0000950170-23-022241 | 10-Q | XBRL Viewer

Schedule of Financial Assets and Liabilities to Fair Value Measurements on Recurring Basis

Financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type as of March 31, 2023 and December 31, 2022 are presented in the following tables (in thousands):


	Fair Value Measurements at March 31, 2023
	Total		Level 1		Level 2		Level 3
Money market funds	$	15,863	$	15,863	$	—	$	—
Certificates of Deposit		5,641		—		5,641		—
Corporate notes		7,799		—		7,799		—
Government and agency notes		56,526		—		56,526		—
Municipal notes		400		—		400		—
Total	$	86,229	$	15,863	$	70,366	$	—


	Fair Value Measurements at December 31, 2022
	Total		Level 1		Level 2		Level 3
Money market funds	$	10,988	$	10,988	$	—	$	—
Certificates of Deposit		6,102		—		6,102		—
Repurchase Agreements		9,000		—		9,000		—
Corporate notes		12,411		—		12,411		—
Government and agency notes		50,766		—		50,766		—
Municipal notes		506		—		506		—
Total	$	89,773	$	10,988	$	78,785	$	—

Summary of Available-for-Sale Securities

The following table summarizes the available-for-sale securities (in thousands):


	Fair Value Measurements at March 31, 2023
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	15,863	$	—	$	—		$	15,863
Certificates of Deposit		5,738		—		(97	)		5,641
Corporate notes		7,869		—		(70	)		7,799
Government and agency notes		56,681		9		(164	)		56,526
Municipal notes		400		—		—			400
Total cash equivalents and investments	$	86,551	$	9	$	(331	)	$	86,229

Classified as:
Cash equivalents (original maturities within 90 days)								$	42,265
Short-term investments (maturities within one year)									43,489
Long-term investments (maturities beyond 1 year)									475
Total								$	86,229


	Fair Value Measurements at December 31, 2022
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	10,988	$	—	$	—		$	10,988
Certificates of Deposit		6,237		1		(136	)		6,102
Repurchase Agreements		9,000		—		—			9,000
Corporate notes		12,575		—		(164	)		12,411
Government and agency notes		51,020		4		(258	)		50,766
Municipal notes		510		—		(4	)		506
Total cash equivalents and investments	$	90,330	$	5	$	(562	)	$	89,773

Classified as:
Cash equivalents ( original maturities within 90 days)								$	40,593
Short-term investments (maturities within one year)									45,602
Long-term investments (maturities beyond 1 year)									3,578
Total cash equivalents and investments								$	89,773

Summary of Unrealized Losses of Company's Investments in Debt Securities Measured at Fair Value

The table below summarizes the unrealized losses of the Company's investments in debt securities measured at fair value as of March 31, 2023 (in thousands):


	Less than twelve months					Twelve months or greater					Total
	Fair value		Gross unrealized loss			Fair value		Gross unrealized loss			Fair value		Gross unrealized loss
Certificates of Deposit	$	1,133	$	(20	)	$	4,508	$	(76	)	$	5,641	$	(96	)
Corporate notes		—		—			7,799		(70	)		7,799		(70	)
Government and agency notes		16,829		(44	)		5,583		(121	)		22,412		(165	)
Total cash equivalents and investments	$	17,962	$	(64	)	$	17,890	$	(267	)	$	35,852	$	(331	)

Schedule of the Ccontractual Maturities of our Investments in Debt Securities Measured at Fair Value

The table below summarizes the contractual maturities of the Company's investments in debt securities measured at fair value as of March 31, 2023 (in thousands):


	Maturities by Period
	Total		Less Than 1 Year		1-5 Years		6-10 Years		More Than 10 Years
Fair value of debt securities	$	43,964	$	43,489	$	475	$	—	$	—

Cash, Cash Equivalents and Investments (Tables)

3 Months Ended

Mar. 31, 2023

Summary of Fair Values of Cash, Cash Equivalents, and Short-Term Investments Measured at Fair Value on Recurring Basis

The following tables categorize the fair values of cash, cash equivalents, short-term investments and long-term investments measured at fair value on a recurring basis on our balance sheets (in thousands):


	March 31, 2023		December 31, 2022
Cash and cash equivalents:
Cash	$	4,449	$	3,986
Money market funds		15,863		10,988
Repurchase agreements		—		9,000
Government and agency notes		26,402		20,605
Total cash and cash equivalents	$	46,714	$	44,579

Short-term investments:
Certificates of deposit	$	5,166	$	5,390
Municipal notes		400		506
Corporate notes		7,799		12,411
Government and agency notes		30,124		27,295
Total short-term investments	$	43,489	$	45,602

Long-term investments
Certificates of deposit	$	475		712
Government and agency notes		—		2,866
Total long-term investments	$	475	$	3,578

Summary of Significant Accounting Policies - Additional Information (Details)	3 Months Ended
	Mar. 31, 2023 USD ($)
Summary Of Significant Accounting Policies [Line Items]
Realized gains or losses on the sale or maturity of available-for-sale securities	$ 0
Lab Equipment
Summary Of Significant Accounting Policies [Line Items]
Assets Held-for-sale	100,000
Money market funds
Summary Of Significant Accounting Policies [Line Items]
Unrealized gains or loss	$ 0

Fair Value Measurements - Summary of Unrealized Losses of Company's Investments in Debt Securities Measured at Fair Value (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Debt Securities, Available-for-Sale, Unrealized Loss Position [Line Items]
Debt securities, less than 12 months, Fair value	$ 17,962
Debt securities, less than 12 months, Gross unrealized losses	(64)
Debt securities, 12 months or longer, Fair value	17,890
Debt securities, 12 months or longer, Gross unrealized losses	(267)
Debt securities, Total fair value	35,852
Debt securities, Total gross unrealized losses	(331)
Certificates of deposit
Debt Securities, Available-for-Sale, Unrealized Loss Position [Line Items]
Debt securities, less than 12 months, Fair value	1,133
Debt securities, less than 12 months, Gross unrealized losses	(20)
Debt securities, 12 months or longer, Fair value	4,508
Debt securities, 12 months or longer, Gross unrealized losses	(76)
Debt securities, Total fair value	5,641
Debt securities, Total gross unrealized losses	(96)
Corporate notes
Debt Securities, Available-for-Sale, Unrealized Loss Position [Line Items]
Debt securities, less than 12 months, Fair value	0
Debt securities, less than 12 months, Gross unrealized losses	0
Debt securities, 12 months or longer, Fair value	7,799
Debt securities, 12 months or longer, Gross unrealized losses	(70)
Debt securities, Total fair value	7,799
Debt securities, Total gross unrealized losses	(70)
Government and agency notes
Debt Securities, Available-for-Sale, Unrealized Loss Position [Line Items]
Debt securities, less than 12 months, Fair value	16,829
Debt securities, less than 12 months, Gross unrealized losses	(44)
Debt securities, 12 months or longer, Fair value	5,583
Debt securities, 12 months or longer, Gross unrealized losses	(121)
Debt securities, Total fair value	22,412
Debt securities, Total gross unrealized losses	$ (165)

Fair Value Measurements - Additional Information (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Fair Value Disclosures [Abstract]
Impairment charges	$ 0	$ 0
Realized gains or losses recognized on the sale or maturity of available-for-sale securities	0		$ 0
Fair value assets level 2 to level 1	0
Fair value assets transfers out of level 3	$ 0

Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2023

Summary of Employee and Non-Employee Stock-Based Compensation Expense

The following table summarizes employee and non-employee stock-based compensation expense for the three months ended March 31, 2023 and 2022 and the allocation within the condensed consolidated statements of operations and comprehensive loss (in thousands):


	Three Months Ended March 31,
	2023		2022
General and administrative expense	$	1,123	$	4,431
Research and development expense		358		4,809
Total stock-based compensation	$	1,481	$	9,240

Service Based Stock Options

Service Based Stock Options | Novosteo

Activity for service-based stock options under the Quince 2019 Plan is as follows:


	Number of Options and Unvested Shares			Weighted Average Exercise Price		Weighted average remaining contractual life (years)		Aggregate intrinsic value
								(In thousands)
Balance at December 31, 2022		3,319,711		$	16.07		4.77	$	65
Options granted		1,384,958			0.87		—		—
Options exercised		(136,215	)		0.41		—		104
Options cancelled / forfeited		(1,154,504	)		12.12		—		—
Balance at March 31, 2023		3,413,950		$	11.86		6.74	$	952
Options vested and expected to vest as of March 31, 2023		3,413,950			11.86		6.74		952
Options exercisable as of March 31, 2023		1,506,826		$	22.80		3.21	$	174

