10-Q 1 jnce-20220630.htm 10-Q jnce-20220630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________________________________________________________________________
FORM 10-Q
________________________________________________________________________________________________________
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022

    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 001-37998
________________________________________________________________________________________________________
JOUNCE THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
________________________________________________________________________________________________________
  Delaware45-4870634
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
780 Memorial Drive
            Cambridge,Massachusetts 02139
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (857259-3840

    Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareJNCEThe Nasdaq Stock Market LLC
    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. Yes   No  
 
    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).  Yes   No 
     
    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller 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   No 

    As of July 29, 2022, there were 51,694,237 shares of common stock, $0.001 par value per share, outstanding.


Table of Contents
Page



References to Jounce
Throughout this Quarterly Report on Form 10-Q, the “Company,” “Jounce,” “Jounce Therapeutics,” “we,” “us,” and “our,” except where the context requires otherwise, refers to Jounce Therapeutics, Inc. and its consolidated subsidiary, and “board of directors” refers to the board of directors of Jounce Therapeutics, Inc.
Cautionary Note Regarding Forward-Looking Statements and Industry Data
This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
The words “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “target,” “will” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about:
the timing, progress, and results of preclinical studies and clinical trials for our current and future product candidates, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, and our research and development programs;
our plans and expectations in light of the COVID-19 pandemic and its impacts on our operations and global healthcare systems;
the timing, scope, or likelihood of regulatory filings and approvals, including, as applicable, timing of our investigational new drug applications for, biologics license application filing for, and final Food and Drug Administration approval of our current and future product candidates;
our ability to use our Translational Science Platform to identify targets for future product candidates and to match immunotherapies to select patient subsets;
our ability to identify, develop and advance future product candidates into, and successfully complete, clinical studies;
our ability to develop combination therapies, whether on our own or in collaboration with third parties, for our current and future product candidates;
our expectations regarding the size of the patient populations for our product candidates, if approved for commercial use, and any product candidates we may develop;
our commercialization and marketing capabilities and strategy;
the pricing and reimbursement of our current and future product candidates, if approved;
the implementation of our business model and our strategic plans for our business, our current and future product candidates, and our technology;
our ability to develop and commercialize a companion diagnostic or complementary diagnostic for our current and future product candidates;
the rate and degree of market acceptance and clinical utility of our current and future product candidates;
the potential benefits of our exclusive license of GS-1811, formerly JTX-1811, to Gilead Sciences, Inc.;
our ability to establish or maintain future collaborations or strategic relationships or obtain additional funding;
our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;
our intellectual property position, including the scope of protection we are able to establish and maintain for intellectual property rights covering our current and future product candidates, and our ability not to infringe, misappropriate or otherwise violate any third-party intellectual property rights;
our competitive position, and developments and projections relating to our competitors and our industry;
our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; and
1

the impact of laws and regulations.
There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. You should also read carefully the factors described in the sections “Summary of Risks Factors” and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make.
You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
This Quarterly Report on Form 10-Q may include industry and market data, which we may obtain from our own internal estimates and research, as well as from industry and general publications and research, surveys, and studies conducted by third parties. Industry publications, studies, and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that such studies and publications are reliable, we have not independently verified market and industry data from third‑party sources.
Website and Social Media Disclosure
From time to time, we may use our website (www.jouncetx.com), investor and media relations website (http://ir.jouncetx.com), Facebook page (https://www.facebook.com/jouncetx), LinkedIn page (https://www.linkedin.com/company/3494537/) and Twitter feed (https://twitter.com/JounceTx) as channels for the distribution of information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts. The contents of our website and social media channels are not, however, a part of this report.
2


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Jounce Therapeutics, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(amounts in thousands, except par value amounts)

d
 June 30,December 31,
 20222021
Assets: 
Current assets: 
Cash and cash equivalents$77,741 $95,529 
Short-term investments70,823 83,037 
Prepaid expenses and other current assets8,783 12,261 
Total current assets157,347 190,827 
Property and equipment, net4,406 4,882 
Long-term investments13,691 41,657 
Operating lease right-of-use asset10,271 11,877 
Other non-current assets               3,186 3,453 
Total assets               $188,901 $252,696 
Liabilities and stockholders’ equity:
 
Current liabilities:
 
Accounts payable$3,439 $1,674 
Accrued expenses15,801 13,467 
Operating lease liability, current3,912 3,695 
Other current liabilities               43 62 
Total current liabilities23,195 18,898 
Operating lease liability, net of current portion7,976 9,993 
Total liabilities31,171 28,891 
Commitments and contingencies


Stockholders’ equity:
 
Preferred stock, $0.001 par value: 5,000 shares authorized at June 30, 2022 and December 31, 2021; no shares issued or outstanding at June 30, 2022 or December 31, 2021
  
Common stock, $0.001 par value: 160,000 shares authorized at June 30, 2022 and December 31, 2021; 51,681 and 51,265 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively
51 51 
Additional paid-in capital471,529 465,865 
Accumulated other comprehensive loss(1,097)(238)
Accumulated deficit(312,753)(241,873)
Total stockholders’ equity157,730 223,805 
Total liabilities and stockholders’ equity$188,901 $252,696 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

