Form 10-Q - Quarterly report [Sections 13 or 15(d)]

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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, 2023


☐	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 001-40067

PARDES BIOSCIENCES, INC.

(Exact name of Registrant as specified in its Charter)


Delaware		85-2696306
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
2173 Salk Avenue, Suite 250 PMB#052 Carlsbad, CA		92008
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (415) 649-8758

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	PRDS	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, a 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.

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 ☒

The number of shares of Registrant’s common stock outstanding as of August 1, 2023 was 62,011,756.

Table of Contents



		Page
PART I	FINANCIAL INFORMATION
Item 1.	Condensed Financial Statements	1
	Condensed Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022	1
	Condensed Statements of Operations and Comprehensive Loss for the three months and six months ended June 30, 2023 and 2022 (unaudited)	2
	Condensed Statements of Stockholders’ Equity for the three months and six months ended June 30, 2023 and 2022 (unaudited)	3
	Condensed Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (unaudited)	4
	Notes to Unaudited Condensed Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	18

PART II	OTHER INFORMATION	19
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	27
SIGNATURES		30

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements, which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions, or strategies regarding the future, including those relating to the statements described below. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

Forward-looking statements relating to us in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•

our plans and expectations regarding our strategic alternative review process and the timing and success of such process regarding a potential transaction;

•

our expectations related to the Agreement and Plan of Merger, dated as of July 16, 2023 (the Merger Agreement), among Pardes Biosciences, Inc. (the Company), MediPacific, Inc., a Delaware corporation (Parent), and MediPacific Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent, including regarding the ability of the parties to complete the transactions contemplated by the Merger Agreement, the ability of the parties to satisfy the conditions to the consummation of the tender offer contemplated by the Merger Agreement (the Offer) and the other conditions set forth in the Merger Agreement, the expected timetable for completing the transactions contemplated by the Merger Agreement, the Company’s and Parent’s beliefs and expectations and statements about the benefits sought to be achieved by Parent’s proposed acquisition of the Company, the potential effects of the acquisition on both the Company and Parent, whether or not the conditions for payment under contingent value rights (CVRs) pursuant the Contingent Value Rights Agreement that the Company expects to enter into with a rights agent and a representative, agent and attorney in-fact of the holders of the CVRs at or prior to the completion of the Offer will be met and the possibility of any termination of the Merger Agreement;

•

timing of and costs associated with our restructuring, and the savings benefits we expect to receive from the restructuring;

•

our success in retaining, or changes required in, our officers, key employees or directors;

•

our public securities’ potential liquidity and trading;

•

our lack of profitability and, to the extent we continue to operate our business, the need for additional capital;

•

our anticipated business-related expenditures;

•

the outcome of any known and unknown litigation;

•

the impact of macroeconomic conditions, including inflation, rising interest rates and volatile market conditions, recent instability in the global banking sector, the federal budget and global events; and

•

other risks and uncertainties indicated in this Quarterly Report on Form 10-Q, including those under “Risk Factors” herein, and our other filings that have been made or will be made with the Securities and Exchange Commission (SEC).

The forward-looking statements in this Quarterly Report on Form 10-Q are based on current expectations and beliefs concerning future developments and their potential effects. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.

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 that such information forms a reasonable basis for such statements, such information may be limited or incomplete, and these 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.

The risks and uncertainties include, but are not limited to, those factors described under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 14, 2023. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. There may be additional risks that we currently consider immaterial or which are unknown. It is not possible to predict or identify all such risks. We do not undertake any obligation to update or revise any

forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

iii

PART I—FINANCIAL INFORMATION

Item 1. Condensed Financial Statements.

PARDES BIOSCIENCES, INC.

CONDENSED BALANCE SHEETS

(in thousands, except share and par value data)


	June 30,			December 31,
	2023			2022
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	100,266		$	59,284
Short-term investments		52,931			138,056
Prepaid expenses and other current assets		4,113			3,062
Total current assets		157,310			200,402
Other assets		—			219
Total assets	$	157,310		$	200,621
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	14		$	4,929
Accrued expenses		1,911			15,496
Total current liabilities		1,925			20,425
Total liabilities		1,925			20,425
Commitments and contingencies (Note 9)
Stockholders' equity:
Preferred stock: $0.0001 par value; 10,000,000 shares authorized as of June 30, 2023 and December 31, 2022; no shares issued and outstanding as of June 30, 2023 and December 31, 2022		—			—
Common stock: $0.0001 par value and 250,000,000 shares authorized; 61,716,745 and 61,734,343 shares issued as of June 30, 2023 and December 31, 2022, respectively; and 60,396,888 and 59,542,714 shares outstanding as of June 30, 2023 and December 31, 2022, respectively		6			6
Additional paid-in capital		332,108			328,372
Accumulated other comprehensive income (loss)		9			(24	)
Accumulated deficit		(176,738	)		(148,158	)
Total stockholders' equity		155,385			180,196
Total liabilities and stockholders' equity	$	157,310		$	200,621

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

PARDES BIOSCIENCES, 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,
	2023			2022			2023			2022
Operating expenses:
Research and development	$	6,928		$	20,344		$	19,908		$	33,543
General and administrative		5,687			7,591			12,516			15,817
Total operating expenses		12,615			27,935			32,424			49,360
Other income:
Interest and other income, net		1,840			298			3,844			283
Net loss	$	(10,775	)	$	(27,637	)	$	(28,580	)	$	(49,077	)
Net loss per share, basic and diluted	$	(0.18	)	$	(0.48	)	$	(0.48	)	$	(0.86	)
Weighted-average number of common shares used in computing net loss per share, basic and diluted		60,209,276			57,686,462			59,990,131			57,384,446

Unrealized gain on available-for-sale securities	$	33		$	—		$	34		$	—
Comprehensive loss	$	(10,742	)	$	(27,637	)	$	(28,546	)	$	(49,077	)

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

PARDES BIOSCIENCES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except share amounts)


	For the Six Months Ended June 30, 2023
	Common Stock
	Number of Shares		$0.0001 Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders' Equity
Balance at December 31, 2022		59,542,714	$	6	$	328,372	$	(24	)	$	(148,158	)	$	180,196
Vesting of restricted stock awards into common stock		427,965		—		—		—			—			—
Stock-based compensation expense		—		—		2,338		—			—			2,338
Other comprehensive income		—		—		—		1			—			1
Net loss		—		—		—		—			(17,805	)		(17,805	)
Balance at March 31, 2023		59,970,679	$	6	$	330,710	$	(23	)	$	(165,963	)	$	164,730
Vesting of restricted stock awards into common stock		426,209		—		—		—			—			—
Stock-based compensation expense		—		—		1,398		—			—			1,398
Other comprehensive income		—		—		—		32			—			32
Net loss		—		—		—		—			(10,775	)		(10,775	)
Balance at June 30, 2023		60,396,888	$	6	$	332,108	$	9		$	(176,738	)	$	155,385


	For the Six Months Ended June 30, 2022
	Common Stock
	Number of Shares		$0.0001 Par Value		Additional Paid-In Capital		Accumulated Deficit			Total Stockholders' Equity
Balance at December 31, 2021		56,765,533	$	6	$	317,812	$	(51,524	)	$	266,294
Vesting of restricted stock awards into common stock		610,765		—		—		—			—
Stock-based compensation expense		—		—		1,527		—			1,527
Net loss		—		—		—		(21,440	)		(21,440	)
Balance at March 31, 2022		57,376,298	$	6	$	319,339	$	(72,964	)	$	246,381
Vesting of restricted stock awards into common stock		604,820		—		—		—			—
Stock-based compensation expense		—		—		3,888		—			3,888
Net loss		—		—		—		(27,637	)		(27,637	)
Balance at June 30, 2022		57,981,118	$	6	$	323,227	$	(100,601	)	$	222,632

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

PARDES BIOSCIENCES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)


	Six Months Ended June 30,
	2023			2022
Operating activities:
Net loss	$	(28,580	)	$	(49,077	)
Adjustments to reconcile net loss to net cash used in operating activities:
Net accretion of discounts on available-for-sale securities		(2,266	)		—
Stock-based compensation expense		3,736			5,415
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(919	)		1,327
Interest receivable		(134	)		—
Accounts payable		(4,915	)		(466	)
Accrued expenses		(13,585	)		3,119
Other assets		219			—
Net cash used in operating activities		(46,444	)		(39,682	)
Investing activities:
Purchases of available-for-sale securities		(15,764	)		—
Proceeds on sale of available-for-sale securities		2,190			—
Maturities of available-for-sale securities		101,000
Net cash provided by investing activities		87,426			—
Financing activities:
Cash paid for deferred offering costs		—			(397	)
Net cash used in financing activities		—			(397	)
Increase (decrease) in cash and cash equivalents		40,982			(40,079	)
Cash and cash equivalents at beginning of period		59,284			268,678
Cash and cash equivalents at end of period	$	100,266		$	228,599

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

PARDES BIOSCIENCES, INC.

Notes to Unaudited Condensed Financial Statements

Note 1. Description of Business

Description of Business

Pardes Biosciences, Inc., a Delaware corporation, is a company that has been focused on discovering, developing and commercializing novel oral-antiviral therapeutics to improve the lives of patients suffering from life-threatening disease. Unless the context otherwise requires, references in these notes to “Pardes,” “the Company,” “we,” “us,” “our” and any related terms are intended to mean Pardes Biosciences, Inc.

On April 3, 2023, we announced topline results from our Phase 2 clinical trial to evaluate pomotrelvir (formerly known as PBI-0451) for the treatment of mild-to-moderate COVID-19 in test-positive, symptomatic, otherwise healthy, vaccinated adults without risk factors for developing severe disease. COVID-19 is caused by infection with the severe acute respiratory syndrome coronavirus (SARS-CoV-2). Pomotrelvir did not achieve the primary endpoint as measured by the proportion of participants below the limit of detection for infectious SARS-CoV-2 by infectious virus assay (IVA) on day three of treatment with pomotrelvir versus with placebo. Pomotrelvir did not demonstrate meaningful improvement over placebo in reduction from baseline of SARS-CoV-2 infectious virus titer by IVA or in the reduction from baseline or proportion achieving undetectable viral load by quantitative reverse transcriptase polymerase chain reaction measured from mid-turbinate swabs.

Based upon the topline results from the Phase 2 clinical trial, on March 31, 2023, the Board of the Directors of the Company (the Board) made the strategic decision to suspend further clinical development of pomotrelvir, winddown the research and development activities of the Company and authorized a reduction in workforce (the RIF) to align operations with the changes in the Company’s corporate strategy. Pursuant to the RIF, the Company reduced headcount in the second quarter of 2023 by approximately 89%. On March 31, 2023, the Board also initiated a review of a range of strategic alternatives that included, but was not limited to, an acquisition, merger, business combination, or other transaction.

Proposed Agreement and Plan of Merger

On July 16, 2023, the Company entered into an Agreement and Plan of Merger (the Merger Agreement) with MediPacific, Inc., a Delaware corporation (Parent), and MediPacific Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (Merger Sub). The Merger Agreement provides for, among other things, an offer by Merger Sub to purchase all of the issued and outstanding shares of Common Stock of the Company for (i) $2.02 per share of Common Stock (the Base Price Per Share), (ii) an additional amount of cash of up to $0.17 per share of Common Stock (such amount as finally determined in accordance with the Merger Agreement, the Additional Price Per Share and together with the Base Price Per Share, the Cash Amount), and (iii) one non-transferable contractual contingent value right per share (each, a CVR) (such amount, or any different amount per share paid pursuant to the Offer (as defined below) to the extent permitted under the Merger Agreement, being the CVR Amount), and, together with the Cash Amount, the Offer Price).The tender offer is being made subject to all terms and conditions set forth in the Offer to Purchase, dated July 28, 2023 (as amended or supplemented from time to time, the Offer to Purchase), and in the related Letter of Transmittal (as amended or supplemented from time to time, the Letter of Transmittal, which together with the Offer to Purchase constitutes the Offer).

Each CVR represents the right to receive contingent payments, in cash, subject to any applicable tax withholding and without interest, equal to a pro rata share of 80% of the Net Proceeds (as defined in the Contingent Value Rights Agreement (the CVR Agreement)), if any, payable to Parent, the Company or any of their respective affiliates that arise from any sale, transfer, license or other disposition (each, a Disposition) of the Company’s assets associated with the Company’s antiviral drug development programs and related assets as of the closing date of the Merger, which Disposition occurs within five years of the closing date of the Merger (the Disposition Period), subject to and in accordance with the terms and conditions of, the CVR Agreement that the Company expects to enter into at or prior to the Offer Closing Time (as defined in the Merger Agreement).