Service Based Stock Options | 2022 Inducement Plan

Activity for service-based stock options under the 2019 Novosteo Plan is as follows:


	Number of Options and Unvested Shares			Weighted Average Exercise Price		Weighted average remaining contractual life (years)		Aggregate intrinsic value
								(In thousands)
Balance at December 31, 2022		503,105		$	0.55		9.23	$	44
Options granted		—			—		—		—
Options exercised		—			—		—		—
Options cancelled / forfeited		(28,764	)		0.55		—		—
Balance at March 31, 2023		474,341		$	0.55		8.76	$	479
Options vested and expected to vest as of March 31, 2023		474,341			0.55		8.76		479
Options exercisable as of March 31, 2023		118,582			0.55		8.76		120

Restricted Stock Units (RSUs)

Activity for service-based stock options under the 2022 Inducement Plan is as follows:


	Number of Options and Unvested Shares			Weighted Average Exercise Price		Weighted average remaining contractual life (years)		Aggregate intrinsic value
								(In thousands)
Balance at December 31, 2022		3,742,255		$	2.98		9.39		—
Options granted		—			—		—		—
Options exercised		—			—		—		—
Options cancelled / forfeited		(38,500	)		2.98		—		—
Balance at March 31, 2023		3,703,755		$	2.98		9.14	$	—
Options vested and expected to vest as of March 31, 2023		3,703,755			2.98		9.14		—
Options exercisable as of March 31, 2023		—			—		—		—

Restricted Stock Awards (RSAs)

The following table summarizes activity under the Company’s RSUs from the Quince 2019 Plan and related information:


	Restricted Stock Units Outstanding
	Number of Shares			Weighted Average Grant Date Fair Value
Unvested - December 31, 2022		30,876		$	4.30
RSUs granted	—			$	—
RSUs vested		(5,738	)	$	4.30
RSUs cancelled		(19,188	)	$	4.30
Unvested - March 31, 2023		5,950		$	4.30

Operating lease right-of-use assets, net

Restricted Stock Awards


	Restricted Stock Awards Outstanding
	Number of Shares			Weighted Average Grant Date Fair Value
Unvested - December 31, 2022		427,401		$	3.30
RSAs granted	—			$	—
RSAs vested		(39,350	)	$	3.30
RSAs cancelled	—			$	—
Unvested - March 31, 2023		388,051		$	3.30

Leases - Supplemental Balance Sheet Information Related to Leases (Details) - USD ($)
$ in Thousands

Mar. 31, 2023

Dec. 31, 2022

Leases [Abstract]

$ 171

$ 291

^[1]

Short-term operating lease liability

269

377

Finance lease right of use asset

$ 0

$ 124

Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]

Property, Plant and Equipment, Net

Finance lease accumulated amortization

$ 0

$ (50)

Total finance lease right of use asset, net

$ 0

$ 74

Weighted average remaining lease term

Operating leases

7 months 6 days

10 months 24 days

Finance leases

1 year

Weighted average discount rate

Operating leases

5.88%

5.71%

Finance leases

4.45%

Operating Lease, Liability, Payment, Due [Abstract]

2023 (excluding the three months ended March 31, 2023)

$ 275

$ 388

Total lease payments

275

388

Less: imputed interest

(6)

(11)

Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]

$ 269

$ 377

[1]	The balance sheet as of December 31, 2022 is derived from the audited financial statements as of that date.

Organization - Additional Information (Details) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

Jan. 27, 2023

Mar. 31, 2023

Dec. 31, 2022

May 09, 2022

Common stock, par value

$ 0.001

Common stock, shares issued

36,278,433

36,136,480

Entity incorporation date

2012-06

Accumulated deficit

$ 300,513

$ 288,259

^[1]

Cash, cash equivalents, and short-term investments

90,200

Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]

$ 475

$ 3,578

^[1]

Stock Agreement [Member]

Percentage of issued and outstanding common stock received

7.50%

Milestone payments receivable

$ 150,000

Merger Agreement [Member]

Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]

Automatically Cancelled and Converted Common Stock

0.0911

Common stock, par value

$ 0.001

Common stock, shares issued

5,520,000

Options outstanding assumed

507,108

[1]	The balance sheet as of December 31, 2022 is derived from the audited financial statements as of that date.

Balance Sheet Components - Schedule of Property and Equipment, Net (Details) - USD ($)
$ in Thousands

Mar. 31, 2023

Dec. 31, 2022

Less: accumulated amortization and depreciation

$ (12)

$ (185)

Property and equipment, net

393

^[1]

Computer Equipment

Lab Equipment

Finance Lease Right of Use Assets

415

124

Leasehold Improvement

Goodwill and Intangible Assets Disclosure [Abstract]

$ 0

$ 21

[1]	The balance sheet as of December 31, 2022 is derived from the audited financial statements as of that date.

Cash, Cash Equivalents and Investments - Additional Information (Details)	Mar. 31, 2023 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cumulative upward adjustments	$ 0
Cumulative impairments	0
Lighthouse Inc
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity investments without readily determinable fair values	$ 70,000

Intangible Assets

3 Months Ended

Mar. 31, 2023

Intangible Assets

Note 12. Intangible Assets

The intangible asset acquired as a result of the Acquisition consists of IPR&D related to NOV004, the Company's bone targeting molecule designed to accelerate fracture repair. The value of the IPR&D was determined using discounted probable future cash flows.

Significant assumptions used in determining the value of the intellectual property include the timing and costs of clinical trials and NDA approval with respect to NOV004, probability of reaching various phases of development, costs and cost of goods sold, and the risk adjusted discount rate applied to the cash flows.

All intangible assets acquired in a business combination that are used in research and development activities are capitalized as indefinite-lived intangible assets. During the period that those assets are considered indefinite lived, they are not amortized but are tested for impairment. Once the research and development efforts are completed, the asset will be amortized over its remaining useful life. If the research and development efforts are abandoned, the intangible asset will be expensed in that period.

The following table provides details of the carrying amount of our indefinite-lived intangible asset (in thousands):


		March 31, 2023
Unamortized intangible assets:
	In-process research and development	$	5,900
	Impairment charge		(5,900	)
	Balance as of March 31, 2023		—

In January 2023, the Company decided to abandon internal development of NOV004 and pursue out-licensing opportunities. As a result, several of the assumptions used in determining the initial fair value have changed including discount rate and expected cash flows and thus triggered the need for an interim impairment assessment as required under ASC 350. And so, the Company performed a fair value assessment of the Intellectual Property as of March 31, 2023, and based upon this assessment, the fair value was determined to be significantly below its carrying value and resulted in an asset impairment charge of $5.9 million during the three months ended March 31, 2023.

Goodwill

The excess of the fair value of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill.

There was no amount related to goodwill reflected on the condensed consolidated balance sheet for the Company as of March 31, 2023 and December 31, 2022. In 2022, management performed an impairment evaluation of goodwill after assessing qualitative factors that indicated a possible impairment of goodwill. Under the qualitative assessment, management considers relevant events and circumstances including but not limited to macroeconomic conditions, industry and market considerations, overall Company performance and events directly affecting the Company. It was noted during our assessment that the Company's market capitalization was significantly below its carrying value and a further quantitative analysis was conducted to determine to the extent, if any, the Company's carrying value exceeded its fair value as of September 30, 2022. The quantitative analysis used fair value based on market capitalization adjusted for control premium based on market comparable transactions. This quantitative analysis resulted in the Company's fair value being significantly below its carrying value, resulting in a non-cash goodwill impairment charge of $0.8 million being recorded during the year ended December 31, 2022.

Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2023	Dec. 31, 2022	May 19, 2022
Acquired Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 0	$ 0	$ 825
Non-cash goodwill impairment charge		$ 800
In Process Research and Development [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Non-cash goodwill impairment charge	$ 5,900

Cash and cash equivalents

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Thousands

Mar. 31, 2023

Dec. 31, 2022

^[1]

Current assets:

$ 46,714

$ 44,579

43,489

45,602

Property and equipment, net

2,288

3,567

Total current assets

92,491

93,748

Assets held for sale

105

393

Operating lease right-of-use assets, net

171

291

Equity investment in Lighthouse, Inc.

