0001104659-22-089656 | 10-Q | XBRL Viewer

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Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2022	Aug. 10, 2022
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2022
Entity File Number	001-37990
Entity Address, Address Line One	47 Thorndike St, Suite B1-1
Entity Address, City or Town	Cambridge
Entity Address, Postal Zip Code	02141
Entity Address, State or Province	MA
Entity Incorporation, State or Country Code	DE
City Area Code	617
Local Phone Number	714-0360
Entity Tax Identification Number	27-4412575
Entity Registrant Name	LEAP THERAPEUTICS, INC.
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	LPTX
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		99,021,376
Entity Central Index Key	0001509745
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 90,883	$ 114,916
Research and development incentive receivable	1,130	1,189
Prepaid expenses and other current assets	428	769
Total current assets	92,441	116,874
Property and equipment, net	28	36
Right-of-use assets, net	863	459
Research and development incentive receivable, net of current portion	610
Deferred tax assets	150	159
Other long term assets	60	90
Deposits	51	293
Total assets	94,203	117,911
Current liabilities:
Accounts payable	7,553	4,189
Accrued expenses	2,463	5,366
Lease liability - current portion	395	432
Total current liabilities	10,411	9,987
Non current liabilities:
Lease liability, net of current portion	474	37
Total liabilities	10,885	10,024
Stockholders' equity:
Common stock, $0.001 par value; 240,000,000 shares authorized; 88,318,454 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	88	88
Additional paid-in capital	374,108	371,638
Accumulated other comprehensive income (loss)	94	(267)
Accumulated deficit	(290,972)	(263,572)
Total stockholders' equity	83,318	107,887
Total liabilities and stockholders' equity	$ 94,203	$ 117,911

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2022	Dec. 31, 2021
CONDENSED CONSOLIDATED BALANCE SHEETS
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized shares	240,000,000	240,000,000
Common stock, issued shares	88,318,454	88,318,454
Common stock, outstanding shares	88,318,454	88,318,454

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
License revenue		$ 375		$ 750
Operating expenses:
Research and development	$ 14,045	7,206	$ 21,829	14,013
General and administrative	2,855	2,795	5,703	5,535
Total operating expenses	16,900	10,001	27,532	19,548
Loss from operations	(16,900)	(9,626)	(27,532)	(18,798)
Interest income	39	1	44	3
Interest expense	(17)	(16)	(38)	(30)
Australian research and development incentives	587	244	624	315
Foreign currency loss	(733)	(129)	(498)	(150)
Net loss attributable to common stockholders	$ (17,024)	$ (9,526)	$ (27,400)	$ (18,660)
Net loss per share
Basic (in dollars per share)	$ (0.15)	$ (0.12)	$ (0.24)	$ (0.24)
Diluted (in dollars per share)	$ (0.15)	$ (0.12)	$ (0.24)	$ (0.24)
Weighted average common shares outstanding
Basic (in shares)	113,248,937	76,389,525	113,248,937	76,384,077
Diluted (in shares)	113,248,937	76,389,525	113,248,937	76,384,077

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net loss	$ (17,024)	$ (9,526)	$ (27,400)	$ (18,660)
Other comprehensive income:
Foreign currency translation adjustments	519	115	361	130
Comprehensive loss	$ (16,505)	$ (9,411)	$ (27,039)	$ (18,530)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock.	Additional Paid-in Capital.	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Total
Balance at the beginning of the period (in shares) at Dec. 31, 2020	59,657,742
Increase (Decrease) in Shares Outstanding
Issuance of common stock upon exercise of stock options (in shares)	2,292
Issuance of common stock upon exercise of warrant (in shares)	11,980
Balance at the end of the period (in shares) at Jun. 30, 2021	59,672,014
Balance at the beginning of the period at Dec. 31, 2020	$ 60	$ 270,155	$ (579)	$ (222,985)	$ 46,651
Increase (Decrease) in Stockholders' Equity
Issuance of common stock upon exercise of stock options		4			4
Issuance of common stock upon exercise of warrants		14			14
Foreign currency translation adjustment			130		130
Stock-based compensation		1,745			1,745
Net loss				(18,660)	(18,660)
Balance at the end of the period at Jun. 30, 2021	$ 60	271,918	(449)	(241,645)	29,884
Balance at the beginning of the period (in shares) at Mar. 31, 2021	59,669,722
Increase (Decrease) in Shares Outstanding
Issuance of common stock upon exercise of stock options (in shares)	2,292
Balance at the end of the period (in shares) at Jun. 30, 2021	59,672,014
Balance at the beginning of the period at Mar. 31, 2021	$ 60	271,002	(564)	(232,119)	38,379
Increase (Decrease) in Stockholders' Equity
Issuance of common stock upon exercise of stock options		4			4
Foreign currency translation adjustment			115		115
Stock-based compensation		912			912
Net loss				(9,526)	(9,526)
Balance at the end of the period at Jun. 30, 2021	$ 60	271,918	(449)	(241,645)	29,884
Balance at the beginning of the period (in shares) at Dec. 31, 2021	88,318,454
Balance at the end of the period (in shares) at Jun. 30, 2022	88,318,454
Balance at the beginning of the period at Dec. 31, 2021	$ 88	371,638	(267)	(263,572)	107,887
Increase (Decrease) in Stockholders' Equity
Foreign currency translation adjustment			361		361
Stock-based compensation		2,470			2,470
Net loss				(27,400)	(27,400)
Balance at the end of the period at Jun. 30, 2022	$ 88	374,108	94	(290,972)	83,318
Balance at the beginning of the period (in shares) at Mar. 31, 2022	88,318,454
Balance at the end of the period (in shares) at Jun. 30, 2022	88,318,454
Balance at the beginning of the period at Mar. 31, 2022	$ 88	372,842	(425)	(273,948)	98,557
Increase (Decrease) in Stockholders' Equity
Foreign currency translation adjustment			519		519
Stock-based compensation		1,266			1,266
Net loss				(17,024)	(17,024)
Balance at the end of the period at Jun. 30, 2022	$ 88	$ 374,108	$ 94	$ (290,972)	$ 83,318

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities:
Net loss	$ (27,400)	$ (18,660)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	8	14
Amortization of contract asset		68
Change in right-of-use asset	206	191
Stock-based compensation expense	2,470	1,745
Foreign currency loss	498	150
Change in fair value of restricted stock liability		(204)
Changes in operating assets and liabilities:
Prepaid expenses and other assets	336	(134)
Research and development incentive receivable	(638)	(258)
Deferred offering costs		209
Accounts payable and accrued expenses	679	1,488
Deferred revenue		(750)
Lease liability	(208)	(198)
Other assets	272
Net cash used in operating activities	(23,777)	(16,339)
Cash flows from financing activities:
Proceeds from the exercise of common stock warrants		14
Proceeds from the exercise of stock options		4
Payment of deferred costs	(210)
Net cash provided by (used in) financing activities	(210)	18
Effect of exchange rate changes on cash and cash equivalents	(46)	(16)
Net decrease in cash and cash equivalents	(24,033)	(16,337)
Cash and cash equivalents at beginning of period	114,916	52,071
Cash and cash equivalents at end of period	90,883	$ 35,734
Supplemental disclosure of non-cash investing and financing activities:
Remeasurement of right-of-use asset and lease liability	$ 609

Nature of Business, Basis of Presentation and Liquidity

6 Months Ended

Jun. 30, 2022

Nature of Business, Basis of Presentation and Liquidity

Nature of Business, Basis of Presentation and Liquidity

1. Nature of Business, Basis of Presentation and Liquidity

Nature of Business

Leap Therapeutics, Inc. was incorporated in the state of Delaware on January 3, 2011. During 2015, HealthCare Pharmaceuticals Pty Ltd. (“HCP Australia”) was formed and is a wholly owned subsidiary of the Company. On December 15, 2021, Leap Securities Corp. was formed and is a wholly owned subsidiary of the Company.

