UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2024

OR

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

For the transition period from       to      

Commission file number: 001-42179

Artiva Biotherapeutics, Inc.

(Exact name of registrant as specified in its charter)

Delaware	83-3614316
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

5505 Morehouse Drive, Suite 100

San Diego CA 92121

(858) 267-4467

(Address including zip code, and telephone number including area code, of registrant’s principal executive offices)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	ARTV	The Nasdaq Global Market

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☒ No ☐

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

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

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

As of August 15, 2024, the registrant had 24,287,144 shares of common stock outstanding.

Artiva Biotherapeutics, Inc.

Table of Contents

	Page
Part I - Financial Information		6
Item 1. Financial Statements (Unaudited)		6
Condensed Balance Sheets		6
Condensed Statements of Operations and Comprehensive Loss		7
Condensed Statements of Convertible Preferred Stock and Stockholders’ Deficit		8
Condensed Statements of Cash Flows		9
Notes to Condensed Financial Statements		10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		29
Item 3. Quantitative and Qualitative Disclosures About Market Risk		41
Item 4. Controls and Procedures		41
Part II - Other Information		42
Item 1. Legal Proceedings		42
Item 1A. Risk Factors		42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		109
Item 3. Defaults Upon Senior Securities		110
Item 4. Mine Safety Disclosures		110
Item 5. Other Information		110
Item 6. Exhibits		110
Signatures		112

3

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding future events, our business strategy, and the plans and objectives of management for future operations, are forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would,” or the negative of these words or other similar terms or expressions.

These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

• the success, cost, timing and potential indications of our product development activities and clinical trials, including the ongoing clinical trials of AlloNK;

• the timing of our planned Investigational New Drug application (IND) submissions to the United States Food and Drug Administration (FDA) for our product candidates, including AlloNK;

• the timing of the initiation, enrollment and completion of planned clinical trials;

• the ability to obtain regulatory approval for our manufacturing facility in San Diego, California and the cost and timing associated therewith;

• our ability to obtain and maintain regulatory approval of our product candidates, including AlloNK, in any of the indications for which we plan to develop them, and any related restrictions, limitations and/or warnings in the label of an approved product candidate;

• our ability to obtain funding for our operations, including funding necessary to complete the clinical trials of any of our product candidates, including AlloNK;

• our plans to research and develop our product candidates, including AlloNK;

• our ability to attract and retain collaborators with development, regulatory and commercialization expertise;

• the size of the markets for our product candidates, and our ability to serve those markets;

• our ability to successfully commercialize our product candidates, including AlloNK;

• the rate and degree of market acceptance of our product candidates, including AlloNK;

• our ability to develop and maintain sales and marketing capabilities, whether alone or with potential future collaborators;

• the performance of our third-party suppliers and manufacturers;

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

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

• the implementation of our business model and strategic plans for our business and operations;

• our ability to attract and retain key scientific or management personnel;

• the accuracy of our estimates regarding expenses, future revenues, capital requirements and needs for additional financing;

• our expectations regarding the impact of global health pandemics, geopolitical conflicts and economic uncertainty, including rising interest rates and inflation on our business and operations, including clinical trials, collaborators, contract research organizations (CROs) and employees;

• our expectations regarding the period during which we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act (JOBS Act); and

• our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates and our ability to operate our business without infringing on the intellectual property rights of others.

4

These forward-looking statements reflect our management’s beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this Quarterly Report on Form 10-Q and are subject to risks and uncertainties. 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 on Form 10-Q, 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. We discuss many of the risks associated with the forward-looking statements in greater detail under the heading “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. 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. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, whether as a result of new information, future events or otherwise.

We may use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation Fair Disclosure promulgated by the U.S. Securities and Exchange Commission. These disclosures will be included on our website under the “Investors” section.

5

Part I - Financial Information

Item 1. Financial Statements

ARTIVA BIOTHERAPEUTICS, INC.

Condensed Balance Sheets

(Unaudited)

(in thousands, except share and par value data)

	AS OF
	JUNE 30, 2024			DECEMBER 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	34,248		$	53,504
Short-term investments		12,308			23,467
Accounts receivable (including related party amounts of $569 and $569, respectively)		569			1,034
Other receivables (including related party amounts of $700 and $607, respectively)		892			724
Prepaid expenses and other current assets		1,732			1,092
Total current assets		49,749			79,821
Restricted cash		258			258
Property and equipment, net		7,315			8,096
Operating lease right-of-use assets		15,129			16,547
Financing lease right-of-use asset		291			—
Deferred offering costs		2,840			—
Other long-term assets		330			392
Total assets	$	75,912		$	105,114
Liabilities, convertible preferred stock, and stockholders’ deficit
Current liabilities:
Accounts payable (including related party amounts of $223 and $199, respectively)	$	823		$	614
Accrued expenses (including related party amounts of $859 and $2,161, respectively)		6,214			8,017
Current portion of operating lease liabilities		3,674			3,596
Current portion of financing lease liability		116			—
Total current liabilities		10,827			12,227
Operating lease liabilities, net of current portion		11,869			13,316
Financing lease liability, net of current portion		106			—
Simple agreements for future equity (“SAFEs”) (including related party amounts of $22,427 and $20,315, respectively)		27,720			25,100
Other non-current liabilities		74			73
Total liabilities		50,596			50,716
Commitments and contingencies (Note 11)
Series A convertible preferred stock, $0.0001 par value; 16,110,463 shares authorized; 3,673,148 issued and outstanding at June 30, 2024 and December 31, 2023; $80,552 aggregate liquidation preference at June 30, 2024 and December 31, 2023		96,767			96,767
Series B convertible preferred stock, $0.0001 par value; 10,909,091 shares authorized, 2,487,237 shares issued and outstanding at June 30, 2024 and December 31, 2023; $120,000 aggregate liquidation preference at June 30, 2024 and December 31, 2023		119,646			119,646
Stockholders’ deficit:
Common stock, $0.0001 par value; 40,248,588 and 38,998,588 shares authorized at June 30, 2024 and December 31, 2023, respectively; 814,202 and 809,758 shares issued and outstanding at June 30, 2024 and December 31, 2023		—			—
Additional paid-in capital		21,899			18,988
Accumulated other comprehensive income		121			308
Accumulated deficit		(213,117	)		(181,311	)
Total stockholders’ deficit		(191,097	)		(162,015	)
Total liabilities, convertible preferred stock and stockholders’ deficit	$	75,912		$	105,114

See accompanying notes to condensed financial statements

6

ARTIVA BIOTHERAPEUTICS, INC.

Condensed Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share data)

	THREE MONTHS ENDED JUNE 30,						SIX MONTHS ENDED JUNE 30,
	2024			2023			2024			2023
Revenue:
Collaboration revenue	$	—		$	3,497		$	—		$	4,487
License and development support revenue (including related party amounts of $0, $0, $251 and $0, respectively)		—			—			251			—
Total revenue		—			3,497			251			4,487
Operating expenses:
Research and development (including related party amounts of $1,172, $894, $1,459 and $1,810, respectively)		12,333			11,262			23,488			26,033
General and administrative		3,857			4,059			7,444			7,965
Total operating expenses		16,190			15,321			30,932			33,998
Loss from operations		(16,190	)		(11,824	)		(30,681	)		(29,511	)
Other income (expense), net:
Interest income		676			509			1,326			1,533
Change in fair value of SAFEs (including related party amounts of $1,895, $0, $2,112 and $0, respectively)		(2,352	)		—			(2,620	)		—
Other income (expense), net		23			31			169			(23	)
Total other income (expense), net		(1,653	)		540			(1,125	)		1,510
Net loss	$	(17,843	)	$	(11,284	)	$	(31,806	)	$	(28,001	)
Net loss per share, basic and diluted	$	(22.00	)	$	(14.09	)	$	(39.24	)	$	(35.12	)
Weighted-average common shares outstanding, basic and diluted		811,210			800,889			810,484			797,403
Comprehensive loss:
Net loss	$	(17,843	)	$	(11,284	)	$	(31,806	)	$	(28,001	)
Other comprehensive income (loss):
Unrealized gain (loss) on short-term investments		(86	)		127			(187	)		127
Comprehensive loss	$	(17,929	)	$	(11,157	)	$	(31,993	)	$	(27,874	)

See accompanying notes to condensed financial statements

7

ARTIVA BIOTHERAPEUTICS, INC.

