10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2023

OR

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

For the transition period fromto

Commission File Number: 001-40356

Rain Oncology Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	82-1130967
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
8000 Jarvis Avenue, Suite 204 Newark, CA	94560
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (510) 953-5559

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	RAIN	The Nasdaq Global Select Market

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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  ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes  ☒    No  ☐

As of August 4, 2023, the registrant had 36,375,671 shares of common stock, $0.001 par value per share, outstanding, comprised of 27,579,947 shares of common stock, $0.001 par value per share and 8,795,724 shares of non-voting common stock, $0.001 par value per share.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	3
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) for the three and six months ended June 30, 2023 and 2022	4
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three and six months ended June 30, 2023 and 2022	5
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2023 and 2022	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33
PART II.	OTHER INFORMATION	34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	35
Item 6.	Exhibits	35
	Signatures	36

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Rain Oncology Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(unaudited)

	June 30,		December 31,
	2023		2022 (1)
Assets
Current assets:
Cash and cash equivalents	$	40,076	$	61,955
Short-term investments		46,214		68,499
Prepaid and other current assets		4,703		3,174
Total current assets		90,993		133,628
Property and equipment, net		361		93
Operating lease right-of-use asset		189		258
Other assets		180		1,201
Total assets	$	91,723	$	135,180
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	5,801	$	7,146
Accrued research and development		7,380		8,232
Other accrued liabilities		4,986		6,424
Operating lease liability, current portion		164		164
Total current liabilities		18,331		21,966
Operating lease liability, net of current portion		39		113
Other long-term liabilities		64		65
Total liabilities		18,434		22,144
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding		—		—
Common stock, $0.001 par value; 250,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 36,375,671 shares (comprised of 27,579,947 shares of common stock and 8,795,724 shares of non-voting common stock) and 36,290,292 shares (comprised of 25,947,572 shares of common stock and 10,342,720 shares of non-voting common stock) issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		37		37
Additional paid-in capital		281,588		278,853
Accumulated other comprehensive loss		(100)		(166)
Accumulated deficit		(208,236)		(165,688)
Total stockholders’ equity		73,289		113,036
Total liabilities and stockholders’ equity	$	91,723	$	135,180

(1) The balance sheet at December 31, 2022 has been derived from the audited financial statements included in Rain Oncology Inc.’s Annual Report on Form 10-K filed on March 9, 2023.

See accompanying Notes to Condensed Consolidated Financial Statements.

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Rain Oncology Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating expenses:
Research and development	$	14,980	$	14,257	$	31,657	$	27,812
General and administrative		5,414		3,461		10,480		7,356
Restructuring charges		2,837		—		2,837		—
Total operating expenses		23,231		17,718		44,974		35,168
Loss from operations		(23,231)		(17,718)		(44,974)		(35,168)
Other income:
Interest income		1,167		107		2,426		163
Total other income		1,167		107		2,426		163
Net loss	$	(22,064)	$	(17,611)	$	(42,548)	$	(35,005)
Net loss per share, basic and diluted	$	(0.61)	$	(0.66)	$	(1.17)	$	(1.32)
Weighted-average shares used to compute net loss per share, basic and diluted		36,363,315		26,529,482		36,351,648		26,520,662
Net loss	$	(22,064)	$	(17,611)	$	(42,548)	$	(35,005)
Other comprehensive loss:
Unrealized gain (loss) on short-term investments		(53)		16		66		(284)
Comprehensive loss	$	(22,117)	$	(17,595)	$	(42,482)	$	(35,289)

See accompanying Notes to Condensed Consolidated Financial Statements.

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Rain Oncology Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

(unaudited)

								Accumulated
				Additional				Other		Total
	Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Loss		Equity
Balance as of December 31, 2022	36,290,292	$	37	$	278,853	$	(165,688)	$	(166)	$	113,036
Exercise of stock options	20,757		—		75		—		—		75
Issuance of common stock from employee stock purchase plan	20,129		—		137		—		—		137
Issuance of common stock in connection with equity financings, net of issuance costs	32,000		—		106						106
Stock-based compensation expense	—		—		1,568		—		—		1,568
Unrealized gain on investments	—		—		—		—		119		119
Net loss	—		—		—		(20,484)		—		(20,484)
Balance as of March 31, 2023	36,363,178	$	37	$	280,739	$	(186,172)	$	(47)	$	94,557
Issuance of common stock from employee stock purchase plan	12,493		—		12		—		—		12
Stock-based compensation expense	—		—		837		—		—		837
Unrealized loss on investments	—		—		—		—		(53)		(53)
Net loss	—		—		—		(22,064)		—		(22,064)
Balance as of June 30, 2023	36,375,671	$	37	$	281,588	$	(208,236)	$	(100)	$	73,289

								Accumulated
				Additional				Other		Total
	Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Loss		Equity
Balance as of December 31, 2021	26,475,812	$	27	$	220,530	$	(89,964)	$	(89)	$	130,504
Exercise of stock options	24,262		—		106		—		—		106
Issuance of common stock from employee stock purchase plan	26,804		—		293		—		—		293
Stock-based compensation expense	—		—		1,242		—		—		1,242
Unrealized loss on investments	—		—		—		—		(300)		(300)
Net loss	—		—		—		(17,394)		—		(17,394)
Balance as of March 31, 2022	26,526,878	$	27	$	222,171	$	(107,358)	$	(389)	$	114,451
Exercise of stock options	3,000		—		12		—		—		12
Stock-based compensation expense	—		—		1,417		—		—		1,417
Unrealized gain on investments	—		—		—		—		16		16
Net loss	—		—		—		(17,611)		—		(17,611)
Balance as of June 30, 2022	26,529,878	$	27	$	223,600	$	(124,969)	$	(373)	$	98,285

See accompanying Notes to Condensed Consolidated Financial Statements.

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Rain Oncology Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

	Six Months Ended June 30,
	2023		2022
Operating activities
Net loss	$	(42,548)	$	(35,005)
Adjustments to reconcile net loss to cash used in operating activities:
Stock-based compensation expense		2,405		2,659
Depreciation and amortization expense		35		44
Amortization of premium and accretion of discounts on short-term investments, net		(1,067)		50
Fair value gain on investments		8		—
Changes in operating assets and liabilities:
Prepaid and other current assets		(1,529)		2,072
Operating lease right-of-use asset and liability, net		(5)		(3)
Other assets		724		(167)
Accounts payable		(1,346)		(4,037)
Accrued research and development		(852)		1,491
Other accrued liabilities		(1,288)		(1,646)
Net cash used in operating activities		(45,463)		(34,542)
Investing activities
Purchases of short-term investments		(26,740)		(17,140)
Maturities of short-term investments		50,150		69,900
Purchases of property and equipment, net		(304)		—
Net cash provided by investing activities		23,106		52,760
Financing Activities
Proceeds from the issuance of common stock under the Company’s equity incentive plans and employee stock purchase plan		224		411
Proceeds from issuance of common stock in connection with the Company’s at-the-market facility		343		—
Payments of issuance costs related to equity financings		(89)		—
Net cash provided by financing activities		478		411
Net (decrease) increase in cash and cash equivalents		(21,879)		18,629
Cash and cash equivalents at beginning of period		61,955		24,780
Cash and cash equivalents at end of period	$	40,076	$	43,409

See accompanying Notes to Condensed Consolidated Financial Statements.

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Rain Oncology Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1 – Organization and Nature of Operations

Description of Business

Rain Oncology Inc. (“Rain” or the “Company”), formerly known as Rain Therapeutics Inc., was incorporated in the state of Delaware in April 2017. Rain is a precision oncology company developing therapies that target oncogenic drivers for which the Company is able to genetically select patients the Company believes will most likely benefit. Rain’s product candidate, milademetan, is a small molecule, oral inhibitor of the MDM2-p53 complex that reactivates p53. The Company operates in one business segment and its principal operations are in the United States, with its headquarters in Newark, California.

On June 22, 2022, the Company formed Rain Oncology Australia Pty Ltd (“Rain Oncology Australia”), a wholly owned subsidiary incorporated under the laws of Australia.

On December 22, 2022, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a change of the Company’s name from “Rain Therapeutics Inc.” to “Rain Oncology Inc.” effective as of December 30, 2022.

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) related to a Quarterly Report on Form 10-Q. These condensed consolidated financial statements include the accounts of the Company and Rain Oncology Australia. All significant inter-company transactions, balances and expenses have been eliminated upon consolidation. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). The year-end balance sheet data was derived from the Company’s audited financial statements but does not include all disclosures required by U.S. GAAP. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K, filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The unaudited financial information for the interim periods presented herein reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial condition and results of operation for the periods presented, with such adjustments consisting only of normal recurring adjustments.

Liquidity and Capital Resources

The Company has devoted substantially all of its efforts to drug discovery and development, raising capital and building operations. The Company has a limited operating history and has not generated any revenue since its inception, and the sales and income potential of the Company’s business is unproven. The Company has incurred net losses and negative cash flows from operating activities since its inception and expects to continue to incur net losses into the foreseeable future as it continues the development of its product candidates. From inception through June 30, 2023, the Company has funded its operations through net proceeds from its initial public offering in April 2021, the offering, issuance and sale of its common stock in November 2022, as well as the issuance of convertible promissory notes and convertible preferred stock.

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. Management believes that the Company’s current cash, cash equivalents and short-term investments will provide sufficient funds to enable the Company to meet its obligations for at least twelve months from the filing date of this report.

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Note 2 – Summary of Significant Accounting Policies

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure of contingent liabilities in the Company’s condensed consolidated financial statements and accompanying notes. The most significant estimate in the Company’s condensed consolidated financial statements relates to the clinical trial expense accruals. Management evaluates its estimates on an ongoing basis. Although these estimates are based on the Company’s historical experience, knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash equivalents include commercial paper and money market funds.

Available-for-Sale Investments

The Company holds investment grade securities consisting of commercial paper, corporate debt securities, U.S. government securities and U.S. agency bonds, classified as available-for-sale (AFS) securities at the time of purchase, since it is the Company’s intent that these investments be available for current operations. The Company has classified all of its AFS securities as current assets in the condensed consolidated balance sheets even though the stated maturity date may be one year or more beyond the current condensed consolidated balance sheet date, which reflects management’s intention to use the proceeds from sales of these securities to fund its operations, as necessary.

The Company carries these securities at fair value and reports unrealized gains and losses, if any, as a separate component of accumulated other comprehensive loss. The cost of debt securities is adjusted for amortization of purchase premiums and accretion of discounts to maturity. Such amortization and accretion are included in interest income in the condensed consolidated statements of operations and comprehensive loss. Realized gains and losses on sales of securities are determined using the specific identification method and recorded in interest income in the condensed consolidated statement of operations and comprehensive loss.

Allowance for Credit Losses

For AFS securities in an unrealized loss position, the Company first assesses whether it intends to sell, or if it is more likely than not that the Company will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through earnings. For AFS securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the severity of the impairment, any changes in interest rates, market conditions, changes to the underlying credit ratings and forecasted recovery, among other factors. The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in interest income through an allowance account. Any impairment that has not been recorded through an allowance for credit losses is included in other comprehensive loss in the condensed consolidated statement of operations and comprehensive loss.

The Company elected the practical expedient to exclude the applicable accrued interest from both the fair value and amortized costs basis of its AFS securities for purposes of identifying and measuring an impairment. Accrued interest receivable on AFS securities is recorded in prepaid and other current assets in the condensed consolidated balance sheets. The Company’s accounting policy is to not measure an allowance for credit loss for accrued interest receivable and to write-off any uncollectible accrued interest receivable as a reversal of interest income in a timely manner, which the Company considers to be in the period in which it determines the accrued interest will not be collected by the Company.

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Research and Development Costs

Research and development costs primarily consist of costs associated with the Company’s research and development activities, including its drug discovery efforts, and the preclinical and clinical development of its product candidates. Research and development costs are expensed as incurred.

Preclinical Studies and Clinical Trial Accruals

The Company is required to estimate its expenses resulting from its obligations under contracts with vendors, consultants, clinical research organizations and clinical site agreements in connection with conducting preclinical activities and clinical trials. The financial terms of these contracts are subject to negotiations which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. The Company reflects preclinical study and clinical trial expenses in its condensed consolidated financial statements by matching those expenses with the period in which services and efforts are expended. The Company accounts for these expenses according to the progress of the preclinical study or clinical trial as measured by the timing of various aspects of the preclinical study, clinical trial or related activities. The Company determines accrual and prepaid estimates through review of the underlying contracts along with preparation of financial models taking into account correspondence with clinical and other key personnel and third-party service providers as to the progress of preclinical studies, clinical trials or other services being conducted. During the course of a preclinical study or clinical trial, the Company adjusts its expense recognition if actual results differ from its estimates. To date, the Company has not experienced any material differences between accrued costs and actual costs incurred.

Stock-Based Compensation

Stock-based compensation expense represents the grant date fair value of equity awards recognized over the requisite service period of the awards (generally the vesting period) on a straight-line basis. The Company recognizes forfeitures as they occur. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model. The fair value of restricted stock units (“RSUs”) granted is based on the Company’s closing stock price on the date of grant.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company recognizes deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions on the basis of a two-step process whereby (1) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more likely than not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense. Any accrued interest and penalties are included within the related tax liability.

Restructuring

Restructuring costs comprised of severance, other termination benefit costs and stock-based compensation expense for stock option modifications related to workforce reductions. The Company recognizes restructuring charges

9

when the liability is probable, and the amount is estimable. Employee termination benefits are accrued at the date management has committed to a plan of termination and affected employees have been notified of their termination date and expected severance benefits.

Comprehensive Loss

Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. The Company’s comprehensive loss includes unrealized gains and losses from short-term investments.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period, without consideration of potential dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the sum of the weighted-average number of shares of common stock plus the potential dilutive effects of potential dilutive securities outstanding during the period. Potential dilutive securities are excluded from diluted earnings or loss per share if the effect of such inclusion is antidilutive. The Company’s potentially dilutive securities, which include shares from the 2021 Employee Stock Purchase Plan (the “ESPP”) and outstanding stock options and RSUs under the Company’s equity incentive plan, have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share. For the periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

Recent Accounting Pronouncements

Financial Instruments. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The objective of the standard is to improve financial reporting of expected credit losses on financial instruments and other commitments to extend credit. ASU 2016-13 requires that an entity measure and recognize expected credit losses for financial assets held at amortized cost and replaces the incurred loss impairment methodology in prior U.S. GAAP with a methodology that requires consideration of a broader range of information to estimate credit losses, and establishes additional disclosures related to credit risks. The Company adopted Topic 326 on January 1, 2023. The adoption did not have a significant impact on the Company’s condensed consolidated financial statements or the related disclosures.

There were no other significant updates to the recently issued accounting standards other than as disclosed herein for the three and six months ended June 30, 2023. Although there are several other new accounting pronouncements issued or proposed by the FASB, based on the Company’s preliminary assessment, the Company does not believe any of those accounting pronouncements have had or will have a material impact on its financial position or operating results. 

Note 3 – Fair Value Measurements

The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

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Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

Financial assets measured at fair value on a recurring basis consist of the Company’s cash equivalents and AFS securities. The Company obtains pricing information from its investment manager and generally determines the fair value of investment securities using standard observable inputs, including reported trades, broker/dealer quotes, and bids and/or offers.

Investments are classified as Level 1 within the fair value hierarchy if their quoted prices are available in active markets for identical securities. Investments in money market funds and U.S. government securities were classified as Level 1 instruments.

Investments in commercial paper, corporate debt securities and U.S. agency bonds are valued using Level 2 inputs. The Company classifies investments within Level 2 if the investments are valued using model driven valuations using observable inputs such as quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Investments are held by custodians who obtain investment prices from a third-party pricing provider that incorporates standard inputs in various asset pricing models.

The carrying amounts of cash, prepaid expenses and other current assets, other assets, accounts payable, accrued research and development, other current liabilities and other long-term liabilities are reasonable estimates of their fair value due to the short-term nature of these accounts.

The Company’s money market funds under cash and cash equivalents are classified using Level 1 inputs within the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. There were no transfers between levels of the fair value hierarchy during the three and six months ended June 30, 2023.

The following tables summarize financial assets that the Company measured at fair value on a recurring basis, classified in accordance with the fair value hierarchy (in thousands):

	Fair Value Measurements at Reporting Date Using:
	Level 1		Level 2		Level 3		Total
As of June 30, 2023:
Money market funds	$	14,051	$	—	$	—	$	14,051
Commercial paper		—		36,169		—		36,169
U.S. government securities		16,337		—		—		16,337
U.S. agency bonds		—		19,066		—		19,066
Total cash equivalents and short-term investments	$	30,388	$	55,235	$	—	$	85,623
Reported as:
Cash and cash equivalents (include cash of $667)							$	40,076
Short-term investments								46,214
Total cash, cash equivalents and short-term investments							$	86,290

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	Fair Value Measurements at Reporting Date Using:
	Level 1		Level 2		Level 3		Total
As of December 31, 2022:
Money market funds	$	8,528	$	—	$	—	$	8,528
Commercial paper		—		83,423		—		83,423
U.S. government securities		10,837		—		—		10,837
U.S. agency bonds		—		22,143		—		22,143
Corporate debt securities		—		997		—		997
Total cash equivalents and short-term investments	$	19,365	$	106,563	$	—	$	125,928
Reported as:
Cash and cash equivalents (include cash of $4,526)							$	61,955
Short-term investments								68,499
Total cash, cash equivalents and short-term investments							$	130,454

There were no liabilities measured at fair value on a recurring basis as of June 30­­­, 2023 and December 31, 2022.

Note 4 – Investments

The Company invests in available-for-sale securities consisting of money market funds, commercial paper, U.S. government securities, U.S. agency bonds and corporate debt securities. Available-for-sale securities are classified as either cash and cash equivalents or short-term investments in the condensed consolidated balance sheets.

The following tables summarize, by major types of cash equivalents, and investments that are measured at fair value on a recurring basis (in thousands):

	As of June 30, 2023
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
Money market funds	$	14,051	$	—	$	—	$	14,051
Commercial paper		36,189		1		(21)		36,169
U.S. government securities		16,347		4		(14)		16,337
U.S. agency bonds		19,136		—		(70)		19,066
Cash equivalents and short-term investments	$	85,723	$	5	$	(105)	$	85,623

	As of December 31, 2022
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
Money market funds	$	8,528	$	—	$	—	$	8,528
Commercial paper		83,479		11		(67)		83,423
U.S. government securities		10,910		—		(73)		10,837
U.S. agency bonds		22,175		4		(36)		22,143
Corporate debt securities		1,002		—		(5)		997
Cash equivalents and short-term investments	$	126,094	$	15	$	(181)	$	125,928

The contractual maturities of the Company’s AFS securities were as follows (in thousands):

	As of June 30, 2023		As of December 31, 2022
Due within one year	$	46,214	$	63,595
Due within one to two years		—		4,904
Total	$	46,214	$	68,499

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The AFS investments are classified as current assets, even though the stated maturity date may be one year or more beyond the current condensed consolidated balance sheet date, which reflects management’s intention to use the proceeds from sales of these securities to fund the Company’s operations, as necessary. There were no realized gains or losses due to investment sales for the three and six months ended June 30, 2023 and 2022. As of June 30, 2023, $52.1 million of the Company’s marketable securities were in gross unrealized loss positions, of which none had been in such position for greater than 12 months and $25.3 million will mature within three months of June 30, 2023.

