Stockholders' Equity

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Stockholders' Equity

5. Stockholders’ Equity

Shelf Registration Statement

In August 2022, the Company filed a shelf registration statement (File No. 333-266720), which was declared effective in September 2022. The shelf registration statement provides the Company with the ability to offer up to $400.0 million of certain securities, including shares of its common stock, from time to time. The specific terms of any offering under the shelf registration statement are established at the time of such offering. Additionally, in August 2022, the Company entered into an Open Market Sale AgreementSM (“Sale Agreement”) with Jefferies LLC (“Jefferies”) to sell shares of common stock, from time to time, through an “at the market offering” program having an aggregate offering price of up to $100.0 million through which Jefferies would act as sales agent. As of March 31, 2023, $100.0 million of common stock remained available for sale under the Sale Agreement. On May 5, 2023, the Company delivered written notice to Jefferies of its decision to terminate the Sale Agreement, which termination was effective immediately on the date of delivery.

2017 Equity Incentive Plan

In August 2017, the Company adopted the Janux Therapeutics, Inc. 2017 Equity Incentive Plan (the “2017 Plan”), which provided for the grant of incentive stock options, nonstatutory stock options, restricted stock awards and other stock awards to its employees, members of its board of directors and consultants. The maximum term of options granted under the 2017 Plan is ten years and, in general, the options issued under the 2017 Plan vest over a four-year period from the vesting commencement date. The 2017 Plan allows for the early exercise of stock options, which may be subject to repurchase by the Company at the original exercise price. Upon the effectiveness of the 2021 Plan defined and described below, no further grants will be made under the 2017 Plan. Any outstanding awards granted under the 2017 Plan will remain subject to the terms of the 2017 Plan and applicable award agreements.

2021 Equity Incentive Plan

In June 2021, the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan,” and together with the 2017 Plan the “Plans”). Under the 2021 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock awards, performance cash awards and other forms of stock awards to employees, directors and consultants. The maximum term of options granted under the 2021 Plan is ten years and, in general, the options issued under the 2021 Plan vest over a four-year period from the vesting commencement date. The 2021 Plan does not permit early exercises. A total of 2,775,890 new shares of common stock were initially reserved for issuance under the 2021 Plan. The number of shares reserved that were remaining under the 2017 Plan as of the effective date of the 2021 Plan, or 1,424,110 shares, were added to the shares initially reserved under the 2021 Plan upon its effectiveness and any future cancellations under the 2017 Plan will become available for future issuance under the 2021 Plan. In addition, the number of shares of common stock available for issuance under the 2021 Plan automatically increases on January 1 of each calendar year through January 1, 2031, in an amount equal to 5% of the total number of shares of the Company’s common stock on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the Company’s board of directors. As of March 31, 2023, there were 8,759,876 shares authorized for issuance under the 2021 Plan, inclusive of shares added from 2017 Plan cancellations.

A summary of the Company’s stock option activity under its Plans is as follows (in thousands, except share, per share data and years):

	Number of Outstanding Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Balance at December 31, 2022		7,345,444		$	11.67		8.31	$	29,806
Granted		1,730,000		$	14.06
Exercised		(148,649	)	$	10.63
Forfeited or cancelled		(36,890	)	$	16.09
Balance at March 31, 2023		8,889,905		$	12.13		8.53	$	24,122
Vested and expected to vest at March 31, 2023		8,889,905		$	12.13		8.53	$	24,122
Exercisable at March 31, 2023		5,301,088		$	9.09		8.01	$	23,378

The weighted-average grant date fair value per share of option grants for the three months ended March 31, 2023 and 2022 was $10.21, and $14.02, respectively. The total intrinsic value of stock options exercised for the three months ended March 31, 2023 and 2022 was $1.5 million and $0.1 million, respectively. As of March 31, 2023, total unrecognized stock-based compensation cost associated with option grants was $52.7 million, which is expected to be recognized over a remaining weighted-average period of approximately 2.7 years.

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

	Three Months Ended March 31,
	2023	2022
Risk-free interest rate	3.5% – 4.2%	1.5% – 1.7%
Expected volatility	83%	84% – 85%
Expected term (in years)	6.0	6.1
Expected dividend yield	—	—

Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero coupon U.S. Treasury notes with maturities similar to the expected term of the awards.

Expected volatility. Given the Company’s limited historical stock price volatility data, the expected volatility assumption is based on volatilities of a peer group of similar companies whose share prices are publicly available. The peer group was developed based on companies in the biotechnology industry. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available.

Expected term. The expected term represents the period of time that options are expected to be outstanding. Because the Company does not have historical exercise behavior, it determines the expected life assumption using the simplified method, for employees, which is an average of the contractual term of the option and its vesting period. The expected term for nonemployee options is generally the contractual term.

Expected dividend yield. The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends and, therefore, used an expected dividend yield of zero.

2021 Employee Stock Purchase Plan

In June 2021, the Company adopted the 2021 Employee Stock Purchase Plan (the “ESPP”), which became effective on June 10, 2021. The ESPP permits eligible employees who elect to participate in an offering under the ESPP to have up to 15% of their eligible earnings withheld, subject to certain limitations, to purchase shares of common stock pursuant to the ESPP. The price of common stock purchased under the ESPP is equal to 85% of the lower of the fair market value of the common stock at the commencement date of each offering period or the relevant date of purchase. A total of 466,000 shares of common stock were approved to be initially reserved for issuance under the ESPP. In addition, the number of shares of common stock available for issuance under the ESPP

automatically increases on January 1 of each calendar year through January 1, 2031, in an amount equal to the lesser of (i) 1% of the total number of shares of the Company’s common stock on the last day of the calendar month before the date of each automatic increase and (ii) 932,000 shares; provided that before the date of any such increase, the Company’s board of directors may determine that such increase will be less than the amount set forth in clauses (i) and (ii). In June 2021, employees began to enroll in the ESPP and the Company’s first offering period commenced. For the three months ended March 31, 2023 and 2022, stock-based compensation expense related to the ESPP was immaterial. As of March 31, 2023, total unrecognized stock-based compensation expense related to the ESPP was $1.0 million, which is expected to be recognized over a remaining weighted-average period of approximately 1.4 years.

Stock-Based Compensation Expense

Stock-based compensation expense has been reported in the statements of operations and comprehensive loss as follows (in thousands):

	Three Months Ended  March 31,
	2023		2022
Research and development	$	2,358	$	1,660
General and administrative		3,115		2,298
Total	$	5,473	$	3,958

Unvested Stock Liabilities

A summary of the Company’s unvested shares and unvested stock liabilities is as follows (in thousands, except share data):

	Number of Unvested Shares			Unvested Stock Liabilities
Balance at December 31, 2022		68,406		$	169
Vested shares		(37,898	)		(134	)
Balance at March 31, 2023		30,508		$	35

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance consists of the following:

	March 31,		December 31,
	2023		2022
Common stock options outstanding		8,889,905		7,345,444
Shares available for issuance under the Plans		4,403,124		4,012,001
Shares available for issuance under the ESPP		1,233,324		816,478
Total		14,526,353		12,173,923