The Company is a biopharmaceutical company acquiring and developing novel therapeutics at the leading edge of cancer biology. The Company’s approach is designed to target compelling tumor-promoting and immuno-oncology pathways to generate durable clinical benefit and enhanced outcomes for patients. The Company’s programs are monoclonal antibodies that target key cellular pathways that enable cancer to grow and spread and specific mechanisms that activate the body’s immune system to identify and attack cancer.

Basis of Presentation

The accompanying condensed consolidated financial statements as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021 have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2022.

The condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments which are necessary for the fair presentation of the Company’s financial position as of June 30, 2022, statements of operations and statements of comprehensive loss for the three and six months ended June 30, 2022 and 2021 and statements of cash flows for the six months ended June 30, 2022 and 2021. Such adjustments are of a normal and recurring nature. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2022.

Liquidity

Since inception, the Company has been engaged in organizational activities, including raising capital, and research and development activities. The Company does not yet have a product that has been approved by the Food and Drug Administration (the “FDA”), has not generated any product sales revenues and has not yet achieved profitable operations, nor has it ever generated positive cash flows from operations. There is no assurance that profitable operations, if achieved, could be sustained on a continuing basis. Further, the Company’s future operations are dependent on the success of the Company’s efforts to raise additional capital, its research and commercialization efforts, regulatory approval, and, ultimately, the market acceptance of the Company’s products.

In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. As of June 30, 2022, the Company had cash and cash equivalents of $90,883. Additionally, the Company had an accumulated deficit of $290,972 at June 30, 2022, and during the six months ended June 30, 2022, the Company incurred a net loss of $27,400. The Company expects to continue to generate operating losses for the foreseeable future. The Company believes that its cash and cash equivalents of $90,883 as of June 30, 2022 will be sufficient to fund its operating expenses for at least the next 12 months from issuance of these financial statements.

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2022

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions are eliminated upon consolidation.

Use of Estimates

The presentation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Research and development incentive income and receivable

The Company recognizes other income from Australian research and development incentives when there is reasonable assurance that the income will be received, the relevant expenditure has been incurred, and the consideration can be reliably measured. The research and development incentive is one of the key elements of the Australian Government’s support for Australia’s innovation system and is supported by legislative law primarily in the form of the Australian Income Tax Assessment Act 1997, as long as eligibility criteria are met.

Management has assessed the Company’s research and development activities and expenditures to determine which activities and expenditures are likely to be eligible under the research and development incentive regime described above. At each period end, management estimates the refundable tax offset available to the Company based on available information at the time.

Under the program, a percentage of eligible research and development expenses incurred by the Company through its subsidiary in Australia are reimbursed. The percentage was 43.5% for the year ended December 31, 2021 and for the six months ended June 30, 2022.

The research and development incentive receivable represents an amount due in connection with the above program. The Company recorded a research and development incentive receivable of $1,740 and $1,189 as of June 30, 2022 and December 31, 2021, respectively, in the condensed consolidated balance sheets and other income from Australian research and development incentives of $587 and $244, respectively, for the three months ended June 30, 2022 and 2021, and $624 and $315 for the six months ended June 30, 2022 and 2021, respectively, in the condensed consolidated statements of operations related to refundable research and development incentive program payments in Australia.

The following table shows the change in the research and development incentive receivable from January 1, 2021 to June 30, 2022 (in thousands):


Balance at January 1, 2021		73
Australian research and development incentive income, net		1,226
Cash received for 2020 eligible expenses		(111)
Foreign currency translation		1
Balance at December 31, 2021	$	1,189
Australian research and development incentive income, net		624
Foreign currency translation		(73)
Balance at June 30, 2022	$	1,740

Foreign Currency Translation

The financial statements of the Company’s Australian subsidiary are measured using the local currency as the functional currency. Assets and liabilities of this subsidiary are translated into U.S. dollars at an exchange rate as of the consolidated balance sheet date. Equity is translated at historical exchange rates. Revenues and expenses are translated into U.S. dollars at average rates of exchange in effect during the period. The resulting cumulative translation adjustments have been recorded as a separate component of stockholders’ equity. Realized and unrealized foreign currency transaction gains and losses are included in the results of operations.

Deposits

As of June 30, 2022 and December 31, 2021, there were $51 and $293, respectively, of deposits made by the Company with certain service providers that are to be applied to future payments due under the service agreements or returned to the Company if not utilized which were recorded in the condensed consolidated balance sheets.

Warrants

The Company will recognize on a prospective basis the value of the effect of the down round feature in the warrants to purchase shares of common stock that were issued in a private placement in November 2017 (the “2017 Warrants”) when it is triggered (i.e., when the exercise price is adjusted downward). This value is measured as the difference between (1) the financial instrument’s fair value (without the down round feature) using the pre-trigger exercise price and (2) the financial instrument’s fair value (with the down round feature) using the reduced exercise price. The value of the effect of the down round feature will be treated as a dividend and a reduction to income available to common stockholders in the basic EPS calculation.

Fair Value of Financial Instruments

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

●

Level 1—Quoted prices in active markets for identical assets or liabilities.

●

Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

●

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

During the periods presented, the Company did not change the manner in which it values assets and liabilities that are measured at fair value using Level 3 inputs. There were no transfers within the hierarchy during the six months ended June 30, 2022 or the year ended December 31, 2021.

A summary of the assets and liabilities carried at fair value in accordance with the hierarchy defined above is as follows (in thousands):


	Total		Level 1		Level 2		Level 3
June 30, 2022
Assets:
Cash equivalents	$	88,747	$	88,747	$	—	$	—
Total assets	$	88,747	$	88,747	$	—	$	—

December 31, 2021
Assets:
Cash equivalents	$	112,726	$	112,726	$	—	$	—
Total assets	$	112,726	$	112,726	$	—	$	—

Cash equivalents of $88,747 and $112,726 as of June 30, 2022 and December 31, 2021, respectively, consisted of overnight investments and money market funds and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

The carrying values of the research and development incentive receivable, accounts payable and accrued liabilities approximate their fair value due to the short-term nature of these assets and liabilities.

Leases

The Company accounts for leases in accordance with Accounting Standards Codification, or ASC, Topic 842, Leases.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. The Company has determined that the rate implicit in the lease is not determinable and the Company does not have borrowings with similar terms and collateral. Therefore, the Company considered a variety of factors, including observable debt yields from comparable companies and the volatility in the debt market for securities with similar terms, in determining that 8% was reasonable to use as the incremental borrowing rate for purposes of the calculation of lease liabilities.