475

3,578

Intangible asset

5,900

Total assets

93,318

103,910

Current liabilities:

Accounts payable

1,651

570

Accrued expenses and other current liabilities

1,464

2,499

Total current liabilities

3,115

3,069

Deferred tax liabilities

248

Total liabilities

3,115

3,317

Stockholders’ equity:

Preferred stock, $0.001 par value, 10,000,000 authorized, no shares issued and outstanding as of March 31, 2023 and December 31, 2022

Common stock, $0.001 par value, 100,000,000 shares authorized, 36,278,433 and 36,136,480 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Additional paid in capital

390,642

389,105

Accumulated other comprehensive income (loss)

(289)

Accumulated deficit

(300,513)

(288,259)

Total stockholders’ equity

90,203

100,593

Total liabilities and stockholders’ equity

$ 93,318

$ 103,910

[1]	The balance sheet as of December 31, 2022 is derived from the audited financial statements as of that date.

Business Combination (Tables)

3 Months Ended

Mar. 31, 2023

Business Combinations [Abstract]

Schedule of fair values of assets acquired and liabilities assumed

The following table summarizes the fair values of the identifiable assets acquired and liabilities assumed as of the date of acquisition (in thousands):


	May 19, 2022
Identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	$	10,593
Prepaid expenses and other current assets		1,040
ROU asset		124
Property and equipment		279
Intangible assets		5,900
Accounts payable and accrued liabilities		(1,726	)
Deferred tax liabilities		(532	)
Net assets acquired	$	15,678
Goodwill	$	825

Schedule of Revenue and Net Loss of the Combined Entity

The amounts of the Company's revenue and net loss included in the acquirer's condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2023 and 2022, and the unaudited pro forma revenue and net loss of the combined entity had the acquisition date been January 1, 2022 are as follows:


	Three Months Ended March 31,
	2023			2022
Revenue	$	6		$	—
Net loss		(12,502	)		(20,113	)

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($)
Private Placement
Stock issuance costs	$ 19

Fair Value Measurements

3 Months Ended

Mar. 31, 2023

Fair Value Measurements

Note 3. Fair Value Measurements

The Company measures and reports its cash equivalents and investments at fair value.

Money market funds are measured at fair value on a recurring basis using quoted prices and are classified as Level 1. Investments in debt securities are measured at fair value based on inputs other than quoted prices that are derived from observable market data and are classified as Level 2 inputs.


	Fair Value Measurements at March 31, 2023
	Total		Level 1		Level 2		Level 3
Money market funds	$	15,863	$	15,863	$	—	$	—
Certificates of Deposit		5,641		—		5,641		—
Corporate notes		7,799		—		7,799		—
Government and agency notes		56,526		—		56,526		—
Municipal notes		400		—		400		—
Total	$	86,229	$	15,863	$	70,366	$	—


	Fair Value Measurements at December 31, 2022
	Total		Level 1		Level 2		Level 3
Money market funds	$	10,988	$	10,988	$	—	$	—
Certificates of Deposit		6,102		—		6,102		—
Repurchase Agreements		9,000		—		9,000		—
Corporate notes		12,411		—		12,411		—
Government and agency notes		50,766		—		50,766		—
Municipal notes		506		—		506		—
Total	$	89,773	$	10,988	$	78,785	$	—

The following table summarizes the available-for-sale securities (in thousands):


	Fair Value Measurements at March 31, 2023
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	15,863	$	—	$	—		$	15,863
Certificates of Deposit		5,738		—		(97	)		5,641
Corporate notes		7,869		—		(70	)		7,799
Government and agency notes		56,681		9		(164	)		56,526
Municipal notes		400		—		—			400
Total cash equivalents and investments	$	86,551	$	9	$	(331	)	$	86,229

Classified as:
Cash equivalents (original maturities within 90 days)								$	42,265
Short-term investments (maturities within one year)									43,489
Long-term investments (maturities beyond 1 year)									475
Total								$	86,229


	Fair Value Measurements at December 31, 2022
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	10,988	$	—	$	—		$	10,988
Certificates of Deposit		6,237		1		(136	)		6,102
Repurchase Agreements		9,000		—		—			9,000
Corporate notes		12,575		—		(164	)		12,411
Government and agency notes		51,020		4		(258	)		50,766
Municipal notes		510		—		(4	)		506
Total cash equivalents and investments	$	90,330	$	5	$	(562	)	$	89,773

Classified as:
Cash equivalents ( original maturities within 90 days)								$	40,593
Short-term investments (maturities within one year)									45,602
Long-term investments (maturities beyond 1 year)									3,578
Total cash equivalents and investments								$	89,773

As of March 31, 2023, the remaining contractual maturities of available-for-sale debt securities was approximately 4 months. There have been no significant realized gains or losses on available-for-sale securities for the periods presented. The Company records its available-for-sale debt securities at fair value, with changes in fair value reported as a component of accumulated other comprehensive income (loss). We periodically assess our investment in available-for-sale securities for impairment losses and credit losses. The amount of credit losses are determined by comparing the difference between the present value of future cash flows expected to be collected on these securities and the amortized cost. Factors considered in assessing credit losses include the position in the capital structure, vintage and amount of collateral, delinquency rates, current credit support, and geographic concentration. There have been no impairment and credit losses related to available-for-sale securities for the three months ended March 31, 2023 and 2022.

The table below summarizes the unrealized losses of the Company's investments in debt securities measured at fair value as of March 31, 2023 (in thousands):


	Less than twelve months					Twelve months or greater					Total
	Fair value		Gross unrealized loss			Fair value		Gross unrealized loss			Fair value		Gross unrealized loss
Certificates of Deposit	$	1,133	$	(20	)	$	4,508	$	(76	)	$	5,641	$	(96	)
Corporate notes		—		—			7,799		(70	)		7,799		(70	)
Government and agency notes		16,829		(44	)		5,583		(121	)		22,412		(165	)
Total cash equivalents and investments	$	17,962	$	(64	)	$	17,890	$	(267	)	$	35,852	$	(331	)

The investments are classified as available-for-sale securities. At March 31, 2023 and December 31, 2022, the balance in the Company’s accumulated other comprehensive income was comprised primarily of activity related to the Company’s available-for-sale securities. There were no realized gains or losses recognized on the sale or maturity of available-for-sale securities for the three months ended March 31, 2023, and as a result, the Company did not reclassify any amounts out of accumulated other comprehensive income for the quarter.

There were no transfers between Levels 1, 2 or 3 for the period presented.

The table below summarizes the contractual maturities of the Company's investments in debt securities measured at fair value as of March 31, 2023 (in thousands):


	Maturities by Period
	Total		Less Than 1 Year		1-5 Years		6-10 Years		More Than 10 Years
Fair value of debt securities	$	43,964	$	43,489	$	475	$	—	$	—

Prepaid Expense and Other Assets, Current [Abstract]

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Intangible Assets - Schedule of Carrying Amount of Indefinite Lived Intangible Asset (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	May 19, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
In-process research and development	$ 5,900		$ 5,900
Impairment charge	(5,900)	$ 0
Indefinite-Lived Intangible Assets (Excluding Goodwill), Ending Balance	$ 0

Business Combination - Schedule of fair values of assets acquired and liabilities assumed (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022	May 19, 2022
Business Combinations [Abstract]
Cash and cash equivalents			$ 10,593
Prepaid expenses and other current assets			1,040
ROU asset			124
Property and equipment			279
Intangible In-process Research and Development	$ 5,900		5,900
Accounts payable and accrued liabilities			(1,726)
Deferred tax liabilities			(532)
Net assets acquired			15,678
Goodwill	$ 0	$ 0	$ 825

Balance Sheet Components - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($)
$ in Thousands

Mar. 31, 2023

Dec. 31, 2022

Prepaid expenses

$ 304

$ 223

Prepaid insurance

657

977

Prepaid research and development expenses

676

1,088

Australia research and development refundable tax credit

472

1,003

Other current assets

179

276

Total prepaid expenses and other current assets

$ 2,288

$ 3,567

^[1]

[1]	The balance sheet as of December 31, 2022 is derived from the audited financial statements as of that date.

Subsequent Events - Additional Information (Details) - $ / shares	Apr. 05, 2023	Mar. 31, 2023	Dec. 31, 2022
Subsequent Event [Line Items]
Common stock, par value		$ 0.001	$ 0.001
Preferred stock, par value		$ 0.001	$ 0.001
Subsequent Event
Subsequent Event [Line Items]
Common stock, par value	$ 0.001
Preferred stock, par value	0.001
Share price	$ 6.00

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2023	May 05, 2023
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Entity Registrant Name	Quince Therapeutics, Inc.
Entity Central Index Key	0001662774
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Common Stock, Shares Outstanding		36,269,897
Entity File Number	001-38890
Entity Tax Identification Number	90-1024039
Entity Address, Address Line One	601 Gateway Boulevard, Suite 1250.
Entity Address, City or Town	South San Francisco
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94080
City Area Code	415
Local Phone Number	910-5717
Document Quarterly Report	true
Document Transition Report	false
Entity Incorporation, State or Country Code	DE
Entity Interactive Data Current	Yes
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Common Stock
Trading Symbol	QNCX
Security Exchange Name	NASDAQ
Title of 12(b) Security	Common Stock, par value $0.001 per share
Series A Junior Participating Preferred Purchase Rights
No Trading Symbol Flag	true
Security Exchange Name	NASDAQ
Title of 12(b) Security	Series A Junior Participating Preferred Purchase Rights

Stock-Based Compensation - Summary of Activity for Service-based Stock Options (Details) - Service Based Stock Options - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
2019 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Options and Unvested Shares, beginning balance	3,319,711
Number of Options and Unvested Shares, granted	1,384,958
Number of Options and Unvested Shares, exercised	(136,215)
Number of Options and Unvested Shares, cancelled / forfeited	(1,154,504)
Number of Options and Unvested Shares, ending balance	3,413,950	3,319,711
Number of Options and Unvested Shares, vested and expected to vest	3,413,950
Number of Options and Unvested Shares, exercisable	1,506,826
Weighted Average Exercise Price, beginning balance	$ 16.07
Weighted Average Exercise Price, granted	0.87
Weighted Average Exercise Price, exercised	0.41
Weighted Average Exercise Price, exercised, cancelled / forfeited	12.12
Weighted Average Exercise Price, ending balance	11.86	$ 16.07
Weighted Average Exercise Price, vested and expected to vest	11.86
Weighted Average Exercise Price, exercisable	$ 22.80
Weighted average remaining contractual life	6 years 8 months 26 days	4 years 9 months 7 days
Weighted average remaining contractual life, vested and expected to vest	6 years 8 months 26 days
Weighted average remaining contractual life, exercisable	3 years 2 months 15 days
Aggregate intrinsic value	$ 952	$ 65
Aggregate intrinsic value, exercised	104
Aggregate intrinsic value, vested and expected to vest	952
Aggregate intrinsic value, exercisable	$ 174
2022 Inducement Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Options and Unvested Shares, beginning balance	3,742,255
Number of Options and Unvested Shares, cancelled / forfeited	(38,500)
Number of Options and Unvested Shares, ending balance	3,703,755	3,742,255
Number of Options and Unvested Shares, vested and expected to vest	3,703,755
Weighted Average Exercise Price, beginning balance	$ 2.98
Weighted Average Exercise Price, exercised, cancelled / forfeited	2.98
Weighted Average Exercise Price, ending balance	2.98	$ 2.98
Weighted Average Exercise Price, vested and expected to vest	$ 2.98
Weighted average remaining contractual life	9 years 1 month 20 days	9 years 4 months 20 days
Weighted average remaining contractual life, vested and expected to vest	9 years 1 month 20 days
Novosteo
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Options and Unvested Shares, beginning balance	503,105
Number of Options and Unvested Shares, cancelled / forfeited	(28,764)
Number of Options and Unvested Shares, ending balance	474,341	503,105
Number of Options and Unvested Shares, vested and expected to vest	474,341
Number of Options and Unvested Shares, exercisable	118,582
Weighted Average Exercise Price, beginning balance	$ 0.55
Weighted Average Exercise Price, exercised, cancelled / forfeited	0.55
Weighted Average Exercise Price, ending balance	0.55	$ 0.55
Weighted Average Exercise Price, vested and expected to vest	0.55
Weighted Average Exercise Price, exercisable	$ 0.55
Weighted average remaining contractual life	8 years 9 months 3 days	9 years 2 months 23 days
Weighted average remaining contractual life, vested and expected to vest	8 years 9 months 3 days
Weighted average remaining contractual life, exercisable	8 years 9 months 3 days
Aggregate intrinsic value	$ 479	$ 44
Aggregate intrinsic value, vested and expected to vest	479
Aggregate intrinsic value, exercisable	$ 120

Income Taxes

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 9. Income Taxes

The Company has a history of losses and expects to record a loss in 2023. The Company accounts for income taxes under ASC Topic 740 – Income Taxes.

A valuation allowance is provided for significant deferred tax assets when it is more likely than not that such assets will not be realized through future operations. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has maintained a valuation allowance for the future deferred tax assets.

The Company recorded a discrete tax benefit of $0.2 million in the three months ended March 31, 2023 due to the release of valuation allowance in connection with the write down of the in-process research and development ("IPR&D") intangible asset related to NOV004. As a result of the impairment, the Company reversed the Deferred tax liabilities associated with the intangible asset resulting in the tax benefit of $0.2 million as of March 31, 2023.

On August 16, 2022, the President signed into law H.R. 5376 (commonly called the “Inflation Reduction Act of 2022”). The primary tax provisions in the new law include an alternative minimum tax (AMT) on certain large corporations, a tax on stock buybacks and certain energy-related tax credits each of which became effective after December 31, 2022. The provisions of the Inflation Reduction Act are not expected to have a material effect on the Company’s 2023 tax provision and related disclosures. The Company will continue to evaluate changes and revisions of the Inflation Reduction Act of 2022 and its impact on the Company’s financial position, results of operations and cash flows.

Related Party Transactions

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Net Loss Per Share

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Net Loss Per Share

Note 10. Net Loss Per Share

The following outstanding potentially dilutive shares have been excluded from the calculation of diluted net loss per share for the period presented due to their anti-dilutive effect:


	March 31,
	2023		2022
Stock options issued and outstanding		7,592,046		6,223,398
Performance stock options		—		275,000
Restricted stock units		5,950		1,013,500
Restricted stock awards		388,051		—
Total		7,986,047		7,511,898

Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - $ / shares	Mar. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	36,278,433	36,136,480
Common stock, shares outstanding	36,278,433	36,136,480

Balance Sheet Components

3 Months Ended

Mar. 31, 2023

Balance Sheet Components [Abstract]

Balance Sheet Components

Note 5. Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):


	March 31, 2023		December 31, 2022
Prepaid expenses	$	304	$	223
Prepaid insurance		657		977
Prepaid research and development expenses		676		1,088
Australia research and development refundable tax credit		472		1,003
Other current assets		179		276
Total prepaid expenses and other current assets	$	2,288	$	3,567

Cortexyme Australia, Pty, Ltd is eligible to obtain a cash refund from the Australian Taxation Office for eligible R&D expenditures under the Australian R&D Tax Incentive Program (the “Australian Tax Incentive”). The Australian Tax Incentive is recognized as a reduction to R&D expense when there is reasonable assurance that the relevant expenditure has been incurred, the amount can be reliably measured and the Australian Tax Incentive will be received. The Company recognized reductions to R&D expense of $0 for the three months ended March 31, 2023 and $0.4 million reductions to R&D expense for the three months ended March 31, 2022.

Novosteo Pty, Ltd is eligible to obtain a cash refund from the Australian Taxation Office for eligible R&D expenditures under the Australian Tax Incentive as well. The Company received a refundable tax credit of $0.5 million in the first quarter of 2023, which reduced prepaid expenses and other current assets by $0.5 million as of March 31, 2023.

Assets Held for Sale

Assets held for sale consist of the following (in thousands):


	March 31, 2023		December 31, 2022
Assets Held for Sale		105		—
Total Assets Held for Sale	$	105	$	—

Property and Equipment, Net

Property and equipment, net consist of the following (in thousands):


	March 31, 2023			December 31, 2022
Computer equipment	$	18		$	18
Lab equipment		—			415
Finance lease right of use assets		—			124
Leasehold improvement		—			21
Less: accumulated amortization and depreciation		(12	)		(185	)
Property and equipment, net	$	6		$	393

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):


	March 31, 2023		December 31, 2022
Personnel expenses	$	457	$	1,130
Professional fees		627		234
Research and development expenses		54		497
Current portion of operating lease liabilities		269		377
Current portion of finance lease liability		—		76
Other		57		185
Total accrued expenses and other current liabilities	$	1,464	$	2,499

Below is the severance accrual activity related to a cost reduction program during the period ended March 31, 2023 (in thousands):


	For the Three Months Ended March 31,
	2023
Beginning accrued severance	$	—
Incurred during the period		268
Severance paid during the period		(237	)
Ending accrued severance	$	31

In response to the reprioritization of the Company's pipeline following the decision to discontinue internal development of NOV004 and to pursue out-licensing opportunities, the Board approved a cost reduction program to reorganize operations and allow continued support for the needs of the business. Under the cost reduction program, the Company lowered headcount through a reduction in workforce. The Company recognized the severance and related expenses over the requisite employment obligation period. The reduction in force has been completed in April 2023.

