Boundless Bio Inc

Organization and Basis of Presentation

Description of Business

Boundless Bio, Inc. (the Company) is a clinical-stage precision oncology company dedicated to unlocking a new paradigm in cancer therapeutics to address the significant unmet need in patients with oncogene amplified tumors by targeting extrachromosomal DNA (ecDNA). The Company is focused on designing and developing small molecule drugs called ecDNA directed therapeutic candidates (ecDTx). The Company was incorporated in the state of Delaware on April 10, 2018 and is headquartered in San Diego, California.

Reverse Stock Split

On March 19, 2024, the Company effected aone-for-19.5 reverse stock split of its issued and outstanding shares of common stock. Accordingly, all share and per share amounts for all periods presented in the accompanying financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this reverse stock split and adjustment of the conversion ratios for each series of the Company’s convertible preferred stock. The par value and the number of authorized shares of the convertible preferred stock and common stock were not adjusted in connection with the reverse stock split.

Liquidity

Since the Company commenced operations in 2018, it has devoted substantially all of its efforts and resources to organizing and staffing the Company, business planning, raising capital, building its proprietary Spyglass platform, discovering its ecDTx, developing its ecDNA diagnostic candidate, establishing its intellectual property portfolio, conducting research, preclinical studies and clinical trials, establishing arrangements with third parties for the manufacture of its ecDTx and related raw materials, and providing other general and administrative support for these operations.

Since inception, the Company has incurred significant operating losses and negative cash flows from its operations and expects that it will continue to do so into the foreseeable future as it continues its development of, seeks regulatory approval for, and potentially commercializes any of its ecDTx and seeks to discover and develop additional ecDTx, utilizes third parties to manufacture its ecDTx and related raw materials, seeks to develop its ecDNA diagnostic candidate, hires additional personnel, and expands and protects its intellectual property. If the Company obtains regulatory approval for any of its ecDTx, it expects to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution. As of March 31, 2024, the Company had an accumulated deficit of $151.5 million and cash, cash equivalents, and short-term investments of $104.9 million. The Company believes that its existing cash, cash equivalents, and short-term investments, as well as the net proceeds from the April 2, 2024 closing of the Company's initial public offering (IPO) discussed in footnote 13, will be sufficient to fund its operations for at least 12 months from the issuance date of these condensed financial statements.

Basis of Presentation

The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and the requirements of the Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. The financial statements are presented in U.S. dollars. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) promulgated by the Financial Accounting Standards Board (FASB).

Summary of Significant Accounting Policies

Unaudited Condensed Interim Financial Information

The condensed balance sheet as of March 31, 2024, the condensed statements of operations and comprehensive loss for the three months ended March 31, 2024 and 2023, the condensed statements of convertible preferred stock and stockholders’ deficit for the three months ended March 31, 2024 and 2023, and the condensed statements of cash flows for the three months ended March 31, 2024 and 2023 are unaudited. These unaudited condensed financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations, and cash flows for the interim period presented. The financial data and the other financial information contained in these notes to the condensed financial statements related to the three months ended March 31, 2024 and 2023 are also unaudited. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any other future annual or interim period.

The condensed balance sheet as of December 31, 2023 included herein was derived from the audited financial statements as of that date. These unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s prospectus dated March 27, 2024 related to its IPO filed pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, with the SEC on March 28, 2024.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenue and expenses, and the disclosure of contingent assets and liabilities in the Company’s financial statements and accompanying notes. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may materially differ from these estimates and assumptions.

On an ongoing basis, management evaluates its estimates, primarily related to stock-based compensation, the fair value of its investments and common stock, and accrued research and development costs. These estimates are based on historical data and experience, as well as various other factors that management believes to be 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. The Company’s estimates relating to the valuation of stock options require the selection of appropriate valuation methodologies and models, and significant judgment in evaluating ranges of assumptions and financial inputs.

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents include cash in readily available checking and money market accounts.