Jounce Therapeutics, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)
(amounts in thousands, except per share amounts)
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Revenue:  
License and collaboration revenue — related party$ $25,368 $ $26,907 
Operating expenses:  
Research and development26,203 22,100 56,318 42,607 
General and administrative7,511 7,317 14,858 14,932 
Total operating expenses33,714 29,417 71,176 57,539 
Operating loss(33,714)(4,049)(71,176)(30,632)
Other income, net          213 40 309 89 
Loss before provision for income taxes(33,501)(4,009)(70,867)(30,543)
Provision for income taxes12 2 13 3 
Net loss$(33,513)$(4,011)$(70,880)$(30,546)
Net loss per share, basic and diluted$(0.65)$(0.08)$(1.37)$(0.63)
Weighted-average common shares outstanding, basic and diluted51,678 51,212 51,658 48,601 
Comprehensive loss:
Net loss$(33,513)$(4,011)$(70,880)$(30,546)
Other comprehensive income (loss):
Unrealized (loss) gain on available-for-sale securities               (196)1 (859)(7)
Comprehensive loss$(33,709)$(4,010)$(71,739)$(30,553)
The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Jounce Therapeutics, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (unaudited)
(amounts in thousands)
 Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity
 SharesAmount
Balance at December 31, 202151,265 $51 $465,865 $(238)$(241,873)$223,805 
Exercises of common stock options64 — 359 — — 359 
Vesting of restricted stock units345 — — — —  
Stock-based compensation expense— — 2,829 — — 2,829 
Other comprehensive loss— — — (663)— (663)
Net loss— — — — (37,367)(37,367)
Balance at March 31, 202251,674 51 469,053 (901)(279,240)188,963 
Exercises of common stock options7 — 33 — — 33 
Stock-based compensation expense— — 2,443 — — 2,443 
Other comprehensive loss— — — (196)— (196)
Net loss— — — — (33,513)(33,513)
Balance at June 30, 202251,681 $51 $471,529 $(1,097)$(312,753)$157,730 
 Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive (Loss) IncomeAccumulated DeficitTotal Stockholders’ Equity
 SharesAmount
Balance at December 31, 202041,729 $42 $362,270 $(17)$(151,001)$211,294 
Issuance of common stock from at the market offering, net of issuance cost3,156 3 30,218 — — 30,221 
Issuance of common stock from follow-on public offering, net of issuance costs5,750 6 60,632 — — 60,638 
Exercise of common stock options342 — 1,019 — — 1,019 
Vesting of restricted stock units223 — — — —  
Stock-based compensation expense— — 2,825 — — 2,825 
Other comprehensive loss— — — (8)— (8)
Net loss— — — — (26,535)(26,535)
Balance at March 31, 202151,200 51 456,964 (25)(177,536)279,454 
Exercises of common stock options21 — 83 — — 83 
Stock-based compensation expense— — 2,935 — — 2,935 
Other comprehensive income— — — 1 — 1 
Net loss— — — — (4,011)(4,011)
Balance at June 30, 202151,221 $51 $459,982 $(24)$(181,547)$278,462 
The accompanying notes are an integral part of these condensed consolidated financial statements.
5

Jounce Therapeutics, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(amounts in thousands)
 Six Months Ended
June 30,
 20222021
Operating activities: 
Net loss$(70,880)$(30,546)
Adjustments to reconcile net loss to net cash used in operating activities: 
Stock-based compensation expense5,272 5,760 
Depreciation expense1,150 1,501 
Net amortization of premiums and discounts on investments524 338 
Changes in operating assets and liabilities: 
Accounts receivable — related party (24,945)
Prepaid expenses and other current assets3,428 (7,126)
Other non-current assets267 345 
Accounts payable1,758 473 
Accrued expenses and other current liabilities2,104 (2,232)
Deferred revenue — related party (1,931)
Other liabilities(194)(101)
Net cash used in operating activities(56,571)(58,464)
Investing activities:  
Purchases of investments(24,928)(78,565)
Proceeds from maturities of investments63,725 38,581 
Purchases of property and equipment(456)(157)
Net cash provided by (used in) investing activities38,341 (40,141)
Financing activities:  
Proceeds from issuance of common stock, net of issuance costs 90,826 
Proceeds from exercise of stock options442 1,100 
Net cash provided by financing activities           442 91,926 
Net decrease in cash, cash equivalents and restricted cash(17,788)(6,679)
Cash, cash equivalents and restricted cash, beginning of period96,799 148,763 
Cash, cash equivalents and restricted cash, end of period$79,011 $142,084 
Non-cash investing and financing activities:  
Purchases of property and equipment in accounts payable and accrued expenses$218 $33 
Stock option exercise receivables in prepaid expenses and other current assets$ $2 
Supplemental cash flow information:
Cash paid for lease liabilities$2,329 $2,626 
Cash paid for income taxes$8 $8 

The accompanying notes are an integral part of these condensed consolidated financial statements.
6

Jounce Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)








1. Nature of Business
Jounce Therapeutics, Inc. (the “Company”) is a clinical-stage immunotherapy company dedicated to transforming the treatment of cancer by developing therapies that enable the immune system to attack tumors and provide long-lasting benefits to patients through a biomarker-driven approach. The Company is subject to a number of risks similar to those of other clinical-stage companies, including dependence on key individuals; the need to develop commercially viable products; competition from other companies, many of which are larger and better capitalized; and the need to obtain adequate additional financing to fund the development of its products.
As of June 30, 2022, the Company had cash, cash equivalents and investments of $162.3 million. The Company expects that its existing cash, cash equivalents and investments will enable it to fund its expected operating expenses and capital expenditure requirements for at least 12 months from August 4, 2022, the filing date of this Quarterly Report on Form 10-Q. The Company expects to finance its future cash needs through a combination of equity or debt financings, collaborations, licensing arrangements and strategic alliances.
2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying condensed consolidated financial statements as of June 30, 2022 and December 31, 2021, and for the three and six months ended June 30, 2022 and 2021, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and generally accepted accounting principles in the United States of America (“GAAP”) as found in the Accounting Standards Codification (“ASC”) of the Financial Accounting Standards Board (“FASB”) for condensed consolidated financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these condensed consolidated financial statements reflect all normal recurring adjustments which are necessary for a fair presentation of the Company’s financial position and results of its operations, as of and for the periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 2, 2022 (the “Annual Report on Form 10-K”).
The information presented in the condensed consolidated financial statements and related notes as of June 30, 2022, and for the three and six months ended June 30, 2022 and 2021, is unaudited. The December 31, 2021 condensed consolidated balance sheet included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including notes, required by GAAP for complete financial statements.
Interim results for the six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022, or any future period.
The accompanying condensed consolidated financial statements include the accounts of Jounce Therapeutics, Inc. and its wholly-owned subsidiary, Jounce Mass Securities, Inc. All intercompany transactions and balances have been eliminated in consolidation.
Summary of Significant Accounting Policies
The significant accounting policies and estimates used in the preparation of the condensed consolidated financial statements are described in the Company’s audited financial statements as of and for the year ended December 31, 2021, and the notes thereto, which are included in the Annual Report on Form 10-K. There have been no material changes in the Company’s significant accounting policies during the six months ended June 30, 2022.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, the Company’s management evaluates its estimates which include, but are not limited to, accrued expenses, stock-based compensation expense and income taxes. The Company bases its estimates on historical experience and other market specific or other relevant assumptions it believes to be reasonable under the circumstances. Actual results could differ from those estimates.
7

Recent Accounting Pronouncements, Not Yet Adopted
In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard requires that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used, and it establishes additional disclosure requirements related to credit risks. For available-for-sale debt securities with expected credit losses, this standard now requires allowances to be recorded instead of reducing the amortized cost of the investment. This guidance was originally effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual reporting periods, and early adoption was permitted. In November 2019, the FASB subsequently issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, whereby the effective date of this standard for smaller reporting companies was deferred to annual reporting periods beginning after December 15, 2022, including interim periods within those annual reporting periods, and early adoption is still permitted. Accordingly, the Company will now adopt this standard effective January 1, 2023, and it is currently evaluating the potential impact that ASU 2016-13 may have on the consolidated financial statements.