Following the completion of the Offer, subject to the absence of injunctions or other legal restraints preventing or making illegal the consummation of the Merger, Merger Sub will merge with and into the Company, with the Company surviving as a wholly-owned subsidiary of Parent, pursuant to the procedure provided for under Section 251(h) of the Delaware General Corporation Law, without any additional stockholder approvals. The Merger will be effected as soon as practicable following the closing time of the Offer. Pursuant to the terms of the Merger Agreement, as of the effective time of the Merger (the Effective Time), by virtue of the Merger and without any action on the part of the holders, (i) each outstanding share of Common Stock of the Company (other than any shares of Common Stock held in the treasury of the Company, owned, directly or indirectly, by Parent, Merger Sub or any subsidiary of Parent, irrevocably accepted for purchase in the Offer or by any stockholders who are entitled to and who properly exercise appraisal rights under Delaware law) will be converted into the right to receive the Offer Price, (ii) the vesting of each option to purchase shares of Common Stock (the Company Options) shall be accelerated and (A) each Company Option that has an exercise price per share that is less than the Cash

Amount (each, an In-the-Money Option) that is then outstanding will be cancelled and, in exchange therefor, the holder of such cancelled In-the-Money Option will be entitled to receive in consideration of the cancellation of such In-the-Money Option, (1) an amount in cash, without any interest thereon and subject to applicable tax withholding, equal to the product of (x) the total number of shares of Common Stock subject to such In-the-Money Option as of immediately prior to the Effective Time multiplied by (y) the excess of the Cash Amount over the applicable exercise price per share under such In-the-Money Option and (2) one CVR for each share of Common Stock issuable under such In-the-Money Option and (B) each Company Option that is not an In-the-Money Option will be cancelled for no consideration.

The obligation of Merger Sub to purchase shares of Common Stock validly tendered pursuant to the Offer and not validly withdrawn prior to the expiration of the Offer is subject to the satisfaction or waiver of a number of conditions set forth in the Merger Agreement, including: (i) that the number of shares of Common Stock validly tendered and not properly withdrawn (excluding shares of Common Stock tendered pursuant to guaranteed delivery procedures that have not been “received” by the “depository,” as such terms are defined by Section 251(h) of the DGCL), equals at least a majority of the number of shares of Common Stock that are then issued and outstanding owned by Unaffiliated Stockholders (as defined in the Merger Agreement) (the Minimum Tender Condition); (ii) that there be no Legal Restraints (as defined in the Merger Agreement) in effect preventing or prohibiting the Offer or the Merger; (iii) the accuracy of representations and warranties made by the Company in the Merger Agreement, subject to certain exceptions and qualifications described in the Merger Agreement and the Offer to Purchase; (iv) compliance by the Company with its covenants and other obligations under the Merger Agreement; (v) that no termination of the Merger Agreement has occurred; and (vi) that the Closing Net Cash (as defined in the Merger Agreement) of the Company is at least $125,000,000 (each individually, an Offer Condition, and collectively, the Offer Conditions). The obligations of the Parent and the Merger Sub to consummate the Offer and the Merger under the Merger Agreement are not subject to a financing condition. Merger Sub expressly reserves the right, in its sole discretion, to: (i) waive, in whole or in part, any Offer Condition other than the Minimum Tender Condition; and/or (ii) modify the terms of the Offer in a manner not inconsistent with the Merger Agreement, subject to certain exceptions described in the Merger Agreement and the Offer to Purchase.

The Merger Agreement contains customary representations and warranties by Parent, Merger Sub and the Company. The Merger Agreement also contains customary covenants and agreements, including with respect to the operations of the business of the Company between signing and closing.

The Merger Agreement contains customary non-solicitation restrictions prohibiting the Company’s solicitation of alternative business combination transactions and restricts the Company’s ability to furnish non-public information to, or participate in any discussions or negotiations with, any third party with respect to any such alternative business combination transaction, subject to customary exceptions in the event of an acquisition proposal that was not solicited in violation of these restrictions and that the Board or Special Committee determines constitutes or could reasonably be expected to lead to a Superior Company Proposal (as defined in the Merger Agreement).

The Merger Agreement contains customary termination rights for both Parent and Merger Sub, on the one hand, and the Company, on the other hand, including, among others, for failure to consummate the Offer on or before December 16, 2023. If the Merger Agreement is terminated under certain circumstances specified in the Merger Agreement in connection with the Company’s entry into an agreement with respect to a Superior Company Proposal (as defined in the Merger Agreement), the Company will be required to pay Parent a termination fee of $2.6 million. If Parent terminates the Merger Agreement due to the Company having Closing Net Cash of less than $125.0 million, the Company will be required to pay to Parent an expense reimbursement fee up to a maximum amount of $1.25 million.

Concurrently with the execution of the Merger Agreement, and as a condition and inducement to the Company’s willingness to enter into the Merger Agreement and the CVR Agreement, Foresite Capital Opportunity Fund V, L.P., Foresite Capital Fund V, L.P. and FS Development Holdings II, LLC (collectively, the Guarantors), affiliates of Parent, executed and delivered to the Company a limited guaranty (the Limited Guaranty), dated as of July 16, 2023, in favor of the Company and the holders of CVRs, in respect of certain of Parent’s and Merger Sub’s obligations arising under, or in connection with, the Merger Agreement and the CVR Agreement that the Company expects to enter into with a rights agent and a representative, agent and attorney in-fact of the holders of the CVR. The Guarantors’ obligations under the Limited Guaranty are subject to a cap of $7.5 million with respect to obligations to the Company arising under or in connection with the Merger Agreement and $400,000 with respect to obligations to the holders of the CVRs arising under or in connection with the CVR Agreement.

The Company anticipates that the Offer and Merger contemplated under the Merger Agreement will be consummated in the third quarter 2023. However, there can be no assurance that the Offer and Merger contemplated by the Merger Agreement will be completed.

Foresite Capital Management, LLC and James B. Tananbaum, M.D., a founding partner of Foresite Capital Management, LLC and a director on the Company’s Board, are the controlling stockholders of Parent, Merger Sub and the Guarantors. As of July 25, 2023, Dr. Tananbaum, Foresite Capital Management and their affiliates beneficially owned in the aggregate 16,813,146 shares of Common Stock (excluding options to purchase 150,000 shares of Common Stock held by Dr. Tananbaum), representing approximately 27.1% of the Company’s outstanding Common Stock. Dr. Tananbaum holds options to purchase 150,000 shares of Common Stock.

If the Merger is effected, the Company’s Common Stock will be delisted from The Nasdaq Stock Market LLC and the Company’s obligation to file periodic reports under the Securities Exchange Act of 1934, as amended, will terminate, and the Company will be privately held.

Liquidity

We believe that our $153.2 million of cash, cash equivalents and short-term investments as of June 30, 2023, will enable us to fund our current planned operations for at least 12 months from the issuance date of these unaudited condensed financial statements.

We have cash deposits with regulated financial institutions, which may from time to time exceed insurance provided on such deposits.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto in our 2022 Form 10-K, from which we derived our balance sheet as of December 31, 2022. The accompanying unaudited condensed financial statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying unaudited condensed financial statements reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of our management, necessary to a fair statement of the results for the interim periods presented. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of results that may be expected for the year ending December 31, 2023 or for any other future annual or interim period.

Use of Estimates

The preparation of the unaudited condensed financial statements in accordance with GAAP requires our management to make estimates and assumptions that affect the amounts reported on our unaudited condensed financial statements and accompanying notes. The amounts reported could differ under different estimates and assumptions. On an ongoing basis, we evaluate our estimates and judgments, which are based on historical and anticipated results and trends and on various other assumptions that management believes to be reasonable under the circumstances. By their nature, estimates are subject to an inherent degree of uncertainty and, as such, actual results may differ from management’s estimates.

Significant Accounting Policies

The accounting policies we follow are set forth in our audited financial statements for the fiscal year ended December 31, 2022. For further information, please refer to the audited financial statements and footnotes thereto included in Part II, Item 8 of our 2022 Form 10-K. There have been no material changes to these accounting policies.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares and common stock equivalents outstanding for the period determined using the treasury-stock method. Common stock equivalents are only included in the calculation of diluted earnings per common share when net income is reported and their effect is dilutive. For the periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to our net loss position. Basic and diluted net loss attributable to common stockholders per share is presented in conformity with the two-class method required for participating securities as shares of unvested restricted stock are considered participating securities. Our participating securities do not have a contractual obligation to share in our losses. As such, the net loss was attributed entirely to common stockholders for all periods presented.

The following outstanding shares of potentially dilutive securities were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods presented because including them would be anti-dilutive (in common stock equivalent shares):


	June 30, 2023		June 30, 2022
Outstanding stock options		10,356,431		7,356,791
Restricted common stock subject to repurchase or forfeiture		1,319,857		4,339,806
Total		11,676,288		11,696,597

New Accounting Pronouncements Adopted and Not Yet Adopted

The Company has not adopted any significant accounting policies since December 31, 2022. Upon evaluation of recently issued accounting pronouncements, the Company does not believe any will have a material impact on its unaudited condensed financial statements or related financial statement disclosures.

Note 3. Investments

Available-for-sale securities consisted of U.S. Treasury securities, U.S. Agency bonds, commercial paper, corporate debt securities and asset-backed securities.

Our cash equivalents consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Cash equivalents
Money market fund	$	92,645	$	32,426
U.S. government and government agencies		2,414		19,869
Commercial paper		—		2,997
Corporate debt securities		—		2,993
Total cash equivalents	$	95,059	$	58,285

Short-term investments are classified as available-for-sale, which reflects management’s intention to use proceeds from sales of these securities to fund our operations as necessary and, as such, are carried at fair value. Our short-term investments that are measured at fair value on a recurring basis consisted of the following:


		June 30, 2023
	Maturities	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Short-term investments
U.S. government and government agencies	Within one year	$	21,339	$	—	$	(25	)	$	21,314
Commercial paper	Within one year		25,794		4		(11	)		25,787
Asset-backed securities	After one year through five years		5,772		58		—			5,830
Total short-term investments		$	52,905	$	62	$	(36	)	$	52,931


		December 31, 2022
	Maturities	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Short-term investments
U.S. government and government agencies	Within one year	$	75,409	$	15	$	(48	)	$	75,376
Commercial paper	Within one year		59,405		—		—			59,405
Asset-backed securities	Within one year		3,267		8		—			3,275
Total short-term investments		$	138,081	$	23	$	(48	)	$	138,056

The amortized cost and the fair value of short-term investments were $52.9 million at June 30, 2023 and $138.1 million at December 31, 2022. As of June 30, 2023, there were 10 short-term investments with fair value totaling $27.9 million that were in a gross unrealized loss position for less than 12 months, and none were in a gross unrealized loss position for 12 months or more. Based on our analysis of available-for-sale securities, we determined the unrealized losses were primarily due to changes in interest rates and not due to credit risks. As such, we did not record a credit allowance as of either June 30, 2023 or December 31, 2022. Accrued interest receivable on our available-for-sale securities was $0.3 million at each of June 30, 2023 and December 31, 2022. For the three and six months ended June 30, 2023 and 2022, we did not write off any accrued interest receivables and there were no realized gains or losses.

Note 4. Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 — Observable inputs such as quoted prices in active markets;

Level 2 — Inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-driven valuations in which all significant inputs are observable or can be derived principally from, or corroborated with, observable market data; and

Level 3 — Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Below are summaries of our cash equivalents and short-term investments that were measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):


	June 30, 2023						December 31, 2022
	Level 1		Level 2		Estimated Fair Value		Level 1		Level 2		Estimated Fair Value
Cash equivalents
Money market fund	$	92,645	$	—	$	92,645	$	32,426	$	—	$	32,426
U.S. government and government agencies		—		2,414		2,414		—		19,869		19,869
Commercial paper		—		—		—		—		2,997		2,997
Corporate debt securities		—		—		—		—		2,993		2,993
Total cash equivalents	$	92,645	$	2,414	$	95,059	$	32,426	$	25,859	$	58,285


	June 30, 2023				December 31, 2022
	Level 2		Estimated Fair Value		Level 2		Estimated Fair Value
Short-term investments
U.S. government and government agencies	$	21,314	$	21,314	$	75,376	$	75,376
Commercial paper		25,787		25,787		59,405		59,405
Asset-backed securities		5,830		5,830		3,275		3,275
Total short-term investments	$	52,931	$	52,931	$	138,056	$	138,056

Note 5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Prepaid insurance	$	2,244	$	1,582
Prepaid research and development costs		12		495
Other prepaid expenses and current assets		1,857		985
Total	$	4,113	$	3,062

Note 6. Accrued Expenses

Accrued expenses consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Research and development accruals	$	721	$	10,784
Accrued compensation		674		3,878
Other accrued expenses		516		834
Total	$	1,911	$	15,496

Note 7. Stockholders’ Equity

Preferred Stock

Pursuant to the terms of the Second Amended and Restated Certificate of Incorporation dated December 23, 2021 (Certificate of Incorporation), we authorized 10,000,000 shares of preferred stock, par value $0.0001 per share, all of which shares of preferred stock are undesignated. Our Board has the authority, without further action by the stockholders, to issue such shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series and to fix the designations, powers, voting and other rights, preferences and privileges of the shares. As of June 30, 2023 and December 31, 2022, there were no shares of preferred stock outstanding.

Common Stock

Pursuant to the Certificate of Incorporation, as of June 30, 2023 and December 31, 2022, there were 250,000,000 shares of Common Stock authorized. There were 61,716,745 and 61,734,343 shares of Common Stock issued as of June 30, 2023 and December 31, 2022, respectively.

