Rapport Therapeutics Inc

Previous wording

We are a clinical-stage biopharmaceutical company focused on discovery and development of transformational small molecule medicines for patients suffering from central nervous system (“CNS”) disorders. Neuronal receptors are complex assemblies of proteins, comprising receptor principal subunits and their receptor associated proteins (“RAPs”), the latter of which play crucial roles in regulating receptor expression and function. Our founders have made pioneering discoveries related to RAP function to form the basis of our RAP technology platform. We believe that our deep expertise in RAP biology provides an opportunity for us to interrogate previously inaccessible targets and develop CNS drugs that are specific for receptor variants and neuroanatomical regions associated with certain diseases. RAP-219, our most advanced product candidate, is an AMPA receptor (“AMPAR”) negative allosteric modulator (“NAM”). RAP-219 is designed to achieve neuroanatomical specificity through its selective targeting of a RAP known as TARPg 8, which is associated with the neuronal AMPAR, a clinically validated target for epilepsy. Whereas AMPARs are distributed widely in the CNS, TARPg 8 is expressed only in discrete regions, including the hippocampus, a key site involved in focal epilepsy. We completed our Phase 1 trials in healthy adults to assess the safety and tolerability of RAP-219, and we are on track to initiate a Phase 2a proof-of-concept trial in adult patients with drug-resistant focal epilepsy in the third quarter of 2024, with topline results expected in mid 2025. We believe RAP-219 also has therapeutic potential in peripheral neuropathic pain and bipolar disorder, and we intend to initiate Phase 2a trials in these indications in the second half of 2024 and in 2025, respectively. We have also initiated our second multiple ascending dose (“MAD”) clinical trial of RAP-219 to assess dosing regimens that may accelerate therapeutic exposure, which will inform dosing for our planned Phase 2a trial for the treatment of bipolar disorder. Results from this MAD trial are expected in the second half of 2024. In addition, we have identified another TARPg 8 targeted molecule with differentiated chemical and pharmacokinetic properties, RAP-199, for which we expect to initiate a Phase 1 trial in the first half of 2025.

Current wording

We are a clinical-stage biopharmaceutical company focused on discovery and development of transformational small molecule medicines for patients suffering from central nervous system (“CNS”) disorders. Neuronal receptors are complex assemblies of proteins, comprising receptor principal subunits and their receptor associated proteins (“RAPs”), the latter of which play crucial roles in regulating receptor expression and function. Our founders have made pioneering discoveries related to RAP function to form the basis of our RAP technology platform. We believe that our deep expertise in RAP biology provides an opportunity for us to interrogate previously inaccessible targets and develop CNS drugs that are specific for receptor variants and neuroanatomical regions associated with certain diseases. RAP-219, our most advanced product candidate, is an AMPA receptor (“AMPAR”) negative allosteric modulator (“NAM”). RAP-219 is designed to achieve neuroanatomical specificity through its selective targeting of a RAP known as TARPg 8, which is associated with the neuronal AMPAR, a clinically validated target for epilepsy. Whereas AMPARs are distributed widely in the CNS, TARPg 8 is expressed only in discrete regions, including the hippocampus, a key site involved in focal epilepsy. We completed a single ascending dose (“SAD”) and a multiple ascending dose (“MAD”) Phase 1 trial in healthy adults to assess the safety and tolerability of RAP-219, and patient recruitment and screening is underway for our Phase 2a proof-of-concept trial in adult patients with drug-resistant focal epilepsy, for which we expect to report topline results in mid 2025. We believe RAP-219 also has therapeutic potential in peripheral neuropathic pain and bipolar disorder, and we intend to initiate a Phase 2a trial for the treatment of bipolar disorder in 2025. We were recently notified by the U.S. Food and Drug Administration (“FDA”) Division of Anesthesiology, Addiction Medicine and Pain Medicine that the Investigational New Drug application (“IND”) submitted by us for the initiation of a Phase 2a proof-of-concept trial of RAP-219 for the treatment of diabetic peripheral neuropathic pain (“DPNP”) was placed on clinical hold. The FDA requested additional information and amendments specific to the protocol design. The clinical hold is specific to the IND for DPNP and has not impacted our ongoing Phase 2a trial in focal epilepsy or planned proof-of-concept trial in bipolar disorder. We believe in our ability to resolve the clinical hold in DPNP and will provide an update on the anticipated timing of the Phase 2a trial initiation once available. We have also initiated our second MAD clinical trial of RAP-219 to assess dosing regimens that may accelerate time to reach therapeutic exposure, which will inform dosing for our planned Phase 2a trial for the treatment of bipolar disorder. This second MAD trial is expected to be completed by the end of 2024, with topline results expected to be relea…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Since our inception in February 2022, we have not generated any revenue from product sales or other sources and have incurred significant operating losses and negative cash flows from our operations. We have devoted substantially all of our efforts to organizing and staffing our company, business planning, research and development activities, building our intellectual property portfolio, and providing general and administrative support for these operations. In June 2024, we completed our initial public offering ("IPO"), pursuant to which we issued and sold 9,200,000 shares of common stock (inclusive of 1,200,000 shares of common stock sold pursuant to the underwriters' exercise of their option to purchase additional shares). In addition, we issued and sold 1,058,824 shares of common stock to certain institutional accredited investors in a concurrent private placement. The aggregate net proceeds received by us from the IPO and concurrent private placement were $157.6 million, after deducting underwriting discounts and commissions, placement agent fees as well as other offering and private placement costs of $16.8 million. To date, we have funded our operations primarily with proceeds from the issuance and sale of our common stock, convertible notes and convertible preferred stock. As of June 30, 2024, we had raised aggregate gross proceeds of $424.4 million from these financings, and had cash, cash equivalents and short-term investments of $336.1 million, excluding our restricted cash.