3.     License and Collaboration Revenue
Gilead License Agreement
On August 31, 2020, the Company and Gilead Sciences, Inc. (“Gilead”) entered into an exclusive license agreement (the “Gilead License Agreement”) to license the Company’s GS-1811, formerly JTX-1811, program to Gilead, which became effective on October 16, 2020. Concurrently with the Gilead License Agreement, the Company and Gilead entered into a stock purchase agreement (the “Stock Purchase Agreement”) and a registration rights agreement (the “Registration Rights Agreement”, and together with the Gilead License Agreement and the Stock Purchase Agreement, the “Transaction Agreements”). Pursuant to the Gilead License Agreement, the Company granted to Gilead a worldwide and exclusive license to develop, manufacture and commercialize GS-1811 and certain derivatives thereof (the “Licensed Products”). Gilead paid the Company a one-time, non-refundable upfront payment of $85.0 million in October 2020. The Company continued to develop GS-1811 during the initial development term, which included conducting activities defined within the agreement to advance GS-1811 through the clearance of an investigational new drug application (“IND”), which occurred in June 2021, after which the program transitioned to Gilead.
Milestone and Royalties
The Company is entitled to receive payments from Gilead upon the achievement of specified clinical, regulatory and sales milestones, including potential clinical development and regulatory milestone payments up to an aggregate total of $510.0 million and potential sales milestone payments up to an aggregate total of $175.0 million.
The Company is also eligible to receive tiered royalty payments based on a percentage of annual worldwide net sales ranging from the high-single digits to mid-teens, based on future annual net sales of the Licensed Products, on a Licensed Product-by-Licensed Product and country-by-country basis.
In June 2021, the Company received clearance of the IND for GS-1811 from the U.S. Food and Drug Administration (“FDA”) and achieved a $25.0 million clinical and development milestone under the Gilead License Agreement.
Termination
Gilead may terminate the Gilead License Agreement for convenience, in its sole discretion, in its entirety or on a Licensed Product-by-Licensed Product or region-by-region basis, at any time with prior written notice to the Company. Unless terminated earlier in accordance with its terms, the Gilead License Agreement provides that it will expire (i) on a Licensed Product-by-Licensed Product (as defined in the Gilead License Agreement) and country-by-country basis on the date of the expiration of the royalty term with respect to such Licensed Product in such country and (ii) in its entirety upon the expiration of all applicable royalty terms with respect to the Licensed Products in all countries, following which the applicable licenses under the Gilead License Agreement will become fully paid-up, perpetual, irrevocable and royalty-free.
8

Accounting Analysis
Identification of the Contract(s)
The Company assessed the Gilead License Agreement and concluded that it represents a contract with a customer within the scope of ASC 606, Revenue from Contracts with Customers (“ASC 606”). In addition, the Company determined that the Gilead License Agreement and Stock Purchase Agreement should be evaluated as a combined contract in accordance with ASC 606 given that the agreements were executed contemporaneously, negotiated as a package and have the same commercial objective to provide funding to further the Company’s research and development activities.
Identification of Promises and Performance Obligations
The Company assessed the promises under the Gilead License Agreement and concluded that the (i) delivery of a worldwide and exclusive license to develop, manufacture and commercialize GS-1811 (the “GS-1811 License”) and (ii) provision of certain research transition activities, specifically outlined within the Gilead License Agreement, related to the advancement of GS-1811 through the clearance of an IND application and transition of the GS-1811 program to Gilead (the “Research and Transition Services”) are capable of being distinct and distinct within the context of the Gilead License Agreement. Based upon this evaluation, the Company concluded that its promise to deliver the GS-1811 License and promise to perform Research and Transition Services represent separate performance obligations in the Gilead License Agreement.
Determination of Transaction Price
The Company received a non-refundable upfront payment of $85.0 million upon the closing of the Gilead License Agreement. This upfront payment represents an element of fixed consideration under the Gilead License Agreement.
The Company also evaluated as possible variable consideration the milestones and royalties discussed above. With respect to clinical development and regulatory milestones, based upon the high degree of uncertainty and risk associated with these potential payments, the Company concluded that all such amounts should be fully constrained and are not included in the initial transaction price. As part of the evaluation of the constraint the Company considered certain factors, including that receipt of such milestones is outside the control of the Company and the probability of success criteria is estimated. Each of these variable consideration items was evaluated under the most-likely amount method. As for royalties and sales milestones, the Company determined that the royalties and milestones relate solely to the GS-1811 License, which is a license of intellectual property (“IP”). Accordingly, the Company did not include any potential royalty or sales milestone amounts in the initial transaction price, and the Company will not recognize revenue related to these royalties and sales milestones until the associated sales occur and relevant thresholds are met. The Company will re-evaluate the transaction price in each reporting period as uncertain events are resolved or as other changes in circumstances occur, and if necessary, will adjust its estimate of the transaction price to include milestones as they become probable of occurrence.
Allocation of Transaction Price to Performance Obligations
The Company allocated the transaction price to each performance obligation on a relative estimated standalone selling price basis. The Company developed the estimated standalone selling price for the GS-1811 License based on the present value of expected future cash flows associated with the license and related clinical development and regulatory milestones. In developing such estimate, the Company applied judgement in determining the timing needed to develop the Licensed Product, the probability of success, and the discount rate. The Company developed the estimated standalone selling price for the Research and Transition Services obligation based on the nature of the services to be performed and the Company’s best estimate of the length of time required to perform the services necessary to achieve clearance of an IND application for the GS-1811 program.
Based on the above considerations, $3.5 million of the initial transaction price was allocated to the Research and Transition Services performance obligation.
Recognition of Revenue
The Company determined that the GS-1811 License is a functional license as the underlying IP has significant standalone functionality. In addition, the Company determined that October 16, 2020 represents (i) the date at which the Company made available the IP to Gilead and (ii) the beginning of the period during which Gilead is able to use and benefit from its right to use the IP. Based upon these considerations, the Company recognized the entirety of the initial transaction price allocated to the GS-1811 License performance obligation during the year ended December 31, 2020.
Further, the Company determined the input method under ASC 606 is the most appropriate method of revenue recognition for the Research and Transition Services performance obligation. The method of measuring progress towards delivery of the services incorporated actual internal and external costs incurred, relative to total internal and external costs expected to be incurred to satisfy the performance obligation. The period over which total costs were estimated reflected the Company’s best
9

estimate of the period over which it would perform the Research and Transition Services to achieve clearance of an IND application of the GS-1811 program and transition the program to Gilead.
No revenue was recognized under the contract during the six months ended June 30, 2022 as all remaining performance obligations were satisfied during the year ended December 31, 2021. During the six months ended June 30, 2021, the Company recognized $26.9 million of license and collaboration revenue related to achievement of a $25.0 million clinical development and regulatory milestone for FDA clearance of the IND for GS-1811 and $1.9 million related to the completion of Research and Transition Services.