The Company does not intend to sell its AFS investments before maturity, and it is unlikely that the Company will be required to sell such investments before recovery of their amortized cost basis. Based on the Company’s review of these AFS securities, the unrealized losses as of June 30, 2023 were primarily due to changes in interest rates and not due to increased credit risks associated with specific securities. The Company has no allowance for credit losses as of June 30, 2023 and December 31, 2022. Unrealized gains and losses that are not credit-related are included in accumulated other comprehensive loss.

Accrued interest receivables on AFS securities were $0.2 million and $0.1 million as of June 30, 2023 and December 31, 2022, respectively. The Company has not written off any accrued interest receivables for the three and six months ended June 30, 2023 and 2022.

Note 5 - Condensed Consolidated Balance Sheet Details

Prepaid and Other Current Assets

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

	As of June 30, 2023		As of December 31, 2022
Prepaid insurance	$	1,821	$	913
Prepaid research and development		1,585		1,103
Prepaid other		563		416
FICA tax credit receivable		531		571
Other current assets		184		152
Deposits		19		19
Prepaid and other current assets	$	4,703	$	3,174

Property and Equipment, Net

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

	As of June 30, 2023		As of December 31, 2022
Furniture and equipment	$	203	$	204
Leasehold improvements		67		67
Computer equipment		50		50
Construction in progress		312		8
		632		329
Less: accumulated depreciation and amortization expense		(271)		(236)
Property and equipment, net	$	361	$	93

Depreciation and amortization expense for the three months ended June 30, 2023 and 2022 was $17,000 and $22,000, respectively. Depreciation and amortization expense for the six months ended June 30, 2023 and 2022 was $35,000 and $44,000, respectively.

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Other Non-Current Assets

Other non-current assets consist of the following (in thousands):

	As of June 30, 2023		As of December 31, 2022
Deposits	$	110	$	781
FICA tax credit receivable		—		52
Other		70		368
Other non-current assets	$	180	$	1,201

Other Accrued Liabilities

Other accrued liabilities consist of the following (in thousands):

	As of June 30, 2023		As of December 31, 2022
Accrued payroll and related	$	1,713	$	229
Accrued bonus		1,055		3,379
ESPP liability		—		155
Other		2,218		2,661
Other accrued liabilities	$	4,986	$	6,424

Note 6 – Stockholders’ Equity

In April 2021, the Company filed a certificate of amendment to its certificate of incorporation, which authorized 260,000,000 shares of capital stock, consisting of 250,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of undesignated preferred stock, par value $0.001 per share that may be issued from time to time by the Company’s board of directors (the “Board of Directors”) in one or more series. Of the 250,000,000 shares of common stock, 200,000,000 shares were designated as “Common Stock” and 50,000,000 shares were designated as “Non-Voting Common Stock.”

Equity Incentive Plan

In August 2020, the Board of Directors amended the Amended and Restated 2018 Stock Option—Stock Issuance Plan (the “2018 Plan”) to increase the maximum number of shares of common stock that may be issued over the term of the plan. The 2018 Plan provided for the grant of stock options, non-statutory stock options, incentive stock options and stock issuances to employees, nonemployees and consultants of the Company.

In April 2021, the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) was approved by the Board of Directors and became effective on April 15, 2021. Upon the effectiveness of the 2021 Plan, no further grants may be made under the 2018 Plan.

The 2021 Plan allows the Company to grant equity-based awards to its officers, employees, directors and other key persons (including consultants). The Company initially reserved up to 3,246,120 shares of common stock for issuance under the 2021 Plan, plus (i) 1,722 shares that remained available for the issuance of awards under the 2018 Plan at the time the 2021 Plan became effective, and (ii) any shares subject to outstanding options or other share awards that were granted under the 2018 Plan that terminate or expire prior to exercise or settlement; are forfeited because of the failure to vest; or are reacquired or withheld (or not issued) to satisfy a tax withholding obligation or the purchase or exercise price. The 2021 Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2022 and each January 1 thereafter through January 31, 2032, by 4.0% of the outstanding number of shares of common stock on the immediately preceding December 31, or such lesser number of shares as determined by the Board of Directors. As a result, the number of shares of common stock reserved for issuance under the 2021 Plan increased by 1,451,611 shares on January 1, 2023.

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Stock Options

A summary of the Company’s stock option activities during the six months ended June 30, 2023 is as follows:

		Weighted-		Weighted-
		Average		Average	Aggregate
		Exercise		Remaining	Intrinsic
		Price Per		Contract Term	Value
	Total Options	Share		(in years)	(in millions)
Outstanding as of December 31, 2022	2,593,761	$	8.08	8.2	$	—
Granted	1,312,762	$	9.43
Exercised	(20,757)	$	3.59
Forfeited or cancelled	(1,009,324)	$	(9.36)
Outstanding as of June 30, 2023	2,876,442	$	8.27	7.2	$	—
Vested and expected to vest as of June 30, 2023	2,876,442	$	8.27	7.2	$	—
Vested and exercisable as of June 30, 2023	1,476,242	$	7.07	5.5	$	—

The weighted-average grant date fair values of option grants during the six months ended June 30, 2023 and 2022 were $7.75 and $7.33 per share, respectively. The weighted-average grant date fair values of options forfeited during the six months ended June 30, 2023 and 2022 were $7.99 and $12.05 per share, respectively.

Restricted Stock Units

A summary of the Company’s RSU activities during the six months ended June 30, 2023 is as follows:

		Weighted-		Aggregate
	Total	Average		Intrinsic
	Restricted	Grant Date		Value
	Stock Units	Fair Values		(in millions)
Outstanding as of December 31, 2022	8,945	$	6.25	$	—
Granted	95,333	$	9.59
Vested	—	$	—
Forfeited or cancelled	(41,906)	$	9.35
Outstanding as of June 30, 2023	62,372	$	9.27	$	0.1

No RSUs vested during the six months ended June 30, 2023.

Employee Stock Purchase Plan

The ESPP was approved by the Board of Directors and became effective on April 15, 2021. The ESPP initially reserved and authorized the issuance of up to 259,689 shares of common stock to participating employees. Under the ESPP, eligible employees can contribute up to 15% of their eligible compensation, as defined in the ESPP, towards the purchase of the Company’s common stock at a price of 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last trading day of the offering period. The ESPP provides for twenty-four-month offering periods with four six-month purchase periods in each offering period. The ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2022 and each January 1 thereafter through January 31, 2032, by 1.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year. As a result, the number of shares of common stock reserved for issuance under the ESPP increased by 362,902 shares on January 1, 2023. Under the ESPP, the Company issued 32,622 shares of common stock for aggregate cash proceeds of $0.1 million during the six months ended June 30, 2023.

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Stock-Based Compensation Expense

The Company recognized stock-based compensation expense as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Research and development	$	534	$	1,203	$	1,660	$	2,093
General and administrative		266		214		708		566
Restructuring charges		37		-		37		-
Total stock-based compensation expense	$	837	$	1,417	$	2,405	$	2,659

As of June 30, 2023, the total unrecognized compensation cost was $11.2 million and is expected to be recognized as expense over approximately 2.8 years.

The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the stock option grants were as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Risk-free interest rate	3.5%	2.9% - 3.0%	3.5% - 4.3%	1.6% - 3.0%
Expected volatility	115.4%	88.1% - 90.2%	102.8% - 115.4%	88.1% - 112.1%
Expected term (in years)	6.1	6.1	6.1	5.3 - 6.1
Expected dividend yield	0%	0%	0%	0%

The determination of the fair value of share-based payment awards utilizing the Black-Scholes option-pricing model is affected by the Company’s stock price and the following assumptions:

Risk-free interest rate. The risk-free interest rate assumption is based on the U.S. Treasury instruments, the terms of which were consistent with the expected term of the Company’s stock-based awards.

Expected volatility. Due to the Company’s limited operating history and lack of company-specific historical or implied volatility, the expected volatility assumption was determined by examining the historical volatilities of a group of industry peers whose share prices are publicly available.

Expected term. The expected term represents the weighted-average period the stock-based awards are expected to be outstanding. The Company uses the simplified method for estimating the expected term. The simplified method calculates the expected term as the average of the time-to-vesting and the contractual life of the stock-based awards.

Expected dividend yield. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has not paid and does not intend to pay dividends.

Forfeitures. The Company reduces stock-based compensation expense for actual forfeitures during the period.

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance consist of the following:

	As of June 30, 2023	As of December 31, 2022
Stock options	2,876,442	2,593,761
Restricted stock units	62,372	8,945
Reserved for future equity award grants	4,179,478	3,084,732
Reserved for future ESPP issuances	824,065	466,585
Common stock reserved for future issuance	7,942,357	6,154,023

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Note 7 – License Agreements

The Company has entered into license agreements, accounted for as asset acquisitions, under which the Company is required to use commercially reasonable efforts to meet certain specified development and regulatory milestones related to the licensed technologies within specified time periods. In consideration of the rights granted to the Company under the agreements, the Company is required to make cash milestone payments to the licensors upon the completion of certain development, regulatory and commercial milestones. For the arrangements that the Company accounted for as asset acquisitions, contingent consideration liabilities are recorded as an additional cost of the acquired assets when the contingency is resolved, and the consideration is paid or becomes payable. Additionally, the Company has agreed to pay royalties on net sales of products applicable to the license agreements. The Company may terminate the agreements upon written notice to the licensors.

Daiichi Sankyo License Agreement

On September 2, 2020, the Company licensed the rights to milademetan (DS-3032b) for all human prophylactic or therapeutic uses in all countries and territories of the world from Daiichi Sankyo Company, Limited (“Daiichi Sankyo”), a Japanese corporation (the “Daiichi Sankyo License Agreement”). Daiichi Sankyo conducted clinical studies of milademetan prior to the Company’s licensing the rights to this product. The Company refers to this product candidate as milademetan.

In accordance with the terms of the Daiichi Sankyo License Agreement, the Company paid Daiichi Sankyo an initial upfront payment of $5.0 million in September 2020.

Under the Daiichi Sankyo License Agreement, the Company obtained worldwide, sublicensable exclusive rights to seven families of patents with respect to milademetan (the “Licensed Compound”). The Company is solely responsible under the Daiichi Sankyo License Agreement for the research, development and registration of milademetan. Pursuant to the Daiichi Sankyo License Agreement, Daiichi Sankyo had the right to continue to conduct three clinical trials and prepare final reports with respect to these clinical trials, and such right expires upon all subjects completing the study treatment. The Company has agreed to reimburse Daiichi Sankyo certain third-party expenses incurred while conducting such trials. On March 3, 2022, the Company and Daiichi Sankyo entered into a Memorandum of Understanding, which provides that Daiichi Sankyo will terminate its U105 study, and the Company will reimburse a total of $2.0 million to Daiichi Sankyo for expenses related to such study in four installments of $0.5 million each until December 31, 2022. As of June 30, 2023, the Company paid all four installments under the Memorandum of Understanding. Under the Daiichi Sankyo License Agreement, the Company made other clinical trials payments in the aggregate of $30,000 for the three and six months ended June 30, 2023. The Company made other clinical trials payments of $57,000 and $87,000 under the Daiichi Sankyo License Agreement for the three and six months ended June 30, 2022, respectively.

The Company is required to make aggregate future milestone payments of up to $223.5 million, contingent on the attainment of certain development, regulatory and sales milestones. The $223.5 million aggregate future milestone payments include a $2.0 million increase that was agreed upon in the Memorandum of Understanding with Daiichi Sankyo. On July 20, 2021, the Company announced that the first patient has been randomized in the multicenter, open-label, Phase 3 registrational trial (MANTRA) evaluating milademetan for the treatment of de-differentiated liposarcoma. Accordingly, pursuant to the Daiichi Sankyo License Agreement, the Company recorded $5.5 million in milestone fees as research and development expense in the consolidated statement of operations and comprehensive loss during the year ended December 31, 2021. Of the $5.5 million milestone fees, $2.5 million was paid in the third quarter of 2021 and $3.0 million was accrued as part of accrued research and development in the consolidated balance sheet as of December 31, 2021. On June 29, 2022, the Company and Daiichi Sankyo entered into an amendment to the Daiichi Sankyo License Agreement. The amendment reduced the $3.0 million milestone fee liability associated with the previously achieved milestone to $2.0 million. The amendment also extended the due date of the milestone fee payment to June 30, 2023. As of June 30, 2023, such milestone fee payment remained accrued. During the three and six months ended June 30, 2023 and 2022, the Company incurred no milestone research and development expense under the Daiichi Sankyo License Agreement.

Additionally, the Company is required to pay Daiichi Sankyo a high single digit royalty based on the annual net sales of products containing milademetan as an active pharmaceutical ingredient (the “Products”), subject to reduction at an agreed rate upon expiration of the licensed patent in the particular country where the Products are sold. To date, no royalty payments have been made to Daiichi Sankyo under the Daiichi Sankyo License Agreement. The royalty obligation terminates on a country-by-country and on a product-by-product basis on the later of: (i) loss of all market exclusivity for

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such Product in such country, (ii) the last-to-expire patent that covers the Licensed Compound or the Product in such country and (iii) twelve years from launch of the first Product sold by the Company in such country.

Unless sooner terminated or extended, the Daiichi Sankyo License Agreement will remain in full force and effect until the Company, its affiliates and its sublicensees cease all development and commercial activity related to milademetan. Either party may terminate the Daiichi Sankyo License Agreement for cause in the event of an uncured material breach (subject to a 90-day cure period). However, the Company may only terminate the Daiichi Sankyo License Agreement with respect to the countries affected by such uncured material breach. Daiichi Sankyo may also terminate the Daiichi Sankyo License Agreement in the event of Rain’s bankruptcy or insolvency. Additionally, Daiichi Sankyo may terminate the Daiichi Sankyo License Agreement immediately upon written notice if the Company, its affiliates or its sublicensors initiate or join any challenge to the validity or enforceability of a licensed patent, subject to certain exclusions. Furthermore, the Company may terminate the Daiichi Sankyo License Agreement in its entirety or on a country-by-country basis for bona fide material concerns regarding the (i) lack of safety for human use arising from toxicity of the Licensed Compound or Product(s), (ii) lack of efficacy of the Licensed Compound or Product(s) or (iii) adverse economic impact to the Company in connection with its continued development of the Products, in each case, upon six months’ prior written notice to Daiichi Sankyo. In addition, if the Company is acquired by a third party that is developing and commercializing a competing compound and the acquiring party decides not to discontinue the development or commercialization of such competing compound, such third party must terminate the Daiichi Sankyo License Agreement within 30 days of such acquisition if it does not discontinue such development or commercialization. Upon termination of the Daiichi Sankyo License Agreement by Daiichi Sankyo for the Company’s uncured material breach or by the Company for its bona fide material concerns regarding the safety, efficacy or adverse economic impacts relating to the Licensed Compound or Products, or its development thereof, the Company is required to, among other actions, if requested by Daiichi Sankyo (i) transfer to Daiichi Sankyo ongoing clinical trials, data, reports, records and materials, (ii) grant to Daiichi Sankyo an exclusive, irrevocable, sublicensable, fully paid-up license under any patents and know-how that are controlled and actually used by the Company at the time of termination in connection with the Products to allow Daiichi Sankyo exploit the Licensed Compound or Products in countries that are affected by the termination, (iii) grant to Daiichi Sankyo an exclusive, irrevocable, sublicensable, fully paid up license to use trademarks that are specific to the Products and (iv) assign any applicable sublicenses.

Drexel License Agreement and Sponsored Research Agreement

In February 2023, the Company decided to discontinue further development of its preclinical program focused on targeting RAD52 in the DNA damage repair pathway, and the Company notified Drexel University (“Drexel”) of the termination of the intellectual property license agreement, dated July 30, 2020, between Drexel and the Company to focus use of the Company’s financial and personnel resources on the milademetan clinical program.

Roche Clinical Supply Agreement

In December 2021, the Company entered into a clinical supply agreement with Roche for the supply of the anti-Programmed Death Ligand-1 (PD-L1) monoclonal antibody, atezolizumab. Clinical trials are planned to evaluate milademetan, in combination with atezolizumab for the treatment of patients in genetically selected populations. Under this agreement, Rain is the sponsor of the anticipated clinical trials, and Roche will supply atezolizumab. The Company does not have any financial commitments to Roche under this agreement. In May 2023, the Company notified Roche of the termination of the clinical supply agreement.

Note 8 – Commitments and Contingencies

Leases

In September 2018, the Company entered into a noncancelable operating lease agreement for office space for its corporate headquarters in Newark, California with an initial term of 5.25 years. The lease commenced in January 2019 and ends March 2024. Under the terms of the lease, the Company pays annual base rent, subject to an annual fixed percentage increase of 2% on March 1st of each year. The Company is obligated to pay for its share of direct expenses including operating expense and taxes, which are considered variable lease costs and are expensed as incurred.

In March 2020, Governor Newsom issued State of California Executive Order No. N-33-20 instructing all individuals in California to stay at home due to the COVID-19 pandemic. In connection with such order, the Company entered into an amendment to the noncancelable operating lease agreement in June 2020. The amendment provided the Company rent

18

relief for three months in 2020. In consideration of the rent relief, the Company agreed to adjust the base rent annual fixed percentage increase of 3% on February 1st of each year and extend the lease until September 2024. The amendment was determined to be a lease modification that qualified as a change of accounting on the existing lease and not a separate contract. Remeasurement of the right-of-use asset and operating lease liabilities at the date of modification did not result in a material increase of the right-of-use asset and operating lease liabilities.

In October 2022, the Company entered into a second amendment to its corporate headquarters lease agreement to expand the leased premises by approximately 3,880 square feet. The lease commencement date for the expansion premises is expected to be July 2023 and will expire in September 2024. Total future lease payments over the life of the lease are estimated to increase by approximately $0.2 million as a result of the amendment.

In March 2023, the Company entered into a third amendment to its corporate headquarters lease agreement to expand the leased premises by approximately 5,600 square feet on a temporary basis. The lease commencement date for the expansion into the temporary space was March 2023 and will expire on the date the expanded premises under the second amendment are ready for occupancy. The expanded premises were ready for occupancy in July 2023. Pursuant to this third amendment, the Company will not pay any rent on the temporary space, but the Company will be responsible for its share of operating costs, taxes, and utilities.

The future minimum lease payments required under the operating lease are summarized as follows (in thousands):

	As of June 30, 2023
2023 - remainder	$	86
2024		130
Total minimum lease payments	$	216
Less: amount representing interest		(13)
Present value of operating lease liabilities	$	203
Operating lease liabilities, current		164
Operating lease liabilities, non-current		39
Total operating lease liabilities	$	203
Weighted-average remaining lease term (in years)		1.3
Weighted-average incremental borrowing rate		10.0%

In addition to what is included in the table above, the future minimum lease payments for the operating lease not yet commenced are summarized as follows (in thousands):

	As of June 30, 2023
2023	$	86
2024		130
Total minimum lease payments	$	216

The table below summarizes the Company’s lease costs and cash payments in connection with operating lease obligations (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Total operating lease expense	$	40	$	40	$	80	$	80
Operating cash flows used for operating lease	$	43	$	41	$	86	$	82

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Contingencies

In the event the Company becomes subject to claims or suits arising in the ordinary course of business, the Company would accrue a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated.

