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10-Q 1 tlis-20230331.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 March 31, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number: 001-40047

Talis Biomedical Corporation

(Exact Name of Registrant as Specified in its Charter)


Delaware (State or other jurisdiction of incorporation or organization)		46-3122255 (I.R.S. Employer Identification No.)
1100 Island Drive Redwood City, California		94065
(Address of principal executive offices)		(Zip Code)
(650) 433-3000
(Registrant’s telephone number, including area code)

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

TLIS

The 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, 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 May 4, 2023, there were 56,743,493 shares of the Registrant’s common stock and preferred stock outstanding, consisting of 26,879,819 shares of common stock and 29,863,674 shares of Series 1 convertible preferred stock, which is a voting common stock equivalent, subject to certain limitations.

Table of Contents


		Page
	SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS	1
PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements	3
	Condensed Balance Sheets at March 31, 2023 (unaudited) and December 31, 2022	3
	Condensed Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2023 and 2022 (unaudited)	4
	Condensed Statements of Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2023 and 2022 (unaudited)	5
	Condensed Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022 (unaudited)	6
	Notes to Condensed Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23
PART II.	OTHER INFORMATION	24
Item 1.	Legal Proceedings	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	26
Signatures		27

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this Quarterly Report) contains forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors which 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. Forward-looking statements include, but are not limited to, statements about:

•

our expectations regarding our revenue, expenses and other operating results;

•

the timing or outcome of any of our domestic and international regulatory submissions;

•

our planned regulatory clearance pathways;

•

our efforts to successfully develop and commercialize our products and services, including our ability to successfully conduct clinical trials and studies and expand our product menu;

•

our expectations of the reliability, accuracy and performance of our products and services, as well as expectations of the benefits to patients, clinicians and providers of our products and services;

•

future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements, future revenues, expenses, reimbursement rates and needs for additional financing;

•

our ability to manufacture a regulatory cleared product at a low cost;

•

impact from future regulatory, judicial, and legislative changes or developments in the United States and foreign countries;

•

our ability to re-establish and deploy our commercial capabilities and acquire customers;

•

our expectations regarding our sales models;

•

the costs and success of our research and development efforts, including the potential effects of inflation;

•

our ability to increase demand for our products and services, obtain and maintain favorable coverage and reimbursement determinations from third-party payors and expand geographically;

•

the performance of our third-party suppliers and manufacturers;

•

our ability to effectively grow, including our ability to retain and recruit personnel, and maintain our culture;

•

the impact of the ongoing COVID-19 pandemic on our business, clinical trials, financial conditions, liquidity and results of operations;

•

our ability to compete effectively with existing competitors and new market entrants;

•

the impact on our business of economic or political events or trends;

•

the size and growth potential of the markets for our products and services, and our ability to serve those markets; and

•

the rate and degree of market acceptance of our products and services.

In some cases, you can identify these statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expects,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms, and similar expressions that convey uncertainty of future events or outcomes. These forward-looking statements reflect our management’s beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this Quarterly Report and are subject to risks and uncertainties. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and 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. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements. You should carefully read this Quarterly Report and the documents that we reference in this Quarterly Report and have filed as exhibits to this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the

forward-looking statements in this Quarterly Report by these cautionary statements. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, whether as a result of new information, future events or otherwise.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Talis Biomedical Corporation

Condensed Balance Sheets

(in thousands, except for shares and par value)


	March 31,			December 31,
	2023			2022
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	112,959		$	130,191
Restricted cash		1,010			—
Accounts receivable, net		127			308
Prepaid expenses and other current assets		1,492			2,783
Total current assets		115,588			133,282
Property and equipment, net		3,634			3,312
Operating lease right-of-use-assets		12,289			30,920
Other long-term assets		1,542			1,776
Total assets	$	133,053		$	169,290
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,871		$	3,768
Accrued compensation		2,733			4,212
Accrued liabilities		1,614			989
Operating lease liabilities, current portion		2,962			3,703
Total current liabilities		11,180			12,672
Operating lease liabilities, long-term portion		11,749			29,879
Total liabilities	$	22,929		$	42,551
Commitments and contingencies (Note 5)
Stockholders’ equity:
Series 1 convertible preferred stock, $0.0001 par value—60,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 29,863,674 shares issued and outstanding as of March 31, 2023 and December 31, 2022; aggregate liquidation preference of $3 as of March 31, 2023 and December 31, 2022		3			3
Common stock, $0.0001 par value; 200,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 26,867,565 and 26,795,800 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively		3			3
Additional paid-in capital		605,903			604,687
Accumulated deficit		(495,785	)		(477,954	)
Total stockholders’ equity		110,124			126,739
Total liabilities and stockholders’ equity	$	133,053		$	169,290