Current wording

Since our inception in February 2022, we have not generated any revenue from product sales or other sources and have incurred significant operating losses and negative cash flows from our operations. We have devoted substantially all of our efforts to organizing and staffing our company, business planning, research and development activities, building our intellectual property portfolio, and providing general and administrative support for these operations. In June 2024, we completed our initial public offering (“IPO”), pursuant to which we issued and sold 9,200,000 shares of common stock (inclusive of 1,200,000 shares of common stock sold pursuant to the underwriters’ exercise of their option to purchase additional shares). In addition, we issued and sold 1,058,824 shares of common stock to certain institutional accredited investors in a concurrent private placement. The aggregate net proceeds received by us from the IPO and concurrent private placement were $157.6 million, after deducting underwriting discounts and commissions, placement agent fees as well as other offering and private placement costs of $16.8 million. To date, we have funded our operations primarily with proceeds from the issuance and sale of our common stock, convertible notes and convertible preferred stock. As of September 30, 2024, we had raised aggregate gross proceeds of $424.4 million from these financings, and had cash, cash equivalents and short-term investments of $320.7 million, excluding our restricted cash.

Previous wording

We have incurred significant operating losses in each year since our inception. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of any product candidates we may develop. Our net losses were $18.1 and $6.4 for the three months ended June 30, 2024 and 2023, respectively, and $40.8 million and $12.6 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, we had an accumulated deficit of $86.2 million. We expect our expenses and operating losses will increase substantially as we:

Current wording

We have incurred significant operating losses in each year since our inception. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of any product candidates we may develop. Our net losses were $17.5 million and $8.7 million for the three months ended September 30, 2024 and 2023, respectively, and $58.3 million and $21.3 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, we had an accumulated deficit of $103.8 million. We expect our expenses and operating losses will increase substantially as we:

Previous wording

In August 2022, we entered into an option and license agreement with Janssen Pharmaceutical NV, as amended on April 3, 2023, April 18, 2023, May 2, 2023, October 2, 2023, and April 9, 2024 (collectively, the “Janssen License”), under which we received an exclusive option to obtain from Janssen (a) a worldwide exclusive license for the research, development, and commercialization of transmembrane TARPg 8 AMPAR products for the diagnosis, treatment, prophylaxis or palliation of any disease or condition in humans or other animals (the “Field”) and (b) an assignment of certain patents related to TARPg 8, in each case of (a)-(b), subject to certain retained rights by Janssen. Pursuant to the Janssen License, we also received a worldwide, royalty-free, non-exclusive license

Current wording

In August 2022, we entered into an option and license agreement with Janssen Pharmaceutical NV, as amended on April 3, 2023, April 18, 2023, May 2, 2023, October 2, 2023, and April 9, 2024 (collectively, the “Janssen License”), under which we received an exclusive option to obtain from Janssen (a) a worldwide exclusive license for the research, development, and commercialization of transmembrane TARPg 8 AMPAR products for the diagnosis, treatment, prophylaxis or palliation of any disease or condition in humans or other animals (the “Field”) and (b) an assignment of certain patents related to TARPg 8, in each case of (a)-(b), subject to certain retained rights by Janssen. Pursuant to the Janssen License, we also received a worldwide, royalty-free, non-exclusive license (exclusive under certain joint patents) for the research, development, and commercialization of certain neuronal nicotinic acetylcholine (“nACh”) products in the Field.

