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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 September 30, 2020
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: 001-39593
Shattuck Labs, Inc.
(Exact name of registrant as specified in its charter)
Delaware
81-2575858
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
1018 W. 11th Street, Suite 100
Austin, TX 78703
(919) 864-2700
(Address of principal executive offices including zip code)
Former name, former address and former fiscal year, if changed since last report: N/A
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per shareSTTKThe 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.
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 November 1, 2020, the registrant had 41,744,237 shares of common stock, $0.0001 par value per share, outstanding.




SHATTUCK LABS, INC.
TABLE OF CONTENTS
Page
PART I1
Item 1.
1
1
2
3
5
6
19
Item 3.32
Item 4.32
PART II
33
Item 1.33
33
84
Item 3.85
Item 4.85
Item 5.85
86

87



CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS
This quarterly report contains “forward-looking statements” within the meaning of the federal securities laws, which statements are subject to substantial risks and uncertainties and are based on estimates and assumptions. All statements, including statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, financing needs, plans or intentions relating to products and markets, and business trends and other information referred to under the sections entitled “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “might,” “will,” “objective,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “design,” “estimate,” “predict,” “potential,” “plan,” or the negative of these terms, and similar expressions intended to identify forward-looking statements. Forward-looking statements are not historical facts, and reflect our current views with respect to future events. Given the significant uncertainties, you should not place undue reliance on these forward-looking statements.
There are a number of risks, uncertainties and other factors that could cause our actual results to differ materially from the forward-looking statements expressed or implied in this filing. Such risks, uncertainties and other factors include, among others, the following risks, uncertainties and factors:
the recent and ongoing COVID-19 pandemic and associated shelter-in-place orders;
the timing of the initiation, progress, and expected results of our preclinical studies, our clinical trials and our research and development programs;
our ability to retain the continued service of our key executives and to identify, hire, and retain additional qualified professionals;
our ability to advance product candidates into, and successfully complete, preclinical studies and clinical trials;
the timing or likelihood of regulatory filings and approvals;
the commercialization of our product candidates, if approved;
our ability and the potential to successfully manufacture and supply our product candidates for clinical trials and for commercial use, if approved;
the pricing, coverage, and reimbursement of our product candidates, if approved;
the implementation of our business model, strategic plans for our business, and product candidates;
• the scope of protection we are able to establish and maintain for intellectual property rights covering our technology platforms, including our ARC and GADLEN product candidates and other product candidates, including the defense of such intellectual property rights;
our potential need to obtain additional licenses of third-party technology that may not be available to us or are available only on commercially unreasonable terms, and which may cause us to operate our business in a more costly or otherwise adverse manner that was not anticipated;
our ability to enter into strategic arrangements and/or collaborations and to realize the potential benefits of such arrangements;
our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;
our estimates regarding the market opportunity for our product candidates, if approved;
our estimates regarding expenses, capital requirements, and needs for additional financing and our ability to obtain additional capital;
our financial performance; and



developments relating to our competitors and our industry, including competing product candidates and therapies.
There may be other factors that may cause our actual results to differ materially from the forward-looking statements expressed or implied in this filing, including factors disclosed in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You should evaluate all forward-looking statements made in this filing in the context of these risks and uncertainties.
We caution you that the risks, uncertainties, and other factors referred to above and elsewhere in this filing may not contain all of the risks, uncertainties and other factors that may affect our future results and operations. Moreover, new risks will emerge from time to time. It is not possible for our management to predict all risks. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected.
Any forward-looking statements contained in this Quarterly Report on Form 10-Q speak only as of the date hereof and not of any future date, and we expressly disclaim any intent to update any forward-looking statements, whether as a result of new information, future events or otherwise.




PART I. - FINANCIAL INFORMATION
Item 1.         Financial Statements
SHATTUCK LABS, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)
September 30,
2020
December 31,
2019
Assets
Current assets:
Cash and cash equivalents$128,600 $7,013 
Short-term investments6,339 32,074 
Prepaid expenses and other current assets7,315 3,355 
Total current assets142,254 42,442 
Property and equipment, net2,515 2,437 
Other assets89 90 
Total assets$144,858 $44,969 
Liabilities, redeemable convertible preferred stock and stockholders’ deficit
Current liabilities:
Accounts payable$1,350 $3,051 
Accrued expenses6,518 4,039 
Deferred revenue – related party8,613 12,894 
Total current liabilities16,481 19,984 
Deferred revenue – related party net of current portion19,722 9,571 
Deferred rent911 898 
Total liabilities37,114 30,453 
Commitments and contingencies (Note 5)
Redeemable convertible preferred stock:
Series A redeemable convertible preferred stock, $0.0001 par value: 1,093,019 shares authorized, issued and outstanding as of September 30, 2020 and December 31, 2019; (liquidation value of $68,286 as of September 30, 2020)
49,064 49,064 
Series B redeemable convertible preferred stock, $0.0001 par value: 550,571 shares authorized as of September 30, 2020 and December 31, 2019; 550,571 and none issued and outstanding as of September 30, 2020 and December 31, 2019, respectively; (liquidation value of $34,620 as of September 30, 2020)
34,427 — 
Series B-1 redeemable convertible preferred stock, $0.0001 par value: 1,319,964 shares authorized as of September 30, 2020 and December 31, 2019, 1,319,964 and none issued and outstanding as of September 30, 2020 and December 31, 2019, respectively; (liquidation value of $83,000 as of September 30, 2020)
82,613 — 
Stockholders' deficit:
Common stock, $0.0001 par value: 10,000,000 shares authorized; 7,796,069 and 7,632,777 shares issued and 7,779,280 and 7,600,877 shares outstanding at September 30, 2020 and December 31, 2019, respectively
1 1 
Additional paid-in capital1,730 887 
Accumulated other comprehensive income (loss)(10)54 
Accumulated deficit(60,081)(35,490)
Total stockholders’ deficit(58,360)(34,548)
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit$144,858 $44,969 
See accompanying notes to unaudited interim condensed financial statements
1


SHATTUCK LABS, INC.
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except share and per share amounts)
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Collaboration revenue – related party$2,435 $1,784 $8,592 $7,066 
Operating expenses:
Research and development11,804 7,945 27,696 20,447 
General and administrative2,470 1,366 5,816 4,062 
Expense from operations14,274 9,311 33,512 24,509 
Loss from operations(11,839)(7,527)(24,920)(17,443)
Other income (expense):
Interest income86 279 474 902 
Other(76)(31)(145)(72)
Total other income10 248 329 830 
Net loss$(11,829)$(7,279)$(24,591)$(16,613)
Unrealized gain (loss) on short-term investments(28)10 (64)119 
Comprehensive loss$(11,857)$(7,269)$(24,655)$(16,494)
Net loss per share – basic and diluted$(1.54)$(0.96)$(3.21)$(2.20)
Weighted-average shares outstanding – basic and diluted7,700,371 7,572,746 7,656,077 7,543,831 

See accompanying notes to unaudited interim condensed financial statements
2


SHATTUCK LABS, INC.
CONDENSED STATEMENT OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
(Unaudited)
(In thousands, except share amounts)
Three and Nine Months Ended September 30, 2020
Series A Redeemable Convertible
Preferred Stock
Series B Redeemable Convertible
Preferred Stock
Series B-1 Redeemable Convertible
Preferred Stock
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders’ Deficit
SharesAmountShares  AmountSharesAmountSharesAmount
Balance at January 1, 20201,093,019 $49,064  $  $ 7,600,877 $1 $887 $54 $(35,490)(34,548)
Sale of Series B redeemable convertible preferred stock, net of issuance costs— — 550,571 34,427 — — — — — — — — 
Stock-based compensation expense
— — — — — — — — 180 — — 180 
Unrealized gain on investments
— — — — — — — — — 61 — 61 
Exercise of stock options
— — — — — — 28,113 — — — — — 
Vesting of common stock previously subject to vesting
— — — — — — 5,037 — — — — — 
Net loss— — — — — — — — — — (6,788)(6,788)
Balance at March 31, 20201,093,019 $49,064 550,571 $34,427  $ 7,634,027 $1 $1,067 $115 $(42,278)$(41,095)
Sale of Series B-1 redeemable convertible preferred stock, net of issuance costs— — — — 1,319,964 82,618 — — — — — — 
Stock-based compensation expense
— — — — — — — — 137 — — 137 
Unrealized loss on investments— — — — — — — — — (97)— (97)
Exercise of stock options
— — — — — — 20,131 — — — — — 
Vesting of common stock previously subject to vesting
— — — — — — 5,037 — — — — — 
Net loss— — — — — — — — — — (5,974)(5,974)
Balance at June 30, 20201,093,019 $49,064 550,571 $34,427 1,319,964 $82,618 7,659,195 $1 $1,204 $18 $(48,252)(47,029)
Series B-1 additional issuance costs— — — — — (5)— — — — — — 
Stock-based compensation expense
— — — — — — — — 312 — — 312 
Unrealized loss on investments— — — — — — — — — (28)— (28)
Exercise of stock options
— — — — — — 115,048 — 214 — — 214 
Vesting of common stock previously subject to vesting
— — — — — — 5,037 — — — — — 
Net loss— — — — — — — — — — (11,829)(11,829)
Balance at September 30, 20201,093,019 $49,064 550,571 $34,427 1,319,964 $82,613 7,779,280 $1 $1,730 $(10)$(60,081)(58,360)

See accompanying notes to unaudited interim condensed financial statements
3


SHATTUCK LABS, INC.
CONDENSED STATEMENT OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT (Continued)
(Unaudited)
(In thousands, except share amounts)
Three and Nine Months Ended September 30, 2019
Series A Redeemable Convertible
Preferred Stock  
Series B Redeemable Convertible
Preferred Stock
Series B-1 Redeemable Convertible
Preferred Stock
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders’ Deficit
SharesAmountShares  AmountSharesAmountShares  Amount  
Balance at January 1, 20191,093,019 $49,064 — $— — $— 7,495,988 $1 $426 $— $(11,508)(11,081)
Stock-based compensation expense— — — — — — — — 66 — — 66 
Unrealized gain on investments— — — — — — — — — 44 — 44 
Exercise of stock options— — — — — — 25,488 — — — — — 
Vesting of common stock previously subject to vesting— — — — — — 5,037 — — — — — 
Net loss— — — — — — — — — — (3,449)(3,449)
Balance at March 31, 20191,093,019 $49,064 — $— — $— 7,526,513 $1 $492 $44 $(14,957)$(14,420)
Stock-based compensation expense— — — — — — — — 87 — — 87 
Unrealized gain on investments— — — — — — — — — 65 — 65 
Exercise of stock options— — — — — — 24,401 — — — — — 
Vesting of common stock previously subject to vesting— — — — — — 5,037 — — — — — 
Net loss— — — — — — — — — — (5,885)(5,885)
Balance at June 30, 20191,093,019 $49,064 — $— — $— 7,555,951 $1 $579 $109 $(20,842)(20,153)
Stock-based compensation expense— — — — — — — — 144 — — 144 
Unrealized gain on investments— — — — — — — — — 10 — 10 
Exercise of stock options— — — — — — 26,159 — — — — — 
Vesting of common stock previously subject to vesting— — — — — — 5,037 — — — — — 
Net loss— — — — — — — — — — (7,279)(7,279)
Balance at September 30, 20191,093,019 $49,064 — $— — $— 7,587,147 $1 $723 $119 $(28,121)(27,278)
See accompanying notes to unaudited interim condensed financial statements
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SHATTUCK LABS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
20202019
Cash flows from operations:
Net loss$(24,591)$(16,613)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation448 403 
Stock-based compensation629 297 
Accretion of short-term investments(22)(82)
Changes in operating assets and liabilities:
Accounts receivable 207 
Prepaid expenses and other current assets(2,214)1,649 
Non-current assets(33) 
Accounts payable(1,701)(1,223)
Accrued expenses1,985 1,169 
Deferred revenue—related party5,870 (146)
Deferred rent13 985 
Net cash used in operating activities(19,616)(13,354)
Cash flows from investing activities:
Purchase of property and equipment(526)(445)
Sale and maturities of short-term investments31,270 32,642 
Purchases of short-term investments(5,578)(35,259)
Net cash (used in) provided by investing activities25,166 (3,062)
Cash flows from financing activities:
Payments for public offering costs(1,251) 
Proceeds from the sale of Series B redeemable convertible preferred stock, net of issuance costs34,461  
Proceeds from the sale of Series B-1 redeemable convertible preferred stock, net of issuance costs82,613  
Exercise of stock options214  
Net cash provided by financing activities116,037  
Net increase (decrease) in cash and cash equivalents121,587 (16,416)
Cash and cash equivalents, beginning of period7,013 31,644 
Cash and cash equivalents, end of period$128,600 $15,228 
Supplemental disclosures of non-cash financial activities:
Unrealized gain (loss) on short-term investments$(64)$119 
Accrued public offering costs in other current assets$495 $ 

