IN8BIO INC

Previous wording

We are a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of gamma-delta T cell product candidates for solid and liquid tumors. Gamma-delta T cells are a specialized population of T cells that possess unique properties. They are naturally occurring immune cells that can intrinsically differentiate between healthy and diseased tissue. These cells serve as a functional bridge between innate and adaptive immunity to contribute to direct tumor killing, as well as immune cell recruitment and activation to drive deeper and more comprehensive immune responses. The pivotal role of gamma-delta T cells in immune function and activation, against diseases such as cancer, underscores their therapeutic potential across a wide range of solid and hematologic malignancies. We develop ex vivo-expanded and activated gamma-delta T cell candidates based upon our deep expertise in gamma-delta T cell biology, proprietary genetic engineering, and cell-type specific manufacturing capabilities, which we refer to collectively as our DeltEx platform. Our platform employs allogeneic, autologous, induced pluripotent stem cell, or iPSC, and genetically modified cell therapy approaches that are designed to effectively identify and eradicate tumor cells. We are the most clinically advanced gamma-delta T cell focused cellular therapy company and are utilizing our suite of DeltEx platform technologies as we aspire to eliminate cancer cells to achieve our mission of what we refer to as Cancer Zero ─ the safe elimination of all cancer cells in every patient battling the disease. We believe this lofty aspiration will one day be achievable, and that it is our responsibility to directly contribute to related global health efforts by pursuing scientific research that will advance cancer treatment.

Current wording

We are a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of gamma-delta T cell product candidates and T cell engagers (“TCEs”) for cancer and autoimmune diseases. We are the most clinically advanced gamma-delta T cell-focused company and are utilizing our suite of DeltEx platform technologies as we aspire to eliminate cancer cells to achieve our mission of what we refer to as Cancer Zero ─ the safe elimination of all cancer cells in every patient battling the disease. We developex vivo expanded and activated gamma-delta T cell candidates and TCEs based upon our deep expertise in gamma-delta T cell biology, proprietary genetic engineering, and cell-type specific manufacturing capabilities, which we refer to collectively as our DeltEx platform. Our platform employs allogeneic, autologous, induced pluripotent stem cell ("iPSC"), genetically modified cell therapy approaches, and TCEs that are designed to effectively identify and eradicate tumor and targeted cells. To date, we have conducted two main investigator-sponsored Phase 1 clinical trials to test our gamma-delta T cell technologies in cancer patients. INB-100 tests our DeltEx Allogeneic (“Allo”) gamma-delta T cells in older patients with high-risk leukemias undergoing haploidentical stem cell transplantation (“HSCT”) and INB-200 tested our DeltEx Drug Resistant Immunotherapy (“DRI”) in newly diagnosed glioblastoma (“GBM”) patients. Both trials have demonstrated long-term durable remissions with patients remaining alive and remission for greater than three years.

Previous wording

We also have a portfolio of preclinical programs in development, including INB-300, which focuses on addressing various solid and liquid tumors using a dedicated non-signaling gamma-delta T cell based chimeric antigen receptor T cell, or nsCAR, construct. We presented additional preclinical data demonstrating our proof-of-concept studies against the leukemia antigen targets CD19 and CD33, which demonstrated the ability of our nsCAR constructs to distinguish between tumor and healthy tissue at the American Association for Cancer Research, or AACR, Annual Meeting in 2023 and at our Research and Development Day in October 2023. We expect to present an update at the 2024 AACR Annual Meeting in April.

Current wording

We also have a portfolio of preclinical programs in development. These include INB-300, which is applicable to both solid and liquid tumors using a targeted non-signaling gamma-delta T cell based chimeric antigen receptor (“nsCAR”) construct and INB-500 which encompasses our ability to produce gamma-delta T cells from iPSCs. iPSCs represent a significant step toward next generation approaches of cellular manufacturing for true allogeneic and potentially "off-the-shelf" innate cell therapies. For INB-300 we presented additional preclinical data demonstrating our proof-of-concept in vitro studies, run in triplicate, against the leukemia antigen targets CD33 and CD123. This data, presented at the American Association for Cancer Research ("AACR") Annual Meeting in 2024, demonstrated the ability of our nsCAR constructs to distinguish between tumor tissue and healthy tissue. We plan to continue to optimize the nsCAR construct for advancement towards animal models, IND enabling studies and opportunities for potential partnership .

