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, DC 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2024


☐	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: 001-39926

Terns Pharmaceuticals, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	98-1448275
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1065 East Hillsdale Blvd., Suite 100 Foster City, California	94404
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (650) 525-5535

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, $0.0001 par value per share	TERN	The Nasdaq Global Select Market

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

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

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

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

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

As of November 8, 2024, the registrant had 84,938,855 shares of common stock, $0.0001 par value per share, outstanding.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that are in some cases beyond our control and may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

•

our expectations with regard to the results of our clinical studies, preclinical studies and research and development programs, including the timing and availability of data from such studies;

•

the location, timing of commencement and data reporting of future nonclinical studies and clinical trials and research and development programs;

•

our clinical and regulatory development plans;

•

our expectations regarding the product profile, relative benefits and clinical utility of our product candidates;

•

our expectations regarding the potential market size and size of the potential patient populations for our product candidates and any future product candidates if approved for commercial use;

•

our ability to acquire, discover, develop and advance our product candidates into, and successfully complete, clinical trials;

•

our intentions and our ability to establish collaborations and/or partnerships;

•

the timing or likelihood of regulatory filings and approvals for our product candidates;

•

our commercialization, marketing and manufacturing capabilities and expectations;

•

our intentions with respect to the commercialization of our product candidates;

•

the pricing and reimbursement of our product candidates, if approved;

•

the implementation of our business model and strategic plans for our business and product candidates, including additional indications which we may pursue or elect not to pursue;

•

the scope of protection we are able to establish, maintain, protect and enforce for intellectual property rights covering our product candidates including the projected terms of patent protection;

•

estimates of our expenses, future revenue, capital requirements, our needs for additional financing and our ability to obtain additional capital and the timing of the sufficiency of our capital resources;

•

our future financial performance; and

•

developments and projections relating to our competitors and our industry, including competing products.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
	Signatures	29

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited).

Terns Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(Unaudited; in thousands, except share and per share data)


	September 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	270,136		$	79,926
Marketable securities		102,641			183,514
Prepaid expenses and other current assets		3,729			3,992
Total current assets		376,506			267,432
Property and equipment, net		295			506
Operating lease assets		1,376			523
Other assets		56			56
Total assets	$	378,233		$	268,517
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,787		$	2,515
Accrued expenses and other current liabilities		9,353			8,826
Current portion of operating lease liabilities		272			603
Total current liabilities		11,412			11,944
Taxes payable, non-current		1,318			1,206
Operating lease liabilities, non-current		1,033			—
Total liabilities		13,763			13,150
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value, 150,000,000 shares authorized at September 30, 2024 and December 31, 2023; 84,916,975 and 64,576,719 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		8			6
Additional paid-in capital		763,984			588,008
Accumulated other comprehensive income (loss)		160			(19	)
Accumulated deficit		(399,682	)		(332,628	)
Total stockholders’ equity		364,470			255,367
Total liabilities and stockholders’ equity	$	378,233		$	268,517

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

Terns Pharmaceuticals, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited; in thousands, except share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Operating expenses:
Research and development	$	15,169		$	14,831		$	52,108		$	46,038
General and administrative		9,770			18,353			23,814			32,462
Total operating expenses		24,939			33,184			75,922			78,500
Loss from operations		(24,939	)		(33,184	)		(75,922	)		(78,500	)
Other income:
Interest income		3,088			3,480			9,146			9,568
Other expense, net		(32	)		(5	)		(58	)		(69	)
Total other income, net		3,056			3,475			9,088			9,499
Loss before income taxes		(21,883	)		(29,709	)		(66,834	)		(69,001	)
Income tax expense		(62	)		(58	)		(220	)		(190	)
Net loss	$	(21,945	)	$	(29,767	)	$	(67,054	)	$	(69,191	)

Net loss per share, basic and diluted	$	(0.28	)	$	(0.42	)	$	(0.89	)	$	(0.98	)
Weighted average common stock outstanding, basic and diluted		77,819,658			71,530,180			75,567,851			70,897,320