See accompanying notes to unaudited interim condensed financial statements
5


SHATTUCK LABS, INC.
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
1. Organization and Description of Business
Shattuck Labs, Inc. (the “Company”) was incorporated in 2016 in the State of Delaware and is a clinical-stage biopharmaceutical company developing dual-sided fusion proteins, including its ARC® and GADLEN platforms, as novel classes of biologic medicines capable of multifunctional activity with potential applications in oncology and inflammatory diseases. Using its proprietary technology, the Company is building a pipeline of therapeutics, initially focused on the treatment of solid tumors and hematologic malignancies. The Company has two clinical-stage product candidates, SL-172154 and SL-279252. In addition, the Company has several ARC compounds in preclinical development.
Liquidity
The Company has incurred losses and negative cash flows from operations since inception and has an accumulated deficit of $60.1 million as of September 30, 2020. The Company anticipates incurring additional losses and negative cash flows from operations until such time, if ever, that it can generate significant sales of its product candidates currently in development, and is highly dependent on its ability to find additional sources of funding in the form of licensing of its technology, collaboration agreements, and/or debt and equity financing. The Company’s ability to fund its planned clinical operations, research and development, and commercialization of its product candidates is expected to depend on the amount and timing of cash receipts from these funding sources. Adequate additional funding may not be available to the Company on acceptable terms, or at all. The failure to raise funds as and when needed could have a negative impact on the Company’s financial condition and ability to pursue its business strategies. Management believes that the Company’s cash and cash equivalents and short-term investments of $134.9 million as of September 30, 2020, in addition to the $213.5 million of net proceeds from our initial public offering, are sufficient to fund the projected operations of the Company through at least the end of 2024.
On March 10, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The virus and actions taken to mitigate its spread have had, and are expected to continue to have, a broad adverse impact on the economies and financial markets of many countries, including the geographical areas in which the Company operates and conducts its business and which the Company’s partners operate and conduct their business. The Company is currently following the recommendations of local health authorities to minimize exposure risk for its team members and visitors. However, the scale and scope of this pandemic is unknown and the duration of the business disruption and related financial impact cannot be reasonably estimated at this time. While we have implemented specific business continuity plans to reduce the potential impact of COVID-19, there is no guarantee that the Company’s continuity plans will be successful.
The Company has already experienced certain disruptions to its business such as work-from-home-orders for offices and similar disruptions have occurred for its partners. Specifically, the outbreak has caused disruptions in enrollment and treatment of patients in clinical trials in process, and slowdowns and shutdowns of the laboratories and other service providers that are being relied upon in the development of the Company’s product candidates.
The extent to which COVID-19 or any other health epidemic may impact the Company’s results will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. Accordingly, COVID-19 could have a material adverse effect on the Company’s business, results of operations and financial condition.
2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information.
Unaudited Interim Financial Statements
In the opinion of management, the accompanying interim financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial
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statements) considered necessary to present fairly the Company’s financial position as of September 30, 2020 and its results of operations, statement of changes in redeemable convertible preferred stock and stockholder’s deficit and cash flows for the nine months ended September 30, 2020 and 2019. Operating results for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. The interim financial statements, presented herein, do not contain the required disclosures under U.S. GAAP for annual financial statements. The accompanying unaudited interim financial statements should be read in conjunction with the annual audited financial statements and related notes as of and for the year ended December 31, 2019.
Use of Estimates
The preparation of 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. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, revenue recognition, the accrual of research and development expenses, and the valuation of stock-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from management’s estimates.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received upon the sale of an asset or paid upon the transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. Fair value measurements are classified and disclosed in one of the following categories:
Level 1: Observable inputs such as quoted prices in active markets for identical assets the reporting entity has the ability to access as of the measurement date;
Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
Fair value measurements are classified based on the lowest level of input that is significant to the measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the assets and liabilities and their placement within the fair value hierarchy levels. The determination of the fair values stated below takes into account the market for its financial assets and liabilities, the associated credit risk and other factors as required. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Management believes that the carrying amounts of the Company’s financial instruments, including accounts payable, approximate fair value due to the short-term nature of those instruments. Short-term investments are recorded at their estimated fair value.
Concentration of Risk
Financial instruments that potentially subject the Company to concentrations of credit risk primarily consist of cash, cash equivalents, and short-term investments. The Company maintains its cash and cash equivalents at one accredited financial institution in amounts that exceed federally-insured limits. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company invests in only highly rated debt securities that management believes protects the Company from risk of default and impairment of value.
All of the Company’s revenue is derived from its collaboration agreement with Millennium Pharmaceuticals, Inc., a wholly owned subsidiary of Takeda Pharmaceutical Company Limited (see Note 8).
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The Company is highly dependent on a third-party manufacturer to supply drug products for its research and development activities of its programs, including clinical trials and non-clinical studies. These programs could be adversely affected by a significant interruption in the supply of such drug products.
The Company is highly dependent on two contract research organizations (“CROs”) to manage its clinical trials. These programs could be adversely affected by a significant disruption in services provided by the CROs.
Cash Equivalents
The Company considers all demand deposits with financial institutions and all highly liquid investments with maturities of ninety days or less at the date of purchase to be cash and cash equivalents. Cash equivalents consist of $6.5 million held in a money market fund and $0.5 million held in an operating account at December 31, 2019 and $126.3 million held in a money market fund and $2.3 million held in an operating account at September 30, 2020, and are carried at fair value of the investment based on quoted market prices.
Short-Term Investments
Short-term investments consist of debt securities with a maturity of greater than three months when acquired. The Company classifies its short-term investments at the time of purchase as available-for-sale securities. Available-for-sale securities are carried at fair value. Unrealized gains and losses on available-for-sale securities are reported in accumulated other comprehensive income, a component of stockholders’ deficit, until realized.  
Deferred Offering Costs
The Company capitalizes certain legal, accounting, and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs will be recorded as a reduction of additional paid-in capital generated as a result of the offering. Should the equity financing no longer be considered probable of being consummated, all deferred offering costs would be charged to operating expenses in the statement of operations and comprehensive loss. Deferred offering costs were $0.1 million and $1.8 million at December 31, 2019 and September 30, 2020, respectively.
Series A, Series B and Series B-1 Redeemable Convertible Preferred Stock
The Company records shares of redeemable convertible preferred stock at their respective fair values on the date of issuance, net of issuance costs. The redeemable convertible preferred stock is recorded outside of stockholders’ equity on the balance sheet because the shares contain liquidation features that are not solely within the Company’s control. The Company has elected not to adjust the carrying values of the redeemable convertible preferred stock to the liquidation preferences of such shares because of the uncertainty of whether or when such an event would occur. Subsequent adjustments to increase the carrying value to the liquidation preferences will be made only when it becomes probable that such a liquidation event will occur. See Note 6 for a discussion of the redeemable convertible preferred stock.
Revenue Recognition
Collaboration revenue is recognized in accordance with ASC 606, Revenue from Contracts with Customers (ASC 606). Arrangements with collaborators may include licenses to intellectual property, research and development services, manufacturing services for clinical and commercial supply, and participation on joint steering committees. The Company evaluates the promised goods or services in the contract to determine which promises, or group of promises, represent performance obligations. In contemplation of whether a promised good or service meets the criteria required of a performance obligation, the Company considers the stage of development of the underlying intellectual property, the capabilities and expertise of the customer relative to the underlying intellectual property, and whether the promised goods or services are integral to or dependent on other promises in the contract. When accounting for an arrangement that contains multiple performance obligations, the Company must develop judgmental assumptions, which may include market conditions, reimbursement rates for personnel costs, development timelines and probabilities of regulatory success to determine the stand-alone selling price for each performance obligation identified in the contract.
Upon the amendment of an existing agreement, the Company evaluates whether the amendment represents a modification to an existing contract which would be recorded through a cumulative catch-up to revenue or a separate
8


contract. If it is determined that it is a separate contract, the Company will evaluate the necessary revenue recognition through the five-step process described below.
When the Company concludes that a contract should be accounted for as a combined performance obligation and recognized over time, the Company must then determine the period over which revenue should be recognized and the method by which to measure revenue. The Company generally recognizes revenue using a cost-based input method.
The Company recognizes collaboration revenue when its customer or collaborator obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, it performs the following five steps:
i.identify the contract(s) with a customer;
ii.identify the performance obligations in the contract;
iii.determine the transaction price;
iv.allocate the transaction price to the performance obligations within the contract and;
v.recognize revenue when (or as) the entity satisfies a performance obligation.
The Company only applies the five-step model to contracts when it determines that it is probable it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.
At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within the contract to determine whether each promised good or service is a performance obligation. The promised goods or services in the Company’s arrangements may consist of a license, or options to license, the Company’s intellectual property and research, development and manufacturing services. The Company may provide options to additional items in such arrangements, which are accounted for as separate contracts when the customer elects to exercise such options, unless the option provides a material right to the customer. Performance obligations are promises in a contract to transfer a distinct good or service to the customer that (i) the customer can benefit from on its own or together with other readily available resources, and (ii) is separately identifiable from other promises in the contract. Goods or services that are not individually distinct performance obligations are combined with other promised goods or services until such combined group of promises meet the requirements of a performance obligation.
The Company determines transaction price based on the amount of consideration the Company expects to receive for transferring the promised goods or services in the contract. Consideration may be fixed, variable, or a combination of both. At contract inception for arrangements that include variable consideration, the Company estimates the probability and extent of consideration it expects to receive under the contract utilizing either the most likely amount method or expected amount method, whichever best estimates the amount expected to be received. The Company then considers any constraints on the variable consideration and includes in the transaction price variable consideration to the extent it is deemed probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
The Company then allocates the transaction price to each performance obligation based on the relative standalone selling price and recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) control is transferred to the customer and the performance obligation is satisfied. For performance obligations which consist of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.
The Company records amounts as accounts receivable when the right to consideration is deemed unconditional. When consideration is received, or such consideration is unconditionally due, from a customer prior
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to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded as deferred revenue.
Amounts received prior to satisfying the revenue recognition criteria are recognized as deferred revenue in the Company’s accompanying balance sheet. Deferred revenues expected to be recognized as revenue within the 12 months following the balance sheet date are classified as a current liability. Deferred revenues not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as non-current liabilities.
The Company’s collaboration revenue arrangements may include the following:
Up-front License Fees: If a license is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from nonrefundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.
Milestone Payments: At the inception of an agreement that includes research and development milestone payments, the Company evaluates each milestone to determine when and how much of the milestone to include in the transaction price. The Company first estimates the amount of the milestone payment that the Company could receive using either the expected value or the most likely amount approach. The Company primarily uses the most-likely amount approach as that approach is generally most predictive for milestone payments with a binary outcome. Then, the Company considers whether any portion of that estimated amount is subject to the variable consideration constraint (that is, whether it is probable that a significant reversal of cumulative revenue would not occur upon resolution of the uncertainty.) The Company updates the estimate of variable consideration included in the transaction price at each reporting date which includes updating the assessment of the likely amount of consideration and the application of the constraint to reflect current facts and circumstances.
Royalties: For arrangements that include sales-based royalties, including milestone payments based on a level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any revenue related to sales-based royalties or milestone payments based on the level of sales.
To date, the Company has not granted a development and commercialization license nor recognized any revenue related to licenses, sales-based royalties or milestone payments based on the level of sales.
Research and Development Services: The Company will record costs associated with development and process optimization activities as research and development expenses in the statement of operations and comprehensive loss consistent with ASC 730, Research and Development. The Company considered the guidance in ASC 808, Collaborative Agreements and will recognize the payments received from these agreements as revenue when the related costs are incurred.
Research and Development Costs
Research and development cost are expensed as incurred, and include salaries, stock-based compensation and other personnel-related costs, equipment and supplies, preclinical studies, clinical trials, and manufacturing development activities.
A substantial portion of the Company’s ongoing research and development activities are conducted by third-party service providers, including contract research and manufacturing organizations. The Company accrues for expenses resulting from obligations under agreements with CROs, contract manufacturing organizations (“CMOs”), and other outside service providers for which payment flows do not match the periods over which materials or services are provided to the Company. Accruals are recorded based on estimates of services received and efforts expended pursuant to agreements established with CROs, CMOs, and other outside service providers. These estimates are typically based on contracted amounts applied to the proportion of work performed and determined through analysis with internal personnel and external service providers as to the progress or stage of completion of
10


the services. The Company makes significant judgements and estimates in determining the accrual and/or prepaid balance in each reporting period. In the event advance payments are made to a CRO, CMO, or outside service provider, the payments will be recorded as a prepaid asset which will be amortized as the contracted services are performed. As actual costs become known, the Company adjusts its accruals and prepaid assets accordingly. Inputs, such as the services performed, the number of patients enrolled, or the study duration, may vary from the Company’s estimates, resulting in adjustments to research and development expense in future periods. Changes in these estimates that result in material changes to the Company’s accruals could materially affect the Company’s results of operations.
Net Loss Per Share
Basic loss per share of common stock is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during each period. Diluted loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as redeemable convertible preferred stock, stock options and restricted stock, which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive.
The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:
Nine Months Ended September 30,
20202019
Redeemable convertible preferred stock on an as converted to common stock basis20,300,253 7,487,151 
Stock options2,538,225 1,255,543 
Unvested restricted stock16,789 36,937 
22,855,267 8,779,631 
Other Comprehensive Income (Loss)
Other comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Other comprehensive loss is comprised of the net loss and unrealized gains on short-term investments.
Recently Adopted Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2016-13, Financial Instruments-Credit Losses (“ASC 326”): Measurement of Credit Losses on Financial Instruments (ASU 2016-13) which requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. ASU 2016-13 limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. ASU 2016-13 became effective for the Company during the first quarter of 2020. The Company adopted this pronouncement and it did not have a material impact on the financial statements or related disclosures.
In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurements, which changes the fair value measurement disclosure requirements of ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). The goal of the ASU is to improve the effectiveness of ASC 820’s disclosure requirements. The standard is applicable to the Company for the fiscal year beginning January 1, 2020, and interim periods within that year. The Company adopted this pronouncement and it did not have a material impact on the financial statements or related disclosures.
Recently Issued Accounting Pronouncements (not yet adopted)
In February 2016, the FASB issued ASU No. 2016-02, Leases (ASC 842) which requires a lessee to record a right-of-use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12
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months. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. As the Company has elected to use the extended transition period for complying with new or revised accounting standards as available under the JOBS Act, the standard is effective for the Company beginning January 1, 2022, with early adoption permitted. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures.
3. Short-Term Investments
The Company classifies its debt securities as short-term investments. Debt securities are comprised of highly liquid investments with minimum “A” rated securities and consist of U.S. Treasury, agency bonds and corporate entity commercial paper with maturities of more than three months but less than one year at the date of purchase. Debt securities as of September 30, 2020 have an average maturity of 0.1 years. The debt securities are reported at fair value with unrealized gains or losses recorded in accumulated other comprehensive income in the balance sheets.
The following table represents the Company’s available for sale short-term investments by major security type (in thousands):
September 30, 2020
Amortized
Cost
Gross Unrealized
Gain/(Loss)
Total
Fair Value
Short-term investments
Corporate securities$2,350 $(17)$2,333 
U.S. government securities3,999 7 4,006 
Total short-term investments$6,349 $(10)$6,339 
December 31, 2019
Amortized
Cost
Gross Unrealized
Gain/(Loss)
Total
Fair Value
Short-term investments
Corporate securities$5,375 $(17)$5,358 
U.S. government securities26,645 71 26,716 
Total short-term investments$32,020 $54 $32,074 
 
The Company’s short-term investment instruments and cash and cash equivalents are classified using Level 1 inputs within the fair value hierarchy and are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.
4. Accrued Expenses
Accrued expenses consisted of the following (in thousands):
September 30,
2020
December 31,
2019
Research contract costs$4,539 $2,648 
Compensation1,188 966 
Other791 425 
$6,518 $4,039 
5. Commitments and Contingencies
Operating Leases
On July 24, 2020, the Company entered into an amendment to the lease for the office space in Durham, North Carolina. The amendment expanded the existing leased space. Future minimum payments inclusive of the amended
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lease, by year and in aggregate, under non-cancelable operating leases consist of the following as of September 30, 2020 (in thousands):
2020$73 
2021625 
2022730 
2023753 
2024775 
Thereafter3,340 
Total minimum lease payments $6,296 
Heat License Agreement
In connection with a license agreement with Heat Biologics Inc. (“Heat”), the Company is required to make payments of up to $20.6 million in aggregate for the achievement of specified development, regulatory and commercial sales milestones for certain licensed products. The Company is required to pay Heat a percentage of any upfront fees or other non-royalty payments received that are not tied to milestone events under any sublicense of the licensed products. The Company is also required to pay Heat a royalty on all of its worldwide net sales, those of its affiliates and sublicenses of certain licensed products in the low single digits. The Company has not recorded a liability for the payments aforementioned given the achievement of specified development, regulatory and commercial sales milestones for certain licensed products is not probable as of the balance sheet date.
Litigation
From time to time, the Company may become involved in various legal actions arising in the ordinary course of business. As of September 30, 2020, management was not aware of any existing, pending, or threatened legal actions that would have a material impact on the financial position, results of operations, or cash flows of the Company.  
Contractual Obligations
Contractual obligations represent future cash commitments and liabilities under agreements with third parties, and exclude contingent liabilities for which the Company cannot reasonably predict future payment. The Company’s contractual obligations result primarily from obligations for various contract manufacturing organizations and clinical research organizations, which include potential payments we may be required to make under our agreements. The contracts also contain variable costs and milestones that are hard to predict as they are based on such things as patients enrolled and clinical trial sites. The timing of payments and actual amounts paid under contract manufacturing organization, or CMO, and CRO agreements may be different depending on the timing of receipt of goods or services or changes to agreed-upon terms or amounts for some obligations. Also, those agreements are cancelable upon written notice by the Company and, therefore, not long-term liabilities.
6. Preferred Stock
During the nine months ended September 30, 2020, the Company entered into various stock purchase agreements with new and existing investors pursuant to which the Company sold an aggregate 550,571 shares of the Company’s Series B redeemable convertible preferred stock (“Series B”) and 1,319,964 shares of Series B-1 redeemable convertible preferred stock (“Series B-1”) at $62.88051 per share for aggregate gross proceeds of $117.6 million. Transaction fees of $0.6 million were recorded as a reduction of the carrying value of the Series B and the Series B-1.
The following is a summary of the rights, preferences, and terms of the Company’s Series A redeemable convertible preferred stock, the Series B, and the Series B-1 (“Preferred Stock”):
Rank
The Preferred Stock ranks senior to common stock as to payment of dividends, distributions of assets upon a liquidation event, or otherwise.
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Dividends
The holders of Preferred Stock are entitled to receive non-cumulative dividends, when and if declared by the Board, and in preference to any declaration or payment of any dividend on the Company’s common stock at the rate of 8% of the original issue price per share. No dividends have been declared to date.
Voting Rights
Each share of Preferred Stock entitles the holder to one vote on all matters for which shares of common stock may vote. The Series A holders can elect two board members if a minimum of 276,059 shares of Series A are outstanding. If the number of Series A holders falls below 276,059 but not below 110,423 then they can elect one board member. The Series B-1 holders can elect two board members if a minimum of 329,991 shares of Series B-1 are outstanding. The Series B holders vote for remaining board members as a single class with all other shareholders on an “as converted” basis.
Liquidation Preference
In the event of a liquidation, dissolution, or winding up of the Company, or in the event the Company merges with or is acquired by another entity, each holder has a liquidation preference. Liquidating distributions will first be made to holders of shares of Series B-1 at $62.88051 per share and then to holders of Series B and Series A on a pari passu basis at $62.88051 and $62.475 per share, respectively. As the redemption event is outside of our control, all shares of preferred stock have been presented outside of permanent equity. We have also concluded that since the shares of preferred stock are not mandatorily redeemable, but rather are only contingently redeemable, and given that the redemption event is not certain to occur, the shares have not been accounted for as a liability in any of the periods presented.
After all liquidation preferences are fulfilled, the remaining funds and assets of the Company will be distributed between Series B-1 holders and common shareholders ratably based on the number of shares held by common shareholders and the common shares that would be held by Series B-1 holders on an “as converted” basis. If the total amount received by Series B-1 holders is greater than three times the original issue price, than the holders of the Series B-1 are entitled to the greater of three times the original issue price or the amount such holder would have received if all shares of Series B-1 had been converted into common stock immediately prior to such liquidation.
Conversion
Each share of Preferred Stock is convertible into common stock at any time at the option of the holder at a conversion price then in effect and equal to one-for-6.85 subject to adjustment. All outstanding Preferred Stock will automatically convert into common stock at the conversion price then in effect upon a qualified initial public offering of common stock with a public offering price of at least $9.17964 per share and aggregate gross proceeds of at least $50.0 million. All shares of Preferred Stock are convertible into common stock upon the affirmative election of the holders of at least a 65% of the outstanding shares of Preferred Stock. As disclosed in 'Note 10', on October 14, 2020, the Company completed the initial public offering (IPO) of its common stock pursuant to a Registration Statement on Form S-1. As a result, all Preferred Stock was converted into common stock as of the date of the initial public offering.
Redemption
The Preferred Stock allows the holders to redeem their shares upon a change in control in the Company. As a result, the Company classifies the Preferred Stock as mezzanine equity. The Company charges specific incremental issuance costs incurred in the offering of the Preferred Stock against the gross proceeds of the Preferred Stock.
7. Stock-Based Compensation
In 2016, the Company adopted and subsequently amended the 2016 Stock Incentive Plan (the “Plan”). The total number of shares authorized under the Plan as of September 30, 2020 was 3,819,786, and 335,403 shares remain available for future grants as of September 30, 2020. The Plan permits the granting of options and restricted stock. The terms of the agreements are determined by the Company’s Board of Directors. The Company’s awards vest based on the terms in the agreements and generally vest over four years and have a term of 10 years.
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The Company measures employee and non-employee stock-based awards at grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the award. The Company recorded stock-based compensation expense in the following expense categories of its accompanying unaudited interim statements of operations and comprehensive loss (in thousands):
Three months ended September 30,Nine months ended September 30,
2020201920202019
Research and development$159 $93 $350 $151 
General and administrative153 50 279 146 
$312 $143 $629 $297 
 
The following table summarizes option activity under the Stock Plan:
Options
Weighted
average
exercise
price
Weighted average
remaining
contract life
Balance at January 1, 20201,615,375 $2.60
Granted1,116,966 $5.28
Exercised(163,292)$1.28
Forfeited(30,824)$2.95
Outstanding at September 30, 20202,538,225 $3.868.95
Vested and expected to vest September 30, 20202,485,746 $3.858.94
Exercisable at September 30, 2020684,910 $2.608.03
Options granted during the nine months ended September 30, 2020 had a weighted-average grant-date fair value of $3.36. As of September 30, 2020, unrecognized compensation cost for options issued was $4.5 million, and will be recognized over an estimated weighted-average amortization period of 2.88 years. The aggregate intrinsic value of options outstanding and exercisable as of September 30, 2020 was $8.5 million.
The fair value of each option is estimated on the date of grant using a Black-Scholes option pricing model which takes into account inputs such as the exercise price, the estimated fair value of the underlying common stock at grant date, expected term, expected stock price volatility, risk-free interest rate, and dividend yield. The fair value of each grant of stock options was determined by the Company using the methods and assumptions discussed below. Certain of these inputs are subjective and generally required judgement to determine.
The expected term of employee stock options with service-based vesting is determined using the “simplified” method, whereby the expected life equals the arithmetic average of the vesting term and the original contractual term of the option due to the Company’s lack of sufficient historical data. The expected term of non-employee options is equal to the contractual term.
The expected stock price volatility is based on historical volatilities of comparable public entities within the Company’s industry.
The risk-free interest rate is based on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the respective expected term or contractual term.
The expected dividend yield is 0% because the Company has not historically paid, and does not expect, for the foreseeable future, to pay a dividend on its common stock.
As the Company’s common stock has not been publicly traded, its board of directors periodically estimated the fair value of the Company’s common stock considering, among other things, contemporaneous valuations of its common stock prepared by an unrelated third-party valuation firm.
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The grant date fair value of each option grant was estimated throughout the nine months ended September 30, 2020 using the Black-Scholes option-pricing model using the following weighted-average assumptions:
Expected term5.91
Expected volatility74.21%
Risk-free interest rate0.47%
Expected dividends
Fair value of common stock$5.28
For accounting purposes, restricted shares granted are considered the issuance of shares as opposed to the sale of stock and as such, the Company has recognized compensation expense for these awards. Twenty-five percent of the shares became vested after one year and the remaining shares vest monthly over 36 months so long as the grantee remains employed by or provides service to the Company. In the event the grantee ceases to provide service, the Company has the option to repurchase any or all of the unvested shares at the original issuance price. The following table summarizes the activity relating to these shares for the nine months ended September 30, 2020 :
Awards
Balance at January 1, 202031,900
Vested15,111
Outstanding at September 30, 202016,789
8. Collaboration Agreement—Related Party
In August 2017, the Company entered into a Collaboration agreement with Takeda related to the development of certain ARC molecules as amended in April 2018, October 2018 and March 2020, (the “Collaboration Agreement”). Under the Collaboration Agreement, the Company is responsible to use its commercially reasonable efforts to further research and develop six molecules in accordance with specified development plans for each molecule. Two Designated Molecules, SL-279252 (“DM1”) and SL-115154 (“DM2”) (collectively referred to as the “DMs”), will be progressed through a Phase 1 clinical trial and four Selected Molecules will be developed through the completion of toxicology studies (collectively known as “SMs”). Takeda has an option, which extends through the end of the development term for each molecule, to exclusively license (on a molecule-by-molecule basis) each DM and up to two SMs, which license would grant Takeda exclusive rights to undertake further clinical development and commercialization of the licensed molecule. Additionally, Takeda was granted a right of first negotiation (“ROFN”) to enter into a license for each molecule within a specified class of ARC molecules.
The Company received payments of $8.5 million and $12.1 million in the periods ended September 30, 2019 and 2020, respectively, and recognized total revenue of $50.6 million through September 30, 2020 under the Collaboration Agreement. The Company assessed this arrangement in accordance with ASC 606 and concluded that the Collaboration Agreement had four distinct performance obligations representing the combination of research and development services and participation in a joint development committee associated with both DMs, one SM and the remaining three SMs as a group. The Company also concluded that since the option for the exclusive license was deemed to be at standalone selling price it does not provide the customer with a material right and therefore, it does not represent a separate performance obligation. Finally the Company noted that the ROFN does not guarantee that Takeda can negotiate a license for molecules at prices that are below their respective standalone selling prices and further noted that if Takeda exercises the ROFN, the license fee will be negotiated at standalone selling price for each molecule.
On March 31, 2020, the Company and Takeda entered into an amendment to the Collaboration Agreement (Amendment No. 3) which provided for a second dose expansion cohort for DM1, improvements to the DM1 process and manufacturing controls, certain administrative tasks and a non-refundable up-front payment applied to the license fee for DM1 of $11.3 million. The Company can receive reimbursement for costs incurred in the performance of the second dose expansion cohort up to $3.2 million, plus fifty percent of out-of-pocket costs incurred by the Company for clinical trial materials for the first and second dose expansion cohorts up to $4.0
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million and reimbursements of up to $1.6 million for costs related to improvement to the DM1 process and manufacturing controls.
The Company evaluated the consideration anticipated to be received for each performance obligation under Amendment No. 3 and determined that the contractual amounts for each obligation represent the stand-alone selling price and relate directly to the efforts that the Company will exert to fulfill its performance obligation.
The potential reimbursements for costs incurred in the performance of the second dose expansion cohort and costs incurred by the Company for clinical trial materials for the second dose expansion cohort were determined to be variable consideration. The Company determined that the potential reimbursement associated with the second dose expansion cohort was fully constrained and did not include it in the transaction price. The Company anticipates that the reimbursements associated with clinical trial materials will be earned and as such, the amount was included in the transaction price.
The Company further evaluated the terms of Amendment No. 3 to determine if they represented a modification to the existing agreement or a new agreement. The Company determined that improvements to the DM1 process and manufacturing controls are new and distinct performance obligations with underlying revenue that is to be recorded prospectively. The second dose expansion cohort was determined to be a continuation of research and development services being performed. As such, the second dose expansion cohorts represent a modification to the existing agreement and a continuation under the existing research and development performance obligation.
At the outset of the contract with Takeda the Company viewed the option to license molecules as a discrete performance obligation which would be transferred upon Takeda executing their option and remitting consideration that was negotiated and believed to be in line with the stand-alone value of the option. In conjunction with Amendment No. 3, the $11.3 million payment was applied to the license fee and as such, results in a lower cost to license the molecule. The Company evaluated and determined the prepayment provided a material right. Management determined the stand-alone selling price of the material right using comparable arrangements and probability that Takeda will exercise its option to license. The non-refundable payment was recognized as deferred revenue upon receipt of the up-front payment and will be recognized as revenue upon Takeda entering into the underlying license agreement or when it is certain that Takeda will not exercise its option.
The Company recognizes revenue for the allocated upfront payments using a cost-based input measure. In applying the cost-based input method of revenue recognition, the Company uses actual costs incurred relative to budgeted costs expected to be incurred for the combined performance obligation. Revenue is recognized based on actual costs incurred as a percentage of total budgeted costs as the Company completes its performance obligation over the estimated service period. The Company recognizes revenue related to the reimbursable cost as they are incurred.
The stated development term under the Collaboration Agreement commenced on August 8, 2017 and terminates 90 days after the Phase 1 clinical report is delivered to Takeda for each of the DMs. The development term for the SMs expired in the second quarter of 2019 as the toxicology reports for the SMs were delivered to Takeda and the option period for the exclusive license expired.
Revenue recognized under this agreement is related-party revenue.
9. Related-Party Transactions
Takeda had a seat on the Company’s Board of Directors and held an approximate 7.5% ownership interest in the Company’s outstanding shares as of September 30, 2020. As of December 31, 2019, Takeda held an approximate 14% ownership interest in the Company’s outstanding shares. As a result, all revenue, and deferred revenue associated with the Takeda Collaboration Agreement are represented as related-party transactions. Prepaids and other current assets includes $2.4 million of cost that are reimbursable by Takeda under the Collaboration Agreement. Following the completion of the Company's initial public offering in October 2020, Takeda no longer has a seat on the Company's Board of Directors.
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10. Subsequent Events
The Company has evaluated subsequent events from the balance sheet date through November 13, 2020, the date at which the financial statements were available to be issued, and there are no other items requiring disclosure except for the following:
Stock Split
In September 2020, the Board of Directors and the stockholders of the Company approved a 6.85-for-1 stock split of the Company’s outstanding common stock and adjusted the conversion ratio of the Company’s preferred stock accordingly. The forward stock split was effective as of October 1, 2020. All common stock, preferred stock, and per share information has been retroactively adjusted to give effect to this forward stock split and the adjusted conversion ratios for all periods presented. Shares of common stock underlying outstanding stock options and other equity instruments were proportionately increased and the respective per share value and exercise prices, if applicable, were proportionately decreased in accordance with the terms of the agreements governing such securities. There were no changes in the par values of the Company’s common stock and preferred stock as a result of the forward stock split.
Initial Public Offering
On October 14, 2020, the Company completed the initial public offering ("IPO") of its common stock pursuant to a Registration Statement on Form S-1. In the IPO, the Company sold an aggregate of 13,664,704 shares of common stock (including 1,782,352 shares issued pursuant to the underwriters' option to purchase additional shares) under the Registration Statement at a public offering price of $17.00 per share. On October 14, 2020 the Company received net proceeds of approximately $213.5 million, after deducting underwriting discounts and commissions of $16.3 million and offering expenses of $2.5 million. Upon the completion of the IPO, all outstanding shares of the Company’s Preferred Stock were converted into 20,300,253 shares of common stock.
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Part 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q, or this Quarterly Report, as well as the audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Prospectus dated October 8, 2020 filed with the SEC pursuant to Rule 424(b)(4), which we refer to as the “Prospectus”. This discussion and other parts of this Quarterly Report contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this report entitled “Risk Factors". You should carefully read the “Special Note Regarding Forward-Looking Statements” and “Risk Factors” sections of this Quarterly Report to gain an understanding of the important factors that could cause actual results to differ materially from the results described below.
Overview
We are an innovative clinical-stage biotechnology company pioneering the development of dual-sided fusion proteins as an entirely new class of biologic medicine. We believe our approach has the potential to fundamentally transform the therapeutic modulation of the immune system. We have created a novel approach to immune-modulation by designing biologics with structural characteristics that are not achievable by existing therapeutic modalities. Compounds derived from our proprietary Agonist Redirected Checkpoint, or ARC®, platform simultaneously inhibit checkpoint molecules and activate costimulatory molecules within a single therapeutic. Our initial product candidates are designed to be differentiated therapeutics addressing molecular targets that are well characterized and scientifically validated in immuno-oncology but are underexploited by current treatment modalities.
Our lead, wholly owned product candidate, SL-172154, has been rationally designed to simultaneously inhibit the CD47/SIRPα checkpoint interaction to restore an anti-tumor immune response and to activate the CD40 costimulatory receptor to bolster an immune response. We are currently conducting a Phase 1 clinical trial evaluating SL-172154 in patients with ovarian cancer, and we expect to announce initial data from the dose-escalation portion of this trial in the second half of 2021. We plan to initiate a second Phase 1 trial evaluating SL-172154 in patients with cutaneous squamous cell carcinoma or head and neck squamous cell carcinoma, and we expect to announce data from the dose-escalation portion of this trial in the second half of 2022. Our second product candidate, SL-279252, which is being developed in collaboration with Takeda, has been rationally designed to simultaneously inhibit the PD-1/PD-L1 interaction and activate the OX40 receptor. We are evaluating SL-279252 in a Phase 1 clinical trial in patients with advanced solid tumors and lymphoma, and we expect to announce data from the dose-escalation portion of this trial in the second half of 2021. In addition to our clinical-stage ARC product candidates, we possess a deep pipeline of preclinical immuno-oncology product candidates. Longer-term, we are pursuing additional disease areas, including autoimmune diseases, where our dual-sided fusion protein platforms may provide advantages over current treatment modalities.
Since our inception in 2016, we have devoted substantially all of our resources to developing and perfecting our intellectual property rights, conducting research and development activities, including undertaking preclinical studies of our product candidates, conducting clinical trials of our most advanced product candidates, manufacturing our product candidates, organizing and staffing our company, business planning, and raising capital. We do not have any products approved for sale, and we have not generated any revenue from product sales. We continue to have related party revenue under a collaboration agreement with Takeda. We have funded our operations as of the filing date of this quarterly report through the proceeds of our initial public offering for approximately $213.5 million (subsequent to September 30, 2020 and not reflected in financial statements), the sale of redeemable convertible preferred stock for approximately $152.9 million, the issuance of convertible notes for approximately $10.5 million and payments received pursuant to our collaboration agreement with Takeda for approximately $76.5 million.
For the nine months ended September 30, 2020 and 2019, our net loss was $24.6 million and $16.6 million, respectively. We have not been profitable since inception, and as of September 30, 2020, we had an accumulated
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deficit of $60.1 million and $134.9 million in cash and cash equivalents and short-term investments. We expect to continue to incur significant expenses and increasing operating losses in the near term. We expect our expenses will increase substantially in connection with our ongoing activities, as we:
continue to advance the preclinical and clinical development of our lead product candidates;
initiate preclinical studies and clinical trials for additional product candidates that we may identify in the future;
expand our operational, financial, and management systems and increase personnel, including personnel to support our clinical development, manufacturing, and commercialization efforts;
continue to develop, perfect, and defend our intellectual property portfolio; and
incur additional legal, accounting, or other expenses in operating our business, including the additional costs associated with operating as a public company.
We do not expect to generate significant product revenue unless and until we successfully complete development and obtain regulatory and marketing approval of, and begin to sell, one or more of our product candidates, which we expect will take several years. We expect to spend a significant amount in development and marketing costs prior to such time. We may never succeed in achieving regulatory and marketing approval for our product candidates. We may obtain unexpected results from our preclinical and clinical trials. We may elect to discontinue, delay, or modify preclinical and clinical trials of our product candidates. A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. Accordingly, until such time as we can generate significant product revenue, if ever, we expect to continue to seek private or public equity and debt financing to meet our capital requirements. There can be no assurance that such funding may be available to us on acceptable terms, or at all, or that we will be able to commercialize our product candidates. In addition, we may not be profitable even if we commercialize any of our product candidates.
Coronavirus Pandemic
On March 10, 2020, the World Health Organization characterized the novel COVID-19 virus as a global pandemic. There is significant uncertainty as to the effects of this disease which may, among other things, materially impact our business, including our ongoing and planned clinical trials. To date, we have experienced delays in our SL-279252 and SL-172154 clinical trials as a result of the ongoing pandemic, including delays with certain third-party vendors supporting this trial. We temporarily paused enrollment of patients for our clinical trial of SL-279252 between March and May 2020, and we resumed enrollment in June 2020. As “shelter in place” orders and other public health guidance measures are reinstated in the locations of our clinical trial sites, we expect that some patients may also choose to forego one or more doses in our clinical trials, due to challenges faced by such patients in travelling to our clinical trial sites, which may negatively affect the study results. We expect that our clinical development program timelines will continue to be negatively affected by COVID-19, although the degree of these delays is difficult to predict. Further, due to “shelter in place” orders and other public health guidance measures, we may be required to implement a work-from-home policy for all staff members excluding those necessary to maintain minimum basic operations. In such an instance, our increased reliance on personnel working from home may negatively impact productivity, or disrupt, delay, or otherwise adversely impact our business. For example, with our personnel working from home, some of our research activities that require our personnel to be in our laboratories may be delayed.
Due to the impact of the COVID-19 pandemic and work-from-home policies and other operational limitations mandated by federal, state, and local governments as a result of the pandemic, certain of our research and development activities, including the conduct of preclinical studies, have been delayed and may be further delayed and other aspects of our business, such as the conduct of various corporate functions and the ability of our Board and management to provide oversight and guidance may be adversely impacted until such operational limitations are lifted. The COVID-19 pandemic or local outbreaks associated with the COVID-19 pandemic could result in difficulty manufacturing our product candidates, securing clinical trial site locations, CROs, and/or trial monitors and other critical vendors and consultants supporting our clinical trials. In addition, outbreaks or the perception of an
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outbreak near a clinical trial site location could impact our ability to enroll patients or to complete all scheduled physician visits for currently enrolled patients. These situations, or others associated with COVID-19 pandemic, could cause delays in our clinical trial plans and could increase expected costs, all of which could have a material adverse effect on our business and its financial condition. At the current time, we are unable to quantify the potential effects of the COVID-19 pandemic on our future operations.
Collaboration and License Agreements
Collaboration Agreement with Takeda
On August 8, 2017, we entered into a Collaboration Agreement with Millennium Pharmaceuticals, Inc., or Takeda, a wholly owned subsidiary of Takeda Pharmaceutical Company, Ltd., or the Collaboration Agreement. The Collaboration Agreement was subsequently amended in April 2018, October 2018, and March 2020.
Pursuant to the Collaboration Agreement, we are required to use our commercially reasonable efforts to conduct preclinical and Phase 1 clinical trials for two molecules, SL-279252 and SL-115154, and Takeda has an exclusive option to license one or both of these clinical-stage ARC molecules for a specified amount of time up to and following the conclusion of each respective Phase 1 trial. While we are currently evaluating SL-279252 in a Phase 1 clinical trial, we have not yet conducted a Phase 1 clinical trial for SL-115154. During the development phase of the Collaboration Agreement, we may not, by ourselves or through a third party, develop or commercialize a compound, molecule or product that targets both PD-1 and OX40L, or a compound, molecule or product that targets both CSF1R and CD40L.
Further, pursuant to the Collaboration Agreement, we agreed to conduct certain preclinical studies on four additional preclinical ARC molecules, and Takeda had an option to license up to two of the four preclinical molecules. We completed our research and development activities related to the four preclinical molecules and delivered a final report to Takeda. Takeda elected to not exercise its option to enter into up to two licenses for such molecules, and Takeda’s option period for such molecules has now lapsed. As a result, the Collaboration Agreement is terminated as to the four preclinical molecules and Takeda does not have any rights to participate in the development or commercialization of such molecules.
Under the Collaboration Agreement, Takeda is granted a right of first negotiation to enter into licenses for each molecule within a specified class of ARC molecules. To exercise its right of first negotiation, Takeda will be required to provide a notice within a specified time, and if the parties do not conclude a license agreement within a set timeframe, we will be entitled to enter into licenses with third parties, subject to certain conditions.
Thus far under the Collaboration Agreement, we have received approximately $76.5 million in option payments, milestone payments, and expense reimbursements from Takeda. If Takeda exercises its exclusive option to license one or both of the clinical-stage ARC molecules (SL-279252 and SL-115154), we will enter into a license agreement with Takeda with respect to such compound. Any such license agreement would, among other things, require Takeda to use its commercially reasonable efforts to develop the licensed compound and seek approval for the compound. In addition, Takeda would be solely responsible, at its costs, for the development, manufacture, and commercialization of the licensed ARC molecules. If both ARC molecules are licensed, we would be entitled to additional payments consisting of up to an aggregate of $78.8 million in license fee payments and up to an aggregate of $450 million in clinical, regulatory, and sales milestone payments. In addition, we would be eligible for tiered royalty payments on net sales of licensed products at percentages ranging from the high single digits to sub-teens, subject to specified reductions, during the royalty term.
If Takeda exercises its option to enter into a license agreement, the royalty term with respect to the licensed product would extend, on a country-by-country basis, from the period commencing on the first commercial sale of the product in such country and ending on the later of (i) the expiration of the last to expire of the valid claims of the applicable licensed patent rights covering the product in such country or (ii) the tenth anniversary of the first commercial sale of the product in such country.
Unless sooner terminated, the Collaboration Agreement will continue until the later of (a) February 8, 2021, (b) the earlier of (i) the 90th day following delivery of a report detailing certain results of the SL-279252 Phase 1 clinical trial and (ii) the exercise by Takeda of its right to an exclusive license with respect to SL-279252, and (c) the earlier of (i) the 90th day following delivery of a report detailing certain results of the SL-115154 Phase 1 clinical
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trial and (ii) the exercise by Takeda of its right to an exclusive license with respect to SL-115154. Either party may terminate the Collaboration Agreement prior to expiration upon the insolvency or uncured material breach of the other party.
Heat License Agreement
In June 2016, we entered into an Exclusive License Agreement, or the Heat License Agreement, with Heat Biologics Inc., or Heat. The Heat License Agreement was subsequently amended in November 2016, December 2016, and March 2017. Pursuant to the Heat License Agreement, Heat granted to us a worldwide, sublicensable exclusive license to research, develop, manufacture, and commercialize products under three provisional patent applications, including all patents issuing from such applications, or the Fusion Protein Patent Rights and a worldwide, sublicensable nonexclusive license to research, develop, manufacture, and commercialize certain know how owned and controlled by Heat related to the Fusion Protein Patent Rights.
Under the Heat License Agreement, Heat was required to conduct certain research and development services under a mutually-agreed upon research and development plan and Heat was eligible to receive financial support from us for these efforts. Effective March 2017, Heat completed all research and development services under the Heat License Agreement and assigned to us three patent applications and all data derived from the research and development activities, referred to collectively as the Research Services Inventions. Pursuant to the terms of the Heat License Agreement, we are obligated to use commercially reasonable efforts to diligently research and develop at least one product covered by the Fusion Protein Patent Rights, including the obligation to file an IND application for such product. Our development efforts, including the development of SL-279252 and certain other ARC compounds, to date satisfy these obligations. In addition, we are to provide annual reports to Heat on or before the anniversary of the effective date of the Heat License Agreement to inform Heat of our progress.
Unless sooner terminated or extended, the term of the Heat License Agreement continues until the later of 20 years following the effective date and the expiration of the last-to-expire royalty term. Either party may terminate the agreement due to a material breach by the other party (subject to a 90-day cure period) or if the other party files for bankruptcy. In the event we terminate the Heat License Agreement due to a material breach by Heat, Heat must assign to us all right, title, and interest in the patent rights licensed under the Heat License Agreement.
In addition to an upfront payment of $50,000, the Heat License Agreement requires us to make further payments to Heat of up to $20.6 million in the aggregate, for the achievement of specified development, regulatory, and commercial sale milestones for certain licensed products. We are also required to pay Heat a percentage of certain upfront fees or other non-royalty payments we receive that are not tied to milestone events under any sublicense of the Fusion Protein Patent Rights. We are also required to pay Heat a royalty on all worldwide net sales by us, our affiliates, and sublicenses of certain licensed products in the low single digits. Royalties are payable, on a product-by-product and country-by-country basis, commencing on the first commercial sale of such product and continuing until the last-to-expire valid patent claim to the licensed patent rights that cover such product in that country.
Components of our Results of Operation
Collaboration Revenue – Related Party
Pursuant to the Collaboration Agreement, we are eligible to receive up to $33.8 million if Takeda exercises options to enter into license agreements for SL-279252 and $45.0 million if Takeda exercises options to enter into license agreements for SL-115154. We are also entitled to receive reimbursements for certain materials and costs incurred in conjunction with research and development activities. We are further eligible to receive up to $450.0 million in additional fees if certain milestones are reached, and we are eligible to receive tiered royalties from the high single digits to the sub teens percentages based on annual worldwide net sales.
We received $12.1 million for the nine months ended September 30, 2020. We have recognized total revenue of $50.6 million through September 30, 2020 under the Collaboration Agreement.
We have no products approved for commercial sale, and we have not generated any revenue from commercial product sales. Our total revenue to date has been generated solely from our Collaboration Agreement with Takeda. We expect to continue to recognize revenue under this agreement as development work is performed. We expect that any collaboration revenue we generate from our collaboration agreement with Takeda and any future collaboration
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partners will fluctuate from period to period as a result of the timing and the amount of milestones and other payments.
Operating Expense
Research and Development
Our research and development expenses consist primarily of costs incurred in connection with the discovery and development of our product candidates. These expenses include:
expenses incurred under agreements with contract research organizations, or CROs, as well as investigative sites and consultants that conduct our preclinical studies and clinical trials;
manufacturing and development expenses and the costs of acquiring and manufacturing preclinical study and clinical trial materials;
analysis of manufacturing processes for optimization;
employee-related expenses, including salaries, benefits, and stock-based compensation;
fees paid to consultants who assist with research and development activities;
expenses relating to regulatory activities, including filing fees paid to regulatory agencies;
laboratory materials and supplies used to support our research activities; and
allocated expenses for facility-related costs.
The following table summarizes our research and development expenses by product candidate:
Nine months ended September 30,
(in thousands)20202019
(unaudited)
SL-172154$5,082 $6,018 
SL-27925212,080 5,207 
Other pipeline candidates4,408 4,560 
Internal costs, including personnel related benefits, facilities, and depreciation6,126 4,662 
$27,696 $20,447 

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect our research and development expenses to increase significantly over the next several years as we conduct preclinical studies and clinical trials, including later-stage clinical trials, for our current and future product candidates and pursue regulatory approval of our product candidates, including preparing regulatory filings. As we expand our research and development activities, we will correspondingly incur an increase in personnel costs, including salaries, employee benefits, and stock-based compensation, as discussed in greater detail below under “General and Administrative Expenses.”
The process of conducting the necessary preclinical and clinical research to obtain regulatory approval is costly and time consuming. The actual probability of success for our product candidates may be affected by a variety of factors including:
the safety and efficacy of our product candidates;
early clinical data for our product candidates;
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investment in our clinical programs;
the ability of collaborators to successfully develop our licensed product candidates;
competition;
manufacturing capability; and
commercial viability.
We may never succeed in achieving regulatory approval for any of our product candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of our product candidates, if ever.
General and Administrative Expense
General and administrative expense consists primarily of personnel expenses, including salaries, benefits, and stock-based compensation expense, for employees and consultants in executive, finance, accounting, legal, and human resource functions. General and administrative expense also includes corporate facility costs, including rent, utilities, depreciation, and maintenance, not otherwise included in research and development expense, as well as legal fees related to intellectual property and corporate matters and fees for accounting and consulting services.
We expect that our general and administrative expense will increase in the future to support our continued research and development activities and as a result of the increased costs of operating as a public company. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, lawyers, and accountants, among other expenses. Additionally, we anticipate increased costs associated with being a public company, including expenses related to services associated with maintaining compliance with the requirements of Nasdaq and the SEC, insurance, and investor relations costs. If any of our current or future product candidates obtains U.S. regulatory approval, we expect that we would incur significantly increased expenses associated with building a sales and marketing team.
Interest Income
Interest income consists of interest earned on our cash, cash equivalents and short-term investments, which consists of amounts held in a money market fund and at various times in short-term government obligations.
Income Taxes
Since our inception, we have not recorded any income tax benefits for the net operating losses, or NOLs, we have incurred and for our research and development tax credits, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our NOLs and tax credits will not be realized. Our NOLs and tax credit carryforwards will begin to expire in 2036. We have recorded a full valuation allowance against our deferred tax assets at each balance sheet date.  
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Results of Operations
Comparison of the Three Months Ended September 30, 2020 and 2019
The following table sets forth our results of operations for the three months ended September 30, 2020 and 2019.
Three Months Ended September 30,
Change
(in thousands)20202019DollarPercentage
(unaudited)
Collaboration revenue – related party$2,435 $1,784 $651 36.5 %
Operating expenses:
Research and development11,804 7,945 3,859 48.6 %
General and administrative2,470 1,366 1,104 80.8 %
Loss from operations(11,839)(7,527)(4,312)57.3 %
Other income (expense):
Interest income86 279 (193)(69.2)%
Other(76)(31)(45)145.2 %
Net loss$(11,829)$(7,279)$(4,550)62.5 %
Collaboration Revenue – Related Party
Collaboration revenue increased by $0.7 million, or 36.5%, to $2.4 million for the three months ended September 30, 2020 from $1.8 million for the three months ended September 30, 2019. The increase was primarily driven by increased clinical and development work on SL-279252 associated with the Collaboration Agreement.
Research and Development Expense
Research and development expenses increased by $3.9 million, or 48.6%, to $11.8 million for the three months ended September 30, 2020 from $7.9 million for the three months ended September 30, 2019. The increase was primarily attributable to an increase of $3.5 million in manufacturing and clinical costs in connection with SL-279252 and SL-172154, an increase in personnel, facilities, and clinical related costs of $.9 million as a result of an increase in headcount and expansion of our manufacturing and clinical development capabilities and an increase in pharmacology and laboratory related costs of $.4 million offset by a $.9 million decrease in nonclinical costs as a result of completing nonclinical studies for SL-172154 in 2019.
General and Administrative Expense
General and administrative expenses increased by $1.1 million, or 80.8%, to $2.5 million for the three months ended September 30, 2020 from $1.4 million for the three months ended September 30, 2019. The increase was primarily due to a $1.1 million increase in personnel-related costs driven by higher employee headcount and compensation resulting from transitioning consultants to full-time employee positions.
Interest Income
Interest income decreased by $0.2 million to $0.1 million for the three months ended September 30, 2020 from $0.3 million for the three months ended September 30, 2019. The decrease was primarily due to a decrease in short-term investments in corporate and government obligations in 2020 compared to 2019. 
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Results of Operations
Comparison of the Nine Months Ended September 30, 2020 and 2019
The following table sets forth our results of operations for the nine months ended September 30, 2020 and 2019.
Nine Months Ended September 30,
Change
(in thousands)20202019DollarPercentage
(unaudited)
Collaboration revenue – related party