Tarsus Pharmaceuticals Inc

Previous wording

•our anticipated use of our existing resources and the proceeds from our initial public offering ("IPO, our subsequent follow-on public offerings in May 2022 (the "May 2022 Public Offering"), August 2023 (the "August 2023 Public Offering"), and March 2024 (the "March 2024 Public Offering", collectively the “Follow-On Public Offerings”), as well as proceeds from our sales agreement prospectus (the "2023 ATM Prospectus"), and drawdowns from our loan and security agreement (the "Pharmakon Credit Facility") with funds associated with Pharmakon Advisors, LP ("Pharmakon").

Current wording

•our anticipated use of our existing resources and the proceeds from our initial public offering ("IPO, our subsequent follow-on public offerings in May 2022 (the "May 2022 Public Offering"), August 2023 (the "August 2023 Public Offering"), and March 2024 (the "March 2024 Public Offering", collectively the “Follow-On Public Offerings”), as well as proceeds from our sales agreement prospectus (the "2023 ATM Prospectus"), and drawdowns from our loan and security agreement (the "2024 Credit Facility") with funds associated with Pharmakon Advisors, LP ("Pharmakon").

Previous wording

We are a commercial stage biopharmaceutical company focused on the development and commercialization of therapeutics, starting with eye care. Our lead product, XDEMVY (lotilaner ophthalmic solution) 0.25%, formerly known as TP-03, was approved by the U.S. Food and Drug Administration ("FDA") in July 2023 for the treatment ofblepharitis caused by the infestation of Demodex mites, which is referred to as Demodex blepharitis. Blepharitis ("Blephar" is a reference to eyelid and “itis” is a reference to inflammation) is an ophthalmic lid margin disease characterized by inflammation of the eyelid margin, redness and ocular irritation, including a specific type of eyelash dandruff called collarettes, which are pathognomonic for Demodex blepharitis. Poorly controlled and progressive blepharitis can lead to corneal damage over time and, in extreme cases, blindness. There may be as many as approximately 25 million people in the U.S. who suffer from Demodex blepharitis. XDEMVY is the first and only therapeutic approved by the FDA and we believe is the definitive standard of care for the treatment of Demodex blepharitis.

Current wording

We are a commercial stage biopharmaceutical company focused on the development and commercialization of therapeutics, starting with eye care. Our commercial product, XDEMVY (lotilaner ophthalmic solution) 0.25%, formerly known as TP-03, was approved by the U.S. Food and Drug Administration ("FDA") in July 2023 for the treatment of Demodex blepharitis caused by the infestation of Demodex mites. Blepharitis ("Blephar" is a reference to eyelid and “itis” is a reference to inflammation) is an ophthalmic lid margin disease characterized by inflammation of the eyelid margin, redness and ocular irritation, including a specific type of eyelash dandruff called collarettes, which are pathognomonic for Demodex blepharitis. Poorly controlled and progressive blepharitis can lead to corneal damage over time and, in extreme cases, blindness. There may be as many as approximately 25 million people in the U.S. who suffer from Demodex blepharitis. XDEMVY is the first and only therapeutic approved by the FDA and we believe is the definitive standard of care for the treatment of Demodex blepharitis.

Previous wording

•Approximately 8,000 ECPs have started patients on XDEMVY with more than 50% of ECPs prescribing XDEMVY to multiple patients as of May 3, 2024.

Current wording

•Approximately 11,000 ECPs have started patients on XDEMVY launch-to-date with more than 60% of ECPs prescribing XDEMVY to multiple patients as of August 7, 2024.

Previous wording

TP-03 China Territory Out-License: On February 13, 2024, LianBio Ophthalmology Limited ("LianBio") announced its plan to wind down its operations. On March 14, 2024, LianBio's Board of Directors made a special cash dividend payment to the Company of $0.7 million (equivalent to $4.80 per share, the fair value of the LianBio common stock).

Current wording

TP-03 China Territory Out-License: In February 2024, LianBio Ophthalmology Limited ("LianBio") announced its plan to wind down its operations. In March 2024, LianBio's Board of Directors made a special cash dividend payment to the Company of $0.7 million (equivalent to $4.80 per share, the fair value of the LianBio common stock).

Previous wording

On March 26, 2024, we executed an agreement with Xi An Grand Chang An Pharmaceutical Co., Ltd. ("GrandPharma"), a subsidiary of Grand Pharmaceutical Group Limited, and LianBio to transition the rights to develop and commercialize TP-03 in China for the treatment of Demodex blepharitis (the "Novation Agreement"). Upon execution of the Novation Agreement, the development and license agreement with LianBio (the "China Out-License"), was assigned to GrandPharma and a one-time payment of $2.5 million (the "Termination Payment") was triggered, which was received on April 5, 2024. Additionally, the Novation Agreement amended the $15.0 million future development milestone related to the approval of TP-03 for the treatment of Demodex blepharitis in the China Territory, as defined in the China Out-License, with a combined condition of issuance of a patent related to TP-03. All references to the China Out-License in this Quarterly Report on Form 10-Q shall refer to the China Out-License, as assigned from LianBio to GrandPharma, pursuant to the Novation Agreement.

Current wording

On March 26, 2024, we executed an agreement with Xi An Grand Chang An Pharmaceutical Co., Ltd. ("GrandPharma"), a subsidiary of Grand Pharmaceutical Group Limited, and LianBio to transition the rights to develop and commercialize TP-03 in China for the treatment of Demodex blepharitis and MGD (the "Novation Agreement"). Upon execution of the Novation Agreement, the development and license agreement with LianBio (the "China Out-License"), was assigned to GrandPharma and a one-time payment of $2.5 million (the "Termination Payment") was recorded as license fees and collaboration revenue in the Condensed Statements of Operations and Comprehensive Loss for the six months ended June 30, 2024. Additionally, the Novation Agreement amended the $15.0 million future development milestone related to the approval of TP-03 for the treatment of Demodex blepharitis in the China Territory, as defined in the China Out-License, with a combined condition of issuance of a patent related to TP-03. All references to the China Out-License in this Quarterly Report on Form 10-Q shall refer to the China Out-License, as assigned from LianBio to GrandPharma, pursuant to the Novation Agreement.

Previous wording

Simultaneous with the execution of the Novation Agreement, we entered into an agreement with LianBio to terminate the third tranche of the equity warrants related to the purchase of 78,373 shares of LianBio common stock for a total cancellation payment of $0.4 million (the "Warrant Termination Payment"), which was received on April 5, 2024.

Current wording

Simultaneous with the execution of the Novation Agreement, we entered into an agreement with LianBio to terminate the third tranche of the equity warrants related to the purchase of 78,373 shares of LianBio common stock for a total cancellation payment of $0.4 million (the "Warrant Termination Payment"), which is recorded as license fees and collaboration revenue in the Condensed Statements of Operations and Comprehensive Loss for the six months ended June 30, 2024. In June 2024, we sold our shares of LianBio common stock (see Note 3).

Previous wording

To date we have financed our operations through private placements of preferred stock, convertible promissory notes, net proceeds from issuance of common stock in our IPO, our subsequent follow-on public offerings in May 2022, August 2023, and March 2024, and our 2023 sales agreement prospectus, as well as proceeds from net product sales, our China Out-License, and drawdowns from the Credit Facility and the Pharmakon Credit Facility.

Current wording

To date we have financed our operations through private placements of preferred stock, convertible promissory notes, net proceeds from issuance of common stock in our IPO, our subsequent Follow-On Public Offerings in May 2022, August 2023, and March 2024, and our 2023 ATM Prospectus, as well as proceeds from net product sales, our China Out-License, and drawdowns from our Credit Facilities.

Previous wording

We have incurred significant net operating losses in every year since our inception and expect to continue to incur significant operating expenses as we commercialize XDEMVY for Demodex blepharitis and as we advance our other product candidates through clinical trials, regulatory submissions, and potential commercialization. Our net loss was $35.7 million and $23.4 million for the three months ended March 31, 2024 and 2023, respectively. Our net losses may fluctuate significantly from quarter to quarter and year to year and could be substantial. We anticipate that our operating expenses will increase significantly as we:

Current wording

We have incurred significant net operating losses ("NOLs") in every year since our inception and expect to continue to incur significant operating expenses as we commercialize XDEMVY for Demodex blepharitis and as we advance our other product candidates through clinical trials, regulatory submissions, and potential commercialization. Our net loss was $33.3 million and $31.4 million for the three months ended June 30, 2024 and 2023, respectively, and $69.0 million and $54.8 million for the six months ended June 30, 2024 and 2023, respectively. Our net losses may fluctuate significantly from quarter to quarter and year to year and could be substantial. We anticipate that our operating expenses will increase significantly as we:

Previous wording

•hire additional staff, including clinical, scientific, technical, regulatory, marketing, operations, financial, and other support personnel, to execute our business plan; and

Current wording

•hire additional staff, including clinical, scientific, technical, regulatory, marketing, sales, operations, financial, and other support personnel, to execute our business plan; and

Previous wording

Because of the numerous risks and uncertainties associated with drug product development and commercialization, we are unable to accurately predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate significant revenue from product sales, net we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels.

Current wording

Because of the numerous risks and uncertainties associated with drug product development and commercialization, we are unable to accurately predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate significant revenue from net product sales we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels.

Previous wording

As of March 31, 2024, our aggregate cash, cash equivalents and marketable securities was $298.5 million – see the section below titled “Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

Current wording

As of June 30, 2024, our aggregate cash, cash equivalents and marketable securities was $323.6 million – see the section below titled “Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

Previous wording

In addition, we may be exposed to credit risk on deposits at financial institutions to the extent our account balances exceed the amount insured by the Federal Deposit Insurance Corporation (“FDIC”). We maintain cash held in deposit at financial institutions in the U.S., including SVB, a division of First Citizens Bank. While these deposits are insured by the FDIC in an amount up to $250,000 for any depositor, to the extent we hold cash deposits in amounts that exceed the FDIC insurance limitation, we may incur a loss in the event of a failure of any of the financial institutions where we maintain deposits. We invest our excess cash in highly liquid investments, including money market fund accounts, that are readily convertible into cash without penalty. We believe the Company is not exposed to significant credit risk due to the financial position of the depository institution and the types of accounts we hold, but we will continue to monitor regularly and adjust, if needed, to mitigate risk, including any ongoing or new events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions.

Current wording

In addition, we may be exposed to credit risk on deposits at financial institutions to the extent our account balances exceed the amount insured by the Federal Deposit Insurance Corporation (“FDIC”). We maintain cash held in deposit at financial institutions in the U.S. While these deposits are insured by the FDIC in an amount up to $250,000 for any depositor, to the extent we hold cash deposits in amounts that exceed the FDIC insurance limitation, we may incur a loss in the event of a failure of any of the financial institutions where we maintain deposits. We invest our excess cash in highly liquid investments, including money market fund accounts, that are readily convertible into cash without penalty. We believe the Company is not exposed to significant credit risk due to the financial position of the depository institutions and the types of accounts we hold, but we will continue to monitor regularly and adjust, if needed, to mitigate risk, including any ongoing or new events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions.

Previous wording

During the three months ended March 31, 2024 we recognized revenue of $24.7 million from product sales, net of rebates, chargebacks, discounts, and other adjustments driven by approximately 26,000 prescriptions of XDEMVY to patients. During the three months ended March 31, 2023, there were no product sales, net recognized.

Current wording

During the three months ended June 30, 2024 we recognized revenue of $40.8 million from product sales, net of rebates, chargebacks, discounts, and other adjustments driven by approximately 37,000 bottles of XDEMVY delivered to patients. During the three months ended June 30, 2023, there were no product sales, net recognized.

Previous wording

For the three months ended March 31, 2024, we recognized $1.7 million in cost of sales for XDEMVY. Cost of sales consists of direct and indirect costs related to the manufacturing and distribution of XDEMVY, including raw materials, third-party manufacturing costs, packaging services, and freight-in, as well as third-party royalties payable on our product sales, net and amortization of capitalized intangible assets associated with XDEMVY. During the three months ended March 31, 2023, there were no cost of sales recognized.

Current wording

For the three months ended June 30, 2024, we recognized $3.0 million in cost of sales for XDEMVY. Cost of sales consists of direct and indirect costs related to the manufacturing and distribution of XDEMVY, including raw materials, third-party manufacturing costs, packaging services, and freight-in, as well as third-party royalties payable on our product sales, net and amortization of capitalized intangible assets associated with XDEMVY. During the three months ended June 30, 2023, there were no cost of sales recognized.

Previous wording

Research and development expenses decreased by $0.3 million for the three months ended March 31, 2024, as compared to the prior year period. This decrease was primarily due to (i) $1.6 million of decreased TP-05 program expenses including $1.0 million for the food effect study and $0.5 million for the Carpo trial, and (ii) $1.0 million of prior period milestone expense related to our in-license agreement with Elanco. These decreases were partially offset by (i) $1.5 million of increased payroll and personnel-related costs (including increased stock-based compensation expense of $0.3 million) related to 20 employee additions period over period to drive our product development initiatives, (ii) $0.5 million of other indirect expenses, and (iii) $0.5 million of increased TP-03 program expenses primarily due to Phase 4 studies, which was partially offset by completion of the Ersa Phase 2a trial.

Current wording

Research and development expenses decreased by $0.2 million for the three months ended June 30, 2024, as compared to the prior year period. This decrease was primarily due to (i) $0.4 million of decreased TP-03 program expenses primarily due to completion of the Ersa Phase 2a trial, partially offset by Phase 4 studies, (ii) $0.7 million of decreased TP-04 program expenses related to completion of the Galatea trial, and (iii) $0.5 million of decreased TP-05 program expenses including $0.2 million for the food effect study and $0.4 million for the Carpo trial. These decreases were partially offset by (i) $0.8 million of increased payroll and personnel-related costs (including increased stock-based compensation expense of $0.4 million) related to 10 employee additions period over period to drive our product development initiatives, (ii) $0.2 million of other indirect expenses, and (iii) $0.3 million of increased early-stage programs.

Previous wording

Selling, general and administrative expenses increased by $36.5 million for the three months ended March 31, 2024, as compared to the prior year period. The increase was primarily due to (i) $11.3 million of increased payroll and personnel-related costs (including increased stock-based compensation expense of $1.2 million) for 122 corporate employee additions, period over period, to support our business growth and commercial leadership hires for our recent commercial launch of XDEMVY, (ii) $12.2 million of increased commercial and market research costs as we continued our commercial expansion for the recent commercial launch of XDEMVY, and (iii) $12.7 million of increased IT applications, legal, professional and other corporate expenses. We expect our field sales headcount and associated vendor expenses to continue to increase during 2024 due to further growth and expansion of our commercial activities for XDEMVY.

Current wording

Selling, general and administrative expenses increased by $38.5 million for the three months ended June 30, 2024, as compared to the prior year period. The increase was primarily due to (i) $11.0 million of increased payroll and employee-related costs (including increased stock-based compensation expense of $1.7 million) for 153 commercial and corporate employee additions, period over period, to support our business growth and commercial leadership hires for our commercial launch of XDEMVY, (ii) $13.8 million of increased commercial and marketing costs as we continued our commercial expansion for the commercial launch of XDEMVY, and (iii) $13.6 million of increased information technology applications, legal, professional and other corporate expenses. Our field sales headcount and associated vendor expenses have continued to increase during 2024 due to further growth and expansion of our commercial activities for XDEMVY.

Previous wording

For the three months ended March 31, 2024, we recognized $2.9 million of license fees and collaboration revenue including (i) $2.5 million for the Termination Payment related to the Novation Agreement and (ii) $0.4 million for the Warrant Termination Payment. During three months ended March 31, 2023 we recognized $2.5 million related to the achievement of a contractual milestone under the China Out License. These allocated amounts represented the satisfaction of the transfer of license rights to LianBio and the completion of related performance obligations.

Current wording

For the six months ended June 30, 2024 we recognized $2.9 million of license fees and collaboration revenue including, (i) $2.5 million for the Termination Payment related to the Novation Agreement, and (ii) $0.4 million for the Warrant Termination Payment. For the six months ended June 30, 2023 we recognized $2.5 million related to the achievement of a contractual milestone under the China Out-License. These allocated amounts represented the satisfaction of the transfer of license rights to LianBio and the completion of related performance obligations.

Previous wording

Other income, net increased by $0.4 million primarily due to (i) $0.8 million of increased interest income earned on our cash, cash equivalents and marketable securities, and (ii) $0.6 million of other income, net substantially related to dividend income from LianBio. These increases were partially offset by decreases in other income, net including (i) $0.5 million change in fair value of the LianBio common stock (ii) increased interest expense of $0.3 million on the Credit Facility, and (iii) $0.2 million change in fair value related to the final mark-to-market adjustment on the unvested third tranche equity warrant.

Current wording

Other income, net decreased by $1.0 million primarily due to (i) increased interest expense of $1.6 million related to the Credit Facilities, (ii) $0.6 million change in fair value of the LianBio common stock, and (iii) $0.2 million change in fair value related to the final mark-to-market adjustment on the unvested third tranche equity warrant. These decreases to other income, net were partially offset by (i) $2.7 million of increased interest income earned on our cash, cash equivalents and marketable securities, and (ii) $0.6 million of other income, net substantially related to dividend income from LianBio.

Previous wording

Since our inception, we have financed our operations substantially through private placements of preferred stock, net proceeds from the issuance of common stock through our IPO, Follow-on Public Offerings, and the 2023 ATM Prospectus, as well as proceeds from net product sales, the China Out-License, and drawdowns from the Credit Facility and the Pharmakon Credit Facility. As of March 31, 2024, we had cash, cash equivalents and marketable securities of $298.5 million.

Current wording

Since our inception, we have financed our operations substantially through private placements of preferred stock, net proceeds from the issuance of common stock through our IPO, Follow-on Public Offerings, and the 2023 ATM Prospectus, as well as proceeds from net product sales, the China Out-License, and drawdowns from our Credit Facilities. As of June 30, 2024, we had cash, cash equivalents and marketable securities of $323.6 million.

Previous wording

In February 2024, we filed an automatic shelf registration statement on Form S-3 ASR (the "2024 Shelf Registration Statement"). On March 5, 2024 we completed an underwritten follow-on public offering under the 2024 Shelf Registration Statement on Form S-3 of 2,812,500 shares of our common stock, par value $0.0001 per share, and, in lieu of common stock to a certain investor, pre-funded warrants to purchase 312,500 shares of our common stock (the “March 2024 Public Offering”). The price to the public was $32.00 per share and $31.9999 per pre-funded warrant, which was the price to the public of each share of common stock sold in the March 2024 Public Offering, minus the $0.0001 exercise price per pre-funded warrant. We also granted the underwriters a 30-day option to purchase up to 468,750 additional shares of its common stock at the public offering price of $32.00 per share, which the underwriters exercised in full on March 1, 2024. We received approximately $107.7 million in aggregate net proceeds, after deducting underwriting discounts, commissions, and other estimated offering-related expenses.

Current wording

In February 2024, we filed an automatic shelf registration statement on Form S-3 ASR (the "2024 Shelf Registration Statement"). In March 2024 we completed the March 2024 Public Offering, an underwritten follow-on public offering under the 2024 Shelf Registration Statement on Form S-3 of 2,812,500 shares of our common stock, par value $0.0001 per share, and, in lieu of common stock to a certain investor, pre-funded warrants to purchase 312,500 shares of our common stock. The price to the public was $32.00 per share and $31.9999 per pre-funded warrant, which was the price to the public of each share of common stock sold in the March 2024 Public Offering, minus the $0.0001 exercise price per pre-funded warrant. We also granted the underwriters a 30-day option to purchase up to 468,750 additional shares of its common stock at the public offering price of $32.00 per share, which the underwriters exercised in full in March 2024. We received $107.7 million in aggregate net proceeds, after deducting underwriting discounts, commissions, and other estimated offering-related expenses.

Previous wording

During the year ended December 31, 2023, we sold 1,000,000 shares of our common stock for $20.00 per share under a sales agreement prospectus filed in November 2023, pursuant to the 2023 Shelf Registration Statement (defined below) covering the sale of up to $100.0 million of our common stock pursuant to an Open Market Sale Agreement TM (the "2023 ATM Prospectus") with Jefferies LLC ("Jefferies"). This resulted in net proceeds of $19.2 million, after deducting broker commissions and offering related expenses.

Current wording

During the year ended December 31, 2023, we sold 1,000,000 shares of our common stock for $20.00 per share under a sales agreement prospectus filed in November 2023, pursuant to the 2023 Shelf Registration Statement (defined below) covering the sale of up to $100.0 million of our common stock pursuant to the 2023 ATM Prospectus with Jefferies LLC ("Jefferies"). This resulted in net proceeds of $19.2 million, after deducting broker commissions and offering related expenses.

Previous wording

During the three months ended March 31, 2024, there were no sales of our common stock pursuant to the 2023 ATM Prospectus.

Current wording

During the three and six months ended June 30, 2024, there were no sales of our common stock pursuant to the 2023 ATM Prospectus.

Previous wording

As of March 31, 2024 the Company is eligible to receive further consideration from GrandPharma upon the achievement of additional TP-03 events, including: (i) $20.0 million of potential future regulatory and/or patent milestones; (ii) $100.0 million of potential future China-Based TP-03 sales threshold milestones; and (iii) tiered low-to-high-teen royalties for China Territory TP-03 product sales.

Current wording

As of June 30, 2024 the Company is eligible to receive further consideration from GrandPharma upon the achievement of additional TP-03 events, including: (i) $20.0 million of potential future regulatory and/or patent milestones; (ii)

Previous wording

In February 2022, we executed the Credit Facility with Hercules and SVB. Concurrent with the execution of the Credit Facility we drew $20.0 million. This Credit Facility was amended in January 2023 and August 2023. The Credit Facility, as amended, set a maximum interest rate, updated the terms of prepayment under the Credit Facility and includes an extended period to drawdown the tranche associated with the New Drug Application("NDA") submission, from March 15, 2023 to March 15, 2024 provided at least $5.0 million was drawn on or before March 15, 2023 and at least an additional $5.0 million was drawn on or before September 15, 2023. On March 15, 2023 and September 15, 2023, respectively, we made draws of $5.0 million (including SVB's commitment of $1.25 million) from the $25.0 million tranche associated with the NDA submission of TP-03. The balance on the Credit Facility was $29.9 million as of March 31, 2024 and included a four-year period of interest-only payments. The agreement was extendable for a fifth year to February 2027 maturity, upon our expected achievement of required conditions. As of March 31, 2024, we had $75.0 million of remaining tranched availability.

Current wording

In February 2022, we executed the Credit Facility with Hercules Capital, Inc. and SVB (the "2022 Credit Facility"). Concurrent with the execution of the 2022 Credit Facility we drew $20.0 million. The 2022 Credit Facility was amended in January 2023 and August 2023. The Credit Facility, as amended, set a maximum interest rate, updated the terms of prepayment and included an extended period to drawdown the tranche associated with the New Drug Application("NDA") submission. In March 2023 and September 2023, respectively, we made draws of $5.0 million (including SVB's commitment of $1.25 million) from the $25.0 million tranche associated with the NDA submission of TP-03. We did not incur any lender fees as part of the 2022 Credit Facility.

Previous wording

On April 19, 2024 the Company executed the Pharmakon Credit Facility with Pharmakon. The Pharmakon Credit Facility provides a $75.0 million initial term loan which was drawn in April 2024, a portion of which was utilized to repay all outstanding indebtedness associated with the prior Credit Facility, for total net proceeds of $39.8 million. The Pharmakon Credit Facility provides for three potential additional term loan tranches in principal amounts up to $25.0 million, $50.0 million, and $50.0 million, respectively, subject to customary conditions to funding and, in the case of the last two tranches, achieving minimum net sales milestones. The three additional tranches may be requested on or prior to December 31, 2024, June 30, 2025 and December 31, 2025, respectively. The Pharmakon Credit Facility matures on April 19, 2029.

Current wording

In April 2024, the Company executed the 2024 Credit Facility with Pharmakon with maturity in April 2029. Upon execution, we made a $75.0 million draw from the initial tranche, a portion of which was utilized to repay all outstanding indebtedness associated with the 2022 Credit Facility, for total net proceeds of $39.6 million. The 2024 Credit Facility provides for three potential additional term loan tranches in principal amounts up to $25.0 million, $50.0 million, and $50.0 million, respectively, subject to customary conditions to funding and, in the case of the last two tranches, achieving minimum net sales milestones. The three additional tranches may be requested on or prior to December 31, 2024, June 30, 2025 and December 31, 2025, respectively.

Previous wording

The Pharmakon Credit Facility will bear interest at a floating rate based upon the secured overnight financing rate (“SOFR”), plus a margin of 6.75% per annum. The SOFR is subject to a 3.75% floor. The Pharmakon Credit Facility contains representations and warranties, affirmative and negative covenants in each case. There is also no warrant coverage to the lenders and no financial covenants associated with the financing.

Current wording

The 2024 Credit Facility bears interest at a floating rate based upon the secured overnight financing rate (“SOFR”), plus a margin of 6.75% per annum. The SOFR is subject to a 3.75% floor. The 2024 Credit Facility contains representations and warranties, affirmative and negative covenants in each case. There is also no warrant coverage to the lenders and no financial covenants associated with the financing.

Previous wording

Our operating expenditures currently consist of cost of sales, research and development costs (including activities within our preclinical, clinical, regulatory, and drug manufacturing initiatives) and selling, general and administrative costs. Our use of cash is impacted by the timing and extent of payments for each of these activities and other business requirements. We have incurred significant losses and negative cash flows from operations since our inception and had an accumulated deficit of $280.4 million as of March 31, 2024.

Current wording

Our operating expenditures currently consist of cost of sales, research and development costs (including activities within our preclinical, clinical, regulatory, and drug manufacturing initiatives) and selling, general and administrative costs. Our use of cash is impacted by the timing and extent of payments for each of these activities and other business requirements. We have incurred significant losses and negative cash flows from operations since our inception and had an accumulated deficit of $313.7 million and $244.7 million as of June 30, 2024 and December 31, 2023.

Previous wording

We believe that our cash, cash equivalents and marketable securities of $298.5 million as of March 31, 2024 is sufficient to fund our current and planned operations for at least the next twelve months from this Quarterly Report on Form 10-Q. We also anticipate having additional availability from our Pharmakon Credit Facility of at least $25.0 million on or prior to December 31, 2024 and another $100 million contingent on reaching certain sales milestones. Our cash runway estimate is predicated on current assumptions for future revenue, operating expenses, and debt availability and may require future adjustments. Accordingly, we may be required to raise additional capital earlier than we currently expect based on our cash requirements and market dynamics.

Current wording

We believe that our cash, cash equivalents and marketable securities of $323.6 million as of June 30, 2024 is sufficient to fund our current and planned operations for at least the next twelve months from this Quarterly Report on Form 10-Q. We also anticipate having additional availability from our 2024 Credit Facility of at least $25.0 million on or prior to December 31, 2024 and another $100 million contingent on reaching certain sales milestones. Our cash runway estimate is predicated on current assumptions for future revenue, operating expenses, and debt availability and may require future adjustments. Accordingly, we may be required to raise additional capital earlier than we currently expect based on our cash requirements and market dynamics.

Previous wording

As part of the 2023 Shelf Registration Statement, we concurrently filed the 2023 ATM Prospectus with Jefferies. Under the terms of the 2023 ATM Prospectus, Jefferies will act as the Company's sales agent and is entitled to compensation for its services equal to 3% of the gross proceeds of any shares of common stock sold. In December 2023, we sold 1,000,000 shares of our common stock under the 2023 ATM Prospectus for $20.00 per share and received net proceeds of $19.2 million, after deducting broker commission and offering-related expenses.

Current wording

As part of the 2023 Shelf Registration Statement, we concurrently filed the 2023 ATM Prospectus with Jefferies covering the sale of up to $100.0 million of our common stock pursuant to an Open Market Sale Agreement TM we entered into with Jefferies in 2021 (the “ATM Sales Agreement”). Under the terms of the 2023 ATM Prospectus and ATM Sales Agreement, Jefferies will act as the Company's sales agent and is entitled to compensation for its services equal to 3% of the gross proceeds of any shares of common stock sold. In December 2023, we sold 1,000,000 shares of our common stock under the 2023 ATM Prospectus for $20.00 per share and received net proceeds of $19.2 million, after deducting broker commission and offering-related expenses.

Previous wording

On November 1, 2021, we filed a shelf registration statement on Form S-3 that was declared effective by the SEC on November 5, 2021 (the “2021 Shelf Registration Statement”), which permitted us to offer up to $300.0 million of common stock, preferred stock, debt securities and warrants in one or more offerings and in any combination, including in units from time to time. The 2023 Shelf Registration Statement replaced the 2021 Shelf Registration Statement.

Current wording

In November 2021, we filed a shelf registration statement on Form S-3 that was declared effective by the SEC on November 5, 2021 (the “2021 Shelf Registration Statement”), which permitted us to offer up to $300.0 million of common stock, preferred stock, debt securities and warrants in one or more offerings and in any combination, including in units from time to time. The 2023 Shelf Registration Statement replaced the 2021 Shelf Registration Statement.

Previous wording

Also, as part of the 2021 Shelf Registration Statement, we concurrently filed a sales agreement prospectus covering the sale of up to $100.0 million of our common stock pursuant to an Open Market Sale Agreement TM (the “2021 ATM Prospectus”) with Jefferies LLC. We did not sell any shares of our common stock under the 2021 ATM Prospectus. On July 31, 2023, in connection with the August 2023 Public Offering, we terminated the sales agreement prospectus relating to the 2021 ATM Prospectus.

Current wording

Also, as part of the 2021 Shelf Registration Statement, we concurrently filed a sales agreement prospectus (the “2021 ATM Prospectus”) covering the sale of up to $100.0 million of our common stock pursuant to the ATM Sales Agreement. We did not sell any shares of our common stock under the 2021 ATM Prospectus. In July 2023, in connection with the August 2023 Public Offering, we terminated the sales agreement prospectus relating to the 2021 ATM Prospectus.

Previous wording

We expect to incur significant operating losses for the foreseeable future, and for these losses to further increase, as we expand our clinical development programs for our other product candidates and given the recent commercial launch of XDEMVY. We may also encounter unforeseen expenses, difficulties, complications, delays and other currently unknown factors that could adversely affect our business.

Current wording

We expect to incur significant operating losses for the foreseeable future, and for these losses to further increase, as we expand our clinical development programs for our other product candidates and given the commercial launch of XDEMVY. We may also encounter unforeseen expenses, difficulties, complications, delays and other currently unknown factors that could adversely affect our business.

Previous wording

•the achievement of milestones or occurrence of other developments that trigger payments under any collaboration agreements we might have at such time and availability of our Pharmakon Credit Facility;

Current wording

•the achievement of milestones or occurrence of other developments that trigger payments under any collaboration agreements we might have at such time and availability of our 2024 Credit Facility;

Previous wording

Net cash used in operating activities was $37.8 million for the three months ended March 31, 2024, which primarily consisted of our net loss of $35.7 million and a net decrease in net operating assets and liabilities of $8.6 million, partially offset by a net increase in non-cash and other changes of $6.5 million. The net decrease in net operating assets and liabilities was primarily due to an increase in accounts receivable of $13.3 million and a decrease in accrued payroll and benefits of $7.3 million, partially offset by an increase in accounts payable and other accrued liabilities of $12.3 million. The net non-cash and other charges were primarily related to stock-based compensation expense of $5.5 million and unrealized loss on equity investments of $0.6 million.

Current wording

Net cash used in operating activities was $52.2 million for the six months ended June 30, 2024, which primarily consisted of our net loss of $69.0 million, partially offset by a net increase in net operating assets and liabilities of $1.7 million and a net increase in non-cash and other charges of $15.2 million. The increase in net operating assets and liabilities was primarily due to an increase in accounts payable and other accrued liabilities of $19.4 million and a decrease in prepaid expenses of $1.8 million, partially offset by cash decreases including $12.9 million of accounts receivable, $5.2 million of accrued payroll and benefits and $1.6 million of inventory. The net non-cash and other charges were primarily related to stock-based compensation expense of $13.0 million and a loss on debt extinguishment of $1.9 million.

Previous wording

Net cash used in operating activities was $22.0 million for the three months ended March 31, 2023, which primarily consisted of our net loss of $23.4 million and net decrease in net operating assets and liabilities of $1.4 million, partially offset by a net increase in non-cash and other changes of $2.9 million. The net decrease in net operating assets and liabilities was primarily due to an increase in accounts receivable of $2.5 million, a decrease in accrued payroll and benefits of $1.3 million, and a decrease in accounts payable and other accrued liabilities of $1.0 million, partially offset by a decrease in other receivables of $3.2 million. The net increase in non-cash and other charges were primarily related to stock-based compensation expense of $3.9 million, partially offset by net amortization/accretion on marketable securities of $1.5 million.

Current wording

Net cash used in operating activities was $45.8 million for the six months ended June 30, 2023, which primarily consisted of our net loss of $54.8 million, partially offset by net increases in non-cash and other charges of $7.3 million and net operating assets and liabilities of $1.7 million. The net increase in non-cash and other charges were primarily related to stock-based compensation expense of $9.1 million and depreciation expense of $0.3 million, partially offset by net amortization/accretion on marketable securities of $2.6 million. The net increase in net operating assets and liabilities was primarily due to a decrease in other receivables of $3.3 million, partially offset by a decrease in accounts payable and other accrued liabilities of $0.6 million and an increase in other non-current assets of $0.5 million.

Previous wording

Net cash used in investing activities was $102.2 million for the three months ended March 31, 2024, and primarily relates to $104.6 million of purchased investments and $0.2 million of purchased furniture, fixtures, office equipment and leasehold improvements for our laboratory and administrative offices, partially offset by $2.5 million of proceeds from maturities of investments.

Current wording

Net cash used in investing activities was $142.7 million for the six months ended June 30, 2024, and primarily relates to $151.6 million of purchased marketable securities, $3.0 million of purchased long-term investments, and $1.2 million of purchased manufacturing equipment, office equipment, and furniture and fixtures, partially offset by $13.0 million of proceeds from maturities of investments.

Previous wording

Net cash provided by investing activities was $11.3 million for the three months ended March 31, 2023, and primarily related to $40.3 million of proceeds from maturities of investments, partially offset by $28.7 million of purchased investments and $0.3 million of purchased furniture, fixtures and leasehold improvements for our laboratory and administrative offices.

Current wording

Net cash provided by investing activities was $75.4 million for the six months ended June 30, 2023, and primarily related to $105.2 million of proceeds from maturities of investments, partially offset by $28.7 million of purchased investments and $1.1 million of purchased furniture, fixtures and leasehold improvements for our laboratory and administrative offices.

Previous wording

Net cash provided by financing activities was $108.8 million for the three months ended March 31, 2024, and primarily relates to $98.6 million of net proceeds from the issuance of common stock and $9.4 million of net proceeds from the issuance of pre-funded warrants related to the March 2024 Public Offering, and $0.8 million of proceeds from employee stock option exercises.

Current wording

Net cash provided by financing activities was $151.1 million for the six months ended June 30, 2024, and primarily relates to (i) $98.3 million of net proceeds from the issuance of common stock related to the March 2024 Public Offering, (ii) $9.4 million of net proceeds from the issuance of pre-funded warrants related to the March 2024 Public Offering, (iii) $75.0 million of proceeds from an initial draw against our 2024 Credit Facility, (iv) $2.6 million of proceeds from employee stock option exercises and (v) $1.1 million of proceeds from our ESPP, partially offset by (i) $31.9 million of payments on the 2022 Credit Facility, and (ii) $3.5 million of cash paid for loan issuance costs on the 2024 Credit Facility.

Previous wording

We will remain an emerging growth company until theearliest of (1) December 31, 2025, which is the last day of our first fiscal year following the fifth anniversary of the completion of our IPO, (2) the last day of our first fiscal year (a) in which we have total annual gross revenues of at least $1.235 billion or (b) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million, as of the prior June 30th and (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

Current wording

We will remain an emerging growth company until theearliest of (1) December 31, 2025, which is the last day of our first fiscal year following the fifth anniversary of the completion of our IPO, (2) the last day of our first fiscal year (a) in which we have total annual gross revenues of at least $1.235 billion or (b) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million, as of the prior