Note 8. Stock-Based Compensation

The following table summarizes stock-based compensation expense for all stock-based compensation arrangements (in thousands):


	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023		2022
Research and development	$	(54	)	$	2,571	$	651	$	3,034
General and administrative		1,452			1,317		3,085		2,381
Total stock-based compensation	$	1,398		$	3,888	$	3,736	$	5,415

Note 9. Commitments and Contingencies

Commitments

On March 31, 2023, the Board made the strategic decision to suspend further clinical development of pomotrelvir, winddown the research and development activities of the Company and initiate a review of a range of strategic alternatives that included, but was not limited to, an acquisition, merger, business combination, or other transaction (the Restructuring Plan). Also on March 31, 2023, to better align operations with the change in the Company’s corporate strategy under the Restructuring Plan and reduce operating expenses while we reviewed strategic alternatives, the Board approved the RIF. On April 3, 2023, we notified our employees about the results of the Phase 2 clinical trial, the Restructuring Plan and the RIF. Under the RIF, we reduced headcount in the second quarter of 2023 by approximately 89%, with approximately 55% of our employees terminated in April 2023. The RIF was completed in the second quarter of 2023.

Estimated total costs related to the RIF are approximately $5.2 million, all of which consists of cash-based expenditures primarily related to personnel expenses such as salaries, one-time severance payments and other benefits. The foregoing estimated amount does not include any non-cash charges associated with stock-based compensation. We recognized $1.1 million of the total costs related to the RIF in the first quarter of 2023 and $4.1 million in the second quarter of 2023.

We have historically entered into agreements in the normal course of business with certain vendors for the provision of goods and services, which included manufacturing services with clinical manufacturing organizations (CMOs) and development services with clinical research organizations (CROs). In connection with the suspension of the Phase 2 clinical trial and the winding down of the Company’s research and development activities, we have terminated or modified substantially all of our agreements with CMOs and CROs. As of June 30, 2023, we recognized and paid $0.1 million in contract termination fees.

In the normal course of business, we are a party to a variety of agreements pursuant to which we may be obligated to indemnify the other party. It is not possible to predict the maximum potential amount of future payments under these types of agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these types of agreements have not had a material effect on our business, results of operations or financial condition.

Contingencies

From time to time, we may become subject to claims or suits arising in the ordinary course of business. We accrue a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. As of June 30, 2023 and December 31, 2022, we were not a party to any material legal proceedings.

Note 10. Restructuring and Related Activities

On March 31, 2023, the Board approved the Restructuring Plan and the RIF. Restructuring charges are reported as a component of operating expenses in our condensed statement of operations.

The following table details the accruals and payments for the restructuring charges (in thousands):


Balance at December 31, 2022	$	—
Severance expense		1,125
Balance at March 31, 2023	$	1,125
Severance expense		4,093
Contract termination fees		88
Payments for severance and termination fees		(4,720	)
Balance at June 30, 2023	$	586

In connection with the transactions contemplated by the Merger Agreement, on July 16, 2023, the Company’s Board approved the acceleration and immediate vesting of each outstanding unvested stock option and restricted share of Common Stock effective as of July 16, 2023.

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

You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 and with our audited financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (SEC) on March 14, 2023 (2022 Form 10-K) and other filings we have made with the SEC. As discussed under the heading “Cautionary Note Regarding Forward-Looking Statements,” this discussion contains forward-looking statements that reflect our plans, estimates and beliefs and involve numerous risks and uncertainties, including but not limited to those described in Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q. Actual results may differ materially from those described in or implied by any forward-looking statements. Unless the context otherwise requires, references in these notes to “Pardes,” “the Company,” “we,” “us,” “our” and any related terms are intended to mean Pardes Biosciences, Inc.

Overview

We are a company that has been focused on discovering, developing and commercializing novel oral anti-viral therapeutics to improve the lives of patients suffering from life-threatening disease, with our first indication being COVID-19, which is the disease caused by infection with the severe acute respiratory syndrome coronavirus (SARS-CoV-2).

In early April 2023, we announced topline results from our Phase 2 clinical trial to evaluate pomotrelvir (formerly known as PBI-0451) for the treatment of mild-to-moderate COVID-19 in test-positive, symptomatic, otherwise healthy, vaccinated adults without risk factors for developing severe disease. Based upon the topline results from the Phase 2 clinical trial, we decided to suspend further clinical development of pomotrelvir, winddown our research and development activities and initiated a review of a range of strategic alternatives that included, but was not limited to, an acquisition, merger, business combination, or other transaction (the Restructuring Plan).

In connection with the Restructuring Plan, on March 31, 2023, the Board of Directors of the Company (the Board) approved a reduction in workforce (the RIF) to align operations with the changes in our corporate strategy and to reduce operating expenses. On April 3, 2023, we notified our employees about the results of the Phase 2 clinical trial, the Restructuring Plan and the RIF. Under the RIF, we reduced headcount by approximately 89%, with approximately 55% of our employees terminated in April 2023. The RIF was completed in the second quarter of 2023.

On July 16, 2023, the Company entered into an Agreement and Plan of Merger (the Merger Agreement) with MediPacific, Inc., a Delaware corporation (Parent), and MediPacific Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (Merger Sub). The Merger Agreement provides for, among other things, (i) the acquisition of the Company by Parent through a cash tender offer (the Offer) by Merger Sub for all of the Company’s outstanding shares of common stock, par value $0.0001 (the Common Stock), for: (A) $2.02 per share of Common Stock (the Base Price Per Share), (B) an additional amount of cash of up to $0.17 per share of Common Stock (such amount as finally determined pursuant to the Merger Agreement, the Additional Price Per Share and together with the Base Price Per Share, the Cash Amount), and (C) one non-transferable contractual contingent value right (a CVR) associated with any future monetization of the Company’s antiviral drug development programs and related assets per share (together with the Cash Amount, the Offer Price) and (ii) the merger of Merger Sub with and into the Company (the Merger) with the Company surviving the Merger. Subject to the terms of the Merger Agreement and the Contingent Value Rights Agreement that the Company expects to enter into with a rights agent and a representative, agent and attorney in-fact of the holders of the CVRs at or prior to the completion of the Offer (the CVR Agreement), the Offer Price will be paid net of any applicable tax withholding and without interest. There can be no assurance that the transactions contemplated by the Merger Agreement will be completed.

Pomotrelvir

In September 2022, we initiated a Phase 2 double-blind, randomized study evaluating the antiviral activity, safety, and clinical efficacy of pomotrelvir compared with placebo in nonhospitalized, symptomatic, otherwise healthy adults with mild-to-moderate COVID-19 and a confirmed positive SARS-CoV-2 test. Participants were dosed orally twice-daily at 700 mg (2 x 350 mg tablets) with food for five days.

In April 2023, we reported that pomotrelvir did not achieve the primary endpoint as measured by the proportion of participants below the limit of detection for infectious SARS-CoV-2 by infectious virus assay (IVA) on day three of treatment with pomotrelvir versus with placebo. Pomotrelvir did not demonstrate meaningful improvement over placebo in reduction from baseline of SARS-CoV-2 infectious virus titer by IVA or in the reduction from baseline or proportion achieving undetectable viral load by quantitative reverse transcriptase polymerase chain reaction measured from mid-turbinate swabs.

The median time to alleviation of the 14 U.S. Food and Drug Administration guidance-defined and 12 (excluding loss of taste and smell) targeted COVID-19 symptoms were eight days and seven days, respectively, in both pomotrelvir and placebo treated participants. The median time to alleviation of five key COVID-19 symptoms (cough, stuffy or runny nose, low energy or tiredness, sore throat, and

feeling hot or feverish) was six days in both pomotrelvir and placebo treated participants with median times to resolution of each individual key symptom being two to five days and similar for pomotrelvir- and placebo-treated participants.

There were no deaths and no participants experienced progression to severe COVID-19. There were no treatment emergent drug-related serious adverse events and no drug-related adverse events leading to study drug or study discontinuation in either treatment arm. Pomotrelvir was well tolerated, with drug-related nausea occurring in 3.1% of participants, which represented the only adverse event occurring in greater than 2% of pomotrelvir-treated participants.

Based upon the topline data indicating difficulty in demonstrating a clinically meaningful benefit of treatment of SARS-CoV-2 infection in otherwise healthy nonhospitalized participants with COVID-19, the Board initiated the Restructuring Plan and the RIF.

Impact of Macroeconomic Conditions

Uncertainty in the global economy presents significant risks to our business. We are subject to continuing risks and uncertainties in connection with the current macroeconomic environment, including as a result of increases in inflation, rising interest rates and instability in the global banking system, the federal budget and geopolitical factors, including the ongoing conflict between Russia and Ukraine and the responses thereto. While we are closely monitoring the impact of the current macroeconomic conditions on all aspects of our business, the ultimate extent of the impact on our business remains highly uncertain and will depend on future developments and factors that continue to evolve. Most of these developments and factors are outside of our control and could exist for an extended period of time. As a result, we are subject to continuing risks and uncertainties and continue to closely monitor the impact of the current conditions on our business. For additional information, see the sections titled “Risk Factors” in the 2022 Form 10-K and in this Quarterly Report on Form 10-Q.

Components of Our Results of Operations

Revenue

We have not generated any revenue since inception and do not expect to generate any revenue in the near term, if ever. We are not currently developing any product candidates and we do not have any products approved for sale. If we decide to pursue any future product development efforts, we will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for any future product candidate. In addition, if we obtain regulatory approval for any product candidate and to the extent that we engage in commercialization activities on our own, we expect we will incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing, and distribution activities.

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for research activities, including drug discovery efforts and the development of our potential product candidates. We expense research and development costs as incurred, which include:

•

expenses incurred to conduct the necessary preclinical studies, nonclinical studies and clinical trials required to obtain regulatory approval;

•

expenses incurred under agreements with contract research organizations (CROs) that are primarily engaged in the oversight and conduct of our drug discovery efforts and preclinical studies, clinical trials and contract manufacturing organizations (CMOs) that are primarily engaged to provide preclinical and clinical drug substance and product for our research and development programs;

•

other costs related to acquiring and manufacturing materials in connection with our drug discovery efforts and preclinical studies and clinical trial materials, including manufacturing validation batches, as well as investigative site and consultants that conduct our clinical trials, preclinical studies and other scientific development services;

•

employee-related expenses, including salaries and benefits, travel and stock-based compensation expense for employees engaged in research and development functions; and

•

costs related to compliance with regulatory requirements.

We recognize research and development expenses as incurred. Any advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are expensed as the related goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered. We estimate and accrue for the value of goods and services received from CROs, CMOs and other third parties each reporting period based on an evaluation of the progress to completion of specific tasks. This process involves reviewing open contracts and purchase orders, communicating with our personnel and service providers to identify services that have been performed on our behalf

and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs.

We do not allocate employee costs and overhead costs associated to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources to manage our research and discovery as well as our preclinical, nonclinical, manufacturing and clinical development activities. To date, substantially all of the research and development costs incurred have been in connection with the development of our lead product candidate, pomotrelvir.

Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

General and Administrative Expenses

General and administrative expenses consist primarily of employee-related expenses, including salaries and related benefits, travel and stock-based compensation for personnel in executive, business development, finance, human resources, legal, information technology and administrative functions. General and administrative expenses also include insurance costs and professional fees for legal, patent, consulting, investor and public relations, pre-commercial planning, accounting and audit services. Our general and administrative costs are expensed as incurred.

Income Taxes

We have incurred net losses in every period since our inception and have not recorded any U.S. federal or state income tax benefits for the losses, as they have been offset by valuation allowances.

Interest and Other Income, Net

Interest and other income, net consists primarily of interest income.

Results of Operations

Comparison of the three and six months ended June 30, 2023 and 2022

The following table sets forth our results of operations for the periods presented (in thousands):


	Three Months Ended June 30,									Six Months Ended June 30,
	2023			2022			Change			2023			2022			Change
Operating expenses:
Research and development	$	6,928		$	20,344		$	(13,416	)	$	19,908		$	33,543		$	(13,635	)
General and administrative		5,687			7,591			(1,904	)		12,516			15,817			(3,301	)
Total operating expenses		12,615			27,935			(15,320	)		32,424			49,360			(16,936	)
Interest and other income, net		1,840			298			1,542			3,844			283			3,561
Net loss	$	(10,775	)	$	(27,637	)	$	16,862		$	(28,580	)	$	(49,077	)	$	20,497

Research and Development Expenses

The following table summarizes the components of research and development expenses for the periods presented (in thousands):


	Three Months Ended June 30,								Six Months Ended June 30,
	2023			2022		Change			2023		2022		Change
External costs:
Pomotrelvir	$	3,216		$	11,260	$	(8,044	)	$	12,647	$	19,074	$	(6,427	)
Next generation and discovery programs		—			3,759		(3,759	)		—		6,609		(6,609	)
Total external costs		3,216			15,019		(11,803	)		12,647		25,683		(13,036	)
Internal costs:
Salaries and benefits		3,686			2,402		1,284			6,371		4,222		2,149
Stock-based compensation		(54	)		2,571		(2,625	)		651		3,034		(2,383	)
Other unallocated costs		80			352		(272	)		239		604		(365	)
Total internal costs		3,712			5,325		(1,613	)		7,261		7,860		(599	)
Total research and development expenses	$	6,928		$	20,344	$	(13,416	)	$	19,908	$	33,543	$	(13,635	)

Research and development expenses were $6.9 million for the three months ended June 30, 2023, compared to $20.3 million for the three months ended June 30, 2022, a decrease of $13.4 million. Research and development expenses were $19.9 million for the six months ended June 30, 2023, compared to $33.5 million for the six months ended June 30, 2022, a decrease of $13.6 million. The decreases were primarily driven by the suspension of the clinical development of pomotrelvir and the winddown of all research and development activities, offset by RIF expenses. We anticipate that our research and development expenses will continue to decrease as we complete the winddown of our research and development activities.

