria for equity classification are classified as liabilities. The Company adjusts such warrants to fair value at each reporting period until the warrants are exercised or expire. Any change in fair value is recognized in the Company’s statements of operations and comprehensive loss.
Significant Accounting Policies
There have been no material changes to the Company’s significant accounting policies during the nine months ended September 30, 2024 from those discussed in our Form 10-K.
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Recent Accounting Pronouncements
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative, which modifies the disclosure or presentation requirements related to variety of FASB Accounting Standard Codification topics. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K is effective. If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the associated amendment will be removed from the Codification and will not become effective for any entities. The Company is currently evaluating the effect of adopting this ASU.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which amends the guidance in ASC 740, Income Taxes. The ASU is intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU’s amendments are effective for public business entities for annual periods beginning after December 15, 2024. Entities are permitted to early adopt the standard “for annual financial statements that have not yet been issued or made available for issuance.” As adoption is either prospectively or retrospectively, the Company will adopt this ASU on a prospective basis. The Company is currently evaluating the impact of this ASU but does not expect any material impacts upon adoption.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expense. This update requires entities to disaggregate operating expenses into specific categories, such as salaries and wages, depreciation, and amortization, to provide enhanced transparency into the nature and function of expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. ASU 2024-03 may be applied retrospectively or prospectively. The Company is currently evaluating the impact of ASU 2024-03 on its financial statement presentation and disclosures.
3. Net Loss per Share
The following table shows the calculation of net loss per share (in thousands, except share and per share data):
Three Months Ended | Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 |
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Numerator: |
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Net loss - basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||
Denominator: |
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Weighted average common shares outstanding used to compute basic and diluted net loss per share |
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Net loss per share, basic and diluted | ( | ( | ( | ( |
Weighted average common shares outstanding for the three and nine months ended September 30, 2024 includes
The amounts in the table below were excluded from the calculation of diluted net loss per share, due to their anti-dilutive effect:
Three Months Ended | Nine Months Ended | ||||||||
September 30, | September 30, | ||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 |
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Common warrants (1) | |
| — | |
| — | |||
Outstanding options | |
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(1) | Based on the treasury stock method, such common warrants that are in-the-money should be included in the calculation of diluted earnings per share (“EPS”) if the impact is not anti-dilutive. Therefore, as the Company was in a net loss position for the three and nine months ended September 30, 2024 and other expense from the revaluation of the common warrants was $ |
4. Fair Value Measurements
Financial assets and liabilities are measured and recorded at fair value. The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The hierarchy defines three levels of valuation inputs:
● | Level 1—Quoted prices in active markets for identical assets or liabilities |
● | Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly |
● | Level 3—Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability |
There have been no transfers of assets and liabilities between levels of hierarchy.
The Company’s Level 2 investments are valued using third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar investments, issuer credit spreads, benchmark investments, prepayment/default projections based on historical data and other observable inputs.
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Financial Assets
The following tables present information as of September 30, 2024 and December 31, 2023 about the Company’s assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy the Company utilized to determine such fair values (in thousands):
September 30, 2024 | ||||||||||||
Fair Value Measured Using | Total | |||||||||||
| (Level 1) |
| (Level 2) |
| (Level 3) |
| Balance | |||||
Assets |
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Cash equivalents | $ | | $ | — | $ | — | $ | | ||||
Marketable securities |
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| — |
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$ | | $ | | $ | — | $ | |
December 31, 2023 | ||||||||||||
Fair Value Measured Using | Total | |||||||||||
| (Level 1) |
| (Level 2) |
| (Level 3) |
| Balance | |||||
Assets |
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Cash equivalents | $ | | $ | — | $ | — | $ | | ||||
Marketable securities | |
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| — |
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$ | | $ | | $ | — | $ | |
As of September 30, 2024, all marketable securities had a maximum remaining maturity of less than
As of September 30, 2024 and December 31, 2023, the fair value of available for sale marketable securities by type of security were as follows (in thousands):
September 30, 2024 | ||||||||||||
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| Gross |
| Gross |
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Amortized | Unrealized | Unrealized | Fair | |||||||||
Cost | Gains | Losses | Value | |||||||||
U.S. Treasury securities | $ | | $ | | $ | — | $ | | ||||
U.S. Government agency securities | | | — | | ||||||||
$ | | $ | | $ | — | $ | |
December 31, 2023 | ||||||||||||
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| Gross |
| Gross |
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Amortized | Unrealized | Unrealized | Fair | |||||||||
Cost | Gains | Losses | Value | |||||||||
U.S. Treasury securities | $ | | $ | | $ | — | $ | | ||||
U.S. Government agency securities | | | — | | ||||||||
$ | | $ | | $ | — | $ | |
Financial Liabilities
The following tables present information as of September 30, 2024 about the Company’s liabilities that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy the Company utilized to determine such fair values (in thousands):
September 30, 2024 | ||||||||||||
Fair Value Measured Using | Total | |||||||||||
| (Level 1) |
| (Level 2) |
| (Level 3) |
| Balance | |||||
Warrant liability | $ | — | $ | — | $ | | $ | |
The Company had
13
During the nine months ended September 30, 2024, the changes in the Company’s warrant liability were as follows (in thousands):
Warrants | |||
Warrant liability balance as of December 31, 2023 | $ | — | |
Issuance of warrants | | ||
Change in fair value | | ||
Warrant liability balance as of September 30, 2024 | $ | |
The Company uses the Black-Scholes pricing model to determine the fair value of its warrant liabilities using Level 3 inputs. Inputs used to determine estimated fair value of the warrant liabilities include the fair value of the underlying stock at the valuation date, the term of the warrants, and the expected volatility of the underlying stock. The significant unobservable input used in the fair value measurement of the warrant liabilities is the estimated term of the warrants.
The key inputs into valuation models used to estimate the fair value of the warrant liabilities as of May 6, 2024, the issuance date, and as of September 30, 2024 were as follows:
May 6, | |||||||
2024 | |||||||
September 30, | (Date of | ||||||
2024 | Issuance) | ||||||
Risk-free interest rate | | % | | % | |||
Expected volatility | | % | | % | |||
Expected term (in years) | |||||||
Share price | $ | | $ | |
5. Equity Method Investment
Angel Pharmaceuticals Co. Ltd. (“Angel”) is a corporate venture in the People’s Republic of China designed to develop, manufacture, and commercialize soquelitinib, ciforadenant and mupadolimab compounds for distribution within the countries of China, Taiwan, Macao, and Hong Kong based on intellectual property licenses to be contributed to Angel by the Company.
As of September 30, 2024 and December 31, 2023, the Company’s ownership interest in Angel was approximately
Summary Financial Information
Summary financial information for Angel Pharmaceuticals is as follows:
As of | As of | |||||
Balance Sheet Data |
| September 30, 2024 | December 31, 2023 | |||
| (in thousands) | |||||
Current assets | $ | | $ | | ||
Non-current assets |
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| | ||
Current liabilities |
| |
| | ||
Non-current liabilities |
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