4.    Fair Value Measurements
Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value is determined based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect certain market assumptions. As a basis for considering such assumptions, GAAP establishes a three-tier value hierarchy, which prioritizes the inputs used to develop the assumptions and for measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets for identical assets; (Level 2) inputs other than the quoted prices in active markets that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.
The Company measures the fair value of money market funds, U.S. Treasuries and government agency securities based on quoted prices in active markets for identical securities. Investments also include corporate debt securities which are valued either based on recent trades of securities in inactive markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data.
The carrying amounts reflected in the condensed consolidated balance sheets for cash, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values, due to their short-term nature.
Assets measured at fair value on a recurring basis as of June 30, 2022 were as follows (in thousands):
 TotalQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Money market funds, included in cash equivalents$75,742 $75,742 $ $ 
Investments:
Corporate debt securities34,061  34,061  
U.S. Treasuries44,683 44,683   
Government agency securities7,769  7,769  
Totals$162,255 $120,425 $41,830 $ 
Assets measured at fair value on a recurring basis as of December 31, 2021 were as follows (in thousands):
 TotalQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Money market funds, included in cash equivalents$95,529 $95,529 $ $ 
Investments:   
Corporate debt securities86,470  86,470  
U.S. Treasuries30,271 30,271   
Government agency securities7,953  7,953  
Totals$220,223 $125,800 $94,423 $ 
There were no changes in valuation techniques during the six months ended June 30, 2022 or during the year ended December 31, 2021. There were no liabilities measured at fair value on a recurring basis as of June 30, 2022 or December 31, 2021.
10

5.     Investments
Short-term investments consist of investments with maturities greater than ninety days and less than one year from the balance sheet date. Long-term investments consist of investments with maturities of greater than one year that are not expected to be used to fund current operations. The Company classifies all of its investments as available-for-sale securities. Accordingly, these investments are recorded at fair value. Realized gains and losses, amortization and accretion of discounts and premiums are included in other income, net. Unrealized gains and losses on available-for-sale securities are included in other comprehensive income as a component of stockholders’ equity until realized.
Cash equivalents, short-term investments and long-term investments as of June 30, 2022 were comprised as follows (in thousands):
June 30, 2022
 Amortized CostUnrealized GainsUnrealized LossesFair Value
Cash equivalents and short-term investments:   
Money market funds, included in cash equivalents$75,742 $— $— $75,742 
Corporate debt securities31,253  (339)30,914 
U.S. Treasuries36,141  (265)35,876 
Government agency securities6,168  (136)6,032 
Total cash equivalents and short-term investments
$149,304 $ $(740)$148,564 
Long-term investments:   
Corporate debt securities3,192  (45)3,147 
U.S. Treasuries9,062  (255)8,807 
Government agency securities1,794  (57)1,737 
Total long-term investments
14,048  (357)13,691 
Total cash equivalents and investments
$163,352 $ $(1,097)$162,255 
Cash equivalents, short-term investments and long-term investments as of December 31, 2021 were comprised as follows (in thousands):
December 31, 2021
 Amortized CostUnrealized GainsUnrealized LossesFair Value
Cash equivalents and short-term investments:   
Money market funds, included in cash equivalents$95,529 $— $— $95,529 
Corporate debt securities69,316  (34)69,282 
U.S. Treasuries13,777  (22)13,755 
Total cash equivalents and short-term investments
178,622  (56)178,566 
Long-term investments:   
Corporate debt securities17,276  (88)17,188 
U.S. Treasuries16,580  (64)16,516 
Government agency securities7,983  (30)7,953 
Total long-term investments
41,839  (182)41,657 
Total cash equivalents and investments
$220,461 $ $(238)$220,223 
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As of June 30, 2022 and December 31, 2021, the aggregate fair value of securities that were in an unrealized loss position for less than twelve months was $54.8 million and $86.7 million, respectively. As of June 30, 2022 and December 31, 2021, the aggregate fair value of securities that were in an unrealized loss position for more than twelve months was $20.9 million and $4.8 million, respectively. As of June 30, 2022, the Company did not intend to sell, and would not be more likely than not required to sell, the securities in an unrealized loss position before recovery of their amortized cost bases. Furthermore, the Company determined that there was no material change in the credit risk of these securities. As a result, the Company determined it did not hold any securities with any other-than-temporary impairment as of June 30, 2022.
There were no realized gains or losses on available-for-sale securities during the three or six months ended June 30, 2022 or June 30, 2021.
6.     Restricted Cash
As of both June 30, 2022 and December 31, 2021, the Company maintained non-current restricted cash of $1.3 million. This amount is included within “Other non-current assets” in the accompanying condensed consolidated balance sheets and is comprised solely of a security deposit required pursuant to the lease for the Company’s corporate headquarters.
The following table provides a reconciliation of cash, cash equivalents and restricted cash that sums to the total of the same such amounts shown in the condensed consolidated statements of cash flows (in thousands):
 Six Months Ended
June 30, 2022
Six Months Ended
June 30, 2021
 Beginning of PeriodEnd of PeriodBeginning of PeriodEnd of Period
Cash and cash equivalents$95,529 $77,741 $147,493 $140,814 
Restricted cash1,270 1,270 1,270 1,270 
Cash, cash equivalents and restricted cash$96,799 $79,011 $148,763 $142,084 
7.     Accrued Expenses
Accrued expenses as of June 30, 2022 and December 31, 2021 were comprised as follows (in thousands):
 June 30,December 31,
 20222021
External research, development and professional services$10,327 $6,252 
Employee compensation and benefits4,796 6,844 
Lab consumables and other678 371 
Total accrued expenses$15,801 $13,467 
8.   Common Stock and Preferred Stock
Common Stock
The Company is authorized to issue 160,000,000 shares of common stock. Holders of common stock are entitled to one vote per share. Holders of common stock are entitled to receive dividends, if and when declared by the board of directors.
On December 17, 2019, the Company entered into a Sales Agreement (the “2019 Sales Agreement”) with Cowen and Company, LLC (“Cowen”) pursuant to which the Company could offer and sell shares of its common stock with an aggregate offering price of up to $50.0 million under an “at the market” (“ATM”) offering program (the “2019 ATM Offering”). The 2019 Sales Agreement provided that Cowen would be entitled to a sales commission equal to 3.0% of the gross sales price per share of all shares sold under the 2019 ATM Offering. During the first quarter of 2021, the Company sold an aggregate of 3,156,200 shares at an average price of $9.87 per share for net proceeds of $30.2 million, which completed the sale of all available amounts under the 2019 ATM Offering.
In addition, during the first quarter of 2021, the Company completed a follow-on public offering of its common stock, selling an aggregate of 5,750,000 shares of common stock at a public offering price of $11.25 per share for net proceeds of $60.6 million, after deducting underwriting discounts and commissions and offering fees.
12

On November 4, 2021, the Company entered into a new Sales Agreement with Cowen (the “2021 Sales Agreement”), pursuant to which the Company may offer and sell shares of its common stock with an aggregate offering price of up to $75.0 million under an ATM offering program (the “2021 ATM Offering”). The 2021 Sales Agreement provides that Cowen will be entitled to a sales commission equal to 3.0% of the gross sales price per share of all shares sold under the 2021 ATM Offering. No sales have been made under the 2021 ATM Offering.
Preferred Stock
The Company is authorized to issue 5,000,000 shares of undesignated preferred stock in one or more series. As of June 30, 2022 and December 31, 2021, no shares of preferred stock were issued or outstanding.
Shares Reserved for Future Issuance
As of June 30, 2022 and December 31, 2021, the Company had reserved for future issuance the following number of shares of common stock (in thousands):
 June 30,December 31,
 20222021
Shares reserved for vesting of restricted stock units992 833 
Shares reserved for exercises of outstanding stock options8,627 7,629 
Shares reserved for future issuance under the 2017 Stock Option and Incentive Plan1,737 1,258 
Total shares reserved for future issuance11,356 9,720 
9.   Stock-based Compensation
2013 Stock Option and Grant Plan
In February 2013, the board of directors adopted and the Company’s stockholders approved the 2013 Stock Option and Grant Plan (the “2013 Plan”), as amended and restated, under which it could grant incentive stock options (“ISOs”), non-qualified stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) to eligible employees, officers, directors, and consultants. The 2013 Plan was subsequently amended in January 2015, April 2015, July 2015, March 2016 and October 2016 to allow for the issuance of additional shares of common stock.
2017 Stock Option and Incentive Plan
In January 2017, the board of directors adopted and the Company’s stockholders approved the 2017 Stock Option and Incentive Plan (the “2017 Plan”). Upon the adoption of the 2017 Plan, no further awards will be granted under the 2013 Plan.
The 2017 Plan provides for the grant of ISOs, non-qualified stock options, RSAs, RSUs, stock appreciation rights and other stock-based awards. The Company’s employees, officers, directors and consultants and advisors are eligible to receive awards under the 2017 Plan. The terms of awards, including vesting requirements, are determined by the board of directors, subject to the provisions of the 2017 Plan.
The Company initially registered on Form S-8 1,753,758 shares of common stock under the 2017 Plan, which was comprised of (i) 1,510,000 shares of common stock reserved for issuance under the 2017 Plan, plus (ii) 243,758 shares of common stock originally reserved for issuance under the 2013 Plan that became available for issuance under the 2017 Plan upon the completion of the Company’s IPO. The 2017 Plan also provides that an additional number of shares will automatically be added to the shares authorized for issuance under the 2017 Plan on January 1, 2018 and each January 1st thereafter. The number of shares added each year will be equal to the lesser of (i) 4% of the outstanding shares on the immediately preceding December 31st or (ii) such amount as determined by the compensation committee of the board of directors. Effective January 1, 2021 and 2022, 1,669,162 and 2,050,601 additional shares, respectively, were automatically added to the shares authorized for issuance under the 2017 Plan.
As of June 30, 2022, there were 1,736,586 shares available for future issuance under the 2017 Plan.
13

Inducement Stock Options
The Company may grant, upon approval by the compensation committee of the board of directors, awards, including options to purchase shares of common stock, as an inducement to employment in accordance with Nasdaq Listing Rule 5635(c)(4). The securities are issued pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended, relating to transactions by an issuer not involving any public offering. These options are subject to substantially the same terms as options issued pursuant to the 2017 Plan. During the second quarter of 2021, the Company granted an option to purchase 225,000 shares of common stock as an inducement award.
2017 Employee Stock Purchase Plan
In January 2017, the board of directors adopted and the Company’s stockholders approved the 2017 Employee Stock Purchase Plan (the “2017 ESPP”). The Company initially reserved 302,000 shares of common stock for future issuance under the 2017 ESPP. The 2017 ESPP also provides that an additional number of shares will automatically be added to the shares authorized for issuance under the 2017 ESPP on January 1, 2018 and each January 1st thereafter through January 1, 2027. The number of shares added each year will be equal to the lesser of (i) 1% of the outstanding shares on the immediately preceding December 31st, (ii) 603,000 shares or (iii) such amount as determined by the compensation committee of the board of directors. Effective January 1, 2021 and 2022, 417,291 and 512,650 additional shares, respectively, were automatically added to the shares authorized for issuance under the 2017 ESPP. No offering periods under the 2017 ESPP had been initiated as of June 30, 2022.
Stock-based Compensation Expense
Total stock-based compensation expense recognized in the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2022 and 2021 was as follows (in thousands):
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Research and development$1,129 $1,286 $2,659 $2,501 
General and administrative1,314 1,649 2,613 3,259 
Total stock-based compensation expense$2,443 $2,935 $5,272 $5,760 
RSU Activity
The Company has also granted RSUs to its employees under the 2017 Plan. The following table summarizes RSU activity for the six months ended June 30, 2022 (in thousands, except per share amounts):
 RSUsWeighted-Average Grant Date Fair Value per Share
Unvested as of December 31, 2021833 $9.13 
Issued624 $7.55 
Vested(345)$8.23 
Cancelled(120)$8.58 
Unvested as of June 30, 2022992 $8.51 
No RSUs vested during the three months ended June 30, 2022 or 2021. The aggregate fair value of RSUs that vested during the six months ended June 30, 2022 and 2021, based upon the fair values of the stock underlying the RSUs on the day of vesting, was $2.6 million and $1.5 million, respectively.
As of June 30, 2022, there was unrecognized stock-based compensation expense related to unvested RSUs of $6.6 million, which the Company expects to recognize over a weighted-average period of approximately 1.9 years.
14

Stock Option Activity
The fair value of stock options granted during the three and six months ended June 30, 2022 and 2021 was calculated on the date of grant using the following weighted-average assumptions:
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Risk-free interest rate3.0 %1.1 %1.9 %0.8 %
Expected dividend yield % % % %
Expected term (in years)5.65.96.06.0
Expected volatility82.0 %82.5 %81.0 %81.8 %
Using the Black-Scholes option pricing model, the weighted-average grant date fair value of stock options granted during the three months ended June 30, 2022 and 2021 was $2.89 per share and $6.21 per share, respectively. The weighted-average grant date fair value of stock options granted during the six months ended June 30, 2022 and 2021 was $4.88 per share and $7.63 per share, respectively.
The following table summarizes stock option activity during the six months ended June 30, 2022 (in thousands, except per share amounts):
 OptionsWeighted-Average Exercise PriceWeighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value
Outstanding at December 31, 20217,629 $8.87 6.4$16,881 
Granted1,547 $7.02   
Exercised(71)$5.49   
Cancelled(478)$9.10   
Outstanding at June 30, 20228,627 $8.55 6.4$2,064 
Exercisable at June 30, 20225,604 $8.93 5.0$2,028 
The aggregate intrinsic value of stock options exercised during the three months ended June 30, 2022 and 2021 was less than $0.1 million. The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2022 and 2021 was $0.1 million and $2.9 million, respectively.
As of June 30, 2022, there was unrecognized stock-based compensation expense related to unvested stock options of $15.0 million, which the Company expects to recognize over a weighted-average period of approximately 2.5 years.
10.   Related-party Transactions
In August 2020, the Company entered into the Gilead License Agreement and Stock Purchase Agreement under which it received a non-refundable upfront payment of $85.0 million and cash consideration of $35.0 million for Gilead’s purchase of 5,539,727 shares of the Company’s common stock. As of June 30, 2022, the Company had no reimbursable expenses due from Gilead.
11.   Net Loss per Share
For purposes of the diluted net loss per share calculation, outstanding stock options and unvested RSUs are considered to be potentially dilutive securities, however the following weighted-average amounts were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Outstanding stock options8,692 7,332 8,527 7,143 
Unvested RSUs1,038 809 972 745 
Total9,730 8,141 9,499 7,888 
15