Related Party Transactions

3 Months Ended

Mar. 31, 2023

Note 8. Related Party Transactions

David Lamond, Chairperson of the Board was a director and an equity holder in Novosteo, Inc. which Quince acquired on May 19, 2022. The shares of Novosteo, Inc. beneficially owned by Mr. Lamond were automatically canceled and converted into the right to receive shares of Quince common stock in accordance with the terms of the Merger Agreement. The respective boards of directors of Quince and Novosteo have approved the Merger Agreement, and the Novosteo’s stockholders adopted the Merger

Agreement upon recommendation of the Novosteo board of directors. Mr. Lamond was not part of either company's special committees that evaluated the Acquisition and recused himself from board meetings where the Acquisition was discussed.

Philip Low, a former Board member of Quince Therapeutics, Inc., is employed as a professor at Purdue University. The Company rents a lab facility and office space from Purdue Research Foundation, a private, nonprofit foundation of Purdue University. Purdue Research Foundation also owns 154,497 shares of Quince Therapeutics, Inc. and has provided the Company an exclusive worldwide license under certain bone fracture repair and oncology therapeutics related patents and technology developed by the Purdue University and owned by Purdue Research Foundation. In addition, we are required to pay Purdue Research Foundation annual license maintenance fees, development milestones (up to $4.25 million for each licensed product), royalties on the gross receipts of the licensed products (subject to annual minimums), and a share of certain payments that we may receive from our sublicensees.

Dirk Thye, Chief Executive Officer, is an investor in Morphimmune Inc. and Philip Low, a former Board member of Quince Therapeutics, Inc., is a co-founder and Board member of Morphimmune Inc. In the quarter ended March 31, 2023, the Company sold certain lab equipment to Morphimmune Inc. for $80,000 as well as signed a sublease with Morphimmune as the sublessee with total payments of approximately $57,000 for the lease term of March 17, 2023 through December 31, 2023.

Leases - Additional Information (Details) - USD ($)

1 Months Ended

3 Months Ended

6 Months Ended

12 Months Ended

May 31, 2020

Oct. 31, 2022

Jun. 30, 2022

Mar. 31, 2023

Mar. 31, 2022

Jun. 30, 2022

Dec. 31, 2022

Feb. 28, 2023

Finance lease ROU asset and Finance lease liability

$ 269,000

$ 377,000

$ 70,000

Operating lease asset

171,000

291,000

^[1]

Future rent expense

$ 176,000,000

Finance lease amortized period on equipment service

18 months

Finance lease amortization of right of use assets

$ 3,000

Impairment charges

$ 0

Minimum

Operating lease remaining term on a straight-line basis

8 months

Maximum

Operating lease remaining term on a straight-line basis

9 months

San Diego, California

San Diego, California | Prepaid Expenses and Other Current Assets

Lease agreement period

3 years

Operating lease payments

$ 337,000

Impairment charges

$ 136,000

Security deposit paid

$ 29,000

South San Francisco

Operating lease payments

$ 271,000,000

$ 256,000

Security deposit paid

17,000,000

West Lafayette

Lease agreement period

15 months

Operating lease payments

$ 151,000,000

Loan proceeds used to offset rent expense, utility costs and mortgage interest expense

$ 145,000,000

57,000

Right-of-use assets obtained in exchange for new operating lease liabilities

$ 10,000

Impairment charges

66,000

West Lafayette | Accrued Expenses And Other Current Liabilities

Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]

Security deposit paid

$ 6,000

[1]	The balance sheet as of December 31, 2022 is derived from the audited financial statements as of that date.

Related Party Transactions - Additional Information (Details)	3 Months Ended
	Mar. 31, 2023 USD ($) shares
Purdue Research Foundation
Related Party Transaction [Line Items]
Shares held by related party \| shares	154,497
Purdue Research Foundation \| Maximum
Related Party Transaction [Line Items]
Contractual Obligation	$ 4,250,000
Morphimmune Inc.
Related Party Transaction [Line Items]
Operating lease payments	57,000
Morphimmune Inc. \| Lab Equipment
Related Party Transaction [Line Items]
Proceeds from sale of lab equipment	$ 80,000

Cash, Cash Equivalents and Investments - Summary of Fair Values of Cash, Cash Equivalents, and Short-Term Investments Measured at Fair Value on Recurring Basis (Details) - USD ($)
$ in Thousands

Mar. 31, 2023

Dec. 31, 2022

$ 46,714

$ 44,579

43,489

45,602

^[1]

Government and agency notes

475

3,578

^[1]

Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]

Fair Value on Recurring | Cash

26,402

20,605

Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]

Fair Value on Recurring | Money market funds

4,449

3,986

Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]

Fair Value on Recurring | Repurchase agreements

15,863

10,988

Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]

Fair Value on Recurring | Certificates of deposit

9,000

Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]

5,166

5,390

Fair Value on Recurring | Municipal notes

475

712

Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]

Fair Value on Recurring | Corporate notes

400

506

Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]

Fair Value on Recurring | Government and agency notes

7,799

12,411

Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]

30,124

27,295

Cash flows from operating activities

$ 0

$ 2,866

[1]	The balance sheet as of December 31, 2022 is derived from the audited financial statements as of that date.

Business Combination - Schedule of Revenue and Net Loss of the Combined Entity (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Business Acquisition, Pro Forma Information [Abstract]
Revenue	$ 6	$ 0
Net loss	$ (12,502)	$ (20,113)

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands

3 Months Ended

Mar. 31, 2023

Mar. 31, 2022

Net Loss

$ (12,254)

$ (21,641)

Adjustments to reconcile net loss to net cash used in operating activities:

Stock based compensation

1,481

9,240

Depreciation and amortization

Impairment loss on operating lease

Loss on disposal of fixed assets

Equity investment in Lighthouse, Inc.

(70)

Non-cash intangible impairment charge

5,900

Amortization of (discount) premium on available for sale investments

(139)

135

Change in deferred tax liabilities

(248)

Changes in operating assets and liabilities:

Right of use assets and lease liabilities

1,413

(45)

Other assets

165

Accounts payable

1,081

(1,180)

Accrued expenses and other current liabilities

(844)

(2,890)

Net cash used in operating activities

(3,569)

(16,091)

Cash flow from investing activities:

Purchase of investments

(7,691)

(8,957)

Proceeds from maturities of investments

13,277

22,375

Proceeds from disposal of fixed assets

Purchase of property and equipment

(136)

(5)

Net cash provided by investing activities

5,540

13,413

Cash flows from financing activities:

Payments of finance leases

(6)

Proceeds from issuance of common stock on exercise of stock options

Proceeds from issuance of common stock in connection with open market sales agreement, net of issuance costs

608

Net cash provided by financing activities

622

Effect of exchange rate changes on cash

114

(104)

Net increase (decrease) in cash and cash equivalents

2,135

(2,160)

Cash and cash equivalents at beginning of period

44,579

^[1]

69,724

Cash and cash equivalents at end of period

46,714

67,564

Supplemental disclosures of non-cash information:

Right-of-use asset and financing lease liability reduction as a result of lease modification

(70)

Right-of-use asset and operating lease liability reduction as a result of lease modification

$ 0

$ (640)

[1]	The balance sheet as of December 31, 2022 is derived from the audited financial statements as of that date.

Balance Sheet Components - Schedule of Assets Held for Sale (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Restructuring Cost and Reserve [Line Items]
Assets held for sale	$ 105	$ 0
Novosteo [Member]
Restructuring Cost and Reserve [Line Items]
Assets held for sale	$ 105	$ 0

Stock-Based Compensation

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Note 7. Stock-Based Compensation

The Company operates three stock plans as of March 31, 2023.