Note 9 – Employee Benefits

The Company has a defined contribution 401(k) plan available to eligible employees. Under the terms of the plan, employees may make voluntary contributions as a percent of compensation, limited to the maximum amount allowable under federal tax regulations. The Company, at its discretion, may make certain contributions to the 401(k) plan. The Company made matching contributions of $143,000 and $156,000 for the three months ended June 30, 2023 and 2022, respectively. The Company made matching contributions of $577,000 and $231,000 for the six months ended June 30, 2023 and 2022, respectively.

Note 10 – Restructuring Charges

In May 2023, the Company announced a reduction in its workforce in connection with the reprioritization of the Company’s clinical strategy designed to optimize Company resources. The Company recorded restructuring charges of $2.8 million in the statements of operations and comprehensive loss for the three and six months ended June 30, 2023, comprised of $2.8 million cash severance, employee transition and related employee benefits and taxes of affected employees, as well as $37,000 of stock-based compensation expense related to option modifications. 1 As of June 30, 2023, the Company had approximately $1.7 million outstanding unpaid cash severance, employee transition and related employee benefits and taxes included within other accrued liabilities in the balance sheet, which the Company expects to be paid in full in the third quarter of 2023.

Note 11 – Net Loss Per Share

The following table summarizes the computation of the basic and diluted net loss per share (in thousands, except share and per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Net loss	$	(22,064)	$	(17,611)	$	(42,548)	$	(35,005)
Denominator:
Weighted-average shares of common stock outstanding, basic and diluted		36,363,315		26,529,482		36,351,648		26,520,662
Weighted-average shares used to compute net loss per share, basic and diluted		36,363,315		26,529,482		36,351,648		26,520,662
Net loss per share, basic and diluted	$	(0.61)	$	(0.66)	$	(1.17)	$	(1.32)

The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their inclusion would be anti-dilutive:

	As of June 30,
	2023	2022
Stock options	2,876,442	2,402,872
Restricted stock units	62,372	—
ESPP shares	—	53,266
Total	2,938,814	2,456,138

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Note 12 – Subsequent Event

On July 17, 2023, a purported securities class action lawsuit was commenced in the United States District Court for the Northern District of California, naming the Company and certain of the Company’s officers as defendants (the “Shareholders Class Action Lawsuit”), captioned Thant v. Rain Oncology, et al., Case No. 3-23-mc-8185. The Shareholder Class Action Lawsuit alleges violations of Sections 10(b) and 20(a) of the Exchange Act in connection with allegedly false and misleading information about the Phase 3 MANTRA trial design quality and risks related to its clinical development strategy and regulatory approval. The Shareholder Class Action Lawsuit seeks compensatory damages in an unspecified amount, attorneys fees and costs, and any other relief the court deems proper.

The Shareholder Class Action Lawsuit and any other related lawsuits are subject to inherent uncertainties and the actual costs to be incurred relating to the Shareholder Class Action Lawsuit will depend upon many unknown factors. The outcome of the litigation is uncertain and the Company may not prevail. The Company could be forced to expend significant resources in the defense of the Shareholder Class Action Lawsuit. The Company is not currently able to estimate the possible cost to the Company from this matter, as the Shareholder Class Action Lawsuit is currently at an early stage and the Company cannot ascertain how long it may take to resolve. The Company has not established any reserve for any potential liability relating to the Shareholder Class Action Lawsuit. The Company believes that it has meritorious defenses and intends to defend the Shareholder Class Action Lawsuit vigorously.

Item 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 together with our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis contain forward-looking statements based upon our current plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intentions and beliefs. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section titled “Risk Factors” and included in our Annual Report on Form 10-K for the year ended December 31, 2022. You should carefully read the sections titled “Note Regarding Forward-Looking Statements” and “Risk Factors” to gain an understanding of the important factors that could cause actual results to differ materially from the results described below.

Overview

We are a precision oncology company developing therapies that target oncogenic drivers to genetically select patients we believe will most likely benefit. Our product candidate, milademetan (also known as RAIN-32) is an oral, small molecule inhibitor of the mouse double minute 2 (MDM2)-p53 complex that reactivates p53. We in-licensed milademetan from Daiichi Sankyo Company, Limited (Daiichi Sankyo) in September 2020 based on the results of a Phase 1 clinical trial, which demonstrated meaningful antitumor activity in an MDM2-amplified subtype of liposarcoma (LPS) and other solid tumors.

Since our inception in 2017, we have incurred significant operating losses and have utilized substantially all of our resources to date in-licensing and developing our product candidates, organizing and staffing our company and providing other general and administrative support for our operations. As of June 30, 2023, we had an accumulated deficit of $208.2 million and we incurred net losses of approximately $22.1 million and $42.5 million for the three and six months ended June 30, 2023, respectively. Our operations to date have been funded primarily through the issuance of convertible promissory notes, the issuance of convertible preferred stock, as well as issuance and sale of common stock through our initial public offering and our offering, issuance and sale of our common stock in November 2022 (the November 2022 Offering). From our inception through June 30, 2023, we have raised aggregate gross proceeds of $9.9 million from the issuance of convertible promissory notes and $81.9 million from the issuance of convertible preferred stock. In November 2022, we completed a registered direct offering of an aggregate of 8,576,330 shares of common stock and non-voting common stock at $5.83 per share. In addition, we issued an additional 1,140,068 shares of common stock in connection with the exercise of the underwriters’ option to purchase additional shares at the offering price. We received net proceeds from our November 2022 Offering of approximately $52.9 million, after deducting underwriting discounts and commissions, and other offering fees. As of June 30, 2023, we had cash, cash equivalents and short-term investments of $86.3 million. Although we believe, based on our current business plans, that our existing cash, cash equivalents and short-term investments will be sufficient to meet our obligations for at least the next twelve months, we anticipate that we will require additional capital in the future in order to continue the research and development of our drug candidates. Our ability to generate product revenue sufficient to

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achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years as we continue our development of, and seek regulatory approvals for, our product candidates and begin to commercialize any approved products, seek to expand our product pipeline, invest in our organization, as well as incur expenses associated with operating as a public company.

We do not expect to generate any revenue from product sales unless and until we successfully complete development and obtain regulatory approval for one or more product candidates, which will not be for many years, if ever. Accordingly, until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through public or private equity offerings, debt financings or other capital sources which may include strategic collaborations, licensing arrangements or other arrangements with third parties. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms or at all. If we raise funds through strategic collaborations or other similar arrangements with third parties, we may have to relinquish valuable rights to our platform technology, future revenue streams, research programs or product candidates or we may have to grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts. Our ability to raise additional funds may be adversely impacted by potential worsening global macroeconomic conditions and the disruptions to and volatility in the credit and financial markets in the United States and worldwide. Because of the numerous risks and uncertainties associated with our product development, we cannot predict the timing or amount of increased expenses and cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

We do not own or operate, and currently have no plans to establish, any manufacturing facilities. We currently rely and expect to continue to rely for the foreseeable future, on third parties for the manufacture of our drug candidates for preclinical and clinical testing, as well as for commercial manufacture of any drugs that we may commercialize. We expect to continue to develop drug candidates that can be produced cost-effectively at contract manufacturing facilities. For the milademetan program, we have transferred Daiichi Sankyo Company, Limited (Daiichi Sankyo) processes to suitable third-party contract manufacturing organizations to supply active pharmaceutical ingredients and clinical drug product for our clinical trials and in preparation for submission of marketing applications and potential future commercial supplies.

Recent Developments

In May 2023, we announced topline pivotal data from our Phase 3 MANTRA trial. The trial, evaluating the efficacy, safety, and tolerability of milademetan in patients with dedifferentiated (DD) LPS, did not meet its primary endpoint of progression free survival (PFS) by blinded independent central review compared to the standard of care, trabectedin.

The median PFS for milademetan was 3.6 months versus 2.2 months for trabectedin, with a hazard ratio of 0.89, p=0.53. The most common treatment emergent adverse events (TEAEs) in the milademetan arm included nausea, thrombocytopenia, anemia, vomiting and neutropenia. The most common Grade 3/4 TEAEs were thrombocytopenia (39.5%), neutropenia (25.5%) and anemia (18.6%). Dose reductions in the milademetan arm were 44.2% compared to 29.1% in the trabectedin arm. Discontinuation in the milademetan arm due to AEs were 11.6% compared to 19.0% in the trabectedin arm. Based upon these topline data, we do not expect to pursue further development of milademetan in DD LPS.

In May 2023, we provided Company updates and outlined strategic priorities of milademetan clinical programs as follows:

● Continue evaluation of the totality of the pivotal Phase 3 MANTRA data

o Planned data presentation at a medical conference in the fourth quarter of 2023

● Suspend enrollment of additional patients into the MANTRA-2 MDM2 amplified basket study

o Planned MANTRA-2 clinical update at a medical conference in the fourth quarter of 2023

● Terminate plans for the MANTRA-4 clinical trial in patients with CDKN2A-loss, p53 wildtype (WT) advanced solid tumors

● Evaluate avenues to enhance the pipeline through precision oncology program acquisition

● Streamline internal resources to execute on realigned strategy

o Reducing full-time employees by approximately 65%, combined with careful workforce management, including employee attrition

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o Transitioning chief medical officer responsibilities from Dr. Richard Bryce to Dr. Robert Doebele

Our Development Pipeline

Our development pipeline is unified by a strategy to target oncogenic drivers through differentiated therapies for which we are able to genetically select the patients we believe will be most likely to benefit from treatment. We currently retain global development and commercialization rights to our product candidate, miladementan.

Our Lead Product Candidate, Milademetan

Milademetan Overview

Our product candidate, milademetan, is a small molecule, oral inhibitor of MDM2 and is being developed in patients with MDM2-dependent cancers. Historically, MDM2 inhibition has presented treatment challenges due to dose-limiting, on-target hematologic toxicities. We believe an MDM2-targeted therapy must possess certain pharmacological characteristics related to potency and pharmacokinetics to allow for the design of an optimized dosing schedule. An optimized dosing schedule is intended to improve peak drug exposure leading to apoptosis and cell cycle arrest during the dosing period, while permitting hematopoietic precursor cell recovery during the dosing break, thereby minimizing hematologic toxicity.

Overview of p53 and MDM2

Milademetan reactivates p53, known as the “guardian of the genome,” by inhibiting MDM2. p53 is present in every normal cell and acts as a key regulator of a variety of cellular processes including cell cycle, DNA repair and apoptosis. In a normal cell, the activity of p53 is controlled and regulated by the inhibitory protein MDM2. MDM2 binds to p53, thereby inducing degradation and allowing normal cells to function properly. In response to cell damage and other stress conditions, p53 is activated and prevents the formation of cancerous cells by inducing apoptosis.

In contrast to normal cells, in tumor cells, the two primary mechanisms by which p53 can be inactivated in tumor cells are mutations in p53 and activation or overexpression of MDM2. Approximately half of all tumors are characterized by mutations of the p53 gene. The remaining cancer patients have a p53 gene that is not mutated, and is otherwise known as WT p53, but can be functionally suppressed through the activation or overexpression of MDM2. We have identified MDM2 dependence in several solid tumors. This dependence is caused by overexpression of MDM2 through gene amplification or other mechanisms, loss of a negative regulator of MDM2 or other causes. Overexpression of MDM2 promotes the degradation of p53 and also eliminates p53’s ability to activate transcription. Milademetan, by binding MDM2 at the p53 interaction site, prevents the formation of the MDM2-p53 complex, allowing p53 reactivation and subsequent transcription of genes that trigger cancer cell cycle arrest (e.g., p21) or apoptosis (e.g., PUMA) and can be readily measured by increases in the pharmacodynamic marker MIC-1 (GDF15) in the blood.

Clinical Development Plan

Phase 3 Trial in DDLPS Patients (MANTRA)

In July 2021, we initiated a randomized, multicenter, open-label, Phase 3 registrational trial (MANTRA) for patients with unresectable or metastatic DDLPS that has progressed on one or more prior systemic therapies, including at least one anthracycline-based therapy. This trial is an open label, 1:1 randomized trial comparing milademetan to trabectedin, a standard of care (SOC) therapeutic, planned for approximately 160 DDLPS patients with prior anthracycline-based therapy. The dosing schedule for the Phase 3 trial is identical to the Schedule D dose of 260 mg (qd 3/14x2) employed in the Phase 1 trial. The primary objective of the trial is to compare progression-free survival (PFS) evaluated by Response Evaluation Criteria in Solid Tumors (RECIST) criteria in blinded independent review between the milademetan treatment arm and the trabectedin control arm. Secondary endpoints include overall survival (OS), PFS by investigator assessment, objective response rate, duration of response, disease control rate, safety and patient reported outcomes.

The PFS assumptions for statistical powering are based on a PFS assumption for the control arm of 3.0 months and 6.0 months for milademetan. The doubling of PFS corresponds to a hazard ratio of 0.5.

In August 2022, we announced the completion of enrollment into our MANTRA Phase 3 trial of milademetan. In May 2023, we announced topline pivotal data from our MANTRA Phase 3 trial. The trial, evaluating the efficacy, safety, and

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tolerability of milademetan in patients with DD LPS, did not meet its primary endpoint of PFS by blinded independent central review compared to the standard of care, trabectedin. We continued evaluation of the totality of the pivotal Phase 3 MANTRA data and plan for data presentation at a medical conference in the fourth quarter of 2023.

Phase 2 MDM2-amplified Tumor-agnostic Basket Trial (MANTRA-2)

In November 2021, the first patient was dosed in the multicenter, single arm, open-label, Phase 2 basket trial evaluating Milademetan for the treatment of MDM2-amplified advanced solid (MANTRA-2). The MANTRA-2 trial is designed to evaluate the safety and efficacy of milademetan in patients with advanced or metastatic solid tumors refractory or intolerant to standard-of-care therapy and that exhibit WT p53 and a prespecified minimum MDM2 gene copy number. Approximately 65 patients are anticipated to be enrolled to receive milademetan. The primary endpoint of the trial is objective response rate (ORR) as measured by RECIST criteria. Secondary endpoints include duration of response, disease control rate PFS by investigator assessment, OS, and growth modulation index.

We enrolled patients that have received and progressed on SOC therapy and will be unlikely to tolerate or derive clinically meaningful benefit from SOC therapy. Patients with MDM2 amplification will be selected using local tumor testing, such as a commercially-available next generation sequencing-based diagnostic assay. Milademetan will be administered in doses of 260 mg using the Schedule D dosing schedule from the Phase 1 trial (qd 3/14). The primary endpoint of this trial is ORR by RECIST, with secondary endpoints of PFS, duration of response, OS, and growth-modulation index.

In November 2022, we announced preliminary data in our MANTRA-2 trial. As of the latest data cutoff on October 26, 2022, 17 patients had been enrolled, 15 of whom had been dosed with milademetan. There were 10 efficacy-evaluable patients with CN greater than or equal to 8 by central testing. We observed two unconfirmed partial responses with tumor regression of 34% and 30% (pancreatic and lung cancer, respectively). Two additional patients exhibited promising activity with tumor regression of 29% and 27% (biliary tract and breast cancer, respectively). In addition, we observed anti-tumor effect of milademetan in heavily pretreated, refractory patients, with a median of four prior therapies. The safety profile as of the data cutoff was preliminarily consistent with our prior Phase 1 trial of milademetan. In May 2023, we announced that we have suspended enrollment of additional patients into the MANTRA-2 MDM2 amplified basket study. We plan to provide a MANTRA-2 clinical update at a medical conference in the fourth quarter of 2023.

Phase 1/2 Trial for Milademetan in Combination with Atezolizumab in Patients with CDKN2A Loss and Wildtype p53 advanced solid tumors (MANTRA-4)

Cyclin-dependent kinase inhibitor 2A (CDKN2A) encodes for the tumor suppressor p14ARF, an inhibitor of MDM2, and the loss of CDKN2A may lead to MDM2-dependent cancers. This concept of MDM2 dependency is supported by nonclinical data demonstrating in vitro sensitivity to milademetan of cancer cell lines harboring CDKN2A loss and WT p53 as well as several in vivo models with CDKN2A loss showing anti-tumor activity of milademetan. Loss of p53 activity via MDM2 and/or CDKN2A loss has also been associated with poor clinical outcomes for patients treated with immune checkpoint inhibitors (ICI). Nonclinical data in an immune competent mouse model of colorectal cancer with CDKN2A loss demonstrated enhanced combinatorial activity of milademetan plus an anti-PD1 antibody compared to either agent alone.

In January 2022, we announced a clinical supply agreement with Roche for the supply of the anti-Programmed Death Ligand-1 (PD-L1) monoclonal antibody, atezolizumab. Clinical trials are planned to evaluate milademetan in combination with atezolizumab for the treatment of patients in genetically selected populations. Under this agreement, we are the sponsor of the anticipated clinical trials, and Roche will supply atezolizumab. In May 2023, the Company notified Roche of the termination of the clinical supply agreement.

An initial Phase 1/2 basket trial (MANTRA-4) was planned to evaluate the safety, tolerability and efficacy of milademetan in combination with atezolizumab in patients with loss of CDKN2A and WT p53 advanced solid tumors who have previously progressed on immune checkpoint inhibitors. In May 2023, we announced that we have terminated plans for the MANTRA-4 clinical trial in patients with CDKN2A-loss, p53 WT advanced solid tumors.

Collaboration and License Agreements

We are party to a license agreement for the in-license of our product candidates and development programs. See Note 7 to the Condensed Consolidated Financial Statements.

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Components of Our Results of Operations

Revenue

To date, we have not generated any revenue from product sales, licenses or collaborations and do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval, we may generate revenue from future product sales. If we enter into license or collaboration agreements for any of our product candidates or intellectual property, we may generate revenue in the future from payments as a result of such license or collaboration agreements. We cannot predict if, when, or to what extent we will generate revenue from the commercialization and sale of our product candidates or from license or collaboration agreements. We may never succeed in obtaining regulatory approval for any of our product candidates.

Operating Expenses

Our operating expenses since inception have consisted solely of research and development costs, including acquisition of in-process research and development, and general and administrative costs.

Research and Development Expenses

To date, our research and development expenses have related to the discovery and clinical development of our product candidates, including acquisition of in-process research and development. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

Research and development expenses include:

● salaries, payroll taxes, employee benefits and stock-based compensation charges for those individuals involved in research and development efforts;

● expenses incurred in connection with research, laboratory consumables and preclinical studies;

● external research and development expenses incurred under agreements with contract research organizations (CROs) and consultants to conduct and support our planned clinical trials of our product candidates;

● the cost of consultants engaged in research and development-related services and the cost to manufacture drug product for use in our preclinical studies and clinical trials;

● costs related to regulatory compliance;

● the cost of annual license fees and the cost of acquiring in-process research and development, including upfront license payments; and

● any development milestone payments that we may make under our license agreements.

We track external development costs by product candidate or development program, but we do not allocate personnel costs or other internal costs to specific development programs or product candidates as our personnel works across multiple development programs and product candidates. These costs are included in unallocated research and development expenses in the table below.

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The following table summarizes our research and development expenses by product candidate or development program:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(in thousands)				(in thousands)
Milademetan	$	7,505	$	7,576	$	15,499	$	16,127
Other research and clinical candidates		135		161		203		411
Unallocated internal research and development costs		7,340		6,520		15,955		11,274
Total research and development expenses	$	14,980	$	14,257	$	31,657	$	27,812

To the extent we develop future product candidates, we expect our research and development expenses would substantially increase. We cannot predict with certainty the timing for initiation or completion of, the duration of, or the costs of current or future clinical trials and nonclinical studies of any of our product candidates due to the inherently unpredictable nature of clinical and preclinical development. The clinical development timeline, probability of success of clinical trials and development costs can differ materially from expectations. In addition, we cannot forecast which product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.

Our future clinical development costs may vary significantly. See the section titled “Risk Factors—Risks Related to Product Development—Preclinical and clinical development involves a lengthy and expensive process with uncertain outcomes, and results of earlier studies and trials may not be predictive of future clinical trial results. If our preclinical studies and clinical trials are not sufficient to support regulatory approval of any of our product candidates, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development of such product candidates” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022.

General and Administrative Expenses

General and administrative expenses consist of salaries and employee-related costs, including stock-based compensation, for personnel in executive, finance and other administrative functions, legal fees relating to intellectual property and corporate matters, professional fees for accounting and consulting services and facility-related costs. We anticipate increased expenses related to audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs associated with operating as a public company as we continue to develop future product candidates.

Interest Income

Interest income consists of interest on our available-for-sale (AFS) securities.

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Results of Operations

Comparison of Three and Six Months Ended June 30, 2023 and 2022

The following table summarizes our results of operations for the three and six months ended June 30, 2023 and 2022, together with the changes in those items in dollars:

	Three Months Ended June 30,						Six Months Ended June 30,
	2023		2022		Change		2023		2022		Change
	(in thousands)						(in thousands)
Operating expenses:
Research and development	$	14,980	$	14,257	$	723	$	31,657	$	27,812	$	3,845
General and administrative		5,414		3,461		1,953		10,480		7,356		3,124
Restructuring charges		2,837		—		2,837		2,837		—		2,837
Total operating expenses		23,231		17,718		5,513		44,974		35,168		9,806
Loss from operations		(23,231)		(17,718)		(5,513)		(44,974)		(35,168)		(9,806)
Other income:
Interest income		1,167		107		1,060		2,426		163		2,263
Total other income		1,167		107		1,060		2,426		163		2,263
Net loss	$	(22,064)	$	(17,611)	$	(4,453)	$	(42,548)	$	(35,005)	$	(7,543)

Research and Development Expenses

Research and development (R&D) expenses were $15.0 million and $14.3 million for the three months ended June 30, 2023 and 2022, respectively. The increase in R&D expenses was primarily related to clinical trial costs for milademetan, higher payroll-related costs for our R&D personnel, and various other R&D costs for milademetan. Non-cash stock-based compensation expenses included in R&D expenses were $0.5 million and $1.2 million for the three months ended June 30, 2023 and 2022, respectively.

R&D expenses were $31.7 million and $27.8 million for the six months ended June 30, 2023 and 2022, respectively. The increase in R&D expenses was primarily related to clinical trial costs for milademetan, higher payroll-related costs for our R&D personnel, and various other R&D costs for milademetan. Non-cash stock-based compensation expenses, included as part of personnel costs, were $1.7 million and $2.1 million for the six months ended June 30, 2023 and 2022, respectively. We expect our R&D costs to significantly decrease for the remainder of 2023 as we implement the reprioritization of our clinical strategy designed to optimize Company resources.

General and Administrative Expenses

General and administrative (G&A) expenses were $5.4 million and $3.5 million for the three months ended June 30, 2023 and 2022, respectively. The increase in G&A expenses was primarily due to higher professional services costs, legal costs, and payroll-related costs. Non-cash stock-based compensation expense included in G&A expenses was approximately $0.3 million and $0.2 million for the three months ended June 30, 2023 and 2022, respectively.

G&A expenses were $10.5 million and $7.4 million for the six months ended June 30, 2023 and 2022, respectively. The increase in G&A expenses was primarily due to higher professional services costs, legal costs, and payroll-related costs. Non-cash stock-based compensation expense included in G&A expenses was approximately $0.7 million and $0.6 million for the six months ended June 30, 2023 and 2022, respectively. We expect our G&A expenses to significantly decrease for the remainder of 2023 as we implement the reprioritization of the Company’s business strategy designed to optimize our resources.

Restructuring Charges

In May 2023, we announced a reduction in our workforce in connection with the reprioritization of our clinical strategy designed to optimize Company resources. We recorded restructuring charges of $2.8 million in the statements of operations and comprehensive loss for the three and six months ended June 30, 2023, comprised of $2.8 million cash

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severance, employee transition and related employee benefits and taxes of affected employees, as well as $37,000 of stock-based compensation expense related to option modifications. As of June 30, 2023, we have approximately $1.6 million outstanding unpaid cash severance, employee transition and related employee benefits and taxes included within other accrued liabilities in the balance sheet, which we expected to be paid in full in the third quarter of 2023.

Other Income

Other income for the three and six months ended June 30, 2023 and 2022 represents interest income from money market or short-term investments.

Liquidity and Capital Resources

Since our inception, we have incurred significant operating losses. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance the preclinical and clinical development of our research programs and product candidates. We expect that our research and development and general and administrative costs will increase in connection with conducting any future preclinical studies and clinical trials, expanding our intellectual property portfolio and providing general and administrative support for our operations. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements or other sources.

We do not currently have any approved products and have not generated any revenue from product sales since inception. To date, we have financed our operations through the issuance of convertible promissory notes and the issuance of convertible preferred stock and common stock. From our inception through June 30, 2023, we have raised aggregate gross proceeds of $9.9 million from the issuance of convertible promissory notes and $81.9 million from the issuance of convertible preferred stock.

In May 2022, we entered into a sales agreement (the “Sales Agreement”) with Oppenheimer & Co. Inc. (the “Sales Agent”) pursuant to which we may offer and sell up to $50.0 million of shares of our common stock, from time to time, in “at-the-market” offerings (the “ATM Facility”). The Sales Agent is entitled to compensation at a commission equal to 3.0% of the aggregate gross sales price per share sold under the Sales Agreement. During the six months ended June 30, 2023, we received $0.3 million of net proceeds, after deducting underwriting discounts and commissions, from the sales of 32,000 shares of our common stock pursuant to the ATM Facility. During the three months ended June 30, 2023, we had no sales pursuant to the ATM Facility.

In November 2022, we completed a registered direct offering of an aggregate of 8,576,330 shares of common stock and non-voting common stock at $5.83 per share. In addition, we issued an additional 1,140,068 shares of common stock in connection with the exercise of the underwriters’ option to purchase additional shares at the public offering price. We received net proceeds from our November 2022 Offering of approximately $52.9 million, after deducting underwriting discounts and commissions, and other offering fees.

As of June 30, 2023, we had cash, cash equivalents and short-term investments of $86.3 million. Although we believe, based on our current business plans, that our existing cash, cash equivalents and short-term investments will be sufficient to meet our obligations for at least the next twelve months, we anticipate that we will require additional capital in the future in order to continue the research and development of our drug candidates. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.

Future Funding Requirements

We expect our expenses to increase substantially in connection with our ongoing development activities related to milademetan and other product candidates and programs, which are still in the early stages of development. In addition, we expect to continue to incur additional costs associated with operating as a public company. We expect that our expenses will increase substantially if and as we:

● initiate new clinical trials for our current and future programs;

● initiate and continue research and preclinical and clinical development of our product candidates;

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● seek to identify and develop additional product candidates;

● seek marketing approvals for any of our product candidates that successfully complete clinical trials, if any;

● establish a sales, marketing, manufacturing and distribution infrastructure to commercialize any products for which we may obtain marketing approval;

● require the manufacture of larger quantities of our product candidates for clinical development and potentially commercialization;

● maintain, expand, protect and enforce our intellectual property portfolio;

● acquire or in-license other drugs and technologies;

● defend against any claims of infringement, misappropriation or other violation of third-party intellectual property;

● hire and retain additional clinical, quality control and scientific personnel;

● build out new facilities or expand existing facilities to support our ongoing development activity;

● add operational, financial and management information systems and personnel, including personnel to support our drug development, any future commercialization efforts and our transition to a public company;

● potentially experience the effects of the recent disruptions to and volatility in the credit and financial markets in the United States and worldwide from ongoing macroeconomic conditions and the geopolitical environment; and

● operate as a public company.

Because of the numerous risks and uncertainties associated with the development of milademetan and other product candidates and programs and because the extent to which we may enter into collaborations with third parties for development of our product candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates and programs. Our future capital requirements will depend on many factors, including:

● the scope, progress, results and costs of our current and future clinical trials of milademetan for our current targeted indications;

● the scope, progress, results and costs of drug discovery, preclinical research and clinical trials for other product candidates;

● the number of future product candidates that we pursue and their development requirements;

● the costs, timing and outcome of regulatory review of our product candidates;

● the extent to which we acquire or invest in businesses, products and technologies, including entering into or maintaining licensing or collaboration arrangements for product candidates on favorable terms, although we currently have no commitments or agreements to complete any such transactions;

● the costs of preparing, filing and prosecuting patent applications, maintaining, protecting and enforcing our intellectual property rights and defending intellectual property-related claims;

● our headcount growth and associated costs as we expand our business operations and our research and development activities;

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● our ability to successfully acquire or in-license other drugs and technologies;

● the costs and timing of future commercialization activities, including drug sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval, to the extent that such sales, marketing, manufacturing and distribution are not the responsibility of any collaborator that we may have at such time;

● the amount of revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval; and

● the costs of operating as a public company.

Developing drug products, including conducting preclinical studies and clinical trials, is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval for any product candidates or generate revenue from the sale of any products for which we may obtain marketing approval. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of drugs that we do not expect to be commercially available for many years, if at all. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.

Until such time, if ever, as we can generate product revenues to support our cost structure, we expect to finance our cash needs through public or private equity offerings, including our ATM Facility, debt financings or other capital sources which may include strategic collaborations, licensing arrangements or other arrangements with third parties. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through strategic collaborations or other similar arrangements with third parties, we may have to relinquish valuable rights to our technology, future revenue streams, research programs or product candidates or may have to grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts. Our ability to raise additional funds may be adversely impacted by potential worsening global macroeconomic conditions and the disruptions to and volatility in the credit and financial markets in the United States and worldwide. Because of the numerous risks and uncertainties associated with product development, we cannot predict the timing or amount of increased expenses and cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

Cash Flows

The following table summarizes our sources and uses of cash and cash equivalents for the six months ended June 30, 2023 and 2022:

	Six Months Ended June 30,
	2023		2022
	(in thousands)
Net cash provided by (used in):
Operating activities	$	(45,463)	$	(34,542)
Investing activities		23,106		52,760
Financing activities		478		411
Net (decrease) increase in cash and cash equivalents	$	(21,879)	$	18,629

Operating Activities

We have incurred losses since inception. Net cash used in operating activities for the six months ended June 30, 2023 was $45.5 million, consisting primarily of net loss of $42.5 million, resulting from expenses associated with research

30

and development activities for our lead product candidate and general and administrative expenses, as well as changes in operating assets and liabilities of $4.3 million, partially offset by non-cash adjustments of $1.4 million.

Net cash used in operating activities for the six months ended June 30, 2022 was $34.5 million, consisting primarily of net loss of $35.0 million resulting from expenses associated with research and development activities for our lead product candidate and general and administrative expenses. A net decrease in changes in operating assets and liabilities of $2.3 million also contributed to the use of cash. Partially offsetting the cash use was the non-cash stock compensation adjustment of $2.7 million.

Investing Activities

Net cash provided by investing activities for the six months ended June 30, 2023 was $23.1 million, which related to $50.2 million of proceeds received from available for sale securities maturities, partially offset by purchases of available for sale securities of $26.7 million.

Net cash provided by investing activities for the six months ended June 30, 2022 was $52.8 million, which primarily related to $69.9 million of proceeds received from available for sale securities maturities. Purchases of available for sale securities during the period amounted to $17.1 million.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2023 was $0.5 million, which primarily related to $0.3 million of net proceeds from the ATM Facility, after deducting underwriting discounts and commissions, and other offering fees and $0.2 million of net proceeds from option exercises and ESPP purchases.

Net cash provided by financing activities in the six months ended June 30, 2022 was $0.4 million, which primarily related to the net proceeds from option exercises and ESPP purchases.

Obligations and other Commitments

As discussed in Note 7 to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, we are party to agreements to license intellectual property. The license agreements may require us to pay future milestones if certain developmental, regulatory and commercial milestones are achieved, as well as to pay royalties on net sales of products applicable to the license agreements. We cannot estimate if milestone and/or royalty payments will occur in future periods and the agreements are cancelable by us at any time upon prior written notice to the licensor.

In the normal course of business, we enter into contracts with CROs and other vendors for preclinical studies and clinical trials, research and development supplies and other testing and manufacturing services. These contracts generally do not contain minimum purchase commitments and are cancelable by either party at any time upon prior written notice.

Our incurred and accrued research and development obligations as of June 30, 2023 and December 31, 2022 were $7.4 million and $8.2 million, respectively.

There were no material changes outside of the ordinary course of business to our specific contractual obligations during the three and six months ended June 30, 2023.

Critical Accounting Policies and Use of Estimates

There have been no significant changes to our critical accounting policies and use of estimates from our disclosure reported in “Critical Accounting Estimates” in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022, except as described in Note 2 to the interim unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

31

Accrued Research and Development

We are required to estimate our expenses resulting from our obligations under contracts with vendors, consultants, CROs and clinical site agreements in connection with conducting preclinical activities and clinical trials. The financial terms of these contracts are subject to negotiations which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. However, some payments are made in arrears and expenditures are accrued for the time periods which services are performed on a pre-determined schedule or when contractual milestones are met. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones.

This process involves reviewing open contracts and purchase orders, communicating with our applicable personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred when we have not yet been invoiced or otherwise notified of actual costs. During the course of a preclinical study or clinical trial, we adjust our prepaid and expense recognition if actual results differ from our estimates. To date, we have not experienced any material differences between accrued costs and actual costs incurred. The accrued research and development balances were $7.4 million and $8.2 million as of June 30, 2023 and December 31, 2022, respectively.

Stock-Based Compensation

We follow the provision of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, “Compensation – Stock Compensation” (ASC 718), which requires the measurement and recognition of compensation expense for all stock-based payment awards.

We estimate the fair value of our stock options using the Black-Scholes option pricing model, which requires us to develop subjective estimates to be used in calculating the fair value of stock options. The use of the model requires us to make estimates of subjective assumptions, such as expected stock price volatility and the estimated expected term of each award. The fair value of restricted stock units (RSUs) granted is based on our closing stock price on the date of grant.

Stock-based compensation expense based on the fair value estimated is recognized over the requisite service period of the awards (generally the vesting period) on a straight-line basis. For the three months ended June 30, 2023 and 2022, stock-based compensation expense was $0.8 million and $1.4 million, respectively. For the six months ended June 30, 2023 and 2022, stock-based compensation expense was $2.4 million and $2.7 million, respectively. The following table summarizes unvested equity compensation costs not yet recognized as of June 30, 2023 and December 31, 2022.

	As of June 30, 2023		As of December 31, 2022
Unvested equity compensation costs not yet recognized (in millions)	$	11.2	$	10.8
Weighted average period over which the unvested awards are expected to be recognized (in years)		2.8		2.5

Recent Accounting Pronouncements

A description of recent accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company, as defined by Rule 12b-2 under the Securities and Exchange Act of 1934 and in Item 10(f)(1) of Regulation S-K, and are not required to provide the information under this item.

32

Item 4. Controls and Procedures.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2023.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2023, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures.

33

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Except as discussed in Note 12 to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, we are not presently a party to any other legal proceedings that, in the opinion of our management and if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows.

Item 1A. Risk Factors.

Our business is subject to various risks, including those described in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022. Except as disclosed below, there have been no material changes from the risk factors disclosed in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022.

Beginning in the second quarter of 2023, we began to reallocate resources within our organization to align more closely with our business priorities. This included reducing the resources allocated to certain programs and refocusing our resources on other key areas of our business.  We may experience difficulties in managing these changes to our organization and our future revenue and operating results may be adversely affected.

In May 2023, we approved a reduction in workforce that resulted in the termination of approximately 65% of the Company’s workforce. The reduction in force was a component of our broader efforts to reprioritize our clinical strategy and optimize our resources.

Over the past several years, we significantly expanded the size of our organization, particularly personnel within our research and development groups. In addition, in connection with our transition to operating as a public company, we have added additional managerial, operational, financial, and other personnel. The addition of employees imposes significant added responsibilities on members of management, including:

● identifying, recruiting, integrating, maintaining, and motivating additional employees;

● managing our internal development efforts effectively, while complying with our contractual obligations to contractors and other third parties; and

● improving our operational, financial, and management controls, reporting systems, and procedures.

Our future financial performance and our ability to successfully develop, market, and sell any future product candidates will impact our needs in terms of personnel. Our management may also have to divert a disproportionate amount of attention away from day-to-day activities in order to devote a substantial amount of time to managing the appropriate allocation of our resources or further reductions in force, if necessary. The impact of decisions regarding personnel and the size of our workforce could have adverse impacts on future revenue and operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

34

Item 5. Other Information.

None.

Item 6. Exhibits.

The exhibits file or furnished as part of this Quarterly Report on Form 10-Q are set forth below.

Exhibit Number	Description of Exhibit
3.1	Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference from Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on April 27, 2021).
3.2	Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference from Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on December 29, 2022).
3.3	Second Amended and Restated Bylaws of the Registrant (incorporated by reference from Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on February 22, 2023).
4.1	Form of Common Stock Certificate of the Registrant (incorporated by reference from Exhibit 4.1 of the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 filed on April 9, 2021).
4.2	Amended and Restated Investors’ Rights Agreement, dated September 2, 2020, by and among the Registrant and certain of its stockholders (incorporated by reference from Exhibit 4.2 of the Registrant’s Registration Statement on Form S-1 filed on April 2, 2021).
31.1*	Certification of the principal executive officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934.
31.2*	Certification of the principal financial officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934.
32.1 (1)	Certification of the principal executive officer and principal financial officer pursuant to 18 U.S.C. Section 1350 and Rule 13a-14(b) under the Securities Exchange Act of 1934.
101.INS*	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

* Filed herewith.

(1) The certifications on Exhibit 32 hereto are deemed not “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

35

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Rain Oncology Inc.
Date: August 10, 2023	By:	/s/ Avanish Vellanki
		Avanish Vellanki
		Chairman and Chief Executive Officer (principal executive officer)
Date: August 10, 2023	By:	/s/ Josephine Bruce
		Josephine Bruce
		Director of Accounting (principal financial and accounting officer)

36

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Avanish Vellanki, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Rain Oncology Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 10, 2023	By:	/s/ Avanish Vellanki
		Avanish Vellanki
		Chairman and Chief Executive Officer
		(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Josephine Bruce, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Rain Oncology Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 10, 2023	By:	/s/ Josephine Bruce
		Josephine Bruce
		Director of Accounting
		(principal financial and accounting officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Rain Oncology Inc. (the “Company”) for the period ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 10, 2023	By:	/s/ Avanish Vellanki
		Avanish Vellanki
		Chairman and Chief Executive Officer
		(principal executive officer)
Date: August 10, 2023	By:	/s/ Josephine Bruce
		Josephine Bruce
		Director of Accounting
		(principal financial and accounting officer)

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. §1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Note: A signed original of this written statement required by §906 has been provided to Rain Oncology Inc. and will be retained by Rain Oncology Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2023	Aug. 04, 2023
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2023
Entity File Number	001-40356
Entity Registrant Name	Rain Oncology Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	82-1130967
Entity Address, Address Line One	8000 Jarvis Avenue
Entity Address, Address Line Two	Suite 204
Entity Address, City or Town	Newark
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94560
City Area Code	510
Local Phone Number	953-5559
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	RAIN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		36,375,671
Entity Central Index Key	0001724979
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 40,076	$ 61,955
Short-term investments	46,214	68,499
Prepaid and other current assets	4,703	3,174
Total current assets	90,993	133,628
Property and equipment, net	361	93
Operating lease right-of-use asset	189	258
Other assets	180	1,201
Total assets	91,723	135,180
Current liabilities:
Accounts payable	5,801	7,146
Accrued research and development	7,380	8,232
Other accrued liabilities	4,986	6,424
Operating lease liability, current portion	164	164
Total current liabilities	18,331	21,966
Operating lease liability, net of current portion	39	113
Other long-term liabilities	64	65
Total liabilities	18,434	22,144
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding
Common stock, $0.001 par value; 250,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 36,375,671 shares (comprised of 27,579,947 shares of common stock and 8,795,724 shares of non-voting common stock) and 36,290,292 shares (comprised of 25,947,572 shares of common stock and 10,342,720 shares of non-voting common stock) issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	37	37
Additional paid-in capital	281,588	278,853
Accumulated other comprehensive loss	(100)	(166)
Accumulated deficit	(208,236)	(165,688)
Total stockholders' equity	73,289	113,036
Total liabilities and stockholders' equity	$ 91,723	$ 135,180

XML

Condensed Consolidated Balance Sheets (Parenthetical) (unaudited) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Preferred stock, par value	$ 0.001	$ 0.001
Preferred Stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, Par value	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	36,375,671	36,290,292
Common stock, shares outstanding	36,375,671	36,290,292
Common Stock
Common stock, shares issued	27,579,947	25,947,572
Common stock, shares outstanding	27,579,947	25,947,572
Non-voting Common Stock
Common stock, shares issued	8,795,724	10,342,720
Common stock, shares outstanding	8,795,724	10,342,720

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Operating expenses:
Research and development	$ 14,980	$ 14,257	$ 31,657	$ 27,812
General and administrative	5,414	3,461	10,480	7,356
Restructuring charges	2,837		2,837
Total operating expenses	23,231	17,718	44,974	35,168
Loss from operations	(23,231)	(17,718)	(44,974)	(35,168)
Other income:
Interest income	1,167	107	2,426	163
Total other income	1,167	107	2,426	163
Net loss	$ (22,064)	$ (17,611)	$ (42,548)	$ (35,005)
Net loss per share, basic	$ (0.61)	$ (0.66)	$ (1.17)	$ (1.32)
Net loss per share, diluted	$ (0.61)	$ (0.66)	$ (1.17)	$ (1.32)
Weighted-average shares used to compute net loss per share, basic	36,363,315	26,529,482	36,351,648	26,520,662
Weighted-average shares used to compute net loss per share, diluted	36,363,315	26,529,482	36,351,648	26,520,662
Other comprehensive loss:
Unrealized gain (loss) on short-term investments	$ (53)	$ 16	$ 66	$ (284)
Comprehensive loss	$ (22,117)	$ (17,595)	$ (42,482)	$ (35,289)

XML

Condensed Consolidated Statements of Stockholders' Equity (unaudited) - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss	Total
Balance at Dec. 31, 2021	$ 27	$ 220,530	$ (89,964)	$ (89)	$ 130,504
Balance, Shares at Dec. 31, 2021	26,475,812
Exercise of stock options		106			106
Exercise of stock options, shares	24,262
Issuance of common stock from employee stock purchase plan		293			293
Issuance of common stock from employee stock purchase plan, shares	26,804
Stock-based compensation expense		1,242			1,242
Unrealized gain (loss) on investments				(300)	(300)
Net loss			(17,394)		(17,394)
Balance at Mar. 31, 2022	$ 27	222,171	(107,358)	(389)	114,451
Balance, Shares at Mar. 31, 2022	26,526,878
Balance at Dec. 31, 2021	$ 27	220,530	(89,964)	(89)	130,504
Balance, Shares at Dec. 31, 2021	26,475,812
Unrealized gain (loss) on investments					(284)
Net loss					(35,005)
Balance at Jun. 30, 2022	$ 27	223,600	(124,969)	(373)	98,285
Balance, Shares at Jun. 30, 2022	26,529,878
Balance at Mar. 31, 2022	$ 27	222,171	(107,358)	(389)	114,451
Balance, Shares at Mar. 31, 2022	26,526,878
Exercise of stock options		12			12
Exercise of stock options, shares	3,000
Stock-based compensation expense		1,417			1,417
Unrealized gain (loss) on investments				16	16
Net loss			(17,611)		(17,611)
Balance at Jun. 30, 2022	$ 27	223,600	(124,969)	(373)	98,285
Balance, Shares at Jun. 30, 2022	26,529,878
Balance at Dec. 31, 2022	$ 37	278,853	(165,688)	(166)	113,036
Balance, Shares at Dec. 31, 2022	36,290,292
Exercise of stock options		75			75
Exercise of stock options, shares	20,757
Issuance of common stock from employee stock purchase plan		137			137
Issuance of common stock from employee stock purchase plan, shares	20,129
Issuance of common stock in connection with equity financings, net of issuance costs		106			106
Issuance of common stock in connection with equity financings, net of issuance costs, shares	32,000
Stock-based compensation expense		1,568			1,568
Unrealized gain (loss) on investments				119	119
Net loss			(20,484)		(20,484)
Balance at Mar. 31, 2023	$ 37	280,739	(186,172)	(47)	94,557
Balance, Shares at Mar. 31, 2023	36,363,178
Balance at Dec. 31, 2022	$ 37	278,853	(165,688)	(166)	113,036
Balance, Shares at Dec. 31, 2022	36,290,292
Unrealized gain (loss) on investments					66
Net loss					(42,548)
Balance at Jun. 30, 2023	$ 37	281,588	(208,236)	(100)	73,289
Balance, Shares at Jun. 30, 2023	36,375,671
Balance at Mar. 31, 2023	$ 37	280,739	(186,172)	(47)	94,557
Balance, Shares at Mar. 31, 2023	36,363,178
Issuance of common stock from employee stock purchase plan		12			12
Issuance of common stock from employee stock purchase plan, shares	12,493
Stock-based compensation expense		837			837
Unrealized gain (loss) on investments				(53)	(53)
Net loss			(22,064)		(22,064)
Balance at Jun. 30, 2023	$ 37	$ 281,588	$ (208,236)	$ (100)	$ 73,289
Balance, Shares at Jun. 30, 2023	36,375,671

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Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Operating activities
Net loss	$ (42,548,000)	$ (35,005,000)
Adjustments to reconcile net loss to cash used in operating activities:
Stock-based compensation expense	2,405,000	2,659,000
Depreciation and amortization expense	35,000	44,000
Amortization of premium and accretion of discounts on short-term investments, net	(1,067,000)	50,000
Fair value gain on investments	8,000
Changes in operating assets and liabilities:
Prepaid and other current assets	(1,529,000)	2,072,000
Operating lease right-of-use asset and liability, net	(5,000)	(3,000)
Other assets	724,000	(167,000)
Accounts payable	(1,346,000)	(4,037,000)
Accrued research and development	(852,000)	1,491,000
Other accrued liabilities	(1,288,000)	(1,646,000)
Net cash used in operating activities	(45,463,000)	(34,542,000)
Investing activities
Purchases of short-term investments	(26,740,000)	(17,140,000)
Maturities of short-term investments	50,150,000	69,900,000
Purchases of property and equipment, net	(304,000)
Net cash provided by investing activities	23,106,000	52,760,000
Financing Activities
Proceeds from the issuance of common stock under the Company's equity incentive plans and employee stock purchase plan	224,000	411,000
Proceeds from issuance of common stock in connection with the Company's at-the-market facility	343,000
Payments of issuance costs related to equity financings	(89,000)
Net cash provided by financing activities	478,000	411,000
Net (decrease) increase in cash and cash equivalents	(21,879,000)	18,629,000
Cash and cash equivalents at beginning of period	61,955,000	24,780,000
Cash and cash equivalents at end of period	$ 40,076,000	$ 43,409,000

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Organization and Nature of Operations

6 Months Ended

Jun. 30, 2023

Organization and Nature of Operations

Organization and Nature of Operations

Note 1 – Organization and Nature of Operations

Description of Business

Rain Oncology Inc. (“Rain” or the “Company”), formerly known as Rain Therapeutics Inc., was incorporated in the state of Delaware in April 2017. Rain is a precision oncology company developing therapies that target oncogenic drivers for which the Company is able to genetically select patients the Company believes will most likely benefit. Rain’s product candidate, milademetan, is a small molecule, oral inhibitor of the MDM2-p53 complex that reactivates p53. The Company operates in one business segment and its principal operations are in the United States, with its headquarters in Newark, California.

On June 22, 2022, the Company formed Rain Oncology Australia Pty Ltd (“Rain Oncology Australia”), a wholly owned subsidiary incorporated under the laws of Australia.

On December 22, 2022, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a change of the Company’s name from “Rain Therapeutics Inc.” to “Rain Oncology Inc.” effective as of December 30, 2022.

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) related to a Quarterly Report on Form 10-Q. These condensed consolidated financial statements include the accounts of the Company and Rain Oncology Australia. All significant inter-company transactions, balances and expenses have been eliminated upon consolidation. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). The year-end balance sheet data was derived from the Company’s audited financial statements but does not include all disclosures required by U.S. GAAP. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K, filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The unaudited financial information for the interim periods presented herein reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial condition and results of operation for the periods presented, with such adjustments consisting only of normal recurring adjustments.

Liquidity and Capital Resources

The Company has devoted substantially all of its efforts to drug discovery and development, raising capital and building operations. The Company has a limited operating history and has not generated any revenue since its inception, and the sales and income potential of the Company’s business is unproven. The Company has incurred net losses and negative cash flows from operating activities since its inception and expects to continue to incur net losses into the foreseeable future as it continues the development of its product candidates. From inception through June 30, 2023, the Company has funded its operations through net proceeds from its initial public offering in April 2021, the offering, issuance and sale of its common stock in November 2022, as well as the issuance of convertible promissory notes and convertible preferred stock.

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. Management believes that the Company’s current cash, cash equivalents and short-term investments will provide sufficient funds to enable the Company to meet its obligations for at least twelve months from the filing date of this report.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure of contingent liabilities in the Company’s condensed consolidated financial statements and accompanying notes. The most significant estimate in the Company’s condensed consolidated financial statements relates to the clinical trial expense accruals. Management evaluates its estimates on an ongoing basis. Although these estimates are based on the Company’s historical experience, knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash equivalents include commercial paper and money market funds.

Available-for-Sale Investments

The Company holds investment grade securities consisting of commercial paper, corporate debt securities, U.S. government securities and U.S. agency bonds, classified as available-for-sale (AFS) securities at the time of purchase, since it is the Company’s intent that these investments be available for current operations. The Company has classified all of its AFS securities as current assets in the condensed consolidated balance sheets even though the stated maturity date may be one year or more beyond the current condensed consolidated balance sheet date, which reflects management’s intention to use the proceeds from sales of these securities to fund its operations, as necessary.

The Company carries these securities at fair value and reports unrealized gains and losses, if any, as a separate component of accumulated other comprehensive loss. The cost of debt securities is adjusted for amortization of purchase premiums and accretion of discounts to maturity. Such amortization and accretion are included in interest income in the condensed consolidated statements of operations and comprehensive loss. Realized gains and losses on sales of securities are determined using the specific identification method and recorded in interest income in the condensed consolidated statement of operations and comprehensive loss.

Allowance for Credit Losses

For AFS securities in an unrealized loss position, the Company first assesses whether it intends to sell, or if it is more likely than not that the Company will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through earnings. For AFS securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the severity of the impairment, any changes in interest rates, market conditions, changes to the underlying credit ratings and forecasted recovery, among other factors. The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in interest income through an allowance account. Any impairment that has not been recorded through an allowance for credit losses is included in other comprehensive loss in the condensed consolidated statement of operations and comprehensive loss.

The Company elected the practical expedient to exclude the applicable accrued interest from both the fair value and amortized costs basis of its AFS securities for purposes of identifying and measuring an impairment. Accrued interest receivable on AFS securities is recorded in prepaid and other current assets in the condensed consolidated balance sheets. The Company’s accounting policy is to not measure an allowance for credit loss for accrued interest receivable and to write-off any uncollectible accrued interest receivable as a reversal of interest income in a timely manner, which the Company considers to be in the period in which it determines the accrued interest will not be collected by the Company.

Research and Development Costs

Research and development costs primarily consist of costs associated with the Company’s research and development activities, including its drug discovery efforts, and the preclinical and clinical development of its product candidates. Research and development costs are expensed as incurred.

Preclinical Studies and Clinical Trial Accruals

The Company is required to estimate its expenses resulting from its obligations under contracts with vendors, consultants, clinical research organizations and clinical site agreements in connection with conducting preclinical activities and clinical trials. The financial terms of these contracts are subject to negotiations which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. The Company reflects preclinical study and clinical trial expenses in its condensed consolidated financial statements by matching those expenses with the period in which services and efforts are expended. The Company accounts for these expenses according to the progress of the preclinical study or clinical trial as measured by the timing of various aspects of the preclinical study, clinical trial or related activities. The Company determines accrual and prepaid estimates through review of the underlying contracts along with preparation of financial models taking into account correspondence with clinical and other key personnel and third-party service providers as to the progress of preclinical studies, clinical trials or other services being conducted. During the course of a preclinical study or clinical trial, the Company adjusts its expense recognition if actual results differ from its estimates. To date, the Company has not experienced any material differences between accrued costs and actual costs incurred.

Stock-Based Compensation

Stock-based compensation expense represents the grant date fair value of equity awards recognized over the requisite service period of the awards (generally the vesting period) on a straight-line basis. The Company recognizes forfeitures as they occur. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model. The fair value of restricted stock units (“RSUs”) granted is based on the Company’s closing stock price on the date of grant.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company recognizes deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions on the basis of a two-step process whereby (1) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more likely than not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense. Any accrued interest and penalties are included within the related tax liability.

Restructuring

Restructuring costs comprised of severance, other termination benefit costs and stock-based compensation expense for stock option modifications related to workforce reductions. The Company recognizes restructuring charges

when the liability is probable, and the amount is estimable. Employee termination benefits are accrued at the date management has committed to a plan of termination and affected employees have been notified of their termination date and expected severance benefits.

Comprehensive Loss

Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. The Company’s comprehensive loss includes unrealized gains and losses from short-term investments.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period, without consideration of potential dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the sum of the weighted-average number of shares of common stock plus the potential dilutive effects of potential dilutive securities outstanding during the period. Potential dilutive securities are excluded from diluted earnings or loss per share if the effect of such inclusion is antidilutive. The Company’s potentially dilutive securities, which include shares from the 2021 Employee Stock Purchase Plan (the “ESPP”) and outstanding stock options and RSUs under the Company’s equity incentive plan, have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share. For the periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

Recent Accounting Pronouncements

Financial Instruments. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The objective of the standard is to improve financial reporting of expected credit losses on financial instruments and other commitments to extend credit. ASU 2016-13 requires that an entity measure and recognize expected credit losses for financial assets held at amortized cost and replaces the incurred loss impairment methodology in prior U.S. GAAP with a methodology that requires consideration of a broader range of information to estimate credit losses, and establishes additional disclosures related to credit risks. The Company adopted Topic 326 on January 1, 2023. The adoption did not have a significant impact on the Company’s condensed consolidated financial statements or the related disclosures.

There were no other significant updates to the recently issued accounting standards other than as disclosed herein for the three and six months ended June 30, 2023. Although there are several other new accounting pronouncements issued or proposed by the FASB, based on the Company’s preliminary assessment, the Company does not believe any of those accounting pronouncements have had or will have a material impact on its financial position or operating results. 

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Fair Value Measurements

6 Months Ended

Jun. 30, 2023

Fair Value Measurements

Fair Value Measurements

Note 3 – Fair Value Measurements

The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

Financial assets measured at fair value on a recurring basis consist of the Company’s cash equivalents and AFS securities. The Company obtains pricing information from its investment manager and generally determines the fair value of investment securities using standard observable inputs, including reported trades, broker/dealer quotes, and bids and/or offers.

Investments are classified as Level 1 within the fair value hierarchy if their quoted prices are available in active markets for identical securities. Investments in money market funds and U.S. government securities were classified as Level 1 instruments.

Investments in commercial paper, corporate debt securities and U.S. agency bonds are valued using Level 2 inputs. The Company classifies investments within Level 2 if the investments are valued using model driven valuations using observable inputs such as quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Investments are held by custodians who obtain investment prices from a third-party pricing provider that incorporates standard inputs in various asset pricing models.

The carrying amounts of cash, prepaid expenses and other current assets, other assets, accounts payable, accrued research and development, other current liabilities and other long-term liabilities are reasonable estimates of their fair value due to the short-term nature of these accounts.

The Company’s money market funds under cash and cash equivalents are classified using Level 1 inputs within the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. There were no transfers between levels of the fair value hierarchy during the three and six months ended June 30, 2023.

The following tables summarize financial assets that the Company measured at fair value on a recurring basis, classified in accordance with the fair value hierarchy (in thousands):

	Fair Value Measurements at Reporting Date Using:
	Level 1		Level 2		Level 3		Total
As of June 30, 2023:
Money market funds	$	14,051	$	—	$	—	$	14,051
Commercial paper		—		36,169		—		36,169
U.S. government securities		16,337		—		—		16,337
U.S. agency bonds		—		19,066		—		19,066
Total cash equivalents and short-term investments	$	30,388	$	55,235	$	—	$	85,623
Reported as:
Cash and cash equivalents (include cash of $667)							$	40,076
Short-term investments								46,214
Total cash, cash equivalents and short-term investments							$	86,290

	Fair Value Measurements at Reporting Date Using:
	Level 1		Level 2		Level 3		Total
As of December 31, 2022:
Money market funds	$	8,528	$	—	$	—	$	8,528
Commercial paper		—		83,423		—		83,423
U.S. government securities		10,837		—		—		10,837
U.S. agency bonds		—		22,143		—		22,143
Corporate debt securities		—		997		—		997
Total cash equivalents and short-term investments	$	19,365	$	106,563	$	—	$	125,928
Reported as:
Cash and cash equivalents (include cash of $4,526)							$	61,955
Short-term investments								68,499
Total cash, cash equivalents and short-term investments							$	130,454

There were no liabilities measured at fair value on a recurring basis as of June 30­­­, 2023 and December 31, 2022.

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Investments

6 Months Ended

Jun. 30, 2023

Investments

Investments

Note 4 – Investments

The Company invests in available-for-sale securities consisting of money market funds, commercial paper, U.S. government securities, U.S. agency bonds and corporate debt securities. Available-for-sale securities are classified as either cash and cash equivalents or short-term investments in the condensed consolidated balance sheets.

The following tables summarize, by major types of cash equivalents, and investments that are measured at fair value on a recurring basis (in thousands):

	As of June 30, 2023
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
Money market funds	$	14,051	$	—	$	—	$	14,051
Commercial paper		36,189		1		(21)		36,169
U.S. government securities		16,347		4		(14)		16,337
U.S. agency bonds		19,136		—		(70)		19,066
Cash equivalents and short-term investments	$	85,723	$	5	$	(105)	$	85,623

	As of December 31, 2022
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
Money market funds	$	8,528	$	—	$	—	$	8,528
Commercial paper		83,479		11		(67)		83,423
U.S. government securities		10,910		—		(73)		10,837
U.S. agency bonds		22,175		4		(36)		22,143
Corporate debt securities		1,002		—		(5)		997
Cash equivalents and short-term investments	$	126,094	$	15	$	(181)	$	125,928

The contractual maturities of the Company’s AFS securities were as follows (in thousands):

	As of June 30, 2023		As of December 31, 2022
Due within one year	$	46,214	$	63,595
Due within one to two years		—		4,904
Total	$	46,214	$	68,499

The AFS investments are classified as current assets, even though the stated maturity date may be one year or more beyond the current condensed consolidated balance sheet date, which reflects management’s intention to use the proceeds from sales of these securities to fund the Company’s operations, as necessary. There were no realized gains or losses due to investment sales for the three and six months ended June 30, 2023 and 2022. As of June 30, 2023, $52.1 million of the Company’s marketable securities were in gross unrealized loss positions, of which none had been in such position for greater than 12 months and $25.3 million will mature within three months of June 30, 2023.

The Company does not intend to sell its AFS investments before maturity, and it is unlikely that the Company will be required to sell such investments before recovery of their amortized cost basis. Based on the Company’s review of these AFS securities, the unrealized losses as of June 30, 2023 were primarily due to changes in interest rates and not due to increased credit risks associated with specific securities. The Company has no allowance for credit losses as of June 30, 2023 and December 31, 2022. Unrealized gains and losses that are not credit-related are included in accumulated other comprehensive loss.

Accrued interest receivables on AFS securities were $0.2 million and $0.1 million as of June 30, 2023 and December 31, 2022, respectively. The Company has not written off any accrued interest receivables for the three and six months ended June 30, 2023 and 2022.

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Condensed Consolidated Balance Sheet Details

6 Months Ended

Jun. 30, 2023

Condensed Consolidated Balance Sheet Details

Condensed Consolidated Balance Sheet Details

Note 5 - Condensed Consolidated Balance Sheet Details

Prepaid and Other Current Assets

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

	As of June 30, 2023		As of December 31, 2022
Prepaid insurance	$	1,821	$	913
Prepaid research and development		1,585		1,103
Prepaid other		563		416
FICA tax credit receivable		531		571
Other current assets		184		152
Deposits		19		19
Prepaid and other current assets	$	4,703	$	3,174

Property and Equipment, Net

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

	As of June 30, 2023		As of December 31, 2022
Furniture and equipment	$	203	$	204
Leasehold improvements		67		67
Computer equipment		50		50
Construction in progress		312		8
		632		329
Less: accumulated depreciation and amortization expense		(271)		(236)
Property and equipment, net	$	361	$	93

Depreciation and amortization expense for the three months ended June 30, 2023 and 2022 was $17,000 and $22,000, respectively. Depreciation and amortization expense for the six months ended June 30, 2023 and 2022 was $35,000 and $44,000, respectively.

Other Non-Current Assets

Other non-current assets consist of the following (in thousands):

	As of June 30, 2023		As of December 31, 2022
Deposits	$	110	$	781
FICA tax credit receivable		—		52
Other		70		368
Other non-current assets	$	180	$	1,201

Other Accrued Liabilities

Other accrued liabilities consist of the following (in thousands):

	As of June 30, 2023		As of December 31, 2022
Accrued payroll and related	$	1,713	$	229
Accrued bonus		1,055		3,379
ESPP liability		—		155
Other		2,218		2,661
Other accrued liabilities	$	4,986	$	6,424

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Stockholders' Equity

6 Months Ended

Jun. 30, 2023

Stockholders' Equity

Stockholders' Equity

Note 6 – Stockholders’ Equity

In April 2021, the Company filed a certificate of amendment to its certificate of incorporation, which authorized 260,000,000 shares of capital stock, consisting of 250,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of undesignated preferred stock, par value $0.001 per share that may be issued from time to time by the Company’s board of directors (the “Board of Directors”) in one or more series. Of the 250,000,000 shares of common stock, 200,000,000 shares were designated as “Common Stock” and 50,000,000 shares were designated as “Non-Voting Common Stock.”

Equity Incentive Plan

In August 2020, the Board of Directors amended the Amended and Restated 2018 Stock Option—Stock Issuance Plan (the “2018 Plan”) to increase the maximum number of shares of common stock that may be issued over the term of the plan. The 2018 Plan provided for the grant of stock options, non-statutory stock options, incentive stock options and stock issuances to employees, nonemployees and consultants of the Company.

In April 2021, the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) was approved by the Board of Directors and became effective on April 15, 2021. Upon the effectiveness of the 2021 Plan, no further grants may be made under the 2018 Plan.

The 2021 Plan allows the Company to grant equity-based awards to its officers, employees, directors and other key persons (including consultants). The Company initially reserved up to 3,246,120 shares of common stock for issuance under the 2021 Plan, plus (i) 1,722 shares that remained available for the issuance of awards under the 2018 Plan at the time the 2021 Plan became effective, and (ii) any shares subject to outstanding options or other share awards that were granted under the 2018 Plan that terminate or expire prior to exercise or settlement; are forfeited because of the failure to vest; or are reacquired or withheld (or not issued) to satisfy a tax withholding obligation or the purchase or exercise price. The 2021 Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2022 and each January 1 thereafter through January 31, 2032, by 4.0% of the outstanding number of shares of common stock on the immediately preceding December 31, or such lesser number of shares as determined by the Board of Directors. As a result, the number of shares of common stock reserved for issuance under the 2021 Plan increased by 1,451,611 shares on January 1, 2023.

Stock Options

A summary of the Company’s stock option activities during the six months ended June 30, 2023 is as follows:

		Weighted-		Weighted-
		Average		Average	Aggregate
		Exercise		Remaining	Intrinsic
		Price Per		Contract Term	Value
	Total Options	Share		(in years)	(in millions)
Outstanding as of December 31, 2022	2,593,761	$	8.08	8.2	$	—
Granted	1,312,762	$	9.43
Exercised	(20,757)	$	3.59
Forfeited or cancelled	(1,009,324)	$	(9.36)
Outstanding as of June 30, 2023	2,876,442	$	8.27	7.2	$	—
Vested and expected to vest as of June 30, 2023	2,876,442	$	8.27	7.2	$	—
Vested and exercisable as of June 30, 2023	1,476,242	$	7.07	5.5	$	—

The weighted-average grant date fair values of option grants during the six months ended June 30, 2023 and 2022 were $7.75 and $7.33 per share, respectively. The weighted-average grant date fair values of options forfeited during the six months ended June 30, 2023 and 2022 were $7.99 and $12.05 per share, respectively.

Restricted Stock Units

A summary of the Company’s RSU activities during the six months ended June 30, 2023 is as follows:

		Weighted-		Aggregate
	Total	Average		Intrinsic
	Restricted	Grant Date		Value
	Stock Units	Fair Values		(in millions)
Outstanding as of December 31, 2022	8,945	$	6.25	$	—
Granted	95,333	$	9.59
Vested	—	$	—
Forfeited or cancelled	(41,906)	$	9.35
Outstanding as of June 30, 2023	62,372	$	9.27	$	0.1

No RSUs vested during the six months ended June 30, 2023.

Employee Stock Purchase Plan

The ESPP was approved by the Board of Directors and became effective on April 15, 2021. The ESPP initially reserved and authorized the issuance of up to 259,689 shares of common stock to participating employees. Under the ESPP, eligible employees can contribute up to 15% of their eligible compensation, as defined in the ESPP, towards the purchase of the Company’s common stock at a price of 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last trading day of the offering period. The ESPP provides for twenty-four-month offering periods with four six-month purchase periods in each offering period. The ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2022 and each January 1 thereafter through January 31, 2032, by 1.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year. As a result, the number of shares of common stock reserved for issuance under the ESPP increased by 362,902 shares on January 1, 2023. Under the ESPP, the Company issued 32,622 shares of common stock for aggregate cash proceeds of $0.1 million during the six months ended June 30, 2023.

Stock-Based Compensation Expense

The Company recognized stock-based compensation expense as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Research and development	$	534	$	1,203	$	1,660	$	2,093
General and administrative		266		214		708		566
Restructuring charges		37		-		37		-
Total stock-based compensation expense	$	837	$	1,417	$	2,405	$	2,659

As of June 30, 2023, the total unrecognized compensation cost was $11.2 million and is expected to be recognized as expense over approximately 2.8 years.

The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the stock option grants were as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Risk-free interest rate	3.5%	2.9% - 3.0%	3.5% - 4.3%	1.6% - 3.0%
Expected volatility	115.4%	88.1% - 90.2%	102.8% - 115.4%	88.1% - 112.1%
Expected term (in years)	6.1	6.1	6.1	5.3 - 6.1
Expected dividend yield	0%	0%	0%	0%

The determination of the fair value of share-based payment awards utilizing the Black-Scholes option-pricing model is affected by the Company’s stock price and the following assumptions:

Risk-free interest rate. The risk-free interest rate assumption is based on the U.S. Treasury instruments, the terms of which were consistent with the expected term of the Company’s stock-based awards.

Expected volatility. Due to the Company’s limited operating history and lack of company-specific historical or implied volatility, the expected volatility assumption was determined by examining the historical volatilities of a group of industry peers whose share prices are publicly available.

Expected term. The expected term represents the weighted-average period the stock-based awards are expected to be outstanding. The Company uses the simplified method for estimating the expected term. The simplified method calculates the expected term as the average of the time-to-vesting and the contractual life of the stock-based awards.

Expected dividend yield. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has not paid and does not intend to pay dividends.

Forfeitures. The Company reduces stock-based compensation expense for actual forfeitures during the period.

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance consist of the following:

	As of June 30, 2023	As of December 31, 2022
Stock options	2,876,442	2,593,761
Restricted stock units	62,372	8,945
Reserved for future equity award grants	4,179,478	3,084,732
Reserved for future ESPP issuances	824,065	466,585
Common stock reserved for future issuance	7,942,357	6,154,023

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License Agreements

6 Months Ended

Jun. 30, 2023

License Agreements

License Agreements

Note 7 – License Agreements

The Company has entered into license agreements, accounted for as asset acquisitions, under which the Company is required to use commercially reasonable efforts to meet certain specified development and regulatory milestones related to the licensed technologies within specified time periods. In consideration of the rights granted to the Company under the agreements, the Company is required to make cash milestone payments to the licensors upon the completion of certain development, regulatory and commercial milestones. For the arrangements that the Company accounted for as asset acquisitions, contingent consideration liabilities are recorded as an additional cost of the acquired assets when the contingency is resolved, and the consideration is paid or becomes payable. Additionally, the Company has agreed to pay royalties on net sales of products applicable to the license agreements. The Company may terminate the agreements upon written notice to the licensors.

Daiichi Sankyo License Agreement

On September 2, 2020, the Company licensed the rights to milademetan (DS-3032b) for all human prophylactic or therapeutic uses in all countries and territories of the world from Daiichi Sankyo Company, Limited (“Daiichi Sankyo”), a Japanese corporation (the “Daiichi Sankyo License Agreement”). Daiichi Sankyo conducted clinical studies of milademetan prior to the Company’s licensing the rights to this product. The Company refers to this product candidate as milademetan.

In accordance with the terms of the Daiichi Sankyo License Agreement, the Company paid Daiichi Sankyo an initial upfront payment of $5.0 million in September 2020.

Under the Daiichi Sankyo License Agreement, the Company obtained worldwide, sublicensable exclusive rights to seven families of patents with respect to milademetan (the “Licensed Compound”). The Company is solely responsible under the Daiichi Sankyo License Agreement for the research, development and registration of milademetan. Pursuant to the Daiichi Sankyo License Agreement, Daiichi Sankyo had the right to continue to conduct three clinical trials and prepare final reports with respect to these clinical trials, and such right expires upon all subjects completing the study treatment. The Company has agreed to reimburse Daiichi Sankyo certain third-party expenses incurred while conducting such trials. On March 3, 2022, the Company and Daiichi Sankyo entered into a Memorandum of Understanding, which provides that Daiichi Sankyo will terminate its U105 study, and the Company will reimburse a total of $2.0 million to Daiichi Sankyo for expenses related to such study in four installments of $0.5 million each until December 31, 2022. As of June 30, 2023, the Company paid all four installments under the Memorandum of Understanding. Under the Daiichi Sankyo License Agreement, the Company made other clinical trials payments in the aggregate of $30,000 for the three and six months ended June 30, 2023. The Company made other clinical trials payments of $57,000 and $87,000 under the Daiichi Sankyo License Agreement for the three and six months ended June 30, 2022, respectively.

The Company is required to make aggregate future milestone payments of up to $223.5 million, contingent on the attainment of certain development, regulatory and sales milestones. The $223.5 million aggregate future milestone payments include a $2.0 million increase that was agreed upon in the Memorandum of Understanding with Daiichi Sankyo. On July 20, 2021, the Company announced that the first patient has been randomized in the multicenter, open-label, Phase 3 registrational trial (MANTRA) evaluating milademetan for the treatment of de-differentiated liposarcoma. Accordingly, pursuant to the Daiichi Sankyo License Agreement, the Company recorded $5.5 million in milestone fees as research and development expense in the consolidated statement of operations and comprehensive loss during the year ended December 31, 2021. Of the $5.5 million milestone fees, $2.5 million was paid in the third quarter of 2021 and $3.0 million was accrued as part of accrued research and development in the consolidated balance sheet as of December 31, 2021. On June 29, 2022, the Company and Daiichi Sankyo entered into an amendment to the Daiichi Sankyo License Agreement. The amendment reduced the $3.0 million milestone fee liability associated with the previously achieved milestone to $2.0 million. The amendment also extended the due date of the milestone fee payment to June 30, 2023. As of June 30, 2023, such milestone fee payment remained accrued. During the three and six months ended June 30, 2023 and 2022, the Company incurred no milestone research and development expense under the Daiichi Sankyo License Agreement.

Additionally, the Company is required to pay Daiichi Sankyo a high single digit royalty based on the annual net sales of products containing milademetan as an active pharmaceutical ingredient (the “Products”), subject to reduction at an agreed rate upon expiration of the licensed patent in the particular country where the Products are sold. To date, no royalty payments have been made to Daiichi Sankyo under the Daiichi Sankyo License Agreement. The royalty obligation terminates on a country-by-country and on a product-by-product basis on the later of: (i) loss of all market exclusivity for

such Product in such country, (ii) the last-to-expire patent that covers the Licensed Compound or the Product in such country and (iii) twelve years from launch of the first Product sold by the Company in such country.

Unless sooner terminated or extended, the Daiichi Sankyo License Agreement will remain in full force and effect until the Company, its affiliates and its sublicensees cease all development and commercial activity related to milademetan. Either party may terminate the Daiichi Sankyo License Agreement for cause in the event of an uncured material breach (subject to a 90-day cure period). However, the Company may only terminate the Daiichi Sankyo License Agreement with respect to the countries affected by such uncured material breach. Daiichi Sankyo may also terminate the Daiichi Sankyo License Agreement in the event of Rain’s bankruptcy or insolvency. Additionally, Daiichi Sankyo may terminate the Daiichi Sankyo License Agreement immediately upon written notice if the Company, its affiliates or its sublicensors initiate or join any challenge to the validity or enforceability of a licensed patent, subject to certain exclusions. Furthermore, the Company may terminate the Daiichi Sankyo License Agreement in its entirety or on a country-by-country basis for bona fide material concerns regarding the (i) lack of safety for human use arising from toxicity of the Licensed Compound or Product(s), (ii) lack of efficacy of the Licensed Compound or Product(s) or (iii) adverse economic impact to the Company in connection with its continued development of the Products, in each case, upon six months’ prior written notice to Daiichi Sankyo. In addition, if the Company is acquired by a third party that is developing and commercializing a competing compound and the acquiring party decides not to discontinue the development or commercialization of such competing compound, such third party must terminate the Daiichi Sankyo License Agreement within 30 days of such acquisition if it does not discontinue such development or commercialization. Upon termination of the Daiichi Sankyo License Agreement by Daiichi Sankyo for the Company’s uncured material breach or by the Company for its bona fide material concerns regarding the safety, efficacy or adverse economic impacts relating to the Licensed Compound or Products, or its development thereof, the Company is required to, among other actions, if requested by Daiichi Sankyo (i) transfer to Daiichi Sankyo ongoing clinical trials, data, reports, records and materials, (ii) grant to Daiichi Sankyo an exclusive, irrevocable, sublicensable, fully paid-up license under any patents and know-how that are controlled and actually used by the Company at the time of termination in connection with the Products to allow Daiichi Sankyo exploit the Licensed Compound or Products in countries that are affected by the termination, (iii) grant to Daiichi Sankyo an exclusive, irrevocable, sublicensable, fully paid up license to use trademarks that are specific to the Products and (iv) assign any applicable sublicenses.

Drexel License Agreement and Sponsored Research Agreement

In February 2023, the Company decided to discontinue further development of its preclinical program focused on targeting RAD52 in the DNA damage repair pathway, and the Company notified Drexel University (“Drexel”) of the termination of the intellectual property license agreement, dated July 30, 2020, between Drexel and the Company to focus use of the Company’s financial and personnel resources on the milademetan clinical program.

Roche Clinical Supply Agreement

In December 2021, the Company entered into a clinical supply agreement with Roche for the supply of the anti-Programmed Death Ligand-1 (PD-L1) monoclonal antibody, atezolizumab. Clinical trials are planned to evaluate milademetan, in combination with atezolizumab for the treatment of patients in genetically selected populations. Under this agreement, Rain is the sponsor of the anticipated clinical trials, and Roche will supply atezolizumab. The Company does not have any financial commitments to Roche under this agreement. In May 2023, the Company notified Roche of the termination of the clinical supply agreement.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies.

Commitments and Contingencies

Note 8 – Commitments and Contingencies

Leases

In September 2018, the Company entered into a noncancelable operating lease agreement for office space for its corporate headquarters in Newark, California with an initial term of 5.25 years. The lease commenced in January 2019 and ends March 2024. Under the terms of the lease, the Company pays annual base rent, subject to an annual fixed percentage increase of 2% on March 1st of each year. The Company is obligated to pay for its share of direct expenses including operating expense and taxes, which are considered variable lease costs and are expensed as incurred.

In March 2020, Governor Newsom issued State of California Executive Order No. N-33-20 instructing all individuals in California to stay at home due to the COVID-19 pandemic. In connection with such order, the Company entered into an amendment to the noncancelable operating lease agreement in June 2020. The amendment provided the Company rent

relief for three months in 2020. In consideration of the rent relief, the Company agreed to adjust the base rent annual fixed percentage increase of 3% on February 1st of each year and extend the lease until September 2024. The amendment was determined to be a lease modification that qualified as a change of accounting on the existing lease and not a separate contract. Remeasurement of the right-of-use asset and operating lease liabilities at the date of modification did not result in a material increase of the right-of-use asset and operating lease liabilities.

In October 2022, the Company entered into a second amendment to its corporate headquarters lease agreement to expand the leased premises by approximately 3,880 square feet. The lease commencement date for the expansion premises is expected to be July 2023 and will expire in September 2024. Total future lease payments over the life of the lease are estimated to increase by approximately $0.2 million as a result of the amendment.

In March 2023, the Company entered into a third amendment to its corporate headquarters lease agreement to expand the leased premises by approximately 5,600 square feet on a temporary basis. The lease commencement date for the expansion into the temporary space was March 2023 and will expire on the date the expanded premises under the second amendment are ready for occupancy. The expanded premises were ready for occupancy in July 2023. Pursuant to this third amendment, the Company will not pay any rent on the temporary space, but the Company will be responsible for its share of operating costs, taxes, and utilities.

The future minimum lease payments required under the operating lease are summarized as follows (in thousands):

	As of June 30, 2023
2023 - remainder	$	86
2024		130
Total minimum lease payments	$	216
Less: amount representing interest		(13)
Present value of operating lease liabilities	$	203
Operating lease liabilities, current		164
Operating lease liabilities, non-current		39
Total operating lease liabilities	$	203
Weighted-average remaining lease term (in years)		1.3
Weighted-average incremental borrowing rate		10.0%

In addition to what is included in the table above, the future minimum lease payments for the operating lease not yet commenced are summarized as follows (in thousands):

	As of June 30, 2023
2023	$	86
2024		130
Total minimum lease payments	$	216

The table below summarizes the Company’s lease costs and cash payments in connection with operating lease obligations (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Total operating lease expense	$	40	$	40	$	80	$	80
Operating cash flows used for operating lease	$	43	$	41	$	86	$	82

Contingencies

In the event the Company becomes subject to claims or suits arising in the ordinary course of business, the Company would accrue a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated.

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Employee Benefits

6 Months Ended

Jun. 30, 2023

Employee Benefits

Employee Benefits

Note 9 – Employee Benefits

The Company has a defined contribution 401(k) plan available to eligible employees. Under the terms of the plan, employees may make voluntary contributions as a percent of compensation, limited to the maximum amount allowable under federal tax regulations. The Company, at its discretion, may make certain contributions to the 401(k) plan. The Company made matching contributions of $143,000 and $156,000 for the three months ended June 30, 2023 and 2022, respectively. The Company made matching contributions of $577,000 and $231,000 for the six months ended June 30, 2023 and 2022, respectively.

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Restructuring Charges

6 Months Ended

Jun. 30, 2023

Restructuring Charges.

Restructuring Charges

Note 10 – Restructuring Charges

In May 2023, the Company announced a reduction in its workforce in connection with the reprioritization of the Company’s clinical strategy designed to optimize Company resources. The Company recorded restructuring charges of $2.8 million in the statements of operations and comprehensive loss for the three and six months ended June 30, 2023, comprised of $2.8 million cash severance, employee transition and related employee benefits and taxes of affected employees, as well as $37,000 of stock-based compensation expense related to option modifications. 1 As of June 30, 2023, the Company had approximately $1.7 million outstanding unpaid cash severance, employee transition and related employee benefits and taxes included within other accrued liabilities in the balance sheet, which the Company expects to be paid in full in the third quarter of 2023.

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Net Loss Per Share

6 Months Ended

Jun. 30, 2023

Net Loss Per Share

Net Loss Per Share

Note 11 – Net Loss Per Share

The following table summarizes the computation of the basic and diluted net loss per share (in thousands, except share and per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Net loss	$	(22,064)	$	(17,611)	$	(42,548)	$	(35,005)
Denominator:
Weighted-average shares of common stock outstanding, basic and diluted		36,363,315		26,529,482		36,351,648		26,520,662
Weighted-average shares used to compute net loss per share, basic and diluted		36,363,315		26,529,482		36,351,648		26,520,662
Net loss per share, basic and diluted	$	(0.61)	$	(0.66)	$	(1.17)	$	(1.32)

The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their inclusion would be anti-dilutive:

	As of June 30,
	2023	2022
Stock options	2,876,442	2,402,872
Restricted stock units	62,372	—
ESPP shares	—	53,266
Total	2,938,814	2,456,138

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Subsequent Event

6 Months Ended

Jun. 30, 2023

Subsequent Event

Subsequent Event

Note 12 – Subsequent Event

On July 17, 2023, a purported securities class action lawsuit was commenced in the United States District Court for the Northern District of California, naming the Company and certain of the Company’s officers as defendants (the “Shareholders Class Action Lawsuit”), captioned Thant v. Rain Oncology, et al., Case No. 3-23-mc-8185. The Shareholder Class Action Lawsuit alleges violations of Sections 10(b) and 20(a) of the Exchange Act in connection with allegedly false and misleading information about the Phase 3 MANTRA trial design quality and risks related to its clinical development strategy and regulatory approval. The Shareholder Class Action Lawsuit seeks compensatory damages in an unspecified amount, attorneys fees and costs, and any other relief the court deems proper.

The Shareholder Class Action Lawsuit and any other related lawsuits are subject to inherent uncertainties and the actual costs to be incurred relating to the Shareholder Class Action Lawsuit will depend upon many unknown factors. The outcome of the litigation is uncertain and the Company may not prevail. The Company could be forced to expend significant resources in the defense of the Shareholder Class Action Lawsuit. The Company is not currently able to estimate the possible cost to the Company from this matter, as the Shareholder Class Action Lawsuit is currently at an early stage and the Company cannot ascertain how long it may take to resolve. The Company has not established any reserve for any potential liability relating to the Shareholder Class Action Lawsuit. The Company believes that it has meritorious defenses and intends to defend the Shareholder Class Action Lawsuit vigorously.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Summary of Significant Accounting Policies

Use of Estimates

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure of contingent liabilities in the Company’s condensed consolidated financial statements and accompanying notes. The most significant estimate in the Company’s condensed consolidated financial statements relates to the clinical trial expense accruals. Management evaluates its estimates on an ongoing basis. Although these estimates are based on the Company’s historical experience, knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash equivalents include commercial paper and money market funds.

Available-for-Sale Investments

Available-for-Sale Investments

The Company holds investment grade securities consisting of commercial paper, corporate debt securities, U.S. government securities and U.S. agency bonds, classified as available-for-sale (AFS) securities at the time of purchase, since it is the Company’s intent that these investments be available for current operations. The Company has classified all of its AFS securities as current assets in the condensed consolidated balance sheets even though the stated maturity date may be one year or more beyond the current condensed consolidated balance sheet date, which reflects management’s intention to use the proceeds from sales of these securities to fund its operations, as necessary.

The Company carries these securities at fair value and reports unrealized gains and losses, if any, as a separate component of accumulated other comprehensive loss. The cost of debt securities is adjusted for amortization of purchase premiums and accretion of discounts to maturity. Such amortization and accretion are included in interest income in the condensed consolidated statements of operations and comprehensive loss. Realized gains and losses on sales of securities are determined using the specific identification method and recorded in interest income in the condensed consolidated statement of operations and comprehensive loss.

Allowance for Credit Losses

Allowance for Credit Losses

For AFS securities in an unrealized loss position, the Company first assesses whether it intends to sell, or if it is more likely than not that the Company will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through earnings. For AFS securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the severity of the impairment, any changes in interest rates, market conditions, changes to the underlying credit ratings and forecasted recovery, among other factors. The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in interest income through an allowance account. Any impairment that has not been recorded through an allowance for credit losses is included in other comprehensive loss in the condensed consolidated statement of operations and comprehensive loss.

The Company elected the practical expedient to exclude the applicable accrued interest from both the fair value and amortized costs basis of its AFS securities for purposes of identifying and measuring an impairment. Accrued interest receivable on AFS securities is recorded in prepaid and other current assets in the condensed consolidated balance sheets. The Company’s accounting policy is to not measure an allowance for credit loss for accrued interest receivable and to write-off any uncollectible accrued interest receivable as a reversal of interest income in a timely manner, which the Company considers to be in the period in which it determines the accrued interest will not be collected by the Company.

Research and Development Costs

Research and Development Costs

Research and development costs primarily consist of costs associated with the Company’s research and development activities, including its drug discovery efforts, and the preclinical and clinical development of its product candidates. Research and development costs are expensed as incurred.

Preclinical Studies and Clinical Trial Accruals

Preclinical Studies and Clinical Trial Accruals

The Company is required to estimate its expenses resulting from its obligations under contracts with vendors, consultants, clinical research organizations and clinical site agreements in connection with conducting preclinical activities and clinical trials. The financial terms of these contracts are subject to negotiations which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. The Company reflects preclinical study and clinical trial expenses in its condensed consolidated financial statements by matching those expenses with the period in which services and efforts are expended. The Company accounts for these expenses according to the progress of the preclinical study or clinical trial as measured by the timing of various aspects of the preclinical study, clinical trial or related activities. The Company determines accrual and prepaid estimates through review of the underlying contracts along with preparation of financial models taking into account correspondence with clinical and other key personnel and third-party service providers as to the progress of preclinical studies, clinical trials or other services being conducted. During the course of a preclinical study or clinical trial, the Company adjusts its expense recognition if actual results differ from its estimates. To date, the Company has not experienced any material differences between accrued costs and actual costs incurred.

Stock-Based Compensation

Stock-Based Compensation

Stock-based compensation expense represents the grant date fair value of equity awards recognized over the requisite service period of the awards (generally the vesting period) on a straight-line basis. The Company recognizes forfeitures as they occur. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model. The fair value of restricted stock units (“RSUs”) granted is based on the Company’s closing stock price on the date of grant.

Income Taxes

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company recognizes deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions on the basis of a two-step process whereby (1) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more likely than not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense. Any accrued interest and penalties are included within the related tax liability.

Restructuring

Restructuring

Restructuring costs comprised of severance, other termination benefit costs and stock-based compensation expense for stock option modifications related to workforce reductions. The Company recognizes restructuring charges

when the liability is probable, and the amount is estimable. Employee termination benefits are accrued at the date management has committed to a plan of termination and affected employees have been notified of their termination date and expected severance benefits.

Comprehensive Loss

Comprehensive Loss

Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. The Company’s comprehensive loss includes unrealized gains and losses from short-term investments.

Net Loss Per Share

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period, without consideration of potential dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the sum of the weighted-average number of shares of common stock plus the potential dilutive effects of potential dilutive securities outstanding during the period. Potential dilutive securities are excluded from diluted earnings or loss per share if the effect of such inclusion is antidilutive. The Company’s potentially dilutive securities, which include shares from the 2021 Employee Stock Purchase Plan (the “ESPP”) and outstanding stock options and RSUs under the Company’s equity incentive plan, have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share. For the periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Financial Instruments. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The objective of the standard is to improve financial reporting of expected credit losses on financial instruments and other commitments to extend credit. ASU 2016-13 requires that an entity measure and recognize expected credit losses for financial assets held at amortized cost and replaces the incurred loss impairment methodology in prior U.S. GAAP with a methodology that requires consideration of a broader range of information to estimate credit losses, and establishes additional disclosures related to credit risks. The Company adopted Topic 326 on January 1, 2023. The adoption did not have a significant impact on the Company’s condensed consolidated financial statements or the related disclosures.

There were no other significant updates to the recently issued accounting standards other than as disclosed herein for the three and six months ended June 30, 2023. Although there are several other new accounting pronouncements issued or proposed by the FASB, based on the Company’s preliminary assessment, the Company does not believe any of those accounting pronouncements have had or will have a material impact on its financial position or operating results. 

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Measurements

Summary of Financial Assets Measured at Fair Value on Recurring Basis

The following tables summarize financial assets that the Company measured at fair value on a recurring basis, classified in accordance with the fair value hierarchy (in thousands):

	Fair Value Measurements at Reporting Date Using:
	Level 1		Level 2		Level 3		Total
As of June 30, 2023:
Money market funds	$	14,051	$	—	$	—	$	14,051
Commercial paper		—		36,169		—		36,169
U.S. government securities		16,337		—		—		16,337
U.S. agency bonds		—		19,066		—		19,066
Total cash equivalents and short-term investments	$	30,388	$	55,235	$	—	$	85,623
Reported as:
Cash and cash equivalents (include cash of $667)							$	40,076
Short-term investments								46,214
Total cash, cash equivalents and short-term investments							$	86,290

	Fair Value Measurements at Reporting Date Using:
	Level 1		Level 2		Level 3		Total
As of December 31, 2022:
Money market funds	$	8,528	$	—	$	—	$	8,528
Commercial paper		—		83,423		—		83,423
U.S. government securities		10,837		—		—		10,837
U.S. agency bonds		—		22,143		—		22,143
Corporate debt securities		—		997		—		997
Total cash equivalents and short-term investments	$	19,365	$	106,563	$	—	$	125,928
Reported as:
Cash and cash equivalents (include cash of $4,526)							$	61,955
Short-term investments								68,499
Total cash, cash equivalents and short-term investments							$	130,454

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Investments (Tables)

6 Months Ended

Jun. 30, 2023

Investments

Summary of Cash Equivalents and Investments Measured at Fair Value on Recurring Basis

The following tables summarize, by major types of cash equivalents, and investments that are measured at fair value on a recurring basis (in thousands):

	As of June 30, 2023
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
Money market funds	$	14,051	$	—	$	—	$	14,051
Commercial paper		36,189		1		(21)		36,169
U.S. government securities		16,347		4		(14)		16,337
U.S. agency bonds		19,136		—		(70)		19,066
Cash equivalents and short-term investments	$	85,723	$	5	$	(105)	$	85,623

	As of December 31, 2022
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
Money market funds	$	8,528	$	—	$	—	$	8,528
Commercial paper		83,479		11		(67)		83,423
U.S. government securities		10,910		—		(73)		10,837
U.S. agency bonds		22,175		4		(36)		22,143
Corporate debt securities		1,002		—		(5)		997
Cash equivalents and short-term investments	$	126,094	$	15	$	(181)	$	125,928

Schedule of Contractual Maturities of AFS Securities

The contractual maturities of the Company’s AFS securities were as follows (in thousands):

	As of June 30, 2023		As of December 31, 2022
Due within one year	$	46,214	$	63,595
Due within one to two years		—		4,904
Total	$	46,214	$	68,499

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Condensed Consolidated Balance Sheet Details (Tables)

6 Months Ended

Jun. 30, 2023

Condensed Consolidated Balance Sheet Details

Schedule of Prepaid and Other Current Assets

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

	As of June 30, 2023		As of December 31, 2022
Prepaid insurance	$	1,821	$	913
Prepaid research and development		1,585		1,103
Prepaid other		563		416
FICA tax credit receivable		531		571
Other current assets		184		152
Deposits		19		19
Prepaid and other current assets	$	4,703	$	3,174

Schedule of Property and Equipment, Net

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

	As of June 30, 2023		As of December 31, 2022
Furniture and equipment	$	203	$	204
Leasehold improvements		67		67
Computer equipment		50		50
Construction in progress		312		8
		632		329
Less: accumulated depreciation and amortization expense		(271)		(236)
Property and equipment, net	$	361	$	93

Schedule of Other Non-Current Assets

Other non-current assets consist of the following (in thousands):

	As of June 30, 2023		As of December 31, 2022
Deposits	$	110	$	781
FICA tax credit receivable		—		52
Other		70		368
Other non-current assets	$	180	$	1,201

Schedule of Other Accrued Liabilities

Other accrued liabilities consist of the following (in thousands):

	As of June 30, 2023		As of December 31, 2022
Accrued payroll and related	$	1,713	$	229
Accrued bonus		1,055		3,379
ESPP liability		—		155
Other		2,218		2,661
Other accrued liabilities	$	4,986	$	6,424

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2023

Summary of Stock Option Activities

		Weighted-		Weighted-
		Average		Average	Aggregate
		Exercise		Remaining	Intrinsic
		Price Per		Contract Term	Value
	Total Options	Share		(in years)	(in millions)
Outstanding as of December 31, 2022	2,593,761	$	8.08	8.2	$	—
Granted	1,312,762	$	9.43
Exercised	(20,757)	$	3.59
Forfeited or cancelled	(1,009,324)	$	(9.36)
Outstanding as of June 30, 2023	2,876,442	$	8.27	7.2	$	—
Vested and expected to vest as of June 30, 2023	2,876,442	$	8.27	7.2	$	—
Vested and exercisable as of June 30, 2023	1,476,242	$	7.07	5.5	$	—

Summary of Stock-Based Compensation Expense Recognized

The Company recognized stock-based compensation expense as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Research and development	$	534	$	1,203	$	1,660	$	2,093
General and administrative		266		214		708		566
Restructuring charges		37		-		37		-
Total stock-based compensation expense	$	837	$	1,417	$	2,405	$	2,659

Weighted-Average Assumptions Used in Black-Scholes Option Pricing Model to Determine Fair Value of Stock Option Grants

	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Risk-free interest rate	3.5%	2.9% - 3.0%	3.5% - 4.3%	1.6% - 3.0%
Expected volatility	115.4%	88.1% - 90.2%	102.8% - 115.4%	88.1% - 112.1%
Expected term (in years)	6.1	6.1	6.1	5.3 - 6.1
Expected dividend yield	0%	0%	0%	0%

Schedule of Common Stock Reserved for Future Issuance

	As of June 30, 2023	As of December 31, 2022
Stock options	2,876,442	2,593,761
Restricted stock units	62,372	8,945
Reserved for future equity award grants	4,179,478	3,084,732
Reserved for future ESPP issuances	824,065	466,585
Common stock reserved for future issuance	7,942,357	6,154,023

RSU

Summary of Restricted Stock Units Activities

		Weighted-		Aggregate
	Total	Average		Intrinsic
	Restricted	Grant Date		Value
	Stock Units	Fair Values		(in millions)
Outstanding as of December 31, 2022	8,945	$	6.25	$	—
Granted	95,333	$	9.59
Vested	—	$	—
Forfeited or cancelled	(41,906)	$	9.35
Outstanding as of June 30, 2023	62,372	$	9.27	$	0.1

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies.

Schedule of Future Minimum Lease Payments Required under Operating Lease

The future minimum lease payments required under the operating lease are summarized as follows (in thousands):

	As of June 30, 2023
2023 - remainder	$	86
2024		130
Total minimum lease payments	$	216
Less: amount representing interest		(13)
Present value of operating lease liabilities	$	203
Operating lease liabilities, current		164
Operating lease liabilities, non-current		39
Total operating lease liabilities	$	203
Weighted-average remaining lease term (in years)		1.3
Weighted-average incremental borrowing rate		10.0%

Schedule of operating lease liability not yet commenced maturity

In addition to what is included in the table above, the future minimum lease payments for the operating lease not yet commenced are summarized as follows (in thousands):

	As of June 30, 2023
2023	$	86
2024		130
Total minimum lease payments	$	216

Summary of Lease Costs and Cash Payments

The table below summarizes the Company’s lease costs and cash payments in connection with operating lease obligations (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Total operating lease expense	$	40	$	40	$	80	$	80
Operating cash flows used for operating lease	$	43	$	41	$	86	$	82

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Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2023

Net Loss Per Share

Schedule of Computation of Basic and Diluted Net Loss per Share

The following table summarizes the computation of the basic and diluted net loss per share (in thousands, except share and per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Net loss	$	(22,064)	$	(17,611)	$	(42,548)	$	(35,005)
Denominator:
Weighted-average shares of common stock outstanding, basic and diluted		36,363,315		26,529,482		36,351,648		26,520,662
Weighted-average shares used to compute net loss per share, basic and diluted		36,363,315		26,529,482		36,351,648		26,520,662
Net loss per share, basic and diluted	$	(0.61)	$	(0.66)	$	(1.17)	$	(1.32)

Schedule of Potentially Dilutive Securities Excluded from Calculation of Diluted Net Loss per Share

	As of June 30,
	2023	2022
Stock options	2,876,442	2,402,872
Restricted stock units	62,372	—
ESPP shares	—	53,266
Total	2,938,814	2,456,138

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Fair Value Measurements (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2023	Dec. 31, 2022
Fair Value Measurements
Assets transfer, Level 1 to 2	$ 0	$ 0
Assets transfer, Level 2 to 1	0	0
Assets transfer, out of Level 3	0	0
Assets transfer, into Level 3	0	0
Liabilities transfer, Level 1 to 2	0	0
Liabilities transfer, Level 2 to 1	0	0
Liabilities transfer, into of Level 3	0	0
Liabilities transfer, out of Level 3		0
Financial liabilities	$ 0	$ 0	$ 0

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Fair Value Measurements - Summary of Financial Assets Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	$ 46,214	$ 68,499
Fair Value on Recurring Basis
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total cash equivalents and short-term investments	85,623	125,928
Cash and cash equivalents (includes cash)	40,076	61,955
Short-term investments	46,214	68,499
Total cash, cash equivalents and short-term investments	86,290	130,454
Fair Value on Recurring Basis | Money Market Funds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total cash equivalents and short-term investments	14,051	8,528
Fair Value on Recurring Basis | Commercial Paper
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total cash equivalents and short-term investments	36,169	83,423
Fair Value on Recurring Basis | U.S. Government Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total cash equivalents and short-term investments	16,337	10,837
Fair Value on Recurring Basis | U.S. Agency Bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total cash equivalents and short-term investments	19,066	22,143
Fair Value on Recurring Basis | Corporate Debt Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total cash equivalents and short-term investments		997
Fair Value on Recurring Basis | Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total cash equivalents and short-term investments	30,388	19,365
Fair Value on Recurring Basis | Level 1 | Money Market Funds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total cash equivalents and short-term investments	14,051	8,528
Fair Value on Recurring Basis | Level 1 | U.S. Government Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total cash equivalents and short-term investments	16,337	10,837
Fair Value on Recurring Basis | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total cash equivalents and short-term investments	55,235	106,563
Fair Value on Recurring Basis | Level 2 | Commercial Paper
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total cash equivalents and short-term investments	36,169	83,423
Fair Value on Recurring Basis | Level 2 | U.S. Agency Bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total cash equivalents and short-term investments	$ 19,066	22,143
Fair Value on Recurring Basis | Level 2 | Corporate Debt Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total cash equivalents and short-term investments		$ 997

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Fair Value Measurements - Summary of Financial Assets Measured at Fair Value on Recurring Basis - Additional Information (Details) - Fair Value on Recurring Basis - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash and cash equivalents (includes cash)	$ 40,076	$ 61,955
Cash
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash and cash equivalents (includes cash)	$ 667	$ 4,526

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Investments - Summary of Cash Equivalents and Investments Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Cash Cash Equivalents And Investments [Line Items]
Investments, estimated fair value	$ 46,214	$ 68,499
Fair Value on Recurring Basis
Cash Cash Equivalents And Investments [Line Items]
Cash equivalents and short-term investments, amortized cost	85,723	126,094
Cash equivalents and short-term investments, unrealized gains	5	15
Cash equivalents and short-term investments, unrealized losses	(105)	(181)
Cash equivalents and short-term investments, estimated fair value	85,623	125,928
Fair Value on Recurring Basis | Money Market Funds [Member]
Cash Cash Equivalents And Investments [Line Items]
Cash equivalents, amortized cost	14,051	8,528
Cash equivalents, estimated fair value	14,051	8,528
Commercial Paper [Member] | Fair Value on Recurring Basis
Cash Cash Equivalents And Investments [Line Items]
Investments, amortized cost	36,189	83,479
Investments, unrealized gains	1	11
Investments, unrealized losses	(21)	(67)
Investments, estimated fair value	36,169	83,423
U.S. Government Securities | Fair Value on Recurring Basis
Cash Cash Equivalents And Investments [Line Items]
Investments, amortized cost	16,347	10,910
Investments, unrealized gains	4
Investments, unrealized losses	(14)	(73)
Investments, estimated fair value	16,337	10,837
U.S. Agency Bonds | Fair Value on Recurring Basis
Cash Cash Equivalents And Investments [Line Items]
Investments, amortized cost	19,136	22,175
Investments, unrealized gains		4
Investments, unrealized losses	(70)	(36)
Investments, estimated fair value	$ 19,066	22,143
Corporate Debt Securities | Fair Value on Recurring Basis
Cash Cash Equivalents And Investments [Line Items]
Investments, amortized cost		1,002
Investments, unrealized losses		(5)
Investments, estimated fair value		$ 997

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Investments - Schedule of Contractual Maturities of AFS Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Investments
Due within one year	$ 46,214	$ 63,595
Due within one to two years		4,904
Total	$ 46,214	$ 68,499

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Investments - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Investments
Investments, realized gains or losses	$ 0	$ 0	$ 0	$ 0
Marketable securities, gross unrealized loss position	52,100,000		52,100,000
Marketable securities, continuous unrealized loss position, greater than 12 months	0		0
Marketable securities, continuous unrealized loss position, less than 12 months	25,300,000		25,300,000
Allowance for credit losses	0		0		$ 0
Accrued interest receivable on AFS securities	200,000		200,000		$ 100,000
Accrued interest receivable written off	$ 0	$ 0	$ 0	$ 0

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Condensed Consolidated Balance Sheet Details - Schedule of Prepaid and Other Current Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Condensed Consolidated Balance Sheet Details
Prepaid insurance	$ 1,821	$ 913
Prepaid research and development	1,585	1,103
Prepaid other	563	416
FICA tax credit receivable	531	571
Other current assets	184	152
Deposits	19	19
Prepaid and other current assets	$ 4,703	$ 3,174

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Condensed Consolidated Balance Sheet Details - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 632	$ 329
Less: accumulated depreciation and amortization expense	(271)	(236)
Property and equipment, net	361	93
Furniture and Equipment
Property Plant And Equipment [Line Items]
Property and equipment, gross	203	204
Leasehold Improvements
Property Plant And Equipment [Line Items]
Property and equipment, gross	67	67
Computer Equipment
Property Plant And Equipment [Line Items]
Property and equipment, gross	50	50
Construction in Progress
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 312	$ 8

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Condensed Consolidated Balance Sheet Details - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Condensed Consolidated Balance Sheet Details
Depreciation and amortization expense	$ 17,000	$ 22,000	$ 35,000	$ 44,000

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Condensed Consolidated Balance Sheet Details - Schedule of Other Non-Current Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Condensed Consolidated Balance Sheet Details
Deposits	$ 110	$ 781
FICA tax credit receivable		52
Other	70	368
Other non-current assets	$ 180	$ 1,201

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Condensed Consolidated Balance Sheet Details - Schedule of Other Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Condensed Consolidated Balance Sheet Details
Accrued payroll and related	$ 1,713	$ 229
Accrued bonus	1,055	3,379
ESPP liability		155
Other	2,218	2,661
Other accrued liabilities	$ 4,986	$ 6,424

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Stockholders' Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands		6 Months Ended
	Apr. 15, 2021	Jun. 30, 2023	Jun. 30, 2022	Jan. 01, 2023	Dec. 31, 2022	Apr. 16, 2021
Class Of Stock [Line Items]
Common stock, shares authorized		250,000,000			250,000,000	250,000,000
Preferred Stock, shares authorized		10,000,000			10,000,000
Common stock, Par value		$ 0.001			$ 0.001	$ 0.001
Preferred stock, par value		$ 0.001			$ 0.001
Common stock, reserved for future issuance		7,942,357			6,154,023
Weighted-average grant date fair values of option grants		$ 7.75	$ 7.33
Weighted-average grant date fair values of options forfeited		$ 7.99	$ 12.05
Aggregate cash proceeds from issued shares of common stock		$ 343
Common Stock Options
Class Of Stock [Line Items]
Common stock, reserved for future issuance		2,876,442			2,593,761
Stock options and restricted stock units
Class Of Stock [Line Items]
Unrecognized compensation cost related to outstanding options		$ 11,200
Cost not yet recognized, period for Recognition		2 years 9 months 18 days
2018 Stock Issuance Plan
Class Of Stock [Line Items]
Stock options granted	0
2018 Stock Issuance Plan | Common Stock Options
Class Of Stock [Line Items]
Stock options, grant equity-based awards issued		1,722
2021 Equity Incentive Plan
Class Of Stock [Line Items]
Stock options granted		1,312,762
Percentage of outstanding number of shares of common stock	4.00%
2021 Equity Incentive Plan | Common Stock Options
Class Of Stock [Line Items]
Common stock, reserved for future issuance				1,451,611
Employee Stock Purchase Plan
Class Of Stock [Line Items]
Common stock, reserved for future issuance				362,902
Percentage of outstanding number of shares of common stock	1.00%
Maximum contribution made by employees compensation	15.00%
Purchase of common stock at discount from market price, offering date	85.00%
Stock plan offering period	24 months
Shares issued in period		32,622
Aggregate cash proceeds from issued shares of common stock		$ 100
Maximum | 2021 Equity Incentive Plan | Common Stock Options
Class Of Stock [Line Items]
Common stock, reserved for future issuance	3,246,120
Maximum | Employee Stock Purchase Plan
Class Of Stock [Line Items]
Shares authorized for issuance	259,689
IPO
Class Of Stock [Line Items]
Common stock, shares authorized						260,000,000
Undesignated Preferred Stock
Class Of Stock [Line Items]
Preferred Stock, shares authorized						10,000,000
Preferred stock, par value						$ 0.001
Common Stock
Class Of Stock [Line Items]
Common stock, shares authorized						200,000,000
Non-voting Common Stock
Class Of Stock [Line Items]
Common stock, shares authorized						50,000,000

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Stockholders' Equity - Summary of Stock Option Activities (Details) - 2021 Equity Incentive Plan - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Total Options
Total Options Outstanding, Beginning balance	2,593,761
Total Options, Granted	1,312,762
Total Options, Exercised	(20,757)
Total Options Forfeited or cancelled	(1,009,324)
Total Options Outstanding, Ending balance	2,876,442	2,593,761
Vested and expected to vest as of June 30, 2023	2,876,442
Vested and exercisable as of June 30, 2023	1,476,242
Weighted-Average Exercise Price Per Share
Weighted-Average Exercise Price Per Share	$ 8.08
Weighted-Average Exercise Price Per Share, Granted	9.43
Weighted-Average Exercise Price Per Share, Exercised	3.59
Weighted-Average Exercise Price Per Share, Forfeited or cancelled	(9.36)
Weighted-Average Exercise Price Per Share	8.27	$ 8.08
Weighted-Average Exercise Price Per Share, Vested and expected to vest	8.27
Weighted-Average Exercise Price Per Share, Vested and exercisable	$ 7.07
Weighted-Average Remaining Contract Term
Weighted-Average Remaining Contract Term	7 years 2 months 12 days	8 years 2 months 12 days
Weighted-Average Remaining Contract Term, Vested and expected to vest	7 years 2 months 12 days
Weighted-Average Remaining Contract Term, Vested and exercisable	5 years 6 months

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Stockholders' Equity - RSU Activities (Details) - RSU $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2023 USD ($) $ / shares shares
Total Restricted Stock Units
Total Restricted Stock Units Outstanding, Beginning balance	8,945
Total Restricted Stock Units, Granted	95,333
Total Restricted Stock Units, Vested	0
Total Restricted Stock Units, Forfeited or cancelled	(41,906)
Total Restricted Stock Units Outstanding, Ending balance	62,372
Weighted-Average Grant Date Fair Values
Weighted-Average Grant Date Fair Values Outstanding, Beginning balance | $ / shares	$ 6.25
Weighted-Average Grant Date Fair Values, Granted | $ / shares	9.59
Weighted-Average Grant Date Fair Values, Forfeited or cancelled | $ / shares	9.35
Weighted-Average Grant Date Fair Values Outstanding, Ending balance | $ / shares	$ 9.27
Aggregate Intrinsic Value
Aggregate Intrinsic Value, Outstanding | $	$ 0.1

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Stockholders' Equity - Summary of Stock-Based Compensation Expense Recognized (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 837	$ 1,417	$ 2,405	$ 2,659
Research and Development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	534	1,203	1,660	2,093
General and Administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	266	$ 214	708	$ 566
Restructuring charges
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 37		$ 37

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Stockholders' Equity - Weighted-Average Assumptions Used in Black-Scholes Option Pricing Model to Determine Fair Value of Stock Option Grants (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Risk-free interest rate	3.50%
Risk-free interest rate, minimum		2.90%	3.50%	1.60%
Risk-free interest rate, maximum		3.00%	4.30%	3.00%
Expected volatility	115.40%
Expected volatility, minimum		88.10%	115.40%	88.10%
Expected volatility, maximum		90.20%		112.10%
Expected term (in years)	6 years 1 month 6 days	6 years 1 month 6 days	6 years 1 month 6 days
Expected dividend yield	0.00%	0.00%	0.00%	0.00%
Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected term (in years)				5 years 3 months 18 days
Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected term (in years)				6 years 1 month 6 days

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Stockholders' Equity - Schedule of Common Stock Reserved for Future Issuance (Details) - shares	Jun. 30, 2023	Dec. 31, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved for future issuance	7,942,357	6,154,023
Stock options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved for future issuance	2,876,442	2,593,761
RSU
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved for future issuance	62,372	8,945
Reserved for future equity award grants
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved for future issuance	4,179,478	3,084,732
Reserved for future ESPP issuances
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved for future issuance	824,065	466,585

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License Agreements (Details)		1 Months Ended	3 Months Ended		6 Months Ended
	Mar. 03, 2022 USD ($) installment	Sep. 30, 2020 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) item	Jun. 30, 2022 USD ($)	Jun. 29, 2022 USD ($)	Jun. 28, 2022 USD ($)	Dec. 31, 2021 USD ($)	Sep. 30, 2021 USD ($)
License Agreements [Line Items]
Accrued milestone payment							$ 2,000,000.0	$ 3,000,000.0
Daiichi Sankyo License Agreement
License Agreements [Line Items]
License agreement, effective date					Sep. 02, 2020
Upfront payment		$ 5,000,000.0
Sublicensable rights, number of families of patents | item					7
Number of clinical trials | item					3
Reimbursement total	$ 2,000,000.0
Number of reimbursement installments | installment	4
Reimbursement paid in each installment	$ 500,000
Period of installment maturity date					Dec. 31, 2022
Other clinical trials payments			$ 30,000	$ 57,000	$ 30,000	$ 87,000
Maximum future milestone payments			223,500,000		223,500,000
Clinical trials reimbursement expense					2,000,000.0
Milestone fees			$ 0	$ 0	0	$ 0			$ 5,500,000
Milestone payments										$ 2,500,000
Accrued milestone payment									$ 3,000,000.0
Royalty payments					$ 0
Royalty obligation termination description					The royalty obligation terminates on a country-by-country and on a product-by-product basis on the later of: (i) loss of all market exclusivity for such Product in such country, (ii) the last-to-expire patent that covers the Licensed Compound or the Product in such country and (iii) twelve years from launch of the first Product sold by the Company in such country.
Cure period					90 days
Agreement termination written notice period					6 months

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Commitments and Contingencies - Narrative (Details) $ in Millions	1 Months Ended
	Jun. 30, 2020	Sep. 30, 2018	Mar. 31, 2023 ft²	Oct. 31, 2022 USD ($) ft²
Commitments and Contingencies.
Initial term of operating lease		5 years 3 months
Operating lease commencement month and year		2019-01
Operating lease expiration month and year		2024-03
Increase in annual base rent percentage	3.00%	2.00%
Increase in annual base rent month and day of each year	--02-01	--03-01
Rent relief period	3 months
Operating lease extended expiration month and year	2024-09
Future lease payments over the life of the lease are estimated to increase | $				$ 0.2
Lease agreement to expand the leased premises | ft²			5,600	3,880

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Commitments and Contingencies - Schedule of Future Minimum Lease Payments Required under Operating Lease (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Commitments and Contingencies.
2023 - remainder	$ 86
2024	130
Total minimum lease payments	216
Less: amount representing interest	(13)
Present value of operating lease liabilities	203
Operating lease liabilities, current	164	$ 164
Operating lease liabilities, non-current	$ 39	$ 113
Weighted-average remaining lease term (in years)	1 year 3 months 18 days
Weighted-average incremental borrowing rate	10.00%

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Commitments and Contingencies -Future Minimum Lease Payments For The Operating Lease Not Yet Commenced (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Commitments and Contingencies.
2023	$ 86
2024	130
Total minimum lease payments	$ 216

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Commitments and Contingencies - Summary of Lease Costs and Cash Payments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Commitments and Contingencies.
Total operating lease expense	$ 40	$ 40	$ 80	$ 80
Operating cash flows used for operating lease	$ 43	$ 41	$ 86	$ 82

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Employee Benefits (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Employee Benefits
Defined contribution plan, employer matching contribution amount	$ 143,000	$ 156,000	$ 577,000	$ 231,000

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Restructuring Charges (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2023 USD ($)
Restructuring Charges.
Restructuring charges	$ 2,837,000	$ 2,837,000
Severance costs	2,800,000	2,800,000
Stock based compensation	37,000	37,000
Restructuring costs expected to be paid	$ 1,700,000	$ 1,700,000

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Net Loss Per Share - Schedule of Computation of Basic and Diluted Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Numerator:
Net loss	$ (22,064)	$ (20,484)	$ (17,611)	$ (17,394)	$ (42,548)	$ (35,005)
Denominator:
Weighted-average shares of common stock outstanding, basic	36,363,315		26,529,482		36,351,648	26,520,662
Weighted-average shares of common stock outstanding, diluted	36,363,315		26,529,482		36,351,648	26,520,662
Weighted-average shares used to compute net loss per share, basic	36,363,315		26,529,482		36,351,648	26,520,662
Weighted-average shares used to compute net loss per share, diluted	36,363,315		26,529,482		36,351,648	26,520,662
Net loss per share, basic	$ (0.61)		$ (0.66)		$ (1.17)	$ (1.32)
Net loss per share, diluted	$ (0.61)		$ (0.66)		$ (1.17)	$ (1.32)

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Net Loss Per Share - Schedule of Potentially Dilutive Securities Excluded from Calculation of Diluted Net Loss per Share (Details) - shares	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities	2,938,814	2,456,138
Stock options
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities	2,876,442	2,402,872
Restricted stock units
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities	62,372
ESPP shares
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities		53,266