10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended June 30, 2023

OR

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

For the transition period from to

Commission File Number: 001-39971

 

Landos Biopharma, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

81-5085535

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

P.O. Box 11239

Blacksburg, Virginia

24062

(Address of principal executive offices)

(Zip Code)

(540) 218-2232

Registrant’s telephone number, including area code

 

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 $0.01 per share

 

LABP

 

The Nasdaq Stock Market LLC

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

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

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

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

 

 

 

 

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

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

As of August 4, 2023, the registrant had 3,116,729 shares of common stock, $0.01 par value per share, outstanding.

 

 

 


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

3

 

 

 

Item 1.

Financial Statements (Unaudited)

3

 

Condensed Consolidated Balance Sheets

3

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

4

 

Condensed Consolidated Statements of Cash Flows

5

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity

6

 

Notes to Unaudited Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

23

Item 4.

Controls and Procedures

23

 

 

 

PART II.

OTHER INFORMATION

24

 

 

 

Item 1.

Legal Proceedings

24

Item 1A.

Risk Factors

24

Item 6.

Exhibits

25

Signatures

26

 

 


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements. (Unaudited)

Landos Biopharma, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

 

 

 

June 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

44,049

 

 

$

36,640

 

Marketable securities, available-for-sale

 

 

687

 

 

 

7,762

 

Prepaid expenses and other current assets

 

 

1,549

 

 

 

851

 

Total current assets

 

 

46,285

 

 

 

45,253

 

Total assets

 

$

46,285

 

 

$

45,253

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,029

 

 

$

3,435

 

Accrued liabilities

 

 

1,986

 

 

 

2,687

 

Total current liabilities

 

 

3,015

 

 

 

6,122

 

Total liabilities

 

 

3,015

 

 

 

6,122

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.01 par value; 10,000,000 shares authorized, no shares issued and
  outstanding as of June 30, 2023 and December 31, 2022

 

 

 

 

 

 

Common stock, $0.01 par value; 20,000,000 shares authorized, 3,116,729 and
  
4,025,489 shares issued and outstanding as of June 30, 2023 and December 31,
  2022, respectively

 

 

31

 

 

 

40

 

Additional paid-in capital

 

 

186,629

 

 

 

172,575

 

Accumulated other comprehensive loss

 

 

(7

)

 

 

(57

)

Accumulated deficit

 

 

(143,383

)

 

 

(133,427

)

Total stockholders’ equity

 

 

43,270

 

 

 

39,131

 

Total liabilities and stockholders’ equity

 

$

46,285

 

 

$

45,253

 

 

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

 

 

3


 

Landos Biopharma, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

2,463

 

 

$

6,604

 

 

$

5,789

 

 

$

17,404

 

General and administrative

 

 

1,976

 

 

 

4,662

 

 

 

5,129

 

 

 

8,815

 

Total operating expenses

 

 

4,439

 

 

 

11,266

 

 

 

10,918

 

 

 

26,219

 

Loss from operations

 

 

(4,439

)

 

 

(11,266

)

 

 

(10,918

)

 

 

(26,219

)

Other income:

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) gain from foreign exchange

 

 

(40

)

 

 

25

 

 

 

(44

)

 

 

26

 

Interest and other income (expense), net

 

 

557

 

 

 

(43

)

 

 

1,006

 

 

 

45

 

Other income (expense), net

 

 

517

 

 

 

(18

)

 

 

962

 

 

 

71

 

Net loss

 

$

(3,922

)

 

$

(11,284

)

 

$

(9,956

)

 

$

(26,148

)

Net loss per share, basic and diluted

 

$

(0.63

)

 

$

(2.80

)

 

$

(1.57

)

 

$

(6.50

)

Weighted-average shares used to compute net loss per share, basic and diluted

 

 

6,207,707

 

 

 

4,025,489

 

 

 

6,345,206

 

 

 

4,025,489

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(3,922

)

 

$

(11,284

)

 

$

(9,956

)

 

$

(26,148

)