The balance reflected in these financial statements as restricted cash represents a deposit account pledged as collateral to secure a standby letter of credit required as a security deposit on one of the Company’s leased facilities. The Company has classified the restricted cash as a noncurrent asset on its balance sheets as of March 31, 2024 and December 31, 2023.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to the concentration of credit risk, consist primarily of cash, cash equivalents, and investments. The Company maintains deposits in federally insured financial institutions which exceeded federally insured limits by $2.3 million. Management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. The Company’s investment policy includes guidelines for the quality of the related institutions and financial instruments and defines allowable investments that the Company may invest in, which the Company believes minimizes its exposure to concentration of credit risk.

Fair Value Measurements

Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement determined based on assumptions that market participants would use in pricing an asset or liability. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

Cash, cash equivalents, and short-term investments are carried at fair value, determined according to the fair value hierarchy described above. The carrying values of the Company’s prepaid expenses, accounts payable, and accrued expenses approximate their fair value due to the short-term nature of these assets and liabilities. None of the Company’s non-financial assets or liabilities are recorded at fair value on a non-recurring basis.

Deferred Offering Costs

The Company capitalizes certain legal, professional, accounting, and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in stockholders’ equity (deficit) as a reduction of proceeds generated as a result of the offering. Should the in-process equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the statements of operations and comprehensive loss. As of March 31, 2024 and December 31, 2023, there were $5.3 million and $2.2 million of deferred offering costs, respectively.

Segments

Operating segments are identified as components of an enterprise about which discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business asone operating segment.

Convertible Preferred Stock

The Company’s convertible preferred stock is classified as temporary equity in the accompanying balance sheets and excluded from stockholders’ deficit as the potential redemption of such stock is outside the Company’s control and would require the redemption of the then-outstanding convertible preferred stock. The convertible preferred stock is not redeemable except for in the event of a liquidation, dissolution, or winding up of the Company. Costs incurred in connection with the issuance of convertible preferred stock are recorded as a reduction of gross proceeds from issuance. The Company does not accrete the carrying values of the preferred stock to the redemption values since the occurrence of these events was not considered probable as of March 31, 2024 and December 31, 2023. Subsequent adjustments of the carrying values to the ultimate redemption values will be made only when it becomes probable that these events will occur.

Net Loss Per Share

Basic net loss per common share attributable to common stockholders is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, without consideration of potentially dilutive securities. Diluted net loss per share attributable to common stockholders is computed by dividing the net loss by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period. The Company’s potentially dilutive securities, which include its convertible preferred stock, options to purchase common stock, and common stock subject to repurchase related to unvested restricted stock and options early exercised, have been excluded from the computation of diluted net loss per share as the effect would reduce the net loss per share. Therefore, the weighted-average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share is the same.

Recently Adopted Accounting Pronouncements

As of March 31, 2024, several new accounting pronouncements had been issued by the Financial Accounting Standards Board with future adoption dates. All applicable accounting pronouncements will be adopted by the Company by the date required. Management is reviewing the impact of adoption of all pending accounting pronouncements but is not yet in a position to determine the impact on the Company’s financial statements and the notes thereto.

Fair Value Measurements

The following tables summarize the Company’s financial assets measured at fair value on a recurring basis and their respective input levels based on the fair value hierarchy (in thousands):

(1)

Included in cash and cash equivalents on the balance sheets.

(2)

Included in short-term investments on the balance sheets.

(1)

Included in cash and cash equivalents on the balance sheets.

(2)

Included in short-term investments on the balance sheets.

The Company’s money market funds are classified as Level 1 because they are valued using quoted market prices. The Company’s investments consist of available-for-sale securities and are classified as Level 2 because their value is based on valuations using significant inputs derived from or corroborated by observable market data.

There wereno transfers of assets between fair value levels for all periods presented.

Investments

The following tables summarize investments accounted for as available-for-sale securities (in thousands):

On March 31, 2024 and December 31, 2023, the remaining contractual maturities of all the Company’s available-for-sale investments were less than 12 months. As of March 31, 2024 and December 31, 2023, the Company has not established an allowance for credit losses for any of its available-for-sale securities.

