Nkarta, Inc. [NKTX] Filings

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

10-Q 1 nktx-20240930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 September 30, 2024


☐	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: 001-39370

Nkarta, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	47-4515206
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1150 Veterans Boulevard South San Francisco, CA	94080
(Address of principal executive offices)	(Zip Code)

(925) 407-1049

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

    Title of each class

    Trading
Symbol(s)

    Name of each exchange on which registered

    Common Stock, $0.0001 par value per share

    NKTX

    Nasdaq Global Select Market

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, smaller reporting company, or an 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.

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 November 4, 2024, the registrant had 70,568,754 shares of common stock, par value $0.0001 per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited):	1
	Condensed Balance Sheets as of September 30, 2024 and December 31, 2023	1
	Condensed Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2024 and 2023	2
	Condensed Statements of Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023	3
	Condensed Statements of Cash Flows for the nine months ended September 30, 2024 and 2023	5
	Notes to Unaudited Condensed Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	77
Item 3.	Defaults Upon Senior Securities	77
Item 4.	Mine Safety Disclosures	77
Item 5.	Other Information	77
Item 6.	Exhibits	78
SIGNATURES		79

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, and the information incorporated herein by reference, particularly in the sections captioned “Risk Factors” under Part II, Item 1A, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part I, Item 2, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “predict,” “project,” “potential,” “should,” “will,” or “would,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. Examples of these forward-looking statements include, but are not limited to, statements concerning our financial and business performance, including our future funding requirements, our position, plans, strategies, and timelines (including initiation of further clinical trials and the availability of disclosure of clinical data from our clinical trials) for the continued and future clinical development and commercial potential of our product candidates and the therapeutic potential, accessibility, tolerability, advantages, and safety profile of NK cell therapies, including NKX019 for the treatment of autoimmune diseases. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. In addition, these statements are based on our management’s beliefs and assumptions and on information currently available to our management as of the date of this Quarterly Report on Form 10-Q. While we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. You should read the sections titled “Risk Factor Summary” below and “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements, which such factors may be updated or supplemented from time to time by subsequent reports we file with the Securities and Exchange Commission.

Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

You should read 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. We qualify all of our forward-looking statements by these cautionary statements.

RISK FACTOR SUMMARY

Below is a summary of material factors that make an investment in our common stock speculative or risky. Importantly, this summary does not address all the risks and uncertainties that we face. Additional discussion of the risks and uncertainties summarized in this risk factor summary, as well as other risks and uncertainties that we face, can be found under Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q. The below summary is qualified in its entirety by the more complete discussion of such risks and uncertainties. You should consider carefully the risks and uncertainties described under Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q as part of your evaluation of an investment in our common stock.

•

We have a limited operating history and do not have any products approved for sale.

•

We have incurred significant losses since our inception and we expect to continue to incur significant losses for the foreseeable future.

•

We have never generated revenue from product sales and may never achieve or maintain profitability.

•

We will require additional capital, which, if available, may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our product candidates.

•

Our business depends upon the success of our CAR NK-cell technology platform.

•

Utilizing CAR NK cells represents a novel therapeutic approach, and we must overcome significant challenges in order to develop, commercialize and manufacture our product candidates.

•

Certain aspects of the function and production of CAR NK cells are currently unknown or poorly understood, and may only become known through further preclinical testing and clinical trials. Any potential re-engineering required may result in delays and additional expense.

•

Clinical development involves a lengthy and expensive process with an uncertain outcome, and we may encounter substantial delays due to a variety of reasons outside our control.

•

Our business is highly dependent on the clinical success of our product candidates, and on the clinical success of NKX019, in particular, and we may fail to develop NKX019 and/or our other product candidates successfully or be unable to obtain regulatory approval for them.

•

Clinical data supporting the effectiveness of CD19-targeted cell therapies against autoimmune disease are limited, and CD19-targeted CAR NK-cell therapies, such as NKX019, may not provide the same, or any, therapeutic benefit against lupus nephritis or other autoimmune diseases, or be competitive with respect to other CD19-targeted therapies for the treatment of autoimmune disease.

•

Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be delayed, made more difficult or rendered impossible by multiple factors outside our control.

•

Our preclinical pipeline programs may experience delays or may never advance to clinical trials, which would adversely affect our ability to obtain regulatory approvals or commercialize these programs on a timely basis or at all.

