Tarsus Pharmaceuticals Inc

Previous wording

•our ability to successfully commercialize XDEMVY®, formerly known as TP-03, for the treatment of Demodex blepharitis;

Current wording

•our ability to continue to successfully commercialize XDEMVY®, formerly known as TP-03, for the treatment of Demodex blepharitis;

Previous wording

•our plans relating to commercializing XDEMVY and our product candidates, if approved, including commercialization timelines and sales strategy;

Current wording

•our plans related to the continued commercialization of XDEMVY and our product candidates, if approved, including commercialization timelines and sales strategy;

Previous wording

•our estimates of the number of patients in the United States ("U.S.") or globally, as applicable, who suffer from Demodex blepharitis, Meibomian Gland Disease ("MGD"), rosacea, Lyme disease and malaria and the number of patients that will enroll in our clinical trials;

Current wording

•our estimates of the number of patients in the United States ("U.S.") or globally, as applicable, who suffer from Demodex blepharitis, rosacea, Lyme disease and malaria and the number of patients that will enroll in our clinical trials;

Previous 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.

Current wording

We are a commercial stage biopharmaceutical company focused on the development and commercialization of therapeutics, starting with eye care. We launched XDEMVY (lotilaner ophthalmic solution) 0.25%, formerly known as TP-03, for the treatment of Demodex blepharitis, in August 2023 after receiving U.S. Food and Drug Administration ("FDA") approval in July 2023. Demodex blepharitis is 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.

Previous wording

To date, we have completed seven clinical trials that include a Phase 3 Saturn-2 trial, a Phase 2b/3 Saturn-1 trial, four Phase 2 trials, and a Phase 1 trial for XDEMVY in Demodex blepharitis, all of which met their primary, secondary and/or certain exploratory endpoints, with the drug well tolerated throughout each trial. We have also completed, and/or have ongoing clinical trials for TP-03 for the potential treatment of MGD, TP-04 for the potential treatment of rosacea and TP-05 for potential Lyme disease prophylaxis, among others.

Current wording

To date, we have completed seven clinical trials that include a Phase 3 Saturn-2 trial, a Phase 2b/3 Saturn-1 trial, four Phase 2 trials, and a Phase 1 trial for XDEMVY in Demodex blepharitis, all of which met their primary, secondary and/or certain exploratory endpoints, with the drug well tolerated throughout each trial. We have also completed, and/or have ongoing clinical trials for the potential treatment of Demodex blepharitis in patients with MGD including the Ersa clinical trial involving XDEMVY, and the Rhea clinical trial involving XDEMVY vehicle; TP-04 for the potential treatment of rosacea, and TP-05 for potential Lyme disease prophylaxis, among others.

Previous wording

We intend to further advance our pipeline with the lotilaner API to address several diseases in human medicine, including eye care, dermatology, and infectious disease prevention. We are investigating the development of our product candidates to address targeted diseases with high unmet medical needs, which currently include TP-03 for the potential treatment of MGD, TP-04, a novel gel formulation of lotilaner for the potential treatment of rosacea, and TP-05, a novel investigative oral formulation of lotilaner, for potential Lyme disease prophylaxis and community malaria reduction.

Current wording

We intend to further advance our pipeline with the lotilaner API to address several diseases in human medicine, including eye care, dermatology, and infectious disease prevention. We are investigating the development of our product candidates to address targeted diseases with high unmet medical needs, which currently include TP-04, a novel gel formulation of lotilaner for the potential treatment of rosacea and TP-05, a novel investigative oral formulation of lotilaner, for potential Lyme disease prophylaxis and community malaria reduction.

Previous wording

•Delivered more than 37,000 bottles of XDEMVY to patients during the second quarter of 2024.

Current wording

•Delivered more than 41,400 bottles of XDEMVY to patients during the third quarter of 2024.

Previous 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.

Current wording

•Increased Eye Care Professional ("ECP") adoption with more than 13,000 ECPs who have started patients on XDEMVY launch-to-date and more than 70% of ECPs prescribing XDEMVY to multiple patients as of November 13, 2024.

Previous wording

•On track with plans to deploy approximately 50 additional sales force representatives and leaders by the end of the third quarter of 2024.

Current wording

•We completed recruitment and deployment of approximately 50 new sales force representatives and leaders during the third quarter of 2024.

Previous wording

TP-03 Meibomian Gland Disease, Ersa Trial: In December 2023, we announced positive topline results of the Ersa Phase 2a clinical trial evaluating TP-03 (lotilaner ophthalmic solution, 0.25%) administered twice daily or three times a day for 12 weeks for the treatment of MGD in patients with Demodex mites. TP-03 demonstrated statistically significant and clinically meaningful improvements compared to baseline in two objective measures of the disease – the presence and quality of liquid secretion as measured by the Meibomian Gland Secretion Score and the number of glands secreting normal (clear) liquid and was well tolerated. We plan to discuss and determine the potential regulatory path with the FDA by the end of 2024.

Current wording

TP-03 Demodex blepharitis in patients with Meibomian Gland Disease (MGD), Ersa and Rhea Trials: In December 2023, we announced positive topline results of the Ersa pilot clinical trial evaluating XDEMVY (lotilaner ophthalmic solution, 0.25%) administered twice daily ("BID") or three times a day ("TID") for 6 weeks and 12 weeks for the treatment of MGD in patients with Demodex mites. XDEMVY demonstrated statistically significant and clinically meaningful improvements compared to baseline in two objective measures of the disease: the presence and quality of liquid secretion as measured by the Meibomian Gland Secretion Score; and the number of glands secreting normal or clear liquid. In November 2024, additional positive data was presented from Ersa as well as data from Rhea, a pilot study evaluating XDEMVY vehicle for the treatment of MGD in patients with Demodex mites, at the American Academy of Optometry ("AAOpt") Annual Meeting 2024. The Rhea study enrolled a similar patient population as Ersa, and evaluated the same outcomes, with the same dosing regimens, except Rhea participants received XDEMVY vehicle. Both the Ersa and Rhea studies also assessed patient reported outcomes for some of the most commonly reported patient symptoms in Demodex blepharitis and MGD, namely fluctuating vision, itching, redness, and burning.

Previous wording

TP-04 Rosacea, Galatea Trial: On February 27, 2024, we announced positive topline results from the Galatea trial evaluating TP-04, a novel gel formulation of lotilaner, for the treatment of rosacea which demonstrated statistically significant improvements (p<0.05) in inflammatory lesions and Investigator's Global Assessment score (change in baseline and success rate) were observed compared to vehicle at week 12. TP-04 was generally well tolerated. We plan to discuss and determine the potential regulatory path with the FDA by the end of 2024.

Current wording

TP-04 Rosacea, Galatea Trial: In February 2024, we announced positive topline results from the Galatea trial evaluating TP-04, a novel gel formulation of lotilaner, for the treatment of rosacea which demonstrated statistically significant improvements (p<0.05) in inflammatory lesions and Investigator's Global Assessment score (change in baseline and success rate) were observed compared to vehicle at week 12. TP-04 was generally well tolerated. We plan to discuss and determine the potential regulatory path with the FDA by the end of 2024 and provide an update that is anticipated by the earnings call for the fiscal year ended 2024.

Previous wording

TP-05 Lyme Disease, Carpo Trial: On February 22, 2024, we announced positive topline results from the Carpo trial, which demonstrated statistical significance in the mortality of ticks compared to vehicle (p<0.001), regardless of treatment arm, and was well tolerated. The Carpo trial is designed to evaluate TP-05, a novel investigative oral, non-vaccine pharmacological prophylactic for the potential prevention of Lyme disease in humans. The Carpo trial evaluated the efficacy of TP-05 in killing lab grown, non-disease carrying ticks after they have attached to the skin of healthy volunteers, as well as confirm the safety, tolerability, and blood concentration of TP-05. We plan to discuss and determine the potential regulatory path with the FDA by the end of 2024.

Current wording

TP-05 Lyme Disease, Carpo Trial: In February 2024, we announced positive topline results from the Carpo trial, which demonstrated statistical significance in the mortality of ticks compared to vehicle (p<0.001), regardless of treatment arm, and was well tolerated. The Carpo trial is designed to evaluate TP-05, a novel investigative oral, non-vaccine pharmacological prophylactic for the potential prevention of Lyme disease in humans. The Carpo trial evaluated the efficacy of TP-05 in killing lab grown, non-disease carrying ticks after they have attached to the skin of healthy volunteers, as well as confirm the safety, tolerability, and blood concentration of TP-05. We plan to discuss and determine the potential regulatory path with the FDA by the end of 2024 and provide an update that is anticipated by the earnings call for the fiscal year ended 2024.

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 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.

Current wording

In March 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 nine months ended

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 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).

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 nine months ended September 30, 2024. In June 2024, we sold our shares of LianBio common stock (see Note 3).

Previous 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:

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 $23.4 million and $39.1 million for the three months ended September 30, 2024 and 2023, respectively, and $92.4 million and $94.0 million for the nine months ended September 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

•advance the clinical development of TP-03 for the potential treatment of MGD, TP-04 for the potential treatment of rosacea and TP-05 for the potential Lyme disease prophylaxis;

Current wording

•advance the clinical development of TP-04 for the potential treatment of rosacea and TP-05 for the potential Lyme disease prophylaxis;

Previous 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.”

Current wording

As of September 30, 2024, our aggregate cash, cash equivalents and marketable securities was $317.0 million – see the section below titled “Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

Previous 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.

Current wording

During the three months ended September 30, 2024 and 2023 we recognized revenue of $48.1 million and $1.7 million, respectively, from product sales, net of rebates, chargebacks, discounts, and other adjustments driven by approximately 41,400 bottles of XDEMVY delivered to patients compared to 1,700 bottles delivered in the prior year period.

Previous 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.

Current wording

For the three months ended September 30, 2024 and 2023, we recognized $3.2 million and $0.4 million, respectively, 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.

Previous 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.

Current wording

Research and development expenses for the three months ended September 30, 2024 remained consistent when compared to the prior year period. The slight increase was primarily due to (i) $0.2 million of increased TP-03 program expenses, (ii) $0.2 million of increased payroll and personnel-related costs (including increased stock-based compensation expense of $0.1 million) related to employee additions to drive our product development initiatives, and (iii) $0.2 million of other indirect expenses. These increases were partially offset by (i) $0.3 million of decreased TP-04 program expenses and (ii) $0.2 million of decreased early-stage programs.

Previous 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.

Current wording

Selling, general and administrative expenses increased by $27.6 million for the three months ended September 30, 2024, as compared to the prior year period. The increase was primarily due to (i) $9.5 million of increased payroll and employee-related costs (including increased stock-based compensation expense of $2.0 million) for commercial and corporate employee additions to support our business growth and commercial leadership hires for XDEMVY, (ii) $10.5 million of increased commercial and marketing costs as we continued our commercial expansion for the commercial launch of XDEMVY, and (iii) $7.5 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

Other income, net decreased by $1.4 million primarily due to $1.9 million of loss on debt extinguishment related to the Credit Facility (as defined below), and $1.3 million of increased interest expense related to the Credit Facilities (as defined below), partially offset by $1.9 million of increased interest income earned on our cash, cash equivalents and marketable securities.

Current wording

Other income (expense), net remained consistent period over period primarily due to $1.6 million of increased interest expense related to the Credit Facilities (as defined below), partially offset by (i) $1.3 million of increased interest income earned on our cash, cash equivalents and marketable securities, (ii) $0.1 million related to our LianBio common stock that was sold in June 2024, and (iii) $0.1 million of other miscellaneous income items.

Previous wording

During the six months ended June 30, 2024 we recognized revenue of $65.5 million from product sales, net of rebates, chargebacks, discounts, and other adjustments driven by approximately 63,000 bottles of XDEMVY delivered to patients. During the six months ended June 30, 2023, there were no product sales, net recognized.

Current wording

During the nine months ended September 30, 2024 and 2023, we recognized revenue of $113.7 million and $1.7 million, respectively, from product sales, net of rebates, chargebacks, discounts, and other adjustments driven by approximately 104,400 bottles of XDEMVY delivered to patients, compared to 1,700 bottles delivered in the prior year period.

Previous 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.

Current wording

For the nine months ended September 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 nine months ended September 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

For the six months ended June 30, 2024, we recognized $4.7 million in cost of sales of 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. For the six months ended June 30, 2023, there were no cost of sales recognized.

Current wording

For the nine months ended September 30, 2024 and 2023, we recognized $7.9 million and $0.4 million, respectively, in cost of sales of 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.

Previous wording

Research and development expenses decreased by $0.5 million for the six months ended June 30, 2024, as compared to the prior year period. The decrease was primarily due (i) $1.0 million of prior period milestone expense related to our Eye and Derm Agreement with Elanco, (ii) $2.2 million of decreased TP-05 program expenses including $1.2 million for the food effect study and $1.1 million for the Carpo trial, and (iii) $0.7 million of decreased TP-04 program expenses related to completion of the Galatea trial. These decreases were partially offset by (i) $2.3 million of increased indirect expenses related to payroll and personnel-related costs (including increased stock-based compensation expense of $0.7 million) for 10 employee additions period-over-period to drive our product development initiatives, (ii) $0.7 million of other indirect expenses, and (iii) $0.1 million of increased TP-03 program expenses.

Current wording

Research and development expenses decreased by $0.5 million for the nine months ended September 30, 2024, as compared to the prior year period. The slight decrease was primarily due to (i) $1.0 million of prior period milestone expense related to our Eye and Derm Agreement with Elanco, (ii) $2.2 million of decreased TP-05 program expenses including $1.3 million for the food effect study and $0.8 million for the Carpo trial, and (iii) $1.0 million of decreased TP-04 program expenses related to completion of the Galatea trial. These decreases were partially offset by (i) $2.5 million of increased indirect expenses related to payroll and personnel-related costs (including increased stock-based compensation expense of $0.7 million) for employee additions to drive our product development initiatives, (ii) $0.9 million of other indirect expenses, and (iii) $0.3 million of increased TP-03 program expenses.

Previous wording

Selling, general and administrative expenses increased by $75.0 million for the six months ended June 30, 2024, as compared to the prior year period. The increase was primarily due to (i) $22.4 million of increased payroll and employee-related costs (including increased stock-based compensation expense of $2.9 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) $26.0 million of increased commercial and marketing costs as we continued our commercial expansion for the commercial launch of XDEMVY, and (iii) $26.4 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.

Current wording

Selling, general and administrative expenses increased by $102.6 million for the nine months ended September 30, 2024, as compared to the prior year period. The increase was primarily due to (i) $31.9 million of increased payroll and employee-related costs (including increased stock-based compensation expense of $4.9 million) for commercial and corporate employee additions to support our business growth and commercial leadership hires for XDEMVY, (ii) $36.5 million of increased commercial and marketing costs as we continued our commercial expansion for the commercial launch of XDEMVY, and (iii) $33.9 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

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.

Current wording

Other income (expense), net decreased by $1.0 million primarily due to (i) $1.9 million loss on debt extinguishment related to the Credit Facility (as defined below), (ii) $3.2 million of increased interest expense related to the Credit Facilities, (iii) $0.7 million change in fair value of the LianBio common stock sold in June 2024, and (iv) $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) $4.0 million of increased interest income earned on our cash, cash equivalents and marketable securities, and (ii) $0.7 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 our Credit Facilities. As of June 30, 2024, we had cash, cash equivalents and marketable securities of $323.6 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 September 30, 2024, we had cash, cash equivalents and marketable securities of $317.0 million.

Previous 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.

Current wording

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

Previous 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)

Current wording

As of September 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) $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.

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 $313.7 million and $244.7 million as of June 30, 2024 and December 31, 2023.

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 $337.1 million and $244.7 million as of September 30, 2024 and December 31, 2023.

Previous 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.

Current wording

We believe that our cash, cash equivalents and marketable securities of $317.0 million as of September 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 (including the $5.0 million sales-based milestone triggered in September 2024 and expected to be paid in the fourth quarter of 2024). 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 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.

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. We have not sold any shares of our common stock under the 2023 ATM Prospectus during the three and nine months ended September 30, 2024. 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

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.

Current wording

Net cash used in operating activities was $60.8 million for the nine months ended September 30, 2024, which primarily consisted of our net loss of $92.4 million, partially offset by net increases in non-cash and other charges of $22.0 million and net operating assets and liabilities of $9.6 million. The increase in net non-cash and other charges were primarily related to stock-based compensation expense of $20.4 million and a loss on debt extinguishment of $1.9 million. The increase in net operating assets and liabilities was primarily due to cash increases in accounts payable and other accrued liabilities of $25.3 million and prepaid expenses of $0.7 million, partially offset by cash decreases including $12.5 million of accounts receivable, $1.9 million of accrued payroll and benefits and $2.3 million of inventory.

Previous 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.

Current wording

Net cash used in operating activities was $78.2 million for the nine months ended September 30, 2023, which primarily consisted of our net loss of $94.0 million, partially offset by net increases in non-cash and other charges of $12.7 million and net operating assets and liabilities of $3.1 million. The net increase in non-cash and other charges were primarily related to stock-based compensation expense of $14.3 million, depreciation expense of $0.5 million and non-cash lease expense of $0.4 million, partially offset by net amortization/accretion on marketable securities of $3.0 million. The net increase in net operating assets and liabilities was primarily due to accounts payable and other accrued liabilities of $5.2 million, accrued payroll and benefits of $2.4 million, and other receivables of $2.6 million, partially offset by cash decreases including $5.4 million of accounts receivable and $1.0 million of prepaid expenses.

Previous 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.

Current wording

Net cash used in investing activities was $139.6 million for the nine months ended September 30, 2024, and primarily relates to (i) $172.7 million of purchased marketable securities (ii) $3.0 million of purchased long-term investments, and (iii) $1.5 million of purchased manufacturing equipment, office equipment, and furniture and fixtures. These cash decreases were partially offset by $37.5 million of proceeds from maturities of marketable securities.

Previous 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.

Current wording

Net cash provided by investing activities was $122.8 million for the nine months ended September 30, 2023, and primarily related to $156.9 million of proceeds from maturities of marketable securities, partially offset by (i) $28.7 million of purchased marketable securities, (ii) $4.0 million of additions to intangible assets related to the first commercial sale of XDEMVY and (iii) $1.5 million of purchased furniture, fixtures and leasehold improvements for our laboratory and administrative offices.

Previous 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.

Current wording

Net cash provided by financing activities was $151.7 million for the nine months ended September 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) $3.3 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 debt extinguishment 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

Net cash provided by financing activities was $5.5 million for the six months ended June 30, 2023, which primarily relates to (i) $5.0 million of proceeds from our 2022 Credit Facility and (ii) $0.5 million of proceeds from our ESPP.

Current wording

Net cash provided by financing activities was $110.4 million for the nine months ended September 30, 2023, which primarily relates to (i) $99.4 million of net proceeds from the issuance of common stock related to the August 2023 Public Offering, (ii) $10.0 million of proceeds from our 2022 Credit Facility, (iii) $0.5 million of proceeds from our ESPP, and $0.6 million of proceeds from employee stock option exercises.