Previous wording

Janssen is also eligible to receive (a) royalties ranging from mid-single digits to high single digits on worldwide net sales of any products containing a TARPg 8 development candidate and (b) royalties ranging from low-single digits to mid-single digits for other TARPg 8 products that do not contain a TARPg 8 development candidate, in each case of (a) and (b), subject to potential reductions following the expiration of valid claims and regulatory exclusivity covering such TARPg 8 products, the launch of certain generic products and the application of certain anti-stacking reductions for third party intellectual property payments, subject to a customary reduction floor. The royalties for any TARPg 8 product will expire on a country-by-country basis upon the latest to occur of (i) the expiration of all valid patent claims covering such product in such country, (ii) the expiration of all regulatory exclusivities in such country, and (iii) a specified number of years following the first commercial sale of such product in such country. The Janssen License provides us with certain other exclusive rights with respect to small molecules with activity against TARPg 8 and nACh.

Current wording

Janssen is also eligible to receive (a) royalties ranging from mid to high-single digit percentages on worldwide net sales of any products containing a TARPg 8 development candidate and (b) royalties ranging from low to mid-single digit percentages for other TARPg 8 products that do not contain a TARPg 8 development candidate, in each case of (a) and (b), subject to potential reductions following the expiration of valid claims and regulatory exclusivity covering such TARPg 8 products, the launch of certain generic products and the application of certain anti-stacking reductions for third party intellectual property payments, subject to a customary reduction floor. The royalties for any TARPg 8 product will expire on a country-by-country basis upon the latest to occur of (i) the expiration of all valid patent claims covering such product in such country, (ii) the expiration of all regulatory exclusivities in such country, and (iii) a specified number of years following the first commercial sale of such product in such country. The Janssen License provides us with certain other exclusive rights with respect to small molecules with activity against TARPg 8 and nACh.

Previous wording

The NeuroPace Agreement expires on the later of three years from the effective date or the completion of all services under all statement of work agreements entered into prior to the third anniversary of the effective date. Either party may terminate the NeuroPace Agreement or any statement of work agreement (i) without cause by giving written notice to the other party within a specified period of time, (ii) by giving written notice upon a curable material breach that is not remediated within a specified period of time, or (iii) immediately upon written notice in the event of a material breach that cannot be cured.

Current wording

NeuroPace Agreement or any statement of work agreement (i) without cause by giving written notice to the other party within a specified period of time, (ii) by giving written notice upon a curable material breach that is not remediated within a specified period of time, or (iii) immediately upon written notice in the event of a material breach that cannot be cured.

Previous wording

During the three months ended June 30, 2024, we paid NeuroPace $0.1 million and recognized $0.3 million in research and development expense for services performed. During the six months ended June 30, 2024, we paid NeuroPace $0.4 million and recognized $0.6 million in research and development expense for services performed, resulting in a prepaid expense balance of $1.3 million as of June 30, 2024. During the year ended December 31, 2023, we paid NeuroPace $1.5 million, which was recorded as prepaid expenses and other current assets in the consolidated balance sheet as of December 31, 2023.

Current wording

During the three months ended September 30, 2024, we paid NeuroPace $0.1 million and recognized $0.5 million in research and development expense for services performed. During the nine months ended September 30, 2024, we paid NeuroPace $0.5 million and recognized $1.1 million in research and development expense for services performed, resulting in a prepaid expense balance of $0.9 million as of September 30, 2024. During the year ended December 31, 2023, we paid NeuroPace $1.5 million, which was recorded as prepaid expenses and other current assets in the consolidated balance sheet as of December 31, 2023.

