Jasper Therapeutics Inc

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes includedin*Part I, Item 1 of this Quarterly Report on Form 10-Q (this “Quarterly Report”) and with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission on March 5, 2024.*Certain of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section entitled “Risk Factors”, in Part I - Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 5, 2024, as updated by the factors described under the heading “Risk Factors” in Part II - Item 1A of this Quarterly Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. You should carefully read the section entitled “Risk Factors” to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see “Cautionary Note Regarding Forward-Looking Statements” below. The events and circumstances reflected in our forward-looking statements may not be achieved or may not occur, and actual results could differ materially from those described in or implied by the forward-looking statements contained in the following discussion and analysis. As a result of these risks, you should not place undue reliance on these forward-looking statements. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes includedinPart I, Item 1 of this Quarterly Report on Form 10-Q (this “Quarterly Report”) and with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission on March 5, 2024. Certain of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section entitled “Risk Factors”, in Part I - Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 5, 2024, as updated by the factors described under the heading “Risk Factors” in Part II - Item 1A of this Quarterly Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. You should carefully read the section entitled “Risk Factors” to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see “Cautionary Note Regarding Forward-Looking Statements” below. The events and circumstances reflected in our forward-looking statements may not be achieved or may not occur, and actual results could differ materially from those described in or implied by the forward-looking statements contained in the following discussion and analysis. As a result of these risks, you should not place undue reliance on these forward-looking statements. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Previous wording

We have incurred significant losses and negative cash flows from operations since our inception. During the three months ended March 31, 2024 and 2023, we incurred net losses of $13.7 million and $14.3 million, respectively. We generated negative operating cash flows of $15.7 million and $10.3 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, we had an accumulated deficit of $183.3 million.

Current wording

We have incurred significant losses and negative cash flows from operations since our inception. During the three and six months ended June 30, 2024, we incurred net losses of $14.6 million and $28.3 million, respectively. During the three and six months ended June 30, 2023, we incurred net losses of $16.1 million and $30.3 million, respectively. During the six months ended June 30, 2024 and 2023, we had negative cash flows from operations of $27.4 million and $23.6 million, respectively. As of June 30, 2024, we had an accumulated deficit of $197.9 million.

Previous wording

We had cash and cash equivalents of $118.5 million as of March 31, 2024. We expect that our existing cash and cash equivalents will be sufficient to fund our operating plan for at least twelve months from the date of filing of this Quarterly Report. We expect to continue to incur substantial losses for the foreseeable future, and our transition to profitability will depend upon successful development, approval and commercialization of our product candidates and upon achievement of sufficient revenues to support our cost structure. We do not expect to generate any revenue from commercial product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates. We may never achieve profitability, and unless we do and until then, we will need to continue to raise additional capital.

Current wording

We had cash and cash equivalents of $106.8 million as of June 30, 2024. We expect that our existing cash and cash equivalents will be sufficient to fund our operating plan for at least twelve months from the date of filing of this Quarterly Report. We expect to continue to incur substantial losses for the foreseeable future, and our transition to profitability will depend upon successful development, approval and commercialization of our product candidates and upon achievement of sufficient revenues to support our cost structure. We do not expect to generate any revenue from commercial product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates. We may never achieve profitability, and unless we do and until then, we will need to continue to raise additional capital.

Previous wording

Research and development expenses increased by $0.5 million, from $9.8 million for the three months ended March 31, 2023 to $10.3 million for the three months ended March 31, 2024, mainly due to hiring of additional personnel, progression of our clinical trials and an increase in consulting costs, offset by a decrease in product development activities.

Current wording

Research and development expenses decreased by $2.0 million, from $13.3 million for the three months ended June 30, 2023 to $11.3 million for the three months ended June 30, 2024, mainly due to a decrease in product development activities.

Previous wording

External CRO, CMO and other third-party preclinical studies and clinical trials expenses decreased by $0.8 million, from $4.8 million for the three months ended March 31, 2023 to $4.0 million for the three months ended March 31, 2024. The decrease is primarily due to a $2.4 million decrease in manufacturing expenses and a $0.4 million decrease in expenses related to pre-clinical studies, partially offset by an increase of $2.1 million in CRO expenses. Expenses related to professional consulting services increased by $0.3 million, from $1.0 million for the three months ended March 31, 2023 to $1.3 million for the three months ended March 31, 2024, due to additional work performed by consultants related to our pre-clinical studies.

Current wording

External clinical research organizations (“CRO”), contract manufacturing organization (“CMO”) and other third-party preclinical studies and clinical trials expenses decreased by $3.8 million, from $7.7 million for the three months ended June 30, 2023 to $3.9 million for the three months ended June 30, 2024. The decrease is primarily due to a $4.4 million decrease in manufacturing expenses, partially offset by an increase of $0.4 million in CRO expenses and an increase of $0.1 million in other clinical studies and trial related expenses. Other external research and development costs increased by $0.6 million, from $0.5 million for the three months ended June 30, 2023 to $1.1 million for the three months ended June 30, 2024 due to increases in purchases of laboratory materials and supplies and other miscellaneous costs.

Previous wording

General and administrative expenses increased by $0.7 million, from $4.1 million for the three months ended March 31, 2023 to $4.8 million for the three months ended March 31, 2024. Employee payroll and related expenses increased by $0.9 million, from $1.7 million for the three months ended March 31, 2023 to $2.6 million for the three months ended March 31, 2024, as a result of continued hiring of executives and administrative employees. Stock-based compensation expenses were $0.8 million and $0.5 million for the three months ended March 31, 2024 and 2023, respectively. Expenses related to professional consulting services increased by $0.2 million, from $1.6 million for the three months ended March 31, 2023 to $1.8 million for the three months ended March 31, 2024. Other expenses, including insurance, office supplies, subscriptions and other miscellaneous expenses, decreased by $0.5 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily related to decreased insurance expenses.

Current wording

General and administrative expenses increased by $0.2 million, from $4.5 million for the three months ended June 30, 2023 to $4.7 million for the three months ended June 30, 2024. Employee payroll and related expenses increased by $0.8 million, from $1.9 million for the three months ended June 30, 2023 to $2.7 million for the three months ended June 30, 2024, as a result of continued hiring of executives and administrative employees. Stock-based compensation expenses were $1.0 million and $0.9 million for the three months ended June 30, 2024 and 2023, respectively. Expenses related to professional consulting services decreased by $0.3 million, from $1.9 million for the three months ended June 30, 2023 to $1.6 million for the three months ended June 30, 2024. Other expenses, decreased by $0.3 million for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily related to decreased insurance expenses.

Previous wording

Interest income increased by $0.3 million, from $1.1 million for the three months ended March 31, 2023 to $1.4 million for the three months ended March 31, 2024, primarily due to higher cash balances invested in money market funds.

Current wording

Interest income increased by $0.1 million, from $1.4 million for the three months ended June 30, 2023 to $1.5 million for the three months ended June 30, 2024, primarily due to higher cash balances invested in money market funds.

Previous wording

Other expense, net is comprised of foreign currency transactions gains and losses and was less than $0.1 million and $0.1 million for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Other expense, net is comprised of foreign currency transactions gains and losses and was less than $0.1 million and $0.1 million for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

Personnel-related costs, including employee payroll and related expenses increased by $0.8 million, from $2.3 million for the three months ended March 31, 2023 to $3.1 million for the three months ended March 31, 2024, as a result of hiring additional employees in our research and development organization. Stock-based compensation expenses decreased by $0.1 million, from $0.5 million for the three months ended March 31, 2023 to $0.4 million for the three months ended March 31, 2024. Facilities and overheads include common facilities, human resources and information technology related expenses allocated to research and development, which increased by $0.2 million, from $1.0 million for the three months ended March 31, 2023 to $1.2 million for the three months ended March 31, 2024.

Current wording

Personnel-related costs, including employee payroll and related expenses increased by $1.9 million, from $5.0 million for the six months ended June 30, 2023 to $6.8 million for the six months ended June 30, 2024, as a result of hiring additional employees in our research and development organization. Stock-based compensation expenses decreased by $0.2 million, from $1.0 million for the six months ended June 30, 2023 to $0.8 million for the six months ended June 30, 2024. Facilities and overheads include common facilities, human resources and information technology related expenses allocated to research and development, which increased by $0.3 million, from $2.3 million for the six months ended June 30, 2023 to $2.6 million for the six months ended June 30, 2024.

Previous wording

We recognized zero and $0.6 million of other expense related to the change in the fair value of the common stock warrants for the three months ended March 31, 2024 and 2023, respectively. These warrants are publicly traded, were classified as liabilities and were remeasured at fair value, which was the closing market price of a warrant, at the end of each reporting period until January 2023. In January 2023, a holder converted all its outstanding shares of non-voting common stock into shares of voting common stock, and we no longer have any outstanding shares of non-voting common stock. As such, the outstanding warrants met equity classification criteria, were reclassified to equity and are no longer remeasured at fair value at the end of each reporting period.

Current wording

We recognized zero and $0.6 million of other expenses related to the change in the fair value of the common stock warrants for the six months ended June 30, 2024 and 2023, respectively. These warrants are publicly traded, were classified as liabilities and were remeasured at fair value, which was the closing market price of a warrant, at the end of each reporting period until January 2023. In January 2023, an investor converted all its outstanding shares of non-voting common stock into shares of voting common stock, and we no longer have any outstanding shares of non-voting common stock. As such, the outstanding warrants met equity classification criteria, were reclassified to equity and are no longer remeasured at fair value at the end of each reporting period.

Previous wording

Our earnout liability relates to the sponsor earnout shares placed in escrow upon the closing of the business combination in September 2021. These shares will be released from escrow upon achieving agreed-upon common stock price targets within the specified period. Refer to Note 7 in our condensed consolidated financial statements included in Part I - Item 1 of this Quarterly Report for additional details. This liability is recorded at fair value using a Monte Carlo simulation model and is re-measured at each period end until shares are released or forfeited. The significant inputs used in the Monte Carlo model include the expected volatility of our common stock, the expected risk-free interest rate, the expected common stock closing price and the expected term when shares will be released. We recognized less than $0.1 million and $0.8 million of other expense related to the increase in the fair value of the earnout liability for the three months ended March 31, 2024 and 2023, respectively, mainly due to the increase in our common stock price during the respective periods.

Current wording

Our earnout liability relates to the sponsor earnout shares placed in escrow upon the closing of the business combination in September 2021. These shares will be released from escrow upon achieving agreed-upon common stock price targets within the specified period. Refer to Note 7 in our condensed consolidated financial statements included in Part I - Item 1 of this Quarterly Report for additional details. This liability is recorded at fair value using a Monte Carlo simulation model and is re-measured at each period end until shares are released or forfeited. The significant inputs used in the Monte Carlo model include the expected volatility of our common stock, the expected risk-free interest rate, the expected common stock closing price and the expected term when shares will be released. We recognized less than $0.1 million and $0.3 million of other expense related to the increase in the fair value of the earnout liability for the six months ended June 30, 2024 and 2023, respectively, mainly due to the increase in our common stock price during the respective periods.

Previous wording

As of March 31, 2024, we had $118.5 million of cash and cash equivalents.

Current wording

As of June 30, 2024, we had $106.8 million of cash and cash equivalents.

Previous wording

We have incurred significant losses and negative cash flows from operations since our inception. As of March 31, 2024, we had an accumulated deficit of $183.3 million. Based on our current operating plan, we have concluded that our existing cash and cash equivalents will be sufficient to fund our current operating plan for at least the next twelve months from the date of filing of this Quarterly Report. We have based these estimates on our current assumptions, which may require future adjustments based on our ongoing business decisions.

Current wording

We have incurred significant losses and negative cash flows from operations since our inception. As of June 30, 2024, we had an accumulated deficit of $197.9 million. Based on our current operating plan, we have concluded that our existing cash and cash equivalents will be sufficient to fund our current operating plan for at least the next twelve months from the date of filing of this Quarterly Report. We have based these estimates on our current assumptions, which may require future adjustments based on our ongoing business decisions.

Previous wording

In August 2020 and January 2022, we leased approximately 13,400 square feet of space for our headquarters in Redwood City, California. The lease expires in August 2026. We have an option to extend the term for an additional five years to August 2031. In addition to base rent, we pay our share of operating expenses and taxes. As of March 31, 2024, our rent commitments under the lease agreement were $1.2 million within the next 12 months from March 31, 2024, and $1.6 million for the remainder of the lease term.

Current wording

In August 2020 and January 2022, we leased approximately 13,400 square feet of space for our headquarters in Redwood City, California. The lease expires in August 2026. We have an option to extend the term for an additional five years to August 2031. In addition to base rent, we pay our share of operating expenses and taxes. As of June 30, 2024, our rent commitments under the lease agreement were $1.2 million within the next 12 months from June 30, 2024, and $1.3 million for the remainder of the lease term.

Previous wording

Net cash used in operating activities was $15.7 million and $10.3 million for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Net cash used in operating activities was $27.4 million and $23.6 million for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

Cash used in operating activities in the three months ended March 31, 2024 was primarily due to our net loss for the period of $13.7 million, adjusted by non-cash net loss of $1.6 million and a net change of $3.6 million in our net operating assets and liabilities. The non-cash amounts consisted of $1.2 million related to stock-based compensation expense, $0.3 million related to depreciation and amortization expense, and $0.1 million non-cash lease expense. The changes in our net operating assets and liabilities were primarily due to a decrease of $1.8 million in accounts payable, a decrease of $1.7 million in accrued expenses and other current liabilities, a decrease of $0.2 million in operating lease liability and an increase of $0.1 million in other non-current assets, offset by an increase of $0.2 million in prepaid expenses and other current assets.

Current wording

Cash used in operating activities in the six months ended June 30, 2024 was primarily due to our net loss for the period of $28.3 million, adjusted by non-cash net loss of $3.5 million and a net change of $2.6 million in our net operating assets and liabilities. The non-cash amounts consisted of $2.7 million related to stock-based compensation expense, $0.6 million related to depreciation and amortization expense, and $0.2 million non-cash lease expense. The changes in our net operating assets and liabilities were primarily due to a decrease of $1.3 million in accounts payable, a decrease of $1.2 million in accrued expenses and other current liabilities, a decrease of $0.5 million in operating lease liability, offset by a decrease of $0.2 million in prepaid expenses and other current assets and a decrease of $0.2 million in other non-current assets.

Previous wording

Cash used in operating activities in the three months ended March 31, 2023 was primarily due to our net loss for the period of $14.3 million, adjusted by non-cash net loss of $3.0 million and a net change of $0.9 million in our net operating assets and liabilities. The non-cash amounts consisted of $1.3 million net loss related to the changes in fair value of common stock warrant liability and the earnout liability, $1.3 million related to stock-based compensation expense, $0.3 million related to depreciation and amortization expense and $0.1 million non-cash lease expense. The changes in our net operating assets and liabilities were primarily due to an increase of $2.1 million in accounts payable, a decrease of $0.7 million in other receivables and a decrease of less than $0.1 million in other non-current assets, partially offset by a decrease of $1.3 million in accrued expenses and other current liabilities, an increase of $0.3 million in prepaid expenses and other current assets, a decrease of $0.2 million in operating lease liabilities and a decrease of less than $0.1 million in other non-current liabilities.

Current wording

Cash used in operating activities in the six months ended June 30, 2023 was primarily due to our net loss for the period of $30.3 million, adjusted by non-cash net loss of $4.3 million and a net change of $2.4 million in our net operating assets and liabilities. The non-cash amounts consisted of $2.7 million related to stock-based compensation expense, $0.9 million net loss related to the changes in fair value of common stock warrant liability and the earnout liability, $0.5 million related to depreciation and amortization expense and $0.2 million non-cash lease expense. The changes in our net operating assets and liabilities were primarily due to an increase of $2.0 million in accrued expenses and other current liabilities, a decrease of $0.7 million in other receivables and a decrease of $0.3 million in other non-current assets, partially offset by a decrease of $0.4 million in operating lease liability and a decrease of $0.2 million in accounts payable.

Previous wording

Cash used in investing activities was less than $0.1 million for each of the three months ended March 31, 2024 and 2023, which primarily consisted of purchases of the computer and lab equipment.

Current wording

Cash used in investing activities was $0.2 million and less than $0.1 million for the six months ended June 30, 2024 and 2023, respectively, which primarily consisted of leasehold improvements, purchases of the computer and lab equipment.

Previous wording

Cash provided by financing activities for the three months ended March 31, 2024 was $47.3 million, which consisted primarily of net proceeds from the issuance and sale of shares of common stock in an underwritten public offering of $47.2 million and cash received from the exercise of stock options of $0.2 million.

Current wording

Cash provided by financing activities for the six months ended June 30, 2024 was $47.5 million, which consisted primarily of net proceeds from the issuance and sale of shares of common stock in an underwritten public offering of $47.2 million and cash received from the exercise of stock options of $0.3 million.

Previous wording

Cash provided by financing activities for the three months ended March 31, 2023 was $101.5 million, which consisted primarily of net proceeds from the issuance and sale of shares of common stock in an underwritten public offering and the ATM Offering of $101.5 million and less than $0.1 million cash received from exercises of stock options.

Current wording

Cash provided by financing activities for the six months ended June 30, 2023 was $101.2 million, which consisted primarily of net proceeds from the issuance and sale of shares of common stock in an underwritten public offering and the ATM Offering of $101.5 million, cash received from the exercise of stock options of $0.4 million and cash received from the issuance of common stock upon Employee Stock Purchase Plan purchase of less than $0.1 million, partially offset by taxes withheld and paid related to net settlement of equity awards of $0.7 million.