10-Q
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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 March 31, 2024

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: 001-38890

 

Quince Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

90-1024039

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

611 Gateway Boulevard, Suite 273

South San Francisco, California

94080

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (415) 910-5717

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.001 per share

Series A Junior Participating Preferred Purchase Rights*

 

QNCX

N/A

 

The Nasdaq Stock Market LLC

The Nasdaq Stock Market LLC

* The Series A Junior Participating Preferred Purchase Rights expired on April 5, 2024.

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 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 filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

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 May 5, 2024, the registrant had 43,215,233 shares of common stock, $0.001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

8

Condensed Consolidated Balance Sheets

8

Condensed Consolidated Statements of Operations and Comprehensive Loss

9

 

Condensed Consolidated Statements of Stockholders’ Equity

10

Condensed Consolidated Statements of Cash Flows

11

Notes to Unaudited Condensed Consolidated Financial Statements

12

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

32

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

43

Item 4.

Controls and Procedures

44

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings

45

Item 1A.

Risk Factors

45

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

100

Item 3.

Defaults Upon Senior Securities

100

Item 4.

Mine Safety Disclosures

101

Item 5.

Other Information

101

Item 6.

Exhibits

102

Signatures

103

 

1


 

Special Note Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial position, business strategy, drug candidates, planned preclinical studies and clinical trials, research and development costs, regulatory approvals, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "could," "would," "expect," "objective," "plan," "potential," "seek," "grow," "target," "if," and similar expressions intended to identify forward-looking statements.

 

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our other filings with the SEC. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur, and actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

our ability to successfully execute on our current strategic direction;
our ability to successfully integrate EryDel;
future research and development activities, including the scope, success, cost and timing of any future development activities, preclinical studies and clinical trials, including clinical trials of EryDex or other pipeline compounds we advance through the drug development process;
the timing and focus of any potential future clinical trials, and the reporting of data from those trials;
our ability and timing of seeking and obtaining FDA and any other regulatory approvals for our drug candidates;
the willingness of the FDA or other regulatory authorities to accept any future completed or planned clinical and preclinical studies and other work, as the basis for review and approval of our drug candidates for their respective indications;
whether regulatory authorities determine that additional trials or data are necessary in order to accept a new drug application for review and/or approval;
the ability of any future clinical trials to demonstrate safety and efficacy of our EryDex and other drug candidates, and other positive results;
our financial performance;
the sufficiency of our existing cash and cash equivalents to fund our future operating expenses and capital expenditure requirements;
the accuracy of our estimates regarding expenses, future revenue, capital requirements, and needs for additional financing;
our expectations related to the use of our available cash;
our ability to obtain funding for our operations, including funding necessary to develop and commercialize our drug candidates;
our expectations regarding the potential market size and the size of the patient populations for our drug candidates, if approved for commercial use, and the potential market opportunities for commercializing our drug candidates;
our plans relating to commercializing our drug candidates, if approved;

2


 

our plans and ability to establish sales, marketing and distribution infrastructure to commercialize any drug candidates for which we obtain approval;
our ability to attract and retain key scientific and clinical personnel, in light of recent management changes and reduction in force;
our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;
our reliance on third parties to conduct clinical trials of our drug candidates, and for the manufacture of our drug candidates for preclinical studies and clinical trials;
dependence upon the integrity of our supply chain, including multiple single-source suppliers;
our reliance on third-party suppliers for certain of our raw materials and components;
our ability to expand our drug candidates into additional indications and patient populations;
the success of competing therapies that are or may become available;
the beneficial characteristics, safety and efficacy of our drug candidates;
governmental or regulatory delays, information requests, clinical holds, and regulatory developments in the United States and other jurisdictions;
our ability to obtain and maintain regulatory approval of our drug candidates, and any related restrictions, limitations and/or warnings in the label of any approved drug candidate;
our ability to obtain and maintain CE Certificates of conformity for the medical device components of our EryDex System in accordance with applicable legislation governing medical devices;
our ability to transition CE Certifications under the previous Medical Device Directive, to a regulatory framework under MDR;
our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available;
the scope of protection we are able to establish and maintain for intellectual property rights covering our drug candidates and technology;
potential claims relating to our intellectual property; and
our ability to grow our organization and increase the size of our facilities to meet our anticipated growth.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we do not intend to update any of these forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or revised expectations.

You should read this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

 

This Quarterly Report on Form 10-Q contains estimates, projections and other information concerning our industry, our business and the markets for our drug candidates. We obtained the industry, market and similar data set forth in this report from our own internal estimates and research and from academic and industry research, publications, surveys and studies conducted by third parties, including governmental agencies. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. While we believe that the data we use from third parties are reliable, we have not separately verified these data. Further, while we believe our internal research is reliable, such research has not been

3


 

verified by any third party. You are cautioned not to give undue weight to any such information, projections and estimates.