•

2019 Equity Incentive Plan (Quince)

•

2019 Equity Incentive Plan (Novosteo)

•

2022 Inducement Plan (Quince)

2019 Equity Incentive Plan (Quince)

On December 4, 2014, the Company’s stockholders approved the 2014 Stock Plan (“2014 Plan”), and on April 25, 2019 amended, restated and re-named the 2014 Plan as the 2019 Equity Incentive Plan (the “Quince 2019 Plan”), which became effective as of May 7, 2019, the day prior to the effectiveness of the registration statement filed in connection with the IPO. The remaining shares available for issuance under the 2014 Plan were added to the shares reserved for issuance under the Quince 2019 Plan.

The Quince 2019 Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, RSUs, performance units, and performance shares to the Company’s employees, directors, and consultants. As of March 31, 2023, the maximum aggregate number of shares that remain available for issuance under the Quince 2019 Plan is 10,036,489 shares of the Company’s common stock. In addition, the number of shares available for issuance under the Quince 2019 Plan will be annually increased on the first day of each fiscal years beginning with fiscal 2020, by an amount equal to the least of (i) 2,146,354 shares of common stock; (ii) 4% of the outstanding shares of its common stock as of the last day of its immediately preceding fiscal year; and (iii) such other amount as the Board may determine.

The Quince 2019 Plan may be amended, suspended or terminated by the Board at any time, provided such action does not impair the existing rights of any participant, subject to stockholder approval of any amendment to the Quince 2019 Plan as required by applicable law or listing requirements. Unless sooner terminated by the Board, the Quince 2019 Plan will automatically terminate on April 23, 2029.

As of March 31, 2023, the Company had 4,981,502 shares available for future issuance under the Quince 2019 Plan.

Stock Options

Activity for service-based stock options under the Quince 2019 Plan is as follows:


	Number of Options and Unvested Shares			Weighted Average Exercise Price		Weighted average remaining contractual life (years)		Aggregate intrinsic value
								(In thousands)
Balance at December 31, 2022		3,319,711		$	16.07		4.77	$	65
Options granted		1,384,958			0.87		—		—
Options exercised		(136,215	)		0.41		—		104
Options cancelled / forfeited		(1,154,504	)		12.12		—		—
Balance at March 31, 2023		3,413,950		$	11.86		6.74	$	952
Options vested and expected to vest as of March 31, 2023		3,413,950			11.86		6.74		952
Options exercisable as of March 31, 2023		1,506,826		$	22.80		3.21	$	174

For the three months ended March 31, 2023 and 2022 the Company recognized stock-based compensation expense of $774,000 and $7,024,000, respectively, related to options granted to employees and non-employees. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed consolidated statement of operations and comprehensive loss for stock-based compensation arrangements. As of March 31, 2023, total unamortized employee stock-based compensation was $4.3 million, which is expected to be recognized over the remaining estimated vesting period of 2.45 years.

Performance Stock Options (“PSOs”)

There was no activity or balance of any PSOs from the 2019 plan for the three months ended March 31, 2023. For the three months ended March 31, 2023 and 2022, the Company recognized stock-based compensation expense of $0 and $2,044,000, respectively, related to these PSOs. As of March 31, 2023 and December 31, 2022, there was no remaining unamortized stock-based compensation related to PSOs.

Restricted Stock Units (“RSUs”)

The following table summarizes activity under the Company’s RSUs from the Quince 2019 Plan and related information:


	Restricted Stock Units Outstanding
	Number of Shares			Weighted Average Grant Date Fair Value
Unvested - December 31, 2022		30,876		$	4.30
RSUs granted	—			$	—
RSUs vested		(5,738	)	$	4.30
RSUs cancelled		(19,188	)	$	4.30
Unvested - March 31, 2023		5,950		$	4.30

The fair value of the RSUs is determined on the grant date based on the fair value of the Company’s common stock. The fair value of the RSUs is recognized as expense ratably over the vesting period of two years. The total grant date fair value of the RSUs vested during the three months ended March 31, 2023 was $24,700. The aggregate intrinsic value of the shares of the RSUs vested during the three months ended March 31, 2023 was $5,700.

For the three months ended March 31, 2023 and 2022, the Company recognized stock-based compensation expense of $18,000 and $172,000 respectively, related to these RSUs. As of March 31, 2023, total unamortized stock-based compensation related to RSUs was $23,600, which is expected to be recognized over the remaining estimated vesting period of 0.93 years.

2019 Equity Incentive Plan (Novosteo)

On May 19, 2022, in accordance with the term of the Merger Agreement, the Company assumed the 2019 Novosteo, Inc Equity Incentive Plan (the "2019 Novosteo Plan"). The 2019 Novosteo Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, RSUs, performance units, and performance shares to the Novosteo legacy employees. On the closing date, each outstanding Novosteo stock option granted under Novosteo’s equity compensation plans was converted into a corresponding stock option with the number of shares underlying such option and the applicable exercise price adjusted based on the exchange ratio of 0.0911. Each such converted stock option continues to be subject to substantially the same terms and conditions as applied to the corresponding Novosteo stock option prior to the Acquisition. The maximum aggregate number of shares that may be issued under the 2019 Novosteo Plan is 544,985 shares of the Company’s common stock.

The 2019 Novosteo Plan may be amended, suspended or terminated by the Board at any time, provided such action does not impair the existing rights of any participant, subject to stockholder approval of any amendment to the 2019 Novosteo Plan as required by applicable law or listing requirements. Unless sooner terminated by the Board, the 2019 Novosteo Plan will automatically terminate on May 20, 2029.

As of March 31, 2023, the Company had 70,644 shares available for future issuance under the 2019 Novosteo Plan.

Activity for service-based stock options under the 2019 Novosteo Plan is as follows:


	Number of Options and Unvested Shares			Weighted Average Exercise Price		Weighted average remaining contractual life (years)		Aggregate intrinsic value
								(In thousands)
Balance at December 31, 2022		503,105		$	0.55		9.23	$	44
Options granted		—			—		—		—
Options exercised		—			—		—		—
Options cancelled / forfeited		(28,764	)		0.55		—		—
Balance at March 31, 2023		474,341		$	0.55		8.76	$	479
Options vested and expected to vest as of March 31, 2023		474,341			0.55		8.76		479
Options exercisable as of March 31, 2023		118,582			0.55		8.76		120

For the three months ended March 31, 2023 and 2022, the Company recognized stock-based compensation expense of $59,000 and $0, respectively, related to options granted to employees and non-employees for the 2019 Novosteo plan. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed consolidated statement of operations and comprehensive loss for stock-based compensation arrangements. As of March 31, 2023, total unamortized employee stock-based compensation was $0.9 million, which is expected to be recognized over the remaining estimated vesting period of 2.98 years.

On May 19, 2022, in accordance with the term of the Merger Agreement, the Company assumed a number of restricted stock awards ("RSAs") agreements with certain employees. Each outstanding Novosteo RSA was converted into a corresponding RSA with the number of shares underlying such RSA adjusted based on the exchange ratio of 0.0911. Each such converted RSA will continue to be subject to substantially the same terms and conditions as applied to the corresponding Novosteo RSA prior to the Acquisition.

Restricted Stock Awards


	Restricted Stock Awards Outstanding
	Number of Shares			Weighted Average Grant Date Fair Value
Unvested - December 31, 2022		427,401		$	3.30
RSAs granted	—			$	—
RSAs vested		(39,350	)	$	3.30
RSAs cancelled	—			$	—
Unvested - March 31, 2023		388,051		$	3.30

For the three months ended March 31, 2023 and 2022, the Company recognized stock-based compensation expense of $128,000 and $0, respectively, related to restricted stock awards. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed consolidated statement of operations and comprehensive loss for stock-based compensation arrangements. As of March 31, 2023, total unamortized employee stock-based compensation was $1.2 million, which is expected to be recognized over the remaining estimated vesting period of 2.50 years.

2022 Inducement Plan

On May 9, 2022, the Board approved 4,000,000 shares of the Company’s common stock that may be offered or issued under the Quince Therapeutics, Inc. 2022 Inducement Plan (the "2022 Inducement Plan"). The 2022 Inducement Plan was adopted by the independent members of the Board without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. In accordance with rule awards under those plans may only be made to an employee who has not previously been an employee or member of the Board or of any board of directors of any parent or subsidiary of the Company, or following a bona fide period of non-employment by the Company or a parent or subsidiary, if he or she is granted such award in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. The terms and conditions of the 2022 Inducement Plan are substantially similar to those of the Quince 2019 Plan.

As of March 31, 2023, the Company had 296,245 shares available for future issuance under the 2022 Inducement Plan.

Activity for service-based stock options under the 2022 Inducement Plan is as follows:


	Number of Options and Unvested Shares			Weighted Average Exercise Price		Weighted average remaining contractual life (years)		Aggregate intrinsic value
								(In thousands)
Balance at December 31, 2022		3,742,255		$	2.98		9.39		—
Options granted		—			—		—		—
Options exercised		—			—		—		—
Options cancelled / forfeited		(38,500	)		2.98		—		—
Balance at March 31, 2023		3,703,755		$	2.98		9.14	$	—
Options vested and expected to vest as of March 31, 2023		3,703,755			2.98		9.14		—
Options exercisable as of March 31, 2023		—			—		—		—

For the three months ended March 31, 2023 and 2022, the Company recognized stock-based compensation expense of and $503,000 and $0, respectively, related to options granted to employees and non-employees for the 2022 Inducement Plan. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed consolidated statement of operations and comprehensive for stock-based compensation arrangements. As of March 31, 2023, total unamortized employee stock-based compensation was $6.6 million, which is expected to be recognized over the remaining estimated vesting period of 3.15 years.

Stock-Based Compensation Expense


	Three Months Ended March 31,
	2023		2022
General and administrative expense	$	1,123	$	4,431
Research and development expense		358		4,809
Total stock-based compensation	$	1,481	$	9,240

Employee Stock Purchase Plan

On April 24, 2019, the Board adopted its 2019 Employee Stock Purchase Plan (“2019 ESPP”), which was subsequently approved by the Company’s stockholders and became effective on May 7, 2019, the day immediately prior to the effectiveness of the registration statement filed in connection with the IPO. The 2019 ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code (the “Code”) for U.S. employees. In addition, the 2019 ESPP authorizes grants of purchase rights that do not comply with Section 423 of the Code under a separate non-423 component for non-U.S. employees and certain non-U.S. service providers. The Company has reserved 1,494,530 shares of common stock for issuance under the 2019 ESPP. In addition, the number of shares reserved for issuance under the 2019 ESPP will be increased automatically on the first day of each fiscal year for a period of up to ten years, starting with the 2020 fiscal year, by a number equal to the least of: (i) 536,589 shares; (ii) 1% of the shares of common stock outstanding on the last day of the prior fiscal year; or (iii) such lesser number of shares determined by the Board. The 2019 ESPP is expected to be implemented through a series of offerings under which participants are granted purchase rights to purchase shares of the Company’s common stock on specified dates during such offerings. The Company has not yet approved an offering under the 2019 ESPP.

Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Taxes [Line Items]
Provision for income taxes	$ (248)	$ 0
IPR&D
Income Taxes [Line Items]
Net discrete tax adjustments	$ 200

Schedule of Outstanding Potentially Dilutive Ordinary Shares Excluded from Calculation of Diluted Net Loss Per Share

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

The following outstanding potentially dilutive shares have been excluded from the calculation of diluted net loss per share for the period presented due to their anti-dilutive effect:


	March 31,
	2023		2022
Stock options issued and outstanding		7,592,046		6,223,398
Performance stock options		—		275,000
Restricted stock units		5,950		1,013,500
Restricted stock awards		388,051		—
Total		7,986,047		7,511,898

Stock-Based Compensation - Summary of Restricted Stock Options (Details)	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Restricted Stock Units (RSUs)
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Outstanding, Number of Shares, Unvested, Beginning Balance \| shares	30,876
Number of Shares, vested \| shares	(5,738)
Number of Shares, cancelled \| shares	(19,188)
Outstanding, Number of Shares, Unvested, Ending Balance \| shares	5,950
Outstanding, Weighted-Average Grant Date Fair Value, Unvested, Beginning Balance \| $ / shares	$ 4.30
Weighted-Average Grant Date Fair Value, vested \| $ / shares	4.30
Weighted-Average Grant Date Fair Value, cancelled \| $ / shares	4.30
Outstanding, Weighted-Average Grant Date Fair Value, Unvested, Ending Balance \| $ / shares	$ 4.30
Restricted Stock Awards (RSAs)
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Outstanding, Number of Shares, Unvested, Beginning Balance \| shares	427,401
Number of Shares, vested \| shares	(39,350)
Outstanding, Number of Shares, Unvested, Ending Balance \| shares	388,051
Outstanding, Weighted-Average Grant Date Fair Value, Unvested, Beginning Balance \| $ / shares	$ 3.30
Weighted-Average Grant Date Fair Value, vested \| $ / shares	3.30
Outstanding, Weighted-Average Grant Date Fair Value, Unvested, Ending Balance \| $ / shares	$ 3.30

Balance Sheet Components - Additional Information (Details) - USD ($)
$ in Thousands

3 Months Ended

Mar. 31, 2023

Mar. 31, 2022

Dec. 31, 2022

Restructuring Cost and Reserve [Line Items]

Reductions in Research and Development Expense

$ 0

$ 400

Consignment equipment

100

Australia research and development refundable tax credit

472

$ 1,003

Restructuring Cost and Reserve [Line Items]

2,288

$ 3,567

^[1]

Novosteo

Australia research and development refundable tax credit

500

Schedule of Prepaid Expenses and Other Current Assets

$ 500

[1]	The balance sheet as of December 31, 2022 is derived from the audited financial statements as of that date.

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Operating expenses:
Research and development	$ 3,230	$ 12,757
General and administrative	3,826	9,106
Intangible asset impairment charge	5,900	0
Total operating expenses	12,956	21,863
Loss from operations	(12,956)	(21,863)
Interest income	700	72
Other income (expense) net	(246)	150
Net loss before income tax benefit	(12,502)	(21,641)
Income tax benefit	248	0
Net loss	(12,254)	(21,641)
Other comprehensive income (loss):
Foreign currency translation adjustments	92	(114)
Unrealized gain (loss) on available for sales securities	235	(313)
Total comprehensive loss	$ (11,927)	$ (22,068)
Net loss per share - basic	$ (0.34)	$ (0.72)
Net loss per share - diluted	$ (0.34)	$ (0.72)
Weighted average shares of common stock outstanding - basic	35,855,200	30,134,445
Weighted average shares of common stock outstanding - diluted	35,855,200	30,134,445

Business Combination - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	May 19, 2022	Mar. 31, 2023	Dec. 31, 2022
Business Acquisition [Line Items]
Common stock, par value		$ 0.001	$ 0.001
Novosteo [Member]
Business Acquisition [Line Items]
Number of shares, Canceled and converted	0.0911
Common stock, par value	$ 0.001
Aggregate purchase of common stock shares	507,108
Unvested restricted shares	519,216
Business acquisition, transaction costs	$ 1,100
Payment to acquire business	$ 16,502,587
Shares issued for acquisition	5,000,784
Share price	$ 3.30

Balance Sheet Components (Tables)

3 Months Ended

Mar. 31, 2023

Balance Sheet Components [Abstract]

Prepaid expenses and other current assets consist of the following (in thousands):


	March 31, 2023		December 31, 2022
Prepaid expenses	$	304	$	223
Prepaid insurance		657		977
Prepaid research and development expenses		676		1,088
Australia research and development refundable tax credit		472		1,003
Other current assets		179		276
Total prepaid expenses and other current assets	$	2,288	$	3,567

Schedule of Assets Held for Sale

Assets held for sale consist of the following (in thousands):


	March 31, 2023		December 31, 2022
Assets Held for Sale		105		—
Total Assets Held for Sale	$	105	$	—

Schedule of Property and Equipment, Net

Property and equipment, net consist of the following (in thousands):


	March 31, 2023			December 31, 2022
Computer equipment	$	18		$	18
Lab equipment		—			415
Finance lease right of use assets		—			124
Leasehold improvement		—			21
Less: accumulated amortization and depreciation		(12	)		(185	)
Property and equipment, net	$	6		$	393

Schedule of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):


	March 31, 2023		December 31, 2022
Personnel expenses	$	457	$	1,130
Professional fees		627		234
Research and development expenses		54		497
Current portion of operating lease liabilities		269		377
Current portion of finance lease liability		—		76
Other		57		185
Total accrued expenses and other current liabilities	$	1,464	$	2,499

Summary of Accrued Severance and Related Expenses

Below is the severance accrual activity related to a cost reduction program during the period ended March 31, 2023 (in thousands):


	For the Three Months Ended March 31,
	2023
Beginning accrued severance	$	—
Incurred during the period		268
Severance paid during the period		(237	)
Ending accrued severance	$	31

Stock-Based Compensation - Summary of Employee and Non-Employee Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation	$ 1,481	$ 9,240
General and Administrative Expense
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation	1,123	4,431
Research and Development Expense
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation	$ 358	$ 4,809

Cash, Cash Equivalents and Investments

3 Months Ended

Mar. 31, 2023

Cash, Cash Equivalents and Investments

Note 4. Cash, Cash Equivalents and Investments


	March 31, 2023		December 31, 2022
Cash and cash equivalents:
Cash	$	4,449	$	3,986
Money market funds		15,863		10,988
Repurchase agreements		—		9,000
Government and agency notes		26,402		20,605
Total cash and cash equivalents	$	46,714	$	44,579

Short-term investments:
Certificates of deposit	$	5,166	$	5,390
Municipal notes		400		506
Corporate notes		7,799		12,411
Government and agency notes		30,124		27,295
Total short-term investments	$	43,489	$	45,602

Long-term investments
Certificates of deposit	$	475		712
Government and agency notes		—		2,866
Total long-term investments	$	475	$	3,578

Equity investments without readily determinable fair values assessed under the measurement alternative

Equity investments without readily determinable fair value include ownership rights that either (i) do not meet the definition of in-substance common stock or (ii) do not provide the Company with control or significant influence and these investments do not have readily determinable fair values.

During the three months ended March 31, 2023, the Company received approximately $70,000 in equity investments without readily determinable fair values of Lighthouse, Inc. in exchange for the Legacy Assets. As of March 31, 2023, the Company has not recorded any cumulative upward adjustments or cumulative impairments for its equity investments without readily determinable fair values.

Subsequent Events

3 Months Ended

Mar. 31, 2023

Subsequent Events [Abstract]

Subsequent Events

Note 12. Subsequent Events

Rights Plan

On April 5, 2023, the Board declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of the common stock, par value $0.001 per share (the “Common Shares”), of the Company. The dividend is effective as of April 17, 2023 (the “Record Date”) with respect to stockholders of record on that date. The Rights will also attach to new Common Shares issued after the Record Date. Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $0.001 per share, (the “Preferred Shares”), of the Company at a price of $6.00 per one one-thousandth of a Preferred Share, subject to adjustment. The descriptions and terms of the Rights are set forth in a Rights Agreement, dated as of April 5, 2023 (the “Rights Agreement"), between the Company and American Stock Transfer & Trust Company, LLC. The Rights will expire on April 5, 2024, unless the Rights are earlier redeemed or exchanged by the Company.

Leases

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Leases

Note 6. Leases

Real Estate Operating Leases

In May 2020, the Company entered into a lease agreement to rent space in San Diego, California. The lease agreement is for three years, which commenced August 1, 2020. Total payments under the lease will be $337,000. In June 2022 the Company determined the San Diego facility was no longer required. In June 2022, the Company determined the San Diego facility was no longer required and, as a result of this decision, recorded an impairment loss of approximately $136,000 at that date. The Company paid a security deposit of $29,000 which is included in Prepaid Expenses and Other Current Assets on the March 31, 2023 condensed consolidated balance sheets.

In June 2022, the Company entered into a Sublease Agreement to rent office space in South San Francisco, California. The Sublease agreement commenced on June 18, 2022 and ends on November 30, 2023. The total payments under the term of the lease are expected to be approximately $271,000. The Company paid a security deposit of $17,000 which is included in Prepaid Expenses and Other Current Assets on the March 31, 2023 condensed consolidated balance sheets. At the commencement of the lease, the Company recorded an operating lease right of use asset and liability of $256,000.

In October 2022, the Company entered into a lease agreement to rent space in West Lafayette, Indiana. The lease agreement amended the original lease to transfer liability to the Company due to the Acquisition. The lease agreement is for 15 months, which commenced on October 1, 2022 and ends on December 31, 2023. The total payments under the term of the lease are expected to be approximately $151,000. At the commencement of the lease, the Company recorded an operating lease right of use asset and liability of $145,000.

In December 2022, the Company entered into an amendment to the lease agreement of the rental space in West Lafayette to rent additional space in the same facility under the same terms as its existing facility lease except the terms of payment. Under the

terms of the amendment, the Company will pay rent monthly for the additional space. The Company recorded an operating lease right of use asset and liability of $10,000.

In February 2023, as a result of the decision to discontinue internal development of NOV004 and to pursue out-licensing opportunities, the Company entered into a sublease agreement as the lessor for the majority of the West Lafayette facility. The lease commenced on March 17, 2023 and ends on December 31, 2023. The sublessee paid the Company a security deposit of $6,000 which is included in Accrued expenses and other current liabilities on the March 31, 2023 condensed consolidated balance sheets. Under the terms of the sublease, the Company is entitled to receive a total rental income that is expected to offset rent expense of $57,000. As a result of this decision and the sublease agreement, the Company recorded an impairment loss of approximately $66,000 which is included in Other income (expense), net for the three months ended March 31, 2023 condensed consolidated statement of operations and comprehensive loss.

The Company recognizes lease expense on a straight-line basis over the term of its operating lease. As of March 31, 2023, total future rent expense from all real estate operating leases of $176,000 will be recognized over the remaining term of 8 to 9 months on a straight-line basis over the respective lease period.

Clinical Equipment Financing Lease

As part of the Acquisition, the Company acquired a financing lease for certain lab equipment. The Company recognizes the depreciation expense in research and development expenses in the condensed consolidated statements of operations and comprehensive loss and recognizes expense on a straight-line basis starting when the equipment is placed into service until the end of the remaining contract term of 18 months. Amortization expense of the financing lease right of use asset for the three months ended March 31, 2023 was $3,000.

In February 2023, as a result of the decision to discontinue internal development of NOV004 and to pursue out-licensing opportunities, the Company exercised its purchase option for the financed equipment in order to resell and this equipment is currently held on consignment and is included in Assets held for sale on the March 31, 2023 condensed consolidated balance sheets. As a result of this action, the Company reduced the Finance lease ROU asset and Finance lease liability by approximately $70,000.

Supplemental balance sheet information related to leases as follows (in thousands except lease terms and discount rates):


	March 31, 2023			December 31, 2022
Operating lease right of use asset, net	$	171		$	291
Short-term operating lease liability	$	269		$	377

Finance lease right of use asset		—			124
Finance lease accumulated amortization		—			(50	)
Total finance lease right of use asset, net	$	—		$	74


Weighted average remaining lease term
Operating leases	0.6 years			0.9 years
Finance leases		—		1.0 year

Weighted average discount rate
Operating leases		5.88	%		5.71	%
Finance leases		—	%		4.45	%

Year ended December 31,	Operating Lease			Operating Lease
2023 (excluding the three months ended March 31, 2023)	$	275		$	388
Total lease payments		275			388
Less: imputed interest		(6	)		(11	)
Total remaining lease liability	$	269		$	377

Fair Value Measurements - Summary of Available-for-Sale Securities (Details) - USD ($)
$ in Thousands

Mar. 31, 2023

Dec. 31, 2022

Schedule Of Available For Sale Securities [Line Items]

$ 86,551

$ 90,330

(331)

(562)

Cash equivalents (original maturities within 90 days)

86,229

89,773

Fair Value Total

86,229

42,265

40,593

Short-term investments (maturities within one year)

43,489

45,602

^[1]

Long-term investments (maturities beyond 1 year)

475

3,578

^[1]

Total cash equivalents and investments

89,773

Money market funds

Schedule Of Available For Sale Securities [Line Items]

15,863

10,988

Schedule Of Available For Sale Securities [Line Items]

15,863

10,988

Certificates of deposit

5,738

6,237

(97)

(136)

Schedule Of Available For Sale Securities [Line Items]

5,641

6,102

Repurchase agreements

9,000

Schedule Of Available For Sale Securities [Line Items]

9,000

Corporate notes

7,869

12,575

(70)

(164)

Government and agency notes

7,799

12,411

Schedule Of Available For Sale Securities [Line Items]

56,681

51,020

(164)

(258)

Schedule Of Available For Sale Securities [Line Items]

56,526

50,766

Municipal notes

400

510

(4)