As of March 31, 2024, there were 33 available-for-sale securities, with an estimated fair value of $56.9 million in gross unrealized loss positions. As of December 31, 2023, there were 24 available-for-sale securities, with an estimated fair value of $40.3 million in gross unrealized loss positions. Based on its review of these investments, the Company believes that the unrealized losses reflect the impact of the rising interest rate environment and were not other-than-temporary in nature.

Property and Equipment

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

Depreciation and amortization expense related to property and equipment was $0.3 million and $0.2 million for the three months ended March 31, 2024 and 2023, respectively.

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following (in thousands):

Lease Agreements

2022 Lease

In March 2021, as amended in November 2021, the Company entered into a non-cancelable operating lease for a facility in San Diego, California (the 2022 Lease). The 2022 Lease had an initial term that ended in May 2024, although this was subsequently amended such that this lease now ends on that date occurring 14 days after the lease commencement date for the 2024 Lease (see below). The 2022 Lease provides for the rental of lab and office space, contains rent escalation provisions, and obligates the Company to pay a portion of the operating costs related to the underlying multitenant facility. Rental payments under the 2022 Lease commenced in mid-January 2022. Based on information obtained from its landlord, the Company has recorded a right-of-use (ROU) asset and an associated lease obligation for the lab and office space leased under the 2022 Lease. The net ROU asset of $1.4 million and associated lease obligation of $1.5 million are reflected in the Company’s balance sheet as of March 31, 2024 and are estimates that will change should there be a change in the anticipated occupancy date of the property and associated campus underlying the 2024 Lease. The Company’s estimated incremental borrowing rate of approximately 8.0% was used in its present value calculation as the 2022 Lease does not have a stated rate and the implicit rate was not readily determinable.

As of March 31, 2024, future minimum lease payments under the 2022 Lease are expected to total $1.6 million, including imputed interest of approximately $28,000. All future payments under the 2022 Lease are expected to occur in 2024.

2024 Lease

In December 2021, the Company entered into a non-cancelable facility lease for approximately 80,000 square feet of lab and office space in La Jolla, California (the 2024 Lease). The facility to be occupied by the Company under the 2024 Lease will be built to the Company’s specifications; the 2024 Lease agreement includes tenant improvement allowances totaling $22.0 million, repayment of which is included in the future minimum lease payments called for under the agreement.

As of March 31, 2024, although construction of the property underlying the 2024 Lease is underway, the commencement date of the 2024 Lease has not yet been determined. At completion of construction, the Company will occupy the facility for a 120-month term, with payments under the lease commencing after a six-month rent abatement period and continuing through the conclusion of the term. As of March 31, 2024, the landlord has advised the Company that this property will be available for occupancy in October 2024. This date is an estimate, which is subject to change based on the delivery of the property and its associated campus. The 2024 Lease includes base lease payments aggregating $71.9 million, as well as additional charges for common area maintenance and property taxes. The Company has the right to extend the term of the 2024 Lease for an additional 60 months.

Additionally, as a security deposit under this agreement, the Company is required to maintain a standby letter-of-credit in the amount of $0.5 million, which must remain in place until November 2034.

Operating Leases

The Company has made upfront payments under its lease agreements totaling $0.8 million, $0.5 million of which is included in other long-term assets on the balance sheet as of March 31, 2024 and December 31, 2023.

Cash paid for operating lease liabilities during the three months ended March 31, 2024 and 2023 totaled $0.7 million and $0.7 million, respectively.

Commitments and Contingencies

Contracts

The Company enters into contracts in the normal course of business with various third parties for preclinical research studies, clinical trials, testing, manufacturing, and other services. These contracts generally provide for termination upon notice and are cancellable without significant penalty or payment and do not contain any minimum purchase commitments.

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners, 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. In addition, the Company has entered into indemnification agreements with officers and members of its Board of Directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs because of these indemnifications. The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its financial statements as of March 31, 2024 and December 31, 2023.

Litigation

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. There are no matters currently outstanding for which any liabilities have been accrued. The Company was not a defendant in any lawsuit for the three months ended March 31, 2024 and the year ended December 31, 2023.