Other comprehensive loss:
Net loss	$	(21,945	)	$	(29,767	)	$	(67,054	)	$	(69,191	)
Unrealized gain (loss) on available-for-sale securities, net of tax		586			(33	)		178			87
Foreign exchange translation adjustment, net of tax		17			(28	)		1			(101	)
Comprehensive loss	$	(21,342	)	$	(29,828	)	$	(66,875	)	$	(69,205	)

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

Terns Pharmaceuticals, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited; in thousands, except share data)


Nine Months Ended September 30, 2024
	Common Stock				Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Capital			(Loss) Income			Deficit			Equity
Balances at December 31, 2023		64,576,719	$	6	$	588,008		$	(19	)	$	(332,628	)	$	255,367
Vesting of restricted stock units with service conditions		74,974		—		—			—			—			—
Stock-based compensation expense		—		—		4,028			—			—			4,028
Unrealized loss on available-for-sale securities		—		—		—			(293	)		—			(293	)
Foreign exchange translation adjustment		—		—		—			(9	)		—			(9	)
Net loss		—		—		—			—			(22,373	)		(22,373	)
Balances at March 31, 2024		64,651,693	$	6	$	592,036		$	(321	)	$	(355,001	)	$	236,720
Exercise of stock options		4,000		—		12			—			—			12
Issuance of common stock under employee stock purchase plan		87,083		—		387			—			—			387
Issuance of common stock in connection with exercise of pre-funded warrants		5,564,904		1		(1	)		—			—			—
Vesting of restricted stock units with service conditions		27,956		—		—			—			—			—
Stock-based compensation expense		—		—		4,420			—			—			4,420
Unrealized loss on available-for-sale securities		—		—		—			(115	)		—			(115	)
Foreign exchange translation adjustment		—		—		—			(7	)		—			(7	)
Net loss		—		—		—			—			(22,736	)		(22,736	)
Balances at June 30, 2024		70,335,636	$	7	$	596,854		$	(443	)	$	(377,737	)	$	218,681
Issuance of common stock and pre-funded warrants, net of issuance costs of $394		14,064,048		1		161,917			—			—			161,918
Exercise of stock options		171,081		—		1,055			—			—			1,055
Issuance of common stock in connection with exercise of pre-funded warrants		306,913		—		—			—			—			—
Vesting of restricted stock units with service conditions		39,297		—		—			—			—			—
Stock-based compensation expense		—		—		4,158			—			—			4,158
Unrealized gain on available-for-sale securities		—		—		—			586			—			586
Foreign exchange translation adjustment		—		—		—			17			—			17
Net loss		—		—		—			—			(21,945	)		(21,945	)
Balances at September 30, 2024		84,916,975	$	8	$	763,984		$	160		$	(399,682	)	$	364,470

Nine Months Ended September 30, 2023
	Common Stock				Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Capital			Loss			Deficit			Equity
Balances at December 31, 2022		53,723,171	$	5	$	520,178		$	(822	)	$	(242,418	)	$	276,943
Issuance of common stock in at-the-market offering		2,929,922		—		27,924			—			—			27,924
Vesting of restricted stock units with service conditions		16,503		—		—			—			—			—
Stock-based compensation expense		—		—		3,938			—			—			3,938
Unrealized gain on available-for-sale securities		—		—		—			418			—			418
Foreign exchange translation adjustment		—		—		—			(12	)		—			(12	)
Net loss		—		—		—			—			(21,528	)		(21,528	)
Balances at March 31, 2023		56,669,596	$	5	$	552,040		$	(416	)	$	(263,946	)	$	287,683
Exercise of stock options		95,176		—		248			—			—			248
Issuance of common stock under employee stock purchase plan		114,739		—		241			—			—			241
Issuance of common stock in connection with exercise of pre-funded warrants		4,174,960		1		(1	)		—			—			—
Vesting of restricted stock units with service conditions		10,552		—		—			—			—			—
Stock-based compensation expense		—		—		4,233			—			—			4,233
Unrealized loss on available-for-sale securities		—		—		—			(298	)		—			(298	)
Foreign exchange translation adjustment		—		—		—			(61	)		—			(61	)
Net loss		—		—		—			—			(17,896	)		(17,896	)
Balances at June 30, 2023		61,065,023	$	6	$	556,761		$	(775	)	$	(281,842	)	$	274,150
Exercise of stock options		9,000		—		20			—			—			20
Issuance of common stock in connection with exercise of pre-funded warrants		703,486		—		—			—			—			—
Vesting of restricted stock units with service conditions		7,707		—		—			—			—			—
Stock-based compensation expense		—		—		14,083			—			—			14,083
Unrealized loss on available-for-sale securities		—		—		—			(33	)		—			(33	)
Foreign exchange translation adjustment		—		—		—			(28	)		—			(28	)
Net loss		—		—		—			—			(29,767	)		(29,767	)
Balances at September 30, 2023		61,785,216	$	6	$	570,864		$	(836	)	$	(311,609	)	$	258,425

