10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_______________________________________

FORM 10-Q

_______________________________________

(Mark One)

x 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

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

For the transition period from ______________ to ______________

Commission File Number: 001-40869

_______________________________________

THESEUS PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in its Charter)

_______________________________________

Delaware	83-0712806
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
314 Main Street Cambridge, Massachusetts	02142
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (857) 400-9491

_______________________________________

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	THRX	The Nasdaq Global Market, LLC (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 x No o

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 x No o

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	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	x

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. o

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

As of August 4, 2023, the registrant had 43,603,369 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31
Signatures		33

i

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or Quarterly Report, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, as well as information included in oral statements or other written statements made or to be made by us, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that involve substantial risks and uncertainties. All statements contained in this Quarterly Report other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” and similar expressions are intended to identify forward-looking statements.

Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:

•the ability of our preclinical studies and clinical trials to demonstrate safety and efficacy of product candidates and other positive results;

•the initiation, timing, progress, results and cost of our research and development programs and our current and future preclinical studies and clinical trials for current product candidates and other product candidates we may develop, and related preparatory work;

•the timing, scope and likelihood of regulatory filings and approvals, including timing of investigational new drug applications and final approval by the US Food and Drug Administration, or the FDA, of our current product candidates and any future product candidates we may develop;

•our ability to develop and advance our current product candidates and development programs into, and successfully complete, clinical trials;

•our manufacturing, commercialization, and marketing capabilities and strategy;

•our plans relating to commercializing product candidates, if approved, including the geographic areas of focus and sales strategy;

•the need to hire additional personnel and our ability to attract and retain such personnel;

•the size of the market opportunity for our product candidates and development programs, including our estimates of the number of patients who suffer from the diseases we are targeting;

•our competitive position and the success of competing therapies that are or may become available;

•the beneficial characteristics, and the potential safety, efficacy and therapeutic effects of product candidates;

•the potential advantages of our integrated research and development approach;

•existing regulations and laws and regulatory developments in the United States, Europe and other jurisdictions;

•our expectations regarding the impact of the COVID-19 pandemic on our business and the timing and enrollment of our clinical trials;

•our intellectual property position, including the scope of protection we are able to establish and maintain for intellectual property rights covering our current product candidates and other product candidates we may develop, including the extensions of existing patent terms where available, the validity of intellectual property rights held by third parties, and our ability not to infringe, misappropriate or otherwise violate any third-party intellectual property rights;

ii

•our continued reliance on third parties to conduct additional preclinical studies and clinical trials of product candidates;

•our ability to contract with third-party suppliers and manufacturers for the manufacture of product candidates for preclinical studies and clinical trials and their ability to perform timely and adequately as a result of supply chain constraints or otherwise;

•our ability to obtain, and negotiate favorable terms of, any collaboration, licensing or other arrangements that may be necessary or desirable to develop, manufacture or commercialize product candidates;

•the pricing and reimbursement of current product candidates and other product candidates we may develop, if approved;

•the rate and degree of market acceptance and clinical utility of current product candidates and other product candidates we may develop;

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

•our anticipated use of our existing cash resources and use of proceeds from sales of our common stock in “at-the-market” offerings and the period over which such proceeds, together with existing cash, will be sufficient to meet our operating needs;

•our financial performance;

•the period over which we estimate our existing cash, cash equivalents, and marketable securities will be sufficient to fund our future operating expenses and capital expenditure requirements;

•our expectations regarding the period during which we will remain an emerging growth company, or EGC, under the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act;

•developments relating to our competitors, our industry or the economy, the impact of the instability in the global financial markets and the disruptions of the financial services industry; and

•other risks and uncertainties, including those listed in the section titled “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission, or the SEC, on March 9, 2023, or the Annual Report.

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

These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in the section titled “Risk Factors” in Part II, Item 1A of our Annual Report and elsewhere in this Quarterly Report. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance or achievements. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report or to conform these statements to actual results or to changes in our expectations, except as required by law.

iii

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report and the documents that we reference in this Quarterly Report and have filed with the SEC with the understanding that our actual future results, performance and events and circumstances may be materially different from what we expect.

iv

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Theseus Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(Unaudited)

	JUNE 30, 2023		DECEMBER 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	47,465	$	94,605
Short-term marketable securities	160,740		103,374
Prepaid expenses and other current assets	5,548		4,137
Total current assets	213,753		202,116
Property and equipment, net	437		416
Operating lease right-of-use asset	4,060		4,334
Long-term marketable securities	26,027		13,817
Other assets	794		1,764
Total assets	$	245,071	$	222,447
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,415	$	4,973
Accrued expenses and other current liabilities	4,513		5,414
Operating lease liability, current portion	754		743
Total current liabilities	7,682		11,130
Operating lease liability, net of current portion	3,014		3,236
Restricted stock liability, net of current portion	292		466
Total liabilities	10,988		14,832
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 50,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 0 shares issued and outstanding as of June 30, 2023 and December 31, 2022	—		—
Common stock, $0.0001 par value; 500,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 43,603,369 and 38,734,446 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	4		4
Additional paid-in capital	376,217		320,183
Accumulated deficit	(141,577)		(112,186)
Accumulated other comprehensive loss	(561)		(386)
Total stockholders’ equity	234,083		207,615
Total liabilities and stockholders’ equity	$	245,071	$	222,447

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

1

Theseus Pharmaceuticals, 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	$	12,919	$	7,344	$	25,320	$	13,892
General and administrative	4,668		4,736		9,322		8,767
Total operating expenses	17,587		12,080		34,642		22,659
Loss from operations	(17,587)		(12,080)		(34,642)		(22,659)
Other income, net	2,782		431		5,251		513
Total other income, net	2,782		431		5,251		513
Net loss	$	(14,805)	$	(11,649)	$	(29,391)	$	(22,146)
Net loss attributable to common stockholders—basic and diluted	$	(14,805)	$	(11,649)	$	(29,391)	$	(22,146)
Weighted-average common stock outstanding—basic and diluted	43,736,275		38,415,379		43,061,113		38,332,605
Net loss per share attributable to common stockholders—basic and diluted	$	(0.34)	$	(0.30)	$	(0.68)	$	(0.58)
Comprehensive loss:
Net loss	$	(14,805)	$	(11,649)	$	(29,391)	$	(22,146)
Other comprehensive loss:
Unrealized gain (loss) on marketable securities	$	(402)	$	(203)	$	(175)	$	(332)
Total comprehensive loss	$	(15,207)	$	(11,852)	$	(29,566)	$	(22,478)

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

2

Theseus Pharmaceuticals, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(Unaudited)

	COMMON STOCK $0.0001 PAR VALUE			ADDITIONAL PAID-IN CAPITAL		ACCUMULATED OTHER COMPREHENSIVE LOSS		ACCUMULATED DEFICIT		TOTAL STOCKHOLDERS’ EQUITY
	SHARES	AMOUNT
Balance at December 31, 2022	38,422,621	$	4	$	320,183	$	(386)	$	(112,186)	$	207,615
Vesting of restricted stock	66,015	—		—		—		—		—
Stock-based compensation	—	—		2,993		—		—		2,993
Vesting of early exercised options	21,620	—		87		—		—		87
Issuance of common stock upon exercise of stock options	17,880	—		48		—		—		48
Vesting of restricted stock units, less shares withheld and retired to satisfy tax obligations	7,907	—		—		—		—		—
Issuance of common stock, net of issuance costs of $1,343	4,816,301	—		49,104		—		—		49,104
Unrealized gain on marketable securities	—	—		—		227		—		227
Net loss	—	—		—		—		(14,586)		(14,586)
Balance at March 31, 2023	43,352,344	$	4	$	372,415	$	(159)	$	(126,772)	$	245,488
Vesting of restricted stock	44,017	—		—		—		—		—
Stock-based compensation	—	—		3,573		—		—		3,573
Vesting of early exercised options	21,621	—		87		—		—		87
Vesting of restricted stock units, less shares withheld and retired to satisfy tax obligations	1,969	—		—		—		—		—
Issuance of common stock under employee stock purchase plan	24,866	—		142		—		—		142
Unrealized gain on marketable securities	—	—		—		(402)		—		(402)
Net loss	—	—		—		—		(14,805)		(14,805)
Balance at June 30, 2023	43,444,817	$	4	$	376,217	$	(561)	$	(141,577)	$	234,083

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

3

Theseus Pharmaceuticals, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(Unaudited)

	COMMON STOCK $0.0001 PAR VALUE			ADDITIONAL PAID-IN CAPITAL		ACCUMULATED OTHER COMPREHENSIVE LOSS		ACCUMULATED DEFICIT		TOTAL STOCKHOLDERS’ EQUITY
	SHARES	AMOUNT
Balance at December 31, 2021	37,872,604	$	4	$	308,008	$	—	$	(61,578)	$	246,434
Vesting of restricted stock	85,431	—		—		—		—		—
Stock-based compensation	—	—		2,044		—		—		2,044
Unrealized (loss) on marketable securities	—	—		—		(129)		—		(129)
Net loss	—	—		—		—		(10,497)		(10,497)
Balance at March 31, 2022	37,958,035	$	4	$	310,052	$	(129)	$	(72,075)	$	237,852
Vesting of restricted stock	85,431	—		—		—		—		—
Stock-based compensation	—	—		2,518		—		—		2,518
Vesting of early exercised options	100,895	—		407		—		—		407
Issuance of common stock under employee stock purchase plan	10,780	—		70		—		—		70
Unrealized loss on investments	—	—		—		(203)		—		(203)
Net loss	—	—		—		—		(11,649)		(11,649)
Balance at June 30, 2022	38,155,141	$	4	$	313,047	$	(332)	$	(83,724)	$	228,995

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

4

Theseus Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	SIX MONTHS ENDED JUNE 30,
	2023		2022
Cash flows from operating activities:
Net loss	$	(29,391)	$	(22,146)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	41		12
Stock-based compensation expense	6,566		4,562
Amortization and accretion of marketable securities	(2,055)		(55)
Non-cash interest income	(5)		(311)
Non-cash operating lease expense	273		125
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(1,746)		586
Other assets	1,367		960
Accounts payable	(2,608)		504
Accrued expenses and other current liabilities	(901)		486
Operating lease liability	(210)		(505)
Net cash used in operating activities	(28,669)		(15,782)
Cash flows from investing activities:
Purchases of short-term and long-term marketable securities	(140,060)		(93,477)
Sales and maturities of short-term and long-term marketable securities	72,369		—
Purchases of property and equipment	(11)		(381)
Net cash used in investing activities	(67,702)		(93,858)
Cash flows from financing activities:
Proceeds from issuance of common stock through ATM sales, net of offering costs	49,438		—
Proceeds from exercise of stock options	48		—
Proceeds from issuance of common stock under employee stock purchase plan	142		70
Net cash provided by financing activities	49,628		70
Net increase (decrease) in cash, cash equivalents and restricted cash	(46,743)		(109,570)
Cash, cash equivalents and restricted cash at beginning of year	94,984		245,040
Cash, cash equivalents and restricted cash at end of period	$	48,241	$	135,470
Supplemental disclosure of cash flows:
Vesting of early exercised options	$	174	$	407
Obtaining a right-of-use asset in exchange for an operating lease liability	$	—	$	4,721
Purchases of property and equipment in accounts payable	$	50	$	—

The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of each of the dates shown below:

	SIX MONTHS ENDED JUNE 30,
	2023		2022
Cash and cash equivalents	$	47,465	$	135,091
Restricted cash (included in other assets)	776		379
Total cash, cash equivalents, and restricted cash	$	48,241	$	135,470

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

5

Theseus Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Nature of the Business

Theseus Pharmaceuticals, Inc. (“Theseus” or the “Company”) is a clinical-stage biopharmaceutical company focused on improving the lives of cancer patients through the discovery, development and commercialization of transformative targeted therapies. The Company was incorporated in December 2017 under the laws of the State of Delaware, and its principal offices are in Cambridge, Massachusetts.

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative US GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The accompanying condensed consolidated financial statements and footnotes to the condensed consolidated financial statements have been prepared on the same basis as the most recently audited annual consolidated financial statements and, in the opinion of management, reflect all normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of June 30, 2023 and the results of its operations and its cash flows for the interim periods presented. The results for the three and six months ended June 30, 2023 are not necessarily indicative of results to be expected for the year ending December 31, 2023, any other interim periods, or any future year or period. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2022.

Liquidity

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. The Company’s product candidates and development programs will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Because of the numerous risks and uncertainties associated with product development, the Company is unable to predict the timing or amount of increased expenses, or when or if the Company will be able to achieve or maintain profitability. Even if the Company is able to generate revenue from product sales, the Company may not become profitable. If the Company fails to become profitable or is unable to sustain profitability on a continuing basis, then the Company may be unable to continue its operations at planned levels and be forced to reduce or terminate its operations. The Company expects to incur substantial operating losses and negative cash flows from operations for the foreseeable future.

In accordance with ASC 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. As of June 30, 2023, the Company had an accumulated deficit of $141.6 million. During the six months ended June 30, 2023, the Company incurred a loss of $29.4 million and utilized $28.7 million of cash in operations. The Company expects to continue to generate operating losses for the foreseeable future. The Company expects that its cash, cash equivalents, and marketable securities of $234.2 million at June 30, 2023 will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next twelve months from issuance of the accompanying condensed consolidated financial statements.

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2. Summary of Significant Accounting Policies

The significant accounting policies and estimates used in the preparation of the accompanying condensed consolidated financial statements are described in the Company’s audited consolidated financial statements, which were included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 9, 2023 (“Annual Report”). There have been no material changes in the Company’s significant accounting policies during the six months ended June 30, 2023, except as noted below.

Unaudited Interim Financial Information

The accompanying condensed consolidated financial statements and the accompanying notes as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022 are unaudited. The condensed consolidated interim financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of June 30, 2023 and the results of its operations for the three and six months ended June 30, 2023 and 2022 and its cash flows for the six months ended June 30, 2023 and 2022.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Estimates and judgments are based on historical information and other market-specific or various relevant assumptions, including in certain circumstances, future projections, that management believes to be reasonable under the circumstances. Actual results could differ materially from estimates. Significant estimates and assumptions are used for, but not limited to, the accruals for research and development expenses.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents, and marketable securities. Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality and have not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Such deposits have and will continue to exceed federally insured limits. The Company has not experienced any losses on its cash deposits. The Company’s short-term and long-term marketable securities are invested in high grade securities with limited concentration in any one issuer, and as a result, the Company believes represent minimal credit risk.

Recently Issued and Adopted Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its condensed consolidated financial statements and disclosures.

In June 2016, the FASB issued ASU No. 2016‑13, Financial Instruments—Credit Losses (Topic 326)—Measurement of Credit Losses on Financial Instruments, which has been subsequently amended (“ASU 2016‑13”). This updated accounting guidance significantly changes the impairment model for most financial assets and certain other instruments. ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on trade receivables, loans and other financial instruments. This update is effective for the Company’s fiscal year beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted this new standard on January 1, 2023, and the adoption had no material impact on the Company's consolidated financial statements.

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3. Fair Value Measurements

The carrying values of other current assets, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of these instruments. The Company’s marketable securities, which may include both short-term and long-term marketable securities consisting of high-quality, marketable debt instruments of corporations are measured at fair value in accordance with the fair value hierarchy.

Assets measured at fair value on a recurring basis are as follows (in thousands):

	FAIR VALUE MEASUREMENTS AT JUNE 30,2023
	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
Cash equivalents:
Money market funds	$	44,155	$	—	$	—	$	44,155
Marketable securities:
Commercial paper	—		78,655		—		78,655
Corporate debt securities	—		26,154		—		26,154
Asset-backed securities	—		24,625		—		24,625
Government securities	25,045		32,288		—		57,333
Total financial assets	$	69,200	$	161,722	$	—	$	230,922

	FAIR VALUE MEASUREMENTS AT DECEMBER 31,2022
	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
Cash equivalents:
Money market funds	$	6,846	$	—	$	—	$	6,846
Commercial paper	—		3,989		—		3,989
Marketable securities:
Commercial paper	—		25,187		—		25,187
Corporate debt securities	—		45,673		—		45,673
Asset-backed securities	—		13,574		—		13,574
Government securities	—		32,757		—		32,757
Total financial assets	$	6,846	$	121,180	$	—	$	128,026

During the six months ended June 30, 2023 and the year ended December 31, 2022, there were no transfers between fair value levels.

4. Marketable Securities

The Company’s investment policy defines allowable investments and establishes guidelines relating to credit quality, diversification, and maturities of its marketable securities to preserve principal and maintain liquidity. In accordance with the Company’s investment policy, it has invested funds in marketable securities as of June 30, 2023 and December 31, 2022. The Company’s marketable securities are classified as available-for-sale investments.

The cost, gross unrealized holding gains, gross unrealized holding losses and fair value of marketable securities by types and classes of security consisted of the following (in thousands):

8

	JUNE 30, 2023
	MATURITY IN YEARS	AMORTIZED COST		UNREALIZED GAIN		UNREALIZED LOSS		FAIR VALUE
Commercial paper	less than 1	$	78,926	$	1	$	(272)	$	78,655
Corporate debt securities	less than 1	26,225		3		(74)		26,154
Asset-backed securities	less than 1	979		—		(2)		977
Government securities	less than 1	55,062		13		(121)		54,954
Short-term marketable securities		$	161,192	$	17	$	(469)	$	160,740
Asset-backed securities	1 - 2	23,750		14		(116)		23,648
Government securities	1 - 2	2,386		—		(7)		2,379
Long-term marketable securities		$	26,136	$	14	$	(123)	$	26,027

	DECEMBER 31, 2022
	MATURITY IN YEARS	AMORTIZED COST		UNREALIZED GAIN		UNREALIZED LOSS		FAIR VALUE
Commercial paper	less than 1	$	25,187	$	—	$	—	$	25,187
Corporate debt securities	less than 1	39,071		9		(185)		38,895
Asset-backed securities	less than 1	8,555		2		(10)		8,547
Government securities	less than 1	30,892		8		(155)		30,745
Short-term marketable securities		$	103,705	$	19	$	(350)	$	103,374
Corporate debt securities	1 - 2	6,783		—		(5)		6,778
Asset-backed securities	1 - 2	5,074		—		(47)		5,027
Government securities	1 - 2	2,015		—		(3)		2,012
Long-term marketable securities		$	13,872	$	—	$	(55)	$	13,817

The Company has recorded marketable securities at fair value in its condensed consolidated balance sheets and unrealized gains and losses are reported as a component of accumulated other comprehensive income (loss). The amount of realized gains and losses reclassified into earnings are based on the specific identification of the securities sold or securities that reached maturity date. The amount of realized gains and losses reclassified into earnings have not been material to the Company’s condensed consolidated statements of operations. The Company generally does not intend to sell any marketable securities prior to recovery of their amortized cost basis for any marketable securities in an unrealized loss position.

The Company has determined that there were no material declines in fair value of its marketable securities due to credit-related factors as of June 30, 2023 and December 31, 2022.

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5. Property and Equipment, net

Property and equipment, net consisted of the following as of June 30, 2023 and as of December 31, 2022 (in thousands):

	JUNE 30, 2023		DECEMBER 31, 2022
Computer equipment	$	50	$	50
Furniture and fixtures	391		341
Office equipment	87		76
Property and equipment	528		467
Less: accumulated depreciation	(91)		(51)
Property and equipment, net	$	437	$	416

Depreciation expense for the six months ended June 30, 2023 and 2022 was $40,862 and $12,040, respectively. There were no impairments recorded to date.

6. Accrued Expenses

Accrued expenses consisted of the following as of June 30, 2023 and as of December 31, 2022 (in thousands):

	JUNE 30, 2023		DECEMBER 31, 2022
Accrued research and development	$	1,798	$	1,498
Accrued legal	81		164
Accrued compensation and benefits	1,888		3,130
Accrued other	397		273
Restricted stock liability, current	349		349
Total accrued expenses and other current liabilities	$	4,513	$	5,414

7. License Agreement

During the six months ended June 30, 2023, there were no changes to the Company’s license agreement with ARIAD Pharmaceuticals, Inc. (“ARIAD”). For a summary of the terms of the license agreement, including the Company’s accounting treatment, please refer to Note 7 to the Company’s audited consolidated financial statements for the year ended December 31, 2022, included in the Company’s Annual Report.

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8. Leases

The following table presents future lease payments under the terms of the Company’s operating leases as of June 30, 2023, including a reconciliation to the present value of operating lease liabilities recognized in the condensed consolidated balance sheet (in thousands):

Fiscal Year	Operating Lease
Remainder of 2023	$	390
2024	797
2025	821
2026	846
Thereafter	1,995
Total future minimum lease payments	4,849
Less: imputed interest	(1,081)
Present value of lease liabilities	$	3,768

9. Commitments and Contingencies

Legal Proceedings

The Company may from time to time be party to litigation arising in the ordinary course of business. The Company was not subject to any material legal proceedings during the six months ended June 30, 2023, and no material legal proceedings are currently pending or, to the best of the Company’s knowledge, threatened.

Indemnification Agreements

The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to the indemnification agreements, the Company agrees to indemnify, hold harmless, and to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s business partners, in connection with any US patent or any copyright or other intellectual property infringement claim by any third-party with respect to the Company’s products. The term of these indemnification agreements is generally perpetual any time after execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements.

401(k) Plan

The Company maintains a defined-contribution plan under Section 401(k) of the Internal Revenue Code of 1986 (the “401(k) Plan”). The 401(k) Plan covers all employees who meet defined minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Matching contributions to the 401(k) Plan may be made at the discretion of management. The Company contributed $0.3 million to the 401(k) Plan during the six months ended June 30, 2023. There was $0.4 million in employer contributions made to the 401(k) Plan during the year ended December 31, 2022.

10. Stockholders’ Equity

Preferred Stock

The Company was authorized to issue up to 50,000,000 shares of preferred stock, $0.0001 par value per share, as of June 30, 2023 and December 31, 2022, respectively. There were no shares of preferred stock outstanding as of June 30, 2023 and December 31, 2022, respectively.

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Common Stock

The Company was authorized to issue 500,000,000 shares of common stock, $0.0001 par value per share, as of June 30, 2023 and as of December 31, 2022, respectively. The voting, dividend and liquidation rights of the holders of the Company’s common stock are subject to and qualified by the rights, powers and preference of the holders of any series of preferred stock.

Voting Rights

Each share of common stock entitles the holder to one vote on all matters submitted to the stockholders for a vote.

Dividends

Subject to preferences that may apply to shares of preferred stock outstanding at the time, the holders of outstanding shares of the Company’s common stock are entitled to receive dividends out of funds legally available if and when the Board, in its discretion, determines to issue dividends. As of June 30, 2023, no cash dividends have been declared or paid.

Liquidation Rights

Upon the Company’s dissolution, liquidation, or winding-up, the assets legally available for distribution to stockholders are distributable ratably among holders of the Company’s common stock, subject to prior satisfaction of all outstanding debt and liabilities, and the preferential rights and payment of liquidation preferences, if any, on any outstanding shares of preferred stock.

11. Stock-Based Compensation

Equity Incentive Plans

In September 2021, the Company adopted the Theseus Pharmaceuticals, Inc. 2021 Equity Incentive Plan (the “2021 Plan”), which replaced the 2018 Stock Incentive Plan (the “2018 Plan”) and allows for the issuance of stock options, restricted stock awards, restricted stock units (“RSUs”), and other types of equity awards. No further awards were made under the 2018 Plan as of the effective date of the 2021 Plan. Any options or awards outstanding under the 2018 Plan are governed by their existing terms. On the first day of each fiscal year of the Company during the term of the Plan, commencing on January 1, 2023 and ending on (and including) January 1, 2031, the aggregate number of Common Shares that may be issued under the Plan shall automatically increase by a number equal to the lesser of (a) five percent (5%) of the total number of Common Shares actually issued and outstanding on the last day of the preceding fiscal year, or (b) a number of Common Shares determined by the Board. As of June 30, 2023 and December 31, 2022, the number of shares of common stock reserved for issuance were 11,039,176 and 9,132,930 shares, respectively. Of those shares reserved for issuance, there were 1,762,637 and 1,843,494 shares available for future grant as of June 30, 2023 and December 31, 2022, respectively.

The 2021 Plan is administered by the Board (or its compensation committee), and the exercise prices, vesting and other restrictions for the awards are determined at the discretion of the Board, except that the exercise price per share of stock options may not be less than 100% of the fair market value of the common stock on the date of grant. Stock options awarded under the 2021 Plan expire ten years after the grant date unless the Board sets a shorter term. Stock options and restricted stock units granted to employees and non-employees typically vest over four years. Shares of restricted common stock awards granted to employees, officers, members of the Board, advisors, and consultants of the Company typically vest over five years. Certain executives who are option holders are able to early exercise stock option awards prior to full satisfaction of the vesting conditions. If and when this occurs, the executive receives restricted common stock upon exercise of the option, and the shares remain subject to the Company’s right of repurchase, at exercise price, until the remaining vesting terms are met. During the year ended December 31, 2021, options to purchase 345,930 shares of common stock were exercised early. As of June 30, 2023 and December 31, 2022, the Company recognized $0.6 million and $0.8 million, respectively, as a liability related to the early exercise. The amount of remaining unvested shares

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related to the early exercise as of June 30, 2023 and December 31, 2022 were 158,552 and 201,793, respectively. There were no additional early exercises of options during the six months ended June 30, 2023.

Employee Stock Purchase Plan

In September 2021, the Company’s board of directors adopted, and its stockholders approved, the 2021 Employee Stock Purchase Plan (the "ESPP"), which became effective on October 6, 2021. The number of shares of common stock initially reserved for issuance under the ESPP was 400,000. In addition, on the first day of each fiscal year of the Company during the term of the ESPP, commencing on January 1, 2023 and concluding on January 1, 2041, the aggregate number of shares of common stock reserved for issuance under the ESPP shall automatically increase by a number equal to the lesser of (i) one percent (1%) of the total number of shares of common stock actually issued and outstanding on the last day of the preceding fiscal year, and (ii) a number of shares of common stock determined by the Company’s board of directors. The ESPP enables eligible employees to purchase shares of common stock of the Company at the end of each offering period at a price equal to 85% of the lower of the fair market value of the common stock at the commencement date of each offering period or the relevant date of purchase. As of June 30, 2023, the number of shares of common stock that may be issued under the ESPP is 730,682.

Stock Option Valuation

The assumptions that the Company used in Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted are as follows:

	FOR THE SIX MONTHS ENDED JUNE 30, 2023	FOR THE YEAR ENDED DECEMBER 31, 2022
Risk-free interest rate	3.54% - 3.99%	1.60% - 4.20%
Expected term (in years)	5.50 - 6.08	1.03 - 6.08
Expected volatility	88.04% - 89.15%	78.00% - 90.51%
Expected dividend yield	0%	0%

A summary of option activity under the 2021 Plan during the six months ended June 30, 2023, is as follows (in thousands except share, per share data and contractual terms):

	SHARES	WEIGHTED-AVERAGE PER-SHARE EXERCISE PRICE		WEIGHTED-AVERAGE REMAINING CONTRACTUAL TERM	AGGREGATE INTRINSIC VALUE
Outstanding as of December 31, 2022	7,257,786	$	5.95	8.58	$	10,751
Granted	1,690,130	11.21
Exercised	(17,880)	2.70
Forfeited	(6,361)	11.20
Outstanding as of June 30, 2023	8,923,675	$	6.95	8.38	30,181
Options vested and exercisable as of June 30, 2023	3,683,524	$	4.92	7.94	$	18,506

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.

The weighted-average per share grant date fair value of options granted during the six months ended June 30, 2023 and 2022 was $8.47 and $7.29, respectively. As of June 30, 2023, there was $32.3 million of unrecognized stock-based compensation expense related to unvested stock options. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 2.5 years as of June 30, 2023.

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Restricted Stock Units

The Company issues RSUs that generally vest over a four-year period with 25% of the RSUs vesting one year from the vesting commencement date, and the remainder vesting quarterly thereafter over the following 36 months. Any unvested shares underlying an RSU will be forfeited upon termination of services. The fair value of an RSU is equal to the fair market value price of the Company’s common stock on the date of grant.

A summary of RSU activity during the six months ended June 30, 2023 is as follows:

	SHARES	WEIGHTED-AVERAGE PER-SHARE GRANT-DATE FAIR VALUE
Unvested shares at December 31, 2022	31,650	$	11.21
Granted	333,810	8.88
Forfeited	(2,720)	8.84
Vested and released	(9,876)	11.21
Unvested shares at June 30, 2023	352,864	$	9.02

As of June 30, 2023, there was $3.3 million of unrecognized stock-based compensation expense related to unvested RSUs. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 3.5 years as of June 30, 2023.

Shares of Restricted Common Stock

The Company issued shares of restricted common stock to its founders in May 2018, which vested monthly over five years through May 2023. At issuance, these shares also contained certain performance-based vesting criteria which were associated with the milestone events applicable to the formerly outstanding shares of Series A preferred stock, two of which were achieved in 2020. In conjunction with the termination of the Series A preferred stock purchase agreement, the final performance-based vesting criteria was waived, leaving only service-based vesting criteria remaining for the founders’ shares through the end of the requisite service period. As noted above, certain executives who are option holders are able to early exercise stock option awards prior to full satisfaction of the vesting conditions. If and when such exercise occurs, the executive receives shares of restricted common stock. Early exercise shares are included in the table below.

A summary of restricted common stock activity during the six months ended June 30, 2023 is as follows:

	SHARES	WEIGHTED-AVERAGE PER-SHARE GRANT-DATE FAIR VALUE
Unvested shares at December 31, 2022	311,825	$	3.96
Vesting of restricted common stock	(153,273)	2.20
Unvested shares at June 30, 2023	158,552	$	5.67

As of June 30, 2023, there was $0.9 million of unrecognized stock-based compensation expense related to unvested restricted common stock. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 1.8 years as of June 30, 2023.

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Stock-based Compensation Expense

Total stock-based compensation expense recorded as research and development and general and administrative expenses, respectively, for employees, directors and non-employees during the three and six months ended June 30, 2023 and 2022 was as follows (in thousands):

	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
	2023		2022		2023		2022
Research and development	$	1,903	$	1,278	$	3,423	$	2,286
General and administrative	1,670		1,240		3,143		2,276
	$	3,573	$	2,518	$	6,566	$	4,562

12. Income Taxes

Income taxes for the three and six months ended June 30, 2023 and 2022 have been calculated based on an estimated annual effective tax rate and certain discrete items. For the three and six months ended June 30, 2023 and 2022, no income tax was recorded, as the Company recognized losses and maintains a full valuation allowance against its net deferred tax assets. The Company has never been examined by the Internal Revenue Service or any other jurisdiction for any tax years and, as such, all years within the applicable statutes of limitations are potentially subject to audit.

13. Net Loss Per Share

Basic and diluted loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average common shares outstanding (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	$	(14,805)	$	(11,649)	$	(29,391)	$	(22,146)
Net loss attributable to common stockholders - basic and diluted	$	(14,805)	$	(11,649)	$	(29,391)	$	(22,146)
Denominator:
Weighted-average common stock outstanding - basic and diluted	43,736,275		38,415,379		43,061,113		38,332,605
Net loss per share attributable to common stockholders - basic and diluted	$	(0.34)	$	(0.30)	$	(0.68)	$	(0.58)

The Company’s potentially dilutive securities, which include preferred stock, unvested restricted common stock, unvested RSUs and stock options, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following from the computation of diluted net loss per

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share attributable to common stockholders for the three and six months ended June 30, 2023 and 2022 because including them would have had an anti-dilutive effect:

	JUNE 30,
	2023	2022
Unvested restricted stock	158,552	558,289
Unvested RSUs	352,864	31,650
Options to purchase common stock	8,923,675	7,113,143
	9,435,091	7,703,082

14. Subsequent Event

On July 13, 2023, the Company announced its decision to discontinue enrollment in the ongoing phase 1/2 clinical trial of THE-630 and terminate development of THE-630 in patients with gastrointestinal stromal tumors. As a result of its decision, the Company estimates that it will incur approximately $0.6 million in incremental costs in connection with the discontinuation of the study including termination of vendor contracts and contingent liabilities. Also, following the announcement, the Company had a reduction in workforce which resulted in $0.6 million in severance costs. The incremental costs are expected to be incurred in the third quarter of 2023.

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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 unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report and our audited consolidated financial statements and related notes, included in our Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report includes forward-looking statements that involve risks and uncertainties, such as statements of our plans, strategies, objectives, expectations, and intentions. See “Special Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by these forward-looking statements.

Overview

We are a clinical-stage biopharmaceutical company focused on improving the lives of cancer patients through the discovery, development and commercialization of transformative targeted therapies. Our product candidates and development programs are designed to address drug resistance mutations in key driver oncogenes, which are mutated genes that cause cancer. Resistance mutations limit the efficacy of existing targeted therapies by rendering tumor cells unresponsive to drugs, and therefore present a critical challenge in cancer treatment today. Our initial focus is on developing the next generation of tyrosine kinase inhibitors, or TKIs, and is rooted in the critical role that tyrosine kinases play in the development of cancer. Despite the commercial success of approved TKIs, the development of drug resistance is a persistent limitation, narrowing the number of effective treatment options available to patients as they progress through subsequent lines of therapy.

Our goal is to develop “pan-variant” kinase inhibitors—inhibitors that target all major cancer causing and drug resistance mutations in clinically significant protein kinases. We believe that truly pan-variant inhibitors are required to effectively inhibit the heterogeneous mix of resistance mutations found in patients, and may also suppress the emergence of new mutations when used in earlier lines of therapy. To develop such inhibitors, we deploy our novel predictive resistance assay, or PRA, a highly differentiated cell-based method for testing TKIs that we believe is predictive for “pan-ness”. We also employ structure-guided drug design, and, coupled with our PRA, we believe our approach has the potential to optimize molecules for pan-variant activity while maintaining selectivity and tolerability.

On July 13, 2023, we announced that we were discontinuing enrollment in the ongoing phase 1/2 study and terminating development of THE-630 in patients with gastrointestinal stromal tumors. We analyzed trial data to inform the feasibility of developing low dose THE-630 for KIT-associated mast cell-driven inflammatory indications. Based on the observed reductions in serum tryptase, a biomarker for mast cell activation, we are evaluating next steps for potential plans to explore doses of 9 mg and below in clinical studies in patients with mast cell-driven diseases, such as chronic urticaria.

Our lead product candidate is THE-349, a fourth-generation epidermal growth factor receptor, or EGFR, inhibitor for the treatment of non-small cell lung cancer, or NSCLC. THE-349 is designed to address on-target treatment resistance to existing EGFR inhibitors by targeting the common activating mutations in exons 19 and 21 alone or in combination with the most frequently observed resistance mutations, T790M and C797X. Preclinical characterization of THE-349 as central nervous system, or CNS active, and mutant-selective inhibitor with potent activity against single-, double-, and triple-mutant EGFR variants, including T790M and C797X, was shared in a poster presentation at the 34th EORTC-NCI-AACR, or ENA, Symposium in Barcelona on October 26-28, 2022. We have initiated Investigational New Drug, or IND-enabling studies, and expect to file an IND for this product candidate with the FDA in the fourth quarter of 2023 and initiate a first-in-human trial thereafter, assuming acceptance of our IND by the FDA. We plan to pursue initial clinical development of THE-349 as a monotherapy in patients with C797X-mediated resistance after treatment with osimertinib or another third-generation inhibitor. Assuming positive clinical data and subject to discussions with the FDA, we intend to expand into evaluation of combination treatment with other relevant modalities. If clinical data support, we would target a broader second-line patient population to address the unmet need of patients who have been previously treated with osimertinib or another third-generation inhibitor, but progress with either on-target or off-target resistance.

Our second program is a next-generation BCR-ABL TKI that we are designing to be potent, selective, and pan-variant—features that we believe would balance safety and efficacy—for patients with relapsed/refractory chronic myeloid leukemia, or CML, and Philadelphia chromosome-positive, or Ph+, acute lymphoblastic

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leukemia, or ALL. We expect to nominate a development candidate for this program in the first half of 2024, with the goal of pursuing clinical development in patients with CML who have been previously treated with a second-generation TKI or have the T315I mutation, and as a combination therapy for newly diagnosed patients with Ph+ ALL.

Our third program is a next-generation, highly selective pan-variant KIT inhibitor for the treatment of early-line GIST. We intend to nominate a development candidate for this program in the first half of 2024.

Since our inception in December 2017, our operations have focused on organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio and performing research and development activities, including with respect to THE-630 and THE-349. We do not have any products approved for sale and have not generated any revenue from product sales. To date, we have financed our operations primarily through the sale and issuance of our preferred stock and common stock including the aggregate net offering proceeds raised in our initial public offering, or IPO, and the sale and issuance of our common stock pursuant to our at-the-market, or ATM Program. Upon the closing of the IPO, each outstanding share of our preferred stock automatically converted into one share of common stock.

We have incurred significant operating losses since inception. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more product candidates. Our net losses were $29.4 million and $22.1 million for the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023, we had an accumulated deficit of $141.6 million. We expect to continue to incur significant and increasing losses for the foreseeable future. We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we:

•advance THE-349, our BCR-ABL program, our next-generation KIT program, and other compounds we may develop in the future from discovery through preclinical development and clinical trials;

•seek marketing approvals for any product candidates that successfully complete clinical trials;

•obtain, expand, maintain, defend and enforce our intellectual property portfolio;

•hire additional clinical, regulatory and scientific personnel;

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

•establish agreements with contract research organizations, or CRO, and contract manufacturing organizations, or CMO; and

•add operational, legal, compliance, financial and management information systems and personnel to support our research, product development and future commercialization efforts, as well as to support our operations as a public company.

Our net losses may fluctuate significantly from period to period, depending on the timing of expenditures related to our research and development activities.

We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for a product candidate. In addition, if we obtain regulatory approval for a product candidate and do not enter into a third-party commercialization partnership, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing and distribution activities.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings or other capital sources, which could include collaborations, strategic alliances or licensing arrangements. We may be unable to raise additional funds or enter into such arrangements when needed, on favorable terms, or at all. Our failure to raise capital or enter into such agreements as, and when, needed, could have a material adverse effect on our

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business, results of operations, and financial condition, including requiring us to have to delay, reduce or eliminate product development or future commercialization efforts.

Because of the numerous risks and uncertainties associated with development of targeted oncology therapies, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. We will need to generate significant revenue to achieve profitability, and we may never do so. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

Additionally, we continue to actively monitor macroeconomic conditions and market volatility resulting from global economic developments, political unrest, high inflation, the recent failure of certain banks and financial institutions, and health crises such as COVID-19 pandemic. While we believe there has been no significant impact to our business or financial results during the periods presented, future developments and potential impacts on our business are uncertain and cannot be predicted with confidence.

As of June 30, 2023, we had cash, cash equivalents, and marketable securities of $234.2 million. Based on our current operating plan, we believe that our existing cash, cash equivalents, and marketable securities, will be sufficient to fund our operations and capital expenses into 2026. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See section titled “—Liquidity and Capital Resources.”

Components of Our Results of Operations

Revenue

We have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products or from other sources in the near future, if at all. If our development efforts for our product candidate, THE-349, our BCR-ABL program, and our next-generation KIT program, or any other product candidates that we may develop in the future are successful and result in marketing approval or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from such collaboration or license agreements.

Operating Expenses

Research and Development Expenses

Research and development expenses account for a significant portion of our operating expenses and consist primarily of costs incurred in connection with the discovery and preclinical development of our potential development candidates, and include:

•salaries, benefits, stock-based compensation and other related costs for individuals involved in research and development activities;

•external research and development expenses incurred under agreements with CROs and consultants that conduct our preclinical studies and other scientific development services;

•costs incurred under agreements with CMOs for manufacturing material for our preclinical studies and planned clinical trials; and

•costs related to compliance with regulatory requirements.

We expense research and development costs as incurred. We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors or our estimate of the level of service that has been performed at each reporting date. Payments for these external development activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our condensed consolidated financial statements as prepaid expenses or accrued expenses. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized, even when there is no alternative future

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use for the research and development. The capitalized amounts are expensed as the related goods are delivered or the services are performed.

A significant portion of our research and development costs have been external costs, which we track after a clinical product candidate has been identified. We utilize third-party contractors for our research and development activities and CMOs for our manufacturing activities and we do not have our own laboratory or manufacturing facilities. Therefore, we have no material facilities expenses attributed to research and development. Our internal research and development costs are primarily personnel-related costs and other indirect costs.

Research and development activities are central to our business model. We expect that our research and development expenses will continue to increase for the foreseeable future as we advance clinical development of our product candidate, THE-349, and continue to discover and develop additional product candidates, expand our headcount and maintain, expand and enforce our intellectual property portfolio. If any product candidates enter into later stages of clinical development, they will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. There are numerous factors associated with the successful development and commercialization of any product candidates we may develop in the future, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will impact our clinical development program and plans.

The successful development of our current product candidate, THE-349, or any product candidates we may develop in the future is highly uncertain. Therefore, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development and commercialization of THE-349 and any other product candidates we may develop. We are also unable to predict when, if ever, material net cash inflows will commence from the sale of any current or future product candidate, if approved. This is due to the numerous risks and uncertainties associated with product development, including the uncertainty of:

•the timing and progress of preclinical and clinical development activities;

•the number and scope of preclinical and clinical programs we decide to pursue;

•our ability to maintain our current research and development programs and to establish new programs;

•successful patient enrollment in, and the initiation and completion of, clinical trials;

•the successful completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority;

•the timing, receipt and terms of any marketing approvals from applicable regulatory authorities;

•our ability to establish new licensing or collaboration arrangements;

•the performance of our future collaborators, if any;

•our ability to establish arrangements with third-party manufacturers for the clinical supply of our product candidates and commercial supply of products that receive marketing approval, if any;

•development and timely delivery of commercial-grade drug formulations that can be used in our planned clinical trials and for commercialization;

•obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;

•commercializing product candidates, if approved, whether alone or in collaboration with others; and

•maintaining a continued acceptable safety profile of the product candidates following approval.

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Any changes in the outcome of any of these variables with respect to the development of THE-349 or any other future product candidates in preclinical and clinical development could mean a significant change in the costs and timing associated with the development of these product candidates. For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect, or if we experience significant delays in enrollment in any clinical trials following the FDA’s acceptance and clearance of an IND application, we could be required to expend significant additional financial resources and time to complete clinical development than we currently expect. We may never obtain regulatory approval for any product candidates that we develop.

General and Administrative Expenses

General and administrative expenses consist of personnel-related expenses, including salaries, benefits, and stock-based compensation expenses for personnel in executive, finance, accounting, human resources and other administrative functions; as well as other significant general and administrative expenses include legal fees relating to patent, intellectual property and corporate matters, and fees paid for accounting, consulting and other professional services; and expenses for rent, insurance and other operating costs.

We anticipate that our general and administrative expenses will increase in the future as our business expands to support our continued research and development activities, including any future clinical trials. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, among other expenses. We also anticipate increased expenses associated with being a public company, including costs for audit, legal, regulatory and tax-related services related to compliance with the rules and regulations of the SEC, listing standards applicable to companies listed on a national securities exchange, director and officer insurance premiums and investor relations costs. In addition, if we obtain regulatory approval for our current product candidates or any product candidates we may develop in the future and do not enter into a third-party commercialization collaboration, we expect to incur significant expenses related to building a sales and marketing team to support product sales, marketing and distribution activities.

We do not believe that inflation has had a material effect on our business. However, if our costs, in particular costs related to clinical trial expenses, preclinical expenses and/or employee-related expenses, were to become subject to significant inflationary pressures, it may adversely impact our business, operating results and financial condition.

Other Income, Net

Other income, net primarily consists of interest income, which is earned on cash equivalents that generate interest on a monthly basis, and short-term and long-term marketable securities.

Results of Operations

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

The following table summarizes our results of operations for the three months ended June 30, 2023 and 2022 (in thousands):

	THREE MONTHS ENDED JUNE 30,				CHANGE
	2023		2022
Operating expenses:
Research and development	$	12,919	$	7,344	$	5,575
General and administrative	4,668		4,736		(68)
Total operating expenses	17,587		12,080		5,507
Loss from operations	(17,587)		(12,080)		(5,507)
Other income, net	2,782		431		2,351
Total other income, net	2,782		431		2,351
Net loss	$	(14,805)	$	(11,649)	$	(3,156)

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Research and Development Expenses

The following table summarizes our research and development expenses for the three months ended June 30, 2023 and 2022 (in thousands):

	THREE MONTHS ENDED JUNE 30,				CHANGE
	2023		2022
Direct research and development expenses by program:
Pan-variant KIT inhibitor (THE-630)	$	2,068	$	1,514	$	554
Fourth-generation EGFR inhibitor (THE-349)	3,384		1,288		2,096
Discovery programs	1,928		727		1,201
Unallocated research and development expenses:
Personnel-related (including stock-based compensation)	4,961		3,351		1,610
Other	578		464		114
Total research and development expenses	$	12,919	$	7,344	$	5,575

The change in research and development expenses was primarily attributable to the following:

•a $0.6 million increase in costs related to THE-630 primarily driven by increase in clinical costs. We expect a decrease in costs related to THE-630 in future periods as a result of discontinued enrollment in the ongoing phase 1/2 study and termination of development of THE-630 in GIST;

•a $2.1 million increase in costs related to THE-349 as the program continues to advance through IND-enabling studies, including manufacturing costs of $2.0 million, an increase in clinical start-up costs of $0.6 million, partially offset by a decrease of $0.4 million in IND-enabling costs;

•a $1.2 million increase in costs related to progress on our discovery programs, due primarily to an increase in contract research expenses;

•a $1.6 million increase in personnel-related costs consisting of $0.6 million of stock-based compensation expense, and an increase in salary and benefit related expense of $1.0 million driven by an increase in headcount; and

•a $0.1 million increase in other unallocated research and development expenses, primarily due to an increase in facilities costs.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the three months ended June 30, 2023 and 2022 (in thousands):

	THREE MONTHS ENDED JUNE 30,				CHANGE
	2023		2022
Personnel-related expenses (including stock-based compensation)	$	3,000	$	2,702	$	298
Facilities and supplies	162		186		(24)
Legal and professional fees	751		1,060		(309)
Other expenses	755		788		(33)
	$	4,668	$	4,736	$	(68)

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The change in general and administrative expenses was primarily attributable to the following:

•a $0.3 million increase in personnel-related costs primarily due to an increase in headcount, including an increase in stock-based compensation expense of $0.4 million partially offset by decrease in recruiting expense of $0.1 million.

Total Other Income, Net

Total other income, net, was $2.8 million for the three months ended June 30, 2023, and consisted primarily of interest income of $1.5 million and amortization and accretion in marketable securities earned of $1.2 million. During the three months ended June 30, 2022, total other income, net, of $0.4 million was recorded and consisted primarily of interest income.

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

The following table summarizes our results of operations for the six months ended June 30, 2023 and 2022 (in thousands):

	SIX MONTHS ENDED JUNE 30,				CHANGE
	2023		2022
Operating expenses:
Research and development	$	25,320	$	13,892	$	11,428
General and administrative	9,322		8,767		555
Total operating expenses	34,642		22,659		11,983
Loss from operations	(34,642)		(22,659)		(11,983)
Other income, net	5,251		513		4,738
Total other income, net	5,251		513		4,738
Net loss	$	(29,391)	$	(22,146)	$	(7,245)

Research and Development Expenses

The following table summarizes our research and development expenses for the six months ended June 30, 2023 and 2022 (in thousands):

	SIX MONTHS ENDED JUNE 30, 2023				CHANGE
	2023		2022
Direct research and development expenses by program:
Pan-variant KIT inhibitor (THE-630)	$	3,767	$	3,201	$	566
Fourth-generation EGFR inhibitor (THE-349)	$	7,287	2,510		4,777
Discovery programs	$	3,817	1,251		2,566
Unallocated research and development expenses:
Personnel-related (including stock-based compensation)	$	9,340	6,198		3,142
Other	$	1,109	732		377
Total research and development expenses	$	25,320	$	13,892	$	11,428

The change in research and development expenses was primarily attributable to the following:

•a $0.6 million increase in costs related to THE-630 primarily driven by increase in clinical costs. We expect a decrease in costs related to THE-630 in future periods as a result of discontinued enrollment in the ongoing phase 1/2 study and termination of development of THE-630 in GIST;

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•a $4.8 million increase in costs related to THE-349 as the program continues to advance through IND-enabling studies, including manufacturing costs of $4.0 million and an increase in clinical start-up costs of $0.8 million;

•a $2.6 million increase in costs related to progress on our discovery programs, due primarily to an increase in contract research expenses;

•a $3.1 million increase in personnel-related costs consisting of $1.1 million of stock-based compensation expense, and an increase in salary and benefit related expense of $2.0 million driven by an increase in headcount; and

•a $0.4 million increase in other unallocated research and development expenses, primarily due to an increase in facilities costs.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the six months ended June 30, 2023 and 2022 (in thousands):

	SIX MONTHS ENDED JUNE 30, 2023				CHANGE
	2023		2022
Personnel-related expenses (including stock-based compensation)	$	5,829	$	4,984	$	845
Facilities and supplies	331		290		41
Legal and professional fees	1,687		1,949		(262)
Other expenses	1,475		1,544		(69)
	$	9,322	$	8,767	$	555

The change in general and administrative expenses was primarily attributable to the following:

•a $0.8 million increase in personnel-related costs primarily due to an increase in headcount, including an increase in stock-based compensation expense of $0.9 million; and

•a $0.3 million decrease in professional fees, including legal and audit expenses.

Total Other Income, Net

Total other income, net, was $5.3 million for the six months ended June 30, 2023, and consisted primarily of interest income of $3.2 million, and amortization and accretion in marketable securities earned of $2.1 million. During the six months ended June 30, 2022, total other income, net, of $0.5 million was recorded and consisted primarily of interest income.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception, we have incurred significant losses in each period and on an aggregate basis. We have not yet commercialized any product candidates, and we do not expect to generate revenue from sales of any product candidates or from other sources for several years, if at all. As of June 30, 2023, we had cash, cash equivalents, and marketable securities of $234.2 million.

We have funded our operations primarily from sales of our preferred stock and common stock, including the net proceeds received from the underwriters’ partial exercise of their over-allotment option in our IPO.

On November 3, 2022, we filed a shelf registration statement on Form S-3 (File No. 333-268125), with the SEC, which was declared effective on November 10, 2022, or the Shelf Registration Statement, in relation to the

24

registration of common stock, preferred stock, debt securities, warrants and/or units of any combination thereof for the purposes of selling, from time to time, our common stock, debt securities or other equity securities in one or more offerings. The Shelf Registration Statement also included a prospectus for “an at-the-market” program, or ATM Program, pursuant to which we may sell from time to time up to an aggregate of $100.0 million of shares of our common stock, under a Sales Agreement with Cantor Fitzgerald & Co., as Sales Agent. We will pay to the Sales Agent cash commissions of up to 3.0 percent of the aggregate gross proceeds of sales of common stock under the Sales Agreement. To date, pursuant to the ATM Program, we have sold an aggregate of 4,816,301 shares of our common stock, resulting in gross proceeds of approximately $50.4 million before fees and offering costs.

Cash Flows

The following table provides information regarding our cash flows for each of the periods presented (in thousands):

	SIX MONTHS ENDED JUNE 30,
	2023		2022
Net cash used in operating activities	$	(28,669)	$	(15,782)
Net cash used in investing activities	(67,702)		(93,858)
Net cash provided by financing activities	49,628		70
Net decrease in cash	$	(46,743)	$	(109,570)

Net Cash Used in Operating Activities

During the six months ended June 30, 2023, net cash used in operating activities was $28.7 million, primarily due to our net loss of $29.4 million, uses of cash for amortization and accretion of marketable securities of $2.1 million, a $1.7 million change in prepaid expenses and other current assets, a $2.6 million change in accounts payable, and a $0.9 million change in accrued expenses and other current liabilities, partially offset by $6.6 million of stock-based compensation expense and a $1.4 million change in other assets.

During the six months ended June 30, 2022, net cash used in operating activities was $15.8 million, primarily due to our net loss of $22.1 million, and use of cash for our operating lease liability of $0.5 million, partially offset by $4.6 million of stock-based compensation expense, a $0.6 million change in prepaid expenses and other current assets, a $1.0 million change in other assets, a $0.5 million change in accounts payable, and a $0.5 million change in accrued expenses and other current liabilities.

Net Cash Used in Investing Activities

During the six months ended June 30, 2023, net cash used in investing activities was $67.7 million, consisting of $140.1 million in purchases of marketable securities, partially offset by $72.4 million in proceeds from sales and maturities of marketable securities.

During the six months ended June 30, 2022, net cash used in investing activities was $93.9 million, resulting primarily from our purchases of short-term and long-term marketable securities, and purchases of property and equipment of $0.4 million.

Net Cash Provided by Financing Activities

During the six months ended June 30, 2023, net cash provided by financing activities was $49.6 million, resulting primarily from proceeds received from the sale and issuance of common stock under our ATM Program.

During the six months ended June 30, 2022, net cash provided by financing activities was $0.1 million, resulting entirely from proceeds received from the issuance of common stock under our employee stock purchase plan.

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Funding Requirements

We expect our expenses to increase substantially in connection with our ongoing research and development activities, particularly as we continue research and development and advance the preclinical development of our programs, including our product candidate, THE-349, our BCR-ABL program and our next-generation KIT program. Furthermore, we expect to continue to incur additional costs associated with operating as a public company including increased costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance costs and investor and public relations costs. As a result, we expect to incur substantial operating losses and negative operating cash flows for the foreseeable future.

Based on our current operating plan, we believe that our cash, cash equivalents, and marketable securities of $234.2 million as of June 30, 2023 will be sufficient to fund our operations and capital expenses into 2026. However, we have based this estimate on assumptions that may prove to be wrong, and we could exhaust our capital resources sooner than we expect.

Because of the numerous risks and uncertainties associated with research, development and commercialization of product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on, and could increase significantly as a result of, many factors, including:

•the scope, rate of progress, success and costs of our drug discovery, preclinical development activities, laboratory testing and clinical trials for product candidates;

•the number and scope of clinical programs we decide to pursue;

•the scope and costs of manufacturing development and commercial manufacturing activities for product candidates, if approved;

•the extent to which we acquire or in-license other product candidates and technologies;

•the timing and amount of any payments required to be made under the agreements governing acquired or in-licensed product candidates or technologies;

•the cost, timing and outcome of regulatory review of product candidates;

•the cost and timing of establishing sales and marketing capabilities, if any product candidate receives marketing approval;

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

•our ability to establish and maintain collaborations on favorable terms, if at all;

•the impact of the COVID-19 pandemic or other external disruptions on our business, results of operations and financial position;

•our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of product candidates;

•the costs associated with being a public company; and

•the cost associated with commercializing product candidates, if they receive marketing approval.

A change in the outcome of any of these or other variables with respect to the development of THE-349 or any product or development candidate we may develop in the future could significantly change the costs and timing associated with our development plans. Further, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs

26

through a combination of equity offerings, debt financings or other capital sources, which could include collaborations, strategic alliances or licensing arrangements. We currently have no credit facility or committed sources of capital. Adequate additional funds may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our existing stockholders may be diluted, and the terms of these securities may include liquidation or other preferences that could adversely affect the rights of such stockholders. Debt financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business.

If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research program or product candidates, or grant licenses on terms that may not be favorable to us. 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 or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Contractual Obligations

There have been no significant changes in our contractual obligations and outstanding indebtedness as disclosed in our Annual Report. Refer to Note 8 and Note 9 in our condensed consolidated financial statements included elsewhere in this Quarterly Report for further details.

Critical Accounting Policies and Significant Judgments and Estimates

This management’s discussion and analysis is based on our condensed consolidated financial statements, which have been prepared in accordance with US generally accepted accounting principles. The preparation of these condensed consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses during the reported periods. We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates, if any, will be reflected in the condensed consolidated financial statements prospectively from the date of change in estimates. There have been no significant changes to our critical accounting policies from those described in our Annual Report.

Emerging Growth Company Status

In April 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an EGC, may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period for new or revised accounting standards during the period in which we remain an EGC; however, we may adopt certain new or revised accounting standards early.

We will remain an EGC until the earliest to occur of: (1) the last day of the fiscal year in which we have more than $1.235 billion in annual revenue; (2) the date we qualify as a “large accelerated filer,” with at least $700.0 million of equity securities held by non-affiliates; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) December 31, 2026, the last day of the fiscal year ending after the fifth anniversary of our IPO.

We are also a “smaller reporting company” as defined in the Securities Exchange Act of 1934, as amended, or the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an EGC. We may take advantage of certain of the scaled disclosures available to smaller reporting companies until the fiscal year following the determination that our common stock held by non-affiliates is more than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenues are more than $100.0

27

million during the most recently completed fiscal year and our common stock held by non-affiliates is more than $700.0 million measured on the last business day of our second fiscal quarter.

Recently Issued and Adopted Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report.

Item 3. Quantitative and Qualitative Disclosures About Market Risks

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

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act 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 our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2023. Our disclosure controls and procedures are designed to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures, and is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at a 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 15(d)-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We are from time to time subject to litigation and other legal proceedings. We believe that there are no pending lawsuits or claims that, individually or in the aggregate, may have a material effect on our business, financial condition or operating results.

Item 1A. Risk Factors

As of the date of this filing, there have been no material changes to the risk factors included in our Annual Report, except as set forth below.

Our portfolio of marketable securities or bank deposits may be subject to market, interest and credit risk that may reduce their value and adversely affect our business, results of operations and financial condition.

The value of our marketable securities may decline due to increases in interest rates, downgrades of the bonds and other securities included in our commercial money market account portfolio and instability in the global financial markets that reduces the liquidity of securities included in our portfolio. In addition, disruptions in the banking industry, including the closure of Silicon Valley Bank, or SVB, and Signature Bank and the appointment of the Federal Deposit Insurance Corporation, or the FDIC, as receiver, created bank-specific and broader financial institution liquidity risk and concerns. Although the Department of the Treasury, the Federal Reserve, and the FDIC jointly released a statement that depositors at SVB and Signature Bank would have access to their funds, even those in excess of the standard FDIC insurance limits, under a systemic risk exception, future adverse developments with respect to specific financial institutions or the broader financial services industry may impair our ability to access capital needed to support near-term working capital needs, whether from our existing marketable security and deposit accounts and credit facilities or otherwise, and may lead to market-wide liquidity shortages and create additional market and economic uncertainty. Since then, additional financial institutions have experienced similar failures and have been placed into receivership and it is possible that additional banks and financial institutions will face similar difficulty in the future. There is no guarantee that depositors will get access to funds in excess of standard FDIC insurance limits in the event that other banks or financial institutions fail, are swept into receivership or otherwise. Furthermore, a possible recession, rising inflation, and the ongoing COVID-19 pandemic has and may continue to adversely affect the financial markets in some or all countries worldwide. Each of these events may cause us to record charges to reduce the carrying value of our marketable securities portfolio or sell marketable securities for less than our acquisition cost. Although we attempt to mitigate these risks through diversification of our marketable securities, the value of our marketable securities may nevertheless decline, and our ability to fund our near-term and long-term working capital needs to support our business and clinical development plans may be adversely affected. In addition, any decline in available funding or access to our cash and liquidity resources could also result in breaches of our financial and/or contractual obligations or result in violations of federal or state wage and hour laws.

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

Unregistered Sale of Securities

None.

Use of Proceeds from Initial Public Offering

On October 12, 2021, we closed our initial public offering, or the IPO, in which we sold 10,000,200 shares of our common stock at a public offering price of $16.00 per share. On October 25, 2021, the Underwriters (as defined below) exercised their option to purchase an additional 1,171,990 shares of our common stock at the public offering price of $16.00 per share. After deducting underwriting discounts, commissions and offering expenses, the aggregate net offering proceeds raised in the IPO was approximately $162.5 million. All of the shares issued and sold in the IPO were registered under the Securities Act, pursuant to a Registration Statement on Form S-1 (File No. 333-259549), which was declared effective by the SEC on October 6, 2021, and a Registration Statement on Form S-1 MEF (File No. 333-260102) filed pursuant to Rule 462(b) of the Securities Act.

29

Jefferies LLC, SVB Leerink LLC and Cantor Fitzgerald & Co. acted as joint book-running managers, and Wedbush Securities Inc. acted as lead manager for the offering, or collectively, the Underwriters.

There has been no material change in the planned use of proceeds from the IPO from that described in the final prospectus filed with the SEC on October 7, 2021.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

		Incorporated by Reference
No.	Description of Exhibit	Form	File No.	Referenced Exhibit	Filing Date	Filed Herewith
3.1	Amended and Restated Certificate of Incorporation of Registrant.	10-Q	001-40869	3.1	August 11, 2022
3.2	Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Registrant.					X
3.3	Amended and Restated Bylaws of Registrant.	10-Q	001-40869	3.2	August 11, 2022
4.1	Amended and Restated Investors’ Rights Agreement, dated January 22, 2021, by and among the Registrant and the other parties thereto.	S-1	333-259549	4.2	September 15, 2021
10.1*	Amended and Restated Outside Director Compensation Policy.					X
31.1	Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
31.2	Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
32.1**	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
32.2**	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
101.INS	Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.					X
101.SCH	Inline XBRL Taxonomy Extension Schema Document.					X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.					X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.					X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.					X

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101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.	X
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).	X
*	Management Contract or compensatory plan or arrangement.
**	The certifications attached as Exhibit 32.1 and 32.2 that accompany this Quarterly Report are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Theseus Pharmaceuticals, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report, irrespective of any general incorporation language contained in such filing.

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SIGNATURES

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

	THESEUS PHARMACEUTICALS, INC.
Date: August 10, 2023	By:	/s/ Timothy P. Clackson, Ph.D.
		Name: Timothy P. Clackson, Ph.D.
		Title: President and Chief Executive Officer (Principal Executive Officer)
Date: August 10, 2023	By:	/s/ Bradford D. Dahms
		Name: Bradford D. Dahms
		Title: Chief Financial Officer (Principal Financial and Accounting Officer)

33

EX-3.2

Exhibit 3.2

CERTIFICATE OF AMENDMENT

TO THE

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

THESEUS PHARMACEUTICALS, INC.

(Pursuant to Section 242 of the

General Corporation Law of the State of Delaware

Theseus Pharmaceuticals, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:

1.The Corporation was originally incorporated pursuant to the General Corporation Law of the State of Delaware (the “DGCL”) on December 29, 2017. An Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on October 12, 2021 (the “Charter”). Pursuant to Section 242 of the DGCL, this Certificate of Amendment (this “Amendment”) amends certain provisions of the Charter.

2.This Amendment has been approved and duly adopted by the Corporation’s Board of Directors and stockholders in accordance with the provisions of Section 242 of the DGCL.

3.The Charter is hereby amended by adding a new Article FOURTEENTH to read in its entirety as follows:

“FOURTEENTH. To the fullest extent permitted by the DGCL as it now exists and as it may hereafter be amended, no officer of the Corporation shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as an officer of the Corporation, except for liability (a) for any breach of the officer’s duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) for any transaction from which the officer derived an improper personal benefit, or (d) arising from any claim brought by or in the right of the Corporation. Without limiting the effect of the preceding sentence, if the DGCL is hereafter amended to authorize the further elimination or limitation of the liability of an officer, then the liability of an officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. For purpose of this Article FOURTEENTH, “officer” shall mean an individual who has been duly appointed as an officer of the Corporation and who, at the time of an act or omission as to which liability is asserted, is deemed to have consented to service of process to the registered agent of the Corporation as contemplated by 10 Del. C. § 3114(b). No amendment, repeal or modification of this Article FOURTEENTH (including due to the adoption of any provision of this Certificate of Incorporation inconsistent with this Article FOURTEENTH) shall apply to or have any adverse effect on any right or protection of, or any limitation of the liability of an officer of the Corporation existing at the time of such amendment, repeal or modification with respect to acts or omissions occurring prior to such amendment, repeal or modification.”

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, this Amendment, having been duly adopted in accordance with Section 242 of the DGCL, has been duly executed by a duly authorized officer of the Corporation on this 13th day of June, 2023.

THESEUS PHARMACEUTICALS, INC.

By: /s/ Timothy P. Clackson, Ph.D.

Name: Timothy P. Clackson, Ph.D.

Title: President and Chief Executive Officer

EX-10.1

Exhibit 10.1

THESEUS PHARMACEUTICALS, INC.

AMENDED AND RESTATED

OUTSIDE DIRECTOR COMPENSATION POLICY

Adopted and approved by the Board of Directors on March 22, 2023

Effective on June 9, 2023 (the “Effective Date”)

Theseus Pharmaceuticals, Inc. (the “Company”) believes that providing cash and equity compensation to its members of the Board of Directors (the “Board,” and members of the Board, the “Directors”) represents an effective tool to attract, retain and reward Directors who are not employees of the Company (the “Outside Directors”). This Amended and Restated Outside Director Compensation Policy (the “Policy”) is intended to formalize the Company’s policy regarding the compensation to its Outside Directors. Unless otherwise defined herein, capitalized terms used in this Policy will have the meaning given to such terms in the Company’s 2021 Equity Incentive Plan (the “Plan”), or if the Plan is no longer in place, the meaning given to such terms or any similar terms in the equity plan then in place. Each Outside Director will be solely responsible for any tax obligations incurred by such Outside Director as a result of the equity and cash payments such Outside Director receives under this Policy.

1.CASH COMPENSATION

Annual Cash Retainer

Each Outside Director will be paid an annual cash retainer of $35,000. There are no per‑meeting attendance fees for attending Board meetings. This cash compensation will be paid quarterly in arrears on a prorated basis.

Committee Annual Cash Retainer

Effective as of the Effective Date, each Outside Director who serves as the chair of the Board, the lead independent Outside Director, or the chair or a member of a committee of the Board listed below will be eligible to earn additional annual cash fees (paid quarterly in arrears on a prorated basis) as follows:

Chair of the Board	$30,000
Lead Independent Director	$15,000
Chair of Audit Committee:	$15,000
Member of Audit Committee:	$7,500
Chair of Compensation Committee:	$10,000
Member of Compensation Committee:	$5,000
Chair of Nominating and Governance Committee:	$8,000
Member of Nominating and Governance Committee:	$4,000

For clarity, each Outside Director who serves as the chair of a committee shall receive only the additional annual cash fee as the chair of the committee, and not the additional annual cash fee as a member of the committee.

2.EQUITY COMPENSATION

Outside Directors will be eligible to receive all types of Awards (except Incentive Stock Options) under the Plan (or the applicable equity plan in place at the time of grant), including discretionary Awards not covered under this Policy. All grants of Awards to Outside Directors pursuant to Section 2 of this Policy will be automatic and nondiscretionary, except as otherwise provided herein, and will be made in accordance with the following provisions:

(a) No Discretion. No person will have any discretion to select which Outside Directors will be granted any Awards under this Policy or to determine the number of Common Shares to be covered by such Awards.

(b) Initial Award. Each Outside Director joining the Board after the Effective Date shall be automatically granted an award of Options covering 52,000 Common Shares (the “Initial Award”) upon first joining the Board (such date, the “Start Date”). Subject to Section 3 of this Policy, the Initial Award will vest monthly over 36 months (on the same day of the month as the Start Date), subject to the Outside Director continuing to be a Service Provider through the applicable vesting date.

For the avoidance of doubt, if an individual was a member of the Board and also an employee, becoming an Outside Director due to termination of employment will not entitle the Outside Director to an Initial Award under Section 2(b). Such an Outside Director would receive an Annual Award under Section 2(c).

(c) Annual Award. On the date of each annual meeting of the Company’s stockholders following the Effective Date (each, an “Annual Meeting”), each Outside Director will be automatically granted an award of Options covering 19,500 Common Shares and an award of 3,250 Restricted Stock Units (an “Annual Award”). Subject to Section 3 of this Policy, each Annual Award will vest on the earlier of (i) the one-year anniversary of the date the Annual Award is granted or (ii) the day prior to the date of the Annual Meeting next following the date the Annual Award is granted, in each case, subject to the Outside Director continuing to be a Service Provider through the applicable vesting date.

Notwithstanding the foregoing, an Outside Director who has been granted an Initial Award will not be granted an Annual Award in the same calendar year.

(d) Adjustments. In the event of a subdivision of the outstanding shares, a declaration of a dividend payable in shares or a combination or consolidation of the outstanding shares (by reclassification or otherwise) into a lesser number of shares, a corresponding adjustment will automatically be made in the share numbers described above.

3.CHANGE IN CONTROL

In the event of a Change in Control, each Outside Director’s outstanding Company equity awards will accelerate and vest.

4.TRAVEL EXPENSES

Each Outside Director’s reasonable, customary and documented travel expenses to Board or Board committee meetings will be reimbursed by the Company.

5.ADDITIONAL PROVISIONS

All provisions of the Plan not inconsistent with this Policy will apply to Awards granted to Outside Directors.

6.SECTION 409A

In no event will cash compensation or expense reimbursement payments under this Policy be paid after the later of (i) 15th day of the 3rd month following the end of the Company’s fiscal year in which the compensation is earned or expenses are incurred, as applicable, or (ii) 15th day of the 3rd month following the end of the calendar year in which the compensation is earned or expenses are incurred, as applicable, in compliance with the “short-term deferral” exception under Section 409A of the Internal Revenue Code of 1986, as amended, and the final regulations and guidance thereunder, as may be amended from time to time (together, “Section 409A”). It is the intent of this Policy that this Policy and all payments hereunder be exempt from or otherwise comply with the requirements of Section 409A so that none of the compensation to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities or ambiguous terms herein will be interpreted to be so exempt or comply. In no event will the Company reimburse an Outside Director for any taxes imposed or other costs incurred as a result of Section 409A.

7.REVISIONS

The Board may amend, alter, suspend or terminate this Policy at any time and for any reason. No amendment, alteration, suspension or termination of this Policy will materially impair the rights of an Outside Director with respect to compensation that already has been paid or awarded, unless otherwise mutually agreed between the Outside Director and the Company. Termination of this Policy will not affect the Board’s or the Compensation Committee’s ability to exercise the powers granted to it under the Plan with respect to Awards granted under the Plan pursuant to this Policy prior to the date of such termination.

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, Timothy P. Clackson, certify that:

1.I have reviewed this Quarterly Report of Theseus Pharmaceuticals, 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(s) 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 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(s) 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/ Timothy P. Clackson, Ph.D.
		Name: Timothy P. Clackson, Ph.D.
		Title: President 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, Bradford D. Dahms, certify that:

1.I have reviewed this Quarterly Report of Theseus Pharmaceuticals, 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(s) 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 15d-15(f)) for the registrant and have:

(1)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;

(2)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;

(3)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

(4)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(s) 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):

(1)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

(2)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/ Bradford D. Dahms
		Name: Bradford D. Dahms
		Title: Chief Financial Officer (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 of Theseus Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

Date: August 10, 2023	By:	/s/ Timothy P. Clackson, Ph.D.
		Name: Timothy P. Clackson, Ph.D.
		Title: President and Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

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 of Theseus Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

Date: August 10, 2023	By:	/s/ Bradford D. Dahms
		Name: Bradford D. Dahms
		Title: Chief Financial Officer (Principal Financial and Accounting Officer)

XML

Cover - shares	6 Months Ended
	Jun. 30, 2023	Aug. 04, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-40869
Entity Registrant Name	THESEUS PHARMACEUTICALS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	83-0712806
Entity Address, Address Line One	314 Main Street
Entity Address, City or Town	Cambridge
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02142
City Area Code	857
Local Phone Number	400-9491
Title of 12(b) Security	Common Stock, $0.0001 par value per share
Trading Symbol	THRX
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		43,603,369
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Entity Central Index Key	0001745020
Amendment Flag	false
Document Fiscal Period Focus	Q2

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 47,465	$ 94,605
Short-term marketable securities	160,740	103,374
Prepaid expenses and other current assets	5,548	4,137
Total current assets	213,753	202,116
Property and equipment, net	437	416
Operating lease right-of-use asset	4,060	4,334
Long-term marketable securities	26,027	13,817
Other assets	794	1,764
Total assets	245,071	222,447
Current liabilities:
Accounts payable	2,415	4,973
Accrued expenses and other current liabilities	4,513	5,414
Operating lease liability, current portion	754	743
Total current liabilities	7,682	11,130
Operating lease liability, net of current portion	3,014	3,236
Restricted stock liability, net of current portion	292	466
Total liabilities	10,988	14,832
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 50,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 0 shares issued and outstanding as of June 30, 2023 and December 31, 2022	0	0
Common stock, $0.0001 par value; 500,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 43,603,369 and 38,734,446 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	4	4
Additional paid-in capital	376,217	320,183
Accumulated deficit	(141,577)	(112,186)
Accumulated other comprehensive loss	(561)	(386)
Total stockholders’ equity	234,083	207,615
Total liabilities and stockholders’ equity	$ 245,071	$ 222,447

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock, par value (in usd per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	50,000,000	50,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in usd per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	43,603,369	38,734,446
Common stock, shares outstanding (in shares)	43,603,369	38,734,446

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss - 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	$ 12,919	$ 7,344	$ 25,320	$ 13,892
General and administrative	4,668	4,736	9,322	8,767
Total operating expenses	17,587	12,080	34,642	22,659
Loss from operations	(17,587)	(12,080)	(34,642)	(22,659)
Other income, net	2,782	431	5,251	513
Total other income, net	2,782	431	5,251	513
Net loss	(14,805)	(11,649)	(29,391)	(22,146)
Net loss attributable to common stockholders—basic	(14,805)	(11,649)	(29,391)	(22,146)
Net loss attributable to common stockholders—diluted	$ (14,805)	$ (11,649)	$ (29,391)	$ (22,146)
Weighted-average common stock outstanding—basic (in shares)	43,736,275	38,415,379	43,061,113	38,332,605
Weighted-average common stock outstanding—diluted (in shares)	43,736,275	38,415,379	43,061,113	38,332,605
Net loss per share attributable to common stockholders—basic (in usd per share)	$ (0.34)	$ (0.30)	$ (0.68)	$ (0.58)
Net loss per share attributable to common stockholders—diluted (in shares)	$ (0.34)	$ (0.30)	$ (0.68)	$ (0.58)
Comprehensive loss:
Net loss	$ (14,805)	$ (11,649)	$ (29,391)	$ (22,146)
Unrealized gain (loss) on marketable securities	(402)	(203)	(175)	(332)
Total comprehensive loss	$ (15,207)	$ (11,852)	$ (29,566)	$ (22,478)

XML

Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	ADDITIONAL PAID-IN CAPITAL	ACCUMULATED OTHER COMPREHENSIVE LOSS	ACCUMULATED DEFICIT
Beginning balance (in shares) at Dec. 31, 2021		37,872,604
Beginning balance at Dec. 31, 2021	$ 246,434	$ 4	$ 308,008	$ 0	$ (61,578)
Increase (Decrease) in Stockholders' Equity
Vesting of restricted stock (in shares)		85,431
Stock-based compensation	2,044		2,044
Unrealized gain (loss) on marketable securities	(129)			(129)
Net loss	(10,497)				(10,497)
Ending balance (in shares) at Mar. 31, 2022		37,958,035
Ending balance at Mar. 31, 2022	237,852	$ 4	310,052	(129)	(72,075)
Beginning balance (in shares) at Dec. 31, 2021		37,872,604
Beginning balance at Dec. 31, 2021	246,434	$ 4	308,008	0	(61,578)
Increase (Decrease) in Stockholders' Equity
Unrealized gain (loss) on marketable securities	(332)
Net loss	(22,146)
Ending balance (in shares) at Jun. 30, 2022		38,155,141
Ending balance at Jun. 30, 2022	228,995	$ 4	313,047	(332)	(83,724)
Beginning balance (in shares) at Mar. 31, 2022		37,958,035
Beginning balance at Mar. 31, 2022	237,852	$ 4	310,052	(129)	(72,075)
Increase (Decrease) in Stockholders' Equity
Vesting of restricted stock (in shares)		85,431
Stock-based compensation	2,518		2,518
Vesting of early exercised options (in shares)		100,895
Vesting of early exercised options	407		407
Issuance of common stock under employee stock purchase plan (in shares)		10,780
Issuance of common stock under employee stock purchase plan	70		70
Unrealized gain (loss) on marketable securities	(203)			(203)
Net loss	(11,649)				(11,649)
Ending balance (in shares) at Jun. 30, 2022		38,155,141
Ending balance at Jun. 30, 2022	228,995	$ 4	313,047	(332)	(83,724)
Beginning balance (in shares) at Dec. 31, 2022		38,422,621
Beginning balance at Dec. 31, 2022	207,615	$ 4	320,183	(386)	(112,186)
Increase (Decrease) in Stockholders' Equity
Vesting of restricted stock (in shares)		66,015
Stock-based compensation	2,993		2,993
Vesting of early exercised options (in shares)		21,620
Vesting of early exercised options	87		87
Issuance of common stock upon exercise of stock options (in shares)		17,880
Issuance of common stock upon exercise of stock options	48		48
Vesting of restricted stock units, less shares withheld and retired to satisfy tax obligations (in shares)		7,907
Issuance of common stock (in shares)		4,816,301
Issuance of common stock, net of issuance costs	49,104		49,104
Unrealized gain (loss) on marketable securities	227			227
Net loss	(14,586)				(14,586)
Ending balance (in shares) at Mar. 31, 2023		43,352,344
Ending balance at Mar. 31, 2023	245,488	$ 4	372,415	(159)	(126,772)
Beginning balance (in shares) at Dec. 31, 2022		38,422,621
Beginning balance at Dec. 31, 2022	$ 207,615	$ 4	320,183	(386)	(112,186)
Increase (Decrease) in Stockholders' Equity
Issuance of common stock upon exercise of stock options (in shares)	17,880
Unrealized gain (loss) on marketable securities	$ (175)
Net loss	(29,391)
Ending balance (in shares) at Jun. 30, 2023		43,444,817
Ending balance at Jun. 30, 2023	234,083	$ 4	376,217	(561)	(141,577)
Beginning balance (in shares) at Mar. 31, 2023		43,352,344
Beginning balance at Mar. 31, 2023	245,488	$ 4	372,415	(159)	(126,772)
Increase (Decrease) in Stockholders' Equity
Vesting of restricted stock (in shares)		44,017
Stock-based compensation	3,573		3,573
Vesting of early exercised options (in shares)		21,621
Vesting of early exercised options	87		87
Vesting of restricted stock units, less shares withheld and retired to satisfy tax obligations (in shares)		1,969
Issuance of common stock under employee stock purchase plan (in shares)		24,866
Issuance of common stock under employee stock purchase plan	142		142
Unrealized gain (loss) on marketable securities	(402)			(402)
Net loss	(14,805)				(14,805)
Ending balance (in shares) at Jun. 30, 2023		43,444,817
Ending balance at Jun. 30, 2023	$ 234,083	$ 4	$ 376,217	$ (561)	$ (141,577)

XML

Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) $ / shares
Statement of Stockholders' Equity [Abstract]
Common stock, par value (in usd per share) | $ / shares	$ 0.0001
Stock issuance costs | $	$ 1,343

XML

Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net loss	$ (29,391,000)	$ (22,146,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	40,862	12,040
Stock-based compensation expense	6,566,000	4,562,000
Amortization and accretion of marketable securities	(2,055,000)	(55,000)
Non-cash interest income	(5,000)	(311,000)
Non-cash operating lease expense	273,000	125,000
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(1,746,000)	586,000
Other assets	1,367,000	960,000
Accounts payable	(2,608,000)	504,000
Accrued expenses and other current liabilities	(901,000)	486,000
Operating lease liability	(210,000)	(505,000)
Net cash used in operating activities	(28,669,000)	(15,782,000)
Cash flows from investing activities:
Purchases of short-term and long-term marketable securities	(140,060,000)	(93,477,000)
Sales and maturities of short-term and long-term marketable securities	72,369,000	0
Purchases of property and equipment	(11,000)	(381,000)
Net cash used in investing activities	(67,702,000)	(93,858,000)
Cash flows from financing activities:
Proceeds from issuance of common stock through ATM sales, net of offering costs	49,438,000	0
Proceeds from exercise of stock options	48,000	0
Proceeds from issuance of common stock under employee stock purchase plan	142,000	70,000
Net cash provided by financing activities	49,628,000	70,000
Net increase (decrease) in cash, cash equivalents and restricted cash	(46,743,000)	(109,570,000)
Cash, cash equivalents and restricted cash at beginning of year	94,984,000	245,040,000
Cash, cash equivalents and restricted cash at end of period	48,241,000	135,470,000
Supplemental disclosure of cash flows:
Vesting of early exercised options	174,000	407,000
Obtaining a right-of-use asset in exchange for an operating lease liability	0	4,721,000
Purchases of property and equipment in accounts payable	$ 50,000	$ 0

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Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022
Statement of Cash Flows [Abstract]
Cash and cash equivalents	$ 47,465	$ 135,091
Restricted cash (included in other assets)	776	379
Total cash, cash equivalents, and restricted cash	$ 48,241	$ 135,470

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Nature of the Business

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of the Business

Nature of the Business

Theseus Pharmaceuticals, Inc. (“Theseus” or the “Company”) is a clinical-stage biopharmaceutical company focused on improving the lives of cancer patients through the discovery, development and commercialization of transformative targeted therapies. The Company was incorporated in December 2017 under the laws of the State of Delaware, and its principal offices are in Cambridge, Massachusetts.

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative US GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The accompanying condensed consolidated financial statements and footnotes to the condensed consolidated financial statements have been prepared on the same basis as the most recently audited annual consolidated financial statements and, in the opinion of management, reflect all normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of June 30, 2023 and the results of its operations and its cash flows for the interim periods presented. The results for the three and six months ended June 30, 2023 are not necessarily indicative of results to be expected for the year ending December 31, 2023, any other interim periods, or any future year or period. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2022.

Liquidity

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. The Company’s product candidates and development programs will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Because of the numerous risks and uncertainties associated with product development, the Company is unable to predict the timing or amount of increased expenses, or when or if the Company will be able to achieve or maintain profitability. Even if the Company is able to generate revenue from product sales, the Company may not become profitable. If the Company fails to become profitable or is unable to sustain profitability on a continuing basis, then the Company may be unable to continue its operations at planned levels and be forced to reduce or terminate its operations. The Company expects to incur substantial operating losses and negative cash flows from operations for the foreseeable future.

In accordance with ASC 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. As of June 30, 2023, the Company had an accumulated deficit of $141.6 million. During the six months ended June 30, 2023, the Company incurred a loss of $29.4 million and utilized $28.7 million of cash in operations. The Company expects to continue to generate operating losses for the foreseeable future. The Company expects that its cash, cash equivalents, and marketable securities of $234.2 million at June 30, 2023 will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next twelve months from issuance of the accompanying condensed consolidated financial statements.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

The significant accounting policies and estimates used in the preparation of the accompanying condensed consolidated financial statements are described in the Company’s audited consolidated financial statements, which were included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 9, 2023 (“Annual Report”). There have been no material changes in the Company’s significant accounting policies during the six months ended June 30, 2023, except as noted below.

Unaudited Interim Financial Information

The accompanying condensed consolidated financial statements and the accompanying notes as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022 are unaudited. The condensed consolidated interim financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of June 30, 2023 and the results of its operations for the three and six months ended June 30, 2023 and 2022 and its cash flows for the six months ended June 30, 2023 and 2022.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Estimates and judgments are based on historical information and other market-specific or various relevant assumptions, including in certain circumstances, future projections, that management believes to be reasonable under the circumstances. Actual results could differ materially from estimates. Significant estimates and assumptions are used for, but not limited to, the accruals for research and development expenses.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents, and marketable securities. Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality and have not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Such deposits have and will continue to exceed federally insured limits. The Company has not experienced any losses on its cash deposits. The Company’s short-term and long-term marketable securities are invested in high grade securities with limited concentration in any one issuer, and as a result, the Company believes represent minimal credit risk.

Recently Issued and Adopted Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its condensed consolidated financial statements and disclosures.

In June 2016, the FASB issued ASU No. 2016‑13, Financial Instruments—Credit Losses (Topic 326)—Measurement of Credit Losses on Financial Instruments, which has been subsequently amended (“ASU 2016‑13”). This updated accounting guidance significantly changes the impairment model for most financial assets and certain other instruments. ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on trade receivables, loans and other financial instruments. This update is effective for the Company’s fiscal year beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted this new standard on January 1, 2023, and the adoption had no material impact on the Company's consolidated financial statements.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The carrying values of other current assets, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of these instruments. The Company’s marketable securities, which may include both short-term and long-term marketable securities consisting of high-quality, marketable debt instruments of corporations are measured at fair value in accordance with the fair value hierarchy.

Assets measured at fair value on a recurring basis are as follows (in thousands):

	FAIR VALUE MEASUREMENTS AT JUNE 30,2023
	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
Cash equivalents:
Money market funds	$	44,155	$	—	$	—	$	44,155
Marketable securities:
Commercial paper	—		78,655		—		78,655
Corporate debt securities	—		26,154		—		26,154
Asset-backed securities	—		24,625		—		24,625
Government securities	25,045		32,288		—		57,333
Total financial assets	$	69,200	$	161,722	$	—	$	230,922

	FAIR VALUE MEASUREMENTS AT DECEMBER 31,2022
	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
Cash equivalents:
Money market funds	$	6,846	$	—	$	—	$	6,846
Commercial paper	—		3,989		—		3,989
Marketable securities:
Commercial paper	—		25,187		—		25,187
Corporate debt securities	—		45,673		—		45,673
Asset-backed securities	—		13,574		—		13,574
Government securities	—		32,757		—		32,757
Total financial assets	$	6,846	$	121,180	$	—	$	128,026

During the six months ended June 30, 2023 and the year ended December 31, 2022, there were no transfers between fair value levels.

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Marketable Securities

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Marketable Securities

Marketable Securities

The Company’s investment policy defines allowable investments and establishes guidelines relating to credit quality, diversification, and maturities of its marketable securities to preserve principal and maintain liquidity. In accordance with the Company’s investment policy, it has invested funds in marketable securities as of June 30, 2023 and December 31, 2022. The Company’s marketable securities are classified as available-for-sale investments.

The cost, gross unrealized holding gains, gross unrealized holding losses and fair value of marketable securities by types and classes of security consisted of the following (in thousands):

	JUNE 30, 2023
	MATURITY IN YEARS	AMORTIZED COST		UNREALIZED GAIN		UNREALIZED LOSS		FAIR VALUE
Commercial paper	less than 1	$	78,926	$	1	$	(272)	$	78,655
Corporate debt securities	less than 1	26,225		3		(74)		26,154
Asset-backed securities	less than 1	979		—		(2)		977
Government securities	less than 1	55,062		13		(121)		54,954
Short-term marketable securities		$	161,192	$	17	$	(469)	$	160,740
Asset-backed securities	1 - 2	23,750		14		(116)		23,648
Government securities	1 - 2	2,386		—		(7)		2,379
Long-term marketable securities		$	26,136	$	14	$	(123)	$	26,027

	DECEMBER 31, 2022
	MATURITY IN YEARS	AMORTIZED COST		UNREALIZED GAIN		UNREALIZED LOSS		FAIR VALUE
Commercial paper	less than 1	$	25,187	$	—	$	—	$	25,187
Corporate debt securities	less than 1	39,071		9		(185)		38,895
Asset-backed securities	less than 1	8,555		2		(10)		8,547
Government securities	less than 1	30,892		8		(155)		30,745
Short-term marketable securities		$	103,705	$	19	$	(350)	$	103,374
Corporate debt securities	1 - 2	6,783		—		(5)		6,778
Asset-backed securities	1 - 2	5,074		—		(47)		5,027
Government securities	1 - 2	2,015		—		(3)		2,012
Long-term marketable securities		$	13,872	$	—	$	(55)	$	13,817

The Company has recorded marketable securities at fair value in its condensed consolidated balance sheets and unrealized gains and losses are reported as a component of accumulated other comprehensive income (loss). The amount of realized gains and losses reclassified into earnings are based on the specific identification of the securities sold or securities that reached maturity date. The amount of realized gains and losses reclassified into earnings have not been material to the Company’s condensed consolidated statements of operations. The Company generally does not intend to sell any marketable securities prior to recovery of their amortized cost basis for any marketable securities in an unrealized loss position.

The Company has determined that there were no material declines in fair value of its marketable securities due to credit-related factors as of June 30, 2023 and December 31, 2022.

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Property and Equipment, net

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment, net

Property and Equipment, net

Property and equipment, net consisted of the following as of June 30, 2023 and as of December 31, 2022 (in thousands):

	JUNE 30, 2023		DECEMBER 31, 2022
Computer equipment	$	50	$	50
Furniture and fixtures	391		341
Office equipment	87		76
Property and equipment	528		467
Less: accumulated depreciation	(91)		(51)
Property and equipment, net	$	437	$	416

Depreciation expense for the six months ended June 30, 2023 and 2022 was $40,862 and $12,040, respectively. There were no impairments recorded to date.

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Accrued Expenses

6 Months Ended

Jun. 30, 2023

Payables and Accruals [Abstract]

Accrued Expenses

Accrued Expenses

Accrued expenses consisted of the following as of June 30, 2023 and as of December 31, 2022 (in thousands):

	JUNE 30, 2023		DECEMBER 31, 2022
Accrued research and development	$	1,798	$	1,498
Accrued legal	81		164
Accrued compensation and benefits	1,888		3,130
Accrued other	397		273
Restricted stock liability, current	349		349
Total accrued expenses and other current liabilities	$	4,513	$	5,414

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License Agreement	6 Months Ended
	Jun. 30, 2023
License Agreement
License Agreement	License AgreementDuring the six months ended June 30, 2023, there were no changes to the Company’s license agreement with ARIAD Pharmaceuticals, Inc. (“ARIAD”). For a summary of the terms of the license agreement, including the Company’s accounting treatment, please refer to Note 7 to the Company’s audited consolidated financial statements for the year ended December 31, 2022, included in the Company’s Annual Report.

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Leases

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Leases

Leases

The following table presents future lease payments under the terms of the Company’s operating leases as of June 30, 2023, including a reconciliation to the present value of operating lease liabilities recognized in the condensed consolidated balance sheet (in thousands):

Fiscal Year	Operating Lease
Remainder of 2023	$	390
2024	797
2025	821
2026	846
Thereafter	1,995
Total future minimum lease payments	4,849
Less: imputed interest	(1,081)
Present value of lease liabilities	$	3,768

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal Proceedings

The Company may from time to time be party to litigation arising in the ordinary course of business. The Company was not subject to any material legal proceedings during the six months ended June 30, 2023, and no material legal proceedings are currently pending or, to the best of the Company’s knowledge, threatened.

Indemnification Agreements

The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to the indemnification agreements, the Company agrees to indemnify, hold harmless, and to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s business partners, in connection with any US patent or any copyright or other intellectual property infringement claim by any third-party with respect to the Company’s products. The term of these indemnification agreements is generally perpetual any time after execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements.

401(k) Plan

The Company maintains a defined-contribution plan under Section 401(k) of the Internal Revenue Code of 1986 (the “401(k) Plan”). The 401(k) Plan covers all employees who meet defined minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Matching contributions to the 401(k) Plan may be made at the discretion of management. The Company contributed $0.3 million to the 401(k) Plan during the six months ended June 30, 2023. There was $0.4 million in employer contributions made to the 401(k) Plan during the year ended December 31, 2022.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Preferred Stock

The Company was authorized to issue up to 50,000,000 shares of preferred stock, $0.0001 par value per share, as of June 30, 2023 and December 31, 2022, respectively. There were no shares of preferred stock outstanding as of June 30, 2023 and December 31, 2022, respectively.

Common Stock

The Company was authorized to issue 500,000,000 shares of common stock, $0.0001 par value per share, as of June 30, 2023 and as of December 31, 2022, respectively. The voting, dividend and liquidation rights of the holders of the Company’s common stock are subject to and qualified by the rights, powers and preference of the holders of any series of preferred stock.

Voting Rights

Each share of common stock entitles the holder to one vote on all matters submitted to the stockholders for a vote.

Dividends

Subject to preferences that may apply to shares of preferred stock outstanding at the time, the holders of outstanding shares of the Company’s common stock are entitled to receive dividends out of funds legally available if and when the Board, in its discretion, determines to issue dividends. As of June 30, 2023, no cash dividends have been declared or paid.

Liquidation Rights

Upon the Company’s dissolution, liquidation, or winding-up, the assets legally available for distribution to stockholders are distributable ratably among holders of the Company’s common stock, subject to prior satisfaction of all outstanding debt and liabilities, and the preferential rights and payment of liquidation preferences, if any, on any outstanding shares of preferred stock.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation

Equity Incentive Plans

In September 2021, the Company adopted the Theseus Pharmaceuticals, Inc. 2021 Equity Incentive Plan (the “2021 Plan”), which replaced the 2018 Stock Incentive Plan (the “2018 Plan”) and allows for the issuance of stock options, restricted stock awards, restricted stock units (“RSUs”), and other types of equity awards. No further awards were made under the 2018 Plan as of the effective date of the 2021 Plan. Any options or awards outstanding under the 2018 Plan are governed by their existing terms. On the first day of each fiscal year of the Company during the term of the Plan, commencing on January 1, 2023 and ending on (and including) January 1, 2031, the aggregate number of Common Shares that may be issued under the Plan shall automatically increase by a number equal to the lesser of (a) five percent (5%) of the total number of Common Shares actually issued and outstanding on the last day of the preceding fiscal year, or (b) a number of Common Shares determined by the Board. As of June 30, 2023 and December 31, 2022, the number of shares of common stock reserved for issuance were 11,039,176 and 9,132,930 shares, respectively. Of those shares reserved for issuance, there were 1,762,637 and 1,843,494 shares available for future grant as of June 30, 2023 and December 31, 2022, respectively.

The 2021 Plan is administered by the Board (or its compensation committee), and the exercise prices, vesting and other restrictions for the awards are determined at the discretion of the Board, except that the exercise price per share of stock options may not be less than 100% of the fair market value of the common stock on the date of grant. Stock options awarded under the 2021 Plan expire ten years after the grant date unless the Board sets a shorter term. Stock options and restricted stock units granted to employees and non-employees typically vest over four years. Shares of restricted common stock awards granted to employees, officers, members of the Board, advisors, and consultants of the Company typically vest over five years. Certain executives who are option holders are able to early exercise stock option awards prior to full satisfaction of the vesting conditions. If and when this occurs, the executive receives restricted common stock upon exercise of the option, and the shares remain subject to the Company’s right of repurchase, at exercise price, until the remaining vesting terms are met. During the year ended December 31, 2021, options to purchase 345,930 shares of common stock were exercised early. As of June 30, 2023 and December 31, 2022, the Company recognized $0.6 million and $0.8 million, respectively, as a liability related to the early exercise. The amount of remaining unvested shares

related to the early exercise as of June 30, 2023 and December 31, 2022 were 158,552 and 201,793, respectively. There were no additional early exercises of options during the six months ended June 30, 2023.

Employee Stock Purchase Plan

In September 2021, the Company’s board of directors adopted, and its stockholders approved, the 2021 Employee Stock Purchase Plan (the "ESPP"), which became effective on October 6, 2021. The number of shares of common stock initially reserved for issuance under the ESPP was 400,000. In addition, on the first day of each fiscal year of the Company during the term of the ESPP, commencing on January 1, 2023 and concluding on January 1, 2041, the aggregate number of shares of common stock reserved for issuance under the ESPP shall automatically increase by a number equal to the lesser of (i) one percent (1%) of the total number of shares of common stock actually issued and outstanding on the last day of the preceding fiscal year, and (ii) a number of shares of common stock determined by the Company’s board of directors. The ESPP enables eligible employees to purchase shares of common stock of the Company at the end of each offering period at a price equal to 85% of the lower of the fair market value of the common stock at the commencement date of each offering period or the relevant date of purchase. As of June 30, 2023, the number of shares of common stock that may be issued under the ESPP is 730,682.

Stock Option Valuation

The assumptions that the Company used in Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted are as follows:

	FOR THE SIX MONTHS ENDED JUNE 30, 2023	FOR THE YEAR ENDED DECEMBER 31, 2022
Risk-free interest rate	3.54% - 3.99%	1.60% - 4.20%
Expected term (in years)	5.50 - 6.08	1.03 - 6.08
Expected volatility	88.04% - 89.15%	78.00% - 90.51%
Expected dividend yield	0%	0%

A summary of option activity under the 2021 Plan during the six months ended June 30, 2023, is as follows (in thousands except share, per share data and contractual terms):

	SHARES	WEIGHTED-AVERAGE PER-SHARE EXERCISE PRICE		WEIGHTED-AVERAGE REMAINING CONTRACTUAL TERM	AGGREGATE INTRINSIC VALUE
Outstanding as of December 31, 2022	7,257,786	$	5.95	8.58	$	10,751
Granted	1,690,130	11.21
Exercised	(17,880)	2.70
Forfeited	(6,361)	11.20
Outstanding as of June 30, 2023	8,923,675	$	6.95	8.38	30,181
Options vested and exercisable as of June 30, 2023	3,683,524	$	4.92	7.94	$	18,506

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.

The weighted-average per share grant date fair value of options granted during the six months ended June 30, 2023 and 2022 was $8.47 and $7.29, respectively. As of June 30, 2023, there was $32.3 million of unrecognized stock-based compensation expense related to unvested stock options. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 2.5 years as of June 30, 2023.

Restricted Stock Units

The Company issues RSUs that generally vest over a four-year period with 25% of the RSUs vesting one year from the vesting commencement date, and the remainder vesting quarterly thereafter over the following 36 months. Any unvested shares underlying an RSU will be forfeited upon termination of services. The fair value of an RSU is equal to the fair market value price of the Company’s common stock on the date of grant.

A summary of RSU activity during the six months ended June 30, 2023 is as follows:

	SHARES	WEIGHTED-AVERAGE PER-SHARE GRANT-DATE FAIR VALUE
Unvested shares at December 31, 2022	31,650	$	11.21
Granted	333,810	8.88
Forfeited	(2,720)	8.84
Vested and released	(9,876)	11.21
Unvested shares at June 30, 2023	352,864	$	9.02

As of June 30, 2023, there was $3.3 million of unrecognized stock-based compensation expense related to unvested RSUs. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 3.5 years as of June 30, 2023.

Shares of Restricted Common Stock

The Company issued shares of restricted common stock to its founders in May 2018, which vested monthly over five years through May 2023. At issuance, these shares also contained certain performance-based vesting criteria which were associated with the milestone events applicable to the formerly outstanding shares of Series A preferred stock, two of which were achieved in 2020. In conjunction with the termination of the Series A preferred stock purchase agreement, the final performance-based vesting criteria was waived, leaving only service-based vesting criteria remaining for the founders’ shares through the end of the requisite service period. As noted above, certain executives who are option holders are able to early exercise stock option awards prior to full satisfaction of the vesting conditions. If and when such exercise occurs, the executive receives shares of restricted common stock. Early exercise shares are included in the table below.

A summary of restricted common stock activity during the six months ended June 30, 2023 is as follows:

	SHARES	WEIGHTED-AVERAGE PER-SHARE GRANT-DATE FAIR VALUE
Unvested shares at December 31, 2022	311,825	$	3.96
Vesting of restricted common stock	(153,273)	2.20
Unvested shares at June 30, 2023	158,552	$	5.67

As of June 30, 2023, there was $0.9 million of unrecognized stock-based compensation expense related to unvested restricted common stock. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 1.8 years as of June 30, 2023.

Stock-based Compensation Expense

Total stock-based compensation expense recorded as research and development and general and administrative expenses, respectively, for employees, directors and non-employees during the three and six months ended June 30, 2023 and 2022 was as follows (in thousands):

	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
	2023		2022		2023		2022
Research and development	$	1,903	$	1,278	$	3,423	$	2,286
General and administrative	1,670		1,240		3,143		2,276
	$	3,573	$	2,518	$	6,566	$	4,562

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Income Taxes	6 Months Ended
	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesIncome taxes for the three and six months ended June 30, 2023 and 2022 have been calculated based on an estimated annual effective tax rate and certain discrete items. For the three and six months ended June 30, 2023 and 2022, no income tax was recorded, as the Company recognized losses and maintains a full valuation allowance against its net deferred tax assets. The Company has never been examined by the Internal Revenue Service or any other jurisdiction for any tax years and, as such, all years within the applicable statutes of limitations are potentially subject to audit.

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Net Loss Per Share

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Net Loss Per Share

Net Loss Per Share

Basic and diluted loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average common shares outstanding (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	$	(14,805)	$	(11,649)	$	(29,391)	$	(22,146)
Net loss attributable to common stockholders - basic and diluted	$	(14,805)	$	(11,649)	$	(29,391)	$	(22,146)
Denominator:
Weighted-average common stock outstanding - basic and diluted	43,736,275		38,415,379		43,061,113		38,332,605
Net loss per share attributable to common stockholders - basic and diluted	$	(0.34)	$	(0.30)	$	(0.68)	$	(0.58)

The Company’s potentially dilutive securities, which include preferred stock, unvested restricted common stock, unvested RSUs and stock options, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following from the computation of diluted net loss per

share attributable to common stockholders for the three and six months ended June 30, 2023 and 2022 because including them would have had an anti-dilutive effect:

	JUNE 30,
	2023	2022
Unvested restricted stock	158,552	558,289
Unvested RSUs	352,864	31,650
Options to purchase common stock	8,923,675	7,113,143
	9,435,091	7,703,082

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Subsequent Events	6 Months Ended
	Jun. 30, 2023
Subsequent Events [Abstract]
Subsequent Event	Subsequent EventOn July 13, 2023, the Company announced its decision to discontinue enrollment in the ongoing phase 1/2 clinical trial of THE-630 and terminate development of THE-630 in patients with gastrointestinal stromal tumors. As a result of its decision, the Company estimates that it will incur approximately $0.6 million in incremental costs in connection with the discontinuation of the study including termination of vendor contracts and contingent liabilities. Also, following the announcement, the Company had a reduction in workforce which resulted in $0.6 million in severance costs. The incremental costs are expected to be incurred in the third quarter of 2023.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Unaudited Interim Financial Information

Unaudited Interim Financial InformationThe accompanying condensed consolidated financial statements and the accompanying notes as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022 are unaudited. The condensed consolidated interim financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of June 30, 2023 and the results of its operations for the three and six months ended June 30, 2023 and 2022 and its cash flows for the six months ended June 30, 2023 and 2022.

Use of Estimates

Use of EstimatesThe preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Estimates and judgments are based on historical information and other market-specific or various relevant assumptions, including in certain circumstances, future projections, that management believes to be reasonable under the circumstances. Actual results could differ materially from estimates. Significant estimates and assumptions are used for, but not limited to, the accruals for research and development expenses.

Concentration of Credit Risk

Concentration of Credit RiskFinancial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents, and marketable securities. Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality and have not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Such deposits have and will continue to exceed federally insured limits. The Company has not experienced any losses on its cash deposits. The Company’s short-term and long-term marketable securities are invested in high grade securities with limited concentration in any one issuer, and as a result, the Company believes represent minimal credit risk.

Recently Issued and Adopted Accounting Pronouncements

Recently Issued and Adopted Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its condensed consolidated financial statements and disclosures.

In June 2016, the FASB issued ASU No. 2016‑13, Financial Instruments—Credit Losses (Topic 326)—Measurement of Credit Losses on Financial Instruments, which has been subsequently amended (“ASU 2016‑13”). This updated accounting guidance significantly changes the impairment model for most financial assets and certain other instruments. ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on trade receivables, loans and other financial instruments. This update is effective for the Company’s fiscal year beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted this new standard on January 1, 2023, and the adoption had no material impact on the Company's consolidated financial statements.

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets measured at fair value on a recurring basis are as follows (in thousands):

	FAIR VALUE MEASUREMENTS AT JUNE 30,2023
	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
Cash equivalents:
Money market funds	$	44,155	$	—	$	—	$	44,155
Marketable securities:
Commercial paper	—		78,655		—		78,655
Corporate debt securities	—		26,154		—		26,154
Asset-backed securities	—		24,625		—		24,625
Government securities	25,045		32,288		—		57,333
Total financial assets	$	69,200	$	161,722	$	—	$	230,922

	FAIR VALUE MEASUREMENTS AT DECEMBER 31,2022
	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
Cash equivalents:
Money market funds	$	6,846	$	—	$	—	$	6,846
Commercial paper	—		3,989		—		3,989
Marketable securities:
Commercial paper	—		25,187		—		25,187
Corporate debt securities	—		45,673		—		45,673
Asset-backed securities	—		13,574		—		13,574
Government securities	—		32,757		—		32,757
Total financial assets	$	6,846	$	121,180	$	—	$	128,026

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Marketable Securities (Tables)

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Schedule of Cost, Gross Unrealized Holding Gains, Gross Unrealized Holding Losses and Fair Value of Investments by Types and Classes of Security

The cost, gross unrealized holding gains, gross unrealized holding losses and fair value of marketable securities by types and classes of security consisted of the following (in thousands):

	JUNE 30, 2023
	MATURITY IN YEARS	AMORTIZED COST		UNREALIZED GAIN		UNREALIZED LOSS		FAIR VALUE
Commercial paper	less than 1	$	78,926	$	1	$	(272)	$	78,655
Corporate debt securities	less than 1	26,225		3		(74)		26,154
Asset-backed securities	less than 1	979		—		(2)		977
Government securities	less than 1	55,062		13		(121)		54,954
Short-term marketable securities		$	161,192	$	17	$	(469)	$	160,740
Asset-backed securities	1 - 2	23,750		14		(116)		23,648
Government securities	1 - 2	2,386		—		(7)		2,379
Long-term marketable securities		$	26,136	$	14	$	(123)	$	26,027

	DECEMBER 31, 2022
	MATURITY IN YEARS	AMORTIZED COST		UNREALIZED GAIN		UNREALIZED LOSS		FAIR VALUE
Commercial paper	less than 1	$	25,187	$	—	$	—	$	25,187
Corporate debt securities	less than 1	39,071		9		(185)		38,895
Asset-backed securities	less than 1	8,555		2		(10)		8,547
Government securities	less than 1	30,892		8		(155)		30,745
Short-term marketable securities		$	103,705	$	19	$	(350)	$	103,374
Corporate debt securities	1 - 2	6,783		—		(5)		6,778
Asset-backed securities	1 - 2	5,074		—		(47)		5,027
Government securities	1 - 2	2,015		—		(3)		2,012
Long-term marketable securities		$	13,872	$	—	$	(55)	$	13,817

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Property and Equipment, net (Tables)

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment, Net

Property and equipment, net consisted of the following as of June 30, 2023 and as of December 31, 2022 (in thousands):

	JUNE 30, 2023		DECEMBER 31, 2022
Computer equipment	$	50	$	50
Furniture and fixtures	391		341
Office equipment	87		76
Property and equipment	528		467
Less: accumulated depreciation	(91)		(51)
Property and equipment, net	$	437	$	416

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Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2023

Payables and Accruals [Abstract]

Schedule of Accrued Expenses

Accrued expenses consisted of the following as of June 30, 2023 and as of December 31, 2022 (in thousands):

	JUNE 30, 2023		DECEMBER 31, 2022
Accrued research and development	$	1,798	$	1,498
Accrued legal	81		164
Accrued compensation and benefits	1,888		3,130
Accrued other	397		273
Restricted stock liability, current	349		349
Total accrued expenses and other current liabilities	$	4,513	$	5,414

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Leases (Tables)

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Schedule of Future Minimum Payments Required Under the Lease

The following table presents future lease payments under the terms of the Company’s operating leases as of June 30, 2023, including a reconciliation to the present value of operating lease liabilities recognized in the condensed consolidated balance sheet (in thousands):

Fiscal Year	Operating Lease
Remainder of 2023	$	390
2024	797
2025	821
2026	846
Thereafter	1,995
Total future minimum lease payments	4,849
Less: imputed interest	(1,081)
Present value of lease liabilities	$	3,768

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Option Valuation Assumptions

The assumptions that the Company used in Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted are as follows:

	FOR THE SIX MONTHS ENDED JUNE 30, 2023	FOR THE YEAR ENDED DECEMBER 31, 2022
Risk-free interest rate	3.54% - 3.99%	1.60% - 4.20%
Expected term (in years)	5.50 - 6.08	1.03 - 6.08
Expected volatility	88.04% - 89.15%	78.00% - 90.51%
Expected dividend yield	0%	0%

Schedule of Summary of Option Activity

A summary of option activity under the 2021 Plan during the six months ended June 30, 2023, is as follows (in thousands except share, per share data and contractual terms):

	SHARES	WEIGHTED-AVERAGE PER-SHARE EXERCISE PRICE		WEIGHTED-AVERAGE REMAINING CONTRACTUAL TERM	AGGREGATE INTRINSIC VALUE
Outstanding as of December 31, 2022	7,257,786	$	5.95	8.58	$	10,751
Granted	1,690,130	11.21
Exercised	(17,880)	2.70
Forfeited	(6,361)	11.20
Outstanding as of June 30, 2023	8,923,675	$	6.95	8.38	30,181
Options vested and exercisable as of June 30, 2023	3,683,524	$	4.92	7.94	$	18,506

Schedule of RSU Activity

A summary of RSU activity during the six months ended June 30, 2023 is as follows:

	SHARES	WEIGHTED-AVERAGE PER-SHARE GRANT-DATE FAIR VALUE
Unvested shares at December 31, 2022	31,650	$	11.21
Granted	333,810	8.88
Forfeited	(2,720)	8.84
Vested and released	(9,876)	11.21
Unvested shares at June 30, 2023	352,864	$	9.02

Schedule of Restricted Common Stock Activity

A summary of restricted common stock activity during the six months ended June 30, 2023 is as follows:

	SHARES	WEIGHTED-AVERAGE PER-SHARE GRANT-DATE FAIR VALUE
Unvested shares at December 31, 2022	311,825	$	3.96
Vesting of restricted common stock	(153,273)	2.20
Unvested shares at June 30, 2023	158,552	$	5.67

Schedule of Stock-Based Compensation Expense

Total stock-based compensation expense recorded as research and development and general and administrative expenses, respectively, for employees, directors and non-employees during the three and six months ended June 30, 2023 and 2022 was as follows (in thousands):

	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
	2023		2022		2023		2022
Research and development	$	1,903	$	1,278	$	3,423	$	2,286
General and administrative	1,670		1,240		3,143		2,276
	$	3,573	$	2,518	$	6,566	$	4,562

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Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Loss Per Share

Basic and diluted loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average common shares outstanding (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	$	(14,805)	$	(11,649)	$	(29,391)	$	(22,146)
Net loss attributable to common stockholders - basic and diluted	$	(14,805)	$	(11,649)	$	(29,391)	$	(22,146)
Denominator:
Weighted-average common stock outstanding - basic and diluted	43,736,275		38,415,379		43,061,113		38,332,605
Net loss per share attributable to common stockholders - basic and diluted	$	(0.34)	$	(0.30)	$	(0.68)	$	(0.58)

Schedule of Antidilutive Securities Excluded from Computation of Diluted Net Loss Per Share

The Company excluded the following from the computation of diluted net loss per

share attributable to common stockholders for the three and six months ended June 30, 2023 and 2022 because including them would have had an anti-dilutive effect:

	JUNE 30,
	2023	2022
Unvested restricted stock	158,552	558,289
Unvested RSUs	352,864	31,650
Options to purchase common stock	8,923,675	7,113,143
	9,435,091	7,703,082

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Nature of the Business (Details) - USD ($) $ 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	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accumulated deficit	$ 141,577				$ 141,577		$ 112,186
Net loss	14,805	$ 14,586	$ 11,649	$ 10,497	29,391	$ 22,146
Net cash used in operating activities					28,669	$ 15,782
Amount of cash and cash equivalents, and investments	$ 234,200				$ 234,200

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Fair Value Measurements (Details) - Fair Value, Recurring - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Assets
Total financial assets	$ 230,922	$ 128,026
Commercial paper
Assets
FAIR VALUE	78,655	25,187
Corporate debt securities
Assets
FAIR VALUE	26,154	45,673
Asset-backed securities
Assets
FAIR VALUE	24,625	13,574
Government securities
Assets
FAIR VALUE	57,333	32,757
Money market funds
Assets
Cash equivalents	44,155	6,846
Commercial paper
Assets
Cash equivalents		3,989
LEVEL 1
Assets
Total financial assets	69,200	6,846
LEVEL 1 | Commercial paper
Assets
FAIR VALUE	0	0
LEVEL 1 | Corporate debt securities
Assets
FAIR VALUE	0	0
LEVEL 1 | Asset-backed securities
Assets
FAIR VALUE	0	0
LEVEL 1 | Government securities
Assets
FAIR VALUE	25,045	0
LEVEL 1 | Money market funds
Assets
Cash equivalents	44,155	6,846
LEVEL 1 | Commercial paper
Assets
Cash equivalents		0
LEVEL 2
Assets
Total financial assets	161,722	121,180
LEVEL 2 | Commercial paper
Assets
FAIR VALUE	78,655	25,187
LEVEL 2 | Corporate debt securities
Assets
FAIR VALUE	26,154	45,673
LEVEL 2 | Asset-backed securities
Assets
FAIR VALUE	24,625	13,574
LEVEL 2 | Government securities
Assets
FAIR VALUE	32,288	32,757
LEVEL 2 | Money market funds
Assets
Cash equivalents	0	0
LEVEL 2 | Commercial paper
Assets
Cash equivalents		3,989
LEVEL 3
Assets
Total financial assets	0	0
LEVEL 3 | Commercial paper
Assets
FAIR VALUE	0	0
LEVEL 3 | Corporate debt securities
Assets
FAIR VALUE	0	0
LEVEL 3 | Asset-backed securities
Assets
FAIR VALUE	0	0
LEVEL 3 | Government securities
Assets
FAIR VALUE	0	0
LEVEL 3 | Money market funds
Assets
Cash equivalents	$ 0	0
LEVEL 3 | Commercial paper
Assets
Cash equivalents		$ 0

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Marketable Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Short-term marketable securities
Investments
AMORTIZED COST	$ 161,192	$ 103,705
UNREALIZED GAIN	17	19
UNREALIZED LOSS	(469)	(350)
FAIR VALUE	160,740	103,374
Long-term marketable securities
Investments
AMORTIZED COST	26,136	13,872
UNREALIZED GAIN	14	0
UNREALIZED LOSS	(123)	(55)
FAIR VALUE	26,027	13,817
Commercial paper | Short-term marketable securities
Investments
AMORTIZED COST	78,926	25,187
UNREALIZED GAIN	1	0
UNREALIZED LOSS	(272)	0
FAIR VALUE	78,655	25,187
Corporate debt securities | Short-term marketable securities
Investments
AMORTIZED COST	26,225	39,071
UNREALIZED GAIN	3	9
UNREALIZED LOSS	(74)	(185)
FAIR VALUE	26,154	38,895
Corporate debt securities | Long-term marketable securities
Investments
AMORTIZED COST		6,783
UNREALIZED GAIN		0
UNREALIZED LOSS		(5)
FAIR VALUE		6,778
Asset-backed securities | Short-term marketable securities
Investments
AMORTIZED COST	979	8,555
UNREALIZED GAIN	0	2
UNREALIZED LOSS	(2)	(10)
FAIR VALUE	977	8,547
Asset-backed securities | Long-term marketable securities
Investments
AMORTIZED COST	23,750	5,074
UNREALIZED GAIN	14	0
UNREALIZED LOSS	(116)	(47)
FAIR VALUE	23,648	5,027
Government securities | Short-term marketable securities
Investments
AMORTIZED COST	55,062	30,892
UNREALIZED GAIN	13	8
UNREALIZED LOSS	(121)	(155)
FAIR VALUE	54,954	30,745
Government securities | Long-term marketable securities
Investments
AMORTIZED COST	2,386	2,015
UNREALIZED GAIN	0	0
UNREALIZED LOSS	(7)	(3)
FAIR VALUE	$ 2,379	$ 2,012

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Property and Equipment, net - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Property and Equipment, net
Property and equipment	$ 528	$ 467
Less: accumulated depreciation	(91)	(51)
Property and equipment, net	437	416
Computer equipment
Property and Equipment, net
Property and equipment	50	50
Furniture and fixtures
Property and Equipment, net
Property and equipment	391	341
Office equipment
Property and Equipment, net
Property and equipment	$ 87	$ 76

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Property and Equipment, net - Narrative (Details) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 40,862	$ 12,040
Impairments recorded to date	$ 0

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Accrued Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Payables and Accruals [Abstract]
Accrued research and development	$ 1,798	$ 1,498
Accrued legal	81	164
Accrued compensation and benefits	1,888	3,130
Accrued other	397	273
Restricted stock liability, current	349	349
Accrued expenses and other current liabilities	$ 4,513	$ 5,414

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Leases (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Leases [Abstract]
Remainder of 2023	$ 390
2024	797
2025	821
2026	846
Thereafter	1,995
Total future minimum lease payments	4,849
Less: imputed interest	(1,081)
Present value of lease liabilities	$ 3,768

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Commitments and Contingencies (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
401(k) Plan
Commitments and Contingencies
Amount employer contributions made to the 401(k) plan	$ 0.3	$ 0.4

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Stockholders' Equity (Details)	6 Months Ended
	Jun. 30, 2023 USD ($) Vote $ / shares shares	Mar. 31, 2023 $ / shares	Dec. 31, 2022 $ / shares shares	Jun. 30, 2022 $ / shares	Mar. 31, 2022 $ / shares	Dec. 31, 2021 $ / shares
Equity [Abstract]
Preferred stock, shares authorized (in shares)	50,000,000		50,000,000
Preferred stock, par value (in usd per share) | $ / shares	$ 0.0001		$ 0.0001
Preferred stock outstanding (in shares)	0		0
Common stock, shares authorized (in shares)	500,000,000		500,000,000
Common stock, par value (in usd per share) | $ / shares	$ 0.0001	$ 0.0001	$ 0.0001	$ 0.0001	$ 0.0001	$ 0.0001
Number of votes per share of common stock | Vote	1
Common stock, cash dividend | $	$ 0

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Stock-Based Compensation - Narrative (Details) $ / shares in Units, $ in Millions	1 Months Ended	6 Months Ended		12 Months Ended
	May 31, 2018	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2022 $ / shares	Dec. 31, 2021 shares	Dec. 31, 2022 USD ($) shares	Sep. 30, 2021 shares
Stock-Based Compensation
Options to purchase common stock, exercised (in shares)		17,880
Weighted-average per share grant date fair value of options granted (in usd per share) | $ / shares		$ 8.47	$ 7.29
Unrecognized stock-based compensation expense related to unvested stock options | $		$ 32.3
Recognition period		1 year 9 months 18 days
Share-Based Payment Arrangement, Option
Stock-Based Compensation
Recognition period		2 years 6 months
Restricted Stock
Stock-Based Compensation
Vesting period	5 years
Unrecognized stock-based compensation expense | $		$ 0.9
Restricted Stock Units (RSUs)
Stock-Based Compensation
Vesting period		4 years
Unrecognized stock-based compensation expense related to unvested stock options | $		$ 3.3
Recognition period		3 years 6 months
Restricted Stock Units (RSUs) | Share-Based Payment Arrangement, Tranche One
Stock-Based Compensation
Award vesting rights, percentage		25.00%
Restricted Stock Units (RSUs) | Share-Based Payment Arrangement, Tranche Two
Stock-Based Compensation
Vesting period		36 months
Employee Stock
Stock-Based Compensation
Annual percentage increase in aggregate number of common stock reserved for issuance		0.01
Shares available for future grant under the Plan (in shares)		730,682
Share-based compensation arrangement by share-based payment award, number of shares authorized						400,000
ESPP, discount from market price, percentage		85.00%
2021 Plan
Stock-Based Compensation
Annual percentage increase in aggregate number of common stock reserved for issuance		0.05
Shares reserved under the Plan (in shares)		11,039,176			9,132,930
Shares available for future grant under the Plan (in shares)		1,762,637			1,843,494
Expiration period		10 years
Share-based compensation arrangement by share-based payment award, options, liability for early exercise | $		$ 0.6			$ 0.8
2021 Plan | Share-Based Payment Arrangement, Option
Stock-Based Compensation
Vesting period		4 years
2021 Plan | Restricted Stock
Stock-Based Compensation
Vesting period		5 years
2021 Plan | Restricted Stock Units (RSUs)
Stock-Based Compensation
Vesting period		4 years
2021 Plan | Early Exercised Stock Options
Stock-Based Compensation
Options to purchase common stock, exercised (in shares)		0		345,930
Share-based compensation arrangement by share-based payment award, options, nonvested, number of shares		158,552			201,793

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Stock-Based Compensation - Schedule of Stock Option Valuation Assumptions (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Stock-Based Compensation
Share-based compensation arrangement by share-based payment award, fair value assumptions, risk free interest rate, minimum	3.54%	1.60%
Share-based compensation arrangement by share-based payment award, fair value assumptions, risk free interest rate, maximum	3.99%	4.20%
Expected volatility, minimum	88.04%	78.00%
Expected volatility, maximum	89.15%	90.51%
Expected dividend yield	0.00%	0.00%
Minimum
Stock-Based Compensation
Expected term (in years)	5 years 6 months	1 year 10 days
Maximum
Stock-Based Compensation
Expected term (in years)	6 years 29 days	6 years 29 days

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Stock-Based Compensation - Schedule of Summary of Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
SHARES
Outstanding as of beginning of period (in shares)	7,257,786
Granted (in shares)	1,690,130
Exercised (in shares)	(17,880)
Forfeited (in shares)	(6,361)
Outstanding as of end of period (in shares)	8,923,675	7,257,786
Options vested and exercisable (in shares)	3,683,524
WEIGHTED-AVERAGE PER-SHARE EXERCISE PRICE
Outstanding as of beginning of period (in usd per share)	$ 5.95
Granted (in usd per share)	11.21
Exercised (in usd per share)	2.70
Forfeited (in usd per share)	11.20
Outstanding as of end of period (in usd per share)	6.95	$ 5.95
Options vested and exercisable (in usd per share)	$ 4.92
WEIGHTED-AVERAGE REMAINING CONTRACTUAL TERM
Weighted-average remaining contractual term, outstanding	8 years 4 months 17 days	8 years 6 months 29 days
Weighted-average remaining contractual term, options vested and exercisable	7 years 11 months 8 days
AGGREGATE INTRINSIC VALUE
Aggregate intrinsic value, outstanding	$ 30,181	$ 10,751
Aggregate intrinsic value, options vested and exercisable	$ 18,506

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Stock-Based Compensation - Schedule of Restricted Common Stock Activity (Details)	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Restricted Stock Units (RSUs)
SHARES
Unvested shares, Beginning balance (in shares) | shares	31,650
Granted (in shares) | shares	333,810
Forfeited (in shares) | shares	(2,720)
Vested and released (in shares) | shares	(9,876)
Unvested shares, Ending balance (in shares) | shares	352,864
WEIGHTED-AVERAGE PER-SHARE GRANT-DATE FAIR VALUE
Unvested shares, Beginning balance (in usd per share) | $ / shares	$ 11.21
Granted (in usd per share) | $ / shares	8.88
Forfeited (in usd per share) | $ / shares	8.84
Vested and released (in usd per share) | $ / shares	11.21
Unvested shares, Ending balance (in usd per share) | $ / shares	$ 9.02
Restricted Stock
SHARES
Unvested shares, Beginning balance (in shares) | shares	311,825
Vested and released (in shares) | shares	(153,273)
Unvested shares, Ending balance (in shares) | shares	158,552
WEIGHTED-AVERAGE PER-SHARE GRANT-DATE FAIR VALUE
Unvested shares, Beginning balance (in usd per share) | $ / shares	$ 3.96
Vested and released (in usd per share) | $ / shares	2.20
Unvested shares, Ending balance (in usd per share) | $ / shares	$ 5.67

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Stock-Based Compensation - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Stock-Based Compensation
Stock-based compensation expense	$ 3,573	$ 2,518	$ 6,566	$ 4,562
Research and development
Stock-Based Compensation
Stock-based compensation expense	1,903	1,278	3,423	2,286
General and administrative
Stock-Based Compensation
Stock-based compensation expense	$ 1,670	$ 1,240	$ 3,143	$ 2,276

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Income Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Income tax	$ 0	$ 0	$ 0	$ 0

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Net Loss Per Share - Schedule of Basic and Diluted 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	$ (14,805)	$ (14,586)	$ (11,649)	$ (10,497)	$ (29,391)	$ (22,146)
Net loss attributable to common stockholders - basic	(14,805)		(11,649)		(29,391)	(22,146)
Net loss attributable to common stockholders - diluted	$ (14,805)		$ (11,649)		$ (29,391)	$ (22,146)
Denominator:
Weighted-average common stock outstanding - basic (in shares)	43,736,275		38,415,379		43,061,113	38,332,605
Weighted-average common stock outstanding - diluted (in shares)	43,736,275		38,415,379		43,061,113	38,332,605
Net loss per share attributable to common stockholders - basic (in usd per share)	$ (0.34)		$ (0.30)		$ (0.68)	$ (0.58)
Net loss per share attributable to common stockholders - diluted (in usd per share)	$ (0.34)		$ (0.30)		$ (0.68)	$ (0.58)

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Net Loss Per Share - Schedule of Antidilutive Securities Excluded from Computation of Diluted Net Loss Per Share (Details) - shares	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Anti-dilutive Effect
Shares excluded since there inclusion would be anti-dilutive (in shares)	9,435,091	7,703,082
Unvested restricted stock
Anti-dilutive Effect
Shares excluded since there inclusion would be anti-dilutive (in shares)	158,552	558,289
Unvested RSUs
Anti-dilutive Effect
Shares excluded since there inclusion would be anti-dilutive (in shares)	352,864	31,650
Options to purchase common stock
Anti-dilutive Effect
Shares excluded since there inclusion would be anti-dilutive (in shares)	8,923,675	7,113,143

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Subsequent Events (Details) - Subsequent Event $ in Millions	Jul. 13, 2023 USD ($)
Subsequent Event [Line Items]
Costs in connection with the discontinuation	$ 0.6
Severance costs	$ 0.6