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2021 that was filed with the United States Securities and Exchange Commission, or the SEC, on March 2, 2022. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this Quarterly Report on Form 10-Q, including those factors set forth in the section entitled “Cautionary Note Regarding Forward-Looking Statements and Industry Data,” and in the sections entitled “Summary of Risk Factors” and “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021.
Overview
We are a clinical-stage immunotherapy company dedicated to transforming the treatment of cancer by developing therapies that enable the immune system to attack tumors and provide long-lasting benefits to patients. Our strategy is to use a biomarker-driven approach from discovery through clinical development. We have developed a suite of integrated technologies that comprise our Translational Science Platform, enabling us to comprehensively interrogate the cellular and molecular composition of tumors. By focusing on specific cell types, both immune and non-immune, within tumors, we can prioritize targets and then identify related biomarkers designed to match the right therapy to the right patient. Our pipeline is focused on product candidates to address PD-(L)1-inhibitor resistant and PD-(L)1 inhibitor sensitive tumors, which represent significant opportunities requiring different biological approaches. We aim to develop product candidates that address the unmet medical need of patients in both of these populations.
Our highest priority program, JTX-8064, is being developed for patients with either PD-(L)1-inhibitor resistant or PD-(L)1 inhibitor sensitive tumors. JTX-8064 is the first tumor-associated macrophage candidate to emerge from our Translational Science Platform. JTX-8064 is a monoclonal antibody that binds to Leukocyte Immunoglobulin Like Receptor B2, or LILRB2 (also known as ILT4), which is a cell surface receptor expressed on macrophages and other myeloid cells. Our INNATE clinical trial is a Phase 1/2 clinical trial of JTX-8064 as a monotherapy and in combination with our PD-1 inhibitor, pimivalimab, in patients with solid tumors. In 2021, we completed the Phase 1 dose-escalation portions of the INNATE trial for both monotherapy and combination therapy, and initiated enrollment in the Phase 2 monotherapy and combination therapy portions. We selected 700 mg as our recommended Phase 2 dose for further evaluation. JTX-8064 has been well-tolerated to date with no observed dose limiting toxicities. The Phase 2 portion of the INNATE trial is comprised of one monotherapy and seven combination indication-specific expansion cohorts and is designed to demonstrate proof-of-concept. Once proof-of-concept is established, we plan to move JTX-8064 rapidly into registrational trials on a cohort-by-cohort basis.
The expansion cohorts are studying tumor types in three groups of patients: (i) PD-(L)1 inhibitor experienced patients whose tumors progressed on or after treatment with a PD-(L)1 inhibitor (including non-small cell lung cancer, or NSCLC), (ii) PD-(L)1 inhibitor naïve patients whose tumors are historically resistant to PD-(L)1 inhibitors (including ovarian cancer), and (iii) PD-(L)1 inhibitor naïve patients whose tumors are historically more sensitive to PD-(L)1 inhibitors (including front line PD-L1 positive head and neck squamous cell carcinoma). Each Phase 2, proof-of-concept expansion cohort is designed as a Simon’s 2 stage. Once the first stage of a cohort meets prespecified response criteria to further expand, the second stage may open and the cohort will have the potential to enroll up to 29 patients per combination therapy cohort and 47 patients in the monotherapy cohort. Two of our Phase 2 combination cohorts, third/fourth line platinum resistant PD-(L)1 inhibitor naive ovarian and second/third line PD-(L)1 inhibitor experienced clear cell renal cell carcinoma, have met prespecified criteria to continue expansion as of the filing date of this Quarterly Report on Form 10-Q. We expect to report preliminary clinical data on all Phase 1 dose escalation patients and, based on current enrollment, at least 80 Phase 2 patients from INNATE later this year. We also expect to report on the analysis of association of clinical data and a predefined set of potential predictive biomarkers.
Vopratelimab is a clinical-stage monoclonal antibody that binds to and activates the Inducible T cell CO-Stimulator, or ICOS, a protein on the surface of certain T cells commonly found in many solid tumors. The SELECT trial is a randomized Phase 2 proof-of-concept trial outside the United States evaluating two doses of vopratelimab in combination with pimivalimab compared to pimivalimab alone in biomarker-selected, second-line, PD-(L)1 inhibitor naive NSCLC patients. We identified patients for SELECT using TISvopra, an 18 gene signature that includes genes relevant to both CD8 and CD4 T cell biology. TISvopra has been optimized to predict for emergence of ICOS hi CD4 T cells in the peripheral blood, which have been associated with clinical benefit in patients treated with vopratelimab alone or in combination with nivolumab. The two doses under investigation have different patterns of pulsatile target engagement, which we believe may be important for an agonist antibody, and the data from SELECT is expected to enable us to choose one dose for further clinical development. We have completed enrollment and expect to report complete clinical data from SELECT later this year.
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Pimivalimab is a clinical-stage anti-PD-1 monoclonal antibody that we are developing primarily for use in combination with our product candidates, as we believe that combination therapy has the potential to be a mainstay of cancer immunotherapy. We presented safety and preliminary efficacy data from our monotherapy Phase 1 clinical trial of pimivalimab in 2019. Based on the results of that clinical trial, we are using pimivalimab in combination with JTX-8064 in INNATE and vopratelimab in SELECT. Additional monotherapy data on pimivalimab will be presented as part of the SELECT trial.
GS-1811, formerly JTX-1811, is our fourth internally developed program to enter the clinic, and we have transitioned the program to Gilead Sciences, Inc., or Gilead. In August 2020, we entered into an agreement to exclusively license GS-1811 to Gilead. GS-1811 is a monoclonal antibody that is designed to selectively deplete T regulatory cells in the tumor microenvironment, or TME, by targeting a receptor called CCR8, which is preferentially expressed on intra-tumoral T regulatory cells. Pursuant to our exclusive license agreement with Gilead, or the Gilead License Agreement, we granted Gilead a worldwide license to develop, manufacture and commercialize GS-1811 and certain derivatives thereof, as well as backup antibodies defined within the agreement. Gilead initiated a clinical trial of GS-1811 in August 2021.
JTX-1484 is the most recent product candidate to emerge from our Translational Science Platform. JTX-1484 is a monoclonal antibody designed to block human Leukocyte Immunoglobulin Like Receptor B4, or LILRB4 (also known as ILT3), on various myeloid cells which we believe may lead to reduced immune suppression and enhancement of T cell functionality. We are currently conducting investigational new drug application, or IND, enabling activities for JTX-1484, with the goal of submitting an IND in 2023.
With our biomarker-driven approach, we leverage our Translational Science Platform to interrogate cell types within the human TME and to identify and prioritize targets across a broad spectrum of immune and non-immune cell types. In addition, early in the development process, we use our Translational Science Platform to identify potential predictive biomarkers to enable us to enrich our clinical trials for patient populations that may be more likely to respond to a particular immunotherapy. Once clinical data is available for a product candidate, we then use a reverse translational approach to interrogate tumor and blood samples from patients with known outcomes. By using these reverse translational findings, we believe we are better able to design clinical trials and more efficiently develop cancer immunotherapies that potentially provide greater benefit to patients. We believe these biomarker results, coordinated to clinical response, will assist with isolating the contribution of our cancer immunotherapies to clinical activity in a combination therapy setting. These biomarker results may also assist with identifying a potential companion diagnostic and/or complementary diagnostic for a given therapy.
Beyond our product candidates, we continue to advance and build our discovery pipeline. We are discovering and developing next-generation immunotherapies by leveraging our Translational Science Platform to systematically and comprehensively interrogate cell types within the tumor microenvironment. Our broad discovery pipeline includes multiple programs targeting myeloid cells such as macrophages, T regulatory cells and non-immune cells. We believe that the use of our Translational Science Platform to efficiently identify novel immuno-oncology targets and advance them from discovery to IND stage is a sustainable approach that we plan to continually apply across our broad discovery pipeline and target selection process.
Since inception, our operations have focused on organizing and staffing our Company, business planning, raising capital, developing our Translational Science Platform and conducting research, preclinical studies and clinical trials. We do not have any products approved for sale. We are subject to a number of risks comparable to those of other similar companies, including dependence on key individuals; the need to develop commercially viable products; competition from other companies, many of which are larger and better capitalized; and the need to obtain adequate additional financing to fund the development of our products. We have funded our operations primarily through proceeds received from public offerings and private placements of our stock totaling $389.5 million and payments from collaboration and license agreements totaling $385.0 million.
Due to our significant research and development expenditures, we have accumulated substantial losses since our inception. As of June 30, 2022, we had an accumulated deficit of $312.8 million. We expect to incur substantial additional losses in the future as we continue to advance our programs.
The COVID-19 pandemic continues to cause disruption on a global scale and we actively monitor its impact on our business. As of August 4, 2022, we have not experienced a significant financial impact directly related to the COVID-19 pandemic but have experienced some disruptions to clinical operations and to our supply chain. As the pandemic continues, the extent of its effect on our operational and financial performance will depend in large part on future developments, which cannot be predicted with confidence at this time.
17

Financial Operations Overview
Revenue
For the six months ended June 30, 2022, we did not recognize any license or collaboration revenue. For the six months ended June 30, 2021, we recognized $26.9 million of license and collaboration revenue under the Gilead License Agreement for achievement of a clinical development and regulatory milestone of $25.0 million relating to the GS-1811 program and $1.9 million for the performance of research and transition services.
In the future, we may generate revenue from product sales, collaboration agreements, strategic alliances or licensing arrangements, including potential milestone payments and royalties under the Gilead License Agreement. We expect that our revenue will fluctuate from quarter-to-quarter and year-to-year as a result of the timing and amount of license fees, milestones, reimbursement of costs incurred and other payments, if any, and product sales, to the extent any products are successfully commercialized. If we or third parties fail to complete the development of our product candidates in a timely manner or obtain regulatory approval for them, our ability to generate future revenue, and our results of operations and financial position, could be materially adversely affected.
Operating Expenses
Research and Development Expenses
Research and development expenses represent costs incurred by us for the discovery, development and manufacture of our current and future product candidates and include: external research and development expenses incurred under arrangements with third parties, including contract research organizations, contract manufacturing organizations, academic and non-profit institutions and consultants; salaries and personnel-related costs, including non-cash stock-based compensation expense; license fees to acquire in-process technology; and other expenses, which include direct and allocated expenses for laboratory, facilities and other costs.
We use our employee and infrastructure resources across multiple research and development programs and for identifying, testing and developing product candidates from our Translational Science Platform. We manage certain activities such as contract research and manufacture of our product candidates and discovery programs through our third-party vendors.
At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of our product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from sales of our product candidates. This is due to the numerous risks and uncertainties associated with developing such product candidates, including the uncertainty of:
addition and retention of key research and development personnel;
establishing an appropriate safety profile with IND-enabling toxicology studies and clinical trials;
the cost to acquire or make therapies to study in combination with our immunotherapies;
successful enrollment in and completion of clinical trials, including the impacts of the COVID-19 pandemic on the timing and progress of our ongoing and planned clinical trials;
establishing agreements with third-party contract manufacturing organizations for clinical supply for our clinical trials and commercial manufacturing, if our product candidates are approved;
receipt of marketing approvals from applicable regulatory authorities;
commercializing products, if and when approved, whether alone or in collaboration with others;
the cost to develop companion diagnostics and/or complementary diagnostics as needed for each of our development programs;
the costs associated with the development of any additional product candidates we acquire through third-party collaborations or identify through our Translational Science Platform;
the terms and timing of any collaboration, license or other arrangement, including any milestone payments thereunder;
obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our products, if and when approved; and
continued acceptable safety profiles of the products following approval.
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A change in the outcome of any of these variables with respect to the development of any of our product candidates would significantly change the costs, timing and viability associated with the development of that product candidate. We plan to increase our research and development expenses for the foreseeable future as we advance our product candidates through clinical trials and continue the enhancement of our Translational Science Platform and the progression of our pipeline.
Due to the inherently unpredictable nature of preclinical and clinical development, we do not allocate all of our internal research and development expenses on a program-by-program basis as they primarily relate to personnel and lab consumables costs that are deployed across multiple programs under development. Our research and development expenses also include external costs, which we track on a program-by-program basis following a program’s nomination as a development candidate. We began incurring such external costs for vopratelimab in 2015, pimivalimab in 2016, JTX-8064 in 2017, GS-1811 in 2019 and JTX-1484 in 2021.
Included below are external research and development and external clinical and regulatory costs for our development and pre-development candidates for the three and six months ended June 30, 2022 and 2021:
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2022202120222021
JTX-8064$9,025 $4,615 $16,997 $7,193 
Vopratelimab3,262 4,860 7,398 9,019 
Pimivalimab516 821 4,996 1,262 
JTX-1484381 — 504 — 
GS-1811— 634 — 2,476 
Pre-development candidates664 373 978 654 
Total external research and development and clinical and regulatory costs$13,848 $11,303 $30,873 $20,604 
Research and development activities account for a significant portion of our operating expenses. As we continue to implement our business strategy, we expect our research and development expenses to increase over the next several years. We expect that these expenses will increase as we:
continue our development of JTX-8064, including our INNATE trial and in combination with pimivalimab;
continue our development of vopratelimab, including our SELECT trial of vopratelimab and pimivalimab;
continue advancing programs through IND-enabling activities;
continue to identify and develop potential predictive biomarkers and companion diagnostics and/or complementary diagnostics for our product candidates; and
continue to develop and enhance our Translational Science Platform and advance our pipeline of immunotherapy programs and our early research activities into IND-enabling activities.
Product candidates in later stages of clinical development generally incur higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.
General and Administrative Expenses
General and administrative expenses consist of salaries and personnel-related costs, including non-cash stock-based compensation expense, for our personnel in executive, business development, legal, finance and accounting, human resources and other administrative functions, consulting fees, facility costs not otherwise included in research and development expenses, fees paid for accounting and tax services, insurance expenses and legal costs. Legal costs include general corporate legal fees, patent legal fees and related costs. We anticipate that our general and administrative expenses will increase in the future to support our continued operations.
Other Income, Net
Other income, net, consists primarily of interest and investment income on our cash, cash equivalents and investments.
19

Results of Operations
Comparison of the Three Months Ended June 30, 2022 and 2021
The following table summarizes our results of operations for the three months ended June 30, 2022 and 2021:
 Three Months Ended
June 30,
(in thousands)20222021$ Change
Revenue:   
License and collaboration revenue — related party$— $25,368 $(25,368)
Operating expenses:   
Research and development26,203 22,100 4,103 
General and administrative7,511 7,317 194 
Total operating expenses33,714 29,417 4,297 
Operating loss(33,714)(4,049)(29,665)
Other income, net          213 40 173 
Loss before provision for income taxes(33,501)(4,009)(29,492)
Provision for income taxes12 10 
Net loss$(33,513)$(4,011)$(29,502)
License and Collaboration Revenue
For the three months ended June 30, 2022 we did not recognize any license and collaboration revenue. For the three months ended June 30, 2021, we recognized $25.4 million of license and collaboration revenue under the Gilead License Agreement related to achievement of a $25.0 million clinical development and regulatory milestone for clearance of the IND for GS-1811 from the U.S. Food and Drug Administration, or FDA, and $0.4 million related to the performance of research and transition services.
Research and Development Expenses
The following table summarizes our research and development expenses for the three months ended June 30, 2022 and 2021:
 Three Months Ended
June 30,
(in thousands)20222021$ Change
Employee compensation$8,090 $7,454 $636 
External clinical and regulatory7,147 6,457 690 
External research and development6,701 4,846 1,855 
Lab consumables2,496 1,498 998 
Facility costs1,223 1,312 (89)
Other research546 533 13 
Total research and development expenses$26,203 $22,100 $4,103 
Research and development expenses increased by $4.1 million from $22.1 million for the three months ended June 30, 2021 to $26.2 million for the three months ended June 30, 2022. The increase in research and development expenses was primarily attributable to the following:
$1.9 million of increased external research and development costs associated with manufacturing activities for our development programs;
$1.0 million of increased lab consumables to support research activities;
$0.7 million of increased external clinical and regulatory costs primarily attributable to increased costs for our INNATE clinical trial; and
$0.6 million of increased employee compensation costs due to increased headcount.

20

General and Administrative Expenses
The following table summarizes our general and administrative expenses for the three months ended June 30, 2022 and 2021:
 Three Months Ended
June 30,
(in thousands)20222021$ Change
Employee compensation$3,881 $3,863 $18 
Professional services1,193 1,204 (11)
Facility costs1,037 995 42 
Other1,400 1,255 145 
Total general and administrative expenses$7,511 $7,317 $194 
General and administrative expenses increased by $0.2 million from $7.3 million for the three months ended June 30, 2021 to $7.5 million for the three months ended June 30, 2022. The increase in general and administrative expenses was primarily attributable to increased travel and other miscellaneous expenses.
Other Income, net
Other income, net, increased by $0.2 million from less than $0.1 million for the three months ended June 30, 2021 to $0.2 million for the three months ended June 30, 2022. The increase in other income, net is attributable to increased rates of return on our investments.
Comparison of the Six Months Ended June 30, 2022 and 2021
The following table summarizes our results of operations for the six months ended June 30, 2022 and 2021:
 Six Months Ended
June 30,
(in thousands)20222021$ Change
Revenue:   
License and collaboration revenue — related party$— $26,907 $