ALUMIS INC

Previous wording

The following discussion and analysis of our financial condition and results of operations and the unaudited interim condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q should be read in conjunction with the financial statements and related notes thereto as of and for the year ended December 31, 2023 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in the Prospectus dated June 27, 2024, filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended (Securities Act), with the Securities and Exchange Commission (SEC) on June 28, 2024 (Prospectus). This discussion and analysis and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements based upon current beliefs, plans and expectations related to future events and our future financial performance that involve risks, uncertainties and assumptions, such as statements regarding our intentions, plans, objectives and expectations for our business. Our actual results and the timing of selected events could differ materially from those described in or implied by these forward-looking statements as a result of several factors, including those set forth under “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. See also the section titled “Special Note Regarding Forward-Looking Statements.”

Current wording

The following discussion and analysis of our financial condition and results of operations and the unaudited interim condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q should be read in conjunction with the financial statements and related notes thereto as of and for the year ended December 31, 2023 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in the Prospectus dated June 27, 2024, filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “Securities Act”), with the Securities and Exchange Commission (the “SEC”) on June 28, 2024. This discussion and analysis and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements based upon current beliefs, plans and expectations related to future events and our future financial performance that involve risks, uncertainties and assumptions, such as statements regarding our intentions, plans, objectives and expectations for our business. Our actual results and the timing of selected events could differ materially from those described in or implied by these forward-looking statements as a result of several factors, including those set forth under “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. See also the section titled “Special Note Regarding Forward-Looking Statements.”

Previous wording

We are a clinical stage biopharmaceutical company with an initial focus on developing our two Tyrosine Kinase 2 (TYK2) inhibitors: ESK-001, a second-generation inhibitor that we are developing to maximize target inhibition and optimize tolerability, and A-005, a central nervous system (CNS) penetrant molecule. ESK-001 has demonstrated significant therapeutic effect in our Phase 2 program in patients with PsO, which we define as moderate-to-severe plaque psoriasis (PsO), and is currently being evaluated in an additional Phase 2 clinical trial in patients with systemic lupus erythematosus (SLE), for which we expect to report results in 2026. With the favorable results in our Phase 2 clinical trial in PsO, we intend to initiate multiple Phase 3 clinical trials of ESK-001 in the second half of 2024 in this indication, and announced in July 2024, that patient dosing has commenced in the ONWARD Phase 3 clinical program. TYK2 genetic mutations are associated with a strong protective effect in multiple sclerosis, motivating us to develop our second product candidate, A-005, as a CNS-penetrant, allosteric TYK2 inhibitor for neuroinflammatory and neurodegenerative diseases. In April 2024, we initiated our Phase 1 program of A-005 in healthy volunteers and expect to report initial results by the end of 2024.

Current wording

We are a clinical stage biopharmaceutical company with an initial focus on developing our two Tyrosine Kinase 2 (“TYK2”) inhibitors: ESK-001, a second-generation inhibitor that we are developing to maximize target inhibition and optimize tolerability, and A-005, a central nervous system (“CNS”) penetrant molecule. ESK-001 has demonstrated significant therapeutic effect in our Phase 2 program in patients with PsO, which we define as moderate-to-severe plaque psoriasis (“PsO”), and is currently being evaluated in an additional Phase 2 clinical trial in patients with systemic lupus erythematosus (“SLE”), for which we expect to report results in 2026. With the favorable results in our Phase 2 clinical trial in PsO, we have initiated our Phase 3 ONWARD clinical program, which consists of two parallel Phase 3 clinical trials of ESK-001 in this indication and for which we expect to report topline results in the first half of 2026. In addition, the open-label extension (“OLE”) of our Phase 2 clinical trial in PsO remains ongoing. TYK2 genetic mutations are associated with a strong protective effect in multiple sclerosis, motivating us to develop our second product candidate, A-005, as a CNS-penetrant, allosteric TYK2 inhibitor for neuroinflammatory and neurodegenerative diseases. In April 2024, we initiated our Phase 1 program of A-005 in healthy volunteers and expect to report initial results by the end of 2024.

Previous wording

To date, we have primarily funded our operations with proceeds from sales of shares of our common stock and redeemable convertible preferred stock and the issuance of convertible promissory notes in private placements. In July 2024, we closed our initial public offering (IPO) and a Concurrent Private Placement (defined below) and received 233.2 million in net

Current wording

To date, we have primarily funded our operations with proceeds from sales of shares of our common stock and redeemable convertible preferred stock and the issuance of convertible promissory notes in private placements. In July 2024, we closed our initial public offering (the “IPO”) and a Concurrent Private Placement (defined below) and received $233.3 million in

Previous wording

proceeds, after deducting underwriting discounts and commissions and offering expenses payable by the Company. As of June 30, 2024, we had $209.5 million in cash, cash equivalents and marketable securities.

Current wording

net proceeds, after deducting underwriting discounts and commissions and offering expenses payable by the Company. As of September 30, 2024, we had $361.9 million in cash, cash equivalents and marketable securities.

Previous wording

We have incurred significant operating losses and negative cash flows since our inception. Our net loss for the three months ended June 30, 2024 and 2023 was $56.5 million and $36.3 million, respectively. Our net loss for the six months ended June 30, 2024 and 2023 was $106.4 million and $72.3 million, respectively. As of June 30, 2024, we had an accumulated deficit of $470.7 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development efforts, including acquisitions of in-process research and development assets, and, to a lesser extent, from general and administrative costs associated with our operations. Our net losses and operating losses may fluctuate from quarter to quarter and year to year depending primarily on the timing of acquisition of any new product candidates, the timing of our preclinical studies and clinical trials, our other research and development expenses, and the timing and amount of any milestone or royalty payments due under our existing or future license agreements. In addition, we have incurred and will continue to incur additional costs associated with operating as a public company, including significant legal, audit, accounting, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer liability insurance costs, investor and public relations costs, and other expenses that we did not incur as a private company.

Current wording

We have incurred significant operating losses and negative cash flows since our inception. Our net loss for the three months ended September 30, 2024 and 2023 was $93.1 million and $43.4 million, respectively. Our net loss for the nine months ended September 30, 2024 and 2023 was $199.5 million and $115.7 million, respectively. As of September 30, 2024, we had an accumulated deficit of $563.8 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development efforts, including acquisitions of in-process research and development assets, and, to a lesser extent, from general and administrative costs associated with our operations. Our net losses and operating losses may fluctuate from quarter to quarter and year to year depending primarily on the timing of acquisition of any new product candidates, the timing of our preclinical studies and clinical trials, our other research and development expenses, and the timing and amount of any milestone or royalty payments due under our existing or future license agreements. In addition, we have incurred and will continue to incur additional costs associated with operating as a public company, including significant legal, audit, accounting, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer liability insurance costs, investor and public relations costs, and other expenses that we did not incur as a private company.

Previous wording

We anticipate that our expense will increase significantly in connection with our ongoing activities, particularly if and as we:

Current wording

We anticipate that our expenses will increase significantly in connection with our ongoing activities, particularly if and as we:

Previous wording

On June 28, 2024, our Registration Statement on Form S-1 for our IPO was declared effective and, on July 1, 2024, we completed our IPO, pursuant to which we issued and sold 13,125,000 shares of our common stock at $16.00 price per share to the public. Net proceeds from the IPO were approximately $193.2 million, after deducting underwriting discounts and commissions and other offering costs totaling approximately $16.8 million.

Current wording

On June 28, 2024, our Registration Statement on Form S-1 for our IPO was declared effective, and, on July 1, 2024, we completed our IPO, pursuant to which we issued and sold 13,125,000 shares of our common stock at $16.00 price per share to the public. Net proceeds from the IPO were $193.3 million, after deducting underwriting discounts and commissions and other offering costs totaling $16.7 million.

Previous wording

In connection with the IPO, an existing investor and a holder of more than 5% of our capital stock, purchased an additional 2,500,000 shares of our common stock at the IPO price per share for a total of $40.0 million in a private placement transaction (the “Concurrent Private Placement”). The closing of the Concurrent Private Placement was contingent on the closing of the IPO. The sale of such shares is not registered under the Securities Act, and as such, the shares may not be offered or sold absent registration or an applicable exemption from registration. The shares sold in connection with the Concurrent Private Placement are subject to existing resale registration rights and are subject to a 180-day lock-up agreement with the underwriters in the IPO. The Concurrent Private Placement closed on July 17, 2024.

Current wording

In connection with the IPO, an existing investor and a holder of more than 5% of our capital stock, purchased an additional 2,500,000 shares of our common stock at the IPO price per share for total gross and net proceeds of $40.0 million in a private placement transaction (the “Concurrent Private Placement”). The closing of the Concurrent Private Placement was contingent on the closing of the IPO. The sale of such shares is not registered under the Securities Act, and as such, the shares may not be offered or sold absent registration or an applicable exemption from registration. The shares sold in connection with the Concurrent Private Placement are subject to existing resale registration rights and are subject to a 180-day lock-up agreement with the underwriters in the IPO. The Concurrent Private Placement closed on July 17, 2024.

Previous wording

We have acquired and may continue to acquire the rights to develop and commercialize new product candidates. Upfront and milestone payments are accrued for and expensed as in process research and development (IPRD) assets expense when the achievement of the milestone is probable up to the point of regulatory approval and, absent obtaining such approval, have no alternative future use. Milestone payments made after a product’s regulatory approval will be capitalized and amortized over the remaining useful life of the related product.

Current wording

We have acquired and may continue to acquire the rights to develop and commercialize new product candidates. Upfront and milestone payments are accrued for and expensed as in process research and development (“IPR&D”) assets expense when the achievement of the milestone is probable up to the point of regulatory approval and, absent obtaining such approval, have no alternative future use. Milestone payments made after a product’s regulatory approval will be capitalized and amortized over the remaining useful life of the related product.

Previous wording

In May 2023 and in March 2024, in connection with our redeemable convertible preferred stock financings, we issued options to purchase additional shares of redeemable convertible preferred stock at a specified price, which were accounted for as derivative liabilities. Changes in fair value of these derivative liabilities are included in the other income (loss) in the interim condensed consolidated statement of operations and comprehensive loss for each reporting period until the derivatives were exercised or expired.

Current wording

In May 2023 and in March 2024, in connection with our redeemable convertible preferred stock financings, we issued options to purchase additional shares of redeemable convertible preferred stock at a specified price, which were accounted for as derivative liabilities. Changes in fair value of these derivative liabilities were included in the other income (loss) in the condensed consolidated statement of operations and comprehensive loss for each reporting period until the derivatives were exercised or expired.

Previous wording

The following tables summarize our results of operations for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

Current wording

The following tables summarize our results of operations for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):

Previous wording

The following tables summarize our external and internal research and development expenses for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

Current wording

The following tables summarize our external and internal research and development expenses for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):

Previous wording

CRO, CMO and clinical trials expenses increased by $9.9 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to a $6.3 million increase in CMC expenses associated with manufacturing of clinical supplies to support our trials and a $3.6 million increase in CRO and clinical trial expenses due to the timing and progression of our clinical trials for ESK-001 and A-005.

Current wording

CRO, CMO and clinical trials expenses increased by $21.4 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to a $15.7 million increase in CRO and clinical trial expenses due to the timing and progression of our clinical trials for ESK-001 and A-005 and a $5.7 million increase in CMC expenses associated with manufacturing of clinical supplies to support our trials.

Previous wording

Personnel-related costs increased by $4.3 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to increased research and development headcount and an increase in stock-based compensation expense of $1.0 million as a result of additional stock options granted.

Current wording

Personnel-related costs increased by $5.0 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to increased research and development headcount and an increase

Previous wording

CRO, CMO and clinical trials expenses increased by $16.4 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 due to a $14.0 million increase in CMC expenses primarily associated with manufacturing of clinical supplies to support our trials and a $2.4 million increase in CRO and clinical trial expenses due to the timing and progression of our clinical trials for ESK-001 and A-005.

Current wording

CRO, CMO and clinical trials expenses increased by $37.8 million for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, due to a $19.7 million increase in CMC expenses primarily associated with manufacturing of clinical supplies to support our trials and a $18.1 million increase in CRO and clinical trial expenses due to the timing and progression of our clinical trials for ESK-001 and A-005.

Previous wording

Personnel-related costs increased by $2.3 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to increased research and development headcount and an increase in stock-based compensation expense of $0.6 million as a result of additional stock options granted.

Current wording

Personnel-related costs increased by $9.3 million for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to increased research and development headcount and an increase in stock-based compensation expense of $3.5 million as a result of additional stock options granted, which included awards granted under the 2024 Performance Option Plan.

Previous wording

Facilities and allocated overhead costs increased by $0.9 million, primarily as a result of an increase in depreciation and facilities expenses allocated to the research and development activities.

Current wording

Facilities and allocated overhead costs increased by $2.0 million primarily as a result of an increase in software license costs and depreciation expenses allocated to the research and development activities, partially offset by a decrease in facilities costs.

Previous wording

The following table summarizes our external costs by program for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

Current wording

The following table summarizes our external costs by program for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):

Previous wording

Personnel-related expenses increased by $2.3 million, to $7.4 million for the six months ended June 30, 2024, from $5.1 million for the six months ended June 30, 2023, primarily due to increased headcount and included an increase in stock-based compensation expense of $1.7 million resulting from additional stock options granted.

Current wording

Personnel-related expenses increased by $3.5 million, to $6.4 million for the three months ended September 30, 2024, from $2.9 million for the three months ended September 30, 2023, primarily due to increased headcount and included an increase in stock-based compensation expense of $2.5 million resulting from additional stock options granted, which included awards granted under the 2024 Performance Option Plan.

Previous wording

Expenses related to professional consulting services increased by $1.7 million, to $4.8 million for the six months ended June 30, 2024, from $3.1 million for the six months ended June 30, 2023, primarily due to an increase in consulting, accounting, audit and recruiting services to support our growth and business development.

Current wording

Expenses related to professional consulting services increased by $0.8 million, to $3.4 million for the three months ended September 30, 2024, from $2.6 million for the three months ended September 30, 2023, primarily due to an increase in consulting, recruiting and legal services to support our growth and business development, partially offset by a decrease in accounting and audit costs.

Previous wording

Personnel-related expenses increased by $1.3 million, to $3.9 million for the three months ended June 30, 2024, from $2.6 million for the three months ended June 30, 2023, primarily due to increased headcount and included a stock-based compensation expense of $0.6 million resulting from additional stock options granted.

Current wording

Personnel-related expenses increased by $5.8 million, to $13.8 million for the nine months ended September 30, 2024, from $8.0 million for the nine months ended September 30, 2023, primarily due to increased headcount and included an increase in stock-based compensation expense of $3.6 million resulting from additional stock options granted, which included awards granted under the 2024 Performance Option Plan.

Previous wording

Expenses related to professional consulting services increased by $1.1 million, to $2.8 million for the three months ended June 30, 2024, from $1.7 million for the three months ended June 30, 2023, primarily due to an increase in consulting, accounting, audit and recruiting services to support our growth and business development.

Current wording

Expenses related to professional consulting services increased by $2.5 million, to $8.2 million for the nine months ended September 30, 2024, from $5.7 million for the nine months ended September 30, 2023, primarily due to an increase in consulting, recruiting, legal and accounting services to support our growth and business development.

Previous wording

Total other income (expense), net decreased by $1.7 million, to $0.4 million other expense, net for the three months ended June 30, 2024, from $1.3 million other income, net for the three months ended June 30, 2023. Total other income (expense), net decreased by $4.6 million, to $2.6 million other expense, net for the six months ended June 30, 2024, from $2.0 million other income, net for the six months ended June 30, 2023.

Current wording

Total other income (expense), net increased by $4.9 million, to $5.3 million other income, net for the three months ended September 30, 2024, from $0.4 million other income, net for the three months ended September 30, 2023. Total other income (expense), net increased by $0.4 million, to $2.7 million other income, net for the nine months ended September 30, 2024, from $2.3 million other income, net for the nine months ended September 30, 2023.

Previous wording

Interest income increased by $1.1 million, to $2.0 million for the three months ended June 30, 2024, from $0.9 million for the three months ended June 30, 2023, primarily as a result of higher investments balances.

Current wording

Interest income increased by $4.3 million, to $5.3 million for the three months ended September 30, 2024, from $1.0 million for the three months ended September 30, 2023, primarily as a result of higher balances of cash equivalents and marketable securities.

Previous wording

Interest income increased by $1.3 million, to $2.8 million for the six months ended June 30, 2024, from $1.6 million for the six months ended June 30, 2023, primarily as a result of higher investments balances.

Current wording

Interest income increased by $5.7 million, to $8.2 million for the nine months ended September 30, 2024, from $2.5 million for the nine months ended September 30, 2023, primarily as a result of higher balances of cash equivalents and marketable securities.

Previous wording

We recognized a change in fair value of a derivative liability loss of $2.3 million and $5.4 million for the three and six months ended June 30, 2024, respectively, related to the derivative liability recognized in connection with our Series C redeemable convertible preferred stock financing entered into in March 2024. The derivative liability was re-measured at fair value and settled in May 2024, when we closed the second tranche of the Series C financing.

Current wording

We recognized a change in fair value of a derivative liability loss of zero and $5.4 million for the three and nine months ended September 30, 2024, respectively, related to the derivative liability recognized in connection with our Series C redeemable convertible preferred stock financing entered into in March 2024. The derivative liability was re-measured at fair value and settled in May 2024, when we closed the second tranche of the Series C financing.

Previous wording

We recognized a change in fair value of a derivative liability gain of $0.4 million for each of the three and six months ended June 30, 2023 related to the derivative liability recognized in connection with our Series B-2 redeemable convertible preferred stock financing entered into in May 2023. The derivative liability was re-measured at fair value and settled in October 2023, when we closed the second tranche of the Series B-2 financing. See Note 3 to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

Current wording

We recognized a change in fair value of a derivative liability loss of $0.6 million and $0.1 million for the three and nine months ended September 30, 2023, respectively, related to the derivative liability recognized in connection with our Series B-2 redeemable convertible preferred stock financing entered into in May 2023. The derivative liability was re-measured at fair value and settled in October 2023, when we closed the second tranche of the Series B-2 financing. See Note 3 to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

Previous wording

In July 2024, we closed our IPO and the Concurrent Private Placement and received net proceeds of approximately $193.2 million and $40.0 million, respectively.

Current wording

In July 2024, we closed our IPO and the Concurrent Private Placement and received net proceeds of $193.3 million and $40.0 million, respectively.

Previous wording

We expect that our existing cash, cash equivalents and marketable securities of $209.5 million as of June 30, 2024, together with aggregate net proceeds of approximately $233.2 million from our IPO and the Concurrent Private Placement, will be sufficient to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the issuance of this Quarterly Report on Form 10-Q. We have based this estimate on our current assumptions, which may prove to be wrong, and we may exhaust our available capital resources sooner than we expect.

Current wording

We believe that our existing cash, cash equivalents and marketable securities of $361.9 million as of September 30, 2024, will be sufficient to meet our operating and capital requirements for at least 12 months from the date of issuance of this Quarterly Report on Form 10-Q. We have based this estimate on our current assumptions, which may prove to be wrong, and we may exhaust our available capital resources sooner than we expect. We will need to raise significant additional capital to fund ongoing research and development activities and maintain future operations. We plan to monitor expenses and may raise additional capital through a combination of public and private equity, debt financings, strategic alliances, and licensing arrangements. Our ability to access capital when needed is not assured and, if capital is not available to us when, and in the amounts, needed, on the terms which are favorable, we could be required to delay, scale back, or abandon some or all of our planned development programs and other operations, which could materially harm our business, financial condition and results of operations.

Previous wording

Under our stock purchase agreement to acquire FronThera U.S. Holdings, Inc. and its wholly owned subsidiary, FronThera U.S. Pharmaceuticals LLC, we are obligated to pay contingent consideration of up to an aggregate of $120.0 million based on the achievement of specified clinical and approval milestones, for up to an aggregate of $70.0 million payable for clinical milestones, and for up to an aggregate of $50.0 million payable for approval milestones, all related to technology acquired under the agreement. We incurred and made a $37.0 million milestone payment in 2022 for the first administration of ESK-001 to a patient enrolled in a Phase 2 clinical trial of ESK-001, which was recorded as research and development expenses in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2022. In July 2024, we met a milestone in connection with the first administration of ESK-001 to a patient enrolled in a Phase 3 clinical trial of ESK-001 and became obligated to pay $23.0 million, which we expect to pay in the third quarter of 2024. No other milestones were achieved or probable as of June 30, 2024.

Current wording

Under our stock purchase agreement to acquire FronThera U.S. Holdings, Inc. and its wholly owned subsidiary, FronThera U.S. Pharmaceuticals LLC, we are obligated to pay contingent consideration of up to an aggregate of $120.0 million based on the achievement of specified clinical and approval milestones, for up to an aggregate of $70.0 million payable for clinical milestones, and for up to an aggregate of $50.0 million payable for approval milestones, all related to technology acquired under the agreement. We incurred and made a $37.0 million milestone payment in 2022 for the first administration of ESK-001 to a patient enrolled in a Phase 2 clinical trial of ESK-001, which was recorded as research and development expenses in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2022. In July 2024, we met a milestone in connection with the first administration of ESK-001 to a patient enrolled in a Phase 3 clinical trial of ESK-001 and made a $23.0 million milestone payment in August 2024, which was recorded as research and development expense in the consolidated statement of operations and comprehensive loss for the three months ended September 30, 2024. No other milestones were achieved or probable as of September 30, 2024.

Previous wording

Our primary uses of cash are to fund our operations, which consist primarily of research and development expenditures related to our programs and, to a lesser extent, general and administrative expenditures. We anticipate that we will continue to incur significant and increasing expenses for the foreseeable future as we continue to advance our product candidates, expand our corporate infrastructure, including the costs associated with being a public company, further our research and development initiatives for our product candidates, and incur costs associated with potential commercialization. We are subject to all of the risks typically related to the development of new drug candidates, and we may encounter unforeseen

Current wording

Our primary uses of cash are to fund our operations, which consist primarily of research and development expenditures related to our programs and, to a lesser extent, general and administrative expenditures. We anticipate that we will continue to incur significant and increasing expenses for the foreseeable future as we continue to advance our product candidates, expand our corporate infrastructure, including the costs associated with being a public company, further our research and development initiatives for our product candidates, and incur costs associated with potential commercialization. We are subject to all of the risks typically related to the development of new drug candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We anticipate that we will need substantial additional funding in connection with our continuing operations.

Previous wording

We do not have any products approved for sale and have not generated any revenue from product sales since our inception. We do not expect to generate revenue from any product candidates that we develop until we obtain regulatory approval for one or more of such product candidates and commercialize our products or enter into collaboration agreements with third parties. Because of the numerous risks and uncertainties associated with biopharmaceutical product development, we may never achieve or sustain profitability and, unless and until we are able to develop and commercialize our product candidates, we will need to continue to raise additional capital. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through public or private equity or debt financings, or potentially other capital sources, such as collaboration or licensing arrangements with third parties or other strategic transactions. There are no assurances that we will be successful in obtaining an adequate level of financing to support our business plans when needed on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaboration or licensing arrangements with third parties or other strategic transactions, we may have to relinquish rights to our intellectual property, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise capital as and when needed, or on attractive terms, we may have to significantly delay, reduce, or discontinue the development and commercialization of our product candidates or scale back or terminate our pursuit of new in-licenses and acquisitions.

Current wording

We do not have any products approved for sale and have not generated any revenue from product sales since our inception. We do not expect to generate revenue from any product candidates that we develop until we obtain regulatory approval for one or more of such product candidates and commercialize our products or enter into collaboration agreements with third parties. Because of the numerous risks and uncertainties associated with biopharmaceutical product development, we may never achieve or sustain profitability and, unless and until we are able to develop and commercialize our product candidates, we will need to continue to raise additional capital. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through public or private equity or debt financings, or potentially other capital sources, such as collaboration or licensing arrangements with third parties or other strategic transactions. There are no assurances that we will be successful in obtaining an adequate level of financing to support our business plans when needed on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaboration or licensing arrangements with third parties or other strategic transactions, we may have to relinquish rights to our intellectual property, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise capital as and when

Previous wording

The following table summarizes our cash flows for the six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following table summarizes our cash flows for the nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

Net cash used in operating activities was $96.5 million and $63.0 million for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Net cash used in operating activities was $180.3 million and $96.2 million for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Net cash used in operating activities for the six months ended June 30, 2024 was due to our net loss for the period of $106.4 million and changes in operating assets and liabilities of $2.4 million, partially offset by non-cash items totaling $12.2 million. Non-cash items included $5.8 million related to stock-based compensation expense, $5.4 million related to the change in fair value of the derivative liability and $1.5 million related to depreciation and amortization, partially offset by net accretion of discounts on marketable securities of $0.5 million. The changes in operating assets and liabilities primarily include an increase of $10.5 million in research and development prepaid expenses, a decrease of $1.9 million in other accrued expenses and current liabilities, and a decrease of $1.0 million in operating lease liabilities, partially offset by an increase of $7.8 million in accounts payable and an increase of $3.6 million in research and development accrued expenses.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2024 was due to our net loss for the period of $199.5 million partially offset by changes in non-cash items totaling $18.9 million and operating assets and liabilities of $0.3 million. Non-cash items included $13.1 million related to stock-based compensation expense, $5.4 million related to the change in fair value of the derivative liability and $2.3 million related to depreciation and amortization, partially offset by net accretion of discounts on marketable securities of $2.0 million. The changes in operating assets and liabilities primarily includes an increase of $7.2 million in research and development accrued expenses, an increase of $5.3 million in accounts payable and a $0.4 million increase in other accrued expenses and current liabilities, partially offset by an increase of $9.6 million in research and development prepaid expenses, an increase of $1.6 million in other prepaid expenses and other assets and a decrease of $1.5 million in operating lease liabilities.

Previous wording

Net cash used in operating activities for the six months ended June 30, 2023 was primarily due to our net loss for the period of $72.3 million, partially offset by changes in operating assets and liabilities of $4.7 million and non-cash items of $4.6 million. Non-cash items primarily include $3.7 million related to stock-based compensation expense and $1.5 million related to non-cash lease expense. The changes in operating assets and liabilities primarily include an increase of $2.3 million in research and development accrued expenses, a decrease of $2.1 million in research and development prepaid expenses and an increase of $0.7 million in accounts payable.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2023 was primarily due to our net loss for the period of $115.7 million, partially offset by changes in operating assets and liabilities of $10.4 million and non-cash items of $9.0 million. Non-cash items primarily include $6.0 million related to stock-based compensation expense and $2.0 million related to non-cash lease expense. The changes in operating assets and liabilities primarily included a decrease of $3.6 million in research and development prepaid expenses, an increase of $3.3 million in research and development accrued expenses, and an increase of $2.6 million in accounts payable.

Previous wording

Net cash used in investing activities for the six months ended June 30, 2024 of $51.6 million was related to purchases of marketable securities of $59.0 million and purchases of property and equipment of $0.6 million, partially offset by proceeds from maturities of marketable securities of $8.0 million.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2024 of $144.7 million was related to purchases of marketable securities of $185.4 million and purchases of property and equipment of $1.4 million, partially offset by proceeds from maturities of marketable securities of $42.0 million.

Previous wording

Net cash provided by investing activities for the six months ended June 30, 2023 was related to proceeds from maturities of marketable securities of $66.5 million, partially offset by purchases of marketable securities of $8.3 million and purchases of property and equipment of $1.2 million.

Current wording

Net cash provided by investing activities for the nine months ended September 30, 2023 of $64.6 million was related to proceeds from maturities of marketable securities of $76.3 million, partially offset by purchases of marketable securities of $8.3 million and purchases of property and equipment of $3.3 million.

Previous wording

Net cash provided by financing activities for the six months ended June 30, 2024 of $257.2 million was related to net proceeds of $258.5 million from the issuance of our Series C redeemable convertible preferred stock and related derivative liability, net of issuance costs, and proceeds from issuance of common stock upon exercise of stock options of $0.5 million, partially offset by payments of deferred offering costs of $1.8 million.

Current wording

Net cash provided by financing activities for the nine months ended September 30, 2024 of $492.4 million included net proceeds of $258.5 million from the issuance of our Series C redeemable convertible preferred stock and related derivative liability, net of issuance costs, $193.3 million net proceeds from our initial public offering, net of underwriter discounts and commissions and other offering costs, gross and net proceeds of $40.0 million from a private placement transaction and proceeds from the issuance of common stock upon exercise of stock options of $0.6 million.

Previous wording

Net cash provided by financing activities for the six months ended June 30, 2023 of $59.9 million was primarily related to net proceeds from the issuance of our Series B-2 and Series B-2A redeemable convertible preferred stock and related derivative liability, net of issuance costs.

Current wording

Net cash provided by financing activities for the nine months ended September 30, 2023 of $60.0 million was primarily related to net proceeds of $59.8 million from the issuance of our Series B-2 and Series B-2A redeemable convertible preferred stock and related derivative liability, net of issuance costs.