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

Terns Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited; in thousands)


	Nine Months Ended September 30,
	2024			2023
Cash flows from operating activities:
Net loss	$	(67,054	)	$	(69,191	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		12,606			22,254
Depreciation expense		253			220
Net accretion on marketable securities		(929	)		(3,530	)
Change in deferred taxes and uncertain tax positions		102			96
Amortization of operating lease assets		429			441
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		263			(1,784	)
Accounts payable		(782	)		1,959
Accrued expenses and other current liabilities		261			1,957
Operating lease liabilities		(581	)		(496	)
Net cash used in operating activities		(55,432	)		(48,074	)
Cash flows from investing activities:
Purchase of property and equipment		(42	)		(8	)
Purchase of investments		(50,594	)		(270,763	)
Proceeds from sales and maturities of investments		132,574			185,552
Net cash provided by (used in) investing activities		81,938			(85,219	)
Cash flows from financing activities:
Net proceeds from the issuance of common stock and pre-funded warrants		162,312			—
Payment of deferred offering costs		(75	)		(344	)
Net proceeds from issuance of common stock in at-the-market offering		—			27,924
Proceeds from stock option exercises		1,067			268
Proceeds from issuance of common stock under employee stock purchase plan		387			241
Net cash provided by financing activities		163,691			28,089
Effect of exchange rate changes on cash and cash equivalents		13			(138	)
Net increase (decrease) in cash and cash equivalents		190,210			(105,342	)
Cash and cash equivalents at beginning of period		79,926			143,235
Cash and cash equivalents at end of period	$	270,136		$	37,893
Supplemental disclosure of cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	$	618		$	540
Supplemental disclosure of non-cash activities:
Right-of-use assets obtained in exchange for lease liabilities	$	1,282		$	65
Deferred offering costs included in accounts payable and accrued expense	$	319		$	—

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

Terns Pharmaceuticals, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies

Nature of the Business

Terns Pharmaceuticals, Inc. (Terns or the Company) is a clinical-stage biopharmaceutical company developing a portfolio of small-molecule product candidates to address serious diseases including oncology and obesity.

Terns was incorporated as an exempted company in the Cayman Islands in December 2016. In December 2020, the Company effected a de-registration of the Company in the Cayman Islands and a domestication in the State of Delaware, pursuant to which it became a Delaware corporation. Terns owns all of the share capital of Terns Pharmaceutical HongKong Limited (Terns Hong Kong) and Terns, Inc., a Delaware corporation (Terns U.S. Opco). Terns Hong Kong holds all of the share capital of Terns China Biotechnology Co., Ltd. (organized in Shanghai, People’s Republic of China (PRC)) (Terns China) and Terns (Suzhou) Biotechnology Co., Ltd. (organized in Suzhou, PRC) (Terns Suzhou).

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.

Basis of Presentation

The accompanying condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and include the accounts of Terns and its wholly owned subsidiaries Terns U.S. Opco and Terns Hong Kong and its wholly owned subsidiaries Terns China and Terns Suzhou, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated balance sheet as of December 31, 2023 has been derived from audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements.

Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or for any other future periods.

Unaudited Interim Financial Information

These unaudited condensed consolidated financial statements include all adjustments necessary, consisting of only normal recurring adjustments, to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with U.S. GAAP. Interim period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim periods. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto in the Company’s Annual Report on Form 10-K (the Annual Report) for the fiscal year ended December 31, 2023, as filed with the SEC on March 14, 2024. There have been no significant changes to the Company's significant accounting policies described in Note 1, Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies, in Notes to Consolidated Financial Statements in Item 8 of Part II of the Form 10-K for the fiscal year ended December 31, 2023.