Previous wording

In December 2023, we entered into a securities purchase agreement, or the Purchase Agreement, with multiple investors, or the Private Placement, pursuant to which we issued and sold an aggregate of 11,823,829 units comprising (i) (a) one share of our common stock, par value $0.0001 per share, or (b) one pre-funded warrant to purchase one share of common stock, or the Pre-Funded Warrants, and, in each case, (ii) one Series A ordinary warrant to purchase one share of common stock, or the Series A Warrants, and (iii) one Series B ordinary warrant to purchase one share of common stock, or the Series B Warrants, and, together with the Series A Warrants, the Common Stock Warrants. In connection with the Private Placement, we issued an aggregate of 11,249,588 shares of common stock, 574,241 Pre-Funded Warrants, 11,823,829 Series A Warrants and 11,823,829 Series B Warrants. The Pre-Funded Warrants have an exercise price of $0.0001 per share, are exercisable immediately and are exercisable until the Pre-Funded Warrant is exercised in full. The Series A Warrants have an exercise price of $1.25 per share, are exercisable immediately and will expire on June 13, 2025. The Series B Warrants have an exercise price of $1.50 per share, are exercisable immediately and will expire on December 13, 2028. The units were sold at a purchase price of $1.22 per unit, for an aggregate initial net proceeds of $13.5 million, after deducting private placement fees and expenses. The closing of the Private Placement occurred on December 13, 2023. Also in December 2023, we entered into a registration rights agreement, or the Registration Rights Agreement, with the investors party to the Purchase Agreement, pursuant to which the Company agreed to register for resale the Shares and the common stock underlying the Warrants, or the Registrable Securities. Under the Registration Rights Agreement, the Company agreed to file a registration statement covering the resale of the Registrable Securities no later than 30 days following the closing of the Private Placement. We filed such registration statement on Form S-3 on January 12, 2024 and it was declared effective by the Securities and Exchange Commission on January 18, 2024. For additional information, see “—Liquidity and Capital Resources—2023 Private Placement” below and Note 1 to our financial statements located elsewhere in this Annual Report.

Current wording

In December 2023, we issued and sold an aggregate of 11,823,829 units comprising (i) (a) one share of our common stock, par value $0.0001 per share, or (b) one pre-funded warrant to purchase one share of common stock (the “2023 Pre-Funded Warrants”), and, in each case, (ii) one Series A warrant to purchase one share of common stock (the “Series A Warrants”), and (iii) one Series B warrant to purchase one share of common stock (the “Series B Warrants” and, together with the Series A Warrants, the “2023 Warrants”) (the “2023 Private Placement” and, together with the 2024 Private Placement, the “Private Placements”). In connection with the 2023 Private Placement, we issued an aggregate of 11,249,588 shares of common stock, 574,241 2023 Pre-Funded Warrants, 11,823,829 Series A Warrants and 11,823,829 Series B Warrants. The 2023 Pre-Funded Warrants have an exercise price of $0.0001 per share, are exercisable immediately and are exercisable until the 2023 Pre-Funded Warrant is exercised in full. The Amended Series A Warrants, have an exercise price of $0.45 per share. The remainder of the Series A warrants (the “Unamended Series A Warrants”) have an exercise price of $1.25 per share. The Series B Warrants have an exercise price of $1.50 per share, are exercisable immediately and will expire on December 13, 2028. The units were sold at a purchase price of $1.22 per unit, for an aggregate initial net proceeds of $13.5 million, after deducting private placement fees and expenses. The closing of the 2023 Private Placement occurred on December 13, 2023. On January 12, 2024, we filed a registration statement on Form S-3 to register for resale the common stock and the common stock underlying the 2023 Warrants and the 2023 Pre-Funded Warrants.

Previous wording

Since inception in 2016, our operations have focused on identifying and developing potential product candidates, conducting clinical trials, organizing and staffing, business planning, establishing our intellectual property portfolio, raising capital, and providing general and administrative support for these operations. We do not have any product candidates approved for sale and have not generated any revenue. We have funded our operations primarily through the sale of equity and equity-linked securities, including through our initial public offering, or IPO, follow-on offering, our at-the-market, or ATM, program with Cantor Fitzgerald & Co., or Cantor Fitzgerald, and the Private Placement.

Current wording

Since inception in 2016, our operations have focused on identifying and developing potential product candidates, conducting clinical trials, organizing and staffing, business planning, establishing our intellectual property portfolio, raising capital, and providing general and administrative support for these operations. We do not have any product candidates approved for sale and have not generated any revenue. We have funded our operations primarily through the sale of equity and equity-linked securities, including through our initial public offering ("IPO"), follow-on offering, our at-the-market ("ATM"), program with Cantor Fitzgerald & Co., ("Cantor Fitzgerald"), and the Private Placements.

Previous wording

We expect to incur additional losses in the future as we advance our product candidates through clinical trials, seek to expand our product candidate portfolio through developing additional product candidates, grow our clinical, regulatory and quality capabilities, and incur costs associated with operating as a public company. Based on our business strategy, our existing cash of $21.3 million as of December 31, 2023 will only fund the projected operating expenses and capital expenditure requirements into January 2025. Accordingly, there is substantial doubt about our ability to continue as a going concern for a period of twelve months from the date of issuance of these financial statements.

Current wording

We expect to incur additional losses in the future as we advance our product candidates through clinical trials, seek to expand our product candidate portfolio through developing additional product candidates, grow our clinical, regulatory and quality capabilities, and incur costs associated with operating as a public company. Based on our business strategy, our existing cash of $11.1 million as of December 31, 2024, along with $3.7 million in net proceeds from the issuance of equity in February 2025 under the ATM program and $0.4 million from the exercise of a portion of our Series C warrants exercised, is not anticipated to fund the Company’s projected operating expenses and capital expenditure requirements for a period of at least twelve months from the date of issuance of these financial statements, and accordingly, there is substantial doubt about the Company’s ability to continue to operate as a going concern.

Previous wording

We continue to deploy cash preservation measures to defer or reduce costs in the near term in order to preserve capital and increase financial flexibility given the on-going market environment for biotechnology stocks. These cash preservation measures may impact our ability and the timing to execute our strategy, including our ability to achieve the anticipated milestones and the timing of regulatory filings for our preclinical and clinical programs. To continue to fund our operations, management has developed plans, which primarily consist of raising additional capital through some combination of equity and/or debt offerings, including through our ATM program, and identifying strategic collaborations, licensing or other arrangements, to support the development of our product candidates. In addition, pursuant to the December 2023 Private Placement, we may receive an additional $14.8 million in aggregate proceeds if the holders of our Series A ordinary warrants exercise their warrants pursuant to the mandatory exercise feature, which is triggered upon our public announcement of INB-100 data for the ten currently enrolled patients, should they remain alive and evaluable, covering a period of at least 11 months of long-term follow-up for each patient, along with certain stock price and trading volume requirements. Further, if not otherwise redeemed by us, we may also receive aggregate proceeds of $17.7 million from the exercise of our outstanding Series B ordinary warrants issued in the Private Placement. There is no assurance, however, that we will receive any additional proceeds from the Private Placement or that any additional financing or any revenue-generating collaboration will be available when needed, that management will be able to obtain financing or enter into a collaboration on terms acceptable to us, or that any additional financing or revenue generated through third-party collaborations will be sufficient to fund our operations. If additional capital is not available to us on a timely basis, or at all, we will be required to take additional actions beyond the cost preservation measures initiated to date to address our liquidity needs, including exploring other strategic options, continuing to further reduce operating expense or delaying, reducing the scope of, discontinuing or altering our research and development activities. For additional information, see “—Liquidity” below.

Current wording

We continue to deploy cash preservation measures to defer or reduce costs in the near term in order to preserve capital and increase financial flexibility given the ongoing market environment for biotechnology stocks. These cash preservation measures may impact our ability and the timing to execute our strategy, including our ability to achieve the anticipated milestones and the timing of regulatory filings for our preclinical and clinical programs. To continue to fund our operations, management has developed plans, which primarily consist of the pipeline prioritization and workforce reduction, raising additional capital through some combination of equity and/or debt offerings, including through our ATM program, and identifying strategic collaborations, licensing or other arrangements to support development of our product candidates. In addition, as of March 10, 2025, we may receive an additional $5.4 million and $8.1 million in aggregate proceeds if the holders of our Series A warrants and Series C warrants exercise their warrants, respectively. Further, if not otherwise redeemed by us, we may also receive aggregate proceeds of up to $17.7 million from the exercise of our outstanding Series B warrants. There is no assurance, however, that we will receive any additional proceeds from the Private Placements or that any additional financing or any revenue-generating collaboration will be available when needed, that management will be able to obtain financing or enter into a collaboration on terms acceptable to us, or that any additional financing or revenue generated through third-party collaborations will be sufficient to fund our operations. If additional capital is not available to us on a timely basis, or at all, we will be required to take additional actions beyond the cost preservation measures initiated to date to address our liquidity needs, including exploring other strategic options, continuing to further reduce operating expense or delaying, reducing the scope of, discontinuing or altering our research and development activities. For additional information, see “—Liquidity” below.

Previous wording

employee-related expenses, including salaries, related-benefits and stock-based compensation expense for employees engaged in research and development functions;

Current wording

employee-related expenses, including salaries, related-benefits, severance payments and stock-based compensation expense for employees engaged in research and development functions;

Previous wording

expenses incurred in connection with conducting clinical trials, including investigator grants and site payments for time and pass-through expenses and expenses incurred under agreements with contract research organizations, or CROs, as well as contract manufacturing organizations, or CMOs, and consultants that conduct and provide supplies for our preclinical studies and clinical trials;

Current wording

expenses incurred in connection with conducting clinical trials including investigator grants and site payments for time and pass-through expenses and expenses incurred under agreements with contract research organizations ("CROs") as well as contract manufacturing organizations ("CMOs") and consultants that conduct and provide supplies for our preclinical studies and clinical trials;

Previous wording

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive and finance functions. General and administrative expenses also include professional fees for legal, accounting, auditing, tax and consulting services; travel expenses; director and officer insurance expenses as a publicly traded company; and facility-related expenses, which include allocated expenses for rent and maintenance of facilities and other operating costs not included in research and development.

Current wording

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive and finance functions. General and administrative expenses also include professional fees for legal, accounting, auditing, tax and consulting services; travel expenses; director and officer insurance expenses as a publicly traded company; and facility-related expenses, which include shared expenses for rent and maintenance of facilities and other operating costs not included in research and development.

Previous wording

General and administrative expenses were $13.5 million for the year ended December 31, 2023, compared to $14.5 million for the comparable prior year period. The decrease of $1.0 million was primarily due to decreases in insurance costs due to cost savings related to D&O insurance premiums, professional services and salaries, partially offset by an increase in marketing expenses and stock-based compensation expense due to the increased headcount.

Current wording

General and administrative expenses were $12.6 million for the year ended December 31, 2024, compared to $13.5 million for the comparable prior year period. The decrease of $0.9 million was primarily due to decreases in insurance costs due to cost savings related to D&O insurance premiums, professional services, and salaries, partially offset by an increase in legal and consulting expenses.

Previous wording

We have funded our operations primarily through the sale of equity and equity-linked securities, including through our IPO, follow-on offering, our ATM program and recently completed Private Placement. Through December 31, 2023, we have raised an aggregate of $115.8 million of gross proceeds from the sale of our securities.

Current wording

We have funded our operations primarily through the sale of equity and equity-linked securities, including through our IPO, follow-on offering, our ATM program and the Private Placements. Through December 31, 2024, we have raised an aggregate of $132.1 million of gross proceeds from the sale of our securities.

Previous wording

As of December 31, 2023, we had cash of $21.3 million. Our current plan of operation is to continue to implement our business strategy, including continuing clinical development of INB-100, INB-200 and INB-400, and advancing our other product candidates, including our preclinical pipeline and our internal research and development capabilities and seek potential collaborative partners for our earlier stage assets. Based on this business strategy, our existing cash as of December 31, 2023 will only fund the projected operating expenses and capital expenditure requirements into January 2025.

Current wording

As of December 31, 2024, we had cash of $11.1 million. Our current plan of operation is to execute our business strategy, by advancing clinical development of INB-100, and progressing our other product candidates, including our preclinical pipeline and strengthening our internal research and development capabilities. Additionally we are actively seeking potential collaborative partners for INB-400 and our earlier stage assets. Based on this business strategy, our existing cash as of December 31, 2024 plus net proceeds of $3.7 million from the issuance of equity under the ATM program raised in February 2025 and $0.4 million from the exercise of a portion of our Series C warrants, is only expected to fund the projected operating expenses and capital expenditure requirements into March 2026.

Previous wording

In November 2022, we filed a shelf registration statement on Form S-3 (File No. 333-268288), or the Shelf Registration Statement, with the SEC, which permits the offering, issuance and sale by us of up to a maximum aggregate offering price of $200 million of our securities, of which $50 million of common stock may be issued and sold pursuant to an ATM program. We entered into a Controlled Equity Offering SM sales agreement, or the Sales Agreement, with Cantor Fitzgerald and Truist, under which Cantor Fitzgerald and Truist agreed to act as our sales agents to sell shares of our common stock, from time to time, through the ATM program. During the year ended December 31, 2023, the Company sold an aggregate of 7,492,580 shares of common stock under the ATM program, resulting in net proceeds of approximately $14.4 million, after deducting underwriting discounts. On March 8, 2024, the Company delivered a termination notice to Truist, removing them as a sales agent under the ATM program. Such termination became effective on March 14, 2024.

Current wording

In November 2022, we filed a shelf registration statement on Form S-3 (File No. 333-268288), or the Shelf Registration Statement, with the SEC, which permits the offering, issuance and sale by us of up to a maximum aggregate offering price of $200 million of our securities, of which $50 million of common stock may be issued and sold pursuant to an ATM program. We entered into a Controlled Equity Offering SM sales agreement (the "Sales Agreement"), with Cantor Fitzgerald and Truist, under which Cantor Fitzgerald and Truist agreed to act as our sales agents to sell shares of our common stock, from time to time, through the ATM program. On March 8, 2024, the Company delivered a termination notice to Truist, removing them as a sales agent under the ATM program. Such termination became effective on March 14, 2024. During the year ended December 31, 2024, we sold an aggregate of 3,479,623 shares of common stock under the ATM program, resulting in net proceeds of approximately $3.8 million, after deducting underwriting discounts. As of March 10, 2025 $11.0 million remained available for the sale of our common stock under the ATM program.

Previous wording

Additionally, inflationary factors, such as increases in the cost of our clinical trial materials and supplies, interest rates and overhead costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates rise) on our operating costs, including our labor costs and research and development costs, due to supply chain constraints, consequences associated with the ongoing Russia-Ukraine war, and employee availability and wage increases, which may result in additional stress on our working capital resources.

Current wording

Additionally, inflationary factors, such as increases in the cost of our clinical trial materials and supplies, interest rates and overhead costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates rise) on our operating costs, including our labor costs and research and development costs, due to supply chain constraints, consequences associated with geopolitical tensions such as the Israel-Hamas war and the Russia-Ukraine war, any future tariffs enacted by the U.S. government and employee availability and wage increases, which may result in additional stress on our working capital resources.

Previous wording

If we raise funds through strategic collaboration, licensing or other arrangements, we may relinquish significant rights or grant licenses on terms that are not favorable to us. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions, increases in inflation expectations and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from recent bank failures, public health crises such as the COVID-19 pandemic and other geopolitical tensions, such as the Israel-Hamas war and the Russia-Ukraine war. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or explore other strategic options for our product development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.

Current wording

If we raise funds through strategic collaboration, licensing or other arrangements, we may relinquish significant rights or grant licenses on terms that are not favorable to us. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions, increases in inflation expectations and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from uncertain economic conditions including inflation expectations and interest rates, uncertainties arising as a result of the change in U.S. federal administration, bank failures, public health crises such as the COVID-19 pandemic, any potential for avian influenza or similar outbreak and other geopolitical tensions, such as the Israel-Hamas war and the Russia-Ukraine war. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or explore other strategic options for our product development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.

Previous wording

Our material cash requirements as of December 31, 2023 included operating lease commitments, including the lease of our current headquarters office in New York, New York, laboratory and office space in Birmingham, Alabama and a manufacturing service agreement with a third party to engage in research of cell therapy products. As of December 31, 2023, we had fixed lease payment obligations of $6.0 million, with $2.0 million payable within 12 months. Refer to Note 14 to our financial statements for additional information.

Current wording

Our material cash requirements as of December 31, 2024 included operating lease commitments, including the lease of our current headquarters office in New York, New York, laboratory and office space in Birmingham, Alabama and a manufacturing service agreement with a third party to engage in research of cell therapy products. As of December 31, 2024, we had fixed lease payment obligations of $6.1 million, with $2.2 million payable within 12 months. See Note 14, Equipment and Facility Leases, for additional information.

Previous wording

Cash used in operating activities was $24.1 million during the year ended December 31, 2022, primarily due to our net loss of $28.5 million, partially offset by an increase in our non-cash charges of $4.6 million. Increases in our non-cash charges consisted primarily of $3.5 million in stock-based compensation due to increased employee headcount resulting from growth in our business and $1.0 million in amortization of operating and finance leases.

Current wording

Cash used in operating activities was $24.1 million during the year ended December 31, 2024, primarily due to our net loss of $30.4 million, partially offset by our non-cash charges of $7.7 million. Increases in our non-cash charges consisted primarily of $5.0 million in stock-based compensation due to increased employee headcount resulting from growth in our business, $1.7 million in amortization of operating and financing leases, and $1.0 million in depreciation expense. The non-cash charges were offset by a decrease of $1.4 million in changes in operating assets and liabilities.