 

4


 

 

DEFINED TERMS

Unless the context requires otherwise, references to “Quince,” “the Company,” “we,” “us,” or “our” in this Quarterly Report on Form 10-Q refer to Quince Therapeutics, Inc. and its consolidated subsidiaries. We also have used several other terms in this Quarterly Report on Form 10-Q, most of which are explained or defined below.

 

Abbreviated Term

Defined Term

2017 Tax Act

Tax Cuts and Jobs Act of 2017

3PLs

Third-party Logistics Providers

AE

Adverse Event

AIA

Leahy-Smith America Invents Act

AIDE

Autologous Intracellular Drug Encapsulation

ANDA

Abbreviated New Drug Application

ARB

Angiotensin Receptor Blockers

ASC

Accounting Standards Codification

ASU

Accounting Standards Update

A-T

Ataxia-Telangiectasia

ATTeST

Ataxia Telangiectasia Trial with the EryDex SysTem

CARES Act

Coronavirus Aid, Relief, and Economic Security Act

C-GIC

Clinical Global Impression of Change

GMP

Current Good Manufacturing Practice

Cmax

The highest (peak) concentration of a drug in the bloodstream or other part of the body after drug administration

CMC

Chemistry Manufacturing Controls

CMO

Contract Manufacturing Organization

CMS

Center for Medicare and Medicaid Services

the Code

Internal Revenue Code of 1986, as amended

COSO framework

Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission

COVID-19

Coronavirus disease

CPA

Certified Public Accountant

Credits

Tax credits

CRO

Contract Research Organization

CTA

Clinical Trial Application

DMD

Duchenne muscular dystrophy

DOJ

United States Department of Justice

DSMB

Data Safety Monitoring Board

DSP

Dexamethasone Sodium Phosphate

EC

European Commission

EMA

European Medicines Agency

EryDel

Quince Therapeutics, S.p.A (previously named EryDel S.p.A.)

EryDex

Red blood cell encapsulated dexamethasone sodium phosphate

EU

European Union

EryKit

Consumable treatment kit that provides EryDex

Exchange Act

Securities Exchange Act of 1934, as amended

FASB

Financial Accounting Standards Board

FCPA

Foreign Assets Controls, the United States Foreign Corrupt Practices Act of 1977

FDA

United States Food and Drug Administration

GAAP

generally accepted accounting principles in the United States

GCP

Good Clinical Practice

GDPR

General Data Protection Regulation

GLP

Good Laboratory Practice

GMP

Good Manufacturing Practice

HHS

United States Department of Health and Human Services

HIPAA

Health Insurance Portability and Accountability Act of 1996

5


 

HITECH

Health Information Technology for Economic and Clinical Health Act of 2009

HPA

Hypothalamic-Pituitary-Adrenal (HPA) Axis

HTA

Health Technology Assessment

ICARS

International Cooperative Ataxia Rating Scale

IND

Investigational New Drug

IPO

Initial Public Offering

IPR&D

In-process Research and Development

IRA

Inflation Reduction Act of 2022

IRB

Institutional Review Board

ITT

Intent To Treat

Jefferies

Jefferies LLC

Lighthouse

Lighthouse Pharmaceuticals, Inc.

LSM

Least Square Mean

MAA

Marketing Authorization Application

MAD

Multiple Ascending Dose

MDD

Medical Devices Directive

MDR

Medical Devices Regulation 2017/745

mICARS

Modified International Cooperative Ataxia Rating Scale

MHRA

United Kingdom Medicines and Healthcare Products Regulatory Agency

MPEEM

Multi-Period Excess Earnings Method

Nasdaq

The Nasdaq Stock Market LLC

NCE

New Chemical Entity

NDA

New Drug Application

NEAT

EryDex Phase 3 Trial (Neurologic Effects of EryDex on Subjects with A-T)

NIH

National Institute of Health

NOL

Net Operating Loss

Novosteo

Novosteo, Inc.

PCAOB

Public Company Accounting Oversight Board

PCT

Patent Cooperation Treaty

PD

Pharmacodynamic

PDMA

Prescription Drug Marketing Act

Process solutions

(Hypotonic Solutions 1& 2 and Hypertonic Solution PIGPA) sterile solutions to allow drug encapsulation and restoring the physiological osmolarity during EryDex process

PP

Per Protocol Population is all patients who enrolled into the study and fulfilled all inclusion/exclusion criteria, did not have any major protocol violations, and completed the initial treatment period of the study as planned.