•

The results of preclinical studies and early-stage clinical trials may not be predictive of future results. Interim, “topline” and preliminary data from our clinical trials may differ materially from the final data. Initial success in any clinical trials may not be indicative of results obtained when these trials are completed or in later stage trials.

•

If any of our product candidates, or any competing product candidates, demonstrate relevant, serious adverse events, we may be required to halt or delay further clinical development.

•

If we fail to compete effectively with academic institutions and other biopharmaceutical companies that develop similar or alternatives to cellular immunotherapy product candidates, our business will be materially adversely affected.

•

We have entered into a research collaboration with CRISPR Therapeutics regarding certain product candidates, and we may enter into additional collaborations with third parties to develop or commercialize other product candidates. Our prospects with respect to those product candidates will depend in significant part on the success of those collaborations, and we may not realize the benefits of such collaborations.

•

Our manufacturing process is novel and complex, and we may encounter difficulties in production, or difficulties with internal manufacturing, which would delay or prevent our ability to provide a sufficient supply of our product candidates for clinical trials or our products for patients, if approved.

iii

•

We rely on third parties to manufacture certain materials for use in the production of our product candidates, or may rely on third parties to manufacture certain of our product candidates in the future, which increases the risk that we will not have sufficient quantities of such materials or product candidates, or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.

•

We are reliant on a sole supplier for certain steps of our manufacturing process.

•

Delays in commissioning and receiving regulatory approvals for our manufacturing facilities could delay our development plans and thereby limit our ability to develop our product candidates and generate revenues.

•

If our license agreement with National University of Singapore and St. Jude Children’s Research Hospital, Inc. is terminated, we could lose our rights to key components enabling our NK-cell engineering platform.

•

If any patent protection we obtain is not sufficiently robust, our competitors could develop and commercialize products and technology similar or identical to ours.

•

If any of our product candidates are approved for marketing and commercialization and we have not developed or secured marketing, sales and distribution capabilities, either internally or from third parties, we will be unable to successfully commercialize such products and may not be able to generate product revenue.

•

Our product candidates, including NKX019, could be subject to regulatory limitations following approval, if and when such approval is granted.

•

The market price for our common stock may be volatile, which could contribute to the loss of all or part of your investment.

•

Concentration of ownership of our shares of common stock among our existing executive officers, directors and principal stockholders may prevent new investors from influencing significant corporate decisions.

•

Computer system interruptions or security breaches of our information systems could significantly disrupt our product development programs and our ability to operate our business.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

NKARTA, INC.

CONDENSED BALANCE SHEETS

(Unaudited, in thousands)


	September 30, 2024			December 31, 2023
Assets
Current assets
Cash and cash equivalents	$	56,960		$	31,040
Short-term investments		226,095			217,149
Prepaid expenses and other current assets		7,095			4,882
Total current assets		290,150			253,071
Long-term investments		119,467			—
Restricted cash		2,743			2,743
Property and equipment, net		76,231			79,326
Operating lease right-of-use assets		38,804			39,949
Other long-term assets		4,639			3,796
Total assets	$	532,034		$	378,885
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	1,937		$	3,665
Operating lease liabilities, current portion		6,756			6,069
Accrued and other current liabilities		13,775			13,596
Total current liabilities		22,468			23,330
Operating lease liabilities, net of current portion		78,693			82,270
Total liabilities		101,161			105,600
Commitments and contingencies (Note 7)		—			—
Stockholders’ equity
Common stock		7			5
Additional paid-in capital		947,441			708,706
Accumulated other comprehensive income		1,714			8
Accumulated deficit		(518,289	)		(435,434	)
Total stockholders’ equity		430,873			273,285
Total liabilities and stockholders’ equity	$	532,034		$	378,885

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

NKARTA, INC.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited, in thousands, except share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Operating expenses:
Research and development	$	25,250		$	22,194		$	73,617		$	73,451
General and administrative		8,544			7,100			23,654			27,014
Total operating expenses		33,794			29,294			97,271			100,465
Loss from operations		(33,794	)		(29,294	)		(97,271	)		(100,465	)
Other income, net:
Interest income		5,453			3,616			14,423			10,651
Other (expense) income, net		(3	)		33			(7	)		67
Total other income, net		5,450			3,649			14,416			10,718
Net loss	$	(28,344	)	$	(25,645	)	$	(82,855	)	$	(89,747	)
Other comprehensive loss:
Net unrealized gain on investments		1,977			192			1,706			270
Comprehensive loss	$	(26,367	)	$	(25,453	)	$	(81,149	)	$	(89,477	)
Net loss per share, basic and diluted	$	(0.39	)	$	(0.52	)	$	(1.26	)	$	(1.83	)
Weighted average shares used to compute net loss per share, basic and diluted		73,563,316			49,062,799			65,941,355			48,985,373