Unrealized (loss) gain on available-for-sale securities

 

 

(86

)

 

 

75

 

 

 

50

 

 

 

(167

)

Comprehensive loss

 

$

(4,008

)

 

$

(11,209

)

 

$

(9,906

)

 

$

(26,315

)

 

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

 

4


 

Landos Biopharma, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$

(9,956

)

 

$

(26,148

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation

 

 

 

 

 

577

 

Stock-based compensation expense

 

 

478

 

 

 

1,575

 

Amortization of premium on marketable securities

 

 

47

 

 

 

549

 

Non-cash loss on termination of lease

 

 

 

 

 

137

 

Gain on sale of equipment

 

 

 

 

 

(23

)

     Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(698

)

 

 

(1,007

)

Accounts payable

 

 

(2,475

)

 

 

(8,255

)

Other liabilities

 

 

(676

)

 

 

(1,904

)

Net cash used in operating activities

 

 

(13,280

)

 

 

(34,499

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Purchase of property and equipment

 

 

 

 

 

(7

)

Proceeds from sale of property and equipment

 

 

 

 

 

35

 

Purchase of available-for-sale marketable securities

 

 

 

 

 

(3,672

)

Proceeds from sales and maturities of marketable securities

 

 

7,078

 

 

 

49,021

 

Net cash provided by investing activities

 

 

7,078

 

 

 

45,377

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from issuance of pre-funded warrants for the purchase of common stock, net of issuance costs

 

 

16,567

 

 

 

 

Repurchase and retirement of common stock

 

 

(3,000

)

 

 

 

Net cash provided by financing activities

 

 

13,567

 

 

 

 

Net change in cash and cash equivalents

 

 

7,365

 

 

 

10,878

 

Cash and cash equivalents at beginning of period

 

 

36,640

 

 

 

8,305

 

Effect of exchange rates on cash

 

 

44

 

 

 

58

 

Cash and cash equivalents at end of period

 

$

44,049

 

 

$

19,241

 

 

 

 

 

 

 

 

Supplemental non-cash disclosure:
NONCASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

Non-cash gain on sale of fixed assets

 

$

 

 

$

14

 

Operating right-of-use asset obtained in exchange for operating lease liability

 

$

 

 

$

824

 

Derecognition of operating right-of-use asset and operating lease liability
   upon termination of lease

 

$

 

 

$

714

 

Unrealized gain (loss) on available-for-sale marketable securities

 

$

50

 

 

$

(167

)

 

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

 

5


 

Landos Biopharma, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amounts

 

 

Additional
Paid-in
Capital

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Accumulated
Deficit

 

 

Total
Stockholders’
Equity

 

Balance at December 31, 2022

 

 

4,025,489

 

 

$

40

 

 

$

172,575

 

 

$

(57

)

 

$

(133,427

)

 

$

39,131

 

Repurchase and retirement of common stock

 

 

(908,644

)

 

 

(9

)

 

 

(2,991

)

 

 

 

 

 

 

 

 

(3,000

)

Issuance of pre-funded warrants for the purchase of common stock, net of issuance costs

 

 

 

 

 

 

 

 

16,567

 

 

 

 

 

 

 

 

 

16,567

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

224

 

 

 

 

 

 

 

 

 

224

 

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

136

 

 

 

 

 

 

136

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,034

)

 

 

(6,034

)

Balance at March 31, 2023

 

 

3,116,845

 

 

$

31

 

 

$

186,375

 

 

$

79

 

 

$

(139,461

)

 

$

47,024

 

Fractional shares adjustment due to reverse stock split

 

 

(116

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock compensation expense

 

 

 

 

 

 

 

 

254

 

 

 

 

 

 

 

 

 

254

 

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

(86

)

 

 

 

 

 

(86

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,922

)

 

 

(3,922

)

Balance at June 30, 2023

 

 

3,116,729

 

 

$

31

 

 

$

186,629

 

 

$

(7

)

 

$

(143,383

)

 

$

43,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amounts

 

