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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-38586
RUBIUS THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
Delaware46-2688109
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
399 Binney Street, Suite 300
Cambridge, Massachusetts
(Address of principal executive offices)
02139
(Zip code)

(617) 679-9600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareRUBYThe Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻
Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of July 29, 2022, the registrant had 90,357,032 shares of common stock, $0.001 par value per share, outstanding.
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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains express or implied forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on our management’s belief and assumptions and on information currently available to our management. These statements reflect our current views with respect to, among other things, our operations and financial performance. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plan, objectives of management, results of preclinical studies or clinical trials and expected market growth are forward-looking statements. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements involve various risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated in these statements. Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

expectations regarding the success, cost and timing of our product development activities and clinical trials, including statements regarding the timing of initiation, enrollment in and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, and our research and development programs;

plans to advance product candidates into or successfully complete any clinical trial;

beliefs about data results and analyses, including what early data demonstrates or suggests, as well as expectations regarding the safety and efficacy, and overall potential and advantages, of our product candidates and our expected timing for data;

beliefs that we have the potential to significantly expand our manufacturing capabilities and plan to stage additional investments based on future needs and in preparation for potential pivotal trial and eventual commercialization;

beliefs that we can obtain or manufacture adequate and timely supply of our product candidates for clinical trials or for commercial use, if approved;

expectations regarding the operation of our manufacturing facility and any plans for further renovation or expansion;

beliefs regarding and plans for our identified research priorities to advance our technologies;

plans to license additional intellectual property relating to our product candidates and expectations that we will be able to comply with our existing license agreements;

expectations that our cash will be sufficient to fund our operating expenses, capital expenditure requirements and debt service payments into the second half of 2023 and that we will be able to obtain funding for our operations, including funding necessary to complete further development, clinical trials and, if approved, commercialization of our product candidates;

beliefs about the intellectual property rights of others and our ability to commercialize our products in light of such third-party rights;

beliefs about developments relating to cellular therapies, including red blood cell therapies;

expectations for competing therapies that are or become available;

plans for the commercialization of, and expectations for the market for, our product candidates, if approved;

our plans to research, develop and commercialize our product candidates;

our plans to attract collaborators with development, regulatory and commercialization expertise;

expectations to enter into agreements with third parties in connection with the commercialization of our product candidates and any other approved product;

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beliefs about the size and growth potential of the markets for our product candidates, and our ability to serve those markets;

expectations for the impact of global economic and political developments on our business and on our clinical trials, including economic slowdowns or recessions that may result from the ongoing COVID-19 pandemic;

expectations for the rate and degree of market acceptance of our product candidates, if approved;

anticipated regulatory developments in the United States and foreign countries;

expectations that we will be able to contract with third-party suppliers and manufacturers and their ability to perform adequately;

estimates for expenses, future revenue, capital requirements and needs for, and ability to obtain, additional financing;

the expected impact of laws and regulations and legislative and regulatory changes; and

our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates.

All of our forward-looking statements are as of the date of this Quarterly Report on Form 10-Q only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of or any material adverse change in one or more of the risk factors or risks and uncertainties referred to in this Quarterly Report on Form 10-Q or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the Securities and Exchange Commission, or the SEC, could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Quarterly Report on Form 10-Q, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Quarterly Report on Form 10-Q that modify or impact any of the forward-looking statements contained in this Quarterly Report on Form 10-Q will be deemed to modify or supersede such statements in this Quarterly Report on Form 10-Q.
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Summary of the Material Risks Associated with Our Business
Our business is subject to numerous risks and uncertainties that you should be aware of in evaluating our business. These risks include, but are not limited to, the following:

we do not currently have sufficient working capital to fund our planned operations for the next twelve months and may not be able to continue as a going concern;
if we are able to continue our operations beyond the near term, we will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development efforts and other operations;
we have incurred net losses in every year since our inception and anticipate that we will continue to incur net losses in the future;
we will require additional capital to fund our operations and if we fail to obtain necessary financing, we will not be able to complete the development and commercialization of our product candidates;
we have a limited operating history, which may make it difficult to evaluate our technology and product development capabilities and predict our future performance;
our business is highly dependent on the success of our initial product candidates targeting cancer and autoimmune diseases. All of our product candidates will require significant additional nonclinical and clinical development before we can seek regulatory approval for and launch a product commercially;
the successful development of cellular therapeutics, such as our investigational Red Cell Therapeutics, or RCTs, is highly uncertain;
our RCT product candidates are based on a new technology, which makes it difficult to predict the time and cost of development and of subsequently obtaining regulatory approval, if at all;
the FDA, the EMA and other regulatory authorities may implement additional regulations or restrictions on the development and commercialization of our product candidates, which may be difficult to predict;
clinical development involves a lengthy and expensive process, with an uncertain outcome. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of any product candidates;
our ongoing and planned clinical trials or those of our future collaborators may reveal significant adverse events not seen in our preclinical or nonclinical studies and may result in a safety profile that could inhibit regulatory approval or market acceptance of any of our product candidates;
positive results from early preclinical studies or early clinical trials of our product candidates are not necessarily predictive of the results of later preclinical studies or any future clinical trials of our product candidates;
if we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected;
cellular therapies are a novel approach and negative perception of any product candidates that we develop could adversely affect our ability to conduct our business or obtain regulatory approvals for such product candidates;
we are subject to numerous laws and regulations, noncompliance with which would subject us to possible legal or regulatory action;
the effects of health epidemics like the ongoing COVID-19 pandemic, including recurring surges and waves of infection and emergent variants of the coronavirus, in regions where we, or the third parties on which we rely, have business operations could adversely impact our business, including our clinical supply, preclinical studies, ongoing and planned clinical trials;
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if we are unable to obtain and maintain patent protection for any product candidates we develop or for our RED PLATFORM, our competitors could develop and commercialize products or technology similar or identical to ours, and our ability to successfully commercialize any product candidates we may develop, and our technology may be adversely affected;
we intend to rely on patent and other rights and available regulatory exclusivities, including the status of our product candidates, if approved, as products eligible for reference product exclusivity under the Biologics Price Competition and Innovation Act, or BPCIA. If we are unable to obtain or maintain exclusivity and otherwise protect our intellectual property from the combination of these approaches, we may not be able to compete effectively in our markets;
third-party claims of intellectual property infringement, misappropriation or other violation against us, our licensors or our collaborators may prevent or delay the development and commercialization of our product candidates, RED PLATFORM and other technologies;
our product candidates are uniquely manufactured. If we or any third-party manufacturers that we may engage encounter difficulties in manufacturing our product candidates, our ability to provide supply of our product candidates for clinical trials or our products for patients, if approved, could be delayed or stopped, or we may be unable to maintain a commercially viable cost structure;
we have acquired and are establishing our own manufacturing facility and infrastructure in addition to or in lieu of relying on contract manufacturing organizations for the manufacture of our product candidates, which is costly, time-consuming, and which may not be successful;
we do not have extensive experience as a company managing a manufacturing facility; and
if we fail to maintain the listing of our common stock with a United States national securities exchange, the liquidity of our common stock could be adversely affected.
The summary risk factors described above should be read together with the text of the full risk factors below and in the other information set forth in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and the related notes, as well as in other documents that we file with the SEC. If any such risks and uncertainties actually occur, our business, prospects, financial condition and results of operations could be materially and adversely affected. The risks summarized above or described in full below are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial may also materially adversely affect our business, prospects, financial condition and results of operations.
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Rubius Therapeutics, Inc.
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Solely for convenience, the trademarks, service marks and trade names referred to in this quarterly report are listed without the ®, (sm) and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names.
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PART I—FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
RUBIUS THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
June 30, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$62,211 $225,848 
Investments78,502  
Prepaid expenses and other current assets2,779 3,975 
Total current assets143,492 229,823 
Operating lease, right-of-use-asset32,548 35,095 
Property, plant and equipment, net51,469 51,530 
Restricted cash1,573 1,573 
Total assets$229,082 $318,021 
Liabilities and Stockholders' Equity  
Current liabilities:  
Accounts payable$12,435 $11,572 
Accrued expenses and other current liabilities9,407 14,072 
Operating lease liabilities9,149 9,015 
Total current liabilities30,991 34,659 
Long-term debt, net of discount76,602 76,154 
Other long-term liabilities67 135 
Operating lease liabilities, net of current portion25,882 28,291 
Total liabilities133,542 139,239 
Commitments and contingencies (see Note 9)  
Stockholders' equity:  
Preferred stock, $0.001 par value; 10,000,000 shares authorized at June 30, 2022 and December 31, 2021; no shares issued or outstanding at June 30, 2022 and December 31, 2021
  
Common stock, $0.001 par value; 150,000,000 shares authorized at June 30, 2022 and December 31, 2021; 90,357,032 and 90,063,770 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively
90 90 
Additional paid-in capital869,243 855,710 
Accumulated other comprehensive loss(122) 
Accumulated deficit(773,671)(677,018)
Total stockholders' equity95,540 178,782 
Total liabilities and stockholders' equity $229,082 $318,021 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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RUBIUS THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share and per share amounts)
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Revenue$$$$
Operating expenses:
Research and development32,99836,07271,29763,749
General and administrative9,90813,85122,47127,091
Total operating expenses42,90649,92393,76890,840
Loss from operations(42,906)(49,923)(93,768)(90,840)
Other income (expense):   
Interest income2552630352
Interest expense(1,630)(1,312)(3,259)(3,060)
Other income, net401,029711,338
Total other income (expense), net(1,335)(257)(2,885)(1,670)
Net loss(44,241)(50,180)(96,653)(92,510)
Net loss per share, basic and diluted$(0.49)$(0.56)$(1.07)$(1.08)
Weighted average common shares outstanding, basic and diluted90,257,52489,517,78490,203,58685,936,079
    
Comprehensive loss:    
Net loss$(44,241)$(50,180)$(96,653)$(92,510)
Other comprehensive income (loss):    
Unrealized losses on investments, net of tax of $0
(65)(6)(122)(3)
Comprehensive loss$(44,306)$(50,186)$(96,775)$(92,513)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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RUBIUS THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six months ended June 30,
20222021
Cash flows from operating activities:
Net loss$(96,653)$(92,510)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense13,301 18,239 
Depreciation and amortization expense3,158 3,012 
Amortization (accretion) of premium (discount) on investments(179)110 
Non-cash interest expense394 807 
Changes in operating assets and liabilities:
Prepaid expenses and other current assets1,034 (821)
Operating lease, right-of-use-asset2,547 2,729 
Accounts payable638 (171)
Accrued expenses and other current liabilities(3,318)(2,466)
Other long-term liabilities(68)(68)
Operating lease liabilities(2,275)(2,320)
Net cash used in operating activities(81,421)(73,459)
Cash flows from investing activities:
Purchases of property, plant and equipment(4,165)(1,591)
Purchases of investments(78,445) 
Sales and maturities of investments 70,000 
Net cash provided by (used in) investing activities(82,610)68,409 
Cash flows from financing activities:
Proceeds from underwritten public offering of common stock, net of commissions and underwriting discounts 188,000 
Payments of offering costs (360)
Payments of debt issuance costs (150)
Proceeds from issuance of common stock upon exercise of stock options and under employee stock purchase plan232 9,628 
Net cash provided by financing activities232 197,118 
Net increase (decrease) in cash, cash equivalents and restricted cash(163,799)192,068 
Cash, cash equivalents and restricted cash at beginning of period227,583 92,901 
Cash, cash equivalents and restricted cash at end of period$63,784 $284,969 
Supplemental cash flow information:
Cash paid for interest$2,865 $1,917 
Cash paid for leases$3,599 $3,806 
Supplemental disclosure of non-cash investing and financing information:
Purchases of property, plant and equipment included in accounts payable or accrued expenses$868 $288 
Offering costs included in accounts payable and accrued expenses$ $35 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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RUBIUS THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share amounts)
(Unaudited)
Accumulated
AdditionalotherTotal
Common stockpaid-incomprehensiveAccumulatedstockholders’
SharesAmountcapitallossdeficitequity
Balances at December 31, 202190,063,770$90$855,710$$(677,018)$178,782
Issuance of common stock upon exercise of stock options
18,2287676
Vesting of restricted stock units104,628
Stock-based compensation expense
8,2608,260
Unrealized losses on investments
(57)(57)
Net loss(52,412)(52,412)
Balances at March 31, 202290,186,62690864,046(57)(729,430)134,649
Issuance of common stock upon exercise of stock options
24,0002222
Vesting of restricted stock units2,500
Issuance of common stock under
   employee stock purchase plan
143,906134134
Stock-based compensation expense
5,0415,041
Unrealized losses on investments
(65)(65)
Net loss(44,241)(44,241)
Balances at June 30, 202290,357,032$90$869,243$(122)$(773,671)$95,540