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

NKARTA, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, in thousands, except share data)


	Common Stock				Additional Paid-in		Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital		Gain/(Loss)			Deficit			Equity
Balance, December 31, 2023		49,181,295	$	5	$	708,706	$	8		$	(435,434	)	$	273,285
Issuance of common stock and pre-funded warrants, net of issuance costs of $15,027		21,010,000		2		225,071		—			—			225,073
Issuance of common stock upon exercise of stock options		128,671		—		578		—			—			578
Issuance of common stock upon vesting of restricted stock units		133,595		—		—		—			—			—
Share-based compensation expense		—		—		4,368		—			—			4,368
Unrealized loss on investments		—		—		—		(135	)		—			(135	)
Net loss		—		—		—		—			(29,518	)		(29,518	)
Balance, March 31, 2024		70,453,561	$	7	$	938,723	$	(127	)	$	(464,952	)	$	473,651
Issuance of common stock upon exercise of stock options		14,382		—		90		—			—			90
Issuance of common stock upon vesting of restricted stock units		22,072		—		—		—			—			—
Common stock issued under employee stock purchase plan		68,531		—		158		—			—			158
Share-based compensation expense		—		—		4,414		—			—			4,414
Unrealized loss on investments		—		—				(136	)		—			(136	)
Net loss		—		—		—		—			(24,993	)		(24,993	)
Balance, June 30, 2024		70,558,546	$	7	$	943,385	$	(263	)	$	(489,945	)	$	453,184
Issuance of common stock upon exercise of stock options		208		—		1		—			—			1
Issuance of common stock upon vesting of restricted stock units		10,000		—		—		—			—			—
Share-based compensation expense		—		—		4,055		—			—			4,055
Unrealized gain on investments		—		—		—		1,977			—			1,977
Net loss		—		—		—		—			(28,344	)		(28,344	)
Balance, September 30, 2024		70,568,754	$	7	$	947,441	$	1,714		$	(518,289	)	$	430,873

NKARTA, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, in thousands, except share data)


	Common Stock				Additional Paid-in		Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital		Gain/(Loss)			Deficit			Equity
Balance, December 31, 2022		48,877,806	$	5	$	690,814	$	(679	)	$	(317,933	)	$	372,207
Vesting of shares of common stock subject to repurchase		395		—		2		—			—			2
Issuance of common stock upon exercise of stock options		253		—		1		—			—			1
Issuance of common stock upon vesting of restricted stock units		50,469		—		—		—			—			—
Share-based compensation expense		—		—		4,746		—			—			4,746
Unrealized gain on investments		—		—		—		505			—			505
Net loss		—		—		—		—			(30,815	)		(30,815	)
Balance, March 31, 2023		48,928,923	$	5	$	695,563	$	(174	)	$	(348,748	)	$	346,646
Vesting of shares of common stock subject to repurchase		113		—		1		—			—			1
Issuance of common stock upon exercise of stock options		5,892		—		21		—			—			21
Issuance of common stock upon vesting of restricted stock units		28,074		—		—		—			—			—
common stock issued under employee stock purchase plan		95,232		—		374		—			—			374
Share-based compensation expense		—		—		4,650		—			—			4,650
Unrealized loss on investments		—		—		—		(427	)		—			(427	)
Net loss		—		—		—		—			(33,287	)		(33,287	)
Balance, June 30, 2023		49,058,234	$	5	$	700,609	$	(601	)	$	(382,035	)	$	317,978
Issuance of common stock upon vesting of restricted stock units		10,000		—				—			—			—
Share-based compensation expense		—		—		4,291		—			—			4,291
Unrealized gain on investments		—		—		—		192						192
Net loss		—		—		—		—			(25,645	)		(25,645	)
Balance, September 30, 2023		49,068,234	$	5	$	704,900	$	(409	)	$	(407,680	)	$	296,816

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

NKARTA, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	Nine Months Ended September 30,
	2024			2023
Cash flows from operating activities:
Net loss	$	(82,855	)	$	(89,747	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense		12,837			13,687
Depreciation and amortization		6,864			3,618
Accretion and amortization of premiums and discounts on investments, net		(4,978	)		(6,915	)
Realized gain on investments		—			(34	)
Impairment of right-of-use assets		—			4,100
Non-cash lease expense		1,725			1,653
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(3,056	)		1,093
Operating lease liabilities		(3,469	)		6,112
Accounts payable and accrued and other liabilities		(2,013	)		3,627
Net cash used in operating activities		(74,945	)		(62,806	)
Cash flows from investing activities:
Purchases of property and equipment		(3,306	)		(21,340	)
Purchases of investments		(320,659	)		(196,877	)
Maturities of investments		198,930			281,395
Net cash (used in) provided by investing activities		(125,035	)		63,178
Cash flows from financing activities:
Proceeds from stock option exercises		669			22
Proceeds from ESPP purchases		158			374
Proceeds from issuance of common stock and pre-funded warrants, net of issuance costs		225,073			—
Net cash provided by financing activities		225,900			396
Net increase in cash and cash equivalents		25,920			768
Cash, cash equivalents, and restricted cash beginning of period		33,783			40,237
Cash, cash equivalents, and restricted cash end of period	$	59,703		$	41,005
Reconciliation of cash, cash equivalents and restricted cash to the balance sheet:
Cash and cash equivalents	$	56,960		$	38,262
Restricted cash		2,743			2,743
Total cash, cash equivalents and restricted cash	$	59,703		$	41,005
Supplemental disclosures of non-cash investing activities:
Right-of-use assets obtained in exchange for operating lease liabilities resulting from new leases	$	579		$	431
Acquisitions of property and equipment in accounts payable and accrued and other current liabilities	$	463		$	1,842

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

NKARTA, INC.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Description of Business

Description of the Business

Nkarta, Inc. ("Nkarta" or the "Company") was incorporated in the State of Delaware in July 2015. The Company is a biopharmaceutical company developing engineered natural killer ("NK") cell therapies to treat autoimmune disease and other diseases. The Company is focused on leveraging the natural potent power of NK cells to identify and kill abnormal cells and recruit adaptive immune effectors to generate responses that are specific and durable. Nkarta is combining its NK-cell expansion platform technology with proprietary cell engineering technologies to generate an abundant supply of NK cells, engineer enhanced NK-cell recognition of therapeutic targets, and improve persistence for sustained activity in the body. Nkarta’s goal is to develop off-the-shelf NK-cell therapy product candidates to improve outcomes for patients. The Company’s operations are based in South San Francisco, California, and it operates in one segment.

Liquidity and Management Plans

The accompanying unaudited condensed financial statements have been prepared assuming that the Company will continue as a going concern. Since inception, the Company has devoted substantially all of its efforts to organizing and staffing, business planning, raising capital, conducting preclinical studies and initiating clinical studies, and has not realized substantial revenues from its planned principal operations. In addition, the Company has incurred operating losses since inception and expects that it will continue to incur net losses into the foreseeable future as it continues its research and development activities. As of September 30, 2024, the Company had an accumulated deficit of $518.3 million and cash, cash equivalents, restricted cash and investments of $405.3 million.

Management plans to continue to incur substantial costs in order to conduct research and development activities for which additional capital will be needed. The Company intends to raise such capital through debt or equity financings or other arrangements, as it has primarily done to date to fund its operations. Management believes that the Company’s current cash, cash equivalents, restricted cash and investments will provide sufficient funds to enable the Company to meet its obligations for at least twelve months from the filing date of this report.

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 have been prepared in accordance with U.S. generally accepted accounting principle ("U.S. GAAP") for interim financial information and pursuant to Article 10 of Regulation S-X of the Securities Act, as amended. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed financial statements include only normal and recurring adjustments that the Company believes are necessary to fairly state the Company’s financial position and the results of its operations and cash flows for the periods presented.

The results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results expected for the full year or any subsequent interim period. The condensed balance sheet as of December 31, 2023 has been derived from the audited financial statements at that date but does not include all disclosures required by U.S. GAAP for complete financial statements. Because all of the disclosures required by U.S. GAAP for complete financial statements are not included herein, these unaudited condensed financial statements and the notes accompanying them should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2023, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed by the Company with the SEC on March 21, 2024.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to preclinical studies and clinical trial accruals, fair value of assets and liabilities, impairment of assets, leases, share-based compensation and income taxes. Management bases its estimates on historical experience, knowledge of current events and actions it may undertake in the future that management believes to be reasonable under the circumstances. Actual results may differ from these estimates and assumptions.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares and pre-funded warrants outstanding for the period, without consideration of potential dilutive securities. Pre-funded warrants are considered outstanding for the purposes of computing basic and diluted net loss per share because shares may be issued for little or no additional consideration and are fully vested and exercisable after the original issuance date of the pre-funded warrants. Diluted net loss per share is computed by dividing the net loss by the sum of the weighted average number of common shares and pre-funded warrants plus the potential dilutive effects of potential dilutive securities outstanding during the period. Potential dilutive securities are excluded from diluted earnings or loss per share if the effect of such inclusion is antidilutive. The Company’s potentially dilutive securities, which include unvested common stock, outstanding stock options and restricted stock units under the Company’s equity incentive plans, have been excluded from the computation of diluted net loss per share as they would be antidilutive to the net loss per share. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

Long-Lived Asset Impairment

The Company assesses the impairment of long-lived assets whenever events or changes in business circumstances indicate that the carrying amounts of the asset or group of assets may not be fully recoverable. In the case of property and equipment and right-of-use assets for the Company's leases, the Company determines whether there has been an impairment by comparing the carrying value of the group of assets to the anticipated undiscounted net future cash flows associated with the group of assets. If such cash flows are less than the carrying value, the Company writes down the group of assets to its fair value, which may be measured as anticipated net cash flows associated with the group of assets, discounted at a rate that the Company believes a market participant would utilize to reflect the risks associated with the cash flows, such as credit risk. See Note 6 for additional information regarding the prior year impairment charge the Company recorded in connection with its leased facilities.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an interim and annual basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal periods beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. The Company is currently evaluating the impact of the guidance on the financial statements and disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 will be effective for us in the annual period beginning January 1, 2025, though early adoption is permitted. The Company is currently evaluating the presentational effect that ASU 2023-09 will have on its financial statements.

In August 2020, the FASB issued ASU No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 740-20) and Derivative and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for the Company beginning on January 1, 2024. The adoption of ASU 2020-06 does not have a material impact on the financial position, results of operations or cash flows of the Company.

There were no other significant updates to the recently issued accounting standards other than as disclosed herewith. Although there are several other new accounting pronouncements issued or proposed by the FASB, the Company does not believe any of those accounting pronouncements have had or will have a material impact on its financial position or operating results.

3. Net Loss Per Share

The following tables summarize the computation of the basic and diluted net loss per share (in thousands except share and per share data):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Numerator:
Net loss	$	(28,344	)	$	(25,645	)	$	(82,855	)	$	(89,747	)
Denominator:
Weighted average common shares outstanding		70,563,285			49,062,799			63,882,940			48,985,448
Less: weighted average unvested common stock issued upon early exercise of common stock options		—			—			—			(75	)
Add: weighted average of common stock to be issued upon exercise of pre-funded warrants		3,000,031			—			2,058,415			—
Weighted average shares used to compute net loss per share, basic and diluted		73,563,316			49,062,799			65,941,355			48,985,373
Net loss per share, basic and diluted	$	(0.39	)	$	(0.52	)	$	(1.26	)	$	(1.83	)

The following table summarizes the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their inclusion would be antidilutive:


	As of September 30,
	2024		2023
Common stock options		9,101,686		7,127,449
Restricted stock units		1,183,129		695,110
		10,284,815		7,822,559

4. Fair Value of Financial Instruments

The following tables summarize the Company's financial instruments measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):


		September 30, 2024
	Valuation Hierarchy	Amortized Cost		Unrealized Losses			Unrealized Gains		Estimated Fair Value
Assets:
Cash equivalents:
Money market funds	Level 1	$	34,938	$	—		$	—	$	34,938
Commercial paper	Level 2		16,443		—			—		16,443
U.S. Government securities	Level 2		5,361		—			—		5,361
Total Cash equivalents			56,742		—			—		56,742
Short-term investments:
Corporate debt securities	Level 2	$	102,410	$	—		$	450	$	102,860
Commercial paper	Level 2		16,401		—			—		16,401
U.S. Government securities	Level 2		106,662		(2	)		174		106,834
Total short-term investments			225,473		(2	)		624		226,095
Long-term investments:
Corporate debt securities	Level 2	$	89,110	$	(10	)	$	923	$	90,023
U.S. Government securities	Level 2		29,265		(6	)		185	$	29,444
Total long-term investments			118,375		(16	)		1,108		119,467
Total		$	400,590	$	(18	)	$	1,732	$	402,304


		December 31, 2023
	Valuation Hierarchy	Amortized Cost		Unrealized Losses			Unrealized Gains		Estimated Fair Value
Assets:
Cash equivalents:
Money market funds	Level 1	$	30,751	$	—		$	—	$	30,751
Short-term investments:
Corporate debt securities	Level 2	$	40,602	$	(11	)	$	18	$	40,609
Commercial paper	Level 2		38,198		(2	)		1		38,197
U.S. Government securities	Level 2		138,341		(56	)		58		138,343
Total short-term investments			217,141		(69	)		77		217,149
Total		$	247,892	$	(69	)	$	77	$	247,900

Investments are classified as Level 1 within the fair value hierarchy if their quoted prices are available in active markets for identical securities. Investments in money market funds of $34.9 million and $30.8 million as of September 30, 2024 and December 31, 2023, respectively, were classified as Level 1 instruments and were included in cash equivalents.

Investments in corporate debt securities, commercial paper and U.S. Government securities are valued using Level 2 inputs. Level 2 securities are initially valued at the transaction price and subsequently valued and reported upon utilizing inputs other than quoted prices that are observable either directly or indirectly, such as quotes from third-party pricing vendors. Fair values determined by Level 2 inputs, which utilize data points that are observable such as quoted prices, interest rates and yield curves, require the exercise of judgment and use of estimates, that if changed, could significantly affect the Company’s financial position and results of operations. The marketable securities of $367.4 million and $217.1 million as of September 30, 2024 and December 31, 2023, respectively, were classified as Level 2 instruments. Accrued interest receivable related to investments was $2.5 million and $1.2 million as of September 30, 2024 and December 31, 2023, respectively, and included as part of prepaid expenses and other current assets in the condensed balance sheets.

The Company has classified its investment securities as current and non-current assets on the condensed balance sheets based on each security's contractual maturity date, and all investment securities are accounted for as available-for-sale because these investment securities are considered available for use in operations.

The Company considers whether unrealized losses have resulted from a credit loss or other factors. The unrealized losses on the Company’s available-for-sale securities as of September 30, 2024 and December 31, 2023 were caused by fluctuations in market value

and interest rates as a result of the economic environment and not credit risk. The Company concluded that an allowance for credit losses was unnecessary as of September 30, 2024 and December 31, 2023. It is neither management’s intention to sell nor is it more likely than not that the Company will be required to sell these investments prior to recovery of their cost basis or recovery of fair value. Unrealized gains and losses are included in accumulated other comprehensive loss.

There was no realized gain or loss on available-for-sale securities for the nine months ended September 30, 2024. During the nine months ended September 30, 2023, there were immaterial realized gains recognized on available-for-sale securities sold in the period. The Company uses the specific identification method to determine the cost basis of investments sold.

5. Balance Sheet Components

Property and Equipment, Net

Property and equipment, net is comprised of the following (in thousands):


	September 30, 2024			December 31, 2023
Leasehold improvements	$	66,618		$	66,618
Furniture and fixtures		746			745
Research equipment		16,729			14,298
Computers and software		404			404
Construction in progress		10,291			8,954
Total property and equipment, gross		94,788			91,019
Less accumulated depreciation and amortization		(18,557	)		(11,693	)
Total property and equipment, net	$	76,231		$	79,326

Depreciation and amortization expense was $2.4 million and $6.9 million for the three and nine months ended September 30, 2024, and $

Nkarta, Inc. [NKTX] Filings
10-Q	[2024-11]
10-Q	[2024-08]
10-Q	[2024-05-09]
10-K	[2024-03-21]
10-Q	[2023-11-09]
10-Q	[2023-08-10]
10-Q	[2023-05-11]
10-K	[2023-03-16]
10-Q	[2022-11-09]
10-Q	[2022-08-11]
10-Q	[2022-05-12]
10-K	[2022-03-17]
10-Q	[2021-11-10]
10-Q	[2021-08-12]
10-Q	[2021-05-13]
10-K	[2021-03-25]
10-Q	[2020-11-12]
10-Q	[2020-08-20]
S-1	[2020-06-19]