 

Additional
Paid-in
Capital

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Accumulated
Deficit

 

 

Total
Stockholders’
Equity

 

Balance at December 31, 2021

 

 

4,025,489

 

 

$

40

 

 

$

170,604

 

 

$

(225

)

 

$

(94,151

)

 

$

76,268

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

941

 

 

 

 

 

 

 

 

 

941

 

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

(242

)

 

 

 

 

 

(242

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,864

)

 

 

(14,864

)

Balance at March 31, 2022

 

 

4,025,489

 

 

$

40

 

 

$

171,545

 

 

$

(467

)

 

$

(109,015

)

 

$

62,103

 

Stock compensation expense

 

 

 

 

 

 

 

 

634

 

 

 

 

 

 

 

 

 

634

 

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

75

 

 

 

 

 

 

75

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,284

)

 

 

(11,284

)

Balance at June 30, 2022

 

 

4,025,489

 

 

$

40

 

 

$

172,179

 

 

$

(392

)

 

$

(120,299

)

 

$

51,528

 

 

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

 

6


 

Landos Biopharma, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

 

1. Organization and Description of the Business

Landos Biopharma, Inc. (“Landos” or the “Company”) was incorporated in the state of Delaware in January 2017 and is a clinical-stage biopharmaceutical company focused on the discovery and development of oral therapeutics for patients with autoimmune diseases. The Company has several active development programs, each discovered internally, targeting novel pathways at the interface of immunity and metabolism.

Reverse Stock Split

In May 2023, the Company’s stockholders approved a reverse stock split at the annual meeting of stockholders, and subsequently, the Company effected a one-for-ten (1-for-10) reverse stock split (the "Reverse Stock Split") of its outstanding common stock and a corresponding reduction in the total number of authorized shares of its common stock from 200,000,000 to 20,000,000. All references to common stock, pre-funded warrants to purchase common stock, options to purchase common stock, restricted stock units, share data, per share data and related information contained in the condensed consolidated financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods presented. No fractional shares were issued as a result of the Reverse Stock Split. Stockholders of record who would otherwise have been entitled to receive a fractional share received a cash payment in lieu thereof.

Nasdaq Listing Rule Compliance

In June 2022, the Company received a notice from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) notifying the Company that its listed securities did not maintain the minimum bid price requirement of $1.00 per share of common stock for continued listing on the Nasdaq Global Market. In December 2022, Nasdaq approved the Company's application to transfer to The Nasdaq Capital Market and notified the Company that it has been granted an additional 180-calendar day compliance period to regain compliance with the minimum bid price requirement. To regain compliance, the Company effected the Reverse Stock Split in May 2023. The Company received notice from Nasdaq in June 2023 that it had regained compliance with the minimum bid price listing requirement.

Liquidity

As of June 30, 2023, the Company had cash, cash equivalents and marketable securities of $44.7 million, which it believes will be sufficient to fund its planned operations for at least one year from the issuance of these condensed consolidated financial statements. Since the Company’s inception in 2017, it has funded its operations through the issuance of convertible preferred stock and convertible promissory notes, the proceeds from its IPO, the upfront payment from the license and collaboration agreement and the sale of pre-funded warrants in a private placement. As of June 30, 2023, the Company had an accumulated deficit of $143.4 million and expects to incur substantial operating losses for at least the next several years. As such, the Company will need to raise additional capital to initiate and complete its ongoing and planned clinical trials, to continue and expand its research and development operations that support its ongoing and planned discovery, development and clinical and regulatory activities and to adequately prepare for commercialization of its product candidates that may achieve regulatory approval in the future.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Landos Biopharma Australia Pty Ltd. All intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s audited financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2022. In the opinion of the Company’s management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of its financial position, operating results and cash flows for the periods presented have been included. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the full year, for any other interim period or for any future year.

 

7


 

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts in the Company's consolidated financial statements and the disclosures made in the accompanying notes. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to, accrued liabilities, fair value of equity instruments and uncertain tax positions. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Despite management’s intention to establish accurate estimates and use reasonable assumptions, actual results may differ from the Company's estimates.

Significant Accounting Policies

The significant accounting policies used in preparation of these unaudited condensed consolidated financial statements for the three and six months ended June 30, 2023 are consistent with, and should be read in conjunction with, those discussed in Note 1 of the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and highly liquid investments with original maturities of three months or less at the date of purchase. The carrying amounts approximate fair value due to the short maturities of these investments. Cash equivalents consist primarily of amounts invested in money market funds and are stated at fair value.

Marketable Securities

The Company’s investments in marketable securities are maintained by investment managers and consist of corporate debt securities and asset backed securities with original maturities of over 90 days, all of which are considered available-for-sale debt securities. The Company classifies its available-for-sale securities as short-term marketable securities on the Condensed Consolidated Balance Sheets, even though the stated maturity date may be one year or more beyond the current Condensed Consolidated Balance Sheets date, as the Company views those securities as available for use in current operations, if needed.

Available-for-sale securities are carried at fair value with their unrealized gains and losses included in accumulated other comprehensive loss within stockholders’ equity, until such gains and losses are realized in other income, net, within the Condensed Consolidated Statements of Operations and Comprehensive Loss, except for the changes in allowance for expected credit losses, which are recorded in other income, net, within the Condensed Consolidated Statements of Operations and Comprehensive Loss. Realized gains and losses are determined using the specific identification method.

The Company conducts periodic reviews to identify and evaluate each investment in its portfolio that has an unrealized loss to determine whether a credit loss exists. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis.

A credit loss is estimated by considering available information relevant to the collectability of the security and information about past events, current conditions and reasonable and supportable forecasts. Any credit loss is recorded as a charge to other income, net, not to exceed the amount of the unrealized loss. Unrealized losses other than the credit loss are recognized in accumulated other comprehensive loss. When determining whether a credit loss exists, the Company considers several factors, including whether the Company has the intent to sell the security or whether it is more likely than not that the Company will be required to sell the security prior to recovery of its amortized cost basis. If the Company has an intent to sell, or if it is more likely than not that the Company will be required to sell a debt security in an unrealized loss position before recovery of its amortized cost basis, the Company will write down the security to its fair value and record the corresponding charge as a component of other income, net. No declines in value were deemed to be credit losses as of January 1, 2023, the adoption date of Accounting Standards Update (“ASU”) 2016-13—Financial Instruments (Topic 326) Measurement of Credit Losses on Financial Instrument (“ASU 2016-23”), or during the three and six months ended June 30, 2023.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash, cash equivalents and marketable securities. Bank deposits are held by accredited financial institutions, and these deposits are often in excess of insured limits. The Company limits its credit risk associated with cash and cash equivalents by placing them with financial institutions it believes are of high quality.

The Company’s available-for-sale investments primarily consist of high-grade corporate debt securities and asset-backed securities and potentially subject the Company to concentrations of credit risk. The Company has adopted investment guidelines that limit the amounts the Company may invest in any one type of investment and requires all investments held by the Company to be highly rated, thereby reducing credit risk exposure.

 

8


 

Research and Development Expenses

Research and development costs consist primarily of external costs related to clinical development, contract manufacturing and discovery as well as personnel costs. The Company estimates preclinical and clinical study and research expenses based on the services performed, pursuant to contracts with research institutions that conduct and manage nonclinical and clinical studies and research services on its behalf. The Company records the costs of research and development activities based upon the estimated amount of services provided but not yet invoiced and includes these costs in accrued liabilities in the Condensed Consolidated Balance Sheets. These costs are a component of the Company’s research and development expenses. The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with its third-party service providers under the service agreements. The Company makes significant judgments and estimates in determining the accrued liabilities balance in each reporting period. As actual costs become known, the Company adjusts its accrued liabilities.

Government Assistance Tax Credits

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) provided refundable employee retention credits ("ERC"), which are used to offset payroll tax liabilities. During the three months ending June 30, 2023, the Company determined that it qualified for an ERC in the amount of $0.6 million related to labor costs recognized during 2020 and 2021 and filed its amended employment tax returns to claim this credit. The entire amount of $0.6 million is included in prepaid expenses and other current assets in the Company's Condensed Consolidated Balance Sheet as of June 30, 2023. The Company has recorded $0.4 million of the offset of this receivable as a reduction to research and development expense and $0.2 million as a reduction to general and administrative expense in the accompanying Condensed Consolidated Statement of Operations and Comprehensive Loss for the three months ended June 30, 2023. In August 2023, prior to the filing of this Quarterly Report on Form 10-Q, the Company has received all $0.6 million of refunds.

Net Loss per Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock together with the number of additional shares of common stock that would have been outstanding if all potentially dilutive shares of common stock had been issued. The Company included the weighted-average number of pre-funded warrants issued in its private placement in the number of outstanding shares for calculating basic and diluted net loss per share because the shares issuable upon exercise of the pre-funded warrants will be issued for little to no consideration. The following table sets forth the computation of basic and diluted net loss per share during the periods presented (in thousands, except share and per share amounts):

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(3,922

)

 

$

(11,284

)

 

$

(9,956

)

 

$

(26,148

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of common stock issued and outstanding

 

 

3,116,798

 

 

 

4,025,489

 

 

 

3,407,989

 

 

 

4,025,489

 

Weighted-average pre-funded warrants outstanding

 

 

3,090,909

 

 

 

 

 

 

2,937,217

 

 

 

 

Weighted-average shares used to calculate net loss per common share, basic and diluted

 

 

6,207,707

 

 

 

4,025,489

 

 

 

6,345,206

 

 

 

4,025,489

 

Net loss per common stock, basic and diluted

 

$

(0.63

)

 

$

(2.80

)

 

$

(1.57

)

 

$

(6.50

)

 

The following outstanding shares of potentially dilutive securities have been excluded from diluted net loss per common share for the periods presented, because their inclusion would be anti-dilutive:

 

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

Stock options to purchase common stock

 

 

494,716

 

 

 

365,417

 

Restricted stock units

 

 

99,807

 

 

 

 

Total

 

 

594,523

 

 

 

365,417

 

 

Comprehensive Loss

The Company’s comprehensive loss is currently comprised of changes in unrealized loss on available-for-sale securities.

 

9


 

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment.

Emerging Growth Company Status

The Company is an emerging growth company (“EGC”), as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an EGC or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-23, which requires an allowance for expected credit losses on financial assets be recognized as early as day one of the instrument. This ASU departs from the incurred loss model which means the probability threshold is removed. It considers more forward-looking information and requires the entity to estimate its credit losses as far as it can reasonably estimate. The ASU was effective for fiscal years beginning after December 15, 2019 for public business entities that are U.S. Securities and Exchange Commission (“SEC”) filers, excluding entities eligible to be smaller reporting companies (“SRC”). For all other public business entities, including SRC, the ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company's adoption of ASU 2016-13 as of January 1, 2023 did not have a material impact on the condensed consolidated financial statements and accompanying notes.

3. Fair Value Measurement

Financial assets and liabilities are recorded at fair value on a recurring basis in the Condensed Consolidated Balance Sheets. The carrying values of the Company’s financial assets and liabilities, including cash and cash equivalents, prepaids and other current assets, accounts payable and accrued expenses approximate their fair value due to the short-term maturity of these instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. Assets and liabilities recorded at fair value in the condensed consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels are directly related to the amount of subjectivity with the inputs to the valuation of these assets or liabilities as follows:

Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2—Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable inputs for similar assets or liabilities. These include quoted prices for identical or similar assets or liabilities in active markets and quoted prices for identical or similar assets of liabilities in markets that are not active;

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table presents information about the Company’s financial assets measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values as of June 30, 2023 (in thousands):

 

 

 

June 30, 2023

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Aggregate
Fair Value

 

Assets: