0001410578-24-001284 | 10-Q | XBRL Viewer

Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2024

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, 2024 and 2023 was calculated as follows (in thousands except share and per share amounts).


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Numerator:
Net loss	$	(20,128)	$	(13,390)	$	(33,948)	$	(55,253)
Dividend attributable to down round feature of warrants		(234)		—		(234)		—
Net loss attributable to common stockholders for basic and diluted loss per share	$	(20,362)	$	(13,390)	$	(34,182)	$	(55,253)

Denominator:
Weighted average number of common shares outstanding – basic and diluted		39,122,662		14,710,375		33,830,083		13,794,605
Net loss per share attributable to common stockholders – basic and diluted	$	(0.52)	$	(0.91)	$	(1.01)	$	(4.01)

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,
	2024	2023	2024	2023
Restricted stock units to purchase common stock	227,500	285,000	227,500	285,000
Options to purchase common stock	4,822,221	2,012,684	4,822,221	2,012,684
Warrants to purchase common stock	3,586,373	3,586,371	3,586,373	3,586,371
	8,636,094	5,884,055	8,636,094	5,884,055

Acquisition of Flame Biosciences	6 Months Ended
Jun. 30, 2024
Acquisition of Flame Biosciences
Acquisition of Flame Biosciences	3. Acquisition of Flame Biosciences Merger On January 17, 2023 (the “Effective Date”), Leap acquired 100% of the outstanding equity of Flame, in accordance with the terms of the Agreement and Plan of Merger, dated as of the Effective Date (the “Merger Agreement”), by and among Leap, Fire Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Leap (“First Merger Sub”), Flame Biosciences LLC, a Delaware limited liability company and wholly owned subsidiary of Leap (“Second Merger Sub”), Flame, and the Stockholder Representative named therein. Pursuant to the Merger Agreement, First Merger Sub merged with and into Flame, and Flame was the surviving corporation of such merger and became a wholly owned subsidiary of Leap (the “First Merger”). Immediately following the First Merger, Flame merged with and into Second Merger Sub, and Second Merger Sub was the surviving entity of such merger (together with the First Merger, the “Merger”). Pursuant to the Merger, Leap agreed to issue to the stockholders of Flame (the “Flame Stockholders”) 1,972,901 shares of common stock, and 136,248 shares of Series X Preferred Stock, which was a newly designated series of preferred stock that was intended to have economic rights equivalent to the common stock, but with limited voting rights, and issued to the warrant holders of Flame (the “Flame Warrant Holders”) the right to acquire 6,530 shares of common stock (the “January 2023 Common Stock Warrants”) and 443 shares of Series X Preferred Stock (the “January 2023 Series X Preferred Stock Warrants”). Each share of Series X Preferred Stock converted into 100 shares of common stock during the three months ended June 30, 2023, as a result of the one-for-ten reverse stock split approved by the stockholders and effected by the Board of Directors. Under the terms of the Merger Agreement, Leap held back approximately 15,604 Series X Preferred shares (the “Holdback Shares”), which converted into 1,560,400 shares of common stock out of the aggregate number of shares that the Flame Stockholders otherwise would be entitled to receive pursuant to the Merger so that Leap can have recourse to the Holdback Shares for purposes of satisfying certain claims for indemnification that Leap may have against the Flame Stockholders in connection with the Merger. In January 2024, Leap released the Holdback Shares to the Flame Shareholders. On June 16, 2023, the Company obtained Stockholder Approval to convert the Series X Preferred Stock into shares of its common stock, which occurred on June 21, 2023. The Company accounted for the acquisition of Flame as an asset acquisition allocating the purchase price under GAAP of $79,016 to net assets acquired. Although there is a presumption under SEC Rule 11-01(d) (“11-01(d)”) that when a legal entity is acquired, it represents a business acquisition, the Company concluded that, in this case, the transaction did not represent the acquisition of a business. After considering the criteria set forth in 11-01(d), the Company concluded that the acquisition of Flame by the Company was an acquisition of assets and not an acquisition of a business in accordance with 11-01(d). Specifically, the Company concluded that 1) the entity did not generate revenue and 2) there was not sufficient continuity of Flame’s operations prior to and following the transaction, in that no facilities, employees, sales force, distribution system, customer base, trade names or production techniques remained with the entity after the acquisition. Leap primarily acquired cash of $50,362, certain working capital items ($928) and a portfolio of clinical- and pre-clinical-stage intellectual property, in connection with the acquisition of Flame. The Company accounted for the acquisition of Flame by recording the cash and any other assets and liabilities of Flame on its condensed consolidated balance sheet at their historical carrying values, which approximates fair values. The remaining fair value of the consideration transferred was allocated to the in-process research and development (“IPR&D”) assets acquired. Certain transaction costs that were not deemed to meet the criteria of costs directly attributable to the issuance of securities were capitalized in accordance with ASC 805-50-30-1 and recognized as part of fair value of assets acquired. As the Company concluded that such IPR&D does not have an alternative future use, the relative fair value allocated to acquired IPR&D of $29,582 was expensed in research and development expenses within the Company’s condensed consolidated statement of operations during the three months ended March 31, 2023. In addition, subject to and upon the terms and conditions set forth in the Merger Agreement, the Company may also (i) pay Contingent Merger Consideration (as defined in the Merger Agreement) that may become payable if, and only if, certain assets of Flame related to Flame’s FL-101 program and/or FL-103 program are sold after the consummation of the Merger pursuant to the FL-101/103 Disposition Agreement (as defined in the Merger Agreement), which Contingent Merger Consideration shall be 80% of the after-tax net proceeds of such sale, if any, and the payment thereof is subject to the terms and conditions set forth in the Merger Agreement and (ii) issue pursuant to the Merger additional shares of Series X Preferred Stock or common stock as a result of any applicable post-closing purchase price adjustment in the event that Flame’s actual Company Net Cash (as defined in the Merger Agreement) as of the Effective Date is determined to be greater than Flame’s estimated Company Net Cash as of the closing. Sale of FL - 101/FL - 103 to AlmataBio, Inc. On December 6, 2023 the Company sold certain IPR&D assets previously acquired from Flame related to Flame’s FL - 101/FL - 103 program, including permits, clinical trial material, clinical data, and related identified contracts, such as licensing, research, clinical trials, and various other agreements. The Company received total consideration in the form of a non - refundable closing date cash payment of $500. Pursuant to the terms of the asset purchase agreement, the Company is entitled to receive milestone payments of up to $70,000 upon achievement of certain regulatory approval and sales milestones specified in the asset purchase agreement. The IPR&D assets sold related to Flame’s FL - 101/FL - 103 program did not meet the definition of a business and had a carrying value of $0 at the time of the sale. In addition, the Company estimated the likelihood of receiving any milestone payments to be remote. As such, management elected the most likely amount method to determine the transaction price of the sale, which included the non - refundable closing date cash payment of $500 and future milestone payments of $0. Therefore, the Company recognized a non - operating gain in other income for the difference between the amount of non - refundable consideration received of $500 and the carrying value of $0 during the year ended December 31, 2023. In the event of a change in circumstances, such that it becomes likely that the Company will receive milestone payments, the Company will recognize income for the change in transaction price in the period in which the transaction price changes. In addition, during the year ended December 31, 2023, the Company incurred various qualified expenses, such as legal fees, consulting and general and administrative expenses in connection with the sale of Flame’s FL - 101 program. Such expenses exceeded the non - refundable consideration received of $500, and therefore, the Company was not obligated to pay Contingent Merger Consideration to the Flame Stockholders. Series X Preferred Stock Pursuant to the Merger, the Company agreed to issue 136,248 shares of Series X Preferred Stock to Flame Stockholders and January 2023 Series X Preferred Stock Warrants for 443 shares of Series X Preferred Stock to Flame Warrant Holders. The Company obtained Stockholder Approval during the three months ended June 30, 2023 to convert each issued share of Series X Preferred Stock and each share of Series X Preferred Stock issuable pursuant to the January 2023 Series X Preferred Stock Warrants into 100 shares of its common stock. The Series X Preferred Stock was converted to common stock on June 21, 2023. January 2023 Common Stock Warrants and January 2023 Series X Preferred Stock Warrants In January 2023, pursuant to the Merger, the warrants held by the Flame Warrant Holders became exercisable for 6,530 shares of Leap’s common stock (the “January 2023 Common Stock Warrants”). The January 2023 Common Stock Warrants have an exercise price of $6.78 per share and expire in February 2025. The January 2023 Common Stock Warrants qualify for equity classification. Also in January 2023, pursuant to the Merger, the warrants held by the Flame Warrant Holders became exercisable for 443 shares of Series X Preferred Stock (the “January 2023 Series X Preferred Stock Warrants”). Upon obtaining Stockholder Approval for the conversion of the Series X Preferred Stock and the one-for-ten reverse stock split, each share of Series X Preferred Stock converted into 100 shares of Common Stock. The January 2023 Series X Preferred Stock Warrants have an exercise price of $6.78 per share and expire in February 2025. The Company initially recorded the January 2023 Series X Preferred Stock Warrants as a liability on the Effective Date and the warrant liability was subsequently remeasured to fair value at each reporting date and on the date on which Stockholder Approval to convert shares of Series X Preferred Stock into shares of common stock was obtained. On June 21, 2023, after obtaining stockholder approval for the conversion of the Series X Preferred Stock into common stock, the January 2023 Series X Preferred Stock Warrants were reclassified from liability to equity. Changes in the fair value of the warrant liability are recognized as gains (losses) in the Company’s consolidated statement of operations. During the three months ended March 31, 2023, the Company recorded a gain of $50 in its condensed consolidated statement of operations.

Acquisition of Flame Biosciences

6 Months Ended

Jun. 30, 2024

Acquisition of Flame Biosciences

Acquisition of Flame Biosciences

3. Acquisition of Flame Biosciences

Merger

On January 17, 2023 (the “Effective Date”), Leap acquired 100% of the outstanding equity of Flame, in accordance with the terms of the Agreement and Plan of Merger, dated as of the Effective Date (the “Merger Agreement”), by and among Leap, Fire Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Leap (“First Merger Sub”), Flame Biosciences LLC, a Delaware limited liability company and wholly owned subsidiary of Leap (“Second Merger Sub”), Flame, and the Stockholder Representative named therein. Pursuant to the Merger Agreement, First Merger Sub merged with and into Flame, and Flame was the surviving corporation of such merger and became a wholly owned subsidiary of Leap (the “First Merger”). Immediately following the First Merger, Flame merged with and into Second Merger Sub, and Second Merger Sub was the surviving entity of such merger (together with the First Merger, the “Merger”).

Pursuant to the Merger, Leap agreed to issue to the stockholders of Flame (the “Flame Stockholders”) 1,972,901 shares of common stock, and 136,248 shares of Series X Preferred Stock, which was a newly designated series of preferred stock that was intended to have economic rights equivalent to the common stock, but with limited voting rights, and issued to the warrant holders of Flame (the “Flame Warrant Holders”) the right to acquire 6,530 shares of common stock (the “January 2023 Common Stock Warrants”) and 443 shares of Series X Preferred Stock (the “January 2023 Series X Preferred Stock Warrants”). Each share of Series X Preferred Stock converted into 100 shares of common stock during the three months ended June 30, 2023, as a result of the one-for-ten reverse stock split approved by the stockholders and effected by the Board of Directors. Under the terms of the Merger Agreement, Leap held back approximately 15,604 Series X Preferred shares (the “Holdback Shares”), which converted into 1,560,400 shares of common stock out of the aggregate number of shares that the Flame Stockholders otherwise would be entitled to receive pursuant to the Merger so that Leap can have recourse to the Holdback Shares for purposes of satisfying certain claims for indemnification that Leap may have against the Flame Stockholders in connection with the Merger. In January 2024, Leap released the Holdback Shares to the Flame Shareholders.

On June 16, 2023, the Company obtained Stockholder Approval to convert the Series X Preferred Stock into shares of its common stock, which occurred on June 21, 2023.

The Company accounted for the acquisition of Flame as an asset acquisition allocating the purchase price under GAAP of $79,016 to net assets acquired. Although there is a presumption under SEC Rule 11-01(d) (“11-01(d)”) that when a legal entity is acquired, it represents a business acquisition, the Company concluded that, in this case, the transaction did not represent the acquisition of a business. After considering the criteria set forth in 11-01(d), the Company concluded that the acquisition of Flame by the Company was an acquisition of assets and not an acquisition of a business in accordance with 11-01(d). Specifically, the Company concluded that 1) the entity did not generate revenue and 2) there was not sufficient continuity of Flame’s operations prior to and following the transaction, in that no facilities, employees, sales force, distribution system, customer base, trade names or production techniques remained with the entity after the acquisition.

Leap primarily acquired cash of $50,362, certain working capital items ($928) and a portfolio of clinical- and pre-clinical-stage intellectual property, in connection with the acquisition of Flame. The Company accounted for the acquisition of Flame by recording the cash and any other assets and liabilities of Flame on its condensed consolidated balance sheet at their historical carrying values, which approximates fair values. The remaining fair value of the consideration transferred was allocated to the in-process research and development (“IPR&D”) assets acquired. Certain transaction costs that were not deemed to meet the criteria of costs directly attributable to the issuance of securities were capitalized in accordance with ASC 805-50-30-1 and recognized as part of fair value of assets acquired. As the Company concluded that such IPR&D does not have an alternative future use, the relative fair value allocated to acquired IPR&D of $29,582 was expensed in research and development expenses within the Company’s condensed consolidated statement of operations during the three months ended March 31, 2023.

In addition, subject to and upon the terms and conditions set forth in the Merger Agreement, the Company may also (i) pay Contingent Merger Consideration (as defined in the Merger Agreement) that may become payable if, and only if, certain assets of Flame related to Flame’s FL-101 program and/or FL-103 program are sold after the consummation of the Merger pursuant to the FL-101/103 Disposition Agreement (as defined in the Merger Agreement), which Contingent Merger Consideration shall be 80% of the after-tax net proceeds of such sale, if any, and the payment thereof is subject to the terms and conditions set forth in the Merger Agreement and (ii) issue pursuant to the Merger additional shares of Series X Preferred Stock or common stock as a result of any applicable post-closing purchase price adjustment in the event that Flame’s actual Company Net Cash (as defined in the Merger Agreement) as of the Effective Date is determined to be greater than Flame’s estimated Company Net Cash as of the closing.

Sale of FL - 101/FL - 103 to AlmataBio, Inc.

On December 6, 2023 the Company sold certain IPR&D assets previously acquired from Flame related to Flame’s FL - 101/FL - 103 program, including permits, clinical trial material, clinical data, and related identified contracts, such as licensing, research, clinical trials, and various other agreements. The Company received total consideration in the form of a non - refundable closing date cash payment of $500.

Pursuant to the terms of the asset purchase agreement, the Company is entitled to receive milestone payments of up to $70,000 upon achievement of certain regulatory approval and sales milestones specified in the asset purchase agreement.

The IPR&D assets sold related to Flame’s FL - 101/FL - 103 program did not meet the definition of a business and had a carrying value of $0 at the time of the sale. In addition, the Company estimated the likelihood of receiving any milestone payments to be

remote. As such, management elected the most likely amount method to determine the transaction price of the sale, which included the non - refundable closing date cash payment of $500 and future milestone payments of $0. Therefore, the Company recognized a non - operating gain in other income for the difference between the amount of non - refundable consideration received of $500 and the carrying value of $0 during the year ended December 31, 2023. In the event of a change in circumstances, such that it becomes likely that the Company will receive milestone payments, the Company will recognize income for the change in transaction price in the period in which the transaction price changes.

In addition, during the year ended December 31, 2023, the Company incurred various qualified expenses, such as legal fees, consulting and general and administrative expenses in connection with the sale of Flame’s FL - 101 program. Such expenses exceeded the non - refundable consideration received of $500, and therefore, the Company was not obligated to pay Contingent Merger Consideration to the Flame Stockholders.

Series X Preferred Stock

Pursuant to the Merger, the Company agreed to issue 136,248 shares of Series X Preferred Stock to Flame Stockholders and January 2023 Series X Preferred Stock Warrants for 443 shares of Series X Preferred Stock to Flame Warrant Holders. The Company obtained Stockholder Approval during the three months ended June 30, 2023 to convert each issued share of Series X Preferred Stock and each share of Series X Preferred Stock issuable pursuant to the January 2023 Series X Preferred Stock Warrants into 100 shares of its common stock. The Series X Preferred Stock was converted to common stock on June 21, 2023.

January 2023 Common Stock Warrants and January 2023 Series X Preferred Stock Warrants

In January 2023, pursuant to the Merger, the warrants held by the Flame Warrant Holders became exercisable for 6,530 shares of Leap’s common stock (the “January 2023 Common Stock Warrants”). The January 2023 Common Stock Warrants have an exercise price of $6.78 per share and expire in February 2025. The January 2023 Common Stock Warrants qualify for equity classification.

Also in January 2023, pursuant to the Merger, the warrants held by the Flame Warrant Holders became exercisable for 443 shares of Series X Preferred Stock (the “January 2023 Series X Preferred Stock Warrants”). Upon obtaining Stockholder Approval for the conversion of the Series X Preferred Stock and the one-for-ten reverse stock split, each share of Series X Preferred Stock converted into 100 shares of Common Stock. The January 2023 Series X Preferred Stock Warrants have an exercise price of $6.78 per share and expire in February 2025.

The Company initially recorded the January 2023 Series X Preferred Stock Warrants as a liability on the Effective Date and the warrant liability was subsequently remeasured to fair value at each reporting date and on the date on which Stockholder Approval to convert shares of Series X Preferred Stock into shares of common stock was obtained. On June 21, 2023, after obtaining stockholder approval for the conversion of the Series X Preferred Stock into common stock, the January 2023 Series X Preferred Stock Warrants were reclassified from liability to equity.

Changes in the fair value of the warrant liability are recognized as gains (losses) in the Company’s consolidated statement of operations. During the three months ended March 31, 2023, the Company recorded a gain of $50 in its condensed consolidated statement of operations.

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2024	Aug. 08, 2024
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2024
Entity File Number	001-37990
Entity Registrant Name	LEAP THERAPEUTICS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	27-4412575
Entity Address, Address Line One	47 Thorndike St, Suite B1-1
Entity Address, City or Town	Cambridge
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02141
City Area Code	617
Local Phone Number	714-0360
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	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		38,264,464
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2
Entity Central Index Key	0001509745
Amendment Flag	false

Equity Incentive Plans (Details) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 16, 2022	Jan. 20, 2017	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Options
Outstanding balance at the beginning of the period (in shares)					3,384,366
Granted (in shares)					1,637,500
Exercised (in shares)					(10,557)
Forfeited (in shares)					(189,088)
Outstanding balance at the end of the period (in shares)			4,822,221		4,822,221		3,384,366
Options exercisable at the end of the period (in shares)			2,017,082		2,017,082
Options vested and expected to vest at end of period (in shares)			4,822,221		4,822,221
Weighted Average Exercise Price Per Share
Outstanding balance at the beginning of the period (in dollars per share)					$ 13.97
Granted (in dollars per share)					2.68
Exercised (in dollars per share)					2.77
Forfeited (in dollars per share)					6.13
Outstanding balance at the end of the period (in dollars per share)			$ 10.47		10.47		$ 13.97
Options exercisable at the end of the period (in dollars per share)			20.69		20.69
Options vested and expected to vest at end of the period (in dollars per share)			$ 10.47		$ 10.47
Weighted Average Remaining Life in Years
Outstanding balance					8 years 6 months		8 years 4 months 24 days
Options exercisable at end of period					7 years 5 months 1 day
Options vested and expected to vest at end of the period					8 years 6 months
Aggregate Intrinsic Value
Outstanding balance			$ 23		$ 23		$ 3,431
Options vested and expected to vest at end of the period			23		$ 23
Assumptions used to determine grant-date fair value
Expected volatility					92.84%	86.02%
Weighted average risk-free interest rate					4.00%	3.57%
Expected dividend yield					0.00%	0.00%
Expected term (in years)					6 years 5 months 8 days	6 years 5 months 8 days
Expiration period					10 years
Unrecognized compensation cost related to non-vested stock options			6,542		$ 6,542
Weighted average period for recognition of compensation cost					2 years 21 days
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
Options to purchase common stock
Weighted Average Exercise Price Per Share
Granted (in dollars per share)					$ 2.12	$ 2.66
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Non vested, Weighted Average Grant Date Fair Value
Stock Based Compensation Expense			1,370	$ 1,265	$ 2,618	$ 2,575
Options to purchase common stock \| Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Non vested, Weighted Average Grant Date Fair Value
Stock Based Compensation Expense			729	645	1,356	1,349
Options to purchase common stock \| General and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Non vested, Weighted Average Grant Date Fair Value
Stock Based Compensation Expense			641	$ 620	$ 1,262	$ 1,226
Restricted stock units to purchase common stock
Assumptions used to determine grant-date fair value
Weighted average period for recognition of compensation cost					7 months 13 days
Vested					$ 4,388
Unrecognized compensation costs related to RSUs granted to employees			$ 884		$ 884
2016 Plan
Assumptions used to determine grant-date fair value
Annual increase in authorized shares (as a percent)		4.00%
2016 Plan \| Restricted stock units to purchase common stock
Assumptions used to determine grant-date fair value
Options unvested at end of period (in dollars per share)			$ 19.29		$ 19.29		$ 19.97
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding at the beginning					262,500
Vested (in shares)					(27,500)
Forfeited (in shares)					(7,500)
Outstanding at the end			227,500		227,500		262,500
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Non vested, Weighted Average Grant Date Fair Value
Outstanding at beginning( in dollars per share)					$ 19.97
Vested(in dollars per share)					25.70
Forfeited (in dollars per share)					19.40
Outstanding at end(in dollars per share)			$ 19.29		$ 19.29		$ 19.97
2022 Plan
Assumptions used to determine grant-date fair value
Number of options or stock awards available for grant under the Plan	750,000
Additional shares approved for future issuance	2,250,000
2016 and 2022 Plan
Assumptions used to determine grant-date fair value
Number of options or stock awards available for grant under the Plan			597,727		597,727

Common Stock (Details) $ / shares in Units, $ in Thousands			3 Months Ended	6 Months Ended
Common Stock (Details) $ / shares in Units, $ in Thousands	Apr. 15, 2024 USD ($) $ / shares shares	Jan. 17, 2023 shares	Jun. 30, 2024 USD ($)	Jun. 30, 2024 USD ($) Vote
Common Stock
Number of vote on common shares \| Vote				1
Dividend declared				$ 0
Proceeds from April 2024 Private Placement				39,999
Stock issuance costs			$ 2,948	$ 2,948
Flame
Common Stock
Percentage of outstanding ordinary shares acquired		100.00%
Number of shares issued \| shares		1,972,901
Private Placement
Common Stock
Common stock issued \| shares	12,660,993
Price per share (in dollars per share) \| $ / shares	$ 2.82
Proceeds from April 2024 Private Placement	$ 37,051
Stock issuance costs	$ 2,948
Private Placement \| Pre-Funded warrants
Common Stock
Price per share (in dollars per share) \| $ / shares	$ 2.819
Warrants issued \| shares	1,523,404
Exercise price per share \| $ / shares	$ 0.001

Leases

6 Months Ended

Jun. 30, 2024

Leases

Leases

5. Leases

The Company has an operating lease 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 expires in July 2025 and 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.

In calculating the present value of future lease payments, the Company utilized its incremental borrowing rate based on the lease term. The Company has an existing net lease 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 six months ended June 30, 2024, the Company extended the term of its operating lease to July 31, 2025 and recorded an additional right-of-use asset and lease liability of $420. As of June 30, 2024, a right-of-use asset of $475 and lease liability of $482 are reflected on the condensed consolidated balance sheet. The Company recorded rent expense of $115 and $114, respectively, during the three months ended June 30, 2024 and 2023, and $225 and $228, respectively, during the six months ended June 30, 2024 and 2023. Cash paid for amounts included in the measurement of lease liabilities was $115 and $113, respectively, during the three months ended June 30, 2024 and 2023, and $229 and $226, respectively, during the six months ended June 30, 2024 and 2023.

Future lease payments under non-cancelable operating leases as of June 30, 2024 are detailed as follows:


Future Operating Lease Payments
2024		233
2025		273
Total Lease Payments		506
Less: imputed interest		(24)
Total operating lease liabilities	$	482

Equity Incentive Plans

6 Months Ended

Jun. 30, 2024

Equity Incentive Plans

Equity Incentive Plans

8. Equity Incentive Plans

Equity Incentive Plans

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 4% of the Company’s outstanding common stock as of the end of the immediately preceding calendar year or such lesser 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 750,000 new shares of the Company’s common stock to be granted. In addition, on June 16, 2023, stockholders approved 2,250,000 new shares of the Company’s common stock to be added to the 2022 Plan for future issuance.

As of June 30, 2024, there were 597,727 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, 2023	3,384,366	$	13.97	8.40	$	3,431
Granted	1,637,500	$	2.68
Exercised	(10,557)	$	2.77
Forfeited	(189,088)	$	6.13
Outstanding at June 30, 2024	4,822,221	$	10.47	8.50	$	23
Options exercisable at June 30, 2024	2,017,082	$	20.69	7.42
Options vested and expected to vest at June 30, 2024	4,822,221	$	10.47	8.50	$	23

The grant date fair value of the options granted during the six months ended June 30, 2024 and 2023 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 the Company. 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, 2024 and 2023 was $2.12 and $2.66 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, 2024 and 2023 were as follows, presented on a weighted average basis:


	Six Months Ended June 30,
	2024		2023

Expected volatility	92.84	%	86.02	%
Weighted average risk-free interest rate	4.00	%	3.57	%
Expected dividend yield	0.00	%	0.00	%
Expected term (in years)	6.44		6.44

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 10 years from the grant date. As of June 30, 2024, there was approximately $6,542 of unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a remaining weighted-average period of approximately 2.06 years.

Restricted Stock Units (“RSUs”)

The Company did not grant any RSUs during the six months ended June 30, 2024 and 2023.

The following table presents RSU activity under the 2016 Plan during the six months ended June 30, 2024:


		Weighted
		Average Grant
	Number of Shares	Date Fair Value
Outstanding at December 31, 2023	262,500	$	19.97
Vested	(27,500)	$	25.70
Forfeited	(7,500)	$	19.40
Outstanding at June 30, 2024	227,500	$	19.29

As of June 30, 2024, there were 227,500 shares outstanding covered by RSUs that are expected to vest with a weighted average grant date fair value of $19.29 per share and an aggregate grant date fair value of approximately $4,388. As of June 30, 2024, there was approximately $884 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 0.62 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 ended June 30, 2024 and 2023 as follows:

Stock Based Compensation Expense


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

Research and development	$	729	$	645	$	1,356	$	1,349
General and administrative		641		620		1,262		1,226
Total	$	1,370	$	1,265	$	2,618	$	2,575

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2024

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, 2023 and for the six months ended June 30, 2024.

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 $1,259 and $771 as of June 30, 2024 and December 31, 2023, respectively, in the condensed consolidated balance sheets and other income from Australian research and development incentives of $253 and $298, respectively, for the three months ended June 30, 2024 and 2023 and $499 and $570 for the six months ended June 30, 2024 and 2023, 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, 2023 to June 30, 2024 (in thousands):


Balance at January 1, 2023	$	2,099
Cash received for 2022 eligible expenses		(2,333)
Australian research and development incentive income, net		1,101
Foreign currency translation		(96)
Balance at December 31, 2023	$	771
Australian research and development incentive income, net		499
Foreign currency translation		(11)
Balance at June 30, 2024	$	1,259

Foreign Currency Translation

The financial statements of the Company’s Australian subsidiary are measured using the local currency as the functional currency. The 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.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents. All cash and cash equivalents are held in United States or Australian financial institutions and money market funds. At times, the Company may maintain cash balances in excess of the federally insured amount of $250 per depositor, per insured bank, for each account ownership category. Although the Company currently believes that the financial institutions with whom it does business will be able to fulfill their commitments to the Company, there is no assurance that those institutions will be able to continue to do so. The Company has not experienced any credit losses associated with its balances in such accounts for the year ended December 31, 2023 or for the six months ended June 30, 2024.

Deposits

As of June 30, 2024 and December 31, 2023, there were $859 and $966, 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”) and in the warrants that were issued in a private placement in March 2020 (the “March 2020 Coverage 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 earnings per share (“EPS”) calculation. In connection with the private placement of common stock and prefunded warrants completed in April 2024 (the “April 2024 Private Placement”), when the 2017 Warrants were repriced from $10.55 to $2.82 as a result of a down round, the Company recorded a dividend of $234 during the three and six months ended June 30, 2024.

The Company initially classified the warrants that were exercisable for shares for Series X Non-Voting Convertible Preferred Stock (the “January 2023 Series X Preferred Stock Warrants”) as a liability on its condensed consolidated balance sheet on January 17, 2023 and subsequently remeasured the warrant liability to fair value at each reporting date until the conversion of Series X Non-Voting Convertible Preferred Stock (the “Series X Preferred Stock”) into common stock, which occurred on June 21, 2023. Changes in the fair value of the warrant liability were recognized as gains (losses) in the Company’s condensed consolidated statement of operations.

In June 2023, in connection with obtaining Stockholder Approval to convert shares of Series X Preferred Stock into shares of common stock (“Stockholder Approval”), the January 2023 Series X Preferred Stock Warrants were reclassified from liability to equity.

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.

A summary of the assets 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, 2024
Assets:
Cash equivalents	$	41,034	$	41,034	$	—	$	—
Total assets	$	41,034	$	41,034	$	—	$	—

December 31, 2023
Assets:
Cash equivalents	$	39,065	$	39,065	$	—	$	—
Total assets	$	39,065	$	39,065	$	—	$	—

Cash equivalents of $41,034 and $39,065 as of June 30, 2024 and December 31, 2023, respectively, consisted of overnight investments and money market funds which 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.

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 Adopted 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, 2023.

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2024

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, 2023 to June 30, 2024 (in thousands):


Balance at January 1, 2023	$	2,099
Cash received for 2022 eligible expenses		(2,333)
Australian research and development incentive income, net		1,101
Foreign currency translation		(96)
Balance at December 31, 2023	$	771
Australian research and development incentive income, net		499
Foreign currency translation		(11)
Balance at June 30, 2024	$	1,259

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

A summary of the assets 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, 2024
Assets:
Cash equivalents	$	41,034	$	41,034	$	—	$	—
Total assets	$	41,034	$	41,034	$	—	$	—

December 31, 2023
Assets:
Cash equivalents	$	39,065	$	39,065	$	—	$	—
Total assets	$	39,065	$	39,065	$	—	$	—

Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2024	Jun. 30, 2023	Jan. 31, 2023
Warrants
Number of Common shares issuable	6,531,548	6,531,548
Dividend attributable to down round feature of warrants	$ (234)	$ (234)
January 23, 2017 Warrants
Warrants
Number of Common shares issuable	5,450	5,450
Exercise price of warrant	$ 0.10	$ 0.10
2017 Warrants
Warrants
Number of Common shares issuable	250,227	250,227
Exercise price of warrant	$ 2.82	$ 2.82
Dividend attributable to down round feature of warrants	$ (234)	$ (234)
2017 Warrants \| Maximum
Warrants
Warrants		$ 10.55
2017 Warrants \| Minimum
Warrants
Warrants		$ 2.82
2019 Warrants
Warrants
Number of Common shares issuable	690,813	690,813
Exercise price of warrant	$ 19.50	$ 19.50
Number of shares redeemed			10,000
Purchase price per share			$ 2.90
March 2020 Pre-funded Warrants
Warrants
Number of Common shares issuable	824,718	824,718
Exercise price of warrant	$ 0.01	$ 0.01
March 2020 Coverage Warrants
Warrants
Number of Common shares issuable	2,594,503	2,594,503
Exercise price of warrant	$ 21.10	$ 21.10
September 2021 Pre-funded Warrants
Warrants
Number of Common shares issuable	591,603	591,603
Exercise price of warrant	$ 0.01	$ 0.01
January 2023 Common Stock Warrants
Warrants
Number of Common shares issuable	50,830	50,830
Exercise price of warrant	$ 6.78	$ 6.78		$ 6.78
April 2024 Pre-funded Warrants
Warrants
Number of Common shares issuable	1,523,404	1,523,404
Exercise price of warrant	$ 0.001	$ 0.001

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net loss	$ (20,128)	$ (13,390)	$ (33,948)	$ (55,253)
Other comprehensive income (loss):
Foreign currency translation adjustments	123	59	(103)	286
Comprehensive loss	$ (20,005)	$ (13,331)	$ (34,051)	$ (54,967)

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income, attributable to parent entity. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

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

+ References

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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482689/260-10-45-60B

Reference 33: http://www.xbrl.org/2003/role/disclosureRef
-Topic 205
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 7
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483499/205-20-50-7

Reference 34: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 230
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 28
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482740/230-10-45-28

Reference 35: http://www.xbrl.org/2003/role/disclosureRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 1A
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482790/220-10-45-1A

Reference 36: http://www.xbrl.org/2003/role/disclosureRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 1B
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482790/220-10-45-1B

Reference 37: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 942
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(22))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478524/942-220-S99-1

+ Details

Acquisition of Flame Biosciences (Details) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended			6 Months Ended
	Jan. 17, 2023 USD ($) shares	Jan. 31, 2023 $ / shares shares	Jun. 30, 2024 USD ($) $ / shares	Jun. 30, 2023 USD ($) shares	Mar. 31, 2023 USD ($)	Jun. 30, 2024 USD ($) $ / shares	Jun. 30, 2023 USD ($) shares	Dec. 31, 2023 USD ($)
Acquisition of Flame Biosciences
Cash \| $			$ 78,479			$ 78,479		$ 70,643
Research and development \| $			$ 17,885	$ 11,104		$ 29,184	$ 50,046
Change in fair value of warrant liability \| $					$ (50)
January 2023 Common Stock Warrants
Acquisition of Flame Biosciences
Shares issuable upon exercise of warrants		6,530
Exercise price per share \| $ / shares		$ 6.78	$ 6.78			$ 6.78
Series X Preferred Stock \| January 2023 Series X Preferred Stock Warrants
Acquisition of Flame Biosciences
Shares issuable upon exercise of warrants		443
Conversion ratio				100			100
Exercise price per share \| $ / shares		$ 6.78
Flame
Acquisition of Flame Biosciences
Percentage of outstanding ordinary shares acquired	100.00%
Number of shares issued	1,972,901
Reverse stock split, conversion ratio	0.1
Number of common stock held back upon conversion of Series X Preferred shares	1,560,400
Purchase price \| $	$ 79,016
Cash \| $	50,362
Working capital items \| $	$ 928
Research and development \| $					$ 29,582
Percentage of contingent merger consideration on after tax net proceeds	80.00%
Flame \| January 2023 Common Stock Warrants
Acquisition of Flame Biosciences
Shares issuable upon exercise of warrants	6,530	6,530
Exercise price per share \| $ / shares		$ 6.78
Flame \| January 2023 Series X Preferred Stock Warrants
Acquisition of Flame Biosciences
Shares issuable upon exercise of warrants		443
Conversion ratio		100
Reverse stock split, conversion ratio		0.1
Exercise price per share \| $ / shares		$ 6.78
Flame \| Series X Non Voting Convertible Preferred Stock
Acquisition of Flame Biosciences
Number of shares issued	136,248
Flame \| Series X Preferred Stock
Acquisition of Flame Biosciences
Shares issuable upon exercise of warrants	443
Conversion ratio	100			100			100
Holdback shares	15,604
Number of shares	136,248
Flame \| Series X Preferred Stock \| January 2023 Series X Preferred Stock Warrants
Acquisition of Flame Biosciences
Shares issuable upon exercise of warrants	443

Warrants - January 2023 Common Stock Warrants and January 2023 Series X Preferred Stock Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023	Jan. 31, 2023
Warrants
Change in fair value of warrant liability	$ (50)
January 2023 Common Stock Warrants
Warrants
Warrant to purchase shares of common stock				6,530
Exercise price per share		$ 6.78		$ 6.78
January 2023 Series X Preferred Stock Warrants \| Series X Preferred Shares
Warrants
Warrant to purchase shares of common stock				443
Exercise price per share				$ 6.78
Conversion ratio			100

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Cash flows from operating activities:
Net loss	$ (33,948)	$ (55,253)
Adjustments to reconcile net loss to net cash used in operating activities:
In-process research and development costs acquired in connection with the acquisition of Flame		29,582
Depreciation expense	5	8
Stock-based compensation expense	2,618	2,575
Foreign currency transaction loss	10	452
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(169)	(70)
Research and development incentive receivable	(498)	(575)
Accounts payable and accrued expenses	2,687	(382)
Right-of-use asset	202	202
Lease liability	(201)	(203)
Other assets	107	779
Net cash used in operating activities	(29,187)	(22,885)
Cash flows from investing activities:
Cash acquired in connection with the acquistion of Flame		50,362
Payment of direct and incremental costs of the asset acquisition		(1,393)
Net cash provided by investing activities		48,969
Cash flows from financing activities:
Proceeds from April 2024 Private Placement	39,999
Payment of offering costs	(2,882)
Payment of redemption of 2019 warrants		(29)
Proceeds from the exercise of stock options	29
Net cash provided by (used in) financing activities	37,146	(29)
Effect of exchange rate changes on cash and cash equivalents	(123)	(140)
Net increase in cash and cash equivalents	7,836	25,915
Cash and cash equivalents at beginning of period	70,643	65,500
Cash and cash equivalents at end of period	78,479	91,415
Supplemental disclosure of non-cash financing activities:
Remeasurement of right-of-use asset and lease liability	420
Dividend attributable to the down round feature of 2017 Warrants	234
Offering costs included in accounts payable	$ 66
Issuance and conversion of Series X Preferred Stock issued in connection with the acquisition of Flame to common stock		67,715
Reclassification of Series X Preferred Stock Warrants from liability to equity		78
Issuance of common stock in connection with the acquisition of Flame		9,805
Issuance of warrants for the purchase of common stock in connection with the acquisition of Flame		13
Net liabilities assumed from acquistion of Flame		$ 928

Commitments and Contingencies

6 Months Ended

Jun. 30, 2024

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, 2024, there were $1,501 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, 2024.

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, 2024.

Collaboration Agreement—On April 2, 2024, the Company amended and restated its existing collaboration agreement with Adimab, LLC (the “Adimab Agreement”), pursuant to which Adimab will conduct research programs to develop monoclonal antibodies to certain targets identified by the Company and provide it with an option to acquire exclusive rights to such antibodies. Upon payment of an option fee, on a product-by-product basis, Adimab will grant the Company a world-wide, exclusive license for, or assign ownership to the Company of, certain intellectual property rights and grant the Company a non-exclusive license with respect to the Adimab platform technology. As defined in the Adimab Agreement, after exercising an option and making the option payment, the Company would be required to pay Adimab milestones upon the completion of clinical development and regulatory milestones, along with a royalty in the low-single digits of net sales of each product, 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, 2024.

License Agreement—On August 13, 2021, the Company entered into a strategic partnership and license agreement with NovaRock Biopharmaceuticals, Inc. (the “NovaRock Agreement”), pursuant to which NovaRock granted the Company a world-wide, excluding the People’s Republic of China, Hong Kong, Macau, and Taiwan, exclusive license for certain intellectual property rights relating to FL-301 and FL-302. As defined in the license agreement, the Company would be required to pay NovaRock milestones upon the completion of development, regulatory and sales milestones for up to three different products (FL-301, FL-302 and potentially one additional target), along with a royalty in the mid-single digits of net sales of each product in the territory, 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, 2024.

Legal Proceedings—At each reporting date, the Company evaluates whether 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, 2024 or December 31, 2023.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Operating expenses:
Research and development	$ 17,885	$ 11,104	$ 29,184	$ 50,046
General and administrative	3,367	3,558	6,893	7,342
Total operating expenses	21,252	14,662	36,077	57,388
Loss from operations	(21,252)	(14,662)	(36,077)	(57,388)
Interest income	865	1,157	1,640	2,005
Australian research and development incentives	253	298	499	570
Foreign currency gain (loss)	6	(145)	(10)	(452)
Change in fair value of Series X preferred stock warrant liability		(38)		12
Net loss	(20,128)	(13,390)	(33,948)	(55,253)
Dividend attributable to down round feature of warrants	(234)		(234)
Net loss attributable to common stockholders	$ (20,362)	$ (13,390)	$ (34,182)	$ (55,253)
Net loss per share
Basic (in dollars per share)	$ (0.52)	$ (0.91)	$ (1.01)	$ (4.01)
Diluted (in dollars per share)	$ (0.52)	$ (0.91)	$ (1.01)	$ (4.01)
Weighted average common shares outstanding
Basic (in shares)	39,122,662	14,710,375	33,830,083	13,794,605
Diluted (in shares)	39,122,662	14,710,375	33,830,083	13,794,605

Acquisition of Flame Biosciences - Sale of FL-101/FL (Details) - Flame - AlmataBio, Inc - Acquired In-process research and development (Sale Agreement) - USD ($) $ in Thousands		6 Months Ended	12 Months Ended
	Dec. 06, 2023	Jun. 30, 2024	Dec. 31, 2023
Acquisition of Flame Biosciences
Consideration, non-refundable	$ 500	$ 500	$ 500
Acquired IPR&D	0		$ 0
Milestone payments to received		$ 0
Achievement of regulatory approval and commercial milestone
Acquisition of Flame Biosciences
Milestone payments entitled to receive	$ 70,000

Warrants

6 Months Ended

Jun. 30, 2024

Warrants

Warrants

6. Warrants

As of June 30, 2024, the number of shares of common stock issuable upon the exercise of outstanding warrants, consisted of the following:


June 30, 2024
	Number of Common Shares
Description	Issuable	Exercise Price		Expiration Date
January 23 2017 Warrants	5,450	$	0.10	Upon M&A Event
2017 Warrants	250,227	$	2.82	November 2024
2019 Warrants	690,813	$	19.50	February 2026
March 2020 Pre-funded Warrants	824,718	$	0.01	No Expiry
March 2020 Coverage Warrants	2,594,503	$	21.10	Jan - March 2027
September 2021 Pre-funded Warrants	591,603	$	0.01	No Expiry
January 2023 Common Stock Warrants	50,830	$	6.78	February 2025
April 2024 Pre-funded Warrants	1,523,404	$	0.001	No Expiry
	6,531,548

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 warrant 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. In connection with the April 2024 Private Placement, when the 2017 Warrants were repriced from $10.55 to $2.82, the Company recorded a dividend of $234 during the three and six months ended June 30, 2024.

2019 Warrants

During the three months ended March 31, 2023, the Company redeemed 10,000 of the 2019 Warrants at a purchase price of $2.90 per share.

January 2023 Common Stock Warrants

January 2023 Series X Preferred Stock Warrants

In January 2023, pursuant to the Merger, the warrants held by the Flame Warrant Holders also became exercisable for 443 shares of Series X Preferred Stock (the “January 2023 Series X Preferred Stock Warrants”). Following Stockholder Approval, each share of Series X Preferred Stock converted into 100 shares of common stock during the three months ended June 30, 2023. The January 2023 Series X Preferred Stock Warrants have an exercise price of $6.78 per share and expire in February 2025.

The Company initially recorded the January 2023 Series X Preferred Stock Warrants as a liability on its condensed consolidated balance sheet as of the Effective Date and subsequently remeasured the warrant liability to fair value at each reporting date and on the date Stockholder Approval was obtained to convert shares of Series X Preferred Stock into shares of common stock. Changes in the fair value of the warrant liability were recognized as gains (losses) in the Company’s consolidated statement of operations. During the three months ended March 31, 2023, the Company recorded a gain of $50 in its condensed consolidated statement of operations.

During the three months ended June 30, 2023, upon obtaining Stockholder Approval, the January 2023 Series X Preferred Stock Warrants were converted into common stock warrants and reclassified from liability to equity.

Net Loss Per Share

6 Months Ended

Jun. 30, 2024

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, 2024 and 2023 was calculated as follows (in thousands except share and per share amounts).


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Numerator:
Net loss	$	(20,128)	$	(13,390)	$	(33,948)	$	(55,253)
Dividend attributable to down round feature of warrants		(234)		—		(234)		—
Net loss attributable to common stockholders for basic and diluted loss per share	$	(20,362)	$	(13,390)	$	(34,182)	$	(55,253)

Denominator:
Weighted average number of common shares outstanding – basic and diluted		39,122,662		14,710,375		33,830,083		13,794,605
Net loss per share attributable to common stockholders – basic and diluted	$	(0.52)	$	(0.91)	$	(1.01)	$	(4.01)

Included within weighted average common shares outstanding for the three and six months ended June 30, 2024 and 2023 are 2,945,175 common shares issuable upon the exercise of certain warrants, which 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.

All warrants exercisable for common stock participate on a one-for-one basis and shares and warrants exercisable for Series X Preferred Stock issued participate on an as converted basis with common stock in the distribution of dividends, if and when declared by the board of directors, on the Company’s common stock. For purposes of computing EPS, these securities are considered to participate with common stock in earnings of the Company. Therefore, the Company calculates basic and diluted EPS using the two-class method. Under the two-class method, net income for the period is allocated between common stockholders and participating securities according to dividends declared and participation rights in undistributed earnings. No income was allocated to the warrants and Series X Preferred Stock for the six months ended June 30, 2024 and 2023, as results of operations were a loss for the period.

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, 2024 and 2023, 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,
	2024	2023	2024	2023
Restricted stock units to purchase common stock	227,500	285,000	227,500	285,000
Options to purchase common stock	4,822,221	2,012,684	4,822,221	2,012,684
Warrants to purchase common stock	3,586,373	3,586,371	3,586,373	3,586,371
	8,636,094	5,884,055	8,636,094	5,884,055

Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Research and development incentive income and receivable
Research and development expenses reimbursed (as a percent)			43.50%		43.50%
Research and development incentive receivable	$ 1,259		$ 1,259		$ 771
Research and development incentive income and receivable
Balance at the beginning of the period			771	$ 2,099	2,099
Cash received for 2022 eligible expenses					(2,333)
Australian research and development incentive income, net	253	$ 298	499	$ 570	(1,101)
Foreign currency translation			(11)		(96)
Balance at the end of the period	1,259		1,259		771
Other Assets
Deposits	859		859		966
Dividend attributable to down round feature of warrants	$ 234		$ 234
Incremental borrowing rate	8.00%		8.00%
2017 Warrants
Other Assets
Dividend attributable to down round feature of warrants	$ 234		$ 234
Maximum \| 2017 Warrants
Other Assets
Warrants			$ 10.55
Minimum \| 2017 Warrants
Other Assets
Warrants			$ 2.82
License and Service
Other Assets
Deposits	$ 859		$ 859		$ 966

Leases (Tables)

6 Months Ended

Jun. 30, 2024

Leases

Schedule of future lease payments

Future lease payments under non-cancelable operating leases as of June 30, 2024 are detailed as follows:


Future Operating Lease Payments
2024		233
2025		273
Total Lease Payments		506
Less: imputed interest		(24)
Total operating lease liabilities	$	482

Net Loss Per Share - Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Numerator:
Net Income (Loss)	$ (20,128)	$ (13,390)	$ (33,948)	$ (55,253)
Dividend attributable to down round feature of warrants	(234)		(234)
Net loss attributable to common stockholders for basic loss per share	(20,362)	(13,390)	(34,182)	(55,253)
Net loss attributable to common stockholders for diluted loss per share	$ (20,362)	$ (13,390)	$ (34,182)	$ (55,253)
Denominator:
Weighted average number of common shares outstanding - basic	39,122,662	14,710,375	33,830,083	13,794,605
Weighted average number of common shares outstanding - diluted	39,122,662	14,710,375	33,830,083	13,794,605
Net loss per share attributable to common stockholders - basic	$ (0.52)	$ (0.91)	$ (1.01)	$ (4.01)
Net loss per share attributable to common stockholders - diluted	$ (0.52)	$ (0.91)	$ (1.01)	$ (4.01)
Exercise of the pre-funded warrants	2,945,175	2,945,175	2,945,175	2,945,175

Leases (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Leases
Additional operating lease liability			$ 420
Additional right of use asset			420
Right of use assets, net	$ 475		475		$ 257
Lease liability	482		482
Operating lease costs	115	$ 114	225	$ 228
Cash paid for measurement of lease liabilities	$ 115	$ 113	$ 229	$ 226

Warrants (Tables)

6 Months Ended

Jun. 30, 2024

Warrants

Schedule of warrants


June 30, 2024
	Number of Common Shares
Description	Issuable	Exercise Price		Expiration Date
January 23 2017 Warrants	5,450	$	0.10	Upon M&A Event
2017 Warrants	250,227	$	2.82	November 2024
2019 Warrants	690,813	$	19.50	February 2026
March 2020 Pre-funded Warrants	824,718	$	0.01	No Expiry
March 2020 Coverage Warrants	2,594,503	$	21.10	Jan - March 2027
September 2021 Pre-funded Warrants	591,603	$	0.01	No Expiry
January 2023 Common Stock Warrants	50,830	$	6.78	February 2025
April 2024 Pre-funded Warrants	1,523,404	$	0.001	No Expiry
	6,531,548

Nature of Business, Basis of Presentation and Liquidity (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Liquidity
Cash and cash equivalents	$ 78,479		$ 78,479		$ 70,643
Accumulated deficit	(433,764)		(433,764)		$ (399,582)
Net loss attributable to common stockholders	$ (20,362)	$ (13,390)	$ (34,182)	$ (55,253)

- Definition

Amount, after deduction of tax, noncontrolling interests, dividends on preferred stock and participating securities; of income (loss) available to common shareholders.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 805
-SubTopic 60
-Name Accounting Standards Codification
-Section 65
-Paragraph 1
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147476176/805-60-65-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483443/250-10-50-3

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 11
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483443/250-10-50-11

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 11
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483443/250-10-50-11

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 4
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483443/250-10-50-4

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 5
-Subparagraph (SAB Topic 6.B)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483621/220-10-S99-5

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 260
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482662/260-10-50-1

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 260
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 10
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482689/260-10-45-10

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 260
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 11
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482689/260-10-45-11

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 260
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 60B
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482689/260-10-45-60B

+ Details

- Definition

Amount of accumulated undistributed earnings (deficit).

+ References + Details

Acquisition of Flame Biosciences - Net assets acquired (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023	Jan. 17, 2023
Acquisition of Flame Biosciences
Cash and cash equivalents	$ 78,479	$ 70,643
Flame
Acquisition of Flame Biosciences
Cash and cash equivalents			$ 50,362
Accounts payable and accrued liabilities			$ (928)

Equity Incentive Plans (Tables)

6 Months Ended

Jun. 30, 2024

Equity Incentive Plans

Schedule 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, 2023	3,384,366	$	13.97	8.40	$	3,431
Granted	1,637,500	$	2.68
Exercised	(10,557)	$	2.77
Forfeited	(189,088)	$	6.13
Outstanding at June 30, 2024	4,822,221	$	10.47	8.50	$	23
Options exercisable at June 30, 2024	2,017,082	$	20.69	7.42
Options vested and expected to vest at June 30, 2024	4,822,221	$	10.47	8.50	$	23

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


	Six Months Ended June 30,
	2024		2023

Expected volatility	92.84	%	86.02	%
Weighted average risk-free interest rate	4.00	%	3.57	%
Expected dividend yield	0.00	%	0.00	%
Expected term (in years)	6.44		6.44

Schedule of RSU activity under the 2016 Plan


		Weighted
		Average Grant
	Number of Shares	Date Fair Value
Outstanding at December 31, 2023	262,500	$	19.97
Vested	(27,500)	$	25.70
Forfeited	(7,500)	$	19.40
Outstanding at June 30, 2024	227,500	$	19.29

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,
	2024		2023		2024		2023

Research and development	$	729	$	645	$	1,356	$	1,349
General and administrative		641		620		1,262		1,226
Total	$	1,370	$	1,265	$	2,618	$	2,575

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2024

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, 2023 to June 30, 2024 (in thousands):


Balance at January 1, 2023	$	2,099
Cash received for 2022 eligible expenses		(2,333)
Australian research and development incentive income, net		1,101
Foreign currency translation		(96)
Balance at December 31, 2023	$	771
Australian research and development incentive income, net		499
Foreign currency translation		(11)
Balance at June 30, 2024	$	1,259

Foreign Currency Translation

Concentration of Credit Risk

Concentration of Credit Risk

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 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, 2024
Assets:
Cash equivalents	$	41,034	$	41,034	$	—	$	—
Total assets	$	41,034	$	41,034	$	—	$	—

December 31, 2023
Assets:
Cash equivalents	$	39,065	$	39,065	$	—	$	—
Total assets	$	39,065	$	39,065	$	—	$	—

Leases

Leases

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

Net Loss per Share

Subsequent Events

Subsequent Events

Recent Adopted Accounting Pronouncements

Recent Adopted Accounting Pronouncements

Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2024

Accrued Expenses

Schedule of accrued expenses


	June 30,		December 31,
	2024		2023
Clinical trials	$	4,818	$	2,522
Professional fees		157		254
Payroll and related expenses		2,372		3,181
Accrued expenses	$	7,347	$	5,957

CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital.	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Series X Non Voting Convertible Preferred Stock	Total
Balance at the beginning of the period (in shares) at Dec. 31, 2022	9,902,137
Balance at the beginning of the period at Dec. 31, 2022	$ 10	$ 376,896	$ 128	$ (318,168)		$ 58,866
Increase (Decrease) in Stockholders' Equity
Conversion of Series X preferred stock to common stock	14	67,701			$ (67,715)	67,715
Issuance of Series X Preferred Stock in connection with Flame merger					$ 67,715
Issuance of Series X Preferred Stock in connection with Flame merger (in shares)					13,625
Issuance of common stock in connection with Flame merger	$ 2	9,803				9,805
Issuance of common stock in connection with Flame merger (in shares)	1,972,901
Issuance of common stock warrants in connection with Flame merger		13				13
Redemption of 2019 Warrants		(29)				(29)
Issuance of common stock upon vest of restricted stock units (in shares)	66,061
Conversion of Series X preferred stock to common stock (in shares)	13,624,800				(13,625)
Reclassification of Series X preferred stock warrants to equity		78				78
Fractional value paid in cash		1				1
Fractional shares paid in cash (in shares)	(485)
Foreign currency translation adjustment			286			286
Stock-based compensation		2,575				2,575
Net Income (Loss)				(55,253)		(55,253)
Balance at the end of the period at Jun. 30, 2023	$ 26	457,038	414	(373,421)		84,057
Balance at the end of the period (in shares) at Jun. 30, 2023	25,565,414
Balance at the beginning of the period (in shares) at Mar. 31, 2023	11,941,099
Balance at the beginning of the period at Mar. 31, 2023	$ 12	387,993	355	(360,031)		28,329
Beginning balance (in shares) at Mar. 31, 2023					13,625
Beginning balance at Mar. 31, 2023					$ 67,715
Increase (Decrease) in Stockholders' Equity
Conversion of Series X preferred stock to common stock	$ 14	67,701				67,715
Conversion of Series X preferred stock to common stock (in shares)	13,624,800
Conversion of Series X preferred stock to common stock					$ (67,715)
Conversion of Series X preferred stock to common stock (in shares)					(13,625)
Reclassification of Series X preferred stock warrants to equity		78				78
Fractional value paid in cash		1				1
Fractional shares paid in cash (in shares)	(485)
Foreign currency translation adjustment			59			59
Stock-based compensation		1,265				1,265
Net Income (Loss)				(13,390)		(13,390)
Balance at the end of the period at Jun. 30, 2023	$ 26	457,038	414	(373,421)		84,057
Balance at the end of the period (in shares) at Jun. 30, 2023	25,565,414
Balance at the beginning of the period (in shares) at Dec. 31, 2023	25,565,414
Balance at the beginning of the period at Dec. 31, 2023	$ 26	459,591	106	(399,582)		60,141
Increase (Decrease) in Stockholders' Equity
Issuance of common stock upon vest of restricted stock units (in shares)	27,500
Issuance of common stock upon exercise of stock options		29				$ 29
Issuance of common stock upon exercise of stock options (in shares)	10,557					10,557
April 2024 Private Placement (net of issuance costs of $2,948)	$ 12	37,039				$ 37,051
April 2024 Private Placement (net of issuance costs of $2,948) (in shares)	12,660,993
Dividend attributable to the down round feature of 2017 Warrants		234		(234)
Foreign currency translation adjustment			(103)			(103)
Stock-based compensation		2,618				2,618
Net Income (Loss)				(33,948)		(33,948)
Balance at the end of the period at Jun. 30, 2024	$ 38	499,511	3	(433,764)		65,788
Balance at the end of the period (in shares) at Jun. 30, 2024	38,264,464
Balance at the beginning of the period (in shares) at Mar. 31, 2024	25,603,471
Balance at the beginning of the period at Mar. 31, 2024	$ 26	460,868	(120)	(413,402)		47,372
Increase (Decrease) in Stockholders' Equity
April 2024 Private Placement (net of issuance costs of $2,948)	$ 12	37,039				37,051
April 2024 Private Placement (net of issuance costs of $2,948) (in shares)	12,660,993
Dividend attributable to the down round feature of 2017 Warrants		234		(234)
Foreign currency translation adjustment			123			123
Stock-based compensation		1,370				1,370
Net Income (Loss)				(20,128)		(20,128)
Balance at the end of the period at Jun. 30, 2024	$ 38	$ 499,511	$ 3	$ (433,764)		$ 65,788
Balance at the end of the period (in shares) at Jun. 30, 2024	38,264,464

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2024	Dec. 31, 2023
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock par value (in dollars per share)	$ 0.001	$ 0.001
Preferred Stock, shares authorized	10,000,000	10,000,000
Preferred stock shares issued	0	0
Preferred Stock, Shares Outstanding	0	0
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	38,264,464	25,565,414
Common stock, outstanding shares	38,264,464	25,565,414

Income Taxes

6 Months Ended

Jun. 30, 2024

Income Taxes

Income Taxes

11. Income Taxes

Due to current and prior year losses, the Company does not expect to have any income tax provision for 2024. In addition, the Company continues to record a valuation allowance on its net deferred tax assets.

- Definition

The entire disclosure for income tax.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 740
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-Name Accounting Standards Codification
-Section 55
-Paragraph 231
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482663/740-10-55-231

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
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-Paragraph 12C
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-Topic 740
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-Name Accounting Standards Codification
-Section 50
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org/1943274/2147477891/740-270-50-1

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Common Stock

6 Months Ended

Jun. 30, 2024

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, 2024, no dividends have been declared for shares of common stock.

Acquisition of Flame – January 2023

On January 17, 2023 Leap acquired 100% of the outstanding equity of Flame. Pursuant to the Merger, Leap issued to Flame Stockholders 1,972,901 shares of common stock. The Company also issued Series X Preferred Stock to Flame Stockholders pursuant to the Merger (see Note 3).

Private Placement - April 2024

On April 15, 2024, the Company completed a private placement whereby the Company issued 12,660,993 shares of its common stock at a purchase price of $2.82 per share, and 1,523,404 prefunded warrants at a purchase price of $2.819 per share (which is equal to the price per share less the $0.001 exercise price per warrant share). The aggregate net proceeds received by the Company from the offering was $37,051, net of $2,948 of underwriting discounts and commissions and offering expenses payable by the Company.

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 19: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-18

+ Details

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 78,479	$ 70,643
Research and development incentive receivable	754	771
Prepaid expenses and other current assets	354	183
Total current assets	79,587	71,597
Property and equipment, net		5
Right of use assets, net	475	257
Research and development incentive receivable, net of current portion	505
Deposits	859	966
Total assets	81,426	72,825
Current liabilities:
Accounts payable	7,809	6,465
Accrued expenses	7,347	5,957
Lease liability - current portion	443	262
Total current liabilities	15,599	12,684
Non current liabilities:
Lease liability, net of current portion	39
Total liabilities	15,638	12,684
Stockholders' equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding
Common stock, $0.001 par value; 240,000,000 shares authorized; 38,264,464 and 25,565,414 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	38	26
Additional paid-in capital	499,511	459,591
Accumulated other comprehensive income	3	106
Accumulated deficit	(433,764)	(399,582)
Total stockholders' equity	65,788	60,141
Total liabilities and stockholders' equity	$ 81,426	$ 72,825

Accrued Expenses

6 Months Ended

Jun. 30, 2024

Accrued Expenses

Accrued Expenses

4. Accrued Expenses

Accrued expenses consist of the following:


	June 30,		December 31,
	2024		2023
Clinical trials	$	4,818	$	2,522
Professional fees		157		254
Payroll and related expenses		2,372		3,181
Accrued expenses	$	7,347	$	5,957

Nature of Business, Basis of Presentation and Liquidity

6 Months Ended

Jun. 30, 2024

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. was formed and is a wholly owned subsidiary of the Company.

On December 10, 2015, the Company entered into a merger agreement with GITR Inc. (“GITR”), an entity under common control, whereby a wholly owned subsidiary was merged with GITR and the surviving name of the wholly owned subsidiary was GITR Inc.

On August 29, 2016, the Company entered into a merger agreement with Macrocure Ltd. (“Macrocure”), a publicly held, clinical stage biotechnology company based in Petach Tikva, Israel. In connection with the merger, the Company applied to be listed on the Nasdaq Global Market. Nasdaq approved the listing, and trading in the Company’s common stock commenced on January 24, 2017, under the trading symbol “LPTX.” On February 1, 2017, Macrocure’s name was changed to Leap Therapeutics Ltd. In 2020, Leap Therapeutics Ltd. was dissolved.

On December 15, 2021, Leap Securities Corp. was formed and is a wholly owned subsidiary of the Company.

On January 17, 2023, the Company entered into a merger agreement with Flame Biosciences, Inc., a privately held, biotechnology corporation (“Flame”), whereby Flame became a wholly owned subsidiary of the Company under the name Flame Biosciences LLC.

The Company is a biopharmaceutical company developing novel biomarker-targeted antibody therapies designed to treat patients with cancer by inhibiting fundamental tumor-promoting pathways, targeting cancer-specific cell surface molecules, and harnessing the immune system to attack cancer cells. The Company’s strategy is to identify, acquire, and develop molecules that translate into therapeutics that generate durable clinical benefit and enhanced patient outcomes. The Company’s lead clinical stage program is DKN-01, a monoclonal antibody that inhibits Dickkopf-related protein 1, or DKK1. The Company is currently studying DKN-01 in multiple ongoing clinical trials in patients with esophagogastric cancer, gynecologic cancers, or colorectal cancer. Its second clinical stage program is FL-301, a monoclonal antibody that targets cells that express Claudin18.2 on their cell surface. The Company also has two preclinical antibody programs, FL-302 and FL-501.

In January 2020, the Company entered into an Option and License Agreement with BeiGene, Ltd., or BeiGene, which granted BeiGene an option to obtain an exclusive license from the Company that would grant to BeiGene the right to develop and commercialize DKN-01 in Asia (excluding Japan), Australia, and New Zealand. In March 2023, BeiGene notified the Company that it did not intend to exercise its option, and the agreement is continuing as a clinical collaboration.

The Company intends to apply its experience identifying and developing products to build a pipeline of programs relating to the practice of cancer medicine.

Basis of Presentation

The December 31, 2023 year-end condensed consolidated balance sheet data in the accompanying interim condensed consolidated financial statements was derived from audited consolidated 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, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 18, 2024.

The accompanying interim condensed consolidated financial statements are unaudited and have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2023. 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, 2024, statements of operations and statements of comprehensive loss for the three and six months ended June 30, 2024 and 2023 and statements of cash flows for the six months ended June 30, 2024 and 2023. Such adjustments are of a normal and recurring nature. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2024.

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 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, 2024, the Company had cash and cash equivalents of $78,479. Additionally, the Company had an accumulated deficit of $433,764 at June 30, 2024, and during the six months ended June 30, 2024, the Company incurred a net loss attributable to common stockholders of $34,182. The Company expects to continue to generate operating losses for the foreseeable future. The Company believes that its cash and cash equivalents of $78,479 as of June 30, 2024 will be sufficient to fund its operating expenses for at least the next 12 months from issuance of these financial statements.

In addition, to support its future operations, the Company will likely seek additional funding through public or private equity financings or government programs and will seek funding or development program cost-sharing through collaboration agreements or licenses with larger pharmaceutical or biotechnology companies. If the Company does not obtain additional funding or development program cost-sharing, or exceeds its current spending forecasts or fails to receive the research and development tax incentive payment, the Company has the ability and would be forced to delay, reduce or eliminate certain clinical trials or research and development programs, reduce or eliminate discretionary operating expenses, and delay company and pipeline expansion, any of which could adversely affect its business prospects. The inability to obtain funding, as and when needed, could have a negative impact on the Company’s financial condition and ability to pursue its business strategies.

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Net Loss Per Share - Antidilutive (Details) - shares	3 Months Ended		6 Months Ended
Net Loss Per Share - Antidilutive (Details) - shares	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Securities excluded from computation of diluted net loss per share
Anti-dilutive securities excluded from calculation of diluted net loss per share	8,636,094	5,884,055	8,636,094	5,884,055
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	227,500	285,000	227,500	285,000
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	4,822,221	2,012,684	4,822,221	2,012,684
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	3,586,373	3,586,371	3,586,373	3,586,371

CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2024
CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
Net of issuance costs	$ 2,948	$ 2,948

Summary of Significant Accounting Policies - Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Assets:
Cash equivalents	$ 41,034	$ 39,065
Total assets	41,034	39,065
Level 1
Assets:
Cash equivalents	41,034	39,065
Total assets	$ 41,034	$ 39,065

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (20,128)	$ (13,390)	$ (33,948)	$ (55,253)

- Definition

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

+ References

+ Details

Leases - Future minimum lease payments (Details) $ in Thousands	Jun. 30, 2024 USD ($)
Leases
2024	$ 233
2025	273
Total Lease Payments	506
Less: imputed interest	(24)
Total operating lease liabilities	$ 482

Accrued Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Accrued Expenses
Clinical trials	$ 4,818	$ 2,522
Professional fees	157	254
Payroll and related expenses	2,372	3,181
Accrued expenses	$ 7,347	$ 5,957

Acquisition of Flame Biosciences - Fair value assigned to each component of the purchase consideration (Details) - Flame $ in Thousands	Jan. 17, 2023 USD ($) shares
Acquisition of Flame Biosciences
Total \| $	$ 79,016
Series X Preferred Shares
Acquisition of Flame Biosciences
Number of shares \| shares	136,248

Commitments and Contingencies - Manufacturing, License and Service Agreements (Details) $ in Thousands	Jun. 30, 2024 USD ($)
Commitments and Contingencies
Manufacturing commitments	$ 1,501
License and service agreements
Commitments and Contingencies
Royalties paid or accrued	0
Licensing agreements
Commitments and Contingencies
Royalties paid or accrued	$ 0