See accompanying notes to the unaudited condensed financial statements

Talis Biomedical Corporation

Condensed Statements of Operations and Comprehensive Loss (Unaudited)

(in thousands, except for share and per share amounts)


	Three Months Ended March 31,
	2023			2022
Revenue
Grant revenue	$	1,081		$	874
Product revenue, net		137			2,313
Total revenue, net		1,218			3,187
Operating expenses:
Cost of products sold		20			3,521
Research and development		13,796			20,703
Selling, general and administrative		6,399			11,930
Total operating expenses		20,215			36,154
Loss from operations		(18,997	)		(32,967	)
Other income (expense), net		1,166			(84	)
Net loss and comprehensive loss	$	(17,831	)	$	(33,051	)
Net loss per share, basic and diluted	$	(0.66	)	$	(1.25	)
Weighted average shares used in the calculation of net loss per share, basic and diluted		26,815,787			26,468,154

See accompanying notes to the unaudited condensed financial statements

Talis Biomedical Corporation

Condensed Statements of Stockholders’ Equity (Deficit) (Unaudited)

(in thousands, except for share amounts)


	Series 1 Convertible Preferred Stock				Common Stock				Additional Paid-in		Accumulated			Stockholders’
	Shares		Value		Shares		Value		Capital		Deficit			Equity
Balance at December 31, 2022		29,863,674	$	3		26,795,800	$	3	$	604,687	$	(477,954	)	$	126,739
Issuance of Common Stock for restricted stock units		—		—		3,450		—				—			—
Issuance of Common Stock pursuant to employee stock purchase plan		—		—		68,315		—		33		—			33
Stock-based compensation expense		—		—		—		—		1,183		—			1,183
Net loss		—		—		—		—		—		(17,831	)		(17,831	)
Balance at March 31, 2023		29,863,674	$	3		26,867,565	$	3	$	605,903	$	(495,785	)	$	110,124


	Series 1 Convertible Preferred Stock				Common Stock				Additional Paid-in		Accumulated			Stockholders’
	Shares		Value		Shares		Value		Capital		Deficit			Equity
Balance at December 31, 2021		29,863,674	$	3	$	26,408,031	$	3	$	598,913	$	(364,942	)	$	233,977
Issuance of Common Stock upon exercise of stock options		—		—		65,862		—		98		—			98
Issuance of Common Stock pursuant to employee stock purchase plan		—		—		145,027		—		216		—			216
Stock-based compensation expense		—		—		—		—		1,545		—			1,545
Net loss		—		—		—		—		—		(33,051	)		(33,051	)
Balance at March 31, 2022		29,863,674	$	3	$	26,618,920	$	3	$	600,772	$	(397,993	)	$	202,785

See accompanying notes to the unaudited condensed financial statements

Talis Biomedical Corporation

Condensed Statements of Cash Flows (Unaudited)

(in thousands)


	Three Months Ended March 31,
	2023			2022
Operating activities
Net loss	$	(17,831	)	$	(33,051	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		1,183			1,545
Depreciation and amortization		174			363
Non-cash lease expense		785			409
Changes in operating assets and liabilities:
Accounts receivable		182			(2,417	)
Inventory		—			(3,499	)
Prepaid expenses and other current assets		1,291			(3,748	)
Other long-term assets		—			981
Accounts payable		(148	)		141
Accrued expenses and other liabilities		(1,075	)		(4,463	)
Lease liabilities		(1,026	)		(19	)
Net cash used in operating activities	$	(16,465	)	$	(43,758	)
Investing activities
Purchase of property and equipment		(24	)		(507	)
Net cash used in investing activities	$	(24	)	$	(507	)
Financing activities
Proceeds from issuance of common stock under employee stock plans		33			314
Net cash provided by financing activities	$	33		$	314
Net (decrease) in cash, cash equivalents and restricted cash		(16,456	)		(43,951	)
Cash, cash equivalents and restricted cash at beginning of period		131,967			233,312
Cash, cash equivalents and restricted cash at end of period	$	115,511		$	189,361
Supplemental disclosure of noncash investing and financing activities
Remeasurement of operating lease right-of-use asset for lease modification	$	(18,696	)	$	285

The following table provides a reconciliation of the cash, cash equivalents and restricted cash balances as of each of the periods shown above:


	March 31,
	2023		2022
Cash and cash equivalents	$	112,959	$	187,586
Restricted cash		1,010		—
Restricted cash – other long-term assets		1,542		1,775
Total cash, cash equivalents and restricted cash	$	115,511	$	189,361

See accompanying notes to the unaudited condensed financial statements

Talis Biomedical Corporation

Notes to Condensed Financial Statements (Unaudited)

1. Organization and nature of business

Talis Biomedical Corporation (the Company) is a molecular diagnostic company focused on advancing health equity and outcomes through the delivery of accurate infectious disease testing in the moment of need, at the point of care. The Company plans to develop and commercialize innovative products on its sample-to-answer Talis One system to enable accurate, low cost, and rapid molecular testing. The Company was incorporated in 2013 under the general laws of the State of Delaware and is based in Redwood City, California (CA) and Chicago, Illinois (IL).

Liquidity

The Company has incurred significant losses and negative cash flows since inception, including a net loss of $17.8 million for the three months ended March 31, 2023. As of March 31, 2023, the Company had unrestricted cash and cash equivalents of $113.0 million and $2.6 million of restricted cash.

Management expects to continue to incur additional substantial losses in the foreseeable future primarily as a result of the Company’s research and development activities and future commercialization of the Talis One system. The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to continue to operationalize the Company’s current technology and to advance the development of its products. The Company expects its existing unrestricted cash and cash equivalents as of March 31, 2023 will be sufficient to fund its operations through at least one year from the date these financial statements are issued. The Company expects to finance its future operations with its existing unrestricted cash and cash equivalents and through strategic financing opportunities that could include, but are not limited to, one or a combination of corporate development and licensing opportunities and grant agreements, the incurrence of debt, future offerings of its equity, or collaborations or partnerships with other companies. However, there is no guarantee that any of these strategic or financing opportunities will be executed or realized on favorable terms, if at all, and some could be dilutive to existing stockholders. The Company’s ability to raise additional capital through either the issuance of equity or debt, is dependent on a number of factors including, but not limited to, the demand for the Company, which itself is subject to a number of development and business risks and uncertainties, as well as the uncertainty that the Company would be able to raise such additional capital at a price or on terms that are favorable to the Company or at all.

In March 2022, we implemented a reduction in force designed to reduce our operating expenses, preserve cash and align our remaining resources to focus on, among other things, developing internal manufacturing expertise to support the commercial launch of the Talis One system. We incurred $1.0 million of expenses during the three months ended March 31, 2022 related to the reduction in force, substantially all of which consisted of charges related to the staff reduction, including cash expenditures and other costs. There were no remaining obligations as of March 31, 2023.

2. Summary of significant accounting policies

Basis of presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting. Accordingly, these unaudited condensed financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed financial statements include all adjustments necessary to fairly state the financial position and the results of our operations and cash flows for interim periods in accordance with GAAP. All such adjustments are of a normal, recurring nature. The results for any interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or for any future period.

The condensed balance sheet presented as of December 31, 2022 has been derived from the audited financial statements as of that date. The condensed financial statements and notes as presented do not contain all information that is included in the annual financial statements and notes thereto of the Company. The condensed financial statements and notes included in this Quarterly Report should be read in conjunction with the financial statements and notes included in the Company’s 2022 Annual Report on Form 10-K (Annual Report) filed with the SEC.

The significant accounting policies used in preparation of these condensed financial statements as of and for the three months ended March 31, 2023 are consistent with those described in our Annual Report.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company bases its estimates and judgments on historical experience and on various other assumptions, including knowledge about current events and expectations about actions the Company may take in the future, that the Company believes are reasonable under the circumstances. Actual results could vary from the amounts derived from management’s estimates and assumptions.

Concentration of credit risk and other risks and uncertainties

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, and accounts receivables. The Company’s cash is deposited in accounts at large financial institutions and its cash equivalents are primarily held in prime and U.S. government money market funds. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and cash equivalents are held.

The Company is subject to risks common to companies in the diagnostics industry including, but not limited to, uncertainties related to commercialization of products, regulatory approvals, and protection of intellectual property rights.

Global economic conditions remain volatile resulting from the continuing and evolving effects of the COVID-19 pandemic, inflationary pressures, rising interest rates, the ongoing military conflict between Russia and Ukraine and related sanctions imposed against Russia and otherwise. The Company continues to evaluate the potential impact of these global issues on our current and future business operations, including our expenses, clinical trials and addressable markets as well as on our industry and healthcare system.

The Company is dependent on key suppliers for certain manufacturing and research and development activities. An interruption in the supply of these materials could temporarily impact the Company’s ability to commercialize, manufacture inventory and perform research and development, testing and clinical trials related to its products. The Company is also dependent on its manufacturing partners that are critical to the Company's ability to supply product to its end customers.

Grant revenue and receivables

Grants awarded to the Company for research and development by government entities are outside the scope of ASC 606. This is because the granting entities are not considered to be customers and are not receiving reciprocal value for their grant support provided to the Company. These grants provide the Company with payments for certain types of expenditures in return for research and development activities or for meeting certain development milestones over a contractually defined period. For efforts performed under these grant agreements, the Company’s policy is to recognize revenue when it is reasonably assured that the grant funding will be received as evidenced through the existence of a grant arrangement, amounts eligible for reimbursement are determinable and have been incurred and paid, the applicable conditions under the grant arrangements have been met, and collectability of amounts due is reasonably assured. Costs of grant revenue are recorded as a component of research and development expenses in the Company’s statements of operations and comprehensive loss.

Grant funds received from third parties are recorded as revenue if the Company is deemed to be the principal participant in the arrangement. If the Company is not the principal participant, the funds from grants are recorded as a reduction to research and development expense. Reimbursable costs paid prior to being billed are recorded as unbilled grant receivables. Funds received in advance are recorded as deferred grant revenue. Management has determined that the Company is the principal participant under the Company’s grant agreements, and accordingly, the Company records amounts earned under these arrangements as grant revenue.

New accounting pronouncements

Recently issued accounting pronouncements

There are no accounting pronouncements currently pending that we expect to have a material impact on our financial statements or disclosures.

Recently adopted accounting standards

We did not adopt any new accounting standards during the three months ended March 31, 2023.

3. Fair value measurement

The following table summarizes the Company's financial assets carried at fair value and measured on a recurring basis by level within the fair value hierarchy (in thousands):


	March 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents (money market funds)	$	108,685	$	—	$	—	$	108,685
Total assets measured at fair value	$	108,685	$	—	$	—	$	108,685


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents (money market funds)	$	127,404	$	—	$	—	$	127,404
Total assets measured at fair value	$	127,404	$	—	$	—	$	127,404

4. Revenue

Grant revenue and receivables

NIH grant

In May 2018, the Company was awarded a grant from the NIH for the Diagnostics via Rapid Enrichment, Identification, and Phenotypic Antibiotic Susceptibility Testing of Pathogens from Blood project. In April 2023, the Company exercised a one-year option under the grant, extending the term through April 2024 with $1.2 million in additional funding available under the grant.

During each of the three months ended March 31, 2023 and 2022, the Company recognized $1.1 million and $0.2 million of revenue related to this grant, respectively.

NIH Rapid Acceleration of Diagnostics - RADx Initiative contracts

In July 2020, the Company was awarded a subaward grant from the University of Massachusetts Medical School for Phase 1 of the NIH’s RADx initiative and a contract from the NIH directly for Phase 2 of the RADx initiative. The RADx initiative aims to speed the development, validation, and commercialization of innovative, rapid tests that can directly detect COVID-19. In 2021, the Company and the NIH amended the contract for the completion of the RADx initiative, extending the term of the contract to January 30, 2022 and decreased the potential milestone payment from $4.0 million to $2.0 million. The contract expired on January 30, 2022.

The Company recognized $0.7 million in revenue related to this grant during the three months ended March 31, 2022.

5. Commitments and contingencies

Operating leases

In March 2023, the Company entered into a lease termination agreement with the landlord of our Redwood City, CA facility. The original term of the lease commenced in June 2022 and was for an initial term of 10.5 years. The termination agreement accelerated the lease termination date to no later than May 12, 2023. As a result of this modification, the Company remeasured the lease liability and the corresponding right-of-use asset resulting in a reduction of each by $18.7 million. The Company incurred immaterial customary termination and broker fees during the first quarter of 2023, which have been included in the remeasurement as of March 31, 2023.

In March 2023, the Company entered into a sublease for a future laboratory and office space in a Redwood City, CA facility. The sublease will continue for a term of 7 years, with no option to extend. The minimum annual commitment under the new sublease is approximately $1.0 million with fixed escalations of 3.5% per annum. The sublease commenced for accounting purposes in the second quarter of 2023, at which time the right-of-use asset and liability will be recorded.

The undiscounted future lease payments for operating leases as of March 31, 2023 were as follows (in thousands):


	Operating Leases
2023(remainder)		2,587
2024		1,677
2025		1,718
2026		1,759
2027		1,802
2028 and thereafter		8,831
Total future minimum lease payments		18,374
Less: imputed interest		(3,663	)
Present value of operating lease liabilities		14,711
Less: current portion of lease liabilities		(2,962	)
Noncurrent portion of lease liabilities	$	11,749

Standby letters of credit

In January 2022, in conjunction with the Company’s Redwood City, CA operating lease, the Company entered into a standby letter of credit (LOC) in the amount of $1.0 million to secure the lease through its expiration. In March 2023, the Company entered into a lease termination agreement with the landlord of our Redwood City, CA facility, which accelerated the lease termination date to no later than May 12, 2023. The Company is required to maintain a cash balance of $1.0 million as collateral for the LOC until all criteria in the termination agreement have been met. The Company expects to meet this criteria upon termination and as a result the $1.0 million LOC has been classified in restricted cash on the balance sheet as of March 31, 2023.

In March 2023, the Company entered into a sublease for a future laboratory and office space in a Redwood City, CA facility. The Company is required to hold a LOC in the amount of $0.7 million to secure this lease through expiration, which has been classified in other long-term assets on the condensed balance sheet as of March 31, 2023, because it is unavailable for a period longer than one year from the balance sheet date.

In conjunction with the Chicago, IL laboratory and office space lease, the Company is required to hold an additional LOC in the amount of $0.8 million to secure this lease through its expiration. The Company is required to maintain a cash balance of $0.8 million as collateral for the LOC, which is classified in other long-term assets on the balance sheet as of March 31, 2023, because it is unavailable for a period longer than one year from the balance sheet date.

The Company has not drawn upon any LOC through March 31, 2023.

Indemnification agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, customers and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. The Company also provides indemnification to directors and officers of the Company to the maximum extent permitted under applicable Delaware law. The maximum potential amount of future payments that the Company could be required to make under these indemnification agreements is, in many cases, unlimited.

As of March 31, 2023, the Company has not incurred any material costs as a result of such indemnifications and is not currently aware of any indemnification claims.

Contingencies

The Company is party to certain legal matters arising in the ordinary course of its business. In addition, third parties may, from time to time, assert claims against us in the form of letters and other communications. The Company records a provision for contingent losses when it is both probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. When management determines that it is not probable, but rather reasonably possible that a liability has been incurred at the date of the financial statements, management discloses such contingencies and the possible loss or range of loss if such estimate can be made. Any estimated range is based on currently available information and involves elements of judgment and significant uncertainties. Any estimated range of possible loss may not represent the maximum possible loss exposure. Circumstances change over time and actual results may vary significantly from estimates.

The Company currently does not believe that the ultimate outcome of any of the matters is probable or reasonably estimable, or that these matters will have a material adverse effect on its business; however, the results of litigation and claims are inherently unpredictable. Regardless of the outcome, litigation and other negotiations can have an adverse impact on the Company because of litigation and settlement costs, diversion of management resources and other factors. Legal costs are expensed as incurred.

6. Stockholders’ equity

Common stock

On July 27, 2022, the Company received a notice (Notice) from the Nasdaq Stock Market (Nasdaq) that the Company is not in compliance with the $1.00 minimum bid price requirement for continued listing, as set forth in Nasdaq Listing Rule 5450(a)(1) (Minimum Bid Price Requirement), as the minimum bid price of the Company’s common stock had been below $1.00 per share for thirty-one (31) consecutive business days as of the date of the Notice.

On January 24, 2023, the Company transferred the listing of its securities to the Nasdaq Capital Market (Capital Market) and received notice from Nasdaq indicating that, while the Company has not regained compliance with the Minimum Bid Price Requirement, Nasdaq has determined that the Company is eligible for an additional 180-day period, or until July 24, 2023, to regain compliance. We have committed to effectuating a reverse stock split by the end of the second compliance period, if necessary, to regain compliance with the Minimum Bid Price Requirement. The Notice has no other immediate effect on the listing of the Company’s common stock, which will trade on the Capital Market under the symbol “TLIS.”

7. Stock-based compensation

Stock options

A summary of stock option activity during the three months ended March 31, 2023 is as follows:


	Number of Units Outstanding			Weighted Average Strike Price per Unit		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2022		8,402,626		$	3.52		8.6	$	—
Granted		3,550,000		$	0.57
Exercised		—		$	—
Forfeited		(363,272	)	$	1.69
Expired		(14,351	)	$	7.27
Outstanding at March 31, 2023		11,575,003		$	2.65		8.9	$	—
Options vested and expected to vest at March 31, 2023		11,575,003		$	2.65		8.9	$	—
Options vested and exercisable at March 31, 2023		3,373,505		$	4.69		7.8	$	—

As of March 31, 2023, the total unrecognized stock-based compensation related to stock options was $9.4 million, which is expected be recognized over a weighted-average period of approximately 3 years. Total options vested during the three months ended March 31, 2023 were 573,844 with a total fair value of $1.3 million.

Restricted stock units

A summary of RSU activity during the three months ended March 31, 2023 is as follows:


	Number of Units Outstanding			Weighted Average Grant Date Fair Value (per RSU)
Outstanding at December 31, 2022		326,364		$	2.75
Granted		12,100		$	0.56
Vested		(9,750	)	$	1.61
Forfeited		(27,500	)	$	2.01
Outstanding at March 31, 2023		301,214		$	2.76

As of March 31, 2023, the total unrecognized stock-based compensation related to RSUs was $0.7 million, which is expected to be recognized over a weighted average period of approximately 3 years. Outstanding RSUs as of March 31, 2023 includes 11,375 RSUs that were vested, but not yet delivered.

Stock-based compensation expense

The following table summarizes the components of stock-based compensation expense recorded in the Company’s statement of operations and comprehensive loss (in thousands):


	Three Months Ended March 31,
	2023		2022
Research and development	$	231	$	575
Selling, general and administrative		952		970
Total stock-based compensation	$	1,183	$	1,545

8. Related-party transactions

Registration rights

In March 2021, the Company entered into a registration rights agreement (the Registration Rights Agreement) with Baker Brothers Life Sciences, L.P. and 667, L.P. (the Baker Funds), holders of the Company’s Series 1 convertible preferred stock and related parties. The obligations of the Company regarding such registration rights include, but are not limited to, file a registration statement with the SEC for the registration of registrable securities, reasonable efforts to cause such registration statement to become effective, keep such registration statement effective for up to 30 days, prepare and file amendments and supplements to such registration statement and the prospectus used in connection with such registration statement, and notify each selling holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed. The terms of the Registration Rights Agreement provide for the payment of certain expenses related to the registration of the shares, including a capped reimbursement of legal fees of a single special counsel for the holders of the shares, but do not impose any obligations for the Company to pay additional consideration to the holders in case a registration statement is not declared effective. On May 10, 2022, the Company filed a registration statement on Form S-3 with the SEC to register the registrable securities pursuant to the Registration Rights Agreement, which registration statement was declared effective on May 24, 2022. Under the Registration Rights Agreement, the Baker Funds also have the right to one underwritten offering per calendar year, but no more than two underwritten offerings or block trades in any twelve-month period, to effect the sale or distribution of their registrable securities, subject to specified exceptions, conditions and limitations. The Registration Rights Agreement also includes customary indemnification obligations in connection with registrations conducted pursuant to the Registration Rights Agreement.

9. Net loss per share

Net loss per share

The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except for share and per share data):


	Three Months Ended
	March 31,
	2023			2022
Numerator:
Net loss - basic and diluted	$	(17,831	)

Talis Biomedical Corp [TLIS] Filings
10-Q	[2023-05-11]
10-K	[2023-03-22]
10-Q	[2022-11-03]
10-Q	[2022-08-02]
10-Q	[2022-05-10]
10-K	[2022-03-15]
10-Q	[2021-11-16]
10-Q	[2021-08-10]
10-Q	[2021-05-13]
10-K	[2021-03-30]
S-1	[2021-01-22]