Convertible Preferred Stock

Series A, B, and C Convertible Preferred Stock

The Company issued its convertible preferred stock in a series of transactions as follows:

•

In August 2018,7,142,857 shares of Series A convertible preferred stock were issued for cash at a price of $0.70 per share, resulting in aggregate net proceeds of $4.9 million;

•

In June 2019, an additional 26,046,438 shares of Series A convertible preferred stock were issued for cash at a price of $0.70 per share, resulting in aggregate net proceeds of $18.1 million;

•

In July 2020, an additional 33,189,295 shares of Series A convertible preferred stock were issued for cash at a price of $0.70 per share, resulting in aggregate net proceeds of $23.2 million;

•

In April 2021, the Company entered into a Series B convertible preferred stock purchase agreement under which it issued 78,211,116 shares of its Series B convertible preferred stock for cash, at a price of $1.35 per share, resulting in aggregate net proceeds of $105.3 million;

•

In April and May 2023, the Company entered into a Series C convertible preferred stock purchase agreement under which it issued 142,857,138 shares of Series C convertible preferred stock for cash, at a price of $0.70 per share, resulting in aggregate net proceeds of $99.7 million.

Rights, Preferences, and Privileges of Convertible Preferred Stock

The holders of the Company’s Series A, B, and C convertible preferred stock (collectively, the Preferred Stock) have the following rights, preferences, and privileges:

Voting Rights

The holders of Preferred Stock are entitled to vote, together with the holders of common stock, on all matters submitted to the stockholders for a vote and are entitled to the number of votes equal to the number of whole shares of common stock into which such holders of Preferred Stock could convert on the record date for determination of stockholders entitled to vote.

Dividends

The Company cannot declare and pay any common stock dividends without first declaring and paying dividends, as defined in the terms of the Company’s amended and restated certificate of incorporation, to the convertible preferred stockholders. The holders of Preferred Stock are entitled to receive, when, as and if, declared by the Company’s Board of Directors, noncumulative dividends at the rate of 6.0%of the applicable original issue price of such Preferred Stock (Original Issue Price), subject to appropriate adjustment in theevent of any stock dividend, stock split, combination, or other similar recapitalization with respect to the Preferred Stock. No dividends have been declared as of March 31, 2024 or December 31, 2023, respectively.

Liquidation Rights

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or Deemed Liquidation Event (as defined in the Company’s amended and restated certificate of incorporation), each holder of Preferred Stock is entitled to receive, prior and in preference to any distributions to the common stockholders, an amount equal to the greater of (i) the Original Issue Price per share, plus any declared but unpaid dividends thereon or (ii) the amount such holder would have received if such holder had converted its shares into common stock immediately prior to such liquidation event. If the assets available for distribution to the holders of Preferred Stock are insufficient to pay such holders the full amounts to which they are entitled, the assets available for distribution will be distributed on a pro rata basis among the holders of the Preferred Stock in proportion to the respective amounts that would otherwise be payable in respect of such stock. After payments have been made in full to the holders of Preferred Stock, then, to the extent available, the remaining amounts would be distributed among the holders of the common stock, pro rata based on the number of shares held by each holder.

Conversion Rights

The shares of Preferred Stock are convertible into an equal number of shares of common stock, at the option of the holder, subject to certain anti-dilution adjustments. Each share of Preferred Stock will be automatically converted into common stock, (A) immediately upon the closing of a firmly underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of common stock for the account of the Company in which the aggregate gross proceeds is at least $50.0 million and the public offering price of at least $1.6875 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization (Qualified IPO Price), (B) at any time upon the affirmative election of the holders of at least 60% of the outstanding shares of the Preferred Stock, including at least one of the holders holding, together with its affiliates, the most, the second most, or the third most shares of Series B Preferred Stock, or (C) the closing of a transaction pursuant to which (i) the Company is merged into, or otherwise combines with, a special purpose acquisition company, or subsidiary thereof, listed on a national securities exchange (SPAC Entity) at a value per share of at least the Qualified IPO Price and (ii) the shares of capital stock of the Company immediately outstanding prior to such transaction are converted to or exchanged for shares of capital stock that represent a majority, by voting power, of the capital stock of the SPAC Entity.