Previous wording

Cash used in investing activities was $3.7 million during the year ended December 31, 2022, primarily due to completion of the space buildout located in Alabama in the prior year.

Current wording

Cash used in investing activities was $0.2 million during the year ended December 31, 2024, primarily due to purchases of property and equipment and construction in progress activity in relation to leasehold improvements to the leased space located in Alabama.

Previous wording

Cash provided by financing activities was $9.0 million during the year ended December 31, 2022, primarily due to $9.4 million in proceeds received from the sale of common stock in our follow-on offering completed in August 2022, $0.1 million in proceeds received from our ATM program and $0.1 million from exercise of common stock options, slightly offset by $0.6 million in principal payments of finance leases.

Current wording

Cash provided by financing activities was $14.2 million during the year ended December 31, 2024, primarily due to $11.2 million in net proceeds received from the 2024 Private Placement and $3.8 million in net proceeds received from our ATM program, offset by $0.8 million in principal payments of finance leases.

Previous wording

Cash provided by financing activities was $27.0 million during the year ended December 31, 2023, primarily due to $14.4 million in proceeds received from our ATM program and $13.5 million in proceeds received from the Private Placement, offset by $0.8 million in principal payments of finance leases.

Current wording

Cash provided by financing activities was $27.0 million during the year ended December 31, 2023, primarily due to $14.4 million in proceeds received from our ATM program and $13.5 million in proceeds received from the 2023 Private Placement, offset by $0.8 million in principal payments of finance leases.

Previous wording

We measure all stock-based awards granted to employees, nonemployees and directors based on the fair value on the date of the grant and recognize compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. We account for our stock-based compensation as an expense in the statements of operations based on the awards’ grant date fair values. We account for forfeitures as they occur by reversing any expense recognized for unvested awards. We estimate the fair value of options granted using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires inputs based on certain subjective assumptions, including (a) the expected stock price volatility, (b) the calculation of expected term of the award, (c) the risk-free interest rate and (d) expected dividends. Due to the lack of company-specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The computation of expected volatility is based on the historical volatility of a representative group of companies with similar characteristics to us, including stage of product development and life science industry focus. We use the simplified method as allowed by the SEC Staff Accounting Bulletin, or SAB, No. 107, Share-Based Payment, to calculate the expected term for options granted to employees, as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The expected dividend yield is assumed to be zero as we have never paid dividends and have no current plans to pay any dividends on our common stock.

Current wording

We measure all stock-based awards granted to employees, nonemployees and directors based on the fair value on the date of the grant and recognize compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. We account for our stock-based compensation as an expense in the statements of operations based on the awards’ grant date fair values. We account for forfeitures as they occur by reversing any expense recognized for unvested awards. We estimate the fair value of options granted using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires inputs based on certain subjective assumptions, including (a) the expected stock price volatility, (b) the calculation of expected term of the award, (c) the risk-free interest rate and (d) expected dividends. Due to the lack of company-specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The computation of expected volatility is based on the historical volatility of a representative group of companies with similar characteristics to us, including stage of product development and life science industry focus. We use the simplified method as allowed by the SEC Staff Accounting Bulletin (SAB) No. 107, Share-Based Payment, to calculate the expected term for options granted to employees, as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The expected dividend yield is assumed to be zero as we have never paid dividends and have no current plans to pay any dividends on our common stock.

Previous wording

We did not adopt any new accounting guidance during the year ended December 31, 2023 and as of the date of this report that had a material impact on the financial statements or disclosures. Additionally, there is no pending accounting guidance that we expect to have a material impact on the financial statements.

Current wording

We did not adopt any new accounting guidance during the year ended December 31, 2024. As of as of January 1, 2025 we adopted Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-07 effective January 1, 2025. See Note 15, Segments, in the accompanying notes to the consolidated financial statements for further detail. Additionally, there is no pending accounting guidance that we expect to have a material impact on the financial statements.

Previous wording

We qualify as an emerging growth company, or EGC, as defined in the Jumpstart Our Business Startups Act, or JOBS Act. As an EGC, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies, including reduced disclosure about our executive compensation arrangements, exemption from the requirements to hold non-binding advisory votes on executive compensation and golden parachute payments and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

Current wording

We qualify as an emerging growth company ("EGC") as defined in the Jumpstart Our Business Startups Act ("JOBS Act"). As an EGC, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies, including reduced disclosure about our executive compensation arrangements, exemption from the requirements to hold non-binding advisory votes on executive compensation and golden parachute payments and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.