Accumulated
AdditionalotherTotal
Common stockpaid-incomprehensiveAccumulatedstockholders’
SharesAmountcapitalincomedeficitequity
Balances at December 31, 202081,053,651$81$621,946$4$(480,471)$141,560
Issuance of common stock
   from public offering, net of
   commissions, underwriting
   discounts and offering costs of
   $800
6,896,5527187,193187,200
Issuance of common stock upon exercise of stock options
1,237,32415,9075,908
Stock-based compensation expense
8,6428,642
Unrealized gains on investments
33
Net loss(42,330)(42,330)
Balances at March 31, 202189,187,52789823,6887(522,801)300,983
Issuance of common stock upon exercise of stock options
532,40013,7193,720
Stock-based compensation expense
9,5979,597
Unrealized losses on investments
(6)(6)
Net loss(50,180)(50,180)
Balances at June 30, 202189,719,927$90$837,004$1$(572,981)$264,114

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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RUBIUS THERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Nature of the Business and Basis of Presentation
Rubius Therapeutics, Inc. (“Rubius” or the “Company”) is a biopharmaceutical company that is biologically engineering red blood cells into medicines, called Red Cell Therapeutics, for the treatment of cancer and autoimmune diseases. Rubius was incorporated in April 2013 as VL26, Inc. under the laws of the State of Delaware. In January 2015, the Company changed its name to Rubius Therapeutics, Inc.
The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, the ability to establish clinical- and commercial-scale manufacturing processes and the ability to secure additional capital to fund operations. In addition, the Company is subject to uncertainty regarding the performance and safety of its product candidates in humans. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.
The Company is monitoring the potential impact of the novel coronavirus (“COVID-19”), if any, on the carrying value of certain assets. To date, the Company has not experienced material business disruption, nor has it incurred impairment of any assets as a result of COVID-19. The extent to which these events may impact the Company’s business will depend on future developments, which are highly uncertain and cannot be predicted at this time. The duration and intensity of these impacts and resulting disruption to the Company’s operations is uncertain and the Company will continue to assess the financial impact.

On July 20, 2018, the Company completed its initial public offering (“IPO”), pursuant to which it issued and sold 12,055,450 shares of common stock, inclusive of 1,572,450 shares sold by the Company pursuant to the full exercise of the underwriters’ option to purchase additional shares. The aggregate net proceeds received by the Company from the IPO were $254.3 million, after deducting underwriting discounts and commissions and other offering costs. Upon the closing of the IPO, all of the shares of the Company’s outstanding convertible preferred stock then outstanding automatically converted into 51,845,438 shares of common stock.
On March 18, 2021, the Company completed an underwritten public offering (the “March 2021 Offering”), pursuant to which it issued and sold 6,896,552 shares of common stock. The aggregate net proceeds received by the Company from the March 2021 Offering were $187.2 million, after deducting underwriting discounts and commissions and other offering costs.
The Company’s current financial resources and currently forecasted operating plan would allow the Company to operate into the second half of 2023. The Company has developed plans to mitigate this risk, which primarily consist of raising additional capital through some combination of equity or debt financings, and/or potentially new collaborations and reducing cash expenditures. If the Company is not able to secure adequate additional funding, the Company plans to make reductions in spending. In that event, the Company may have to delay, scale back, or eliminate some or all of the Company’s research and development programs and technology platform activities which could adversely affect its business prospects, or the Company may be unable to continue operations.

Under Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40) (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued.

As of June 30, 2022, the Company had an accumulated deficit of $773.7 million, and cash, cash equivalents and investments of $140.7 million. For the six months ended June 30, 2022, the Company incurred a loss of $96.7 million and used $81.4 million of cash in operations. The Company expects that its operating losses and negative cash flows will continue for the foreseeable future. Management has assessed the Company’s ability to continue as a going concern in accordance with the requirements of ASC 205-40 and based on its recurring losses from operations incurred since inception, expectation of continuing operating losses for the foreseeable future, and the need to raise additional capital to finance its future operations, as of August 9, 2022, the issuance date of the interim condensed consolidated financial
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statements for the three and six month periods ended June 30, 2022, the Company has concluded that there is substantial doubt about its ability to continue as a going concern for a period of one year from the date that these condensed consolidated financial statements are issued. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.
2. Summary of Significant Accounting Policies
Unaudited Interim Financial Information
The condensed consolidated balance sheet at December 31, 2021 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K for the year-ended December 31, 2021, on file with the SEC. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s condensed consolidated financial position as of June 30, 2022 and condensed consolidated results of operations for the three and six months ended June 30, 2022 and 2021 and the condensed consolidated cash flows for the six months ended June 30, 2022 and 2021 have been made. The Company’s condensed consolidated results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2022.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, the accrual of research and development expenses and the valuation of stock-based awards. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Actual results may differ from those estimates or assumptions.
The full extent to which the ongoing COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, including clinical trials, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19. As of the date of issuance of these unaudited condensed consolidated financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update estimates, judgments or revise the carrying value of any assets or liabilities. Actual results may differ from those estimates or assumptions.
Concentrations of Credit Risk and of Significant Suppliers
Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and investments. The Company’s cash, cash equivalents and investments, as of June 30, 2022, consisted of cash, money market accounts, U.S. government money market funds and U.S. government treasury bills. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.
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The Company relies, and expects to continue to rely, on a small number of vendors to manufacture supplies and raw materials for its development programs. These programs could be adversely affected by a significant interruption in these manufacturing services or the availability of raw materials.
Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.
Restricted Cash
As of June 30, 2022 and December 31, 2021, the Company maintained letters of credit for the benefit of the landlords of its leased properties totaling $1.6 million and $1.7 million, respectively. The Company was required to maintain separate cash balances of these amounts to secure the letters of credit. Related to these separate cash balances, the Company included $1.6 million in restricted cash (non-current) in its condensed consolidated balance sheet as of June 30, 2022. As of December 31, 2021, the Company included $0.1 million in prepaid expenses and other current assets and $1.6 million in restricted cash (non-current) in its condensed consolidated balance sheet.
Cash, cash equivalents and restricted cash presented in the accompanying condensed consolidated statement of cash flows was $63.8 million and $285.0 million for the six months ended June 30, 2022 and 2021, respectively, of which $1.6 million and $1.7 million was restricted cash, respectively.
Fair Value Measurements
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.
The Company’s cash equivalents and investments are carried at fair value, determined according to the fair value hierarchy described above (see Note 3). The carrying values of the Company’s accounts payable and accrued expenses approximate their fair values due to the short-term nature of these liabilities. The carrying value of the Company’s long-term debt approximates its fair value due to its variable interest rate, which approximates a market interest rate.
Investments
The Company’s investments are classified as available-for-sale and are carried at fair value. Realized gains and losses and declines in value are based on the specific identification method and are included as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss. The Company classifies its investments with maturities beyond one year as short-term, based on their highly liquid nature and because such investments are available for current operations.
The Company evaluates its investments with unrealized losses for impairment. When assessing investments for unrealized declines in value, the Company considers whether the decline in value is related to a credit loss or non-credit loss. For credit losses, the Company reduces the investment to fair value through an allowance for credit losses recorded to the balance sheet and corresponding charge to the statement of operations. The allowance for credit losses and corresponding impairment charge is adjusted each period for changes in fair value. For non-credit losses, the Company reduces the investment to fair value through a charge to the statement of comprehensive loss, reported as a component of accumulated
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other comprehensive income (loss) in stockholders’ equity. No such credit losses were recorded during the periods presented.
Leases
At the inception of an arrangement as lessee or lessor, the Company determines whether the arrangement is or contains a lease. Operating lease cost is recognized over the lease term on a straight-line basis. Variable lease cost and short-term leases (lease terms less than 12 months) are recognized as incurred. For both lessee and lessor arrangements, variable lease payments are the amounts owed by the Company to a lessor that are not fixed, such as reimbursement for common area maintenance and utilities costs, and are expensed when incurred. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option.
For lessee arrangements, operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. Operating leases are recognized on the balance sheet as right-of-use assets, operating lease liabilities current and operating lease liabilities non-current.
The Company has elected the following lease policies at the inception of a lease: (1) for lessee and lessor arrangements within all asset classes, combine lease and non-lease components as a single component, with the lease expense recognized over the expected term on a straight-line basis and (2) for lessee arrangements, apply short-term lease exemption for all leases that qualify, where a right-of-use asset or lease liability will not be recognized for leases with terms of one year or less.
3. Investments and Fair Value of Financial Assets and Liabilities
As of June 30, 2022, investments by security type consisted of the following (in thousands):
June 30, 2022
Amortized Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Credit LossesFair Value
U.S. treasury bills (due within one year)$78,624$$(122)$$78,502
$78,624$$(122)$$78,502
The Company had no investments as of December 31, 2021.
The following tables present the Company’s fair value hierarchy for its assets and liabilities, which are measured at fair value on a recurring basis (in thousands):
Fair value measurements at June 30, 2022 using:
Level 1Level 2Level 3Total
Assets:
Cash equivalents:
U.S. government money market funds$56,804 $ $ $56,804 
Investments:
U.S. government treasury bills 78,502  78,502 
$56,804 $78,502 $ $135,306 
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Fair value measurements at December 31, 2021 using:
Level 1Level 2Level 3Total
Assets:
Cash equivalents:
U.S government money market funds$217,009 $ $ $217,009 
$217,009 $ $ $217,009 
U.S. government money market funds were valued by the Company based on quoted market prices, which represent a Level 1 measurement within the fair value hierarchy. U.S. government treasury bills were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 2 measurement within the fair value hierarchy. There have been no changes to the valuation methods during the six months ended June 30, 2022. The Company evaluates transfers between levels at the end of each reporting period. There were no transfers between Level 1, Level 2 or Level 3 during the six months ended June 30, 2022.
4. Property, Plant and Equipment, Net
Property, plant and equipment, net consisted of the following (in thousands):
June 30, 2022December 31, 2021
Land$1,300 $1,300 
Manufacturing facility36,631 33,203 
Manufacturing equipment9,492 8,831 
Laboratory equipment18,191 17,501 
Computer equipment2,824 2,645 
Furniture and fixtures1,306 1,281 
Leasehold improvements570 444 
Construction-in-progress2,169 4,181 
72,483 69,386 
Less: Accumulated depreciation and amortization(21,014)(17,856)
$51,469 $51,530 