PK

Pharmacokinetic

PPACA

Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act of 2010

PRF

Purdue Research Foundation

PTE

Patent Term Extension

R&D

Research and Development

RCL

Red Cell Loader, the machine that encapsulates drug into red blood cells

Registrational or pivotal trial

An adequate and well-controlled trial designed to be sufficient to apply for regulatory approval of a drug candidate, although notwithstanding the Company’s design a regulatory agency may determine that further clinical studies or data are required

RmICARS

Rescored modified International Cooperative Ataxia Rating Scale

RBC

Red Blood Cell

RSA

Restricted Stock Awards

RSU

Restricted Stock Units

SAD

Single Ascending Dose

SAE

Serious Adverse Event

Sarbanes-Oxley Act

The Sarbanes-Oxley Act of 2002

SEC

United States Securities and Exchange Commission

Securities Act

Securities Act of 1933

SPA

Special Protocol Assessment

6


 

Syringe Kit

Device for anticoagulated blood collection and for the sterile connection to the EryKit

TCA

Trade and Cooperation Agreement

TEAE

Treatment-Emergent Adverse Effect

UPC

Unified Patent Court

USPTO

The United States Patent and Trademark Office

VA

Veterans Affairs

 

 

7


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

QUINCE THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands except share amounts)

 

 

 

 

March 31, 2024

 

 

December 31, 2023

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

21,813

 

 

$

20,752

 

Short-term investments

 

 

46,010

 

 

 

54,307

 

Prepaid expenses and other current assets

 

 

2,616

 

 

 

2,381

 

Total current assets

 

 

70,439

 

 

 

77,440

 

Property and equipment, net

 

 

234

 

 

 

234

 

Operating lease right-of-use assets

 

 

576

 

 

 

385

 

Goodwill

 

 

17,245

 

 

 

17,625

 

Intangible asset

 

 

62,253

 

 

 

63,672

 

Other assets

 

 

8,467

 

 

 

8,466

 

Equity investments in Lighthouse Pharmaceuticals, Inc.

 

 

78

 

 

 

78

 

Total assets

 

$

159,292

 

 

$

167,900

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

 

2,070

 

 

$

2,033

 

Short-term contingent consideration

 

 

4,748

 

 

 

4,103

 

Accrued expenses and other current liabilities

 

 

3,020

 

 

 

3,436

 

Total current liabilities

 

 

9,838

 

 

 

9,572

 

Long-term debt

 

 

13,518

 

 

 

13,429

 

Long-term operating lease liabilities

 

 

480

 

 

 

321

 

Long-term contingent consideration

 

 

55,503

 

 

 

53,603

 

Deferred tax liabilities

 

 

5,177

 

 

 

5,304

 

Other long-term liabilities

 

 

599

 

 

 

587

 

Total liabilities

 

 

85,115

 

 

 

82,816

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value, 10,000,000 authorized, (100,000 shares of which are designated as Series A Junior Participating Preferred Stock), no shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.

 

 

 

 

 

 

Common stock, $0.001 par value, 100,000,000 shares authorized, 43,215,233 and 42,973,215 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.

 

 

43

 

 

 

43

 

Additional paid in capital

 

 

403,102

 

 

 

401,638

 

Accumulated other comprehensive income

 

 

1,825

 

 

 

3,047

 

Accumulated deficit

 

 

(330,793

)

 

 

(319,644

)

Total stockholders’ equity

 

 

74,177

 

 

 

85,084

 

Total liabilities and stockholders’ equity

 

$

159,292

 

 

$

167,900

 

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

8


 

QUINCE THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except share and per share amounts)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

$

3,702

 

 

$

3,230

 

General and administrative

 

 

4,971

 

 

 

3,826

 

Intangible asset impairment charge

 

 

 

 

 

5,900

 

Fair value adjustment for contingent consideration

 

 

2,545

 

 

 

Total operating expenses

 

 

11,218

 

 

 

12,956

 

Loss from operations

 

 

(11,218

)

 

 

(12,956

)

Fair value adjustment for long-term debt

 

 

(388

)

 

 

Interest income

 

 

887

 

 

 

700

 

Other expense, net

 

 

(399

)

 

 

(246

)

Net loss before income tax benefit

 

 

(11,118

)

 

 

(12,502

)

Income tax (expense) benefit

 

 

(31

)

 

 

248

 

Net loss

 

 

(11,149

)

 

 

(12,254

)

Other comprehensive loss:

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(1,229

)

 

 

92

 

Unrealized gain on available-for-sale securities

 

 

7

 

 

 

235

 

Total comprehensive loss

 

$

(12,371

)

 

$

(11,927

)

Net loss per share - basic and diluted

 

$

(0.26

)

 

$

(0.34

)

Weighted average shares of common stock outstanding - basic and diluted

 

 

43,010,212

 

 

 

35,855,200

 

 

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

9


 

QUINCE THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

(In thousands, except share and per share amounts)

 

For the three months ended March 31, 2024 and 2023

 

 

 

Common Stock

 

 

Additional
Paid in

 

 

Accumulated Other
Comprehensive

 

 

Accumulated

 

 

Total Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income / (Loss)

 

 

Deficit

 

 

Equity

 

Balance January 1, 2024

 

 

42,973,215

 

 

$

43

 

 

$

401,638

 

 

$

3,047

 

 

$

(319,644

)

 

$

85,084

 

Issuance of common stock on exercise of stock options and vesting of restricted stock units

 

 

242,018

 

 

 

 

 

 

190

 

 

 

 

 

 

 

 

 

190

 

Stock based compensation

 

 

 

 

 

 

 

 

1,274

 

 

 

 

 

 

 

 

 

1,274

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(1,229

)

 

 

 

 

 

(1,229

)

Unrealized gain on available for sale investments

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

7

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,149

)

 

 

(11,149

)

Balance March 31, 2024

 

 

43,215,233

 

 

$

43

 

 

$

403,102

 

 

$

1,825

 

 

$

(330,793

)

 

$

74,177

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance January 1, 2023

 

 

36,136,480

 

 

$

36

 

 

$

389,105

 

 

$

(289

)

 

$

(288,259

)

 

$

100,593

 

Issuance of common stock on exercise of stock options and vesting of restricted stock units

 

 

141,953

 

 

 

 

 

 

56

 

 

 

 

 

 

 

 

 

56

 

Stock based compensation

 

 

 

 

 

 

 

 

1,481

 

 

 

 

 

 

 

 

 

1,481

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

92

 

 

 

 

 

 

92

 

Unrealized gain on available for sale investments

 

 

 

 

 

 

 

 

 

 

 

235

 

 

 

 

 

 

235

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,254

)

 

 

(12,254

)

Balance March 31, 2023

 

 

36,278,433

 

 

$

36

 

 

$

390,642

 

 

$

38

 

 

$

(300,513

)

 

$

90,203

 

 

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

10


 

QUINCE THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

For the Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities

 

 

 

 

 

 

Net Loss

 

$

(11,149

)

 

$

(12,254

)

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

 

 

 

 

 

 

Stock based compensation

 

 

1,274

 

 

 

1,481

 

Depreciation and amortization

 

 

40

 

 

 

17

 

Impairment loss on operating lease

 

 

 

 

 

66

 

Loss on disposal of fixed assets

 

 

 

 

 

73

 

Equity investment in Lighthouse, Inc.

 

 

 

 

 

(70

)

Change in the fair value of contingent consideration liabilities

 

 

2,545

 

 

 

 

Change in fair value of long-term debt

 

 

388

 

 

 

 

Non-cash intangibles impairment charge

 

 

 

 

 

5,900

 

Amortization of discount on available-for-sale investments

 

 

(646

)

 

 

(139

)

Change in deferred tax liabilities due to acquisition of Novosteo, Inc.

 

 

 

 

 

(248

)

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(440

)

 

 

1,413

 

Right of use assets, operating leases and operating lease liabilities

 

 

(35

)

 

 

(45

)

Other assets

 

 

(8

)

 

 

Accounts payable

 

 

59

 

 

 

1,081

 

Accrued expenses and other current liabilities

 

 

(381

)

 

 

(844

)

Net cash used in operating activities

 

 

(8,353

)

 

 

(3,569

)

Cash flow from investing activities:

 

 

 

 

 

 

Purchase of investments

 

 

(39,292

)

 

 

(7,691

)

Proceeds from maturities of investments

 

 

48,245

 

 

 

13,277

 

Proceeds from disposal of assets

 

 

 

 

 

90

 

Purchase of property and equipment

 

 

(39

)

 

 

(136

)

Net cash provided by investing activities

 

 

8,914

 

 

 

5,540

 

Cash flows from financing activities:

 

 

 

 

 

 

Payments of finance leases

 

 

 

 

 

(6

)

Proceeds from issuance of common stock upon exercise of stock options

 

 

190

 

 

 

56

 

Net cash provided by financing activities

 

 

190

 

 

 

50

 

Effect of exchange rate changes on cash

 

 

310

 

 

 

114

 

Net increase in cash and cash equivalents

 

 

1,061

 

 

 

2,135

 

Cash and cash equivalents at beginning of period

 

 

20,752

 

 

 

44,579

 

Cash and cash equivalents at end of period

 

$

21,813

 

 

$

46,714

 

 

 

 

 

 

Supplemental disclosures of non-cash information:

 

 

 

 

 

 

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

 

$

227

 

 

 

 

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

 

 

 

 

$

(70

)

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

 

11


 

 

QUINCE THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. Organization

Description of Business

Quince Therapeutics, Inc is a late-stage biotechnology company dedicated to unlocking the power of a patient’s own biology to deliver innovative therapies to those living with rare diseases.

The Company's proprietary AIDE technology platform is an innovative drug/device combination platform that uses an automated process to encapsulate a drug into a patient’s own red blood cells. Red blood cells have several characteristics that make them a potentially ideal vehicle for drug delivery and our AIDE technology is designed to harness many of these benefits to allow for new and improved therapeutic options for patients living with high unmet medical needs. The AIDE technology platform is believed to confer several benefits over conventional therapies which could be applied to a broad range of small or large molecule drugs and biologics. Our Phase 3 lead asset, EryDex, leverages the AIDE technology to encapsulate DSP into a patient’s own red blood cells, and is targeted to treat a rare pediatric neurodegenerative disease, A-T.

By pioneering the delivery of a drug encapsulated in a patient’s own red blood cells, we seek to advance proprietary therapeutics that hold the potential to redefine the standard of care and meaningfully improve the quality of life for patients with rare disease.

Liquidity and Capital Resources

The Company has incurred losses and negative cash flows from operations since inception and expects to continue to generate operating losses for the foreseeable future. As of March 31, 2024, the Company had an accumulated deficit of $330.8 million. Since inception through March 31, 2024, the Company has funded operations primarily with the net proceeds from the issuance of convertible promissory notes, from the issuance of redeemable convertible preferred stock, from the net proceeds from the Company’s initial public offering (the “IPO”) and from the net proceeds of the private investment in public equity transaction (“PIPE Financing”). As of March 31, 2024, the Company had cash, cash equivalents, and short-term investments of $67.8 million, which it believes will be sufficient to fund its planned operations for a period of at least 12 months from the date of the issuance of the accompanying unaudited consolidated financial statements.

Management expects to incur additional losses in the future to fund the Company's operations and conduct product research and development and may need to raise additional capital to fully implement its business plan. The Company may raise additional capital through the issuance of equity securities, debt financings or other sources including out-licensing or partnerships, in order to further implement its business plan. However, if such financing is not available when needed and at adequate levels, the Company will need to reevaluate its operating plan and may be required to delay the development of product candidates.

Note 2. Summary of Significant Accounting Policies

Basis of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Quince Therapeutics, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and pursuant to the instructions of the SEC on Form 10-Q and Article 8 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results of operations and cash flows for the periods presented have been included.

12


 

The condensed consolidated balance sheet as of March 31, 2024, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2024 and 2023, the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2024 and 2023, the condensed consolidated statements of cash flows for the three months ended March 31, 2024 and 2023, and the financial data and other financial information disclosed in the notes to the condensed consolidated financial statements are unaudited. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2023 included in the Company’s Form 10-K filed with the SEC on April 1, 2024. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any other future annual or interim period.

Risks and Uncertainties

The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s potential drug candidates, uncertainty of market acceptance of the Company’s drug candidates, competition from substitute products and larger companies, securing and protecting proprietary technology, strategic relationships and dependence on key individuals and sole source suppliers. The Company’s drug candidates will require approvals from the FDA and comparable foreign regulatory agencies prior to commercial sales in their respective jurisdictions. There can be no assurance that any drug candidate will receive the necessary approvals.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses, as well as related disclosure of contingent assets and liabilities. The most significant estimates used in the Company’s consolidated financial statements relate to the determination of the fair value of stock-based awards and other issuances, determination of the fair value of identifiable assets and liabilities in connection with business combinations including associated intangible assets and goodwill, contingent consideration, accruals for research and development costs, useful lives of long-lived assets, stock-based compensation and related assumptions, the incremental borrowing rate for leases and income tax uncertainties, including a valuation allowance for deferred tax assets, eligibility of expenses for the Australia research and development refundable tax credits, impairment of intangible assets or goodwill; and contingencies. The Company bases its estimates on historical experience and on various other market specific and other relevant assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from the Company’s estimates.

Foreign Currency Translation and Transactions

The functional currency of the Company’s wholly-owned subsidiaries are the Australian Dollar and the Euro. The Company's financial results and financial position are translated into U.S. dollars using exchange rates at balance sheet dates for assets and liabilities and using average exchange rates for income and expenses. The resulting translation differences are presented as a separate component of accumulated other comprehensive loss, as a separate component of equity.

Foreign currency transactions are translated into the functional currencies using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses, resulting from the settlement of such transactions and from the re-measurement of monetary assets and liabilities denominated in foreign currencies using exchange rates at balance sheet date and non-monetary assets and liabilities using historical exchange rates, are recognized in the condensed consolidated statements of operations and comprehensive loss.

Significant Accounting Policies

There have been no significant changes to the accounting policies during the three months ended March 31, 2024, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2023.

13


 

Segments

The Company operates and manages its business as one reportable and operating segment, which is the business of developing and commercializing therapeutics. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for purposes of allocating and evaluating financial performance. All long-lived assets are maintained in Italy.

Business Combinations

The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. If the screen is not met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs, which would meet the requirements of a business.

The Company accounts for business combinations using the acquisition method pursuant to the FASB ASC Topic 805. This method requires, among other things, that results of operations of acquired companies are included in the Company's financial results beginning on the respective acquisition dates, and that identifiable assets acquired and liabilities assumed are recognized at fair value as of the acquisition date. Intangible assets acquired in a business combination are recorded at fair value using one of three valuation approaches, the income approach, the market approach or the cost approach. The Company reviewed the three valuation approaches and determined the income approach was the most appropriate model to approximate fair value for the EryDel Acquisition. The income approach model requires assumptions about the timing and amount of future net cash flows, the cost of capital and terminal values from the perspective of a market participant. Any excess of the fair value of consideration transferred (the “Purchase Price”) over the fair values of the net assets acquired is recognized as goodwill. The fair value of identifiable assets acquired and liabilities assumed in certain cases may be subject to revision based on the final determination of fair value during a period of time not to exceed 12 months from the acquisition date. Legal costs, due diligence costs, business valuation costs and all other acquisition-related costs are expensed when incurred.

 

Intangible Assets

Intangible assets with a definite useful life are amortized on a straight-line basis over the estimated useful life of the related assets. Intangible assets with an indefinite useful life are not amortized. Intangible assets acquired in a business combination or an acquisition that are used in research and development activities (regardless of whether they have an alternative future use) shall be considered indefinite lived until the completion or abandonment of the associated research and development efforts. Intangible assets acquired in a business combination are initially recorded at fair value. During the period that those assets are considered indefinite lived, they shall not be amortized but shall be tested for impairment. Once the research and development efforts are completed or abandoned, the entity shall determine the useful life of the assets. An intangible asset shall be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the intangible asset is less than its carrying amount, If that is the case, the Company performs a quantitative impairment test, and, if the carrying amount of the Company exceeds its fair value, then the Company will recognize an impairment charge for the amount by which its carrying amount exceeds its fair value, not to exceed the carrying amount of the intangible asset. Qualitative factors to be considered include but are not limited to:

 

Cost factors such as increases in raw materials, labor, or other costs that have a negative effect on future expected earnings and cash flows
Legal/regulatory factors or progress and results of clinical trials
Other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation that could affect significant inputs used to determine the fair value of the indefinite-lived intangible asset
Industry and market considerations such as a deterioration in the environment in which an entity operates, an increased competitive environment

14


 

Macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets that could affect significant inputs used to determine the fair value of the indefinite-lived intangible asset

 

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired as of the acquisition date. Goodwill has an indefinite useful life and is not amortized. The Company reviews its goodwill for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of the Company may exceed its fair value. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the Company is less than its carrying amount, including goodwill. If that is the case, the Company performs a quantitative impairment test, and, if the carrying amount of the Company exceeds its fair value, then the Company will recognize an impairment charge for the amount by which its carrying amount exceeds its fair value, not to exceed the carrying amount of the goodwill.

Contingent Consideration

The Company determines the acquisition date fair value of contingent consideration using a discounted cash flow method, with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC Topic 820, Fair Value Measurement. The significant inputs in the Level 3 measurement not supported by market activity included our probability assessments of expected future cash flows related to the Company's acquisition of EryDel in October 2023, during the contingent consideration period, appropriately discounted considering the uncertainties associated with the earnout obligation, and calculated in accordance with the terms of the definitive agreement. The liabilities for the contingent consideration are established at the time of the acquisition and will be evaluated on a quarterly basis based on additional information as it becomes available. Any change in the fair value adjustment is recorded in the earnings of that period. During the three months ended March 31, 2024, the Company recorded a $2.5 million adjustment to increase the fair value of its contingent consideration related to the acquisition of EryDel. The adjustment is reflected within operating loss on the consolidated statement of operations and comprehensive loss. Changes in the fair value of the contingent consideration obligations may result from changes in probability assumptions with respect to the likelihood of achieving the various contingent payment obligations. Significant increases or decreases in the inputs noted above in isolation would result in a significantly lower or higher fair value measurement.

Cash, Cash Equivalents and Investments

The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. Cash equivalents include marketable securities. Management determines the appropriate classification of its investments in debt securities at the time of purchase and at the end of each reporting period. Investments with original maturities beyond three months at the date of purchase and which mature at, or less than twelve months from the balance sheet date are classified as short-term investments. Investments with a maturity beyond twelve months from the balance sheet date are classified as long-term investments. Collectively, cash equivalents, short-term investments and long-term investments are considered available-for-sale and are recorded at fair value. Unrealized gains and losses are recorded as a component of other comprehensive loss in the consolidated statements of operations and included as a separate component of consolidated statements of stockholders’ equity (deficit). Realized gains and losses are included in interest income in the consolidated statements of operations and comprehensive loss.

Premiums (discounts) are amortized (accreted) over the life of the related investment as an adjustment to yield using the straight-line interest method. Dividend and interest income are recognized when earned. These amounts are recorded in “interest income” in the consolidated statements of operations and comprehensive loss.

Recent Accounting Pronouncements Not Yet Adopted

 

The following are new accounting pronouncements that the Company is evaluating for future impacts on its financial statements:

Improvements to Income Tax Disclosures (ASC 740): In December 2023, the FASB issued ASU No. 2023-09, "Improvements to Income Tax Disclosures." This ASU establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Under this ASU, entities must consistently

15


 

categorize and provide greater disaggregation of information in the rate reconciliation. They must also further disaggregate income taxes paid. The ASU is effective in December 2024 under a prospective approach. Early adoption is permitted. The Company is evaluating the disclosure requirements related to the new standard.

Accounting Standard Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”): In November 2023, the FASB issued ASU 2023-07, which is intended to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses, including for single reportable segment entities. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is evaluating the disclosure requirements related to the new standard.

All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable.

Note 3. Fair Value Measurements

The fair value of the Company's financial instruments reflects the amounts that the Company estimates that it would receive in connection with the sale of an asset or pay in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). The Company discloses and recognizes the fair value of the assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows:

Level 1 - Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs other than quoted prices that are observable for the assets or liability either directly or indirectly, including inputs in markets that are not considered to be active.

Level 3 - Inputs that are unobservable. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The Company's financial instruments are carried in the accompanying condensed consolidated balance sheets at amounts that approximate fair value.

The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers within the hierarchy during the quarter ended March 31, 2024 and December 31, 2023.

The Company elected the fair value option for the EIB Loan assumed as part of the EryDel Acquisition. The Company adjusted the EIB Loan to fair value through the change in fair value of debt in the accompanying consolidated statements of operations and comprehensive loss. Subsequent unrealized gains and losses on items for which the fair value option is elected are reported in earnings. The Company will breakout any change in value due to credit loss in accumulated other comprehensive loss. For the three months ended March 31, 2024 , there was no change in value due to credit loss.

16


 

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, 2024 and December 31, 2023 are presented in the following tables (in thousands):

 

 

Fair Value Measurements as of March 31, 2024

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

5,315

 

 

$

5,315

 

 

$

 

 

$

 

Certificates of Deposit

 

 

490

 

 

 

 

 

 

490

 

 

 

 

Government and agency notes

 

 

60,424

 

 

 

 

 

 

60,424

 

 

 

 

Total Assets

 

$

66,229

 

 

$

5,315

 

 

$

60,914

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

 

60,251

 

 

 

 

 

 

 

 

 

60,251

 

Long-term debt

 

 

13,518

 

 

 

 

 

 

 

 

 

13,518

 

Total

 

$

73,769

 

 

$

 

 

$

 

 

$

73,769

 

 

 

 

Fair Value Measurements as of December 31, 2023

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

4,285

 

 

$

4,285

 

 

$

 

 

$

 

Certificates of Deposit

 

 

729

 

 

 

 

 

 

729

 

 

 

 

Government and agency notes

 

 

68,524

 

 

 

3,971

 

 

 

64,553

 

 

 

 

Total Assets

 

$

73,538

 

 

$

8,256

 

 

$

65,282

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

 

57,706

 

 

 

 

 

 

 

 

 

57,706

 

Long-term debt

 

 

13,429

 

 

 

 

 

 

 

 

 

13,429

 

Total

 

$

71,135

 

 

$

 

 

$

 

 

$

71,135

 

The Company classifies certificates of deposit and government and agency notes as Level 2 investments as the Company uses quoted prices for similar assets sourced from certain third-party pricing services. The third-party pricing services generally utilize industry standard valuation models for which all significant inputs are observable, either directly or indirectly, to estimate the price or fair value of the securities. The primary input generally includes reported trades of or quotes on the same or similar securities. The Company does not make additional judgments or assumptions made to the pricing data sourced from the third-party pricing services.

Level 3 Assets and Liabilities

Contingent Consideration

The following table reflects the changes in present value of acquisition related accrued earnouts of contingent consideration liability using significant unobservable inputs (Level 3) for the three months ended March 31, 2024:

 

 

(in thousands)

 

Beginning Balance as of January 1, 2024

 

$

57,706

 

Change in fair value of contingent consideration

 

 

2,545

 

Ending Balance as of March 31, 2024

 

$

60,251

 

The following table summarizes the quantitative information including the unobservable inputs related to the Company's acquisition related accrued earnout as of March 31, 2024 (in thousands except for percentages):

 

 

March 31, 2024

 

 

Valuation Technique

 

Unobservable Input

 

Range (Input Used)

Contingent consideration

 

$

60,251

 

 

Expected present value

 

Probability of achieving
earnout objectives per the
 purchase agreement

 

0% - 100%

Long-term Debt

17


 

The following table presents the changes in the fair value of the Level 3 EIB Loan for the three months ended March 31, 2024:

 

 

(in thousands)

 

Beginning Balance as of January 1, 2024

 

$

13,429

 

Change in fair value

 

 

388

 

Due to foreign currency translation

 

 

(299

)

Ending Balance as of March 31, 2024

 

$

13,518

 

The following table summarizes the quantitative information including the unobservable inputs related to the Company's acquisition related long term debt as of March 31, 2024 (in thousands except for percentages):

 

 

 

March 31, 2024

 

 

Valuation Technique

 

Unobservable Input

 

Range (Input Used)

EIB loan

 

$

13,518

 

 

Expected present value

 

Credit quality of company
 and credit spreads for comparable debt

 

13%

 

Note 4. Cash, Cash Equivalents and Investments

 

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, 2024

 

 

December 31, 2023

 

Cash and cash equivalents:

 

 

 

 

 

 

Cash

 

$

1,594

 

 

$

1,521

 

Money market funds

 

 

5,315

 

 

 

4,285

 

Government and agency notes

 

 

14,904

 

 

 

14,946

 

Total cash and cash equivalents

 

$

21,813

 

 

$

20,752

 

 

 

 

 

 

 

Short-term investments:

 

 

 

 

 

 

Certificates of deposit

 

$

490

 

 

$

729

 

Government and agency notes

 

 

45,520

 

 

 

53,578

 

Total short-term investments

 

$

46,010

 

 

$

54,307

 

 

The Company's investments are classified as available-for-sale securities. As of March 31, 2024, the weighted average remaining contractual maturities of available-for-sale securities was approximately 2 months. The unrealized gain (loss) activity related to the Company’s available-for-sale securities is included in the Company’s accumulated other comprehensive income. There were no significant realized gains or losses recognized on the sale or maturity of available-for-sale securities for the three months ended March 31, 2024 and 2023, and as a result, the Company did not reclassify any amounts out of accumulated other comprehensive income. Based on the Company’s review of its available-for-sale securities, the Company has a limited number of available-for-sale securities in insignificant loss positions as of March 31, 2024. No other-than-temporary impairments on these securities were recognized for the three months ended March 31, 2024 and 2023.

The Company 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, 2024 and 2023.

For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value and recognized in interest and other income, net in the statement of operations and comprehensive loss. If neither criteria is met, the Company evaluates whether the decline in fair value is related to credit-related factors or other factors. In making this assessment, management considers the extent to which fair

18


 

value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. Credit-related impairment losses, limited by the amount that the fair value is less than the amortized cost basis, are recorded through an allowance for credit losses in interest and other income, net.

Any unrealized losses from declines in fair value below the amortized cost basis as a result of non-credit factors are recognized in accumulated other comprehensive income, net of tax as a separate component of stockholders’ equity, along with unrealized gains. Realized gains and losses and declines in fair value, if any, on available-for-sale securities are included in interest and other income, net in the condensed statement of operations and comprehensive loss.

For purposes of identifying and measuring credit-related impairments, the Company’s policy is to exclude applicable accrued interest from both the fair value and amortized cost basis of the related security. The Company has elected to write-off uncollectible accrued interest receivable balances in a timely manner, which is defined by the Company as when interest due becomes 90 days delinquent. The accrued interest write-off will be recorded by reversing interest income. Accrued interest receivable is recorded in other current assets on the condensed balance sheets.

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

 

 

Fair Value Measurements as of March 31, 2024

 

 

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Fair Value

 

Money market funds

 

$

5,315

 

 

$

 

 

$

 

 

$

5,315

 

Certificates of Deposit

 

 

490

 

 

 

 

 

 

 

 

 

490

 

Government and agency notes

 

 

60,426

 

 

 

1

 

 

 

(3

)

 

 

60,424

 

Total cash equivalents and investments

 

$

66,231

 

 

$

1

 

 

$

(3

)

 

$

66,229

 

 

 

 

 

 

 

 

 

 

 

 

 

Classified as:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents (original maturities within 90 days)

 

 

 

 

 

 

 

 

 

 

$

20,219

 

Short-term investments (maturities within one year)

 

 

 

 

 

 

 

 

 

 

 

46,010

 

Total cash equivalents and investments

 

 

 

 

 

 

 

 

 

 

$

66,229

 

 

 

 

Fair Value Measurements as of December 31, 2023

 

 

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Fair Value

 

Money market funds

 

$

4,285

 

 

$

 

 

$

 

 

$

4,285

 

Certificates of Deposit

 

 

735

 

 

 

 

 

 

(6

)

 

 

729

 

Government and agency notes

 

 

68,528

 

 

 

13

 

 

 

(17

)

 

 

68,524

 

Total cash equivalents and investments

 

$

73,548

 

 

$

13

 

 

$

(23

)

 

$

73,538

 

 

 

 

 

 

 

 

 

 

 

 

 

Classified as:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents (original maturities within 90 days)

 

 

 

 

 

 

 

 

 

 

$

19,231

 

Short-term investments (maturities within one year)

 

 

 

 

 

 

 

 

 

 

 

54,307

 

Total

 

 

 

 

 

 

 

 

 

 

$

73,538

 

 

19


 

Note 5. Balance Sheet Components

Prepaid Expenses and Other Current Assets

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