Previous wording

effective Investigational New Drugs (“INDs”) or comparable foreign applications that allow commencement of our planned clinical trials or future clinical trials for any product candidates we may develop;

Current wording

effective INDs or comparable foreign applications that allow commencement of our planned clinical trials or future clinical trials for any product candidates we may develop;

Previous wording

successful enrollment and completion of clinical trials, including under the U.S. Food and Drug Administration’s (“FDA’s”) current Good Clinical Practices, (“GCPs”) current Good Laboratory Practices, (“GLPs”) and any additional regulatory requirements from foreign regulatory authorities;

Current wording

successful enrollment and completion of clinical trials, including under the U.S. FDA's current Good Clinical Practices (“GCPs”), current Good Laboratory Practices (“GLPs”), and any additional regulatory requirements from foreign regulatory authorities;

Previous wording

For the three and six months ended June 30, 2024 and 2023, we recorded an income tax provision of zero and $3 thousand, respectively. As of December 31, 2023 and June 30, 2024, we recorded a full valuation allowance of our net deferred tax assets, as we believed it was more likely than not we would not be able to utilize our deferred tax assets prior to their expiration.

Current wording

For the three months ended September 30, 2024 and 2023, we recorded an income tax provision of zero and $1 thousand, respectively. For the nine months ended September 30, 2024 and 2023, we recorded an income tax provision of zero and $4 thousand, respectively. As of December 31, 2023 and September 30, 2024, we recorded a full valuation allowance of our net deferred tax assets, as we believed it was more likely than not we would not be able to utilize our deferred tax assets prior to their expiration.

Previous wording

a $3.2 million increase in RAP-219 program costs, which consisted primarily of an increase of $1.7 million in clinical trial costs primarily driven by the start-up costs for our Phase 2a trial, a $0.7 million increase in preclinical toxicology studies driven by initiation of long-term toxicology work, and a $0.7 million increase in contract manufacturing costs related to the production of materials to support our additional Phase 1 and 2a trials.

Current wording

a $2.7 million increase in RAP-219 program costs, which consisted primarily of an increase of $1.9 million in clinical trial costs primarily driven by the start-up costs for our Phase 2a trials in focal epilepsy and peripheral neuropathic pain, costs from our second MAD study, and costs from our PET study, and a $0.8 million increase in contract manufacturing costs related to the production of materials to support our Phase 2a trials.

Previous wording

a $4.7 million increase in preclinical program costs, which consisted primarily of a $2.9 million increase in toxicology and animal studies related to our discovery programs, a $0.6 million increase in external chemistry efforts related to our discovery programs, a $0.7 million increase in contract manufacturing costs related to the production of materials for use in our preclinical studies, a $0.4 million increase in lab supply costs due to increased headcount, and a $0.1 million increase in discovery program consulting costs;

Current wording

a $1.9 million increase in preclinical program costs, which consisted primarily of a $1.5 million increase in toxicology and animal studies related to our discovery programs, a $0.5 million increase in external chemistry efforts related to our discovery programs, and a $0.2 million increase in lab supply costs due to increased headcount. These increases were partially offset by a $0.2 million decrease in contract manufacturing costs related to the production of materials for use in our preclinical studies;

Previous wording

a $2.6 million increase in personnel-related costs due to an increase in headcount, which consisted primarily of salaries, bonuses, and other compensation-related costs of $2.1 million and stock-based compensation of $0.5 million; and

Current wording

a $2.9 million increase in personnel-related costs due to an increase in headcount, which consisted primarily of salaries, bonuses, and other compensation-related costs of $2.1 million, and stock-based compensation of $0.8 million; and

Previous wording

General and administrative expense were $5.1 million for the three months ended June 30, 2024, as compared to $1.9 million for the three months ended June 30, 2023. The increase of $3.2 million consisted of the following:

Current wording

General and administrative expense were $6.1 million for the three months ended September 30, 2024, as compared to $2.0 million for the three months ended September 30, 2023. The increase of $4.1 million consisted of the following:

Previous wording

a $2.5 million increase in workforce expense due to an increase in headcount, consisting primarily of salaries, bonuses, and other compensation-related costs of $1.6 million and stock-based compensation of $0.9 million;

Current wording

a $3.0 million increase in workforce expense due to an increase in headcount, consisting primarily of salaries, bonuses, and other compensation-related costs of $1.4 million and stock-based compensation of $1.6 million;

Previous wording

a $0.4 million increase in professional and consulting fees related to expanding our administrative support to satisfy the requirements of becoming and operating as a public company along with the general growth of the Company, including outsourced legal and accounting expenses; and

Current wording

a $0.6 million increase in professional and consulting fees, related to expanding our administrative support to satisfy the requirements of operating as a public company along with the general growth of the Company, including outsourced legal and accounting expenses; and

Previous wording

a $0.3 million increase in other expenses consisting primarily of administrative expenses due to increased business activities and expanded general and administrative support in connection with becoming and operating as a public company.

Current wording

a $0.6 million increase in other expenses, consisting primarily of administrative expenses due to increased business activities and expanded general and administrative support in connection with operating as a public company.

Previous wording

Interest income was $2.7 million for the three months ended June 30, 2024, as compared to $0.2 million for the three months ended June 30, 2023. The increase of $2.5 million is primarily due to opening additional interest-bearing accounts subsequent to June 30, 2023 in addition to the increased cash, cash equivalent and short-term investments balances from the Series B convertible preferred stock financing in August 2023 and February 2024, and our IPO in June 2024.

Current wording

Interest income was $4.1 million for the three months ended September 30, 2024, as compared to $0.9 million for the three months ended September 30, 2023. The increase of $3.2 million is primarily due to opening additional interest-bearing accounts subsequent to September 30, 2023 in addition to the increased cash, cash equivalent and short-term investments balances from the Series B convertible preferred stock financing in August 2023 and February 2024, and our IPO in June 2024.

Previous wording

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023:

Previous wording

a $6.0 million increase in RAP-219 program costs, which consisted primarily of an increase of $2.7 million in clinical trial costs primarily driven by the start-up costs for our Phase 2a trial, a $2.0 million increase in preclinical toxicology studies driven by initiation of long-term toxicology work, a $1.0 million increase in contract manufacturing costs related to the production of materials to support our additional Phase 1 and 2a trials, and an increase of $0.2 million for consulting related to the peripheral neuropathic pain program;

Current wording

a $8.6 million increase in RAP-219 program costs, which consisted primarily of an increase of $4.6 million in clinical trial costs primarily driven by the start-up costs for our Phase 2a trials in focal epilepsy and peripheral neuropathic pain, costs from our second MAD study, and costs from our PET study, a $2.0 million increase in preclinical toxicology studies driven by initiation of long-term toxicology work, a $1.8 million increase in contract manufacturing costs related to the production of materials to support our additional Phase 1 and 2a trials, and an increase of $0.2 million for consulting related to the peripheral neuropathic pain program;

Previous wording

a $7.9 million increase in preclinical program costs, which consisted primarily of a $4.4 million increase in toxicology and animal studies related to our discovery programs, a $1.2 million increase in external chemistry efforts related to our discovery programs, a $1.0 million increase in contract manufacturing costs related to the production of materials for use in our preclinical studies, a $0.9 million increase in lab supply costs due to increased headcount, and a $0.3 million increase in discovery program consulting costs;

Current wording

a $9.8 million increase in preclinical program costs, which consisted primarily of a $6.0 million increase in toxicology and animal studies related to our discovery programs, a $1.7 million increase in external chemistry efforts related to our discovery programs, a $0.8 million increase in contract manufacturing costs related to the production of materials for use in our preclinical studies, a $1.1 million increase in lab supply costs due to increased headcount, and a $0.3 million increase in discovery program consulting costs;

Previous wording

a $4.7 million increase in personnel-related costs due to an increase in headcount, which consisted primarily of salaries, bonuses, and other compensation-related costs of $4.2 million and stock-based compensation of $0.8 million. These increases were partially offset by a decrease in consulting costs unrelated to discovery programs of $0.3 million; and

Current wording

a $7.6 million increase in personnel-related costs due to an increase in headcount, which consisted primarily of salaries, bonuses, and other compensation-related costs of $6.4 million, and stock-based compensation of $1.5 million. These increases were partially offset by a decrease in general research and development consulting costs of $0.3 million; and

Previous wording

a $1.0 million increase in other costs consisting primarily of research and development facilities expenses and depreciation expense related to opening our Boston office in September 2023 and continuing to expand our San Diego site.

Current wording

a $1.5 million increase in other costs, consisting primarily of research and development facilities expenses and depreciation expense related to opening our Boston office in September 2023, and continuing to expand our San Diego site.