During the six months ended June 30, 2022, the Company placed into service $4.1 million of property, plant and equipment related to renovations to expand the Smithfield, Rhode Island manufacturing facility’s production capacity and operating capabilities. As of December 31, 2021, these additions were not ready for their intended use and continued to be included in construction-in-progress.
5. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
June 30, 2022December 31, 2021
Accrued employee compensation and benefits$3,849 $7,451 
Accrued external research and development expenses3,686 2,713 
Accrued manufacturing facility expenses589 2,349 
Accrued general and administrative expenses688 889 
Other595 670 
$9,407 $14,072 
6. Debt
On December 21, 2018 (the “Closing Date”), the Company entered into a loan and security agreement (the "Original Loan Agreement," and, as amended, the “Loan Agreement”) with Solar Capital Ltd., now SLR Investment Corp., as collateral
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agent for the lenders party thereto for an aggregate principal amount of $75.0 million. The aggregate principal amount was funded in three tranches of term loans of $25.0 million each. On the Closing Date, the Company made an initial borrowing of $25.0 million. In June 2019, the Company made a second borrowing of $25.0 million and in June 2020, the Company made a third and final borrowing of $25.0 million.
On June 22, 2021 (the “Amendment Closing Date”), the Company entered into an amendment (the “Amendment”) to the Original Loan Agreement. Pursuant to the Amendment, the Company and its lenders agreed to extend the interest-only period applicable to borrowings under the Loan Agreement from December 21, 2021 until July 1, 2024 and the final maturity date from December 21, 2023 until June 1, 2026. An additional tranche in the amount of $35.0 million is available at the request of the Company prior to the final maturity date, to be provided at the sole discretion of the lenders. The Amendment increases the LIBOR interest rate floor from 0.00% to 2.10%. Interest on the outstanding loan balance will accrue at a rate of 5.50%, plus the greater of 2.10% or the one-month U.S. LIBOR rate. Certain back-end fees are due to the lender at the time of final repayment based on the total funded term loans. The Company accrues the back-end fees that will be due at final repayment to outstanding debt by charges to interest expense over the term of the loans using the effective interest method. The term loans are subject to a prepayment fee of 1.00% if prepayment occurs within the first year subsequent to the Amendment Closing Date, 0.50% in the second year and 0.25% in the third year through final maturity date.
As the terms of the Amendment were not substantially different than the terms of the Original Loan Agreement, the Amendment was accounted for as a debt modification. In conjunction with the Amendment, the Company incurred issuance costs of $0.2 million payable to the lenders, which were recorded as an additional debt discount and will be amortized to interest expense over the remaining term, together with unamortized original issuance costs as of the Amendment Closing Date, using the effective interest method.
The Loan Agreement contains financial covenants that require the Company to maintain either a minimum cash balance of $10.0 million plus accounts payable that are aged longer than ninety days or a minimum market capitalization threshold. The Company was in compliance with all such financial covenants as of June 30, 2022. The Loan Agreement contains customary representations, warranties and covenants and also includes customary events of default, including payment defaults, breaches of covenants, change of control and a material adverse change default. Upon the occurrence of an event of default, a default interest rate of an additional 4.00% per annum may be applied to the outstanding loan balances, and the lenders may declare all outstanding obligations immediately due and payable. Borrowings under the Loan Agreement are collateralized by substantially all of the Company’s assets, other than its intellectual property.

As of June 30, 2022, the estimated future principal payments due were as follows (in thousands):
Year ending December 31,  
2022 (six months ending December 31)$ 
2023 
202418,750 
202537,500 
2026 and thereafter18,750 
$75,000 
7. Equity
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 not entitled to receive dividends, unless declared by the board of directors.
On July 20, 2018, the Company filed a restated certificate of incorporation in the State of Delaware, which, among other things, restated the number of shares of all classes of stock that the Company has authority to issue to 160,000,000 shares, consisting of (i) 150,000,000 shares of common stock, $0.001 par value per share, and (ii) 10,000,000 shares of preferred stock, $0.001 par value per share. The preferred stock will have such rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be determined by the Company’s board of directors upon issuance. The shares of preferred stock are currently undesignated.
On August 1, 2019, the Company entered into a Distribution Agreement (the “Distribution Agreement”) with J.P. Morgan Securities LLC, Jefferies LLC and SVB Leerink LLC (the “Sales Agents”), pursuant to which the Company may issue and sell, from time to time, shares of its common stock having an aggregate offering price of up to $100.0 million through the
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Sales Agents. The Company’s registration statement on Form S-3 filed on August 1, 2019 was declared effective on August 21, 2019 and ceased to be effective on June 21, 2022. As of June 30, 2022, no shares of common stock have been issued and sold pursuant to the Distribution Agreement and none are expected to be sold because the applicable registration statement is no longer effective. The Distribution Agreement will expire in accordance with its terms on August 21, 2022.
On March 18, 2021, the Company completed the March 2021 Offering, pursuant to which it issued and sold 6,896,552 shares of common stock. The aggregate net proceeds received by the Company from the March 2021 Offering were $187.2 million, after deducting underwriting discounts and commissions and other offering costs.
On July 7, 2022, the Company filed an amendment to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware which increased the number of shares of common stock that the Company has authority to issue from 150,000,000 to 300,000,000 shares. The number of shares of preferred stock authorized for issuance was not impacted by this amendment.
8. Stock-Based Compensation
Service-Based Stock Options
During the six months ended June 30, 2022, the Company granted options with service-based vesting conditions for the purchase of 3,218,103 shares of common stock with a weighted average exercise price of $5.44 per share and a weighted average grant-date fair value of $3.71 per share.
Stock-Based Compensation
The Company recorded stock-based compensation expense in the following expense categories of its condensed consolidated statements of operations and comprehensive loss (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Research and development expenses$2,215 $3,056 $5,692 $5,587 
General and administrative expenses2,826 6,541 7,609 12,652 
$5,041 $9,597 $13,301 $18,239 
As of June 30, 2022, total unrecognized compensation cost related to the unvested stock-based awards was $49.2 million, which is expected to be recognized over a weighted average period of 2.5 years.
9. Commitments and Contingencies
License Agreement with the Whitehead Institute for Biomedical Research
The Company has a license agreement with the Whitehead Institute for Biomedical Research (“WIBR”), as amended, under which the Company has been granted an exclusive, sublicensable, nontransferable license under certain patent families related to the development of the Company’s red blood cell therapies (as amended, the “WIBR License”). The Company is obligated to pay WIBR annual license maintenance fees of less than $0.1 million, as well as patent-related costs, including legal fees, and low single-digit royalties based on annual net sales of licensed products and licensed services by the Company and its sublicensees. Based on the progress the Company makes in the advancement of products covered by the licensed patent rights, the Company is required to make aggregate milestone payments of up to $1.6 million upon the achievement of specified preclinical, clinical and regulatory milestones. In addition, the Company is required to pay to WIBR a percentage of the non-royalty payments that it receives from sublicensees of the patent rights licensed by WIBR. This percentage varies from low single-digit to low double-digit percentages and will be based upon the clinical stage of the product that is the subject of the sublicense. Royalties shall be paid by the Company on a licensed product-by-licensed product and country-by-country basis, beginning on the first commercial sale of such licensed product in such country until expiration of the last valid patent claim covering such licensed product in such country.
The Company has the right to terminate the WIBR License in its entirety, on a patent-by-patent or country-by-country basis, at will upon three months’ notice to WIBR. WIBR may terminate the agreement upon breach of contract or in the event of the Company’s bankruptcy, liquidation, insolvency or cessation of business related to the license.

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401(k) Plan
In January 2018, the Company established a defined-contribution plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”). The 401(k) Plan covers all employees who meet defined minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. The Company makes matching contributions at a rate of 50% of each employee’s contribution up to a maximum employee contribution of 6% of eligible plan compensation. For the three and six months ended June 30, 2022, the Company made matching contributions of $0.2 million and $0.6 million, respectively.
Indemnification Agreements
In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, contract research organizations, 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 and executive officers 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. The Company has not incurred any material costs as a result of such indemnifications and is not currently aware of any indemnification claims.
Legal Proceedings
The Company is not currently party to any material legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses as incurred the costs related to such legal proceedings.
10. Net Loss per Share
Basic and diluted net loss per share was calculated as follows (in thousands, except share and per share amounts):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Numerator:    
Net loss $(44,241)$(50,180)$(96,653)$(92,510)
    
Denominator:    
Weighted average common shares outstanding, basic and diluted90,257,524 89,517,784 90,203,586 85,936,079 
Net loss per share, basic and diluted$(0.49)$(0.56)$(1.07)$(1.08)
The Company’s potential dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares from the periods in the table above, presented based on amounts outstanding at each period end, 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:
June 30,
20222021
Unvested restricted common stock1,413,369 708,668 
Stock options to purchase common stock19,207,827 17,195,305 
20,621,196 17,903,973 


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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Objective

The purpose of the following discussion and analysis is to provide material information relevant to an assessment of our financial condition and results of operations from management’s perspective, including to describe and explain key trends, events and other factors that impacted our reported results and that are reasonably likely to impact our future performance.
As such, the following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission, or SEC, on February 25, 2022. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.
Overview
We are a clinical-stage biopharmaceutical company that is biologically engineering red blood cells or RBCs, to develop an entirely new class of cellular medicines called Red Cell Therapeutics, or RCTs, for the treatment of cancer and autoimmune diseases. Based on our vision that human red blood cells are the foundation of the next significant innovation in medicine, we have developed a programmable and highly versatile platform, which we call the RED PLATFORM, to biologically engineer and culture allogeneic cellular therapies that enable multiple applications, or modalities. We believe that the advantage of the platform is that once a modality is validated, as we have demonstrated with our lead product candidate RTX-240 for the treatment of advanced cancers, we increase the likelihood that all the programs within that modality will work, underscoring the broad potential of the RED PLATFORM to help patients.
As part of the American Association for Cancer Research Annual Meeting in April 2022, we presented updated clinical data from our ongoing Phase 1 arm of RTX-240 in patients with locally advanced or relapsed/refractory solid tumors, which we believe provides clinical validation for our RED PLATFORM and supports the development of our entire oncology pipeline of RCTs. We continue to enroll patients in our Phase 1 arm evaluating RTX-240 in combination with pembrolizumab in patients with advanced solid tumors and have added an additional cohort to evaluate the combination in patients with non-small cell lung cancer (NSCLC) and renal cell carcinoma (RCC) to inform a Phase 2 clinical trial. We plan to report initial clinical data for RTX-240 in combination with pembrolizumab in advanced solid tumors and data from the initial NSCLC and RCC patients enrolled in the expansion cohort during the second half of 2022. In January 2022, we began dosing patients in the Phase 1/2 clinical trial of RTX-224, our second broad immune agonist, for the treatment of patients with certain relapsed/refractory or locally advanced solid tumors, including non-small cell lung cancer, cutaneous melanoma, head and neck squamous cell carcinoma, urothelial (bladder) carcinoma and triple-negative breast cancer. We expect to report initial clinical results from the Phase 1 clinical trial of RTX-224 by year-end 2022 or during the first quarter of 2023.

At the Federation of Clinical Immunology Societies 2022 Annual Meeting in June 2022, we presented new preclinical data that demonstrated the prevention of type 1 diabetes and bystander suppression in a stringent preclinical model from an ongoing experiment. These findings are potentially translatable to multiple T cell-mediated autoimmune diseases, including multiple sclerosis and celiac disease.

We continue to advance our manufacturing capabilities and achieved significant manufacturing milestones, including successfully scaling our manufacturing to 200L bioreactors in support of a potential future pivotal trial for RTX-240 and potential commercialization, as of April 2022. This results in a process at a scale four times our previous 50L bioreactor process. We continue to provide uninterrupted clinical supply for the Phase 1 RTX-240 and the Phase 1 RTX-224 clinical trials. We have the potential to significantly expand our manufacturing capabilities and plan to stage additional investments based on future needs and in preparation for potential pivotal trial and eventual commercialization.

Highlights of our clinical product candidates, RTX-240 and RTX-224 are described further below.





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Broad Immune Stimulation for the Treatment of Cancer

RTX-240

In April 2022, we announced updated clinical data from the ongoing Phase 1/2 clinical trial of monotherapy RTX-240 in advanced solid tumors that we believe provides clinical validation of the RED PLATFORM’s potential ability to stimulate adaptive and innate immunity to generate clinical responses in cancer patients with refractory disease. RTX-240 is an allogeneic, off-the-shelf cellular therapy product candidate that is engineered to simultaneously present hundreds of thousands of copies of the costimulatory molecule 4-1BB ligand (4-1BBL) and IL-15TP (trans-presentation of IL-15 on IL-15Rα) in their native forms. RTX-240 is designed to broadly stimulate the immune system by activating and expanding both NK and CD8+ memory T cells to generate a potent anti-tumor response.

The data reported in April 2022 at the American Association for Cancer Research Annual Meeting included initial safety (n=34) and efficacy (n=27) data from the monotherapy RTX-240 Phase arm in relapsed/refractory or locally advanced solid tumors. Nine dose cohorts were completed at the time of the data cutoff on March 4, 2022. Enrollment continues in the 5e10 Q3W dose cohort.

As of the cutoff date, disease control was observed in 10 patients (1 partial response, 2 unconfirmed partial responses and 7 with stable disease), 9 of whom had previously experienced disease progression on prior anti-PD-1/anti-PD-L1 therapy.

There were three best responses of partial response (PR) in NSCLC, anal cancer and uveal melanoma patients:

an unconfirmed PR (uPR) with 41% decrease of all target lesions and a notable decrease of an external protruding chest wall mass in a patient with NSCLC whose disease had progressed on prior anti-PD-L1 therapy;

a confirmed PR with a 54% reduction in the target lesions in a patient with metastatic anal cancer whose disease had progressed on anti-PD-L1 therapy; and

a uPR with 100% decrease of the target hepatic lesion and resolution of multiple non-target hepatic lesions in a patient with metastatic uveal melanoma whose disease had progressed on anti-PD-1 therapy.

The uPR in NSCLC and 5 cases of stable disease (SD) were observed across the 3e10 cohorts, including 3 SDs in patients with metastatic NSCLC and 2 with RCC supporting expansion of the Phase 1 arm of RTX-240 plus pembrolizumab to include a cohort of NSCLC and RCC patients.

As of the cutoff date, RTX-240 has been generally well tolerated with no treatment-related or investigator-identified immune-related Grade 3/4 adverse events and no dose-limiting toxicities.

Based on the totality of clinical, tolerability and pharmacodynamic data, a recommended monotherapy Phase 2 dose of 5e10 cells administered every 3 weeks was selected. This dose will be further explored in the combination expansion cohort of NSCLC and RCC patients. Enrollment continues in the monotherapy arm of the trial at the recommended Phase 2 dose of 5e10 cells administered every 3 weeks.

In June 2021, we began dosing patients in the arm of our RTX-240 clinical trial that is evaluating RTX-240 as a combination therapy with pembrolizumab for the treatment of patients with relapsed/refractory or locally advanced solid tumors. We believe that RTX-240, with its mechanism of action as a broad immune agonist, may have synergy with immune checkpoint inhibition and could potentially overcome resistance to PD-1 inhibition. Based on the updated clinical results from the ongoing Phase 1 arm of monotherapy RTX-240 in advanced solid tumors, we expanded the Phase 1 arm of RTX-240 in combination with pembrolizumab to evaluate the combination in up to 20 patients with NSCLC and RCC to inform a Phase 2 clinical trial. Patients who have experienced disease progression with 1-2 prior treatment regimens in the metastatic setting are eligible for the trial. If patients previously have received a PD-1/PD-L1 regimen, a prior response of either SD ≥6 months, PR or complete response is required. We expect to report initial clinical results from this arm of the ongoing Phase 1/2 clinical of RTX-240 in advanced solid tumors and the initial data from the NSCLC and RCC cohort during the second half of 2022.

RTX-224

RTX-224 is an allogeneic cellular therapy that is engineered to express hundreds of thousands of copies of 4-1BBL and interleukin-12 (IL-12), on the cell surface. RTX-224 is designed as a broad immune agonist of both adaptive and innate responses, designed to activate CD8+ and CD4+ T cells, activate and expand NK cells, and promote antigen presentation. It is expected to produce a broad and potent anti-tumor T cell response and an innate immune response, and have anti-
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tumor activity in those tumor types with known sensitivity to T cell killing, including tumor types with high mutational burden, PD-L1 expression and known responsiveness to checkpoint inhibitors. The combination of IL-12 and 4-1BBL has the potential to broadly induce an immune response in patients with solid tumors and may serve as the bridge between the innate and adaptive immune systems.

In January 2022, we began dosing patients in the Phase 1/2 clinical trial of RTX-224 for the treatment of patients with certain relapsed/refractory or locally advanced solid tumors, including non-small cell lung cancer, cutaneous melanoma, head and neck squamous cell carcinoma, urothelial (bladder) carcinoma and triple-negative breast cancer. We expect to report initial clinical results from the Phase 1 trial by year-end 2022 or during the first quarter of 2023.

In November 2021, we presented preclinical data for RTX-224 at the Society for Immunotherapy of Cancer’s 36th Annual Meeting, showing that RTX-224 activated immune cells in the spleen and blood, leading to their trafficking into the tumor microenvironment to deliver an anti-tumor effect in our preclinical models.

Antigen-Specific Immune Tolerance for the Treatment of Autoimmune Diseases

RTX-T1D (Type 1 Diabetes)

In June 2022, we presented new preclinical data at the Federation of Clinical Immunology Societies (FOCIS) 2022 Annual Meeting demonstrating tolerance induction and bystander suppression in the non-obese diabetic, or NOD, preclinical model. This is a spontaneous model of autoimmune diabetes which has clear similarities to the human disease. From the ongoing experiment, we showed new efficacy data in the NOD preclinical model demonstrating that by increasing to 3 doses administered and optimizing the dosing schedule, bystander suppression was achieved at 25 weeks by delivering only two antigens, indicating disease prevention caused by many autoantigens.

We also established efficacy in the BDC2.5 adoptive transfer model with data showing that repeated dosing extends duration of disease protection, reverses established inflammation (which is important for the treatment of existing autoimmunity), and induces two types of regulatory T cells, resulting in protection against re-challenge with disease-causing cells.

We believe these findings are potentially translatable to other autoimmune diseases such as celiac disease and multiple sclerosis. We plan to select a clinical candidate for our type 1 diabetes program later in 2022.

Manufacturing
Using our RED PLATFORM, we are utilizing our universal manufacturing processes to advance a broad pipeline of allogeneic, ready-to-use RCT product candidates into clinical trials in cancer and autoimmune diseases. Common design and manufacturing elements of our RCTs should enable us to achieve significant advantages in product development.

We have industrialized the production of RCTs by developing and scaling up a manufacturing process in which hematopoietic progenitor cells are expanded, then biologically engineered and subsequently differentiated into erythroid cells, RCTs that express biotherapeutic proteins within the cell or on the cell surface. By modifying one of our initial manufacturing steps in which we add a gene or genes of interest that encode biotherapeutic proteins within the cell or on the cell surface, we are able to efficiently develop RCTs to potentially treat different diseases. Using this approach, we have expressed more than 1,000 different therapeutic proteins since platform inception. This programmable process allows for the repeated generation of product candidates and enables us to leverage common CMC and toxicology data packages across our therapies.

Recognizing the importance of controlling our own manufacturing capabilities to produce consistent and reproducible product at greater scale, in July 2018 we acquired, renovated and operationalized a manufacturing facility in Smithfield, Rhode Island, which is currently providing cGMP supply for our ongoing Phase 1 clinical trials: RTX-240 in advanced solid tumors, RTX-240 in combination with pembrolizumab and RTX-224 in advanced solid tumors.

As of April 2022, we successfully scaled our manufacturing to 200L bioreactors in support of a potential future pivotal trial for RTX-240 and potential commercialization. This results in a process at a scale four times our previous 50L bioreactor process.

We have the potential to significantly expand our manufacturing capabilities and plan to stage additional investments based on future needs and in preparation for potential pivotal trial and eventual commercialization.


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Funding Overview
Since our inception, we have focused substantially all of our resources on building our proprietary RED PLATFORM, establishing and protecting our intellectual property portfolio, conducting research and development activities, developing our manufacturing process and manufacturing product candidate material, organizing and staffing our company, business planning, raising capital and providing general and administrative support for these operations. We do not have any products approved for sale and have not generated any revenue from product sales. To date, we have funded our operations with proceeds from the sale of preferred stock and issuance of debt and with proceeds from our public offerings.
On July 20, 2018, we completed our IPO pursuant to which we issued and sold 12,055,450 shares of common stock, inclusive of 1,572,450 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares. We received proceeds of $254.3 million after deducting underwriting discounts and commissions and other offering costs. In August 2019, we entered into a Distribution Agreement with J.P. Morgan Securities LLC, Jefferies LLC and SVB Leerink LLC with respect to an at-the-market, or ATM, offering program under which we may offer and sell, from time to time at our sole discretion, shares of our common stock, having aggregate gross proceeds of up to $100.0 million. Our registration statement on Form S-3 filed on August 1, 2019 was declared effective on August 21, 2019 and ceased to be effective on June 21, 2022. As of June 30, 2022, no shares of common stock have been issued and sold pursuant to the Distribution Agreement and none are expected to be sold because the applicable registration statement is no longer effective. The Distribution Agreement will expire in accordance with its terms on August 21, 2022. In March 2021, we completed an underwritten public offering, or the March 2021 Offering, pursuant to which we issued and sold 6,896,552 shares of common stock. We received proceeds of $187.2 million, after deducting underwriting discounts and commissions and other offering costs.
Since our inception, we have incurred significant operating losses. Our ability to generate any product revenue or product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more of our product candidates. We reported net losses of $96.7 million for the six months ended June 30, 2022 and $196.5 million for the year ended December 31, 2021. As of June 30, 2022, we had an accumulated deficit of $773.7 million. We expect to continue to incur significant expenses and operating losses for at least the next several years. We expect that our expenses and capital requirements will increase in connection with our ongoing activities, particularly if, and as, we:
conduct clinical trials for our product candidates and to the extent we continue to experience delays, setbacks or disruptions to our preclinical studies, clinical trials or clinical supply chain due to the ongoing COVID-19 pandemic;
further develop our RED PLATFORM;
continue to discover and develop additional product candidates;
maintain, expand and protect our intellectual property portfolio;
hire additional clinical, scientific, manufacturing and commercial personnel;
expand in-house manufacturing capabilities, including through the operation and any future renovation or expansion of our manufacturing facility;
establish a commercial manufacturing source and secure supply chain capacity sufficient to provide commercial quantities of any product candidates for which we may obtain regulatory approval;
acquire or in-license other product candidates and technologies;
seek regulatory approvals for any product candidates that successfully complete clinical trials;
establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain regulatory approval; and
add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts, as well as to continue to support the requirements of a public company.
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We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing and distribution. Further, we expect to continue to incur costs associated with operating as a public company.
Our current financial resources and currently forecasted operating plan would allow us to operate into the second half of 2023. We have developed plans to mitigate this risk, which primarily consist of raising additional capital through some combination of equity or debt financings, and/or potentially new collaborations and reducing cash expenditures. If we are not able to secure adequate additional funding, we plan to make reductions in spending. In that event, we may have to delay, scale back, or eliminate some or all of the Company’s research and development programs and technology platform activities which could adversely affect our business prospects, or we may be unable to continue operations.

As of June 30, 2022, we had an accumulated deficit of $773.7 million, and cash, cash equivalents and investments of $140.7 million. For the six months ended June 30, 2022, we incurred a loss of $96.7 million and used $81.4 million of cash in operations. We expect that our operating losses and negative cash flows will continue for the foreseeable future. We have assessed our ability to continue as a going concern, and, based on our recurring losses from operations incurred since inception, expectation of continuing operating losses for the foreseeable future, and the need to raise additional capital to finance our future operations, as of August 9, 2022, the issuance date of the interim condensed consolidated financial statements for the three and six month periods ended June 30, 2022, we have concluded that there is substantial doubt about our ability to continue as a going concern for a period of one year from the date that these condensed consolidated financial statements are issued.

Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. Even if we are able to continue operations beyond the next twelve months, if we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
See “—Liquidity and Capital Resources.”
Nasdaq Delisting Notification

On July 27, 2022, we received a deficiency letter from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that, for the last 30 consecutive business days, the bid price for our common stock had closed below the $1.00 per share minimum bid price requirement for continued inclusion on the Nasdaq Global Select Market pursuant to Nasdaq Listing Rule 5450(a)(1) (the “Minimum Bid Price Requirement”). The Nasdaq deficiency letter has no immediate effect on the listing of our common stock, and our common stock will continue to trade on the Nasdaq Global Select Market under the symbol “RUBY” at this time.
In accordance with Nasdaq Listing Rule 5810(c)(3)(A) (the “Compliance Period Rule”), we have been provided a period of 180 calendar days, or until January 23, 2023 (the “Compliance Date”), to regain compliance with the Minimum Bid Price Requirement. If, at any time ending January 23, 2023, the bid price for our common stock closes at $1.00 or more for a minimum of ten consecutive business days, as required under the Compliance Period Rule, the Staff will provide written notification to us that we have regained compliance with the Minimum Bid Price Requirement and our common stock will continue to be eligible for listing on the Nasdaq Global Select Market, unless the Staff exercises its discretion to extend this ten-day period pursuant to Nasdaq Listing Rule 5810(c)(3)(H).
If we do not regain compliance with the Minimum Bid Price Requirement by the Compliance Date, we may be eligible for an additional 180 calendar day compliance period. To qualify, we would need to transfer the listing of our common stock to The Nasdaq Capital Market, provided that we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and would need to provide written notice to Nasdaq of our intention to cure the deficiency during the additional compliance period. To effect such a transfer, we would also need to pay an application fee to Nasdaq and provide written notice to the Staff of our intention to cure the deficiency during the second compliance period by effecting a reverse stock split if necessary. As part of its review process, the Staff will make a determination of whether it believes we will be able to cure the deficiency. Should the Staff conclude that we will not be able to cure the deficiency, the Staff will provide written notification to us that our common stock will be subject to delisting. At that time, we may appeal the Staff’s delisting determination to a Nasdaq Listing and Hearing Review Panel. However, there can be no assurance that, if we receive a delisting notice and appeal the delisting determination by the Staff to the panel, such appeal would be successful.
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We intend to monitor the closing bid price of our common stock and may, if appropriate, consider available options to regain compliance with the Minimum Bid Price Requirement, which could include seeking to effect a reverse stock split. However, there can be no assurance that we will be able to regain compliance with the Minimum Bid Price Requirement, secure a second period of 180 days to regain compliance, or maintain compliance with any of the other Nasdaq continued listing requirements.
Impact of the Ongoing COVID-19 Pandemic
Since March of 2020 and throughout the ongoing COVID-19 pandemic, we have implemented various precautionary measures to protect the health and safety of our employees, partners and prospective clinical trial participants, to comply with applicable national, state and local governmental orders, proclamations and/or directives in effect at any time aimed at minimizing the spread of COVID-19 and to minimize disruption to our operations. Such measures have included, at certain times, the elimination of business travel, shifting to remote work wherever possible and implementing rotating laboratory work schedules to reduce the number of people onsite at our facilities, advance ordering of certain raw materials impacted by delays in the global supply chain, as well as working with our external partners and clinical sites to utilize virtual clinical trial site training and monitoring, minimizing patient visits and instituting telemedicine to minimize patient exposure. We will continue to use these, and other precautionary measures, as required until such time as the ongoing COVID-19 pandemic, including any subsequent outbreak whether or not due to emerging variants thereof, is contained.
While the ongoing COVID-19 pandemic has impacted manufacturing, supply chain and clinical trial activities worldwide, including those of our suppliers, vendors and clinical trial sites, these disruptions have not significantly impacted our results of operations to date. The ultimate impact on our operations, however, is unknown and will depend on future developments, such as the duration, spread and intensity of the pandemic, among others, which are highly uncertain and cannot be predicted with confidence. In particular, global developments concerning COVID-19, including the identification of new strains of coronavirus, and the magnitude of interventions to contain the spread of viruses, such as government-mandated quarantines, shelter-in-place mandates, restrictions on travel, shutdowns for non-essential businesses, requirements regarding social distancing, impact of government-imposed restrictions on the global supply chain, including through use of the Defense Production Act, distribution of vaccines and other public health safety measures, will determine the impact of the pandemic on our business. We are continuing to monitor the latest developments regarding the ongoing COVID-19 pandemic and its impact on our business, financial condition, results of operations and prospects. However, any resulting financial impact cannot be reasonably estimated at this time and may have a material adverse impact on our business, financial condition and results of operations.
Components of Our Results of Operations
Revenue
To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the near future. If our development efforts for our product candidates are successful and result in regulatory approval or license or collaboration agreements with third parties, we may generate revenue in the future from product sales, payments from collaboration or license agreements that we may enter into with third parties, or any combination thereof.
Operating Expenses
Research and Development Expenses
Research and development expenses consist of costs incurred for our research activities, including our drug discovery efforts, and the development and manufacturing of our product candidates, which include:
employee-related expenses, including salaries, related benefits and stock-based compensation expense for employees engaged in research and development functions;
expenses incurred in connection with the preclinical and clinical development of our product candidates and research programs, including under agreements with third parties, such as consultants, contractors and contract research organizations, or CROs;
the cost of developing and scaling our manufacturing process and manufacturing product candidates for use in our preclinical studies and clinical trials, including those produced in our manufacturing facility as well as components that
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are produced under agreements with third parties, such as consultants, contractors and any contract manufacturing organizations, or CMOs, that we may engage;
laboratory supplies and research materials;
facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance; and
payments made under third-party licensing agreements.
We expense research and development costs as incurred. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed.
Our direct research, manufacturing and development expenses are tracked on a program-by-program basis for clinical candidates. These consist mostly of fees, reimbursed materials, testing and other costs paid to consultants, contractors, CMOs and CROs, as well as the cost of materials incurred for internal manufacturing. In addition, we allocate the cost of operating our manufacturing facility to research and development program costs, consisting of associated personnel costs, other than stock-based compensation expense, and manufacturing facility costs, including depreciation. We do not allocate costs associated with our platform development, early-stage research and shared research and development, including associated personnel costs, laboratory supplies, non-manufacturing facilities expenses and other indirect costs, to research and development programs, because these costs are deployed across multiple programs and our technology platform and, as such, are not separately classified.
Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, due to the increased size and duration of later stage clinical trials. Therefore, we have reduced preclinical and other development activities to advance our current clinical programs. As a result, we expect research and development expenses related to those preclinical and other development activities to decrease while we focus on achieving clinical endpoints. The successful development and commercialization of our product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development and commercialization, including the following:
the timing and progress of preclinical and clinical development activities;
the number and scope of preclinical and clinical programs we decide to pursue;
our ability to raise the additional funds necessary to complete preclinical and clinical development of and commercialize our drug candidates;
the progress of the development efforts of parties with whom we may enter into collaboration arrangements;
our ability to maintain our current research and development programs and to establish new ones;
our ability to establish new licensing or collaboration arrangements;
the successful initiation and completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the U.S. Food and Drug Administration, or FDA, or any comparable foreign regulatory authority;
the continued impact of the ongoing COVID-19 pandemic on our operations;
the receipt and related terms of regulatory approvals from applicable regulatory authorities;
the availability of specialty raw materials for use in production of our product candidates;
our ability to consistently manufacture our product candidates for use in clinical trials;
our ability to operate a manufacturing facility, or secure manufacturing supply through relationships with third parties;
our ability to obtain and maintain patents, trade secret protection and regulatory exclusivity, both in the United States and internationally;
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our ability to protect our rights in our intellectual property portfolio;
our ability to successfully commercialize our product candidates, if and when approved;
our ability to obtain and maintain third-party insurance coverage and adequate reimbursement;
the acceptance of our product candidates, if approved, by patients, the medical community and third-party payors;
competition with other products; and
a continued acceptable safety profile of our therapies following approval.
A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any of our product candidates.
General and Administrative Expenses
General and administrative expenses include salaries and related costs, including stock-based compensation, for personnel in executive, finance and administrative functions. General and administrative expenses also include direct and allocated facility-related costs, as well as professional fees for legal, patent, consulting, investor and public relations, accounting and audit services.
Other Income (Expense)
Interest Income
Interest income consists of interest earned on our invested cash balances.
Interest Expense
Interest expense consists of interest owed on outstanding borrowings under our Loan Agreement (as defined below), as well as amortization of debt discount.
Other Income, Net
Other income, net consists of miscellaneous income and expense unrelated to our core operations.
Income Taxes
Since our inception, we have not recorded any income tax benefits for the net losses we have incurred in each year or for our research and development tax credits generated, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss, or NOL, carryforwards and tax credits will not be realized. As of December 31, 2021, we had U.S. federal and state net operating loss carryforwards of $534.2 million and $534.8 million, respectively, which may be available to offset future taxable income. The federal NOLs include $37.2 million, which expire at various dates through 2037, and $497.0 million, which carryforward indefinitely. The state NOLs expire at various dates through 2041. As of December 31, 2021, we also had U.S. federal and state research and development tax credit carryforwards of $22.7 million and $15.6 million, respectively, which may be available to offset future tax liabilities and begin to expire in 2034 and 2026, respectively. We have recorded a full valuation allowance against our net deferred tax assets at each balance sheet date.