General and Administrative Expenses

General and administrative expenses were $5.7 million for the three months ended June 30, 2023, compared to $7.6 million for the three months ended June 30, 2022, a decrease of $1.9 million. General and administrative expenses were $12.5 million for the six months ended June 30, 2023, compared to $15.8 million for the six months ended June 30, 2022, a decrease of $3.3 million. The decreases were primarily due to decreases in professional fees related to legal fees and pre-commercial planning as well as director and officer insurance, offset by RIF expenses. While we anticipate that our general and administrative expenses will continue to decrease in the near term due to our lower headcount, we expect this to be partially offset by legal and other professional fees as a result of the strategic review process and the potential consummation of the transactions contemplated under the Merger Agreement.

Interest and Other Income, Net

Interest and other income, net was $1.8 million for the three months ended June 30, 2023 compared to $0.3 million for the three months ended June 30, 2022, an increase of approximately $1.5 million. Interest and other income, net was $3.8 million for the six months ended June 30, 2023 compared to $0.3 million for the six months ended June 30, 2022, an increase of approximately $3.5 million. The increases were due to higher interest rates.

Liquidity and Capital Resources

Sources of Liquidity and Capital

Since inception, we have not generated any revenue from any product sales or any other sources and have incurred operating losses and negative cash flows from our operations. Through June 30, 2023, we have primarily funded our operations with gross cash proceeds of $44.5 million from sales of preferred stock and net proceeds of approximately $257.5 million in connection with the transactions contemplated under the Agreement and Plan of Merger, dated as of June 29, 2021, as amended on November 7, 2021 (Business Combination Agreement), by and among the FS Development Corp II, Pardes Biosciences, Inc., Orchard Merger Sub, Inc. and Shareholder Representative Services LLC, a Colorado limited liability company solely in its capacity as the representative, agent and attorney-in-fact of the Company Securityholders (as defined in the Business Combination Agreement) and the concurrent private placement of public equity. See Note 1, Description of Business – Business Combination, to the financial statements included in our 2022 Form 10-K for additional information.

On January 12, 2023, we filed a shelf registration statement on Form S-3, which was declared effective by the U.S. Securities and Exchange Commission on January 20, 2023 (2023 Shelf). The 2023 Shelf covers the offering, issuance and sale by us of up to an aggregate of $200.0 million of our common stock, preferred stock, debt securities, warrants to purchase our common stock, preferred stock or debt securities, subscription rights to purchase our common stock, preferred stock or debt securities and/or units consisting of some or all of these securities. In connection with the 2023 Shelf, we entered into a Sales Agreement, dated January 11, 2023, with SVB Securities LLC (Sales Agent), pursuant to which we may offer and sell up to $50.0 million of our common stock, from time to time at our sole discretion, through the Sales Agent, in “at-the-market” offerings under the 2023 Shelf.

As of June 30, 2023, we had cash, cash equivalents and short-term investments of $153.2 million and an accumulated deficit of $176.7 million. We believe that our existing cash resources will be sufficient to fund current planned operations for at least the next 12 months.

Cash and cash equivalents are comprised of cash on deposit, money market funds and available-for-sale securities. We have cash deposits with regulated financial institutions, which may from time to time exceed the insurance provided on such deposits.

CRO and CMO Agreements

We have entered into agreements in the normal course of business with certain vendors for the provision of goods and services, which includes manufacturing services with CMOs and development services with CROs. In connection with the suspension of the Phase 2 clinical trial and the winding down of our research and development activities, we have terminated or modified substantially all of our agreements with CMOs and CROs. As of June 30, 2023, we have recognized and paid $0.1 million in contract termination fees.

During the periods presented, we did not have, and we do not currently have, any commitments or obligations, including contingent obligations, arising from arrangements with unconsolidated entities or persons that have or are reasonably likely to have a material

current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources.

Cash Flows

The following table summarizes our cash flows for the periods presented (in thousands):


	Six Months Ended June 30,
	2023			2022
Net cash used in operating activities	$	(46,444	)	$	(39,682	)
Net cash provided by investing activities		87,426			—
Net cash used in financing activities		—			(397	)
Net increase (decrease) in cash and cash equivalents	$	40,982		$	(40,079	)

Operating Activities

During the six months ended June 30, 2023, net cash used in operating activities primarily consisted of a net loss of $28.6 million, net accretion of discounts on available-for-sale securities of $2.3 million and a decrease of $18.5 million in accounts payable and accrued expenses, partially offset by a non-cash charge of $3.7 million related to stock-based compensation expense.

During the six months ended June 30, 2022, net cash used in operating activities consisted of a net loss of $49.1 million. Changes to our working capital included increases to our accrued expenses of $3.1 million, decreases to prepaid expenses and other assets of $1.3 million, and a decrease in accounts payable of $0.5 million. Non-cash activities included a charge of $5.4 million to stock-based compensation expense of which $2.0 million related to the accelerated recognition of stock compensation expense for our former Chief Executive Officer and President, Dr. Uri Lopatin, who transitioned to a consultant on July 31, 2022. See Note 10, Stock-Based Compensation, to the financial statements included in our 2022 Form 10-K for additional information.

Investing Activities

During the six months ended June 30, 2023, net cash provided by investing activities consisted of $103.2 million from the sale and maturities of available-for-sale securities, offset by $15.8 million in purchases of available-for-sale securities. There were no investing activities during the six months ended June 30, 2022.

Financing Activities

During the six months ended June 30, 2023, there were no financing activities. During the six months ended June 30, 2022, net cash used consisted of payments for transaction costs associated with the Business Combination Agreement.

Funding Requirements

Our operating expenses significantly decreased during the second quarter of 2023 and are expected to continue to decrease during the second half of 2023 due to our decision in March 2023 to implement the Restructuring Plan and the RIF. However, we may not realize, in full or in part, the anticipated benefits and savings in operating expenses from these decisions due to unforeseen difficulties, delays or unexpected costs, including costs associated with the transactions contemplated under the Merger Agreement. As a result, our future expenses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on our ability to close the transactions contemplated under the Merger Agreement in the anticipated timeframes or at all.

Based on our current operating plan, we expect our existing cash, cash equivalents and short-term investments will enable us to fund our operating expenses and capital expenditure requirements for at least 12 months from the date of filing this Quarterly Report on Form 10-Q. However, we have based this estimate on assumptions that may prove to be wrong and we could exhaust our capital resources sooner than we expect.

If the transactions contemplated under the Merger Agreement are not consummated and we decide to pursue another strategic alternative or we decide to pursue any future product development efforts, our future funding requirements will depend on, and could increase significantly as a result of, many factors, including:

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whether we realize the anticipated cost savings in connection with the RIF and the Restructuring Plan;

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our ability to consummate a strategic transaction and the nature and type of such a transaction;

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our ability to bring any product candidates through preclinical and clinical development, and the timing and scope of these research and development activities;

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the costs of obtaining clinical and commercial supplies for any product candidates we may develop;

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our ability to successfully commercialize any product candidates we may develop;

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the manufacturing, selling and marketing costs associated with any product candidates we may develop, including the cost and timing of establishing our sales and marketing capabilities;

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the amount and timing of sales and other revenues from any product candidates we may develop, including the sales price and the availability of adequate third-party reimbursement;

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the time and cost necessary to respond to technological and market developments;

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

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our ability to attract, hire and retain qualified personnel;

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the costs of maintaining, expanding and protecting our intellectual property portfolio; and

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the costs associated with operating as a public company and maintaining compliance with exchange listing and SEC requirements.

A change in the outcome of any of these or other variables with respect to the development of any product candidate we may develop in the future could significantly change the costs and timing associated with the development of that product candidate. Further, our need for additional funds is heavily dependent on our ability to close the transactions contemplated under the Merger Agreement in the anticipated timeframes or at all.

Until such time, if ever, as we can generate substantial product revenues, and subject to our ability to close the transactions contemplated under the Merger Agreement in the anticipated timeframes or at all, we expect to finance our cash needs through a combination of cash-on-hand, equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. We currently have no credit facility or committed sources of capital. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our existing stockholders may be diluted, and the terms of such securities may include liquidation or other preferences that could adversely affect the rights of such stockholders. Additional debt financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business.

If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research program or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate any product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Critical Accounting Policies and Significant Judgments and Estimates

The preparation of our unaudited condensed financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, as of the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. If these estimates differ significantly from actual results, the impact to the unaudited condensed financial statements may be material. There have been no material changes in our critical accounting policies and estimates from those disclosed in our 2022 Form 10-K for the fiscal year ended December 31, 2022. Please refer to Part II, Item 7 of our 2022 Form 10-K for a discussion of our critical accounting policies and significant judgments and estimates.

Recent Accounting Pronouncements

We have not adopted any significant accounting policies since December 31, 2022. Upon evaluation of recently issued accounting pronouncements, we do not believe any will have a material impact on our condensed financial statements or related financial statement disclosures.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information under this item.

Item 4. Controls and Procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2023. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act), means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by a registrant in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a registrant in the reports that it files or submits under the Exchange Act is accumulated and communicated to the registrant’s management, including its principal executive and principal financial officers, or persons performing similar functions as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance and not absolute assurance of achieving their desired control objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of June 30, 2023, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no material changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become subject to various legal proceedings and claims that arise in the ordinary course of our business activities. Although the results of litigation and claims cannot be predicted with certainty, as of June 30, 2023, we do not believe we are party to any claim or litigation the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors.

Our business faces significant risks and uncertainties. If any of the following risks, or other risks not presently known to us or that we currently believe to not be material, are realized, our business, financial condition and results of operations could be materially and adversely affected. If that happens, the market price of our common stock could decline, and stockholders may lose all or part of their investment. Based upon the topline results from the Phase 2 clinical trial of pomotrelvir (formerly known as PBI-0451), we have suspended further clinical development of pomotrelvir, wound down our research and development activities, and our Board of the Directors (Board) initiated a review of a range of strategic alternatives that included, but was not limited to, an acquisition, merger, business combination, or other transaction, including an acquisition via merger, license or otherwise, of products or additional product candidates (the Restructuring Plan). In connection with the Restructuring Plan, on March 31, 2023, the Board approved a reduction in workforce (the RIF) to align operations with the changes in our corporate strategy and to reduce operating expenses. In the event that we were to resume research and development activities and ultimately commercialize any therapeutic products, many of the risks we describe in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (SEC) on March 14, 2023 (2022 Form 10-K) will apply to our future operations. We have included supplemental risks to those described in the 2022 Form 10-K in this Quarterly Report on Form 10-Q describing the additional risks we face in light of our current winddown activities, our efforts to identify and evaluate a range of strategic alternatives and the transactions contemplated under the Merger Agreement. You should carefully review and consider the full discussion of our risk factors below, together with all other information in this Quarterly Report on Form 10-Q, including our unaudited condensed financial statements and notes thereto, and in our other filings with the SEC, including those identified under the caption “Risk Factors” in Part I, Item 1A of our 2022 Form 10-K. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.

Risks Related to the Offer and Merger

The Offer and Merger are subject to a number of conditions beyond our control. Failure to complete the Offer and the Merger within the expected time frame, or at all, could have a material adverse effect on our business, operating results, financial condition and our share price.

On July 16, 2023, we entered into an Agreement and Plan of Merger (the Merger Agreement) with MediPacific, Inc., a Delaware corporation (Parent), and MediPacific Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (Merger Sub), pursuant to which, and upon the terms and subject to the conditions of, Merger Sub commenced a cash tender offer (the Offer) to purchase each issued and outstanding share of the Company’s common stock, par value $0.0001 (the Common Stock). Subject to the terms and conditions of the Merger Agreement, Merger Sub will be merged with and into the Company (the Merger), with the Company continuing as the surviving corporation, and pursuant to the Merger, each share of Common Stock that is not validly tendered and irrevocably accepted for purchase pursuant to the Offer, except as provided in the Merger Agreement, will be converted in the Merger into the right to receive an amount equal to the Merger Consideration (as defined in the Merger Agreement), net to the seller in cash and without interest. Merger Sub’s obligation to accept shares of Common Stock tendered in the Offer is subject to conditions, including: (i) that the number of shares of Common Stock validly tendered and not validly withdrawn, equals at least a majority of all shares of Common Stock then outstanding owned by stockholders other than the Foresite Stockholders (as defined in the Merger Agreement), the members of the Special Committee of the Board (the Special Committee) and the officers of the Company subject to Section 16 of the Securities Exchange Act of 1934, as amended; (ii) the Company’s Closing Net Cash (as defined in and determined in accordance with the Merger Agreement) will be at least $125.0 million as of the expiration of the Offer; (iii) the accuracy of the Company’s representations and warranties contained in the Merger Agreement (subject to certain exceptions and qualifications described in the Merger Agreement and the Offer to Purchase), (iv) the Company’s performance in all material respects of its obligations under the Merger Agreement and (v) the other conditions set forth in Exhibit A to the Merger Agreement. The obligations of Parent and Merger Sub to consummate the Offer and the Merger under the Merger Agreement are not subject to a financing condition.

We cannot predict whether or when the conditions to the Offer will be satisfied. If one or more of these conditions are not satisfied, and as a result, we do not complete the Offer and Merger, we would remain liable for significant transaction costs, and the focus of our management would have been diverted from seeking other potential strategic opportunities, in each case without realizing any benefits of the Offer and the Merger. Certain costs associated with the Offer and Merger have already been incurred or may be payable even if

the Offer and Merger are not consummated. Finally, any disruptions to our business resulting from the announcement and pendency of the Offer and Merger, including any adverse changes in our relationships with our partners, suppliers and employees, could continue or accelerate in the event that we fail to consummate the Offer and Merger.

Our share price may also fluctuate significantly based on announcements by Parent, other third parties, or us regarding the Offer and Merger or based on market perceptions of the likelihood of the satisfaction of the Minimum Tender Condition or other conditions to the consummation of the Offer and Merger. Such announcements may lead to perceptions in the market that the Offer and Merger may not be completed, which could cause our share price to fluctuate or decline. Other factors outside of our control, such as a governmental entity enacting a legal restraint or prohibition that that prevents or prohibits the Offer or Merger, could cause us not to satisfy the Legal Restraint Condition and thus the Offer and Merger would not be consummated. Further, unforeseen and unexpected expenses could cause our net cash to be below the applicable threshold thus causing us to fail to satisfy the Closing Net Cash Condition.

If we do not consummate the Offer and Merger, the price of our Common Stock may decline significantly from the current market price, which may reflect a market assumption that the Offer and Merger will be consummated. Any of these events could have a material adverse effect on our business, operating results and financial condition and could cause a decline in the price of our Common Stock.

The consideration payable to holders of our Common Stock pursuant to the Merger Agreement will be adjusted if our net cash amount exceeds certain threshold, but will not otherwise be adjusted for changes in our business, assets, liabilities, prospects, outlook, financial condition or results of operations, or in the event of any change in our share price.

The consideration payable to holders of our Common Stock will be adjusted based on our Closing Net Cash, but will not be otherwise adjusted for changes in our business, assets, liabilities, prospects, outlook, financial condition or results of operations, or changes in the market price of, analyst estimates of, or projections relating to, our shares of Common Stock.

Our stockholders may not receive any payment on the CVRs and the CVRs may expire valueless.

If the Offer and the Merger are completed, the holders of our Common Stock will be entitled to receive one contingent value right per share of Common Stock (a CVR) representing the right to receive, subject to the terms and conditions of the Contingent Value Rights Agreement that the Company expects to enter into with a rights agent and a representative, agent and attorney in-fact of the holders of the CVRs at or prior to the completion of the Offer (the CVR Agreement), contingent cash payments equal to 80% of net proceeds payable, if any, to Parent, the Company or any of their respective affiliates that arise from any license or disposition (each, a Disposition) of the Company’s assets associated with the Company’s antiviral drug development programs and related assets as of the Merger closing date (collectively, the CVR Products), which Disposition occurs within five years of the Merger closing date. In the event that a Disposition of CVR Products does not occur within the Disposition Period and no other contingent payment condition is achieved, holders of the CVRs will not receive any payment pursuant to the CVR Agreement. The CVRs will not be transferable, except in the limited circumstances specified in the CVR Agreement, will not have any voting or dividend rights, and will not represent any equity or ownership interest in the Company or any of its affiliates, and interest will not accrue on any amounts potentially payable on the CVRs. Accordingly, the right of any of our stockholders to receive any future payment on or derive any value from the CVRs will be contingent solely upon the occurrence of a Disposition, as outlined above, and no such Disposition is achieved for any reason within the time periods specified in the CVR Agreement, no payments will be made under the CVRs, and the CVRs will expire valueless.

The Merger Agreement contains provisions that could discourage a potential competing acquirer.

The Merger Agreement provides that, upon the terms and subject to the conditions thereof, the Company and its representatives cannot directly or indirectly solicit, initiate or knowingly encourage or knowingly facilitate discussions with third parties regarding other proposals to acquire or combine with the Company and we are subject to restrictions on our ability to respond to any such proposal. In the event that we receive an acquisition proposal from a third party, we must notify Parent of such proposal and negotiate in good faith with Parent prior to terminating the Merger Agreement or effecting a change in the recommendation of our Board and the Special Committee to our stockholders with respect to the Offer and Merger. The Merger Agreement also contains certain termination rights for Parent and us and further provides that, upon termination of the Merger Agreement under specified circumstances, including certain terminations in connection with an alternative business combination transaction as permitted by the terms of the Merger Agreement, we will be required to pay Parent a termination fee of $2.6 million. These provisions could discourage a potential third-party acquirer that might have an interest in acquiring all or a significant portion of us from considering or proposing that acquisition, even if it were prepared to pay consideration with a higher per share cash or market value than the market value proposed to be received or realized in the transaction. These provisions also might result in a potential third-party acquirer proposing to pay a lower price to our stockholders than it might otherwise have proposed to pay due to the added expense of the termination fee that may become payable in certain circumstances. If the Merger Agreement is terminated and we determine to seek another business combination, we may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Offer and Merger.

Stockholder litigation could prevent or delay the consummation of the Offer and Merger or otherwise negatively impact our business, operating results and financial condition.

We may incur additional costs in connection with the defense or settlement of any future stockholder litigation in connection with the Offer and Merger. Any such future litigation may adversely affect our ability to complete the Offer and Merger and may impact our ability to meet the Closing Net Cash Condition. We could incur significant costs in connection with any such litigation, including costs associated with the indemnification of our directors and officers. Furthermore, one of the conditions to the consummation of the Offer and Merger is the Legal Restraint Condition. Consequently, if a plaintiff were to secure injunctive or other relief prohibiting, delaying or otherwise adversely affecting our ability to complete the consummation of the Offer and Merger, then such injunctive or other relief may prevent the consummation of the Offer or the Merger within the expected time frames or at all.

We may become involved in securities class action litigation that could divert management’s attention and harm our business, and insurance coverage may not be sufficient to cover all costs and damages.

In the past, securities class action litigation has often followed certain significant business transactions, such as the sale of a company or announcement of any other strategic transaction, or the announcement of negative events, such as negative results from clinical trials. These events may also result in investigations by the SEC. We may be subject to such litigation or investigation even if no wrongdoing has occurred. Litigation and investigations are usually expensive and divert management’s attention and resources, which could adversely affect our business and cash resources and our ability to consummate the Offer and the Merger within the expected time frames or at all, or to consummate any alternative strategic transaction, and could adversely impact the ultimate value our stockholders receive in any such transaction.

Our executive officers and directors may have interests in the Offer and the Merger that are different from, or in addition to, those of our stockholders generally.

Our executive officers and directors may have interests in the Offer and the Merger that are different from, or are in addition to, those of our stockholders generally, including the acceleration of equity awards in connection with the Merger, severance payments and retention bonuses. Such interests of our directors and executive officers are set forth in further detail in the Schedule 14D-9 filed by the Company with the SEC on July 28, 2023.

While the Offer and Merger are pending, we are subject to business uncertainties and contractual restrictions that could disrupt our business, and the Offer and Merger may impair our ability to attract and retain qualified employees or retain and maintain relationships with our suppliers and other business partners.

Whether or not the Offer and Merger are consummated, the Offer and Merger may disrupt our current plans and operations, which could have an adverse effect on our business and financial results. The pendency of the Offer and Merger may also divert management’s attention and our resources from ongoing business and operations and our employees. Other key personnel may have uncertainties about the effect of the Offer and Merger, and the uncertainties may impact our ability to retain key personnel while the Offer and Merger are pending or in the event that we are unable to consummate the Offer or the Merger within the expected time frames or at all. If key personnel depart because of such uncertainties, our business and results of operations may be adversely affected.

In addition, pending consummation of the Offer and Merger, the Merger Agreement generally requires us to operate in the ordinary course of business consistent with past practice and our intent to winddown our activities, and restricts us from taking certain actions with respect to our business and financial affairs without Parent’s consent. Such restrictions will be in place until either the Offer and Merger are consummated or the Merger Agreement is terminated. These restrictions could restrict our ability to, or prevent us from, pursuing attractive business opportunities (if any) that arise prior to the consummation of the Offer and Merger. For these and other reasons, the pendency of the Offer and Merger could adversely affect our business, operating results and financial condition.

We have incurred, and will continue to incur, direct and indirect costs as a result of the Offer and Merger.

We have incurred, and will continue to incur, significant costs and expenses, including fees for professional services and other transaction costs, in connection with the Offer and Merger, including costs that we may not currently expect. We must pay substantially all of these costs and expenses whether or not the transaction is completed. If the Merger Agreement is terminated under specified circumstances, including certain terminations in connection with an alternative business combination transaction, we will be required to pay to Parent a termination fee equal to $2.6 million. In addition, if Parent terminates the Merger Agreement as a result of us failing to satisfy the Closing Net Cash Condition, we will be required to pay to Parent an expense reimbursement fee up to a maximum amount of $1.25 million. There are a number of factors beyond our control that could affect the total amount or the timing of these costs and expenses.

If we are not able to complete the Offer and Merger, we will likely pursue other strategic alternatives. We may not be successful in identifying and implementing any strategic business combination or other transaction and any strategic transaction that we may consummate in the future could have negative consequences. There can be no assurance that the terms of any such other transaction will be favorable.

As part of the Restructuring Strategy approved by the Board on March 31, 2023, we have undertaken a comprehensive assessment of strategic alternatives to maximize stockholder value. These strategic alternatives included, but were not limited to, an acquisition, merger, business combination, or other transaction, including an acquisition via merger, license or otherwise, of products or additional product candidates. Upon the unanimous recommendation of the Special Committee, the Board determined that the terms of the Offer, the Merger and the other transactions contemplated under the Merger Agreement are fair to and in the best interests of the Company and the unaffiliated stockholders, approved the execution of the Merger Agreement and, subject to the terms and conditions of the Merger Agreement, recommended that the unaffiliated stockholders accept the Offer and tender their shares of Common Stock pursuant to the Offer.

If we are not able to consummate the Offer and Merger and decide to evaluate other strategic alternatives there can be no assurance that this review process will result in us pursuing a transaction or that any transaction, if pursued, will be completed on attractive terms or at all. The process of evaluating other strategic alternatives may be time-consuming and complex, and we may incur significant costs related to this evaluation, such as for financial advisors, as well as legal and accounting fees and expenses and other related charges, in addition to those we have already incurred in connection with the Offer and Merger. We may also incur additional unanticipated expenses in connection with this process. A considerable portion of these costs will be incurred regardless of whether any alternative strategic transaction is pursued or completed. Any such expenses will decrease the remaining cash available for use in our business and may diminish or delay any future distributions to our stockholders.

In addition, if we are not able to complete the Offer and Merger and are required to pursue another strategic alternative, such alternative transaction may yield unexpected results that adversely affect our business and decrease the remaining cash available for use in our business or the execution of our strategic plan. There can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated, lead to increased stockholder value, or achieve its anticipated results. Any failure of such potential transaction to achieve its anticipated results could significantly impair our ability to enter into any future strategic transactions and may significantly diminish or delay any future distributions to our stockholders.

We may not realize any additional value in a strategic transaction.

Parent has placed no value on our assets, including pomotrelvir, our next generation compounds and intellectual property, and may spend only limited resources as provided in the CVR Agreement to potentially monetize our assets. Other potential counterparties in a strategic transaction involving us may likewise place minimal or no value on our assets. Further, the development and any potential commercialization of our product candidates will require substantial additional cash to fund the costs associated with conducting the necessary preclinical and clinical testing and obtaining regulatory approval. Consequently, any potential counterparty in a strategic transaction involving us may choose not to spend additional resources and continue development of our product candidates and may likewise attribute little or no value, in such a transaction, to those assets.

If a strategic transaction is not consummated, our Board may decide to pursue a dissolution and liquidation. In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities.

There can be no assurance that the Offer and Merger or any other strategic transaction will be consummated. If a strategic transaction is not consummated, the Special Committee and the Board may decide to pursue a dissolution and liquidation of the Company. In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such decision, as the amount of cash available for distribution will decline over time as we continue to fund our operations. In addition, if our Board were to approve and recommend, and our stockholders were to approve, a dissolution and liquidation, we would be required under Delaware corporate law to pay our outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to our stockholders. As a result of this requirement, a portion of our assets may need to be reserved pending the resolution of such obligations and the timing of any such resolution would be uncertain. In addition, we may be subject to litigation or other claims related to a dissolution and liquidation. If a dissolution and liquidation were pursued, our Board, in consultation with our advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of our Common Stock could lose all or a significant portion of their investment in the event of a liquidation, dissolution or winding up.

Our ability to consummate the Offer and Merger or complete another strategic transaction or a dissolution and liquidation of the Company depends on our ability to retain our employees required to consummate such transaction.

In the second quarter of 2023, we reduced our workforce by approximately 89% as part of the RIF. Our cash conservation activities may yield unintended consequences, such as attrition beyond our planned reduction in workforce, decline in employee productivity and reduced employee morale, which may cause remaining employees to seek alternative employment. Our ability to successfully consummate the Offer and Merger or complete another strategic transaction or a dissolution and liquidation of the Company depends in large part on our ability to retain certain of our remaining personnel, the loss of whose services may adversely impact our ability to consummate such transaction. Due to our limited employee resources, we may not be able to effectively manage our operations or recruit and retain qualified personnel, which may result in weaknesses in our operations, risks that we may not be able to comply with legal and regulatory requirements.

Our executive officers, directors and principal stockholders, if they choose to act together, or Dr. Tananbaum and his affiliates acting together, will have the ability to significantly influence all matters submitted to stockholders for approval.

As of August 1, 2023, Dr. Tananbaum, a member of our Board, and his affiliates (together, the Foresite Group) collectively owned approximately 27.1% of our outstanding shares of Common Stock and, as a result, have the ability to significantly influence all matters submitted to our stockholders for approval, including the approval of any significant transaction. On April 21, 2023, the Foresite Group filed an amended Schedule 13D with the SEC disclosing that it had submitted a non-binding expression of interest letter to the Board setting forth an intent to explore and evaluate a potential acquisition of all of the shares of outstanding Common Stock of the Company not currently owned by the Foresite Group in a going private transaction. We subsequently executed the Merger Agreement with Parent and Merger Sub, of which the Foresite Group is a controlling stockholder and with which Dr. Tananbaum is affiliated. Additionally, as of August 1, 2023, our executive officers, directors and their affiliates (including Dr. Tananbaum), in the aggregate, owned approximately 39.6% of our outstanding shares of Common Stock and, as a result, when acting together have the ability to significantly influence all matters submitted to our Board or stockholders for approval, including the appointment of our management, the election and removal of directors and approval of any significant transaction, as well as our management and business affairs. This concentration of ownership may have the effect of delaying, deferring or preventing a change in control of the Company, impeding a merger, consolidation, takeover or other business combination involving us, or discouraging another potential acquiror from making a tender offer or otherwise attempting to obtain control of our business, even if such a transaction would benefit other stockholders.

Risks Related to our Financial Position and Need for Additional Capital

We have incurred significant losses since our inception and may incur losses for the foreseeable future and may never achieve profitability.

To date, we have devoted almost all of our financial resources to research and development, including preclinical and clinical development activities. While we recently made the decision to suspend development of pomotrelvir and winddown our research and development activities, and are not currently developing any product candidates, if the Offer and Merger are not consummated, in order to become and remain profitable we would need to succeed in developing, and eventually commercializing, a product or products that generate significant revenue. The ability to achieve this success would require us to be effective in a range of challenging activities, including completing preclinical testing and clinical trials of any future product candidates we may develop, obtaining regulatory approval for these future product candidates and manufacturing, marketing and selling any products for which we may obtain regulatory approval. We may never undertake or succeed in these activities and, even if we do, may never generate revenues that are significant enough to achieve profitability. Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will ever achieve profitability.

For the year ended December 31, 2022 and the six months ended June 30, 2023, we reported a net loss of $96.6 million and $28.6 million, respectively. As of June 30, 2023, we had an accumulated deficit of $176.7 million. Depending on whether the Offer and Merger are consummated, or if not consummated, the outcome of our exploration of other strategic alternatives, we may continue to incur significant losses for the foreseeable future, and we expect these losses would continue as we complete the winddown of our operations and continue operations as a public company. Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

If we are unable to consummate the Offer and Merger and decide to pursue an alternative strategic transaction or any future product development efforts, we will need substantial additional funding. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or any commercialization efforts.

As of June 30, 2023 we had cash, cash equivalents and short-term investments of $153.2 million. Our future capital requirements will depend on many factors, including:

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whether we are able to consummate the Offer and Merger within the expected time frames or at all;

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if we are not able to consummate the Offer and Merger, our ability to consummate another strategic transaction and the nature and type of such transaction;

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whether we realize the anticipated cost savings in connection with our RIF and winddown of our research and development programs;

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if we decide to pursue any future product development efforts, our ability to bring any future product candidates through preclinical and clinical development, and the timing and scope of these research and development activities;

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the costs of obtaining clinical and commercial supplies of any future product candidates we may develop;

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our ability to successfully commercialize any future product candidates we may develop;

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the manufacturing, selling and marketing costs associated with any future product candidates we may develop, including the cost and timing of establishing our sales and marketing capabilities;

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the amount and timing of sales and other revenues from any future product candidates we may develop, including the sales price and the availability of coverage and adequate third-party reimbursement;

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the time and cost necessary to respond to technological and market developments;

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the extent to which we may acquire or in-license future product candidates and technologies;

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general conditions in the global economy and financial markets, including relating to changes in gross domestic product growth, volatility and disruptions in the capital and credit markets, rising interest rates, increasing effects of inflation, global supply-chain disruptions, the tightening of the global labor market or turmoil in the global banking sector;

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the costs of maintaining, expanding and protecting our intellectual property portfolio; and

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the costs associated with operating as a public company and maintaining compliance with exchange listing and SEC requirements.

We may seek additional financing to achieve our business objectives. The U.S. capital markets have experienced and continue to experience extreme volatility and disruption and adequate additional financing may not be available to us on acceptable terms, or at all. In addition, we may seek additional capital when market conditions are favorable, or for strategic considerations, even if we believe we have sufficient funds for our current or future operating plans. If adequate funds are not available to us on a timely basis or on terms acceptable to us, we may be required to delay, limit, reduce or terminate any preclinical studies, clinical trials or other activities for any product candidates under development at such time, or delay, limit, reduce or terminate our establishment of sales and marketing capabilities or other activities that may be necessary to commercialize any future product candidates.

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of the sale of one or more of our product candidates or other assets, equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights as common stockholders. Debt financing and preferred equity financings, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our assets, making capital expenditures or declaring dividends.

If we raise additional funds through the sale of one or more of our product candidates or other assets, collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed or on terms acceptable to us, we may be required to delay, limit, reduce or terminate any product then under development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Our limited operating history may make it difficult to evaluate the success of our business to date and to assess our future viability.

We commenced activities in 2020 and our operations to date have been limited to organizing and staffing the Company, business planning, raising capital, developing our technology, and undertaking preclinical studies and clinical trials of our product candidates. We have not yet demonstrated the ability to successfully develop any product candidate, obtain regulatory approvals, manufacture a commercial-scale product or arrange for a third-party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, any predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing products.

We expect our financial condition and operating results to fluctuate significantly from quarter-to-quarter and year-to-year due to a variety of factors, many of which are beyond our control. The Restructuring Plan, the RIF, and our entering into the Merger Agreement are likely to further increase the variability of our operating results in the coming quarters as compared to prior quarters. Accordingly, our stockholders should not rely upon the results of any prior quarterly or annual periods as indications of future operating performance.

Our ability to use our net operating losses (NOLs), and research and development tax credit carryforwards to offset future taxable income may be subject to certain limitations.

We have a history of cumulative losses and anticipate that we will continue to incur significant losses in the foreseeable future; thus, we do not know whether or when we will generate taxable income necessary to utilize our NOLs or research and development tax credit carryforwards. At December 31, 2022, we had federal and state NOL carryforwards of approximately $65.8 million and $2.6 million, respectively. At December 31, 2022, we had federal and state research and development tax credits of $1.3 million and $0.6 million, respectively.

In general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the Code), and corresponding provisions of state law, a corporation that undergoes an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a three year period, is subject to limitations on its ability to utilize its pre-change NOLs and research and development tax credit carryforwards to offset future taxable income. We have not completed an ownership change analysis pursuant to Section 382 of the Code. If ownership changes within the meaning of Section 382 of the Code have occurred, the NOL and research and development carry-forwards available to offset future taxable income and income tax expense in future years may be significantly restricted or eliminated. Further, deferred tax assets associated with such tax attributes could be significantly reduced or eliminated upon realization of an ownership change within the meaning of Section 382 of the Code. We have not conducted a study to assess whether any such ownership changes have occurred. We may have experienced such ownership changes in the past, including as a result of the consummation of the transactions contemplated by the Business Combination Agreement in December 2021, and may experience such ownership changes in the future as a result of subsequent changes in our stock ownership (which may be outside our control). As a result, if, and to the extent that, we earn net taxable income, our ability to use our pre-change NOLs and research and development tax credit carryforwards to offset such taxable income may be subject to limitations.

There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise become unavailable to offset future income tax liabilities. Additionally, state NOLs generated in one state cannot be used to offset income generated in another state. For these reasons, even if we attain profitability, we may be unable to use a material portion of our NOLs and other tax attributes.

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

The Company’s Purchase of Equity Securities

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Update on Restructuring Costs

On April 3, 2023, we filed a Current Report on Form 8-K (the April Form 8-K), which among other things, disclosed the Restructuring Plan and the RIF described elsewhere in this Quarterly Report on Form 10-Q. On May 5, 2023, we filed a Quarterly Report on Form 10-Q (the Q1 2023 Form 10-Q) which supplemented the disclosure in the April Form 8-K. In connection with the further implementation of the Restructuring Plan and the completion of the RIF and the preparation of this Quarterly Report on Form 10-Q, we have further evaluated the estimated costs and expenses associated therewith and are hereby further supplementing the April Form 8-K and Q1 2023 to disclose that the total costs associated with the RIF was $5.2 million rather than the approximately $5.4 million estimate provided in the Q1 2023 Form 10-Q, all of which are cash-based expenditures related primarily to personnel expenses such as salaries, one-time severance payments and other benefits. The foregoing estimated amount does not include any non-cash charges associated with

stock-based compensation. We recognized $1.1 million of the total costs related to the RIF in the first quarter of 2023 and $4.1 million in the second quarter of 2023. During the second quarter of 2023, we also recognized and paid $0.1 million in contract termination fees.

As implementation and activities associated with the Restructuring Plan continue, management will further evaluate the estimated costs and expenses set forth above and may revise the estimated restructuring charges as appropriate, consistent with generally accepted accounting principles. We may incur other charges, including contract termination costs, and will record these expenses in the appropriate period as they are determined. These estimates are subject to a number of assumptions, and actual results may differ. We may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the Restructuring Plan and the RIF.

Item 6. Exhibits.

(a) Exhibits


Exhibit Number	Description	Filed Herewith	Incorporated by Reference herein from Form or Schedule	Filing Date	SEC File/Reg. Number
2.1	Agreement and Plan of Merger among the Company, Parent and Merger Sub, dated July 16, 2023		Exhibit 2.1 on Form 8-K	July 17, 2023	001-40067

10.1	Limited Guaranty, dated July 16, 2023		Exhibit 10.1 on Form 8-K	July 17, 2023	001-40067

10.2	Letter Agreement between the Company and Thomas G. Wiggans, dated July 16, 2023		Exhibit 10.2 on Form 8-K	July 17, 2023	001-40067

31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	x

31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	x

32†	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	x

101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document	x

101.SCH	Inline XBRL Taxonomy Extension Schema Document	x

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	x

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	x

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	x

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	x

104	Cover Page Interactive Data File (embedded within the Inline XBRL document)	x

† This certification will not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act except to the extent specifically incorporated by reference into such filing.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	PARDES BIOSCIENCES, INC.

Date: August 4, 2023	By:	/s/ Thomas G. Wiggans
		Thomas G. Wiggans
		Chief Executive Officer and Chair of the Board of Directors (Principal Executive Officer)


Date: August 4, 2023	By:	/s/ Heidi Henson
		Heidi Henson
		Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas G. Wiggans, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Pardes Biosciences, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 4, 2023


By:		/s/ Thomas G. Wiggans
		Thomas G. Wiggans
		Chief Executive Officer
		(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Heidi Henson, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Pardes Biosciences, Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 4, 2023


By:		/s/ Heidi Henson
		Heidi Henson
		Chief Financial Officer
		(Principal Financial Officer)

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Pardes Biosciences, Inc. (the “Company”) for the quarter ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Thomas G. Wiggans, Chief Executive Officer of the Company, and Heidi Henson, Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

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

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 4, 2023


By:		/s/ Thomas G. Wiggans
		Thomas G. Wiggans
		Chief Executive Officer
		(Principal Executive Officer)

Date: August 4, 2023


By:		/s/ Heidi Henson
		Heidi Henson
		Chief Financial Officer
		(Principal Financial Officer)

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2023	Aug. 01, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Document Quarterly Report	true
Document Transition Report	false
Entity Registrant Name	PARDES BIOSCIENCES, INC.
Entity File Number	001-40067
Entity Tax Identification Number	85-2696306
Entity Address, Address Line One	2173 Salk Avenue
Entity Address, Address Line Two	Suite 250
Entity Address, Address Line Three	PMB#052
Entity Address, City or Town	Carlsbad
Entity Address, Postal Zip Code	92008
City Area Code	415
Local Phone Number	649-8758
Entity Central Index Key	0001822711
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Incorporation, State or Country Code	DE
Entity Address, State or Province	CA
Entity Filer Category	Non-accelerated Filer
Entity Shell Company	false
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	PRDS
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		62,011,756

Condensed Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 100,266	$ 59,284
Short-term investments	52,931	138,056
Prepaid expenses and other current assets	4,113	3,062
Total current assets	157,310	200,402
Other assets	0	219
Total assets	157,310	200,621
Current liabilities:
Accounts payable	14	4,929
Accrued expenses	1,911	15,496
Total current liabilities	1,925	20,425
Total liabilities	1,925	20,425
Commitments and contingencies (Note 9)
Stockholders' equity:
Preferred stock: $0.0001 par value; 10,000,000 shares authorized as of June 30, 2023 and December 31, 2022; no shares issued and outstanding as of June 30, 2023 and December 31, 2022	0	0
Common stock: $0.0001 par value and 250,000,000 shares authorized; 61,716,745 and 61,734,343 shares issued as of June 30, 2023 and December 31, 2022, respectively; and 60,396,888 and 59,542,714 shares outstanding as of June 30, 2023 and December 31, 2022, respectively	6	6
Additional paid-in capital	332,108	328,372
Accumulated other comprehensive income (loss)	9	(24)
Accumulated deficit	(176,738)	(148,158)
Total stockholders' equity	155,385	180,196
Total liabilities and stockholders' equity	$ 157,310	$ 200,621

Condensed Balance Sheets (Parentheticals) - $ / shares	Jun. 30, 2023	Dec. 31, 2022	Dec. 23, 2021
Preferred stock, par value (in Dollars per share)	$ 0.0001	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	61,716,745	61,734,343
Common stock, shares outstanding	60,396,888	59,542,714

Condensed Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Operating expenses:
Research and development	$ 6,928	$ 20,344	$ 19,908	$ 33,543
General and administrative	5,687	7,591	12,516	15,817
Total operating expenses	12,615	27,935	32,424	49,360
Other income:
Interest and other income, net	1,840	298	3,844	283
Net loss	$ (10,775)	$ (27,637)	$ (28,580)	$ (49,077)
Net loss per share, basic	$ (0.18)	$ (0.48)	$ (0.48)	$ (0.86)
Net loss per share, diluted	$ (0.18)	$ (0.48)	$ (0.48)	$ (0.86)
Weighted-average number of common shares used in computing net loss per share, basic	60,209,276	57,686,462	59,990,131	57,384,446
Weighted-average number of common shares used in computing net loss per share, diluted	60,209,276	57,686,462	59,990,131	57,384,446
Unrealized gain on available-for-sale securities	$ 33	$ 0	$ 34	$ 0
Comprehensive loss	$ (10,742)	$ (27,637)	$ (28,546)	$ (49,077)

Condensed Statements of Stockholders Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
Balance at the beginning at Dec. 31, 2021	$ 266,294	$ 6	$ 317,812		$ (51,524)
Balance at the beginning (Shares) at Dec. 31, 2021		56,765,533
Vesting of restricted common stock (Shares)		610,765
Stock-based compensation expense	1,527		1,527
Net loss	(21,440)				(21,440)
Balance at the end at Mar. 31, 2022	246,381	$ 6	319,339		(72,964)
Balance at the end (Shares) at Mar. 31, 2022		57,376,298
Balance at the beginning at Dec. 31, 2021	266,294	$ 6	317,812		(51,524)
Balance at the beginning (Shares) at Dec. 31, 2021		56,765,533
Net loss	(49,077)
Balance at the end at Jun. 30, 2022	222,632	$ 6	323,227		(100,601)
Balance at the end (Shares) at Jun. 30, 2022		57,981,118
Balance at the beginning at Mar. 31, 2022	246,381	$ 6	319,339		(72,964)
Balance at the beginning (Shares) at Mar. 31, 2022		57,376,298
Vesting of restricted common stock (Shares)		604,820
Stock-based compensation expense	3,888		3,888
Net loss	(27,637)				(27,637)
Balance at the end at Jun. 30, 2022	222,632	$ 6	323,227		(100,601)
Balance at the end (Shares) at Jun. 30, 2022		57,981,118
Balance at the beginning at Dec. 31, 2022	$ 180,196	$ 6	328,372	$ (24)	(148,158)
Balance at the beginning (Shares) at Dec. 31, 2022	59,542,714	59,542,714
Vesting of restricted common stock (Shares)		427,965
Stock-based compensation expense	$ 2,338		2,338
Other comprehensive income	1			1
Net loss	(17,805)				(17,805)
Balance at the end at Mar. 31, 2023	164,730	$ 6	330,710	(23)	(165,963)
Balance at the end (Shares) at Mar. 31, 2023		59,970,679
Balance at the beginning at Dec. 31, 2022	$ 180,196	$ 6	328,372	(24)	(148,158)
Balance at the beginning (Shares) at Dec. 31, 2022	59,542,714	59,542,714
Net loss	$ (28,580)
Balance at the end at Jun. 30, 2023	$ 155,385	$ 6	332,108	9	(176,738)
Balance at the end (Shares) at Jun. 30, 2023	60,396,888	60,396,888
Balance at the beginning at Mar. 31, 2023	$ 164,730	$ 6	330,710	(23)	(165,963)
Balance at the beginning (Shares) at Mar. 31, 2023		59,970,679
Vesting of restricted common stock (Shares)		426,209
Stock-based compensation expense	1,398		1,398
Other comprehensive income	32			32
Net loss	(10,775)				(10,775)
Balance at the end at Jun. 30, 2023	$ 155,385	$ 6	$ 332,108	$ 9	$ (176,738)
Balance at the end (Shares) at Jun. 30, 2023	60,396,888	60,396,888

Condensed Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Operating activities:
Net loss	$ (28,580)	$ (49,077)
Adjustments to reconcile net loss to net cash used in operating activities:
Net accretion of discounts on available-for-sale securities	(2,266)	0
Stock-based compensation expense	3,736	5,415
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(919)	1,327
Interest receivable	(134)	0
Accounts payable	(4,915)	(466)
Accrued expenses	(13,585)	3,119
Other assets	219	0
Net cash used in operating activities	(46,444)	(39,682)
Investing activities:
Purchases of available-for-sale securities	(15,764)	0
Proceeds on sale of available-for-sale securities	2,190	0
Maturities of available-for-sale securities	101,000
Net cash provided by investing activities	87,426	0
Financing activities:
Cash paid for deferred offering costs	0	(397)
Net cash used in financing activities	0	(397)
Increase (decrease) in cash and cash equivalents	40,982	(40,079)
Cash and cash equivalents at beginning of period	59,284	268,678
Cash and cash equivalents at end of period	$ 100,266	$ 228,599

Description of Business

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business

Note 1. Description of Business

Description of Business

Proposed Agreement and Plan of Merger

Liquidity

We have cash deposits with regulated financial institutions, which may from time to time exceed insurance provided on such deposits.

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

Use of Estimates

Significant Accounting Policies

Net Loss Per Share


	June 30, 2023		June 30, 2022
Outstanding stock options		10,356,431		7,356,791
Restricted common stock subject to repurchase or forfeiture		1,319,857		4,339,806
Total		11,676,288		11,696,597

New Accounting Pronouncements Adopted and Not Yet Adopted

Investments

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Investments

Note 3. Investments

Available-for-sale securities consisted of U.S. Treasury securities, U.S. Agency bonds, commercial paper, corporate debt securities and asset-backed securities.

Our cash equivalents consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Cash equivalents
Money market fund	$	92,645	$	32,426
U.S. government and government agencies		2,414		19,869
Commercial paper		—		2,997
Corporate debt securities		—		2,993
Total cash equivalents	$	95,059	$	58,285


		June 30, 2023
	Maturities	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Short-term investments
U.S. government and government agencies	Within one year	$	21,339	$	—	$	(25	)	$	21,314
Commercial paper	Within one year		25,794		4		(11	)		25,787
Asset-backed securities	After one year through five years		5,772		58		—			5,830
Total short-term investments		$	52,905	$	62	$	(36	)	$	52,931


		December 31, 2022
	Maturities	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Short-term investments
U.S. government and government agencies	Within one year	$	75,409	$	15	$	(48	)	$	75,376
Commercial paper	Within one year		59,405		—		—			59,405
Asset-backed securities	Within one year		3,267		8		—			3,275
Total short-term investments		$	138,081	$	23	$	(48	)	$	138,056

Fair Value Measurements

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 4. Fair Value Measurements

Level 1 — Observable inputs such as quoted prices in active markets;

Level 3 — Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Below are summaries of our cash equivalents and short-term investments that were measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):


	June 30, 2023						December 31, 2022
	Level 1		Level 2		Estimated Fair Value		Level 1		Level 2		Estimated Fair Value
Cash equivalents
Money market fund	$	92,645	$	—	$	92,645	$	32,426	$	—	$	32,426
U.S. government and government agencies		—		2,414		2,414		—		19,869		19,869
Commercial paper		—		—		—		—		2,997		2,997
Corporate debt securities		—		—		—		—		2,993		2,993
Total cash equivalents	$	92,645	$	2,414	$	95,059	$	32,426	$	25,859	$	58,285


	June 30, 2023				December 31, 2022
	Level 2		Estimated Fair Value		Level 2		Estimated Fair Value
Short-term investments
U.S. government and government agencies	$	21,314	$	21,314	$	75,376	$	75,376
Commercial paper		25,787		25,787		59,405		59,405
Asset-backed securities		5,830		5,830		3,275		3,275
Total short-term investments	$	52,931	$	52,931	$	138,056	$	138,056

Prepaid Expenses and Other Current Assets

6 Months Ended

Jun. 30, 2022

Prepaid Expense, Current [Abstract]

Prepaid Expenses and Other Current Assets

Note 5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Prepaid insurance	$	2,244	$	1,582
Prepaid research and development costs		12		495
Other prepaid expenses and current assets		1,857		985
Total	$	4,113	$	3,062

Accrued Expenses

6 Months Ended

Jun. 30, 2023

Accrued Liabilities [Abstract]

Accrued Expenses

Note 6. Accrued Expenses

Accrued expenses consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Research and development accruals	$	721	$	10,784
Accrued compensation		674		3,878
Other accrued expenses		516		834
Total	$	1,911	$	15,496

Stockholders' Equity

6 Months Ended

Jun. 30, 2023

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Note 7. Stockholders’ Equity

Preferred Stock

Common Stock

Stock-Based Compensation

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Note 8. Stock-Based Compensation

The following table summarizes stock-based compensation expense for all stock-based compensation arrangements (in thousands):


	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023		2022
Research and development	$	(54	)	$	2,571	$	651	$	3,034
General and administrative		1,452			1,317		3,085		2,381
Total stock-based compensation	$	1,398		$	3,888	$	3,736	$	5,415

Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 9. Commitments and Contingencies

Commitments

Contingencies

Restructuring and Related Activities

6 Months Ended

Jun. 30, 2023

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities

Note 10. Restructuring and Related Activities

On March 31, 2023, the Board approved the Restructuring Plan and the RIF. Restructuring charges are reported as a component of operating expenses in our condensed statement of operations.

The following table details the accruals and payments for the restructuring charges (in thousands):


Balance at December 31, 2022	$	—
Severance expense		1,125
Balance at March 31, 2023	$	1,125
Severance expense		4,093
Contract termination fees		88
Payments for severance and termination fees		(4,720	)
Balance at June 30, 2023	$	586

Summary of Significant Accounting Policies (Policies)	6 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 30, 2023
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto in our 2022 Form 10-K, from which we derived our balance sheet as of December 31, 2022. The accompanying unaudited condensed financial statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying unaudited condensed financial statements reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of our management, necessary to a fair statement of the results for the interim periods presented. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of results that may be expected for the year ending December 31, 2023 or for any other future annual or interim period.
Use of Estimates	Use of Estimates The preparation of the unaudited condensed financial statements in accordance with GAAP requires our management to make estimates and assumptions that affect the amounts reported on our unaudited condensed financial statements and accompanying notes. The amounts reported could differ under different estimates and assumptions. On an ongoing basis, we evaluate our estimates and judgments, which are based on historical and anticipated results and trends and on various other assumptions that management believes to be reasonable under the circumstances. By their nature, estimates are subject to an inherent degree of uncertainty and, as such, actual results may differ from management’s estimates.
Net Loss Per Share	Net Loss Per Share Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares and common stock equivalents outstanding for the period determined using the treasury-stock method. Common stock equivalents are only included in the calculation of diluted earnings per common share when net income is reported and their effect is dilutive. For the periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to our net loss position. Basic and diluted net loss attributable to common stockholders per share is presented in conformity with the two-class method required for participating securities as shares of unvested restricted stock are considered participating securities. Our participating securities do not have a contractual obligation to share in our losses. As such, the net loss was attributed entirely to common stockholders for all periods presented.
New Accounting Pronouncements Not Yet Adopted	New Accounting Pronouncements Adopted and Not Yet Adopted The Company has not adopted any significant accounting policies since December 31, 2022. Upon evaluation of recently issued accounting pronouncements, the Company does not believe any will have a material impact on its unaudited condensed financial statements or related financial statement disclosures.

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Schedule of Potentially Dilutive Securities not Included in Calculation of Diluted Net Loss per Share would be Anti-dilutive


	June 30, 2023		June 30, 2022
Outstanding stock options		10,356,431		7,356,791
Restricted common stock subject to repurchase or forfeiture		1,319,857		4,339,806
Total		11,676,288		11,696,597

Investments (Tables)

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Schedule of Cash Equivalents and Short-Term Investments at Fair Value

Our cash equivalents consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Cash equivalents
Money market fund	$	92,645	$	32,426
U.S. government and government agencies		2,414		19,869
Commercial paper		—		2,997
Corporate debt securities		—		2,993
Total cash equivalents	$	95,059	$	58,285

Our short-term investments that are measured at fair value on a recurring basis consisted of the following:


		June 30, 2023
	Maturities	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Short-term investments
U.S. government and government agencies	Within one year	$	21,339	$	—	$	(25	)	$	21,314
Commercial paper	Within one year		25,794		4		(11	)		25,787
Asset-backed securities	After one year through five years		5,772		58		—			5,830
Total short-term investments		$	52,905	$	62	$	(36	)	$	52,931


		December 31, 2022
	Maturities	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Short-term investments
U.S. government and government agencies	Within one year	$	75,409	$	15	$	(48	)	$	75,376
Commercial paper	Within one year		59,405		—		—			59,405
Asset-backed securities	Within one year		3,267		8		—			3,275
Total short-term investments		$	138,081	$	23	$	(48	)	$	138,056

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Summary of Cash Equivalents and Short-Term Investments at Fair Value on a Recurring Basis

Below are summaries of our cash equivalents and short-term investments that were measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):


	June 30, 2023						December 31, 2022
	Level 1		Level 2		Estimated Fair Value		Level 1		Level 2		Estimated Fair Value
Cash equivalents
Money market fund	$	92,645	$	—	$	92,645	$	32,426	$	—	$	32,426
U.S. government and government agencies		—		2,414		2,414		—		19,869		19,869
Commercial paper		—		—		—		—		2,997		2,997
Corporate debt securities		—		—		—		—		2,993		2,993
Total cash equivalents	$	92,645	$	2,414	$	95,059	$	32,426	$	25,859	$	58,285


	June 30, 2023				December 31, 2022
	Level 2		Estimated Fair Value		Level 2		Estimated Fair Value
Short-term investments
U.S. government and government agencies	$	21,314	$	21,314	$	75,376	$	75,376
Commercial paper		25,787		25,787		59,405		59,405
Asset-backed securities		5,830		5,830		3,275		3,275
Total short-term investments	$	52,931	$	52,931	$	138,056	$	138,056

Prepaid Expenses and Other Current Assets (Tables)

6 Months Ended

Jun. 30, 2022

Prepaid Expense, Current [Abstract]

Schedule of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Prepaid insurance	$	2,244	$	1,582
Prepaid research and development costs		12		495
Other prepaid expenses and current assets		1,857		985
Total	$	4,113	$	3,062

Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2023

Accrued Liabilities [Abstract]

Summary of Accrued Expenses

Accrued expenses consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Research and development accruals	$	721	$	10,784
Accrued compensation		674		3,878
Other accrued expenses		516		834
Total	$	1,911	$	15,496

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Schedule Allocation of Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense for all stock-based compensation arrangements (in thousands):


	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023		2022
Research and development	$	(54	)	$	2,571	$	651	$	3,034
General and administrative		1,452			1,317		3,085		2,381
Total stock-based compensation	$	1,398		$	3,888	$	3,736	$	5,415

Restructuring and Related Activities (Tables)

6 Months Ended

Jun. 30, 2023

Restructuring and Related Activities [Abstract]

Schedule of accruals and payments for the restructuring charges

The following table details the accruals and payments for the restructuring charges (in thousands):


Balance at December 31, 2022	$	—
Severance expense		1,125
Balance at March 31, 2023	$	1,125
Severance expense		4,093
Contract termination fees		88
Payments for severance and termination fees		(4,720	)
Balance at June 30, 2023	$	586

Description of Business - Additional Information (Detail) - USD ($)			3 Months Ended
	Jul. 25, 2023	Jul. 16, 2023	Jun. 30, 2023	Dec. 31, 2022
Description of Business and Summary of Significant Accounting Policies [Line Items]
Common stock, par value			$ 0.0001	$ 0.0001
Cash, cash equivalents and short-term investments			$ 153,200,000
Estimated workforce reduction percentage			89.00%
Merger Agreement \| Subsequent Event
Description of Business and Summary of Significant Accounting Policies [Line Items]
Additional amount of cash per share of common stock		$ 0.17
Pro rata share of net income		80.00%
Common stock share held by subsidiary	150,000
Common stock shares owned	16,813,146
Percentage of outstanding common stock	27.10%
Closing balance of net cash in merger agreement		$ 125,000,000
Termination fee		2,600,000
Recovery of Direct Costs		$ 1,250,000
Merger Agreement \| Base Rate Member \| Subsequent Event
Description of Business and Summary of Significant Accounting Policies [Line Items]
Common stock, par value		$ 2.02
Contingent Value Rights Agreement \| Subsequent Event
Description of Business and Summary of Significant Accounting Policies [Line Items]
Guarantors obligation under limited guaranty		$ 7,500,000
Contractual obligation		$ 400,000

Summary of Significant Accounting Policies - Schedule of Potentially Dilutive Securities not Included in Calculation of Diluted Net Loss per Share would be Anti-dilutive (Details) - shares	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potentially dilutive securities not included in calculation of diluted net loss per share because to do so would be anti-dilutive	11,676,288	11,696,597
Outstanding Stock Options
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potentially dilutive securities not included in calculation of diluted net loss per share because to do so would be anti-dilutive	10,356,431	7,356,791
Restricted Common Stock Subject to Repurchase or Forfeiture
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potentially dilutive securities not included in calculation of diluted net loss per share because to do so would be anti-dilutive	1,319,857	4,339,806

Investments - Schedule of Cash Equivalents and Short-Term Investments at Fair Value (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Debt Securities, Available-for-Sale [Line Items]
Money market fund	$ 92,645	$ 32,426
U.S. government and government agencies	2,414	19,869
Commercial paper	0	2,997
Corporate debt securities	0	2,993
Total cash equivalents	95,059	58,285
Short-term investments
Debt Securities, Available-for-Sale [Line Items]
Available For Sale Securities, Amortized Cost	52,905	138,081
Available-for-Sale Securities, Unrealized Gains	62	23
Available-for-Sale Securities, Unrealized Losses	(36)	(48)
Available-for-Sale Securities, Estimated Fair Value	$ 52,931	$ 138,056
Short-term investments \| U.S. government and government agencies
Debt Securities, Available-for-Sale [Line Items]
Available-for-Sale Securities, Maturities	Within one year	Within one year
Available For Sale Securities, Amortized Cost	$ 21,339	$ 75,409
Available-for-Sale Securities, Unrealized Gains	0	15
Available-for-Sale Securities, Unrealized Losses	(25)	(48)
Available-for-Sale Securities, Estimated Fair Value	$ 21,314	$ 75,376
Short-term investments \| Commercial paper
Debt Securities, Available-for-Sale [Line Items]
Available-for-Sale Securities, Maturities	Within one year	Within one year
Available For Sale Securities, Amortized Cost	$ 25,794	$ 59,405
Available-for-Sale Securities, Unrealized Gains	4	0
Available-for-Sale Securities, Unrealized Losses	(11)	0
Available-for-Sale Securities, Estimated Fair Value	$ 25,787	$ 59,405
Short-term investments \| Asset Backed Securities
Debt Securities, Available-for-Sale [Line Items]
Available-for-Sale Securities, Maturities	After one year through five years	Within one year
Available For Sale Securities, Amortized Cost	$ 5,772	$ 3,267
Available-for-Sale Securities, Unrealized Gains	58	8
Available-for-Sale Securities, Unrealized Losses	0	0
Available-for-Sale Securities, Estimated Fair Value	$ 5,830	$ 3,275

Investments - Additional Information (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($) InvestmentSecurity	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) InvestmentSecurity	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Debt Securities, Available-for-Sale [Line Items]
Number of short-term investments in gross unrealized loss position less than 12 months \| InvestmentSecurity	10		10
Number of short-term investments in gross unrealized loss position more than 12 months \| InvestmentSecurity	0		0
Short-term investments in gross unrealized loss position less than 12 months ,Fair value	$ 27,900		$ 27,900
Available-for sale securities, allowance for credit loss	$ 0		$ 0		$ 0
Debt Securities, Available-for-Sale, Accrued Interest, after Allowance for Credit Loss, Current, Statement of Financial Position [Extensible Enumeration]	Accrued Liabilities, Current		Accrued Liabilities, Current		Accrued Liabilities, Current
Available-for sale securities, accrued interest after allowance for credit loss	$ 300		$ 300		$ 300
Available-for sale securities, accrued interest writeoff	0	$ 0	0	$ 0
Short-term investments
Debt Securities, Available-for-Sale [Line Items]
Amortized cost	52,905		52,905		138,081
Fair value	$ 52,931		$ 52,931		$ 138,056

Fair Value Measurements - Summary of Cash Equivalents and Short-Term Investments at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	$ 95,059	$ 58,285
Estimated fair value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	95,059	58,285
Available-for-Sale Securities, Estimated Fair Value	52,931	138,056
Estimated fair value \| U.S. government and government agencies
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	2,414	19,869
Available-for-Sale Securities, Estimated Fair Value	21,314	75,376
Estimated fair value \| Corporate debt securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents		2,993
Estimated fair value \| Asset-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available-for-Sale Securities, Estimated Fair Value	5,830	3,275
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	92,645	32,426
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	2,414	25,859
Available-for-Sale Securities, Estimated Fair Value	52,931	138,056
Level 2 \| U.S. government and government agencies
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	2,414	19,869
Available-for-Sale Securities, Estimated Fair Value	21,314	75,376
Level 2 \| Corporate debt securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents		2,993
Level 2 \| Asset-backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available-for-Sale Securities, Estimated Fair Value	5,830	3,275
Money market fund \| Estimated fair value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	92,645	32,426
Money market fund \| Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents	92,645	32,426
Commercial paper \| Estimated fair value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents		2,997
Available-for-Sale Securities, Estimated Fair Value	25,787	59,405
Commercial paper \| Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash equivalents		2,997
Available-for-Sale Securities, Estimated Fair Value	$ 25,787	$ 59,405

Prepaid Expenses and Other Current Assets - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Prepaid Expense, Current [Abstract]
Prepaid insurance	$ 2,244	$ 1,582
Prepaid research and development costs	12	495
Other prepaid expenses and current assets	1,857	985
Total	$ 4,113	$ 3,062

Accrued Expenses - Summary of Accrued Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Schedule Of Accrued Expenses [Abstract]
Research and development accruals	$ 721	$ 10,784
Accrued compensation	674	3,878
Other accrued expenses	516	834
Total	$ 1,911	$ 15,496

Stockholders' Equity - Additional Information (Details) - $ / shares	Jun. 30, 2023	Dec. 31, 2022	Dec. 23, 2021
Stockholders Equity [Line Items]
Common stock, shares authorized	250,000,000	250,000,000
Series A Preferred Stock, shares authorized	10,000,000	10,000,000	10,000,000
Issuance of series A convertible preferred stock for cash, net of issuance costs (Shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, par value (in Dollars per share)	$ 0.0001	$ 0.0001	$ 0.0001
Preferred stock, shares outstanding	0	0
Common stock, shares issued	61,716,745	61,734,343

Stock-Based Compensation - Schedule Allocation of Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-Based Payment Arrangement, Expense	$ 1,398	$ 3,888	$ 3,736	$ 5,415
Research and Development Expense
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-Based Payment Arrangement, Expense	(54)	2,571	651	3,034
General and Administrative Expense
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-Based Payment Arrangement, Expense	$ 1,452	$ 1,317	$ 3,085	$ 2,381

Commitments and Contingencies (Additional Information) (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended		6 Months Ended
	Apr. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2023
Loss Contingencies [Line Items]
Estimated workforce reduction percentage		89.00%
Reduction In Workforce [Member]
Loss Contingencies [Line Items]
Estimated workforce reduction percentage	55.00%
Severance costs		$ 4.1	$ 1.1	$ 5.2
Contract Termination Member
Loss Contingencies [Line Items]
Contract termination fees		$ 0.1		$ 0.1

Restructuring and Related Activities - Schedule of the Accruals and payments for the Restructuring Charges (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2023	Mar. 31, 2023
Restructuring Cost and Reserve [Line Items]
Beginning Balance	$ 1,125	$ 0
Severance expense	4,093	1,125
Contract termination fees	88
Payments for severance and termination fees	(4,720)
Ending Balance	$ 586	$ 1,125