Condensed Statements of Convertible Preferred Stock and Stockholders’ Deficit

(Unaudited)

(in thousands, except share data)

	SERIES A CONVERTIBLE PREFERRED STOCK				SERIES B CONVERTIBLE PREFERRED STOCK				COMMON STOCK				ADDITIONAL PAID-IN CAPITAL		ACCUMULATED OTHER COMPREHENSIVE INCOME			ACCUMULATED DEFICIT			TOTAL STOCKHOLDERS’ DEFICIT
	SHARES		AMOUNT		SHARES		AMOUNT		SHARES		AMOUNT
Balance at December 31, 2022		3,673,148	$	96,767		2,487,237	$	119,646		792,991	$	—	$	11,895	$	—		$	(152,591	)	$	(140,696	)
Vesting of shares of common stock subject to repurchase, including early exercise		—		—		—		—		1,425		—		7					—			7
Stock-based compensation expense		—		—		—		—		—		—		1,832		—			—			1,832
Net loss		—		—		—		—		—		—		—		—			(16,717	)		(16,717	)
Balance at March 31, 2023		3,673,148	$	96,767		2,487,237	$	119,646		794,416		—	$	13,734	$	—		$	(169,308	)	$	(155,574	)
Exercise of stock options		—		—		—		—		1,948		—		10		—			—			10
Vesting of shares of common stock subject to repurchase, including early exercise		—		—		—		—		8,835		—		8					—			8
Stock-based compensation expense		—		—		—		—		—		—		2,458		—			—			2,458
Unrealized gain on short-term investments		—		—		—		—		—		—		—		127			—			127
Net loss		—		—		—		—		—		—		—		—			(11,284	)		(11,284	)
Balance at June 30, 2023		3,673,148	$	96,767		2,487,237	$	119,646		805,199	$	—	$	16,210	$	127		$	(180,592	)	$	(164,255	)
Balance at December 31, 2023		3,673,148	$	96,767		2,487,237	$	119,646		809,758	$	—	$	18,988	$	308		$	(181,311	)	$	(162,015	)
Stock-based compensation expense investments		—		—		—		—		—		—		1,406		—			—			1,406
Unrealized loss on short-term investments		—		—		—		—		—		—		—		(101	)		—			(101	)
Net loss		—		—		—		—		—		—		—		—			(13,963	)		(13,963	)
Balance at March 31, 2024		3,673,148	$	96,767		2,487,237	$	119,646		809,758	$	—	$	20,394	$	207		$	(195,274	)	$	(174,673	)
Exercise of stock options		—		—		—		—		4,444		—		22		—			—			22
Stock-based compensation expense		—		—		—		—		—		—		1,483		—			—			1,483
Unrealized loss on short-term investments		—		—		—		—		—		—		—		(86	)		—			(86	)
Net loss		—		—		—		—		—		—		—		—			(17,843	)		(17,843	)
Balance at June 30, 2024		3,673,148	$	96,767		2,487,237	$	119,646		814,202	$	—	$	21,899	$	121		$	(213,117	)	$	(191,097	)

See accompanying notes to condensed financial statements

8

ARTIVA BIOTHERAPEUTICS, INC.

Condensed Statements of Cash Flows

(Unaudited)

(in thousands)

	SIX MONTHS ENDED JUNE 30,
	2024			2023
Operating activities:
Net loss	$	(31,806	)	$	(28,001	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		1,190			1,116
Stock-based compensation		2,889			4,290
Change in fair value of SAFEs (including related party amounts of $2,112 and $0, respectively)		2,620			—
Accretion of discounts on short-term investments		(641	)		(14	)
Changes in operating assets and liabilities:
Accounts receivable		465			(1,692	)
Other receivables (including related party amounts of $(93) and $(524), respectively)		(168	)		(679	)
Prepaid expenses and other current assets		(640	)		1,070
Other long-term assets		62			63
Accounts payable (including related party amounts of $24 and $(148), respectively)		(103	)		(72	)
Accrued expenses (including related party amounts of $(1,302) and $(696), respectively)		(2,769	)		(696	)
Operating lease right-of-use asset and lease liabilities		130			88
Deferred revenue		—			(1,480	)
Net cash used in operating activities		(28,771	)		(26,007	)
Investing activities:
Purchases of property and equipment		(482	)		(2,443	)
Purchases of short-term investments		(18,387	)		(22,371	)
Maturities of short-term investments		30,000			2,000
Net cash provided by (used in) investing activities		11,131			(22,814	)
Financing activities:
Proceeds from exercise of stock options		22			10
Payments on finance leases		(78	)		—
Cash paid in connection with deferred offering costs		(1,560	)		—
Repurchase of restricted stock		—			(12	)
Net cash used in financing activities		(1,616	)		(2	)
Net decrease in cash, cash equivalents and restricted cash		(19,256	)		(48,823	)
Cash, cash equivalents and restricted cash at beginning of period		53,762			102,776
Cash, cash equivalents and restricted cash at end of period	$	34,506		$	53,953
Reconciliation of cash, cash equivalents and restricted cash to the balance sheet Cash and cash equivalents	$	34,248		$	53,695
Restricted cash		258			258
Total cash, cash equivalents and restricted cash	$	34,506		$	53,953
Supplemental disclosures of noncash activities:
Property and equipment purchases in accounts payable and accrued liabilities	$	33		$	66
Deferred offering costs in accounts payable and accrued liabilities	$	1,280		$	—
Non-cash additions to financing leases	$	241		$	—

See accompanying notes to condensed financial statements

9

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1. Organization, Liquidity and Basis of Presentation

Organization

Artiva Biotherapeutics, Inc. (the “Company”) was incorporated in the State of Delaware on February 14, 2019. The Company is a biopharmaceutical company focused on developing off-the shelf, allogeneic, natural killer (“NK”) cell-based therapies that are effective, safe and accessible for patients with devastating autoimmune diseases and cancers.

From its inception to June 30, 2024, the Company has devoted substantially all of its resources to organizing and staffing the Company, business planning, raising capital, establishing and engaging in collaborations, performing research and development, advancing and scaling up product candidate manufacturing, establishing cold chain delivery logistics, establishing and protecting its intellectual property portfolio, and providing general and administrative support for these activities. The Company’s operations through June 30, 2024 have been funded primarily through the issuance and sale of convertible promissory notes, convertible preferred stock and simple agreements for future equity (the “SAFEs”).

Liquidity

The Company has incurred net losses and negative cash flows from operations since inception, has a significant accumulated deficit and expects to continue to incur net losses for the foreseeable future. The Company has never generated any revenue from product sales and does not expect to generate any revenues from product sales unless and until it successfully completes development of and obtains regulatory approval for its product candidates, which will not be for several years, if ever. The Company has an accumulated deficit of $213.1 million as of June 30, 2024. During the six months ended June 30, 2024, the Company used $28.8 million of cash for operating activities. As of June 30, 2024, the Company has $34.2 million in cash and cash equivalents and $12.3 million in short-term investments. From inception through June 30, 2024, the Company has raised aggregate gross proceeds of $222.4 million to fund operations, comprised primarily from issuances of convertible promissory notes, SAFEs and private placements of convertible preferred stock. Since inception through June 30, 2024, the Company has also received $39.9 million in upfront and reimbursable research service payments from Merck Sharp & Dohme Corp. (“Merck”). Additionally, on July 22, 2024, the Company closed on their Initial Public Offering (the “IPO”), in which the Company received aggregate net proceeds of $161.9 million (the “IPO Proceeds”). Management estimates that there is no substantial doubt about the Company’s ability to continue as a going concern for the one year period following the date that these unaudited condensed financial statements and accompanying notes were issued, as the IPO Proceeds together with the Company’s existing cash and cash equivalents, will be sufficient to fund planned operations at least through the end of 2026. As such, the prior substantial doubt about the Company’s ability to continue as a going concern as discussed in the Company’s December 31, 2023 audited financial statements as included in the Company’s prospectus dated July 18, 2024 related to its IPO filed pursuant to Rule 424(b)(4) under the Securities Act of 1933, no longer exists.

If the Company is unable to obtain additional funding before achieving sufficient profitability and positive cash flows from operations, if ever, the Company will be forced to delay, reduce or eliminate some or all of its research and development programs, which could adversely affect its business prospects, or the Company may be unable to continue operations. Although management continues to pursue plans to obtain additional funding before achieving sufficient profitability and positive cash flows from operations, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to rules and regulations of the Securities Exchange Commission for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These unaudited condensed financial statements include only normal and recurring adjustments that the Company believes are necessary to fairly state the Company’s financial position and the results of its operations and cash flows. The results for the three and six months ended June 30, 2024 and 2023 are not necessarily indicative of the results expected for the full fiscal year or any subsequent interim period. The unaudited condensed balance sheet as of June 30, 2024 has been derived from the financial statements as of that date but does not include all disclosures required by GAAP for complete financial statements. As all of the disclosures required by GAAP for complete financial statements are not included herein, these condensed financial statements and the notes

10

accompanying herein should be read in conjunction with the Company’s audited financial statements as of and for the year ended December 31, 2023 included in the Company’s prospectus dated July 18, 2024 related to its IPO filed pursuant to Rule 424(b)(4) under the Securities Act of 1933. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”).

2. Summary of Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the audited financial statements as of and for the year ended December 31, 2023, included in the Company’s prospectus dated July 18, 2024 related to its IPO filed pursuant to Rule 424(b)(4) under the Securities Act of 1933. Since the date of those financial statements, there have been no changes to its significant accounting policies, except where noted below.

Use of Estimates

The preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of expenses during the reporting period. Accounting estimates and management judgments reflected in the condensed financial statements include: revenue recognized, the accrual of research and development expenses, common stock, stock-based compensation, SAFEs and operating lease liabilities. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may materially differ from these estimates and assumptions.

Short-Term Investments

Short-term investments consist of debt securities, classified as available-for-sale securities and have original maturities of greater than three months. The Company has classified all available-for-sale securities as current assets in the condensed balance sheets because these are considered highly liquid securities and are available for use in current operations. The Company carries these securities at fair value and reports unrealized gains and losses as a separate component of accumulated other comprehensive income. The cost of debt securities is adjusted for amortization of purchase premiums and accretion of discounts to maturity. Such amortization and accretion are included in other income in the condensed statements of operations and comprehensive loss. Realized gains and losses on sales of securities are determined using the specific identification method and recorded in other income in the condensed statements of operations and comprehensive loss.

As of June 30, 2024, and December 31, 2023, accrued interest receivables on short-term investments were $0.1 million and are included in prepaid expenses and other current assets in the condensed balance sheets. The Company does not measure an allowance for credit losses for accrued interest receivables. For the purposes of identifying and measuring an impairment, accrued interest is excluded from both the fair value and amortized cost basis of the short-term investment. Uncollectible accrued interest receivables associated with an impaired debt security are reversed against interest income upon identification of the impairment. No accrued interest receivables were written off during the three and six months ended June 30, 2024 and 2023.

Restricted Cash

Restricted cash is comprised of cash that is restricted as to withdrawal or use under the terms of certain contractual agreements. Restricted cash as of June 30, 2024 and December 31, 2023, was $0.3 million consisting of collateral for letters of credit related to the Company’s lease agreements and is included in non-current assets in the condensed balance sheets (see Note 11).

Deferred Offering Costs

Deferred offering costs, consisting of legal, accounting and other fees and costs relating to the Company’s IPO, are capitalized and recorded in the condensed balance sheets. As of June 30, 2024 and December 31, 2023, deferred offering costs of $2.8 million and $0 million, respectively, were recorded in the condensed balance sheets.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common stock outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock and common stock equivalents outstanding for the period. Common stock equivalents are only included when their effect is dilutive. The Company’s potentially dilutive securities include shares of its convertible preferred stock, as well as outstanding stock options and restricted stock units under the Company’s equity incentive plan and have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

11

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

	AS OF JUNE 30,		AS OF DECEMBER 31,
	2024		2023
Convertible preferred stock		6,160,385		6,160,385
Unvested restricted stock units		22,514		22,514
Options to purchase common stock		1,803,867		1,315,726
SAFEs (1)		—		—
Total		7,986,766		7,498,625

(1) The contingently convertible SAFEs were not included for purposes of calculating the number of diluted shares outstanding as of June 30, 2024, as the number of dilutive shares is based on a conversion ratio associated with the pricing of a future financing or liquidation event. Therefore, the contingently convertible SAFEs’ conversion ratio, and the resulting number of dilutive shares, is not determinable until the contingency is resolved. If the contingency were to have been resolved as of June 30, 2024, the number of anti-dilutive shares that would have been excluded in the calculation of dilutive net loss per share, when applying the respective conversion ratio, is estimated as 2.1 million as of June 30, 2024.

Recently Adopted Accounting Standards

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020-06 was issued to reduce the complexity associated with accounting for certain financial instruments with characteristics of liabilities and equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and redeemable convertible preferred stock and improves the disclosures for convertible instruments and related earnings per share guidance. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related earnings per share guidance. For public entities that qualify as a filer with the Securities and Exchange Commission, excluding entities eligible to be smaller reporting companies, ASU 2020-06 is effective for fiscal annual periods beginning after December 15, 2021, including interim periods within those fiscal years. For nonpublic entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. ASU 2020-06 must be adopted as of the beginning of a Company’s annual fiscal year. The Company adopted this standard on January 1, 2024, and the adoption of the standard did not have a material impact on its financial statements.

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3. Fair Value Measurements

The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis and indicates their respective levels within the fair value hierarchy (in thousands):

		AS OF JUNE 30, 2024
	CLASSIFICATION	TOTAL		LEVEL 1		LEVEL 2		LEVEL 3
Assets
Money market funds	Cash and cash equivalents	$	25,872	$	25,872	$	—	$	—
Government and government agency bonds	Short-term investments		12,308		—		12,308		—
Total assets		$	38,180	$	25,872	$	12,308	$	—
Liabilities
SAFEs	Liabilities	$	27,720	$	—	$	—	$	27,720
Total liabilities		$	27,720	$	—	$	—	$	27,720
		AS OF DECEMBER 31, 2023
	CLASSIFICATION	TOTAL		LEVEL 1		LEVEL 2		LEVEL 3
Assets
Money market funds	Cash and cash equivalents	$	28,517	$	28,517	$	—	$	—
Commercial paper	Short-term investments		2,090		—		2,090		—
Government and government agency bonds	Short-term investments		19,982		—		19,982		—
Corporate bonds	Short-term investments		1,395		—		1,395		—
Total assets		$	51,984	$	28,517	$	23,467	$	—
Liabilities
SAFEs	Liabilities	$	25,100	$	—	$	—	$	25,100
Total liabilities		$	25,100	$	—	$	—	$	25,100

The carrying amounts of all cash and cash equivalents, accounts receivable, other receivable, prepaid and other current assets, accounts payable, and accrued expenses are considered to be representative of their respective fair values because of the short-term nature of those instruments.

Short-Term Investments

The Company’s assets with a fair value categorized as Level 2 withing the fair value hierarchy consist of commercial paper, government and government agency bonds, and corporate bonds. These assets have been initially valued at the transaction price and subsequently valued at the end of each reporting period utilizing third-party pricing services. The pricing services utilize industry standard valuation models whereby all significant inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, or other market-related data, are observable.

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Simple Agreements for Future Equity

The estimated fair value of the SAFEs (see Note 7) is determined based on the aggregated, probability-weighted average of the outcomes of certain scenarios, including: (i) equity financing, with conversion of the SAFEs into a number of shares of convertible preferred stock at the lower of the post-money valuation cap price of $48.25 and the discount price (the lowest price of the standard convertible preferred stock sold in the equity financing multiplied by the specified discount rate of 85%); (ii) liquidity event (change of control, direct listing, or an initial public offering,) with mandatory conversion to common stock at the lower of post-money valuation cap price of $48.25 and discount price (price of the common stock multiplied by the discount rate of 85%); and (iii) dissolution event, with SAFE holders automatically entitled to receive cash payments equal to the purchase amount, prior to and in preference to any distribution of any assets or surplus funds to the holders of convertible preferred and common stock. On May 29, 2024, the Company executed an amendment to the SAFEs (the “SAFE Amendment”). The SAFE Amendment amended the definition of liquidity event to exclude an initial public offering and amended the definition of the discount price under an initial public offering to the lower of (a) the price per share of common stock sold to the public by the underwriters in the initial public offering multiplied by the discount rate of 85% or (b) the post-money valuation cap price of $48.25. The combined value of the probability-weighted average of those outcomes is then discounted back to each reporting period in which the SAFEs are outstanding, in each case based on a risk-adjusted discount rate estimated based on the implied interest rate using the changes in observed interest rates of corporate debt that the Company believes is appropriate for those probability-adjusted cash flows.

Fair value measurements associated with SAFEs were determined based on significant inputs not observable in the market, which represent Level 3 measurements within the fair value hierarchy. Increases and decreases in the fair value of the SAFEs can result from updates to assumptions such as expected timing and probability of a qualified financing event, or changes in discount rates, among other assumptions. Based on management’s assessment of the valuation of the SAFEs, performed by the Company’s third-party valuation specialists, none of the changes in the fair value of those instruments were due to changes in the Company’s own credit risk for the reporting periods presented. Judgement is used in determining these assumptions as of the initial valuation date and at each subsequent reporting period. Changes or updates to assumptions could have a material impact on the reported fair value, and the change in fair value of SAFEs and the results of operations in any given period.

The following tables summarize the significant inputs not observable in the market upon which the fair value measurements associated with the SAFEs were determined:

	VALUATION TECHNIQUE		UNOBSERVABLE INPUT		AS OF JUNE 30, 2024
Liabilities
SAFEs		Scenario-based approach		Probability weighting		5.0% - 75.0	%
				Discount rate		24.0	%
				Remaining term to event (in years)		0.05 - 0.50

	VALUATION TECHNIQUE		UNOBSERVABLE INPUT		AS OF DECEMBER 31, 2023
Liabilities
SAFEs		Scenario-based approach		Probability weighting		15.0% - 70.0	%
				Discount rate		20.1	%
				Remaining term to event (in years)		0.50 - 0.75

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The following table summarizes the changes in fair value associated with Level 3 financial instruments held during the periods presented (in thousands):

	SAFEs
Balance at December 31, 2023	$	25,100
Changes in fair value of SAFEs		2,620
Balance at June 30, 2024	$	27,720

There were no transfers to or from Level 3 during any of the periods presented.

4. Cash, Cash Equivalents and Short-term Investments

It is the Company’s policy to mitigate credit risk in its financial assets by maintaining a well-diversified portfolio that limits the amount of exposure as to maturity and investment type. All of the Company’s available-for-sale investments had a maturity date of less than one year as of June 30, 2024.

The following table summarizes the Company’s cash, cash equivalents and short-term investments for each of the periods presented (in thousands):

	AS OF JUNE 30, 2024
	CLASSIFICATION	AMORTIZED COST		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES		FAIR MARKET VALU E
Cash and money market funds	Cash and cash equivalents	$	34,248	$	—	$	—	$	34,248
Government and government agency bonds	Short-term investments		12,187		121		—		12,308
Total cash, cash equivalents and short-term investments		$	46,435	$	121	$	—	$	46,556

	AS OF DECEMBER 31, 2023
	CLASSIFICATION	AMORTIZED COST		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES		FAIR MARKET VALUE
Cash and money market funds	Cash and cash equivalents	$	53,504	$	—	$	—	$	53,504
Commercial paper	Short-term investments		2,048		42		—		2,090
Government and government agency bonds	Short-term investments		19,728		254		—		19,982
Corporate bonds	Short-term investments		1,383		12		—		1,395
Total cash, cash equivalents and short-term investments		$	76,663	$	308	$	—	$	76,971

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As of June 30, 2024, the Company did not have any short-term investments with gross unrealized losses. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis. As of June 30, 2024, no allowance for credit losses was recorded.

5. Property and Equipment, Net

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

	AS OF
	JUNE 30,			DECEMBER 31,
	2024			2023
Lab equipment	$	10,129		$	9,760
Furniture and fixtures		872			871
Computers and software		616			607
Leasehold improvements		410			390
		12,027			11,628
Less accumulated depreciation		(4,712	)		(3,532	)
Total property and equipment, net	$	7,315		$	8,096

The Company recognized $0.6 million and $1.2 million in depreciation expense for the three and six months ended June 30, 2024, respectively, and $0.5 million and $1.1 million in depreciation expense for the three and six months ended June 30, 2023, respectively.

6. Accrued Expenses

Accrued expenses consist of the following (in thousands):

	AS OF
	JUNE 30,		DECEMBER 31,
	2024		2023
Accrued research and development expenses	$	1,414	$	2,861
Accrued payroll and other employee benefits		2,936		4,047
Other accrued expenses		1,864		1,109
Total accrued expenses	$	6,214	$	8,017

7. Simple Agreement for Future Equity

During 2023, the Company entered into SAFEs with various existing investors and related parties with aggregate gross proceeds of $24.4 million. The SAFEs granted investors with rights to participate in a future equity financing. The SAFEs have no maturity dates and bear no interest. Upon an equity financing, the SAFEs will automatically convert into the type of stock issued in the financing at a per share conversion price equal to the greater of (i) the purchase amount of the SAFEs divided by the post-money valuation cap price of $48.25 per share, or (ii) the purchase amount of the SAFEs divided by the 85% per share price paid by investors in the financing. Upon an initial public offering, the SAFEs will automatically convert into shares of common stock equal to the purchase amount of the SAFE divided by the discount price (the lower of (a) the price per share of common stock sold to the public by the underwriters in the initial public offering multiplied by the discount rate of 85% or (b) the post-money valuation cap price of $48.25 per share). Other conversion events include liquidity events (a change of control or direct listing). Upon a liquidity event, each investor

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will automatically be entitled to receive a portion of proceeds equal to the greater of (i) the purchase amounts of the SAFEs, or (ii) the amount payable in the number of common shares equal to the purchase amount of the SAFEs divided by the 85% per share price. Upon a dissolution event and to the extent sufficient funds are available, the holders of SAFEs shall be entitled to receive cash payments equal to the purchase amount, prior to and in preference to any distribution of any assets or surplus funds to the holders of convertible preferred and common stock.

8. Collaboration and License Agreements

The Company has entered into several agreements with GC Cell and related entities concerning its NK cell therapy platform and manufacturing of its core products, as described below.

Option and License Agreement with GC Cell

In September 2019, the Company entered into an option and license agreement with GC Cell Corporation (“GC Cell”), formerly Green Cross Cell Corporation, as amended in June 2020 and February 2022 (the “Core Agreement”). Under the Core Agreement, GC Cell granted the Company an exclusive, royalty-bearing license, with the right to sublicense through multiple tiers, under certain intellectual property and technology owned or controlled by GC Cell relating to non-genetically modified and genetically modified NK cells, and culturing, engineering, manufacturing thereof, to research, develop, manufacture, and commercialize NK cell pharmaceutical products in the Artiva Territory, which is anywhere in the world except for Asia, Australia, and New Zealand. GC Cell retained rights under the license to allow it and its affiliates to perform obligations under the Core Agreement and other agreements between the Company and them.

Under the Core Agreement, GC Cell agreed to conduct a discovery, research, preclinical development, and manufacturing program under a plan approved by a Joint Steering Committee (the “JSC”), to generate and identify product candidates for nomination as option candidates. GC Cell will bear all costs for its work under the R&D Plan, except that the Company will bear all costs for completing IND-enabling activities performed by GC Cell on behalf of the Company, other than certain efficacy studies.

For each product candidate determined by the JSC to be an option candidate, the Company has an exclusive option under the Core Agreement to obtain an exclusive, sublicensable license to research, develop, manufacture and commercialize such candidate in the Artiva Territory for any therapeutic, prophylactic or diagnostic uses in humans, on economic terms to be determined in good faith by the parties. GC Cell retains exclusive rights to the licensed technology in Asia, Australia, and New Zealand, though the Company has the right to request, and GC Cell has agreed to consider in good faith, inclusion of Australia, New Zealand, and/or specific countries in Asia in the Artiva Territory on a product-by-product basis. If the Company elects not to exercise the option with respect to a particular option candidate, GC Cell retains the right to continue development of such candidate. As of June 30, 2024, the Company has exercised its rights to license four option candidates, AB-101 (AlloNK), AB-201, AB-202, and AB-205, as described below.

The Company has control over and will bear the costs of the development, regulatory, manufacturing, and commercialization activities relating to the option candidates for which it has exercised its option, each a licensed product. Accordingly, the Company has certain diligence obligations and must use commercially reasonable efforts to develop and seek regulatory approval for each licensed product in at least one indication in the United States and the European Union, and following regulatory approval in a country, to commercialize such licensed product in at least one indication in such country. The Core Agreement provides that the Company has the right to engage GC Cell or its appropriate affiliate to provide research and manufacturing services for the licensed products being developed by the Company in the Artiva Territory under separately executed service agreements.

Under the Core Agreement, the Company is obligated to pay a low single-digit percentage royalty on net sales of any licensed products, the manufacture, use or sale of which is claimed by or uses any Core IP. The royalty rate is subject to reduction under certain scenarios, and royalties are payable on a product-by-product and country-by-country basis, beginning with the first commercial sale of a licensed product and continuing until the later of: (i) expiration of the last-to-expire claim of the licensed patents and jointly owned patents in the country of sale; (ii) expiration of any regulatory exclusivity for a licensed product in that country; and (iii) the tenth anniversary of the first commercial sale of a licensed product in that country. The Company also has the exclusive option to extend its license to the Core IP to be worldwide with respect to products originated from the Company in exchange for a specified increase in the applicable royalty. GC Cell is also obligated to pay the Company a royalty at a rate equal to 50% of the royalty payable by the Company for such product in the Artiva Territory on net sales outside the Artiva Territory of any licensed product, the manufacture, use or sale of which is claimed by or uses any jointly owned intellectual property. As of June 30, 2024, the Company has not recognized any net sales royalties under this agreement.

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AB-101 Selected Product License Agreement

In November 2019, the Company entered into a license agreement with GC Cell for its AB-101 product candidate, as amended in February 2022 (the “AB-101 Agreement”). AB-101 is the first product for which the Company exercised its option under the Core Agreement. Under the AB-101 Agreement, GC Cell granted the Company an exclusive, royalty-bearing license in the Artiva Territory, with the right to sublicense through multiple tiers, under certain intellectual property and technology owned or controlled by GC Cell, to research, develop, manufacture, and commercialize AB-101.

Under the AB-101 Agreement, the Company is obligated to pay tiered royalties in the low-mid to high single-digit percentage range on annual net sales of any licensed AB-101 products. The royalty rate is subject to reduction under certain scenarios, and royalties are payable on a product-by-product and country-by-country basis, beginning with the first commercial sale of a licensed AB-101 product and continuing until the later of: (i) expiration of the last-to-expire claim of the licensed patents and jointly owned patents in the country of sale; (ii) expiration of any regulatory exclusivity for a licensed product in that country; and (iii) the tenth anniversary of the first commercial sale of a licensed product in that country. The Company is also obligated to make milestone payments to GC Cell of: (1) up to $22.0 million upon the first achievement of certain development milestones; and (2) up to $55.0 million upon the first achievement of certain sales milestones. GC Cell is also obligated to pay the Company a royalty at a rate equal to 50% of the royalty payable by the Company for such product in the Artiva Territory on net sales outside the Artiva Territory of any licensed AB-101 product, the manufacture, use or sale of which is claimed by or uses any jointly owned intellectual property. As of June 30, 2024, the Company has not recognized any net sales royalties or milestones under this agreement.

AB-201 Selected Product License Agreement

In October 2020, the Company entered into a license agreement with GC Cell for its AB-201 product candidate, as amended in February 2022 (the “AB-201 Agreement”). AB-201 is the second product for which the Company exercised its option under the Core Agreement. Under the AB-201 Agreement, GC Cell granted the Company an exclusive, royalty-bearing license in the Artiva Territory, with the right to sublicense through multiple tiers, under certain intellectual property and technology owned or controlled by GC Cell, to research, develop, manufacture, and commercialize AB-201.

Under the AB-201 Agreement, the Company is obligated to pay tiered royalties in the mid to high single-digit percentage range on annual net sales of any licensed AB-201 products. The royalty rate is subject to reduction under certain scenarios, and royalties are payable on a product-by-product and country-by-country basis, beginning with the first commercial sale of a licensed AB-201 product and continuing until the later of: (i) expiration of the last-to-expire claim of the licensed patents and jointly owned patents in the country of sale; (ii) expiration of any regulatory exclusivity for a licensed product in that country; and (iii) the tenth anniversary of the first commercial sale of a licensed product in that country. The Company is also obligated to make milestone payments to GC Cell of: (1) up to $25.0 million upon the first achievement of certain development milestones; and (2) up to $55.0 million upon the first achievement of certain sales milestones. GC Cell is also obligated to pay the Company a royalty at a rate equal to 50% of the royalty payable by the Company for such product in the Artiva Territory on net sales outside the Artiva Territory of any licensed AB-201 product, the manufacture, use or sale of which is claimed by or uses any jointly owned intellectual property.

In September 2023, the Company entered an amendment to the AB-201 Agreement (the “Amended AB-201 Agreement”). This amendment granted back GC Cell an exclusive, royalty and milestone bearing license to all information and patents controlled by the Company that relate specifically to the research, development, manufacture and use of AB-201, to be used outside of the Artiva Territory. Under the Amended AB-201 Agreement, the Company will receive tiered royalties in the low single-digit percentage range on annual GC Cell net sales of AB-201 outside of the Artiva Territory. The royalties are payable on a product-by-product and country-by-country basis, beginning with the first commercial sale of AB-201 outside of the Artiva Territory and continuing until the later of: (i) expiration of the last-to-expire claim of the licensed patents in the country of sale; (ii) expiration of any regulatory exclusivity for a licensed product in that country; and (iii) the tenth anniversary of the first commercial sale of a licensed product in that country. The Company will also receive milestone payments upon achievement of certain development milestones, totaling $1.8 million. In December 2023, GC Cell achieved the first regulatory milestone under the Amended AB-201 Agreement for first IND acceptance for AB-201 outside the Artiva Territory.

The Company recognized $0 and $0.3 million of license and development support-related revenue during the three and six months ended June 30, 2024, respectively, in the condensed statements of operations and comprehensive loss, related to development support activities under the Amended AB-201 Agreement. During the three and six months ended June 30, 2023, no license and development support-related revenue was recognized. As of June 30, 2024 and December 31, 2023, total accounts receivable related to the Amended AB-201 Agreement were $0.6 million and $0.6 million, respectively.

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AB-205 Selected Product License Agreement

In December 2022, the Company entered into a license agreement with GC Cell for its AB-205 product candidate (the “AB-205 Agreement”). AB-205 is the fourth product for which the Company exercised its option under the Core Agreement. Under the AB-205 Agreement, GC Cell granted the Company an exclusive, royalty-bearing license in the Artiva Territory, with the right to sublicense through multiple tiers, under certain intellectual property and technology owned or controlled by GC Cell, to research, develop, manufacture, and commercialize AB-205.

Under the AB-205 Agreement, the Company is also obligated to pay tiered royalties in the mid to high single-digit percentage range on annual net sales of any licensed AB-205 products. The royalty rate is subject to reduction under certain scenarios, and royalties are payable on a product-by-product and country-by-country basis, beginning with the first commercial sale of a licensed AB-205 product and continuing until the later of: (i) expiration of the last-to-expire claim of the licensed patents and jointly owned patents in the country of sale; (ii) expiration of any regulatory exclusivity for a licensed product in that country; and (iii) the tenth anniversary of the first commercial sale of a licensed product in that country. Upon election by the Company to proceed with clinical development of AB-205 (prior to which the Company may not make, use or sell AB-205 for clinical development purposes), the Company is obligated to pay a one-time payment of $2.5 million to GC Cell. Thereafter, the Company is also obligated to make milestone payments to GC Cell of: (i) up to $29.5 million upon the first achievement of certain development milestones, excluding any payments for the Development Cost Share as defined in the AB-205 Agreement; and (ii) up to $28.0 million upon the first achievement of certain sales milestones. As of June 30, 2024, the Company has not recognized any net sales royalties or milestones under this agreement.

In connection with the AB-205 License Agreement, the Company recognized $0 and $0.1 million of expense reimbursements for development costs invoiced to GC Cell for the three and six months ended June 30, 2024, respectively, and $0.5 million and $0.5 million for the three and six months ended June 30, 2023, respectively. The Company did not receive any payments from GC cell during the three and six months ended June 30, 2024 and 2023. As of June 30, 2024 and December 31, 2023, the Company recorded $0.7 million and $0.6 million, respectively, in the condensed balance sheets as other receivable from GC Cell.

Research Services Agreement with GC Cell

As contemplated by the Core Agreement, in August 2020 the Company entered into the GC Cell Research Services Agreement, as amended in February 2022, under which GC Cell agreed to provide research services in support of the research and development of one or more of the products the Company has licensed from GC Cell.

The agreement provides that the parties will agree to specific projects as work orders under the GC Cell Research Services Agreement. Each work order shall set forth, upon terms mutually agreeable to GC Cell and the Company, the specific services to be performed by GC Cell, the timeline and schedule for the performance of the services, and the compensation to be paid by the Company to GC Cell for the provision of such services, as well as any other relevant terms and conditions (see Note 10).

Master Manufacturing Agreement with GC Cell

In March 2020, the Company entered into a Master Agreement for Manufacturing Services (the “Manufacturing Agreement”) with GC Cell, under which GC Cell agreed to manufacture specified products under individual work orders for use in the Company’s Phase 1 and Phase 2 clinical trials. Each work order will contain an estimated budget of service fees and out-of-pocket costs to be incurred in the performance of services under the agreement and the work order, as well as additional terms and conditions relating to the estimated budget. The Company will own all results and data generated by GC Cell under the Manufacturing Agreement (see Note 10).

Merck Exclusive License and Collaboration Agreement

In January 2021, the Company entered into the Exclusive License and Research Collaboration Agreement (the “Merck Collaboration Agreement”) with Merck for the discovery, development, manufacture

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and commercialization of CAR-NK cells that target certain solid tumor antigens. Merck paid the Company $30.0 million upfront for two target programs under the Merck Collaboration Agreement. As part of the Merck Collaboration Agreement, the Company was also eligible to receive additional payments for achieving certain development, regulatory approval and sales milestones, as well as royalties on net sales. In addition, the Company would be reimbursed for the conduct of each research program, including external research costs and manufacture and supply of clinical material for Phase 1 clinical trials.

Concurrent with entering into the Merck Collaboration Agreement, the Company also entered into an agreement with GC Cell to obtain exclusive, worldwide rights to GC Cell’s CAR-NK technology with respect to the licensed products and to engage GC Cell to perform services in support of the research programs (“Partnered Program License Agreement”). The Company agreed to reimburse GC Cell for research and development services as these services were provided. The Company was required to pay GC Cell 100% of regulatory milestones, sales milestones and royalty payments received by Merck relating to products in Asia, Australia and New Zealand and 50% of upfront payments, license fees, regulatory milestones, sales milestones and royalty payments received by Merck relating to products in all other territories.

In October 2023, the Merck Collaboration Agreement and development thereunder was terminated by Merck.

The Company applied ASC 808 to the Merck Collaboration Agreement and determined that the agreements were applicable to such guidance. The Company concluded that Merck represented a customer and applied relevant guidance from ASC 606 to account for the Merck Collaboration Agreement. In accordance with this guidance, the Company identified its performance obligations, including its grant of a license to Merck to certain of its intellectual property subject to certain conditions, transfer of technology, its conduct of research services, and its participation in a joint research committee. The Company determined that its grant of a license to Merck to certain of its intellectual property subject to certain conditions was not distinct from other performance obligations because such grant is dependent on the conduct and results of the research services.

Additionally, the Company determined that its conduct of research services was not distinct from other performance obligations since the research could not be conducted without also delivering the rights to the license, developed intellectual property and technology transfer. Accordingly, the Company determined that all performance obligations should be accounted for as one combined performance obligation for each target program, and that the combined performance obligation is transferred over the expected term of the conduct of the research services, which is collectively estimated to be four years, which represents the combined terms for the research programs (“Expected Research Term”).

The Company assessed the upfront, non-refundable and non-creditable payment of $30.0 million received in January 2021 and concluded that there was not a significant financing component to the Merck Collaboration Agreement.

The Company also assessed the effects of the variable consideration under the Merck Collaboration Agreement. Such assessment evaluated, among other things, the likelihood of receiving: (i) various clinical, regulatory and commercial milestone payments; and (ii) royalties on net sales. Based on its assessment, the Company concluded that given the substantial uncertainty related to their achievement, such variable consideration was not included in the transaction price.

In accordance with ASC 606, the Company determined that the initial transaction price under the Merck Collaboration Agreement equaled $58.0 million, consisting of the upfront, non-refundable and non-creditable payment of $30.0 million and the aggregate estimated research and development fees of $28.0 million. The initial transaction price was allocated evenly to each of the two product targets. The upfront payment of $30.0 million was recorded as deferred revenue, and was recognized as revenue over the Expected Research Term as the research services were the primary component of the combined performance obligations. Revenue associated with the upfront payment was recognized based on actual costs incurred as a percentage of the estimated total costs expected to be incurred over the Expected Research.

The Company assessed the payments made to GC Cell in connection with the Partnered Program License Agreement and concluded that all payments received from Merck and paid to GC Cell should be reflected within the Company’s condensed financial statements on a gross basis. The Company recognized payments from Merck as collaboration revenue as the performance obligation was satisfied over time, and payments made to GC Cell were recognized as research and development expense, as incurred.

The Company recognized $0 of revenue under the Merck Collaboration Agreement during the three and six months ended June 30, 2024, and recognized $3.5 million and $4.5 million of revenue under the Merck Collaboration Agreement during the three and six months ended June 30, 2023, respectively. Over the course of the Merck Collaboration Agreement through June 30, 2024, the Company received $39.9 million in payments from Merck, of which $30.0 million related to the upfront fee, and $9.9 million related to reimbursable research services.

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Affimed Collaboration Agreement

On November 1, 2022, the Company entered into a strategic collaboration agreement with Affimed GmbH, a subsidiary of Affimed N.V. (“Affimed”) for the clinical development and commercialization of a combination therapy, for any uses in humans or animals, comprising Affimed’s product consisting of an innate cell engager referred to as “AFM13” and the Company’s product containing an NK cell referred to as AB-101 (the “Affimed Collaboration Agreement”). While the collaboration is initially limited to the United States, the parties will, upon Affimed’s request, in good faith discuss an expansion to certain other territories.

The Company has granted Affimed, with respect to the development of the combination therapy an exclusive, and with respect to the promotion of the combination therapy under the Affimed Collaboration Agreement a non-exclusive, non-transferable (except to affiliates and successors in interest), royalty-free and non-sublicensable (with certain exceptions) license under relevant Company patents and know-how. Affimed has granted the Company a non-exclusive, non-transferable (except to affiliates and successors in interest), royalty-free license and non-sublicensable (with certain exceptions) license under relevant Affimed patents and know-how for use in the clinical development of the combination therapy under the Affimed Collaboration Agreement.

The financial terms of the Affimed Collaboration Agreement provides that Affimed shall be responsible for all costs associated with the development of the combination therapy (including all clinical trial costs), except that Affimed and the Company shall each bear 50% of the costs and expenses incurred in connection with the performance of any confirmatory combination therapy clinical trial required by the FDA. The Company shall be solely responsible for all costs incurred by the Company for the supply of AB-101 and IL-2 product used in the clinical trials for the combination therapy, and for carrying out activities assigned to it under the agreed development plan. In addition, under the Affimed Collaboration Agreement, the parties agree to make payments to each other to achieve a proportion of 67%/33% (Affimed/Company) of revenues generated by both parties from commercial sales of each party’s product as part of the combination therapy.

The Company incurred $0 and $0.1 million of expense in connection with the Affimed Collaboration Agreement during the three and six months ended June 30, 2024, respectively, and $0 and $0.7 million of expense in connection with the Affimed Collaboration Agreement during the three and six months ended June 30, 2023, respectively.

9. Convertible Preferred Stock and Stockholders’ Deficit

Stockholders’ Deficit

Under the Amended and Restated Certificate of Incorporation dated April 29, 2024, the Company had a total of 67,268,142 shares of capital stock authorized for issuance, consisting of 40,248,588 shares of common stock, par value of $0.0001 per share, and 27,019,554 shares of convertible preferred stock, par value of $0.0001 per share. The Amended and Restated Certificate of Incorporation included the authorization of 84,556 shares reserved under the terms specified as part of the Company’s Pledge 1% Movement commitment, in support of its corporate social responsibility and philanthropic pursuits.

Convertible Preferred Stock

In 2020 and 2021, the Company issued 2,077,165 shares and 1,595,983 shares, respectively, of Series A convertible preferred stock at a price of $21.93 per share, resulting in aggregate gross proceeds of $70.0 million and total issuance costs of $0.4 million. The Company converted a promissory note with a fair value of $10.6 million as part of the first closing and reclassified a convertible preferred stock purchase right liability with a fair value of $23.7 million into equity as part of the second closing.

In 2021, the Company issued 2,487,237 shares of Series B convertible preferred stock at a price of $48.25 per share resulting in aggregate gross proceeds of $120.0 million and incurred $0.4 million of total issuance costs.

As of June 30, 2024, the Company’s Series A and Series B convertible preferred stock has been classified as temporary equity in the accompanying condensed balance sheets given that the holders of the convertible preferred stock could cause certain events to occur that are outside of the Company’s control whereby the Company could be obligated to redeem the convertible preferred stock. The carrying value of the convertible preferred stock is not adjusted to the redemption value until the contingent redemption events are considered to be probable of occurring.

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The Company’s convertible preferred stock has the following rights, preferences and privileges:

Dividends

The Company shall not declare, pay or set aside any dividends on shares of any class of capital stock of the Company unless the holders of the Series A or Series B convertible preferred stock shall first receive, or simultaneously receive, a dividend on each outstanding share of the Series A convertible preferred stock equal to an amount as defined in the Company’s Amended and Restated Certificate of Incorporation. No such dividends have been declared or paid through June 30, 2024.

Preferences on Liquidation

The holders of the Series A convertible preferred stock are entitled to receive liquidation preferences, in the event of a change in control, at an amount per share equal to the greater of (i) the Series A original issuance price of $21.93, plus any dividends declared but unpaid or (ii) such amount per share as would have been payable had all shares of Series A convertible preferred stock been converted into common stock. The holders of the Series B convertible preferred stock are entitled to receive liquidation preferences, in the event of a change in control, at an amount per share equal to the greater of (1) the Series B original issuance price of $48.25, plus any dividends declared but unpaid or (2) such amount per share as would have been payable had all shares of Series B convertible preferred stock been converted into common stock. Liquidation payments to the holders of the Series A and Series B convertible preferred stock have priority and are made in preference to any payments to the holders of common stock.

After full payment of the liquidation preference to the holders of the Series A and Series B convertible preferred stock, the remaining assets, if any, will be distributed ratably to the holders of the common stock.

Conversion Rights

The shares of Series A and Series B convertible preferred stock are convertible into an equal number of shares of common stock, at the option of the holder, subject to certain anti-dilution adjustments. The conversion rate for the convertible preferred stock is determined by dividing the original issue price by the conversion price. The conversion price is initially the original issue price, but is subject to adjustment for dividends, stock splits, and other distributions. The conversion rate at June 30, 2024, for the Series A and Series B convertible preferred stock was 1:1.

Each share of Series A convertible preferred stock will be automatically converted into common stock at the then effective conversion rate (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the), common stock) upon: (i) the closing of the sale of common stock to the public in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $75.0 million of gross proceeds to the Company; or (ii) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of 60% of the outstanding shares of Series A convertible preferred stock. Each share of Series B convertible preferred stock will be automatically converted into common stock at the then effective conversion rate (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to common stock) upon: (1) the closing of the sale of common stock to the public in a firm- commitment underwritten public offering pursuant to an effective registration statement Securities Act of 1933, as amended, resulting in at least $75.0 million of gross proceeds to the Company; or (2) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of 60% of the outstanding shares of Series B convertible preferred stock.

Redemption Rights

The holders of Series A and Series B convertible preferred stock do not have any redemption rights, except upon certain liquidation events that are outside of the Company’s control.

Voting

The holder of each share of Series A and Series B convertible preferred stock generally vote together with the shares of common stock as a single class, but also have class vote approval rights as provided by the Company’s certificate of incorporation or as required by applicable law.

Common Stock

The voting, dividend, and liquidation rights of the holders of the common stock are subject to, and qualified by, the rights, preferences and privileges of the holders of the Series A and Series B convertible preferred stock. The holders of the common stock are entitled to one vote for each share of common stock held at all meetings of stockholders.

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Common stock reserved for future issuance consisted of the following:

	AS OF
	JUNE 30, 2024		DECEMBER 31, 2023
Convertible preferred stock		6,160,385		6,160,385
Common stock options granted and outstanding		1,803,867		1,315,726
Restricted stock units granted and outstanding		22,514		22,514
Shares available for issuance under the 2020 equity incentive plan		115,543		323,131
Shares available for issuance under the Pledge 1% commitment		84,556		84,556
Total common stock reserved for future issuance		8,186,865		7,906,312

Stock Options

In June 2020, the Company adopted the 2020 Equity Incentive Plan (the “Plan”). The Plan provides for the grant of incentive stock options (“ISO”), non-statutory stock options (“NSO”), stock appreciation rights, restricted stock awards, restricted stock unit awards, and other stock awards.

The Plan was amended in December 2020, January 2021, July 2021, August 2022, and in April 2024. In April 2024, the Plan was amended to increase the total number of shares reserved under the Plan to 2,083,797.

Options granted under the Plan are exercisable at various dates as determined upon grant and will expire no more than 10 years from their date of grant. The exercise price of each option shall be determined by the board of directors based on the estimated fair value of the Company’s stock on the date of the option grant. The exercise price shall not be less than 100% of the fair market value of the Company’s common stock at the time the option is granted. Most option grants generally vest 25% on the first anniversary of the original vesting commencement date, with the balance vesting monthly over the remaining three years and early exercise is permitted. The vesting period generally occurs over four years unless there is a specific performance vesting trigger at which time those shares will vest when the performance trigger is probable to occur.

On April 6, 2023, the Company’s board of directors approved a stock option repricing (the “Option Repricing”) in which the exercise price of certain outstanding options to purchase shares of the Company’s common stock under the 2020 Plan was reduced to $5.01 per share, the estimated fair value of the Company’s common stock as of December 31, 2022. The Option Repricing was intended to motivate holders of options with exercise prices in excess of the estimated fair value of the Company’s common stock to remain with the Company and work toward its success. The Option Repricing included options granted pursuant to the 2020 Plan that were held by, among others, members of the Company’s board of directors and the Company’s named executive officers.

As a result of the Option Repricing, 1,168,651 shares of vested and unvested stock options outstanding as of April 6, 2023, with original exercise prices ranging from $5.14 to $51.72 per share, were repriced to an exercise price of $5.01 per share. The Option Repricing impacted 70 grantees and the total incremental fair value recognized as a result of the repricing was $1.5 million.

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A summary of the Company’s stock option activity under the Plan is as follows:

	TOTAL OPTIONS			WEIGHTED- AVERAGE EXERCISE PRICE PER SHARE		WEIGHTED- AVERAGE REMAINING CONTRACTUAL TERM		AGGREGATE INTRINSIC VALUE
						(in years)		(in thousands)
Outstanding at December 31, 2023		1,315,726		$	5.02		9.1	$	214
Granted		525,412			10.29		—		—
Exercised		(4,444	)		5.00		—		—
Cancelled		(32,827	)		6.76		—		—
Outstanding at June 30, 2024		1,803,867		$	6.51		8.9	$	12,540
Exercisable as of June 30, 2024		1,167,786		$	5.04		8.0	$	9,840

The weighted-average grant date fair value of options granted for the six months ended June 30, 2024 and 2023, was $8.59 and $1.36 per share, respectively. The total intrinsic value of options exercised during the six months ended June 30, 2024 and 2023, was de minimus. Upon the exercise of stock options, the Company will issue new shares of its common stock.

Restricted Stock Unit Awards

Restricted stock unit awards (“RSUs”) granted under the 2020 Plan are subject to time-based vesting and convert to shares of common stock in accordance with the vesting schedule. RSUs are valued at the estimated fair value of the Company’s stock on the date of grant and are amortized over the requisite service period. The total number of RSUs granted represents the maximum number of RSUs eligible to vest based upon the service conditions set forth in the grant agreements. Employees forfeit unvested RSUs upon termination of employment with a corresponding reversal of expense.

During the six months ended June 30, 2024 and 2023, no RSUs were granted by the Company. As of June 30, 2024, 22,514 total RSUs were outstanding.

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense by condensed financial statement line item in the Company’s statement of operations and comprehensive loss (in thousands):

	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
	2024		2023		2024		2023
Research and development	$	792	$	1,060	$	1,559	$	2,088
General and administrative		691		1,398		1,330		2,202
Total	$	1,483	$	2,458	$	2,889	$	4,290

In 2023, the Company entered into separation agreements with certain executives, terminating their employment and entering into consulting agreements. Under the separation agreements, service-based requirements for one of the

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executives were deemed satisfied for all RSUs as of the date of separation. In order for RSUs to vest, there must be a Liquidity event and the RSUs must meet the time and service-based requirement prior to the defined Liquidity Event Deadline. The Company recognized $0 in incremental compensation cost for the three and six months ended June 30, 2024, and $0.5 million in incremental compensation cost for the three and six months ended June 30, 2023. The separation agreements also provided for extended vesting terms of certain options grants through the term of the consulting agreements. The Company recognized $0 in incremental compensation cost for the three and six months ended June 30, 2024, and $0 and $0.2 million in incremental compensation cost for the three and six months ended June 30, 2023, respectively.

The assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee and nonemployee stock option grants issued for the six months ended June 30, 2024 and 2023, were as follows:

	SIX MONTHS ENDED JUNE 30,
	2024			2023
Stock price	$	1.18 - $3.07		$	1.14
Risk-free rate of interest		4.1% - 4.6	%		3.6% - 3.9	%
Expected term (years)		5.1 - 6.1			5.1 - 6.1
Expected stock price volatility		106.2% - 110.5	%		86.5% - 87.6	%
Expected dividend yield		—			—

As of June 30, 2024, the unrecognized compensation cost related to outstanding employee and nonemployee options was $9.9 million and is expected to be recognized as expense over a weighted-average period of 2.5 years. As of June 30, 2024, there was no unrecognized compensation cost related to outstanding RSUs.

10. Related Party Transactions

GC Cell and GC Corp, subsidiaries of Green Cross Corp, are stockholders of the Company and are represented on the Company’s board of directors.

In November 2019, October 2020, March 2021, and December 2022, the Company entered into a license agreement (collectively, the “License Agreements”) with GC Cell (see Note 8). In August 2020, the Company entered into a Research and Service Agreement with GC Cell in which GC Cell is to provide mutually agreed research services in support of the research and development of one or more of the Selected Products that the Company has licensed from GC Cell under the License Agreements. The Company did not incur any research and development expense in connection with the agreements for the three and six months ended June 30, 2024 and 2023. As of June 30, 2024 and December 31, 2023, the Company had no accounts payable and accrued expenses in connection with the GC Cell License Agreements and Research Service Agreement.

In September 2023, the Company and GC Cell amended the AB-201 Agreement (see Note 8). The Company recognized $0 and $0.3 million of license and development support-related revenue for the three and six months ended June 30, 2024, respectively, on its condensed statements of operations and comprehensive loss, related to GC Cell’s achievement of a defined development milestone and development support activities under the Amended AB-201 Agreement. As of June 30, 2024 and December 31, 2023, total accounts receivable related to the Amended AB-201 Agreement were $0.6 million and $0.6 million, respectively.

Under the AB-205 Agreement, GC Cell agreed to reimburse the Company for Direct Costs incurred on behalf of GC Cell in accordance with the Development Plan under the AB-205 Agreement, provided that such reimbursed costs are deemed to form part of the Direct Costs incurred and paid by GC Cell (see Note 8). Total reimbursements for development costs invoiced to GC Cell in connection with the AB-205 Agreement were $0 and $0.1 million for the three and six months ended June 30, 2024, respectively, and $0.5 million and $0.5 million for the three and six months ended June 30, 2023, respectively. During the three and six months ended June 30, 2024 and 2023, the Company did not receive any payments from GC Cell. As of June 30, 2024 and December 31, 2023, the Company had $0.7 million and $0.6 million recorded in the condensed balance sheets as other receivable, respectively.

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In March 2020, the Company entered into the Manufacturing Agreement with GC Cell, where GC Cell is to perform manufacturing services with respect to any biological or chemical product manufactured or to be manufactured for use in Phase 1 or Phase 2 clinical trials. The Company amended the Manufacturing Agreement in June 2020 to include the Company’s right to terminate the agreement at will. The Company incurred $1.2 million and $1.5 million of research and development expenses in connection with the agreement for the three and six months ended June 30, 2024, respectively, and $0.9 million and $1.8 million of research and development expenses in connection with the agreement for the three and six months ended June 30, 2023, respectively. As of June 30, 2024 and December 31, 2023, the Company had $1.1 million and $2.4 million, respectively, of accounts payable and accrued expenses in connection with the Manufacturing Agreement recorded in the condensed balance sheets.

In January 2021, concurrent with entering into the Merck Collaboration Agreement, the Company also entered into a Partnered Program License Agreement with GC Cell to obtain exclusive, worldwide rights to GC Cell’s CAR-NK technology with respect to the licensed products and to engage GC Cell to perform services in support of the research programs. The Company agreed to reimburse GC Cell for research and development services as these services were provided. The Company was required to pay GC Cell 100% of regulatory milestones, sales milestones and royalty payments received by Merck relating to products in Asia, Australia and New Zealand and 50% of upfront payments, license fees, regulatory milestones, sales milestones and royalty payments received by Merck relating to products in all other territories. In October 2023, the Merck Collaboration Agreement and development thereunder was terminated by Merck.

11. Commitments and Contingencies

Operating Leases

The following table presents operating rent expense and related short-term lease costs (in thousands):

	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
	2024		2023		2024		2023
Rent expense	$	1,020	$	952	$	2,040	$	2,036
Amount of rent expense related to short-term leases		73		71		147		143

Future minimum annual obligations under the Company’s operating leases with terms in excess of one year are as follows (in thousands):

PERIOD ENDED JUNE 30,
2024 (remaining)		2,046
2025		4,023
2026		3,418
2027		3,520
Thereafter		5,916
Total minimum lease payments		18,923
Less: amount representing interest		(3,380	)
Present value of operating lease liabilities		15,543
Less: operating lease liabilities, current		(3,674	)
Operating lease liabilities, net of current portion	$	11,869

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As the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on average discount rate were as follows:

	AS OF
	JUNE 30,			DECEMBER 31,
	2024			2023
Weighted-average remaining lease term		5.0 years			5.3 years
Weighted-average discount rate		7.8	%		7.8	%

On July 22, 2022, the Company entered into a sublease (the “Sublease Agreement”) with Origis Operating Services, LLC, (the “Sublessee”), whereby the Company agreed to sublease to Sublessee all of the 13,405 rentable square feet of office space in San Diego, California currently leased by the Company under the Executive Drive Lease. The sublease commenced on August 1, 2022, and has a term through December 31, 2025. The aggregate base rent is approximately $2.6 million commencing August 1, 2022. The Company records sublease income as a reduction of general and administrative expense.

The expected undiscounted cash flows to be received from the sublease are as follows (in thousands):

PERIOD ENDED JUNE 30,
2024 (remaining)	$	429
2025		873
Total	$	1,302

The Company recognized $0.2 million and $0.4 million of sublease income for the three and six months ended June 30, 2024, respectively and $0.2 million and $0.4 million of sublease income for the three and six months ended June 30, 2023, respectively.

12. Subsequent Events

For the purposes of the condensed financial statements as of June 30, 2024, and the three and six months then ended, the Company has evaluated the subsequent events through August 30, 2024, the date the condensed financial statements were issued.

On July 12, 2024, the Company effected a 1-for-4.386 reverse stock split of its common stock and convertible preferred stock. The par value and the authorized shares of the common stock and convertible preferred stock were not adjusted as a result of the reverse stock split. These accompanying condensed financial statements and notes to the condensed financial statements give retroactive effect to the reverse stock split for all periods presented.

On July 22, 2024, the Company completed its IPO, pursuant to which it issued and sold 13,920,000 shares of common stock at a public offering price of $12.00 per share. The aggregate gross proceeds of the IPO were $167.0 million before underwriter discounts and commissions, fees, and expenses of $16.3 million, for net proceeds from the IPO of $150.7 million. In addition, the Company granted the underwriters an option for a period of 30 days to purchase up to 2,088,000 additional shares of common stock. On July 25, 2024, the underwriters partially exercised their 30-day option and purchased an additional 1,000,000 shares of the Company’s common stock at the IPO price, upon which the Company received net proceeds of approximately $11.2 million. All underwriter discounts and commissions, fees, and expenses, including the previously deferred offering costs as disclosed previously in this Quarterly Report, will be charged to additional paid in capital as recorded against the gross proceeds.

In connection with the closing of the IPO, the Company’s outstanding convertible SAFE shares automatically converted into 2,391,418 shares of common stock, and the Company’s outstanding convertible preferred stock automatically converted into 6,160,385 shares of common stock.

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In connection with the closing of the IPO, the Company’s board of directors adopted the 2024 Equity Inventive Plan (the “2024 Plan”), a successor to and continuation of the 2020 Plan (as defined in Note 9), and the 2024 Employe Stock Purchase Plan (the “2024 ESPP”). Upon the effectiveness of the 2024 Plan, 4,572,025 shares of common stock were authorized for issuance which consists of (1) 2,630,000 new shares of common stock, (2) 115,436 shares available for issuance under the 2020 Plan, and (3) up to 1,826,589 shares of common stock subject to outstanding stock awards granted under the 2020 Plan that, on or after the 2024 Plan becomes effective, expire or otherwise terminate prior to exercise or settlement; are not issued because the stock award is settled in cash; are forfeited or repurchased because of the failure to vest; or are reacquired or withheld to satisfy a tax withholding obligation or the purchase or exercise price, if any, as such shares become available from time to time. Furthermore, upon effectiveness of the 2024 Plan, no further grants will be made under the 2020 Plan, and the 2020 Plan will automatically terminate on June 23, 2030. Upon the effectiveness of the 2024 ESPP, 212,000 shares of common stock were authorized for issuance.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations and the unaudited interim condensed financial statements and related notes included in this Quarterly Report on Form 10-Q should be read in conjunction with the financial statements and related notes thereto as of and for the year ended December 31, 2023 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in the prospectus filed on July 22, 2024, pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the Securities Act), with the Securities and Exchange Commission (the SEC) , or the Prospectus. This discussion and analysis and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements based upon current beliefs, plans and expectations related to future events and our future financial performance that involve risks, uncertainties and assumptions, such as statements regarding our intentions, plans, objectives and expectations for our business. Our actual results and the timing of selected events could differ materially from those described in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the sections of this Quarterly Report on Form 10-Q entitled “Special Note Regarding Forward-Looking Statements” and “Risk Factor,” under Part II, Item 1A.

Overview

We are a clinical-stage biotechnology company focused on developing natural killer (NK) cell-based therapies for patients suffering from devastating autoimmune diseases and cancers. Our product candidates are derived from donor cells (allogeneic) rather than a patient’s own cells (autologous) and are pre-manufactured, stored frozen and ready to ship to a patient’s treatment location, making them what we believe to be “off-the-shelf.” Our lead product candidate, AlloNK, is a non-genetically modified, cryopreserved NK cell therapy being evaluated in combination with B-cell targeted monoclonal antibodies (mAbs) in an ongoing Phase 1/1b trial in systemic lupus erythematosus (SLE) with or without lupus nephritis (LN) and a basket investigator-initiated trial (IIT) in multiple autoimmune indications. Seminal peer-reviewed clinical studies using autologous CD19 chimeric antigen receptor (CAR) T-cell therapy (auto-CAR-T) for the treatment of autoimmune diseases have demonstrated that deep B-cell depletion in the periphery and in the lymphoid tissue can lead to drug free disease remission. We have already demonstrated that AlloNK in combination with rituximab was able to drive deep B-cell depletion in the periphery and observed complete responses (CRs) in heavily pre-treated patients naïve to auto-CAR-T in our ongoing Phase 1/2 clinical trial in patients with relapsed or refractory B-cell non-Hodgkin lymphoma (B-NHL). We believe the preliminary results from our Phase 1/2 clinical trial evaluating AlloNK in combination with rituximab in patients with B-NHL provide a readthrough to autoimmune disease because efficacy in both diseases appears to be accomplished with a shared mechanism of action involving B-cell depletion in the periphery and in the lymphoid tissues, followed by an immunological reset and B-cell reconstitution. We expect to report initial data on autoimmune indications from at least one of our Phase 1/1b trial or the basket IIT in the first half of 2025.

We commenced our operations in 2019 and have devoted substantially all of our resources to date to organizing and staffing our company, business planning, raising capital, establishing and engaging in collaborations, conducting research and development, advancing and scaling up product candidate manufacturing, establishing cold chain delivery logistics, establishing and protecting our intellectual property portfolio and providing general and administrative support for these activities. Our operations to date have been funded primarily through the issuance and sale of convertible promissory notes, convertible preferred stock, and simple agreements for future equity (SAFEs). From our inception through June 30, 2024, we have raised aggregate gross proceeds of $8.0 million from the issuance and sale of convertible promissory notes, $70.0 million from our Series A convertible preferred stock financings, $120.0 million from our Series B convertible preferred stock financing and $24.4 million from our SAFEs. Additionally, on July 22, 2024, we closed on our initial public offering (IPO), in which we issued and sold 13,920,000 shares of common stock at a public offering price of $12.00 per share. We also sold an additional 1,000,000 shares of common stock upon the partial exercise of the underwriters’ purchase option. The aggregate net proceeds of the IPO, inclusive of the partial exercise of the underwriters’ purchase option and after deducting underwriting discounts, commissions, and offering expenses, was $161.9 million.

We have incurred significant operating losses since the commencement of our operations. We have never generated any revenue from product sales and do not expect to generate any revenues from product sales unless and until we successfully complete development of and obtain regulatory approval for our product candidates, which will not be for several years, if ever. In addition, if we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.

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We have incurred a net loss of $31.8 million and $28.0 million during the six months ended June 30, 2024 and 2023, respectively, and $28.7 million and $58.8 million during the years ended December 31, 2023 and 2022, respectively. As of June 30, 2024, we had an accumulated deficit of $213.1 million, and cash, cash equivalents and short term investments of $46.6 million. We expect to continue to incur significant losses for the foreseeable future as we advance our current and future product candidates through preclinical and clinical development, continue to build our operations and transition to operating as a public company. Accordingly, until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through public or private equity or debt financings or other capital sources, which may include our existing and any future strategic collaborations and other strategic arrangements with third parties. However, we may not be able to raise additional funds or enter into such other arrangements when needed or on favorable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaboration or licensing arrangements with third parties or other strategic transactions, we may have to relinquish rights to our intellectual property, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable