SEC Filing - Biomea Fusion

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐	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: 001-40335

Biomea Fusion, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	82-2520134
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
900 Middlefield Road, 4th Floor Redwood City, California	94063
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (650) 980-9099

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, $0.0001 par value

BMEA

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically 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, 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.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 25, 2023, the registrant had 35,631,576 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Balance Sheets	1
	Condensed Statements of Operations and Comprehensive Loss	2
	Condensed Statements of Stockholders’ Equity	3
	Condensed Statements of Cash Flows	5
	Notes to Unaudited Condensed Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	77
Item 3.	Defaults Upon Senior Securities	77
Item 4.	Mine Safety Disclosures	77
Item 5.	Other Information	77
Item 6.	Exhibits	78
Signatures		79

Special Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future financial condition, future operations, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

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our financial performance;

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the sufficiency of our existing cash, cash equivalents and investments to fund our future operating expenses and capital expenditure requirements;

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our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

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our anticipated use of our existing cash, cash equivalents and investments;

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the implementation of our strategic plans for our business and product candidates;

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the size of the market opportunity for our product candidates and our ability to maximize those opportunities;

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the initiation, timing, progress and results of our research and development programs, preclinical studies, clinical trials and investigational new drug applications (INDs) and other regulatory submissions;

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the beneficial characteristics, safety, efficacy and therapeutic effects of our product candidates and the ability of our FUSION™ System to generate additional product candidates with such characteristics;

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the timing, progress and focus of our ongoing and future clinical trials, and the reporting of data from those trials;

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the ability of our clinical trials to demonstrate safety and efficacy of our product candidates, and other favorable results;

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our plans relating to the clinical development of our product candidates, including the disease areas to be evaluated;

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our ability to obtain and maintain regulatory approval of our product candidates;

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our plans relating to commercializing our product candidates, if approved;

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our estimates of the patient populations addressable by our product candidates, if approved, and the number of participants that will enroll in our ongoing and planned clinical trials;

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the expected benefits of potential future strategic collaborations with third parties and our ability to attract collaborators with development, regulatory and commercialization expertise;

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the success of competing therapies that are or may become available;

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the timing or likelihood of regulatory filings and approvals, including our expectation to seek special designations, such as orphan drug designation, for our product candidates;

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our plans relating to the further development and manufacturing of our product candidates, including for additional indications that we may pursue;

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existing regulations and regulatory developments in the United States and other jurisdictions;

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our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available;

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our plan to rely on third parties to conduct and support preclinical and clinical development;

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our ability to retain the continued service of our key personnel and to identify, hire and then retain additional qualified personnel;

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the impact of any pandemics or other related disruptions on our business;

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unfavorable global economic conditions, including inflationary pressures, market volatility, acts of war and civil and political unrest; and

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our expectations regarding the period during which we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012, as amended.

We have based these forward-looking statements largely on our current expectations, estimates, forecasts and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. You should refer to the section titled “Risk Factors” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. We qualify all of the forward-looking statements in this Quarterly Report on Form 10-Q by these cautionary statements.

Biomea Fusion, Inc., the Biomea logo and our other registered or common law trademarks, trade names or service marks appearing in this Quarterly Report on Form 10-Q are owned by us. This Quarterly Report on Form 10-Q contains references to our trademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Quarterly Report on Form 10-Q, including logos, artwork and other visual displays, generally appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

Summary Risk Factors

The following is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not address every aspect of our risk factors, all of the risks that we face, or other factors not presently known to us or that we currently believe are immaterial. Additional discussion of the risks summarized in these summary risk factors, and other risks that we face, can be found under the heading “Risk Factors” in this Quarterly Report on Form 10-Q and should be carefully considered, together with other information in this Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission, or SEC, before making investment decisions regarding our common stock.

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We have a limited operating history, have not completed the clinical development of any product candidates, have no products approved for commercial sale, and have not generated any revenue, which may make it difficult for you to evaluate our current business and likelihood of success and viability.

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We will require substantial additional capital to finance our operations. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and product development programs or future commercialization efforts.

•

Our discovery and preclinical development is focused on the development of novel covalent small-molecule therapies to treat patients with genetically-defined cancers and metabolic diseases, and the approach we are taking to discover and develop such binders is novel, may never lead to marketable products and may not ultimately represent a significant market.

•

Our novel approach to the discovery and development of our current and future product candidates is unproven, and we may not be successful in our efforts to use and expand our FUSION System to build a pipeline of product candidates with commercial value.

•

We are very early in our development efforts and are substantially dependent on our product candidates, BMF-219 and BMF-500. If we are unable to advance BMF-219, BMF-500 or any of our future product candidates through clinical development, obtain regulatory approval and ultimately commercialize BMF-219, BMF-500 or any of our future product candidates, or experience significant delays in doing so, our business, financial condition and results of operations will be materially adversely affected.

•

Preclinical and clinical drug development is a lengthy and expensive process, with an uncertain outcome. Our preclinical and clinical programs may experience delays or may never be initiated or completed, which would adversely affect our ability to obtain regulatory approvals or commercialize our product candidates on a timely basis or at all, which could have an adverse effect on our business.

•

The results of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and the results of our clinical trials may not satisfy the requirements of the FDA or other comparable foreign regulatory authorities. Successful preclinical studies and clinical trials cannot provide assurance of successful commercialization.

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We have limited experience as a company in conducting clinical trials and have not successfully completed the clinical development of any product candidates to date.

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Adverse global economic conditions, including supply chain issues, and inflationary pressures could materially adversely impact our business, results of operations, and financial condition, including our preclinical studies and clinical trials.

iii

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The regulatory approval processes of the FDA and other comparable foreign regulatory authorities are lengthy, time consuming and inherently unpredictable. If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals for our product candidates, we will not be able to commercialize, or will be delayed in commercializing, our product candidates, and our ability to generate revenue will be materially impaired.

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The price of our stock may be volatile, and you may not be able to resell shares of our common stock at or above the price you paid.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Biomea Fusion, Inc.

Condensed Balance Sheets

(Unaudited)

(in thousands, except share and per share data)


	June 30,			December 31,
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	222,908		$	111,899
Short-term investments		—			1,150
Prepaid expenses and other current assets		3,028			4,770
Total current assets		225,936			117,819
Property and equipment, net		5,979			5,841
Operating lease right-of-use assets		12,502			2,151
Restricted cash		351			351
Other assets		3,906			3,145
Total assets	$	248,674		$	129,307
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	4,154		$	6,826
Accrued expenses and other current liabilities		7,486			11,657
Operating lease liabilities, current		2,717			618
Total current liabilities		14,357			19,101
Operating lease liabilities, non-current		10,012			1,667
Total liabilities		24,369			20,768
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 0 shares issued and outstanding as of June 30, 2023 and December 31, 2022		—			—
Common stock, $0.0001 par value; 300,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 35,630,276 and 29,561,554 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		4			3
Additional paid-in capital		409,813			240,107
Accumulated other comprehensive income		—			(1	)
Accumulated deficit		(185,512	)		(131,570	)
Total stockholders' equity		224,305			108,539
Total liabilities and stockholders' equity	$	248,674		$	129,307

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

Biomea Fusion, Inc.

Condensed Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share data)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Operating expenses:
Research and development	$	21,938		$	12,582		$	46,333		$	23,932
General and administrative		5,719			4,892			11,355			9,942
Total operating expenses		27,657			17,474			57,688			33,874
Loss from operations		(27,657	)		(17,474	)		(57,688	)		(33,874	)
Interest and other income, net		2,766			216			3,746			250
Net loss	$	(24,891	)	$	(17,258	)	$	(53,942	)	$	(33,624	)
Other comprehensive loss:
Unrealized gain (loss) on investments, net		—			6			1			(7	)
Comprehensive loss	$	(24,891	)	$	(17,252	)	$	(53,941	)	$	(33,631	)
Net loss per common share, basic and diluted	$	(0.70	)	$	(0.59	)	$	(1.66	)	$	(1.15	)
Weighted-average number of common shares used to compute basic and diluted net loss per common share		35,348,293			29,196,398			32,483,297			29,161,437

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

Biomea Fusion, Inc.

Condensed Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)


	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital		Gain (Loss)			Deficit			Equity
Balance at December 31, 2022		29,561,554	$	3	$	240,107	$	(1	)	$	(131,570	)	$	108,539
Exercise of stock options		44,501		—		407		—			—			407
Issuance of restricted stock		45,079		—		—		—			—			—
Stock-based compensation expense		—		—		3,233		—			—			3,233
Unrealized gain (loss) on investments, net		—		—		—		1			—			1
Net loss		—		—		—		—			(29,051	)		(29,051	)
Balance at March 31, 2023		29,651,134	$	3	$	243,747	$	—		$	(160,621	)	$	83,129
Issuance of common stock from public offering, net of offering costs		5,750,000	$	1	$	161,802	$	—		$	—			161,803
Exercise of stock options		31,560		—		216		—			—			216
Issuance of restricted stock		45,080		—		—		—			—			—
Purchases under employee stock purchase plan		152,502		—		612		—			—			612
Stock-based compensation expense		—		—		3,436		—			—			3,436
Unrealized gain (loss) on investments, net		—		—		—		—			—			—
Net loss		—		—		—		—			(24,891	)		(24,891	)
Balance at June 30, 2023		35,630,276	$	4	$	409,813	$	-		$	(185,512	)	$	224,305


	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital		Gain (Loss)			Deficit			Equity
Balance at December 31, 2021		29,115,421	$	3	$	228,532	$	(10	)	$	(49,742	)	$	178,783
Exercise of stock options		6,044		—		31		—			—			31
Issuance of restricted stock		47,216		—		—		—			—			—
Stock-based compensation expense		—		—		2,330		—			—			2,330
Unrealized gain (loss) on investments, net		—		—		—		(13	)		—			(13	)
Net loss		—		—		—		—			(16,366	)		(16,366	)
Balance at March 31, 2022		29,168,681	$	3	$	230,893	$	(23	)	$	(66,108	)	$	164,765
Exercise of stock options		9,366		—		62		—			—			62
Issuance of restricted stock		47,216		—		—		—			—			—
Purchases under employee stock purchase plan		54,868		—		256								256
Stock-based compensation expense		—		—		2,559		—			—			2,559
Unrealized gain (loss) on investments, net		—		—		—		6			—			6
Net loss		—		—		—		—			(17,258	)		(17,258	)
Balance at June 30, 2022		29,280,131	$	3	$	233,770	$	(17	)	$	(83,366	)	$	150,390

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

Biomea Fusion, Inc.

Condensed Statements of Cash Flows

(Unaudited)

(in thousands)


	Six Months Ended
	June 30,
	2023			2022
Operating Activities
Net loss	$	(53,942	)	$	(33,624	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation expense		676			336
Non-cash operating lease expense		1,285			282
Stock-based compensation expense		6,669			4,889
Net amortization of premiums and accretion of discounts on investments		1			126
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		1,742			(1,460	)
Other assets		(761	)		(394	)
Accounts payable		(163	)		1,081
Accrued expenses and other current liabilities		(4,171	)		3,618
Operating lease liabilities		(1,192	)		(275	)
Net cash used in operating activities		(49,856	)		(25,421	)
Investing Activities
Purchase of property and equipment		(3,323	)		(368	)
Purchase of investments		—			—
Maturities of investments		1,150			28,185
Net cash provided by (used in) investing activities		(2,173	)		27,817
Financing Activities
Proceeds from issuance of common stock from public offering, net of offering costs		161,803			—
Proceeds from stock option exercise and purchases under the employee stock purchase plan		1,235			349
Net cash provided by financing activities		163,038			349
Net increase in cash, cash equivalents, and restricted cash		111,009			2,745
Cash, cash equivalents, and restricted cash at the beginning of the period		112,250			146,087
Cash, cash equivalents, and restricted cash at the end of the period	$	223,259		$	148,832

Non-cash financing and investing activities:
Acquisition of operating lease right-of-use assets	$	11,639		$	—
Acquisition of property and equipment in accounts payable and accrued liabilities	$	28		$	—

Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents	$	222,908		$	148,481
Restricted cash		351			351
Total cash and cash equivalents and restricted cash	$	223,259		$	148,832

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

Biomea Fusion, Inc.

Notes to Unaudited Condensed Financial Statements

Note 1. Organization

Organization

Biomea Fusion, Inc., (the Company), was established in the state of Delaware in August 2017 as Biomea Fusion, LLC. In December 2020, all outstanding membership interests in Biomea Fusion, LLC were converted into equity interests in the Company. The capitalization information included in these unaudited condensed financial statements is consistently presented as if it is that of Biomea Fusion, Inc., even during the prior period when investors held their equity interests in Biomea Fusion, LLC.

The Company is a clinical-stage biopharmaceutical company dedicated to discovering and developing novel covalent small molecules to treat and improve the lives of patients with genetically defined cancers and metabolic diseases. Since its inception in 2017, the Company has built its proprietary FUSIONTM System platform to design and develop a pipeline of novel covalent product candidates.

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2022 has been derived from the audited financial statements at that date but does not include all of the information required by GAAP for complete financial statements. These unaudited condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments which are necessary for a fair statement of the Company’s financial information. The unaudited interim results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any other interim period or for any other future year.

The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2023.

Liquidity and Capital Resources

The Company has incurred net operating losses and negative cash flows from operations since its inception and had an accumulated deficit of $185.5 million at June 30, 2023. As of June 30, 2023, the Company had cash, cash equivalents, restricted cash, and investments of $223.3 million. Management believes that the existing financial resources are sufficient to continue operating activities for at least one year past the issuance date of these unaudited condensed financial statements. The Company has historically financed its operations primarily through the sale of convertible preferred stock and common stock and the issuance of unsecured promissory notes. To date, none of the Company’s product candidates have been approved for sale, and the Company has not generated any revenue since inception. Management expects operating losses to continue and increase for the foreseeable future, as the Company continues clinical development activities for its lead product candidate and advances the preclinical and clinical development of other product candidates. The Company’s prospects are subject to risks, expenses and uncertainties frequently encountered by companies in the biotechnology industry as discussed below. There can be no assurance that in the event the Company requires additional financing, such financing will be available on terms which are favorable or at all. Failure to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending would have a material adverse effect on the Company’s ability to achieve its intended business objectives.

Note 2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of these unaudited condensed financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to clinical and preclinical accruals, manufacturing accruals, fair value of common stock, stock-based compensation, operating lease right-of-use (ROU) assets and liabilities and income taxes. The Company bases its estimates on its historical experience and also on assumptions that it believes are reasonable; however, actual results could significantly differ from those estimates.

Segments

The Company operates and manages its business as one reportable and operating segment, which is the business of developing covalent small molecule drugs to treat patients with genetically defined cancers and metabolic diseases. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for allocating resources and evaluating financial performance. All long-lived assets are maintained in, and all losses are attributable to, the United States of America.

Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to a concentration of credit risk, consist primarily of cash, cash equivalents and investments. The Company maintains bank deposits in federally insured financial institutions and these deposits may exceed federally insured limits. The Company invests in money market funds, U.S. Treasury securities, U.S. government agency securities, corporate notes, commercial paper, and asset backed securities. The Company is exposed to credit risk in the event of default by the financial institutions holding its cash and cash equivalents and issuers of investments to the extent recorded in the balance sheet. The Company’s investment policy limits investments to money market funds, certain types of debt securities issued by the U.S. Government and its agencies, corporate notes and commercial paper, and places restrictions on the credit ratings, maturities and concentration by type and issuer. The Company has not experienced any losses on its deposits of cash, cash equivalents and investments.

The Company’s future results of operations involve a number of other 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 preclinical studies, clinical trials and achievement of milestones, uncertainty of regulatory approval of the Company’s existing and potential product candidates, uncertainty of market acceptance of the Company’s product candidates (if approved), competition from substitute products and larger companies, securing and protecting proprietary technology, strategic relationships and dependence on key individuals or sole source suppliers and changes in the Company's operating expenses as a result of these uncertainties and other factors, such as inflation. The Company’s product candidates require approvals from the U.S. Food and Drug Administration and comparable foreign regulatory agencies prior to commercial sales in their respective jurisdictions. There can be no assurance that any product candidates will receive the necessary approvals. If the Company is denied approval, approval is delayed or the Company is unable to maintain approval for any product candidate, it could have a materially adverse impact on the Company.

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be cash and cash equivalents. Cash equivalents consist of amounts invested in money market accounts and are stated at fair value. Restricted cash consists of two stand-by letters of credit issued to the Company’s landlord in connection with two of the Company’s leases.

Investments

The Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments, on January 1, 2023. Investments consist of money market funds, U.S. Treasury Securities, and corporate notes. The Company’s investments have been classified and accounted for as available-for-sale securities. Fixed income securities consist of U.S. Treasury securities, U.S. government agency securities, corporate debt securities, commercial paper and asset backed securities. The specific identification method is used to determine the cost basis of fixed income securities sold. These securities are recorded on the balance sheets at fair value and reported in cash equivalents, short-term investments, or long-term investments. The Company classifies its investments with the remaining effective maturities of twelve months or less from the balance sheet date as short-term; otherwise, they are classified as long-term on the balance sheet.

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. 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 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. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security is compared to the amortized cost basis of the security. If the present value of cash flows expected to be

collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss on the condensed balance sheet, limited by the amount that the fair value is less than the amortized cost basis. 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 in the statement of operations.

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 (loss), 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 statement of operations.

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 to prepaid expenses and other current assets.

Property and Equipment, Net

Property and equipment are recorded at cost net of accumulated depreciation and amortization. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets. The useful lives of property and equipment are as follows:


Computer equipment	3 years
Furniture and fixtures	5 years
Laboratory equipment	5 years
Leasehold improvements	Shorter of remaining lease term or estimated useful life

Upon retirement or sale of the assets, the cost and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is recorded to the statements of operations. Repairs and maintenance are expensed as incurred.

Leases

The Company determines if an arrangement is a lease at inception in accordance with Accounting Standard Codification 842, “Leases” (ASC 842). As of June 30, 2023, the Company's lease population consisted of real estate leases and th