Neumora Therapeutics Inc

For the Three Months Ended March 31, 2024 and 2023

The following table summarizes our result of operations for the periods presented:

Research and Development Expenses

The following table summarizes our research and development expenses by program for the periods presented:

Research and development expenses increased by $16.3 million, or 55%, to $45.8 million for the three months ended March 31, 2024, from $29.5 million for the three months ended March 31, 2023 as we ramped up our clinical and preclinical programs and related activities. Direct external program expenses increased by $22.4 million, of which $21.8 million was related to the Phase 3 clinical trials for navacaprant and $0.5 million was attributable to the Phase 1 clinical trial for NMRA-266. Internal and unallocated expenses decreased by $6.2 million, which were primarily due to a decrease in contracted research and consulting activities of $8.7 million, attributable to decreased activities under our research and collaboration agreements with Amgen and with other vendors, which was partially offset by an increase in personnel related costs of $2.6 million as we increased our headcount, including $1.4 million related to stock-based compensation.

General and Administrative Expenses

General and administrative expenses increased by $4.6 million, or 48%, to $14.3 million for the three months ended March 31, 2024 from $9.7 million for the three months ended March 31, 2023 as we continued to expand our administrative functions to support our business. The increase was primarily attributable to $4.8 million of higher personnel-related costs as we increased our headcount, including $3.8 million related to stock-based compensation, and a $0.4 million increase in insurance costs, which were partially offset by a decrease in professional services of $0.5 million.

Interest Income

Interest income increased by $2.8 million to $6.4 million for the three months ended March 31, 2024 from $3.6 million for the three months ended March 31, 2023, which was attributable to interest earned on our higher balances in cash equivalents and marketable securities.

Liquidity and Capital Resources

Sources of Liquidity

As of March 31, 2024, we had $423.0 million of cash, cash equivalents and marketable securities. Prior to our IPO we primarily funded our operations with the net proceeds from the sale and issuance of our convertible preferred stock and convertible promissory notes and raised gross cash proceeds of over $600 million including from the sale of convertible preferred stock, borrowings pursuant to convertible promissory notes and cash acquired in our acquisitions of assets. On September 19, 2023, we completed our IPO pursuant to which we issued and sold an aggregate of 14,710,000 shares of common stock at a price to the public of $17.00 per share. We received aggregate net proceeds of $226.5 million after deducting underwriting discounts and commissions of $17.5 million and other offering expenses of $6.0 million.

Since our inception, we have not generated any revenue from the sale of products and we have incurred significant net losses and negative cash flows from operations. Our primary use of our capital resources is to fund our operating expenses, which consist primarily of expenditures related to identifying, acquiring, developing, and in-licensing our precision neuroscience approach, programs, and product candidates, and conducting preclinical studies and clinical trials, and to a lesser extent, general and administrative expenditures. We have not yet commercialized any products and we do not expect to generate revenue from sales of any product candidates for a number of years, if ever. As of March 31, 2024, we had an accumulated deficit of $757.2 million.

Future Funding Requirements

We expect our expenses and operating losses will increase substantially over the foreseeable future as we continue our research and development efforts, advance our product candidates through clinical and preclinical development, enhance our precision neuroscience approach and programs, expand our product pipeline, seek regulatory approval, prepare for commercialization, as well as hire additional personnel and protect our intellectual property, Furthermore, as a result of the completion of our IPO on September 19, 2023, we have incurred and will continue to incur additional costs associated with being a public company. We also expect to increase the size of our administrative function to support the growth of our business. Our net losses may fluctuate significantly from period to period, depending on the factors described below. We are subject to the risks typically related to the development of new products, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business. The expected increase in expenses will be driven in large part by our ongoing activities, and our future capital requirements will depend on many factors, including:

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the scope, timing, progress, costs and results of discovery, preclinical development and clinical trials for our current or future product candidates;

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the number of clinical trials required for regulatory approval of our current or future product candidates;

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the costs, timing and outcome of regulatory review of any of our current or future product candidates;

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the costs associated with acquiring or licensing additional product candidates, technologies or assets, including the timing and amount of any milestones, royalties or other payments due in connection with our acquisitions and licenses;

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the cost of manufacturing clinical and commercial supplies of our current or future product candidates;

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the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims, including any claims by third parties that we are infringing upon their intellectual property rights;

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the effectiveness of our precision neuroscience approach at identifying target patient populations and utilizing our approach to enrich our patient population in our clinical trials;

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our ability to maintain existing, and establish new, strategic collaborations or other arrangements and the financial terms of any such agreements, including the timing and amount of any future milestone, royalty or other payments due under any such agreement;

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our ability to access additional multimodal patient datasets;

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the costs and timing of future commercialization activities, including manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval;

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the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;

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expenses to attract, hire and retain skilled personnel;

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the costs of operating as a public company;

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our ability to establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third-party and government payers;

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the effect of macroeconomic trends including inflation and rising interest rates;

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addressing any potential supply chain interruptions or delays, including those related to geopolitical issues;

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the effect of competing technological and market developments; and

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the extent to which we acquire or invest in business, products and technologies.

Based upon our current operating plan, we believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements through at least the next 12 months following the issuance of the condensed consolidated financial statements. However, we anticipate that we will need to raise additional financing in the future to fund our operations, including the commercialization of any approved product candidates. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We may also raise additional financing on an opportunistic basis in the future. We expect to continue to expend significant resources for the foreseeable future.

To complete the development and commercialization of our product candidates, if approved, we will require substantial additional funding. Until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our operations through public or private equity offerings or debt financings or other capital sources, which may include strategic collaborations or other arrangements with third parties, or other sources of financing.

Cash Flows

The following table summarizes our cash flows for the periods presented:

Operating Activities

Net cash used in operating activities for the three months ended March 31, 2024 was $43.0 million, which consisted of a net loss of $53.7 million, which was partially offset by a change in our net operating assets and liabilities of $3.6 million and $7.2 million in noncash charges. The change in our net operating assets and liabilities primarily resulted from a decrease of $7.4 million in prepaid expenses and other current assets related to our clinical programs and an increase of $1.2 million in accounts payable primarily due to the timing of our accounts payable, partially offset by a decrease in accrued liabilities related to our clinical programs and a decrease in operating lease liabilities of $0.8 million. The noncash charges primarily consisted of $7.4 million of stock-based compensation, $0.8 million of noncash operating lease expense and $0.2 million of depreciation and amortization, partially offset by $1.1 million of net accretion of discounts on marketable securities.

Net cash used in operating activities for the three months ended March 31, 2023 was $33.0 million, which consisted of a net loss of $35.6 million, partially offset by $2.3 million in noncash charges and a $0.3 million change in our net operating assets and liabilities. The noncash charges primarily consisted of $2.2 million of stock-based compensation, $0.8 million of noncash operating lease expense and $0.2 million of depreciation and amortization, partially offset by $0.9 million of net accretion of discounts on marketable securities. The change in our net operating assets and liabilities primarily resulted from a decrease of $7.9 million in prepaid expenses and other current assets and other assets primarily related to our collaboration with Amgen, partially offset by a decrease of $6.7 million in accounts payable and accrued liabilities due to the timing of our accounts payable and a decrease of $0.8 million in operating lease liabilities.

Investing Activities

Net cash used in investing activities for the three months ended March 31, 2024 was $150.0 million, which primarily consisted of $185.8 million in purchases of marketable securities, partially offset by $36.6 million in proceeds from sales and maturities of marketable securities.

Net cash provided by investing activities for the three months ended March 31, 2023 was $2.8 million, which consisted of $44.3 million in proceeds from sales and maturitiesof marketable securities, partially offset by purchases of marketable securities of $41.5 million.

Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2024 was $1.8 million, which consisted of proceeds from the exercise of stock options.

Net cash provided by financing activities for the three months ended March 31, 2023 was $0.1 million, which consisted of $0.6 million from the exercise of stock options, partially offset by $0.5 million in repurchases of unvested early exercised shares.

Contractual Obligations and Other Commitments

As of March 31, 2024, our contractual obligations and commitments relate primarily to our operating lease for our office and laboratory facilities located in Massachusetts with a noncancelable lease term expiring in June 2025. Additionally, as of March 31, 2024, we have amounts due to Amgen pursuant to our September 2021 research and collaboration arrangement within the next year totaling $6.3 million. See Note 8 – Strategic License and Research and Collaboration Agreements to our condensed consolidated financial statements for further information.

We have entered into a number of acquisitions of assets that are summarized in Note 6 – Acquisitions of Assets to our condensed consolidated financial statements. As part of these acquisitions of assets, we are obligated to pay cash and/or stock for future contingent payments that are dependent upon future events, and in some cases, vesting by the recipient of the contingent payment, such as our achievement of certain development, regulatory, and commercial milestones. We have also assumed license arrangements with various third parties, primarily as a result of our acquisitions, and have entered into additional agreements that are summarized in Note 8 –Strategic License and Research and Collaboration Agreements to our condensed consolidated financial statements. In accordance with these agreements, we are obligated to pay, among other items, future contingent payments that are uncertain and dependent upon future events such as our achievement of certain development, regulatory, and commercial milestones royalties, and sublicensing revenue in the future, as applicable. For example, in October 2023, in connection with our acquisition of BlackThorn, a milestone became due upon dosing the first patient in the Phase 3 clinical trial for navacaprant, which was settled in stock and cash in December 2023. In October 2023, in connection with our Vanderbilt License Agreement, a development milestone of $2.0 million became due, which was paid in cash in November 2023.

Critical Accounting Estimates

Our management’s discussion and analysis of the financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with the U.S. generally accepted accounting principles, or GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses, and related disclosures. Our estimates are based on historical experience and on various other factors that are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting estimates from those described under in "Management's Discussion and Analysis of Financial Condition and Results of Operations– Critical Accounting Estimates" included in our 2023 Annual Report on Form 10-K filed with the SEC on March 7, 2024.

Recent Accounting Pronouncements

See Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

JOBS Act Accounting Smaller Reporting Company Elections

We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards apply to private companies.

We have elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements and our interim condensed consolidated financial statements may or may not be comparable to companies that comply with new or revised accounting pronouncements as of public companies’ effective dates.

We are also a “smaller reporting company,” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company.

We have elected to take advantage of certain of the scaled disclosures available to smaller reporting companies, and will be able to take advantage of these scaled disclosures for so long as the market value of our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our voting and non-voting common stock held by non- affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.