Previous wording

General and administrative expense were $9.7 million for the six months ended June 30, 2024, as compared to $3.2 million for the six months ended June 30, 2023. The increase of $6.5 million consisted of the following:

Current wording

General and administrative expense were $15.8 million for the nine months ended September 30, 2024, as compared to $5.2 million for the nine months ended September 30, 2023. The increase of $10.6 million consisted of the following:

Previous wording

$4.5 million increase in workforce expense due to an increase in headcount, consisting primarily of salaries, bonuses, and other compensation-related costs of $3.1 million and stock-based compensation of $1.4 million;

Current wording

$7.5 million increase in workforce expense due to an increase in headcount, consisting primarily of salaries, bonuses, and other compensation-related costs of $4.5 million and stock-based compensation of $3.0 million;

Previous wording

$1.5 million increase in professional and consulting fees related to expanding our administrative support to satisfy the requirements of becoming and operating as a public company along with the general growth of the Company, including outsourced legal and accounting expenses; and

Current wording

$2.1 million increase in professional and consulting fees, related to expanding our administrative support to satisfy the requirements of operating as a public company along with the general growth of the Company, including outsourced legal and accounting expenses; and

Previous wording

$0.4 million increase in other expenses consisting primarily of administrative expenses due to increased business activities and expanded general and administrative support in connection with becoming and operating as a public company.

Current wording

$1.0 million increase in other expenses, consisting primarily of administrative expenses due to increased business activities, and expanded general and administrative support in connection with operating as a public company.

Previous wording

Interest income was $4.5 million for the six months ended June 30, 2024, as compared to $0.3 million for the six months ended June 30, 2023. The increase of $4.2 million is primarily due to opening additional interest-bearing accounts subsequent to June 30, 2023 in addition to the increased cash, cash equivalent and short-term investments balances from the Series B convertible preferred stock financing in August 2023 and February 2024, and our IPO in June 2024.

Current wording

Interest income was $8.6 million for the nine months ended September 30, 2024, as compared to $1.2 million for the nine months ended September 30, 2023. The increase of $7.4 million is primarily due to opening additional interest-bearing accounts subsequent to September 30, 2023 in addition to the increased cash, cash equivalent and short-term investments balances from the Series B convertible preferred stock financing in August 2023 and February 2024, and our IPO in June 2024.

Previous wording

The change in fair value of the preferred stock tranche right liability expense was $7.4 million for the six months ended June 30, 2024, as compared to $1.0 million for the six months ended June 30, 2023. The change in fair value of preferred stock tranche right liability for the six months ended June 30, 2024 consisted of an increase in the fair value of the Series A preferred stock tranche right liability of $1.0 million as a result of the waiver of the second and third milestones and settlement of the Series A tranche right liability. The change in fair value of preferred stock tranche right liabilities for the six months ended June 30, 2023 consisted of an increase in the fair value of the Series B preferred stock tranche right liability of $7.4 million. In conjunction with the waiver of the second tranche milestone in February 2024 and the settlement of the Series B tranche right in March 2024, the Series B tranche right liability was remeasured immediately prior to the waiver, resulting in a $7.4 million increase in fair value.

Current wording

The change in fair value of the preferred stock tranche right liability expense was $7.4 million for the nine months ended September 30, 2024, as compared to $1.0 million for the nine months ended September 30, 2023. The change in fair value of preferred stock tranche right liabilities for the nine months ended September 30, 2024 consisted of an increase in the fair value of the Series B preferred stock tranche right liability of $7.4 million. In conjunction with the waiver of the second tranche milestone in February 2024 and the settlement of the Series B tranche right in March 2024, the Series B tranche right liability was remeasured immediately prior to the waiver, resulting in a $7.4 million increase in fair value. The change in fair value of preferred stock tranche right liability for the nine months ended September 30, 2023 consisted of an increase in the fair value of the Series A preferred stock tranche right liability of $1.0 million as a result of the waiver of the second and third milestones and settlement of the Series A tranche right liability.

Previous wording

Since our inception in February 2022, we have not generated any revenue from any sources and have incurred significant operating losses and negative cash flows from operations. We expect to incur significant expenses and operating losses for the foreseeable future as we advance the clinical development of our product candidates and pipeline. Further, we expect to continue to incur additional costs associated with operating as a public company. To date, we have funded our operations with proceeds from the sale of convertible notes, convertible preferred stock, and the issuance of common stock in our IPO and concurrent private placement. Through June 30, 2024, we received aggregate gross proceeds of $424.4 million from the issuance of convertible promissory notes and the sale of our convertible preferred stock and common stock. As of June 30, 2024, we had cash and cash equivalents of $110.2 million and short-term investments of $226.0 million.

Current wording

Since our inception in February 2022, we have not generated any revenue from any sources and have incurred significant operating losses and negative cash flows from operations. We expect to incur significant expenses and operating losses for the foreseeable future as we advance the clinical development of our product candidates and pipeline. Further, we expect to continue to incur additional costs associated with operating as a public company. To date, we have funded our operations with proceeds from the sale of convertible notes, convertible preferred stock, and the issuance of common stock in our IPO and concurrent private placement. Through September 30, 2024, we received aggregate gross proceeds of $424.4 million from the issuance of convertible promissory notes and the sale of our convertible preferred stock and common stock. As of September 30, 2024, we had cash and cash equivalents of $39.3 million and short-term investments of $281.3 million.

Previous wording

During the six months ended June 30, 2024, operating activities used $34.0 million of cash, resulting primarily from our net loss of $40.8 million, non-cash accretion of investments in marketable securities of $1.8 million, and changes in operating assets and liabilities of $3.3 million, partially offset by $3.8 million of non-cash stock-based compensation expense and non-cash change in fair value of preferred stock tranche right liability of $7.4 million. The $3.3 million change in operating assets and liabilities is primarily driven by an increase in prepaid expenses and other current assets of $1.2 million primarily due to advanced payments on new contracts related to our clinical trials, a decrease in accounts payable of $1.0 million and accrued expenses of $0.8 million due to payments to vendors.

Current wording

During the nine months ended September 30, 2024, operating activities used $50.4 million of cash, resulting primarily from our net loss of $58.3 million, non-cash accretion of investments in marketable securities of $3.8 million, and changes in operating assets and liabilities of $3.8 million, partially offset by $7.0 million of non-cash stock-based compensation expense, non-cash change in fair value of preferred stock tranche right liability of $7.4 million, $0.6 million of non-cash depreciation expense, and $0.5 million of non-cash lease expense. The $3.8 million change in operating assets and liabilities is primarily driven by an increase in prepaid expenses and other current assets of $1.8 million, primarily due to advanced payments on new contracts related to our clinical trials, a decrease in accounts payable of $1.0 million and accrued expenses of $0.5 million due to payments to vendors, and $0.5 million decrease in operating lease liabilities.

Previous wording

During the six months ended June 30, 2023, operating activities used $11.4 million of cash, resulting primarily from our net loss of $12.6 million and changes in operating assets and liabilities of $1.6 million, partially offset by $1.7 million of non-cash stock-based compensation expense and non-cash change in fair value of preferred stock tranche right liability of $1.0 million.

Current wording

During the nine months ended September 30, 2023, operating activities used $16.8 million of cash, resulting primarily from our net loss of $21.3 million, partially offset by changes in operating assets and liabilities of $0.7 million, $2.5 million of non-cash stock-based compensation expense and non-cash change in fair value of preferred stock tranche right liability of $1.0 million.

Previous wording

During the six months ended June 30, 2024, net cash used in investing activities was $149.0 million, primarily consisting of purchases of short-term investments of $183.2 million and purchases of property and equipment of $2.0 million, partially offset by maturities of short-term investments of $36.2 million.

Current wording

During the nine months ended September 30, 2024, net cash used in investing activities was $202.1 million, primarily consisting of purchases of short-term investments of $293.0 million and purchases of property and equipment of $2.2 million, partially offset by maturities of short-term investments of $93.1 million.

Previous wording

During the three months ended June 30, 2023, net cash used in investing activities was $0.1 million, consisting of purchases of property and equipment of $0.1 million.

Current wording

During the nine months ended September 30, 2023, net cash used in investing activities was $0.2 million, consisting of purchases of property and equipment of $0.2 million.

Previous wording

During the six months ended June 30, 2024, net cash provided by financing activities was $223.0 million, primarily consisting of net proceeds from our IPO and concurrent private placement of our common stock in the aggregate amount of $159.1 million, and net proceeds of $63.9 million from our additional issuance of Series B convertible preferred stock.

Current wording

During the nine months ended September 30, 2024, net cash provided by financing activities was $221.6 million, primarily consisting of net proceeds from our IPO and concurrent private placement of our common stock in the aggregate amount of $157.7 million, and net proceeds of $63.9 million from our additional issuance of Series B convertible preferred stock.

Previous wording

During the six months ended June 30, 2023, net cash provided by financing activities was $59.9 million, primarily consisting of net proceeds of $59.9 million from our additional issuance of Series A convertible preferred stock.

Current wording

During the nine months ended September 30, 2023, net cash provided by financing activities was $145.3 million, primarily consisting of net proceeds of $59.9 million from our additional issuance of Series A convertible preferred stock and $85.3 million from the initial issuance of our Series B convertible preferred stock.

Previous wording

As of June 30, 2024, we had cash, cash equivalents and short-term investments of $336.1 million, excluding our restricted cash. As of the issuance date of the condensed consolidated financial statements for the six months ended June 30, 2024, we expect that our cash, cash equivalents and short-term investments will be sufficient to fund our operating expenses and capital expenditure requirements through at least 12 months from the issuance of the condensed consolidated financial statements. We believe that our existing cash, cash equivalents and short-term investments will enable us to fund our operating expenses and capital expenditure requirements through the end of 2026. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. However, our forecast for the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. Additionally, the process of conducting preclinical studies and testing potential future product candidates in clinical trials is costly, and the timing of progress and expenses in these studies and trials is uncertain. We will need to raise substantial additional capital in the future.

Current wording

As of September 30, 2024, we had cash, cash equivalents and short-term investments of $320.7 million, excluding our restricted cash. As of the issuance date of the condensed consolidated financial statements for the nine months ended September 30, 2024, we expect that our cash, cash equivalents and short-term investments will be sufficient to fund our operating expenses and capital expenditure requirements through at least 12 months from the issuance of the condensed consolidated financial statements. We believe that our existing cash, cash equivalents and short-term investments will enable us to fund our operating expenses and capital expenditure requirements through the end of 2026. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. However, our forecast for the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. Additionally, the process of conducting preclinical studies and testing potential future product candidates in clinical trials is costly, and the timing of progress and expenses in these studies and trials is uncertain. We will need to raise substantial additional capital in the future.

Previous wording

As of the June 30, 2024, we had future minimum operating lease payments under non-cancelable leases of $2.0 million related to leases we have recognized on our consolidated balance sheet, which are due over the following 2.5 years. In addition, we have one lease that has been entered into but has not yet commenced, for which we expect to pay approximately $9.6 million over the five-year lease term.

Current wording

As of the September 30, 2024, we had future minimum operating lease payments under non-cancelable leases of 1.8 million related to leases we have recognized on our consolidated balance sheet, which are due over the following 2.5 years. In addition, we have one lease that has been entered into but has not yet commenced, for which we expect to pay approximately $9.6 million over the five-year lease term.

Previous wording

During the year ended December 31, 2023, we paid NeuroPace $1.5 million, which was recorded as prepaid expenses and other current assets in the consolidated balance sheet as of December 31, 2023. During the three months ended June 30, 2024, we paid NeuroPace $0.1 million and recognized $0.3 million in research and development expense for services performed. During the six months ended June 30, 2024, we paid NeuroPace $0.4 million and recognized $0.6 million in research and development expense for services performed, resulting in a prepaid expense balance of $1.3 million as of June 30, 2024.

Current wording

During the year ended December 31, 2023, we paid NeuroPace $1.5 million, which was recorded as prepaid expenses and other current assets in the consolidated balance sheet as of December 31, 2023. During the three months ended September 30, 2024, we paid NeuroPace $0.1 million and recognized $0.5 million in research and development expense for services performed. During the nine months ended September 30, 2024, we paid NeuroPace $0.5 million and recognized $1.1 million in research and development expense for services performed, resulting in a prepaid expense balance of $0.9 million as of September 30, 2024.

Previous wording

During the six months ended June 30, 2024, there were no material changes to our critical accounting policies and estimates described under Management’s Discussion and Analysis of Critical Accounting Policies and Estimates which are included in the Company’s final prospectus for its IPO filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act on June 7, 2024.

Current wording

During the nine months ended September 30, 2024, there were no material changes to our critical accounting policies and estimates described under Management’s Discussion and Analysis of Critical Accounting Policies and Estimates which are included in the Company’s final prospectus for its IPO filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act on June 7, 2024.