In accordance with the guidance in Topic 842, components of a lease should be split into three categories: lease components (e.g. land, building, etc.), non-lease components (e.g. common area maintenance, maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.). Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components.

Although separation of lease and non-lease components is required, certain practical expedients are available. Entities may elect the practical expedient to not separate lease and non-lease components. Rather, they would account for each lease component and the related non-lease component together as a single component. The Company has elected to account for the lease and non-lease components of each of its operating leases as a single lease component and allocate all of the contract consideration to the lease component only. The lease component results in an operating right-of-use asset being recorded on the consolidated balance sheets and amortized such that lease expense is recorded on a straight line basis over the term of the lease.

Revenue Recognition

The Company records revenue in accordance with ASC Topic 606, Revenue From Contracts with Customers. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

License revenue. The Company’s performance obligations under its license agreements may include providing intellectual property licenses, performing technology transfer, performing research and development consulting services and notifying the customer of any enhancements to licensed technology or new technology that it discovers, among others. The Company determined that its performance obligations under its license agreements as evaluated at contract inception were not distinct and represented a single performance obligation. Upfront payments are amortized to revenue on a straight-line basis over the performance period. Upfront payment contract liabilities resulting from the Company’s license agreements do not represent a financing component as the payment is not financing the transfer of goods or services, and the technology underlying the licenses granted reflects research and development expenses already incurred by the Company. Generally, all amounts received or due other than sales-based milestones and royalties are classified as license revenues. Sales-based milestones and royalties under the Company’s license agreements will be recognized as royalty revenue in the period the related sale occurred. The Company generally invoices its licensees upon the completion of the effort or achievement of a milestone, based on the terms of each agreement. Deferred revenue arises from amounts received in advance of the culmination of the earnings process and is recognized as revenue in future periods as performance obligations are satisfied. Deferred revenue expected to be recognized within the next twelve months is classified as a current liability.

Research and Development Services. The promises under the Company’s license agreements may include research and development services to be performed by the Company on behalf of the customer. Payments or reimbursements resulting from the Company’s research and development efforts are recognized as the services are performed and presented on a gross basis because the Company is the principal for such efforts.

Customer Options. If an arrangement is determined to contain customer options that allow the customer to acquire additional goods or services, the goods and services underlying the customer options that are not determined to be material rights are not considered to be performance obligations at the outset of the arrangement, as they are contingent upon option exercise. The Company evaluates the customer options for material rights, or options to acquire additional goods or services for free or at a discount. If the customer options are determined to represent a material right, the material right is recognized as a separate performance obligation at the outset of the arrangement. The Company allocates the transaction price to material rights based on the relative standalone selling price, which is determined based on the identified discount and the probability that the customer will exercise the option. Amounts allocated to a material right are not recognized as revenue until (1) the option is exercised and the additional goods or services are transferred or (2) the option expires.

Milestone Payments. At the inception of each arrangement that includes research or development milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone in making this assessment. There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur. At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

Royalties. For arrangements that include sales-based royalties, including milestone payments upon first commercial sales and milestone payments based on a level of sales, which are the result of a customer-vendor relationship and for which the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied. To date, the Company has not recognized any royalty revenue resulting from any of its licensing arrangements.

Collaborative Arrangements

The Company analyzes its collaboration arrangements to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities and therefore within the scope of ASC Topic 808, Collaborative Arrangements (ASC 808). This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. For collaboration arrangements within the scope of ASC 808 that contain multiple elements, the Company first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and which elements of the collaboration are more reflective of a vendor-customer relationship and therefore within the scope of ASC 606. For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, generally by analogy to ASC 606. Amounts that are owed to collaboration partners are recognized as an offset to collaboration revenues as such amounts are incurred by the collaboration partner. Where amounts owed to a collaboration partner exceed the Company’s collaboration revenues in each quarterly period, such amounts are classified as research and development expense. Reimbursements from and payments to the customer that are the result of a collaborative relationship with a partner, instead of a customer relationship, such as co-development activities, are recorded as a reduction to research and development expense. For those elements of the arrangement that are accounted for pursuant to ASC 606, the Company applies the five-step model described above under ASC 606.

See Note 3 for a complete discussion of the revenue recognition for the Company’s license agreement.

Net Loss per Share

Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted average number of common shares outstanding during the period and, if dilutive, the weighted average number of potential shares of common stock, including the assumed exercise of stock options and warrants.

Subsequent Events

The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements please refer to Note 2, “Summary of Significant Accounting Policies”, in the Company’s previously filed Annual Report on Form 10-K for the year ended December 31, 2021.

BeiGene Exclusive Option and License Agreement

6 Months Ended

Jun. 30, 2022

BeiGene Exclusive Option and License Agreement

BeiGene Exclusive Option and License Agreement

3. BeiGene Exclusive Option and License Agreement

Terms of Agreement

On January 3, 2020, the Company entered into an exclusive option and license agreement (the “BeiGene Agreement”) with BeiGene, Ltd. (“BeiGene”) for the clinical development and commercialization of DKN-01, in Asia (excluding Japan), Australia, and New Zealand. The Company retains exclusive rights for the development, manufacturing, and commercialization of DKN-01 for the rest of the world.

Pursuant to the BeiGene Agreement, the Company received an upfront cash payment of $3,000 from BeiGene in exchange for granting BeiGene an option to an exclusive license to develop and commercialize DKN-01 in Asia (excluding Japan), Australia, and New Zealand. The Company is eligible to receive up to $132,000 in future option exercise and milestone payments, based upon the achievement of certain development, regulatory, and sales milestones, as well as tiered royalties on any product sales of DKN-01 in the licensed territory.

The Company is responsible for conducting development activities prior to the exercise of the option. After the option is exercised, BeiGene is solely responsible for the development and commercialization of DKN-01 in the territory. The BeiGene Agreement continues in effect until the earlier of: (i) 120 days after the end of the option period, if BeiGene has not exercised the option by such date; and (ii) on a country-by country and Licensed Product-by-Licensed Product (as defined in the BeiGene Agreement) basis, the expiration of the Royalty Term (as defined in the BeiGene Agreement) applicable to such licensed product in such country. At any time, BeiGene may terminate the BeiGene Agreement by providing at least 60 days written notice of termination to the Company. Upon termination of the License Agreement, all rights granted by the Company to BeiGene terminate.

Revenue Recognition

The Company evaluated the BeiGene Agreement to determine whether it is a collaborative arrangement for purposes of ASC 808. The Company concluded that because both parties were active participants and were exposed to the risks and rewards of the BeiGene Agreement, that such activities are under the scope of ASC 808. The Company concluded that BeiGene was a customer with regard to the combined license and research and development activities and as such the contract should be evaluated under ASC 606.

In determining the appropriate amount of revenue to be recognized under ASC 606 as the Company fulfills its obligations under the BeiGene Agreement, the Company performs the following steps: (i) identifies the promised goods or services in the contract; (ii) determines whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measures the transaction price, including any constraints on variable consideration; (iv) allocates the transaction price to the performance obligations; and (v) recognizes revenue when (or as) the Company satisfies each performance obligation.

The Company identified the following material promises under the BeiGene Agreement: (1) option to an exclusive license to develop and commercialize DKN-01 in Asia (excluding Japan), Australia, and New Zealand, (2) participation in a joint development committee, (3) technology transfer services and (4) pre-option research and development services. The Company determined that the option to an exclusive license in the territory does not represent a material right. Additionally, the Company determined that the participation in the joint development committee, research and development services and technology transfer services are not distinct from each other, as each has limited value without the other. As such, for the purposes of ASC 606, the Company determined that these four material promises, described above, should be combined into a single performance obligation.

The Company determined the transaction price was equal to the up-front fee of $3,000. The transaction price was fully allocated to the single performance obligation and was recognized as revenue on a straight-line basis over the performance period of the research and development services. During the three and six months ended June 30, 2021, the Company recognized $375 and $750, respectively, of license revenue related to the up-front fee received from BeiGene. During the three and six months ended June 30, 2022, the Company did not recognize any such revenue as the upfront payment was fully recognized as of December 31, 2021.

Cost of contract acquisition

The Company incurred contract acquisition costs of $270 which were capitalized under ASC 340-40 as incremental costs of obtaining the contract with BeiGene. This cost was amortized on a straight-line basis over the performance period of the research and development services. The total amount of amortization expense during the three and six months ended June 30, 2021 was $34 and $68, respectively. During the three and six months ended June 30, 2022, the Company did not recognize any such amortization expense as the contract acquisition costs were fully amortized as of December 31, 2021.

Royalties

As the license is deemed to be the predominant item to which sales-based royalties relate, the Company will recognize revenue when the related sales occur. No royalty revenue was recognized during the six months ended June 30, 2022 and 2021.

Accrued Expenses

6 Months Ended

Jun. 30, 2022

Accrued Expenses

Accrued Expenses

4. Accrued Expenses

Accrued expenses consist of the following:


	June 30,		December 31,
	2022		2021
Clinical trials	$	1,092	$	2,499
Professional fees		108		181
Payroll and related expenses		1,263		2,686
Accrued expenses	$	2,463	$	5,366

Leases

6 Months Ended

Jun. 30, 2022

Leases

Leases

5. Leases

The Company has operating leases for real estate in the United States and does not have any finance leases. The Company’s leases may contain options to renew and extend lease terms and options to terminate leases early. Reflected in the right-of-use asset and lease liability on the Company’s consolidated balance sheets are the periods provided by renewal and extension options that the Company is reasonably certain to exercise, as well as the periods provided by termination options that the Company is reasonably certain to not exercise.

The Company’s existing lease includes variable lease and non-lease components that are not included in the right-of-use asset and lease liability and are reflected as an expense in the period incurred. Such payments primarily include common area maintenance charges and increases in rent payments that are driven by factors such as future changes in an index (e.g., the Consumer Price Index).

In calculating the present value of future lease payments, the Company utilized its incremental borrowing rate based on the lease term. The Company has elected to account for each lease component and its associated non-lease components as a single lease component and has allocated all of the contract consideration across lease components only. This will potentially result in the initial and subsequent measurement of the balances of the right-of-use asset and lease liability for leases being greater than if the policy election was not applied. The Company has existing net leases in which the non-lease components (e.g. common area maintenance, maintenance, consumables, etc.) are paid separately from rent based on actual costs incurred and therefore are not included in the right-of-use asset and lease liability and are reflected as an expense in the period incurred. During the three months ended June 30, 2022, the Company extended the term of its operating lease and recorded an additional right-of-use asset and lease liability of $609. As of June 30, 2022, a right-of-use asset of $863 and lease liability of $869 are reflected on the condensed consolidated balance sheets. The Company recorded rent expense of $112 and $105, respectively, during the three months ended June 30, 2022 and 2021, and $220 and $210, respectively, during the six months ended June 30, 2022 and 2021.

Future lease payments under non-cancelable operating leases as of June 30, 2022 are detailed as follows:


Future Operating Lease Payments
2022	$	222
2023		452
2024		268
Total Lease Payments		942
Less: imputed interest		(73)
Total operating lease liabilities	$	869

Warrants

6 Months Ended

Jun. 30, 2022

Warrants

Warrants

6. Warrants

As of June 30, 2022, outstanding warrants to purchase common stock, all of which are classified as equity warrants, consisted of the following:


June 30, 2022
	Number of Shares
Description	Issuable	Exercise Price		Expiration Date
January 23 2017 Warrants	54,516	$	0.01	Upon M&A Event
2017 Warrants	2,502,382	$	1.055	November 2024
2019 Warrants	7,008,257	$	1.95	February 2026
March 2020	14,413,902	$	0.001	No Expiry
March 2020	25,945,035	$	2.11	Jan - March 2027
June 2020	1,690,137	$	0.001	No Expiry
September 2021	8,771,928	$	0.001	No Expiry
	60,386,157

2017 Warrants

The 2017 Warrants contain full ratchet anti-dilution protection provisions. The Company will recognize on a prospective basis the value of the effect of the down round feature in the 2017 Warrants when it is triggered (i.e., when the exercise price is adjusted downward). This value is measured as the difference between (1) the financial instrument’s fair value (without the down round feature) using the pre-trigger exercise price and (2) the financial instrument’s fair value (with the down round feature) using the reduced exercise price. The value of the effect of the down round feature will be treated as a dividend and a reduction to income available to common stockholders in the basic EPS calculation.

2019 Warrants

On February 5, 2019, in connection with the 2019 Public Offering, the Company issued immediately exercisable warrants (the “2019 Warrants”) to purchase 7,557,142 shares of common stock to investors. The 2019 Warrants have an exercise price of $1.95 per share and expire on February 5, 2026. The 2019 Warrants qualify for equity classification.

March 2020 Warrants

On January 3, 2020, the Company entered into a Securities Purchase Agreement with investors, providing for a private placement transaction exempt from the Securities Act of 1933, as amended, pursuant to which the Company issued and sold 1,421,801 shares of its Series A Preferred Stock, at a purchase price of $10.54 per share, and 1,137,442 shares of its Series B Preferred Stock at a purchase price of $10.55 per share, and one (1) share of the Company’s Special Voting Stock entitling the purchaser of Series A Preferred Stock to elect one member of the Company’s board of directors.

On March 5, 2020, the Company’s stockholders approved the conversion of the Series A Preferred Stock into a pre-funded warrant to purchase 14,413,902 shares of common stock at an exercise price of $0.001 (the “March 2020 Pre-funded Warrants”) and the conversion of the Series B Preferred Stock into 11,531,133 shares of common stock. Each investor also received a warrant to purchase an equal number of shares of common stock at an exercise price of $2.11 per share (the “Coverage Warrants”). The March 2020 Pre-funded Warrants and the Coverage Warrants qualify for equity classification.

June 2020 Warrants

On June 22, 2020, the Company completed a public offering (the “2020 Public Offering”) whereby the Company issued 20,250,000 shares of its common stock, at $2.00 per share and, in lieu of common stock, offered pre-funded warrants (the “June 2020 Pre-funded Warrants”) to purchase up to 2,250,000 shares of its common stock to certain investors. The June 2020 Pre-funded Warrants have an exercise price of $0.001 per share and qualify for equity classification.

September 2021 Warrants

On September 24, 2021, the Company completed a public offering (the “2021 Public Offering”) whereby the Company issued 27,568,072 shares of its common stock, at $2.85 per share and, in lieu of common stock, offered pre-funded warrants (the “September 2021 Pre-funded Warrants”) to purchase up to 8,771,928 shares of its common stock to certain investors. The September 2021 Pre-funded Warrants have an exercise price of $0.001 per share and qualify for equity classification.

Common Stock

6 Months Ended

Jun. 30, 2022

Common Stock

Common Stock

7. Common Stock

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, as may be declared by the board of directors, if any, subject to the preferential dividend rights of the preferred stockholders. Through June 30, 2022, no dividends have been declared for shares of common stock.

Public Offering of Common Stock – September 2021

On September 24, 2021, the Company completed the 2021 Public Offering, whereby the Company issued 22,828,072 shares of its common stock at $2.85 per share and, in lieu of common stock, issued certain investors 8,771,928 of its September 2021 Pre-funded Warrants. The September 2021 Pre-funded Warrants have an exercise price of $0.001 per share and qualify for equity classification. The underwriters exercised their right to purchase 4,740,000 additional shares of the Company’s common stock at the public offering price per share of common stock, less underwriting discounts and commissions. The aggregate net proceeds received by the Company from the 2021 Public Offering were approximately $96,828 net of underwriting discounts and commissions and offering expenses payable by the Company.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Equity Incentive Plans

6 Months Ended

Jun. 30, 2022

Equity Incentive Plans

Equity Incentive Plans

8. Equity Incentive Plans

Equity Incentive Plans

In September 2012, the Company adopted the 2012 Equity Incentive Plan, as amended, which provides designated employees of the Company and its affiliates, certain consultants and advisors who perform services for the Company and its affiliates, and nonemployee members of the board of directors of the Company and its affiliates with the opportunity to receive grants of incentive stock options, nonqualified stock options and stock awards.

On January 20, 2017, the Company’s stockholders approved the 2016 Equity Incentive Plan (the “2016 Plan”). Beginning on January 1, 2018, the number of shares of common stock authorized for issuance pursuant to the 2016 Plan was increased each January 1 by an amount equal to four percent (4%) of the Company’s outstanding common stock as of the end of the immediately preceding calendar year or such other amount as determined by the compensation committee of the Company’s board of directors.

On June 16, 2022, the Company’s stockholders approved the 2022 Equity Incentive Plan (the “2022 Plan”), which provides for a total of 7,500,000 new shares of the Company’s common stock to be granted.

As of June 30, 2022, there were 7,768,193 shares available for grant under the Company’s equity incentive plans.

A summary of stock option activity under the Equity Plans is as follows:


		Weighted
		Average		Weighted		Aggregate
		Exercise Price		Average Remaining		Intrinsic
	Options	Per Share		Life in Years		Value
Outstanding at December 31, 2021	8,525,618	$	4.48	7.58
Granted	745,000	$	1.89
Forfeited	(224,198)	$	2.10
Outstanding at June 30, 2022	9,046,420	$	4.31	7.20	$	2
Options exercisable at June 30, 2022	6,499,613	$	5.20	6.62	$	1
Options vested and expected to vest at June 30, 2022	9,046,420	$	4.31	7.20	$	2

The grant date fair value of the options granted during the six months ended June 30, 2022 and 2021 was estimated at the date of grant using the Black-Scholes option valuation model. The expected life was estimated using the “simplified” method as defined by the SEC’s Staff Accounting Bulletin 107, Share-Based Payment. The expected volatility was based on the historical volatility of comparable public companies from a representative peer group selected based on industry and market capitalization data. The risk-free interest rate was based on the continuous rates provided by the U.S. Treasury with a term approximating the expected life of the option. The expected dividend yield was 0% because the Company does not expect to pay any dividends for the foreseeable future. The Company elected the straight-line attribution method in recognizing the grant date fair value of options issued over the requisite service periods of the awards, which are generally the vesting periods.

The weighted average grant date fair value for the stock options granted during the six months ended June 30, 2022 and 2021 was $1.35 and $2.21 per share, respectively.

The assumptions that the Company used to determine the grant-date fair value of stock options granted to employees and directors during the six months ended June 30, 2022 and 2021 were as follows, presented on a weighted average basis:


	Six Months		Six Months
	Ended June 30,		Ended June 30,
	2022		2021

Expected volatility	82.70	%	66.94	%
Weighted average risk-free interest rate	1.82	%	0.8	%
Expected dividend yield	0.00	%	0.00	%
Expected term (in years)	6.44		6.86

Stock options generally vest over a three or four year period, as determined by the compensation committee of the board of directors at the time of grant. The options expire ten years from the grant date. As of June 30, 2022, there was approximately $3,151 of unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a remaining weighted-average period of approximately 1.66 years.

Restricted Stock Units

During the six months ended June 30, 2022 and 2021, the Company granted 2,575,000 and 275,000, respectively, RSUs to employees that will cliff vest and will be settled after three years of continuous service, or upon a change of control of the Company, whichever is earlier, pursuant to the 2016 Plan.

The following table presents RSU activity under the 2016 Plan during the six months ended June 30, 2022:


		Weighted
		Average Grant
	Number of Shares	Date Fair Value
Outstanding at December 31, 2021	935,606	$	1.76
Awarded	2,575,000	$	1.94
Outstanding at June 30, 2022	3,510,606	$	1.89

As of June 30, 2022, there were 3,510,606 shares outstanding covered by RSUs that are expected to vest with a weighted average grant date fair value of $1.89 per share and an aggregate grant date fair value of approximately $6,640. As of June 30, 2022, there was approximately $4,902 of unrecognized compensation costs related to RSUs granted to employees, which are expected to be recognized as expense over a remaining weighted average period of 2.43 years.

The Company recognized stock-based compensation expense related to the issuance of stock option awards and RSUs to employees and non-employees in the condensed consolidated statements of operations during the three and six months ending June 30, 2022 and 2021 as follows:

Stock Based Compensation Expense


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021

Research and development	$	617	$	398	$	1,171	$	743
General and administrative		649		514		1,299		1,002
Total	$	1,266	$	912	$	2,470	$	1,745

Net Loss Per Share

6 Months Ended

Jun. 30, 2022

Net Loss Per Share

Net Loss Per Share

9. Net Loss Per Share

Basic and diluted net loss per share for the three and six months ended June 30, 2022 and 2021 was calculated as follows (in thousands except share and per share amounts).


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Numerator:
Net loss	$	(17,024)	$	(9,526)	$	(27,400)	$	(18,660)
Net loss attributable to common stockholders for basic and diluted loss per share	$	(17,024)	$	(9,526)	$	(27,400)	$	(18,660)

Denominator:
Weighted average number of common shares outstanding – basic and diluted		113,248,937		76,389,525		113,248,937		76,384,077
Net loss per share attributable to common stockholders – basic and diluted	$	(0.15)	$	(0.12)	$	(0.24)	$	(0.24)

Included within weighted average common shares outstanding for the three and six months ended June 30, 2022 and for the three and six months ended June 30, 2021 are 24,930,483 and 16,718,418, respectively, common shares issuable upon the exercise of the pre-funded warrants and penny warrants, as the warrants are exercisable at any time for nominal consideration, and as such, the shares are considered outstanding for the purpose of calculating basic and diluted net loss per share attributable to common stockholders.

The Company’s potentially dilutive securities include RSUs, stock options and warrants. These securities were excluded from the computations of diluted net loss per share for the three and six months ended June 30, 2022 and 2021, as the effect would be to reduce the net loss per share. The following table includes the potential shares of common stock, presented based on amounts outstanding at each period end, that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:


	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Restricted stock units to purchase common stock	3,510,606	935,606	3,510,606	935,606
Options to purchase common stock	9,046,420	8,386,135	9,046,420	8,386,135
Warrants to purchase common stock	35,455,674	35,974,337	35,455,674	35,974,337
	48,012,700	45,296,078	48,012,700	45,296,078

Commitments and Contingencies

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies

Commitments and Contingencies

10. Commitments and Contingencies

Manufacturing Agreements—The Company is party to manufacturing agreements with vendors to manufacture DKN-01, its lead product candidate, for use in clinical trials. As of June 30, 2022, there were $12,000 noncancelable commitments under these agreements.

License and Service Agreement—On January 3, 2011, the Company entered into a license agreement with Eli Lilly and Company (“Lilly”), a shareholder, to grant a license to the Company for certain intellectual property rights relating to pharmaceutically active compounds that may be useful in the treatment of bone healing, cancer and, potentially, other medical conditions. As defined in the license agreement, the Company would be required to pay royalties to Lilly based upon a percentage in

the low single digits of net sales of developed products, if and when achieved. However, there can be no assurance that clinical or commercialization success of developed products will occur, and no royalties have been paid or accrued through June 30, 2022.

License Agreement—On May 28, 2015, the Company entered into a license agreement with Lonza Sales AG (“Lonza”), pursuant to which Lonza granted the Company a world-wide, non-exclusive license for certain intellectual property relating to a gene expression system for manufacturing DKN-01. As defined in the license agreement, the Company would be required to pay royalties to Lonza based on a percentage in the low single digits of net sales of DKN-01, if and when achieved. However, there can be no assurance that clinical or commercialization success will occur, and no royalties have been paid or accrued through June 30, 2022.

Legal Proceedings—At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses as incurred the costs related to its legal proceedings. As of the date of this report, the Company is not currently a party to any material legal proceedings.

Indemnification Agreements—In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not aware of any claims under indemnification arrangements, and it has not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of June 30, 2022 or December 31, 2021.

Subsequent Events

6 Months Ended

Jun. 30, 2022

Subsequent Events

Subsequent Events

11. Subsequent Events

In July and August 2022, there were cashless exercises of 10,712,767 pre-funded warrants, exercise price $0.001 per share, resulting in the issuance of 10,702,922 shares of the Company's common stock.

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2022

Summary of Significant Accounting Policies

Principles of Consolidation

Use of Estimates

Research and development incentive income and receivable

The following table shows the change in the research and development incentive receivable from January 1, 2021 to June 30, 2022 (in thousands):


Balance at January 1, 2021		73
Australian research and development incentive income, net		1,226
Cash received for 2020 eligible expenses		(111)
Foreign currency translation		1
Balance at December 31, 2021	$	1,189
Australian research and development incentive income, net		624
Foreign currency translation		(73)
Balance at June 30, 2022	$	1,740

Foreign Currency Translation

Deposits

Deposits

Warrants

Warrants

Fair Value of Financial Instruments

Fair Value of Financial Instruments

●

Level 1—Quoted prices in active markets for identical assets or liabilities.

●

A summary of the assets and liabilities carried at fair value in accordance with the hierarchy defined above is as follows (in thousands):


	Total		Level 1		Level 2		Level 3
June 30, 2022
Assets:
Cash equivalents	$	88,747	$	88,747	$	—	$	—
Total assets	$	88,747	$	88,747	$	—	$	—

December 31, 2021
Assets:
Cash equivalents	$	112,726	$	112,726	$	—	$	—
Total assets	$	112,726	$	112,726	$	—	$	—

Leases

Leases

The Company accounts for leases in accordance with Accounting Standards Codification, or ASC, Topic 842, Leases.

Revenue Recognition

Revenue Recognition

License revenue

Research and Development Services

Customer Options

Milestone Payments

Royalties

Collaborative Arrangements

Collaborative Arrangements

See Note 3 for a complete discussion of the revenue recognition for the Company’s license agreement.

Net Loss per Share

Subsequent Events

Subsequent Events

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2022

Summary of Significant Accounting Policies

Schedule of change in the research and development incentive receivable

The following table shows the change in the research and development incentive receivable from January 1, 2021 to June 30, 2022 (in thousands):


Balance at January 1, 2021		73
Australian research and development incentive income, net		1,226
Cash received for 2020 eligible expenses		(111)
Foreign currency translation		1
Balance at December 31, 2021	$	1,189
Australian research and development incentive income, net		624
Foreign currency translation		(73)
Balance at June 30, 2022	$	1,740

Summary of assets and liabilities carried at fair value in accordance with the hierarchy

A summary of the assets and liabilities carried at fair value in accordance with the hierarchy defined above is as follows (in thousands):


	Total		Level 1		Level 2		Level 3
June 30, 2022
Assets:
Cash equivalents	$	88,747	$	88,747	$	—	$	—
Total assets	$	88,747	$	88,747	$	—	$	—

December 31, 2021
Assets:
Cash equivalents	$	112,726	$	112,726	$	—	$	—
Total assets	$	112,726	$	112,726	$	—	$	—

Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2022

Accrued Expenses

Schedule of accrued expenses


	June 30,		December 31,
	2022		2021
Clinical trials	$	1,092	$	2,499
Professional fees		108		181
Payroll and related expenses		1,263		2,686
Accrued expenses	$	2,463	$	5,366

Leases (Tables)

6 Months Ended

Jun. 30, 2022

Leases

Schedule of future lease payments


Future Operating Lease Payments
2022	$	222
2023		452
2024		268
Total Lease Payments		942
Less: imputed interest		(73)
Total operating lease liabilities	$	869

Warrants (Tables)

6 Months Ended

Jun. 30, 2022

Warrants

Schedule of warrants


June 30, 2022
	Number of Shares
Description	Issuable	Exercise Price		Expiration Date
January 23 2017 Warrants	54,516	$	0.01	Upon M&A Event
2017 Warrants	2,502,382	$	1.055	November 2024
2019 Warrants	7,008,257	$	1.95	February 2026
March 2020	14,413,902	$	0.001	No Expiry
March 2020	25,945,035	$	2.11	Jan - March 2027
June 2020	1,690,137	$	0.001	No Expiry
September 2021	8,771,928	$	0.001	No Expiry
	60,386,157

Equity Incentive Plans (Tables)

6 Months Ended

Jun. 30, 2022

Equity Incentive Plans

Summary of stock option activity under the Equity Plans


		Weighted
		Average		Weighted		Aggregate
		Exercise Price		Average Remaining		Intrinsic
	Options	Per Share		Life in Years		Value
Outstanding at December 31, 2021	8,525,618	$	4.48	7.58
Granted	745,000	$	1.89
Forfeited	(224,198)	$	2.10
Outstanding at June 30, 2022	9,046,420	$	4.31	7.20	$	2
Options exercisable at June 30, 2022	6,499,613	$	5.20	6.62	$	1
Options vested and expected to vest at June 30, 2022	9,046,420	$	4.31	7.20	$	2

Schedule of assumptions used to determine grant-date fair value of stock options


	Six Months		Six Months
	Ended June 30,		Ended June 30,
	2022		2021

Expected volatility	82.70	%	66.94	%
Weighted average risk-free interest rate	1.82	%	0.8	%
Expected dividend yield	0.00	%	0.00	%
Expected term (in years)	6.44		6.86

Summary of RSU activity under the 2016 Plan


		Weighted
		Average Grant
	Number of Shares	Date Fair Value
Outstanding at December 31, 2021	935,606	$	1.76
Awarded	2,575,000	$	1.94
Outstanding at June 30, 2022	3,510,606	$	1.89

Schedule of recognized stock-based compensation expense related to the issuance of stock option awards and RSUs to employees and non-employees in the condensed consolidated statements of operations


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021

Research and development	$	617	$	398	$	1,171	$	743
General and administrative		649		514		1,299		1,002
Total	$	1,266	$	912	$	2,470	$	1,745

Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2022

Net Loss Per Share

Schedule of basic and diluted net loss per share

Basic and diluted net loss per share for the three and six months ended June 30, 2022 and 2021 was calculated as follows (in thousands except share and per share amounts).


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Numerator:
Net loss	$	(17,024)	$	(9,526)	$	(27,400)	$	(18,660)
Net loss attributable to common stockholders for basic and diluted loss per share	$	(17,024)	$	(9,526)	$	(27,400)	$	(18,660)

Denominator:
Weighted average number of common shares outstanding – basic and diluted		113,248,937		76,389,525		113,248,937		76,384,077
Net loss per share attributable to common stockholders – basic and diluted	$	(0.15)	$	(0.12)	$	(0.24)	$	(0.24)

Schedule of potentially anti-dilutive securities excluded from calculation of diluted net loss per share


	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Restricted stock units to purchase common stock	3,510,606	935,606	3,510,606	935,606
Options to purchase common stock	9,046,420	8,386,135	9,046,420	8,386,135
Warrants to purchase common stock	35,455,674	35,974,337	35,455,674	35,974,337
	48,012,700	45,296,078	48,012,700	45,296,078

Nature of Business, Basis of Presentation and Liquidity (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Liquidity
Cash and cash equivalents	$ 90,883		$ 90,883		$ 114,916
Accumulated deficit	290,972		290,972		$ 263,572
Net loss	$ 17,024	$ 9,526	$ 27,400	$ 18,660

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

- Definition

The cumulative amount of the reporting entity's undistributed earnings or deficit.

+ References + Details

Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Research and development incentive income and receivable
Research and development expenses reimbursed (as a percent)			43.50%		43.50%
Research and development incentive income and receivable
Balance at the beginning of the period			$ 1,189	$ 73	$ 73
Australian research and development incentive income, net	$ 587	$ 244	624	$ 315	(1,226)
Cash received for 2020 eligible expenses					(111)
Foreign currency translation			(73)		1
Balance at the end of the period	1,740		1,740		1,189
Other Assets
Deposits with service providers that are to be applied to future payments	$ 51		$ 51		$ 293
Incremental borrowing rate	8.00%		8.00%

Summary of Significant Accounting Policies - Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Assets:
Cash equivalents	$ 88,747	$ 112,726
Total assets	88,747	112,726
Level 1
Assets:
Cash equivalents	88,747	112,726
Total assets	$ 88,747	$ 112,726

BeiGene Exclusive Option and License Agreement (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Jan. 03, 2020
BeiGene Exclusive Option and License Agreement
Up-front fee			$ 3,000
Contract acquisition costs	$ 270		270
Amortization expense	0	$ 34	0	$ 68
Exclusive Option and License Agreement
BeiGene Exclusive Option and License Agreement
Future option exercise and milestone payments, maximum					$ 132,000
License
BeiGene Exclusive Option and License Agreement
Revenue recognized	$ 0	$ 375	0	750
Royalty
BeiGene Exclusive Option and License Agreement
Revenue recognized			$ 0	$ 0
Exclusive Option and License Agreement
BeiGene Exclusive Option and License Agreement
Upfront cash payment					$ 3,000

Accrued Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Accrued Expenses
Clinical trials	$ 1,092	$ 2,499
Professional fees	108	181
Payroll and related expenses	1,263	2,686
Accrued expenses	$ 2,463	$ 5,366

Leases (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Right-of-use assets, net	$ 863		$ 863		$ 459
Lease liability	869		869
Additional right of use asset	609
Additional operating lease liability	609
Rent expense	112	$ 105	220	$ 210
Restatement Adjustment \| Accounting Standards Update 2016-02 [Member]
Lease liability	$ 869		$ 869

Leases - Future minimum lease payments (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Leases
2022	$ 222
2023	452
2024	268
Total Lease Payments	942
Less: imputed interest	(73)
Total operating lease liabilities	$ 869

Warrants (Details) - $ / shares	Sep. 24, 2021	Jun. 22, 2020	Mar. 05, 2020	Jan. 03, 2020	Jun. 30, 2022	Feb. 05, 2019
Warrants
Number of Shares Issuable					60,386,157
January 23 2017 Warrants
Warrants
Number of Shares Issuable					54,516
Exercise price of warrant					$ 0.01
2017 Warrants
Warrants
Number of Shares Issuable					2,502,382
Exercise price of warrant					$ 1.055
March 2020
Warrants
Number of Shares Issuable					14,413,902
Exercise price of warrant					$ 0.001
March 2020.
Warrants
Number of Shares Issuable					25,945,035
Exercise price of warrant					$ 2.11
June 2020
Warrants
Number of Shares Issuable					1,690,137
Exercise price of warrant		$ 0.001			$ 0.001
Warrant to purchase shares of common stock		2,250,000
June 2020 \| Common Stock.
Warrants
Common stock issued		20,250,000
Purchase price		$ 2.00
September 2021
Warrants
Number of Shares Issuable					8,771,928
Exercise price of warrant	$ 0.001				$ 0.001
Warrant to purchase shares of common stock	8,771,928
September 2021 \| Common Stock.
Warrants
Common stock issued	22,828,072
Common stock issued	27,568,072
Purchase price	$ 2.85
2019 Warrants
Warrants
Number of Shares Issuable					7,008,257	7,557,142
Exercise price of warrant					$ 1.95	$ 1.95
March 2020 Warrants \| Series A Convertible Preferred Stock
Warrants
Exercise price of warrant			$ 0.001
Common stock issued				1,421,801
Purchase price				$ 10.54
Warrant to purchase shares of common stock			14,413,902
March 2020 Warrants \| Series B Convertible Preferred Stock
Warrants
Exercise price of warrant			$ 2.11
Common stock issued				1,137,442
Purchase price				$ 10.55
Conversion of stock, shares issued			11,531,133

Common Stock - Private Placement of Common Stock (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2022 USD ($) item
Common Stock
Number of Vote on Common Shares \| item	1
Dividends, Common Stock \| $	$ 0

Common stock - Public Offering of Common Stock (Details) - September 2021 - USD ($)	Sep. 24, 2021	Jun. 30, 2022
Warrant to purchase shares of common stock	8,771,928
Exercise price of warrant	$ 0.001	$ 0.001
Common Stock.
Common stock issued	22,828,072
Issue price	$ 2.85
Net proceeds from issuance of common stock	$ 96,828
Underwriters' exercise \| Common Stock.
Common stock issued	4,740,000

Equity Incentive Plans (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended		12 Months Ended
	Jan. 20, 2017	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021	Jun. 16, 2022
Options
Outstanding balance at the beginning of the period (in shares)				8,525,618
Granted (in shares)				745,000
Forfeited (in shares)				(224,198)
Outstanding balance at the end of the period (in shares)		9,046,420		9,046,420		8,525,618
Options exercisable at the end of the period (in shares)		6,499,613		6,499,613
Options vested and expected to vest at end of period (in shares)		9,046,420		9,046,420
Weighted Average Exercise Price Per Share
Outstanding balance at the beginning of the period (in dollars per share)				$ 4.48
Granted (in dollars per share)				1.89
Forfeited (in dollars per share)				2.10
Outstanding balance at the end of the period (in dollars per share)		$ 4.31		4.31		$ 4.48
Exercisable at the end of the period (in dollars per share)		5.20		5.20
Options vested and expected to vest at end of the period (in dollars per share)		$ 4.31		$ 4.31
Weighted Average Remaining Life in Years
Outstanding balance				7 years 2 months 12 days		7 years 6 months 29 days
Options exercisable at end of period				6 years 7 months 13 days
Options vested and expected to vest at end of the period				7 years 2 months 12 days
Aggregate Intrinsic Value
Outstanding balance		$ 2		$ 2
Options exercisable at the end of the period		1		1
Options vested and expected to vest at end of the period		$ 2		$ 2
Assumptions used to determine grant-date fair value
Expected Volatility				82.70%	66.94%
Weighted average risk-free interest rate				1.82%	0.80%
Expected dividend yield				0.00%	0.00%
Expected term (in years)				6 years 5 months 8 days	6 years 10 months 9 days
Expiration period				10 years
Options unvested at end of period (in dollars per share)		$ 1.35	$ 2.21	$ 1.35	$ 2.21
Compensation cost related to the non-vested awards not yet recognized		$ 3,151		$ 3,151
Weighted average period for recognition of compensation cost				1 year 7 months 28 days
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Outstanding at end(in dollars per share)		$ 1.35	$ 2.21	$ 1.35	$ 2.21
Minimum
Assumptions used to determine grant-date fair value
Vesting period				3 years
Maximum
Assumptions used to determine grant-date fair value
Vesting period				4 years
2016 Plan
Assumptions used to determine grant-date fair value
Annual increase in authorized shares (as a percent)	4.00%
Number of options or stock awards available for grant under the Plan		7,768,193		7,768,193
2022 Plan
Assumptions used to determine grant-date fair value
Number of options or stock awards available for grant under the Plan							7,500,000
Options to purchase common stock
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Stock-based compensation expense		$ 1,266	$ 912	$ 2,470	$ 1,745
Options to purchase common stock \| Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Stock-based compensation expense		617	398	1,171	743
Options to purchase common stock \| General and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Stock-based compensation expense		649	$ 514	1,299	$ 1,002
Restricted stock units to purchase common stock
Assumptions used to determine grant-date fair value
Aggregate grant fair value				6,640
Share-based payment arrangement, non vested award, excluding option, cost not yet recognized, amount		$ 4,902		$ 4,902
Weighted average period for recognition of compensation cost				2 years 5 months 4 days
Restricted stock units to purchase common stock \| Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Awarded				2,575,000	275,000
Restricted stock units to purchase common stock \| 2016 Plan
Assumptions used to determine grant-date fair value
Options unvested at end of period (in dollars per share)		$ 1.89		$ 1.89		$ 1.76
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding at the beginning				935,606
Awarded				2,575,000
Outstanding at the end		3,510,606		3,510,606		935,606
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Outstanding at beginning( in dollars per share)				$ 1.76
Awarded (in dollars per share)				1.94
Outstanding at end(in dollars per share)		$ 1.89		$ 1.89		$ 1.76

Net Loss Per Share - Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Numerator:
Net loss	$ (17,024)	$ (9,526)	$ (27,400)	$ (18,660)
Net loss attributable to common stockholders for basic and diluted loss per share	$ (17,024)	$ (9,526)	$ (27,400)	$ (18,660)
Denominator:
Net loss per share attributable to common stockholders - basic	$ (0.15)	$ (0.12)	$ (0.24)	$ (0.24)
Net loss per share attributable to common stockholders - Diluted	$ (0.15)	$ (0.12)	$ (0.24)	$ (0.24)
Weighted average number of common shares outstanding - basic	113,248,937	76,389,525	113,248,937	76,384,077
Weighted average number of common shares outstanding - Diluted	113,248,937	76,389,525	113,248,937	76,384,077
Exercise of the pre-funded warrants	24,930,483	16,718,418	24,930,483	16,718,418

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

- Definition

Amount, after deduction of tax, noncontrolling interests, dividends on preferred stock and participating securities, and addition from assumption of issuance of common shares for dilutive potential common shares; of income (loss) available to common shareholders.

+ References + Details

Net Loss Per Share - Antidilutive (Details) - shares	3 Months Ended		6 Months Ended
Net Loss Per Share - Antidilutive (Details) - shares	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Securities excluded from computation of diluted net loss per share
Anti-dilutive securities excluded from calculation of diluted net loss per share	48,012,700	45,296,078	48,012,700	45,296,078
Restricted stock units to purchase common stock
Securities excluded from computation of diluted net loss per share
Anti-dilutive securities excluded from calculation of diluted net loss per share	3,510,606	935,606	3,510,606	935,606
Options to purchase common stock
Securities excluded from computation of diluted net loss per share
Anti-dilutive securities excluded from calculation of diluted net loss per share	9,046,420	8,386,135	9,046,420	8,386,135
Warrants to purchase common stock
Securities excluded from computation of diluted net loss per share
Anti-dilutive securities excluded from calculation of diluted net loss per share	35,455,674	35,974,337	35,455,674	35,974,337

Commitments and Contingencies - Manufacturing, License and Other Agreements (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Commitments and Contingencies
Manufacturing commitments	$ 12,000
License and service agreements
Commitments and Contingencies
Royalties paid or accrued	0
Licensing agreements
Commitments and Contingencies
Royalties paid or accrued	$ 0

Subsequent Events (Details) - Subsequent event - $ / shares	1 Months Ended
	Aug. 31, 2022	Jul. 31, 2022
Subsequent Events
Common stock issued	10,702,922	10,702,922
Pre-funded Warrants
Subsequent Events
Warrant to purchase shares of common stock	10,712,767	10,712,767
Exercise price of warrant	$ 0.001	$ 0.001