Redemption

The Preferred Stock does not have redemption rights, except for the contingent redemption upon the occurrence of a Deemed Liquidation Event (as defined in the Company’s amended and restated certificate of incorporation).

Common Stock

Common Stock Rights

The holder of each outstanding share of common stock is entitled toone vote on all matters submitted to a vote of the holders of common stock. Subject to the rights of the holders of any class of the Company’s capital stock having any preference or priority over common stock, the holders of common stock are entitled to receive dividends that are declared by the Company’s Board of Directors out of legally available funds. In the event of a liquidation, dissolution or winding-up, the holders of common stock are entitled to share ratably in the net assets remaining after payment of liabilities and the liquidation value of the Preferred Stock then outstanding. The common stock has no preemptive rights, conversion rights, redemption rights or sinking fund provisions, and there are no dividends in arrears or default. All shares of common stock have equal distribution, liquidation and voting rights, and have no preferences or exchange rights.

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance consisted of the following:

Stock Options and Stock-Based Compensation

Equity Incentive Plan

In March 2024, the Company adopted the 2024 Incentive Plan (as amended, the Plan), which expires 10 years from its effective date. The Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards, and other stock awards to its employees, consultants, and directors. Options granted under the Plan are exercisable at various dates as determined upon grant and will expire no more than 10 years from their date of grant. Stock options generally vest over terms of either 36 or 48 months. The exercise price of awards under the Plan shall not be less than 100% of the estimated fair market value of the Company’s stock on the date of grant. As of March 31, 2024, a total of 2,832,882 shares of common stock were authorized for issuance under the Plan. On March 31, 2024,2,298,086 of these shares remain available for grant under the Plan.

Prior to the adoption of the Plan, the Company had awarded common stock options under the 2018 Equity Incentive Plan (as amended, the Predecessor Plan). Under the provisions of the Plan, awards issued under the Predecessor Plan that were outstanding as of March 27, 2024, and that are subsequently cancelled or forfeit, will serve to increase the number of shares that may be issued under the Plan.

Stock Options

Stock option activity under the Plan and certain other related information is as follows:

Aggregate intrinsic value in the above table is the difference between the estimated fair value of the Company’s common stock as of either March 31, 2024 or December 31, 2023, and the exercise price of stock options that had exercise prices below that value.

The options exercised during the three months ended March 31, 2024 and 2023 had an intrinsic value at exercise of $31,000 and approximately $7,000, respectively.

Stock-Based Compensation Expense

Stock-based compensation expense was as follows (in thousands):

As of March 31, 2024, unrecognized compensation cost related to outstanding time-based options was $23.0 million, which is expected to be recognized over a weighted-average period of 2.7 years.

The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the stock options granted during the following periods were as follows:

The weighted-average grant date per share fair value of options granted during the three months ended March 31, 2024 and 2023 was $11.69 and $7.62, respectively.

Net Loss Per Common Share

The following table summarizes the computation of basic and diluted net loss per common share of the Company (in thousands, except share and per share data):

The Company excluded the following potential shares of its common stock, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect:

Subsequent Events

Initial Public Offering

On April 2, 2024, the Company completed its IPO, pursuant to which it sold 6,250,000 shares of its common stock at a public offering price of $16.00 per share, resulting in net proceeds of approximately $87.7 million, after deducting underwriting discounts, commissions, and other offering expenses. Immediately prior to the closing of the IPO, the Company’s outstanding convertible preferred stock automatically converted into 14,740,840 shares of common stock. Following the closing of the IPO, no shares of convertible preferred stock were authorized or outstanding.

In connection with the closing of its IPO, on April 2, 2024, the Company’s certificate of incorporation was amended and restated to authorize 700,000,000 shares of common stock, par value $0.0001 per share and 70,000,000 shares of undesignated preferred stock, par value of $0.0001 per share.

The condensed financial statements as of March 31, 2024, including share and per share amounts, do not give effect to the IPO as it closed subsequent to March 31, 2024.

The table below shows, on a pro forma basis, the impact of the Company’s IPO on certain condensed balance sheet items as if all the transactions occurred on March 31, 2024: