The Company leases office and laboratory space for its current headquarters in San Diego, California under a non-cancelable operating lease expiring in October 2028 (the “Morehouse Lease”). The Morehouse Lease contains an option to extend the lease for a period of five years, which was not included in the determination of the lease term as it was not reasonably certain that the Company would exercise this option. The Morehouse Lease requires a standby letter of credit of $0.1 million, which is secured by a money market account that is classified as restricted cash in the accompanying condensed balance sheets. The restricted cash is classified as long-term as the underlying funds are required as collateral for the standby letter of credit for a period of greater than 12 months from the balance sheet date.

In November 2021, the Company entered into a non-cancelable operating lease for 63,000 square feet of industrial space located in Indianapolis, Indiana for the construction of a GMP manufacturing facility (the “Indianapolis Lease”). The initial lease term is from March 2022 through April 2032 with an option to extend the lease for a period of five years. Monthly base rental payments due under the Indianapolis Lease commenced in March 2022 and escalate throughout the lease term. The Indianapolis Lease includes certain lease incentives and tenant improvement allowances and the Company is subject to additional charges for operating expenses. Under the terms of the Indianapolis Lease, the Company provided the lessor with an irrevocable letter of credit in the amount of $0.2 million, which is secured by a money market account that is classified as restricted cash in the accompanying condensed balance sheets. The restricted cash is classified as long-term as the underlying funds are required as collateral for the standby letter of credit for a period of greater than 12 months from the balance sheet date. The Indianapolis Lease commenced in March 2022 and the Company recorded a ROU asset of $2.3 million and operating lease liability of $2.4 million, net of lease incentives.


	September 30, 2023
Periods ending December 31:
2023 (remaining 3 months)	$	506
2024	2,070
2025	2,132
2026	2,196
2027	2,261
Thereafter	3,414
Total minimum lease payments	12,579
Less: amount representing interest	(2,855)
Total operating lease liabilities	9,724
Less: current portion of lease liabilities	(1,266)
Operating lease liabilities, net of current portion	$	8,458
Weighted-average discount rate	8.6		%
Weighted-average remaining term	6.0 years

On August 3, 2020, the Company and PeptiDream, Inc. (“PeptiDream”) entered into a license and research collaboration agreement (the “PeptiDream Agreement”) to engage in certain collaborative research activities relating to the identification, discovery, validation, and optimization of novel peptide compounds, following which the Company will have the right to develop and commercialize novel peptide-drug conjugates containing one or more compounds arising out of such collaborative research activities. The initial research term under the PeptiDream Agreement is two years and the Company may extend the research term for one year. The PeptiDream Agreement also contains a research plan under which each party is solely responsible for their own costs incurred.

Pursuant to the PeptiDream Agreement, PeptiDream granted the Company a non-transferable, sublicensable, worldwide, royalty and fee-bearing exclusive commercial license to certain licensed intellectual property rights. PeptiDream also granted the Company a non-exclusive, non-transferable, non-sublicensable, worldwide, non-commercial license to certain intellectual property rights for research purposes only, solely to the extent necessary for the Company to perform its collaboration activities. The Company granted PeptiDream a non-exclusive, non-transferable, non-sublicensable, worldwide license to certain intellectual property rights, solely to the extent necessary for PeptiDream to perform its collaboration activities.

As consideration for the rights and licenses provided, the Company agreed to issue its common shares to PeptiDream upon the closing of each preferred stock offering such that PeptiDream will maintain, on a fully diluted basis, a 5% ownership interest in the Company (the “Right to Future Equity”). The Right to Future Equity terminates upon the earliest of (i) termination of the PeptiDream Agreement in accordance with its terms, (ii) consummation of a change of control of the Company or (iii) consummation of an underwritten public offering of the Company’s common stock. The Company evaluated the terms of the Right to Future Equity and determined the right is a derivative that is not separable from the initial shares of common stock issued under the PeptiDream Agreement and in conjunction with the Company’s Series A preferred stock financing, and therefore, the derivative is embedded and will not require bifurcation as there is no net settlement. The Company will recognize the fair value of any common stock issued under the Right to Future Equity at the time of issuance. In addition to the equity grants, the Company has agreed to pay development milestones for each collaboration target and sales milestones of up to an aggregate of $380.0 million. The Company has agreed to pay PeptiDream a mid to high single-digit percentage royalty on net sales of licensed products, subject to reduction under certain circumstances. In addition, if the Company chooses to sublicense the license to any third parties, the Company agreed to pay to PeptiDream a mid single-digit to mid-twenties percentage of all sublicensing revenue. No amounts have been incurred or paid as of September 30, 2023.

Unless earlier terminated, the PeptiDream Agreement will expire on the first to occur of (a) the instance that, at any time from and after the expiration of the research term, there are no selected conjugates under active development or commercialization by the Company or (b) on a licensed product-by-licensed product and country-by-country basis upon the expiration of the applicable royalty term for such licensed product. The applicable royalty term shall begin on the date of first commercial sale of such licensed product in such country and end on the later of (i) expiration of the last-to-expire royalty claim, (ii) expiration of the regulatory exclusivity period with respect to such licensed product in such country, or (iii) 10 years. Upon expiration of the PeptiDream Agreement pursuant to clause (b) above, the commercial licenses granted to the Company will become irrevocable and fully paid-up with respect to such licensed product and country.

The Company has the right to terminate the PeptiDream Agreement, without cause, by giving 60 days’ advance written notice to PeptiDream, (a) in its entirety, (b) with respect to one or more collaboration target-specific aspects of the research plan, or (c) after the research term, with respect to one or more collaboration targets. Further, the PeptiDream Agreement may be terminated at any time during the term (i) upon written notice by either party upon a material uncured breach, (ii) by either party upon the filing or institution of bankruptcy, reorganization, liquidation, or receivership proceedings with respect to the other party, or upon an assignment of a substantial portion of the other party’s assets for the benefit of its creditors, and (iii) by PeptiDream immediately upon written notice to the Company in the event that the Company, or through an affiliate or sublicensee, directly or through assistance from a third party commences or participates in any administrative, judicial or similar proceeding challenging the validity, enforceability and/or patentability of any of PeptiDream’s patents or licensed technology, subject to certain exceptions.

In 2020, 2021 and 2022, the Company issued 1,187,980 shares, 286,656 shares and 851,943 shares, respectively, of its common stock to PeptiDream in conjunction with its Series A, Series B, Series C and Series D convertible preferred stock financings. In connection with the common stock issuances to PeptiDream the Company recognized $6.5 million for the three and nine months ended September 30, 2022, of fair value of the common stock issuances within research and development expense in the accompanying condensed statements of operations. No shares were issued to PeptiDream during the three and nine months ended September 30, 2023.

On August 9, 2022, the Company entered into an amendment to the PeptiDream Agreement (the “PeptiDream Amendment”). Pursuant to the PeptiDream Amendment, the Company (i) terminated an existing collaboration target and replaced it with a new collaboration target, (ii) extended the research term to four years, (iii) granted PeptiDream an exclusive option to develop, manufacture and commercialize the licensed product in a certain country, solely at PeptiDream’s expense, provided that PeptiDream provides notice of such option exercise before a certain clinical period. Pursuant to the PeptiDream Amendment, (iv) granted PeptiDream (a) a non-transferable, sublicensable, royalty-free, fully paid-up, exclusive license to certain background technology and certain collaboration technology to exploit such licensed product in a certain country and (b) a royalty-free, fully paid-up, non-exclusive license to any other know-how the Company or its affiliates control or that the Company or its affiliates come to control during the term of the PeptiDream Agreement that relates to such licensed product and is necessary or useful for the exercise of the license. Pursuant to the PeptiDream Amendment, PeptiDream has the right to grant a license to certain background technology and certain collaboration technology to any of its affiliates or any third party, subject to certain conditions.

In February 2021, as amended in September and November 2021, the Company and Nimble Therapeutics, Inc. (“Nimble”) entered into a research collaboration and license agreement (the “Nimble Agreement”) to collaborate on certain preclinical development activities with the goal of identifying binding peptides to certain collaboration targets. The collaboration may involve up to a fixed number of option targets, which the Company has the right to nominate during a specified time period. The Company has agreed that after a certain stage of each research plan, the Company is responsible for and has decision-making authority with respect to all development, manufacturing and commercialization of program molecules and program products at its sole cost and expense.

Pursuant to the Nimble Agreement, Nimble granted the Company a non-exclusive, sublicensable (subject to certain exclusions) license to certain of its existing and arising patents and know-how, solely to the extent necessary to make, have made, use, sell, offer for sale, export, import and fully exploit certain program molecules and program products, in the diagnosis, screening or treatment of one of more human diseases by introducing into the human body a peptide molecule targeting a collaboration target coupled to any radioactive molecule worldwide. Under the Nimble Agreement, the Company granted Nimble a non-exclusive, royalty-free, worldwide license to certain of its intellectual property solely for the purpose of Nimble’s performance of its assigned activities under each research plan and program.

The Company paid Nimble an upfront payment of $0.8 million for the primary collaboration target and has agreed to pay Nimble (i) up to an aggregate of $201.7 million upon the attainment of certain discovery, development and sales milestones and (ii) a mid-single digit royalty on net product sales for the first target. The Company has also agreed to make the following payments in total if it nominates the maximum number of additional optional collaboration targets permitted under the Nimble Agreement: (i) up to an aggregate of $897.5 million, which consists of an upfront payment, payments upon the attainment of certain discovery, development and first commercial sales milestones, and certain net sales milestones, and (ii) a mid-single digit royalty on net product sales, subject to reduction under certain circumstances. In addition, the Company has agreed to pay Nimble up to a low double digit percentage of certain licensing consideration it receives.

The Nimble Agreement will expire on a program product-by-program product and country-by-country basis on the date of the expiration of all applicable royalty obligations. Both parties have the right to terminate the Nimble Agreement for an uncured material breach or insolvency of the other party. The Company has the unilateral right to terminate the Nimble Agreement in its entirety upon 90 days prior written notice.

At the inception of the Nimble Agreement, the Company capitalized the $0.8 million upfront payment to Nimble and will amortize such amount to research and development expense over the estimated performance period of Nimble’s assigned activities under the Nimble Agreement. No material fair value was assigned to the license given its early stage of development. As of September 30, 2023, there was no unamortized balance to be recognized. For certain costs incurred by Nimble in connection with the Nimble Agreement, the Company reimbursed Nimble $0 and $0.1 million for the three months ended September 30, 2023 and 2022, respectively, and $0.2 million and $0.3 million for the nine months ended September 30, 2023 and 2022, respectively.

In May 2021, as amended in November 2021 and June 2023, the Company entered into a license agreement (the “Ablaze Agreement”) under which the Company granted Ablaze an exclusive, royalty-bearing and sublicenseable (under certain circumstances) license to certain of the Company’s intellectual property to develop, make, have made, use, sell, offer for sale, import and otherwise commercialize a certain number of the Company’s proprietary products in China, Hong Kong, Macau and Taiwan (“greater China”) for all therapeutic, prophylactic and diagnostic uses, and a right of first negotiation to license up to a certain number of additional products from the Company. Upon completion of certain activities by the Company, Ablaze shall have a designated period of time to decide whether to select such product as a product under this Ablaze Agreement. Ablaze is solely responsible for the development, manufacturing and commercialization of all products covered by the Ablaze Agreement. The maximum number of selected products under the Ablaze Agreement is limited to a certain number and Ablaze’s right to select products will expire upon the earlier of (a) Ablaze selecting the maximum number of products allowed to be selected under the Ablaze Agreement; and (b) the Company presenting to Ablaze a certain number of products for consideration by Ablaze to license. Additionally, pursuant to the Ablaze Agreement, Ablaze granted the Company an exclusive, royalty-free and sublicensable (under certain conditions) license to certain of its intellectual property to develop, manufacture and commercialize certain of the Company’s proprietary products for all therapeutic, prophylactic and diagnostic uses outside of greater China.

No upfront payments were required under the Ablaze Agreement. Ablaze has agreed to pay the Company: (i) up to an aggregate of $70.0 million per product upon the attainment of certain development and net sales milestones, and (ii) a mid to high-single digit royalty on net product sales in greater China, subject to certain potential royalty reductions. In addition, Ablaze has agreed to pay the Company up to a percentage in the mid-teens to mid-twenties of certain sublicense revenue it receives, depending on the time when the sublicense agreement is executed. As of September 30, 2023, no payments have been received from Ablaze.

Unless earlier terminated, the Ablaze Agreement will remain in effect on a product-by-product basis and region-by-region basis, until the expiration of the royalty term for such product in such region in greater China. After the expiration (but not early termination) of the term of the Ablaze Agreement for a particular product in a particular region in greater China, the licenses granted by the Company to Ablaze will continue and become fully paid, royalty-free, perpetual and irrevocable with respect to such product in such region. Under the Ablaze Agreement, either party may terminate if there is an uncured material breach. Either party may terminate the Ablaze Agreement immediately upon written notice to the other party if the other party undergoes certain bankruptcy-related events. Ablaze may terminate the Ablaze Agreement on a product-by-product and region-by-region basis by providing 60 days written notice to the Company. The Company may terminate the Ablaze Agreement in its entirety upon written notice to Ablaze if Ablaze or its affiliates or sublicensees commences a legal action challenging the validity, enforceability or scope of any of the Company’s licensed patents anywhere in the world.