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Results of Operations
Comparison of the Three Months Ended June 30, 2022 and 2021
The following table summarizes our results of operations for the three months ended June 30, 2022 and 2021:
Three Months Ended June 30,
20222021Change
(in thousands)
Revenue$$$
Operating expenses:
Research and development32,99836,072(3,074)
General and administrative9,90813,851(3,943)
Total operating expenses42,90649,923(7,017)
Loss from operations(42,906)(49,923)7,017 
Other income (expense):
Interest income25526229 
Interest expense(1,630)(1,312)(318)
Other income, net401,029(989)
Total other income (expense), net(1,335)(257)(1,078)
Net loss$(44,241)$(50,180)$5,939 
Research and Development Expenses
Three Months Ended June 30,
20222021Change
(in thousands)
Research and development program expenses:
Cancer$16,918$19,855$(2,937)
Platform development, early-stage research and unallocated expenses:
Personnel-related7,4016,937464
Stock-based compensation expense2,2153,056(841)
Contract research and development2,1511,707444
Laboratory supplies and research materials88580580 
Facility-related and other3,4283,712(284)
Total research and development expenses$32,998$36,072$(3,074)
Research and development expenses were $33.0 million for the three months ended June 30, 2022, compared to $36.1 million for the three months ended June 30, 2021. The decrease in research and development program expenses of $2.9 million relates to the deprioritization of RTX-321 and RTX-240 AML and monotherapy studies and, therefore, we expect these costs to continue to decrease in future periods. This decrease was partially offset by an increase in clinical costs related to RTX-224. Platform development, early-stage research and unallocated expenses decreased by $0.1 million primarily due to a decrease of $0.8 million in stock-based compensation expense related to a reduction in the market price of our common stock, resulting in a lower valuation of stock options granted in 2022, and a decrease of $0.3 million in facility-related and other expenses related to lower spend on non-capitalized software costs in the current year. These decreases were partially offset by an increase of $0.4 million in contract research and development related to drug discovery activities and platform development. Additionally, personnel-related costs increased by $0.5 million to support our prioritization of clinical programs.


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General and Administrative Expenses
Three Months Ended June 30,
20222021Change
(in thousands)
Personnel-related$3,395$3,429$(34)
Stock-based compensation expense2,8266,541(3,715)
Professional and consultant fees2,0502,240(190)
Facility-related and other1,6371,641(4)
Total general and administrative expenses$9,908$13,851$(3,943)
General and administrative expenses were $9.9 million for the three months ended June 30, 2022, compared to $13.9 million for the three months ended June 30, 2021. The decrease in general and administrative expenses of $3.9 million was primarily due to a decrease in stock-based compensation expense of $3.7 million, which was driven by stock option awards that fully vested during the second half of 2021 and first half of 2022, as well as a reduction in the market price of our common stock, resulting in a lower valuation of stock options granted in 2022.
Interest Income
Interest income was $0.3 million for the three months ended June 30, 2022, compared to less than $0.1 million for the three months ended June 30, 2021. The change in interest income was not significant during the period.
Interest Expense
Interest expense was $1.6 million for the three months ended June 30, 2022, compared to $1.3 million for the three months ended June 30, 2021. The change in interest expense was not significant during the period.
Other Income, Net
Other income, net was less than $0.1 million for the three months ended June 30, 2022, compared to $1.0 million for the three months ended June 30, 2021. The decrease in other income, net was due to the monetization of certain tax credits during the prior period.
Comparison of the Six Months Ended June 30, 2022 and 2021
The following table summarizes our results of operations for the six months ended June 30, 2022 and 2021:
Six Months Ended June 30,
20222021Change
(in thousands)
Revenue$$$
Operating expenses:
Research and development71,29763,7497,548
General and administrative22,47127,091(4,620)
Total operating expenses93,76890,8402,928
Loss from operations(93,768)(90,840)(2,928)
Other income (expense):
Interest income30352 251 
Interest expense(3,259)(3,060)(199)
Other income, net711,338(1,267)
Total other income (expense), net(2,885)(1,670)(1,215)
Net loss$(96,653)$(92,510)$(4,143)

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Research and Development Expenses
Six Months Ended June 30,
20222021Change
(in thousands)
Research and development program expenses:
Rare disease$$217$(217)
Cancer33,93131,5782,353
Platform development, early-stage research and unallocated expenses:
Personnel-related16,23313,3262,907
Stock-based compensation expense5,6925,587105
Contract research and development4,7563,0351,721 
Laboratory supplies and research materials3,6102,5651,045 
Facility-related and other7,0757,441(366)
Total research and development expenses$71,297$63,749$7,548
Research and development expenses were $71.3 million for the six months ended June 30, 2022, compared to $63.7 million for the six months ended June 30, 2021. The increase in research and development program expenses of $2.1 million was primarily due to an increase in preclinical and clinical costs associated with RTX-224 and RTX-240, principally related to clinical research organization, or CRO, costs and internal manufacturing costs. This increase was partially offset by a decrease in clinical costs related to RTX-321 due to start-up activities in the prior period and current period deprioritization of clinical development. We expect these costs to decrease in future periods. Platform development, early-stage research and unallocated expenses increased by $5.4 million principally due to an increase of $2.9 million in personnel-related costs related to headcount increases through the second half of 2021 to support operations. Additionally, increases of $1.7 million in contract research and development and $1.0 million in laboratory supplies and research materials were related to drug discovery activities and platform development. These increases were partially offset by a decrease of $0.4 million in facility-related and other expenses due to lower spend on non-capitalized software costs and a reduction in building operating costs in the current year.
General and Administrative Expenses
Six Months Ended June 30,
20222021Change
(in thousands)
Personnel-related$6,881$6,553$328
Stock-based compensation expense7,60912,652(5,043)
Professional and consultant fees4,6824,516166
Facility-related and other3,2993,370(71)
Total general and administrative expenses$22,471$27,091$(4,620)
General and administrative expenses were $22.5 million for the six months ended June 30, 2022, compared to $27.1 million for the six months ended June 30, 2021. The decrease in general and administrative expenses of $4.6 million was primarily due to a decrease in stock-based compensation expense of $5.0 million, which was driven by stock option awards that fully vested during the second half of 2021 and first half of 2022, as well as a reduction in the market price of our common stock, resulting in a lower valuation of stock options granted in 2022. This decrease was partially offset by an increase in personnel-related expenses of $0.3 million driven by additions to headcount in our general and administrative function and an increase in professional and consultant fees of $0.2 million resulting primarily from additional costs to support operations as a public company.
Interest Income
Interest income was $0.3 million for the six months ended June 30, 2022, compared to $0.1 million for the six months ended June 30, 2021. The change in interest income was not significant during the period.
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Interest Expense
Interest expense was $3.3 million for the six months ended June 30, 2022, compared to $3.1 million for the six months ended June 30, 2021. The change in interest expense was not significant during the period.
Other Income, Net
Other income, net was $0.1 million for the six months ended June 30, 2022, compared to $1.3 million for the six months ended June 30, 2021. The decrease in other income, net was principally due to the monetization of certain tax credits during the prior period.
Liquidity and Capital Resources
Since our inception, we have incurred significant operating losses. We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales of any product candidates for several years, if at all. To date, we have funded our operations with proceeds from the sale of preferred stock, with the issuance of debt, with proceeds from our IPO and, most recently, with proceeds from our March 2021 Offering, described and defined further below. As of June 30, 2022, we had cash, cash equivalents and investments of $140.7 million. In July 2018, we completed our IPO, pursuant to which we issued and sold 12,055,450 shares of common stock, inclusive of 1,572,450 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares. We received proceeds of $254.3 million, after deducting underwriting discounts and commissions and other offering costs. In December 2018, we entered into a loan and security agreement, which was amended in June 2021, which provides for aggregate borrowings of up to $75.0 million. As of June 30, 2022, $75.0 million is outstanding under the agreement and principal payments commence in July 2024. In March 2021, we completed the March 2021 Offering, pursuant to which we issued and sold 6,896,552 shares of common stock. We received proceeds of $187.2 million, after deducting underwriting discounts and commissions and other offering costs.
Cash Flows
The following table summarizes our sources and uses of cash for each of the periods presented:
Six months ended June 30,
20222021
(in thousands)
Cash used in operating activities$(81,421)$(73,459)
Cash provided by (used in) investing activities(82,610)68,409 
Cash provided by financing activities232 197,118 
Net increase (decrease) in cash, cash equivalents and restricted cash$(163,799)$192,068 
Operating Activities
During the six months ended June 30, 2022, operating activities used $81.4 million of cash, primarily resulting from our net loss of $96.7 million, offset by net non-cash charges of $16.7 million, predominantly consisting of stock-based compensation expense. Net cash used in our operating assets and liabilities for the six months ended June 30, 2022 consisted of a net $5.0 million decrease in accounts payable, accrued expenses and other current liabilities, other long-term liabilities and operating lease liabilities, offset by an increase in prepaid expenses and other current assets and operating lease, right-of-use asset of $3.6 million.
During the six months ended June 30, 2021, operating activities used $73.5 million of cash, primarily resulting from our net loss of $92.5 million, offset by net non-cash charges of $22.2 million, predominantly consisting of stock-based compensation expense. Net cash used in our operating assets and liabilities for the six months ended June 30, 2021 consisted of a $5.0 million decrease in accounts payable, accrued expenses and other current liabilities, other long-term liabilities and operating lease liabilities, offset by a decrease in prepaid expenses and other current assets and operating lease, right-of-use asset of $1.9 million.


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Investing Activities
During the six months ended June 30, 2022, net cash used in investing activities was $82.6 million, consisting of purchases of investments of $78.4 million and purchases of property, plant and equipment of $4.2 million. Our cash purchases of property, plant and equipment primarily relate to the purchase of computer and laboratory equipment installed in our manufacturing facility in Smithfield, Rhode Island and our laboratory space in Cambridge, Massachusetts.
During the six months ended June 30, 2021, net cash provided by investing activities was $68.4 million, consisting of sales and maturities of investments of $70.0 million, offset by purchases of property, plant and equipment of $1.6 million. Our cash purchases of property, plant and equipment relate to the purchase of computer and laboratory equipment installed in our manufacturing facility in Smithfield, Rhode Island and our laboratory space in Cambridge, Massachusetts.
Financing Activities
During the six months ended June 30, 2022, net cash provided by financing activities of $0.2 million consisted of proceeds received from issuance of common stock upon exercise of stock options of $0.2 million.
During the six months ended June 30, 2021, net cash provided by financing activities of $197.1 million consisted primarily of proceeds of $187.2 million, after deducting underwriting discounts and commissions and other offering costs, from the March 2021 Offering, as well as proceeds received from issuance of common stock upon exercise of stock options of $9.6 million. Net cash used in financing activities includes $0.4 million of offering cost payments in connection with the March 2021 Offering and $0.2 million of debt issuance cost payments related to the Amended 2018 Credit Facility in June 2021.
Contractual Obligations and Commitments
The following table summarizes our contractual obligations as of June 30, 2022 and the effects that such obligations are expected to have on our liquidity and cash flows in future periods:
Payments Due by Period
TotalLess Than 1 Year1 to 3 Years4 to 5 YearsMore Than 5 Years
(in thousands)
Operating lease commitments (1)$42,523$9,149$15,204$7,929$10,241
Debt obligations (2)96,3145,70047,59443,020
Total$138,837$14,849$62,798$50,949$10,241
(1)    Amounts in table reflect payments due for our leases of office and laboratory space in Cambridge, Massachusetts under two operating lease agreements that expire in January 2027 and August 2028, respectively.
(2)    Amounts in table reflect the contractually required principal and interest payments payable under the Loan Agreement. For purposes of this table, the interest due under the Loan Agreement was calculated using an assumed interest rate of 8.86% per annum, which was the interest rate in effect as of June 30, 2022.
Loan and Security Agreement
In December 2018, or the Closing Date, we entered into a loan and security agreement (the Original Loan Agreement, or, as amended, the Loan Agreement) with SLR Investment Corp. (formerly Solar Capital Ltd.) as collateral agent for the lenders party thereto for an aggregate principal amount of $75.0 million. The aggregate principal amount was funded in three tranches of term loans of $25.0 million each, on the Closing Date, in June 2019 and in June 2020.
On June 22, 2021, or the Amendment Closing Date, we entered into an amendment, or the Amendment, to the Original Loan Agreement. Pursuant to the Amendment, we and our lenders agreed to extend the interest-only period in respect of our borrowings under the Loan Agreement from December 21, 2021 until July 1, 2024. The parties also agreed to extend the final maturity date on which all of our outstanding obligations under the Loan Agreement become due to June 1, 2026 (from December 21, 2023 originally). An additional tranche in the amount of $35.0 million is available to us prior to the final maturity date, to be provided at the sole discretion of the lenders. Interest on the outstanding loan balance will accrue at a rate of 5.50%, plus the greater of 2.10% or the one-month U.S. LIBOR rate. Monthly principal payments will commence on July 1, 2024 and will be amortized over the following 24 months. Certain back-end fees are due to the lender at the time of final repayment based on the total funded term loans. The term loans are subject to a prepayment fee of
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1.00% if prepayment occurs within the first year subsequent to the Amendment Closing Date, 0.50% in the second year and 0.25% in the third year through final maturity date.
The Loan Agreement contains financial covenants that require us to maintain either a certain minimum cash balance or a minimum market capitalization threshold. We were in compliance with all such financial covenants as of June 30, 2022. The Loan Agreement contains customary representations, warranties and covenants and also includes customary events of default, including payment defaults, breaches of covenants, change of control and a material adverse change default. Upon the occurrence of an event of default, a default interest rate of an additional 4.00% per annum may be applied to the outstanding loan balances, and the lenders may declare all outstanding obligations immediately due and payable. Borrowings under the Loan Agreement are collateralized by substantially all of our assets, other than our intellectual property.
Common Stock Sales Agreement
On August 1, 2019, we entered into a Distribution Agreement, or the Distribution Agreement, with multiple sales agents, pursuant to which the Company may offer and sell to or through the agents, from time to time, shares of the Company's common stock, par value $0.001 per share, having an aggregate gross sales price of up to $100.0 million. Our registration statement on Form S-3 filed on August 1, 2019 was declared effective on August 21, 2019 and ceased to be effective on June 21, 2022. There have been no shares of the Company's common stock sold under the Distribution Agreement as of June 30, 2022 and none are expected to be sold because the applicable registration statement is no longer effective. The Distribution Agreement will expire in accordance with its terms on August 21, 2022.
Funding Requirements
We expect our expenses to increase substantially in the future as we conduct the activities necessary to advance our product candidates through development. The timing and amount of our operating and capital expenditures will depend largely on:
the timing and progress of preclinical and clinical development activities;
the commencement, enrollment or results of the planned clinical trials of our product candidates or any future clinical trials we may conduct, or changes in the development status of our product candidates;
the timing and outcome of regulatory review of our product candidates;
the continued impact of the ongoing COVID-19 pandemic, including from any subsequent outbreak whether or not due to emerging variants thereof, on our operations;
our decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical trial;
changes in laws or regulations applicable to our product candidates, including but not limited to clinical trial requirements for approvals;
developments concerning our key vendors;
our ability to obtain materials to produce adequate product supply for any approved product or inability to do so at acceptable prices;
the costs associated with the operation of our multi-suite manufacturing facility and the costs and timing of any future renovation or expansion of the facility;
our ability to establish collaborations if needed;
the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we obtain marketing approval;
the legal patent costs involved in prosecuting patent applications and enforcing patent claims and other intellectual property claims;
additions or departures of key scientific or management personnel;
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unanticipated serious safety concerns related to the use of our product candidates; and
the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder.
Until such time, if ever, as we can generate substantial product revenue, we would need to finance our operations through a combination of public and private equity financings, debt financings, collaborations, strategic alliances and marketing, distribution and licensing arrangements. To the extent that we are able to raise additional capital through the sale of equity or convertible debt securities, investors’ ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect investors’ rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates, or grant licenses on terms that may not be favorable to us. We implemented certain cost reduction actions in April 2022, which are intended to focus our capital on advancing our cancer and autoimmune programs and technology platform. If we are unable to obtain additional funding, we will implement further cost reduction actions that delay, scale back or discontinue some or all of our research and development programs and technology platform activities in order to preserve cash. These actions could adversely affect our business prospects.
As of June 30, 2022, we had an accumulated deficit of $773.7 million, and cash, cash equivalents and investments of $140.7 million. For the six months ended June 30, 2022, we incurred a loss of $96.7 million and used $81.4 million of cash in operations. We expect that our operating losses and negative cash flows will continue for the foreseeable future. We have assessed our ability to continue as a going concern and, based on our recurring losses from operations incurred since inception, expectation of continuing operating losses for the foreseeable future, and the need to raise additional capital to finance our future operations, as of August 9, 2022, the issuance date of the interim condensed consolidated financial statements for the three and six month periods ended June 30, 2022, we have concluded that there is substantial doubt about our ability to continue as a going concern for a period of one year from the date that these condensed consolidated financial statements are issued.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Critical Accounting Policies and Significant Judgments and Estimates
Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 25, 2022. If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected.
There have been no significant changes to our critical accounting policies from those described in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 25, 2022.
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As of June 30, 2022, we had cash, cash equivalents and investments of $140.7 million, which consisted of cash, money market accounts, U.S. government money market funds and U.S. treasury bills. Interest income is sensitive to changes in
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the general level of interest rates; however, due to the nature of these investments, an immediate 10% change in interest rates would not have a material effect on the fair market value of our investment portfolio.
As of June 30, 2022, we had $75.0 million of borrowings outstanding under the Loan Agreement. Interest on the outstanding borrowings under the Loan Agreement accrues at a rate of 5.50%, plus the greater of 2.10% or the one-month U.S. LIBOR rate. An immediate 10% change in the one-month U.S. LIBOR rate would not have a material impact on our debt-related obligations, financial position or results of operations.
We are not currently exposed to significant market risk related to changes in foreign currency exchange rates; however, we have contracted with and may continue to contract with foreign vendors that are located in Europe, Canada and China. Our operations may be subject to fluctuations in foreign currency exchange rates in the future.
Inflation generally affects us by increasing our cost of labor, research supplies and materials and manufacturing raw materials. We do not believe that inflation had a material effect on our business, financial condition or results of operations during the six months ended June 30, 2022.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of June 30, 2022, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently a party to any material legal proceedings.
Item 1A. Risk Factors
Our business is subject to numerous risks. You should carefully consider the risks described below, as well as the other information in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and the related notes and “Management’s discussion and analysis of financial condition and results of operations,” and in our other filings with the Securities and Exchange Commission. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and growth prospects. In such an event, the market price of our common stock could decline and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.
Risks related to our financial condition and capital requirements
We do not currently have sufficient working capital to fund our planned operations for the next twelve months and may not be able to continue as a going concern.
As of August 9, 2022, the issuance date of the interim condensed consolidated financial statements, there is substantial doubt about our ability to continue as a going concern, as we currently do not have adequate financial resources to fund our forecasted operating costs for at least twelve months from the filing of this Quarterly Report on Form 10-Q. As of June 30, 2022, we have incurred a cumulative net loss of $773.7 million. During the six months ended June 30, 2022, we recorded a net loss of $96.7 million. In addition, during the six months ended June 30, 2022 we used $164.0 million in operating and investing activities resulting in a cash, cash equivalents and investments balance of $140.7 million as of June 30, 2022. As a result, our existing cash resources are not sufficient to meet our anticipated needs over the next twelve months from the date hereof, and would need to raise additional capital to continue our operations and to implement our business plan, which capital may not be available on favorable terms or at all.

Our operating history and near-term forecast of incurring net losses and negative operating cash flows raise substantial doubt about our ability to continue as a going concern. If we raise funds from the issuance of equity securities, substantial dilution to our existing stockholders would likely result. If we raise additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that may restrict our ability to operate our business. Further, any contracts or license arrangements we enter into to raise funds may require us to relinquish our rights to our products or technology, and we may not be able to enter into any such contracts or license arrangements on favorable terms, or at all. Having insufficient funds may require us to delay or scale back our development programs and other activities, liquidate certain assets to remain afloat, or cease our operations altogether.

We have incurred net losses in every year since our inception and anticipate that we will continue to incur net losses in the future.
We are a clinical-stage biopharmaceutical company with a limited operating history. Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile, gain regulatory approval and become commercially viable. We have no products approved for commercial sale and have not generated any revenue from product sales to date, and we continue to incur significant research and development and other expenses related to our ongoing operations. As a result, we are not profitable and have incurred losses in each period since our inception in 2013. For the six months ended June 30, 2022 and 2021, we reported net losses of $96.7 million and $92.5 million, respectively. As of June 30, 2022, we had an accumulated deficit of $773.7 million. We expect to continue to incur significant losses for the foreseeable future, and we expect these losses to increase as we continue our research and development of, and seek regulatory approvals for, our product candidates. We anticipate that our expenses will increase substantially if, and as, we:

conduct preclinical studies and clinical trials for our product candidates and if we continue to experience delays, setbacks or disruptions to our preclinical studies, clinical trials or our clinical supply due to the ongoing COVID-19 pandemic, including from any subsequent outbreak whether or not due to emerging variants thereof;
further develop our RED PLATFORM;
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continue to discover and develop additional product candidates;
maintain, expand and protect our intellectual property portfolio;
hire additional clinical, scientific, manufacturing and commercial personnel;
expand in-house manufacturing capabilities, including through the renovation, customization and operation of our manufacturing facility;
establish a commercial manufacturing source and secure supply chain capacity sufficient to provide commercial quantities of any product candidates for which we may obtain regulatory approval;
acquire or in-license other product candidates and technologies;
seek regulatory approvals for any product candidates that successfully complete clinical trials;
establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain regulatory approval; and
add operational, regulatory, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts, as well as any additional infrastructure necessary to function as a public company.
To become and remain profitable, we or any potential future collaborator must develop and eventually commercialize products with significant market potential at an adequate profit margin after cost of goods sold and other expenses. This will require us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials, obtaining marketing approval for product candidates, obtaining adequate reimbursement for product candidates, manufacturing, marketing and selling products for which we may obtain marketing approval and satisfying any post-marketing requirements. We may never succeed in any or all of these activities and, even if we do, we may never generate revenue that is significant or large enough to achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company also could cause our stockholders to lose all or part of their investment.
Even if we succeed in commercializing one or more of our product candidates, we will continue to incur substantial research and development and other expenditures to develop and market additional product candidates. We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital.
We will require additional capital to fund our operations and if we fail to obtain necessary financing, we will not be able to complete the development and commercialization of our product candidates.

Our operations have consumed substantial amounts of cash since inception. We expect to continue to spend substantial amounts to conduct further research and development and preclinical or nonclinical testing and studies and clinical trials of our current and future programs, to build a supply chain, including through operating our own manufacturing facility, to seek regulatory approvals for our product candidates and to launch and commercialize any products for which we receive regulatory approval, including potentially building our own commercial organization. As of June 30, 2022, we had $140.7 million of cash, cash equivalents and investments. However, our future capital requirements and the period for which our existing resources will support our operations may vary significantly from what we expect, and we will in any event require additional capital in order to complete clinical development of any of our current programs. Our monthly spending levels will vary based on new and ongoing development and corporate activities. Because the length of time and scope of activities associated with development of our product candidates is highly uncertain, we are unable to estimate with certainty the actual funds we will require for development and any approved marketing and commercialization activities. Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:

the initiation, progress, timing, costs and results of preclinical or nonclinical testing and studies and clinical trials for our product candidates;
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the preclinical and clinical development plans we establish for our product candidates, including any changes to such plans, such as our recently announced planned expansion of the ongoing Phase 1 arm of the Phase 1/2 clinical study of RTX-240 in combination with pembrolizumab to patients with non-small cell lung cancer, or NSCLC, and renal small cell carcinoma, or RCC;
the number and characteristics of product candidates that we develop or may in-license;
the terms of any collaboration agreements we may choose to conclude;
the outcome, timing and cost of meeting regulatory requirements established by the U.S. Food and Drug Administration, or FDA, the European Medicines Agency, or EMA, and other comparable foreign regulatory authorities;
the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;
the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against us or our product candidates;
the effect of competing technological and market developments;
the costs of establishing and maintaining a supply chain for the development and manufacture of our product candidates;
the cost and timing of establishing, expanding and scaling manufacturing capabilities; and
the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own.
Accordingly, until we can generate sufficient product or royalty revenue to finance our cash requirements, which we may never do, we will need to seek additional funding in connection with our continuing operations and business objectives and expect to finance our operations through a combination of public and private equity financings, debt financings, borrowings under credit facilities, collaborations, strategic alliances and marketing, distribution and licensing arrangements. Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize any of our approved drugs or drug candidates. We cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline. We implemented certain cost reduction actions in April 2022, which are intended to focus our capital on advancing our cancer and autoimmune programs and technology platform. If we are unable to obtain additional funding, we will implement further cost reduction actions that delay, scale back or discontinue some or all of our research and development programs and technology platform activities in order to further extend our forecasted cash runway, or may need to cease operations altogether. These actions could significantly harm our business, prospects, financial condition and results of operations, cause the price of our common stock to decline, or even result in holders of our common stock and other securities suffering a total loss of their investment.

Raising additional capital may cause dilution to our existing stockholders or require us to relinquish rights to our technologies or product candidates.
We may seek additional capital through a combination of public and private equity financings, debt financings, borrowings under credit facilities, collaborations, strategic alliances and marketing, distribution and licensing arrangements. To the extent that we raise additional capital through the sale of common stock or securities convertible into, or exchangeable for, common stock, our stockholders’ ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect their rights as a stockholder.
If we raise additional funds through licensing, marketing or distribution arrangements or other collaborations or strategic alliances with third parties, we may have to relinquish valuable rights to our technologies or product candidates, future revenue streams or research programs or grant licenses on terms unfavorable to us. We also could be required to seek collaborators for one or more of our current or future product candidates at an earlier stage than otherwise would be desirable.

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We have an effective shelf registration statement on Form S-3 on file with the Securities and Exchange Commission, or the SEC, pursuant to which we may, from time to time, sell up to an aggregate of $250.0 million (as of June 30, 2022) of our common stock, preferred stock, debt securities, warrants or units. Future sales of securities under the registration statement (or otherwise) would result in dilution of our stockholders and could have a negative impact on our stock price.
The terms of our debt facility place restrictions on our operating and financial flexibility, and failure to comply with covenants or to satisfy certain conditions of the agreement governing the debt facility may result in acceleration of our repayment obligations and foreclosure on our pledged assets, which could significantly harm our liquidity, financial condition, operating results, business and prospects and cause the price of our common stock to decline.
Our loan and security agreement with SLR Investment Corp. (formerly Solar Capital Ltd.), or the Loan Agreement, is collateralized by a lien covering substantially all of our assets, excluding intellectual property, but including proceeds from the sale, license, or disposition of our intellectual property, under which, as of June 30, 2022, we have borrowed $75.0 million.
The Loan Agreement requires us to comply with a number of covenants (affirmative and negative), including restrictive covenants that limit our ability, subject to certain exceptions, to: incur additional indebtedness; encumber the collateral securing the loan; acquire, own or make investments; repurchase or redeem any class of stock or other equity interest; declare or pay any cash dividend or make a cash distribution on any class of stock or other equity interest; transfer a material portion of our assets; acquire other businesses; and merge or consolidate with or into any other organization or otherwise suffer a change in control.
Although we extended the repayment date under the Loan Agreement to 2024 pursuant to the amendment to the Loan Agreement entered into in June 2021, there is no guarantee that we will have sufficient funds available to repay the amounts outstanding when due. If we cannot maintain a specified minimum cash and cash equivalent balance or maintain a specified valuation, we will default under the facility. If we default under the facility, the lenders may accelerate all of our repayment obligations and, if we are unable to access funds to meet those obligations or to renegotiate our agreement, the lenders could take control of the collateral securing such obligations and, as a result, we may need to cease operations. If we were to renegotiate our agreement under such circumstances, the terms may be significantly less favorable to us. If we were liquidated, the lender’s right to repayment would be senior to the rights of our stockholders to receive any proceeds from the liquidation. Any declaration of the Collateral Agent of an event of default could significantly harm our liquidity, financial condition, operating results, business, and prospects and cause the price of our common stock to decline.

The incurrence of additional indebtedness, if available and permitted, would increase our fixed payment obligations and could subject us to additional, more burdensome covenants restricting or limiting our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends, or acquiring or licensing intellectual property rights. We may also be required to secure any such debt obligations with some or all of our assets.

Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.

Our results of operations and general business strategy could be adversely affected by general conditions in the global economy and in the global financial markets. In the past several years, global credit and financial markets have experienced volatility, instability and disruptions, including as a result of the ongoing COVID-19 pandemic. From time to time, this volatility, instability and disruption has caused, and may cause in the future, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. For example, since early 2020, the coronavirus, or COVID-19, pandemic has caused disruption in the financial markets both globally and in the United States. While certain negative effects of the ongoing COVID-19 pandemic have lessened as vaccines are distributed and administered and prevention and treatment methods improve, there have been and may continue to be resurgences of cases, including as a result of the emergence of variants that may be more contagious or more resistant to the vaccine and treatment options available, placing renewed and prolonged strain on both health care facilities and our workforce. Given the inter-connectivity of the global economy, pandemic disease and health events have the potential to continue to negatively impact economic activities in many countries, including the United States. The ongoing spread of the coronavirus, including variants thereof and resurgences in geographies experiencing some relief, could have a negative material impact on our business, prospects, financial condition and results of operations of the Company.

In addition, our general business strategy may be adversely affected by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions. If the current equity and credit markets deteriorate, or do not improve, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse
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effect on our growth strategy, financial performance and stock price and could require us to delay, scale back or abandon the development or commercialization of one or more of our product candidates or one or more of our other research and development initiatives. In addition, there is a risk that one or more of our current service providers, manufacturers or other partners may not survive these difficult economic times, which could directly affect our ability to attain our operating goals on schedule and on budget.

Geopolitical developments, such as the Russian invasion of Ukraine or deterioration in the bilateral relationship between the United States and China, may impact government spending, international trade and market stability, and cause weaker macro-economic conditions. The impact of these developments, including any resulting sanctions, export controls or other restrictive actions that may be imposed against governmental or other entities in, for example, Russia, have in the past contributed and may in the future contribute to disruption, instability and volatility in the global markets, which in turn could adversely impact our operations and weaken our financial results. Russia’s invasion of Ukraine, which has persisted for months, and the global response, including the imposition of sanctions by the United States and other countries, could create or exacerbate risks facing our business. The continuing conflict has had a significant impact on the global supply chain, impeding the flow of goods and fueling dramatic cost increases and product shortages, which could adversely affect our supply chain, as well. Further, state-sponsored cyberattacks could expand as part of the conflict, which could adversely affect our and our suppliers’ ability to maintain or enhance key cyber security and data protection measures.

Certain political developments may also lead to uncertainty to regulations and rules that may materially affect our business. For example, Brexit could result in the United Kingdom or the European Union significantly altering its regulations affecting the clearance or approval of our product candidates that may in the future be developed in the United Kingdom. Any new regulations could add time and expense to the conduct of our business, as well as the process by which our product candidates receive regulatory approval, if any, in the United Kingdom, the European Union and elsewhere.

As of June 30, 2022, we had cash, cash equivalents and investments of $140.7 million. While we are not aware of any downgrades, material losses, or other significant deterioration in the fair value of our cash equivalents since June 30, 2022, no assurance can be given that further deterioration of the global credit and financial markets would not negatively impact our current portfolio of cash equivalents or our ability to meet our financing objectives. Furthermore, our stock price may decline due in part to the volatility of the stock market and the general economic downturn.

Recent increases in interest rates may increase our borrowing costs, including interest expenses and/or borrowing costs under our variable rate credit facility.

To meet our liquidity needs, we have relied in part on borrowed funds, and may continue to do so in the future. Our currently outstanding debt bears interest at variable interest rates. Continued increases in interest rates may increase the cost of servicing our outstanding indebtedness and any additional indebtedness we may incur in the future, may increase the cost of refinancing our outstanding indebtedness, should we decide to do so, and could materially and adversely affect our results of operations, financial condition, liquidity and cash flows.

Changes in tax law could adversely affect our business and financial condition.

The rules dealing with U.S. federal, state, and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect our business. In recent years, many such changes have been made and changes are likely to continue to occur in the future. Future changes in tax laws could have a material adverse effect on our business, cash flow, financial condition or results of operations. We urge investors to consult with their legal and tax advisers regarding the implications of potential changes in tax laws on an investment in our common stock.

The amount of and our ability to use net operating losses and research and development credits to offset future taxable income may be subject to certain limitations and uncertainty.

As of December 31, 2021, we had federal and state net operating loss, or NOL, carryforwards of $534.2 million and $534.8 million, respectively, which may be available to offset future taxable income. The federal NOLs include $37.2 million which expire at various dates through 2037 and $497.0 million which carryforward indefinitely. The state NOLs expire at various dates through 2041. As of December 31, 2021, we also had federal and state research and development tax credit carryforwards of $22.7 million and $15.6 million, respectively, which may be available to offset future tax liabilities and begin to expire in 2034 and 2026, respectively.

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Federal NOLs generated in taxable years after December 31, 2017 generally may not be carried back to prior taxable years, and while such federal NOLs generated in taxable years beginning after December 31, 2017 will not be subject to expiration, the deduction for such NOL in any taxable year will be limited to 80% of our taxable income in such year, where taxable income is determined without regard to the NOL deduction itself. However, the Coronavirus Aid, Relief and Economic Security Act repeals the 80% limitation on the utilization of such federal NOLs generated in taxable years beginning after December 31, 2017 and beginning before January 1, 2021 and allows for federal NOLs generated in taxable years beginning after December 31, 2017 and before January 1, 2021, to be carried back to each of the five taxable years preceding the taxable year in which the loss arises. It is uncertain whether this change in law temporarily allowing for the carryback of federal NOLs will produce any material benefit for our business.

In addition, in general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs or tax credits, or NOLs or credits (including federal research and development tax credits), to offset future taxable income or taxes. For these purposes, an ownership change generally occurs where the aggregate stock ownership of one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a specified testing period. Our existing NOLs or credits may be subject to limitations arising from previous ownership changes, including in connection with our earlier private placements, IPO, our recent underwritten offering and other transactions. In addition, future changes in our stock ownership, many of which are outside of our control, could result in an ownership change under Sections 382 and 383 of the Code and limit our ability to utilize our NOLs and our credits. Our NOLs or credits may also be impaired under state law. Accordingly, we may not be able to