Any reference to these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASUs) of the Financial Accounting Standards Board (FASB).

At-the-Market Offering

In March 2022, the Company entered into a Sales Agreement with Cowen and Company, LLC (Cowen) as sales agent, pursuant to which the Company has the ability to offer and sell, from time to time, through Cowen, shares of its common stock having an aggregate offering price of up to $75.0 million in an at-the-market offering. The shares are offered pursuant to the Company's shelf registration statement on Form S-3 filed with the Securities and Exchange Commission (SEC), which became effective in March 2022. As of September 30, 2024, there were 9,781,673 shares of our common stock sold for aggregate net proceeds of $66.6 million after deducting commissions and offering expenses pursuant to this agreement. There were no sales of the Company's common stock pursuant to this agreement during the nine months ended September 30, 2024.

In May 2023, the Company entered into a Sales Agreement with Cowen as sales agent, pursuant to which the Company has the ability to offer and sell, from time to time, through Cowen, shares of its common stock having an aggregate offering price of up to $150.0 million in an at-the-market offering. The shares are offered pursuant to the Company's shelf registration statement on Form S-3 filed with the SEC, which became effective in February 2023. There were no sales of the Company's common stock pursuant to this agreement through September 30, 2024.

September 2024 Financing

In September 2024, the Company issued 14,064,048 shares of its common stock at a public offering price of $10.50 per share and, to certain investors in lieu of common stock, pre-funded warrants to purchase 2,380,952 shares of common stock at a public offering price of $10.4999 per pre-funded warrant in an underwritten public offering. The purchase price per share of each pre-funded warrant represents the per share public offering price for the common stock, minus the $0.0001 per share exercise price of each such pre-funded warrant. Aggregate net proceeds were $161.9 million after deducting underwriting discounts and commissions and offering expenses.

The pre-funded warrants were classified as a component of permanent stockholders’ equity within additional paid-in capital and were recorded at the issuance date using a relative fair value allocation method. The pre-funded warrants are equity classified because they (i) are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, (ii) are immediately exercisable, (iii) do not embody an obligation for the Company to repurchase its shares, (iv) permit the holders to receive a fixed number of shares of common stock upon exercise, (v) are indexed to the Company’s common stock and (vi) meet the equity classification criteria. In addition, such pre-funded warrants do not provide any guarantee of value or return. The Company valued the pre-funded warrants at issuance, concluding that their sales price approximated their fair value, and allocated net proceeds from the sale proportionately to the common stock and pre-funded warrants, of which $23.4 million was allocated to the pre-funded warrants and recorded as a component of additional paid-in capital. No pre-funded warrants have been exercised as of September 30, 2024.

Summary of Significant Accounting Policies

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to, the estimates for accruals of research and development expenses, accrual of research contract costs, unrecognized tax benefits, fair value of common stock and stock option valuations. On an ongoing basis, the Company evaluates its estimates and judgments, using historical and anticipated results and trends and on various other assumptions that management believes to be reasonable under the circumstances. Actual results could materially differ from those estimates.

Cash, Cash Equivalents and Marketable Securities

Cash and cash equivalents consist of standard checking accounts and money market funds. The Company considers all highly liquid investments with an original maturity of 90 days or less at the date of purchase to be cash equivalents.

The Company classifies as available-for-sale marketable securities with a remaining maturity when purchased of greater than three months. The Company’s marketable securities are maintained by investment managers and may consist of U.S. government and non-U.S. government securities, corporate debt securities and commercial paper. Debt securities are carried at fair value with the unrealized gains and losses included in the condensed consolidated statements of operations and comprehensive loss and as a component of stockholders’ equity until realized. Any premium arising at purchase is amortized to the earliest call date and any discount arising at purchase is accreted to maturity. Amortization and accretion of premiums and discounts are recorded in interest income and/or expense. Gains and losses on securities sold are recorded based on the specific identification method and are included in Interest income, net in the condensed consolidated statements of operations and comprehensive loss. The Company has not incurred any material realized gains or losses from sales of securities to date.

The Company assesses its available-for-sale debt securities for impairment as of each reporting date in order to determine if a portion of any decline in fair value below carrying value is the result of a credit loss. The Company records credit losses in the condensed consolidated statements of operations and comprehensive loss as credit loss expense within other expense, net, which is limited to the difference between the fair value and the amortized cost of the security. To date, the Company has not recorded any credit losses on its available-for-sale debt securities.

Interest receivable related to the Company's available-for-sale debt securities is presented as marketable securities on the Company's condensed consolidated balance sheets. The Company writes off interest receivable once it has determined that the asset is not realizable. To date, the Company has not written off any interest receivables associated with its marketable securities.

Operating Leases and Rent Expense

At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, upon lease commencement, the Company records a lease liability which represents the Company’s obligation to make lease payments arising from the lease, and a corresponding right-of-use (ROU) asset which represents the Company’s right to use an underlying asset during the lease term.

Operating lease ROU assets and liabilities are recognized on the balance sheet at the lease commencement date based on the present value of the future minimum lease payments over the lease term. In determining the net present value of the lease payments, the Company uses its incremental borrowing rate applicable to the underlying asset unless the implicit rate is readily determinable. Any lease incentives received are deferred and recorded as a reduction of the ROU asset and amortized over the term of the lease. The Company does not separate lease and non-lease components and instead treats them as a single component. Rent expense, comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term. The Company determines the lease term as the noncancellable period of the lease and may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

The Company elected to not apply the recognition requirements of the new leasing standard to short-term leases with terms of 12 months or less. As a result, leases with a term of 12 months or less are not recognized on the balance sheet.

Research and Development Expenses

Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred to discover, research and develop drug candidates, including personnel expenses, stock-based compensation expense, allocated facility-related and depreciation expenses, third-party license fees and external costs, including fees paid to consultants and contract research organizations (CROs) in connection with nonclinical studies and clinical trials and other related clinical trial fees, such as for investigator grants, patient screening, laboratory work, clinical trial database management, clinical trial material management and statistical compilation and analysis. Non-refundable prepayments for goods or services that will be used or rendered for future research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the 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. Costs incurred in obtaining technology licenses are charged immediately to research and development expense if the technology licensed has not reached technological feasibility and has no alternative future uses.

The Company has from time to time entered into various research and development and other agreements with commercial firms, researchers, universities and others for provisions of goods and services. These agreements are generally cancelable, and the related costs are recorded as research and development expenses as incurred. The Company records accruals for estimated ongoing research and development costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ materially from the Company’s estimates. Since inception, the Company’s historical accrual estimates have not been materially different from the actual costs.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities included the following:


(in thousands)	September 30, 2024		December 31, 2023
Research and development costs	$	2,342	$	2,010
Compensation and benefit costs		4,280		5,683
Accrued professional fees		2,254		855
Other		477		278
Total accrued expenses and other current liabilities	$	9,353	$	8,826

Executive Leadership Transition

In August 2023, Bryan Yoon, former chief operating officer and general counsel, and Mark Vignola, Ph.D., chief financial officer, received retention awards payable in cash in the aggregate amount of $0.5 million for Mr. Yoon and $0.7 million for Dr. Vignola. Each retention award was payable in two installments of 33% of the award on February 1, 2024 and 67% of the award on August 1, 2024, subject to the applicable officer’s continued employment with the Company through such date. Expense was recognized on a straight-line basis over the requisite service period. During the nine months ended September 30, 2024, the Company recognized an expense of $0.7 million related to the retention awards. The retention awards were fully paid as of September 30, 2024. The expenses were recognized as operating expenses within the Condensed Consolidated Statements of Operations and Comprehensive Loss under General and administrative.

In July 2024, Mr. Yoon entered into a separation agreement with the Company. The separation agreement provided for Mr. Yoon’s continued service as chief operating officer and special counsel for a transition period until September 3, 2024. Pursuant to the separation agreement, Mr. Yoon is entitled to receive severance in the amount of $0.5 million, equivalent to 12 months of his annual base salary, the remaining unpaid portion of his retention award of $0.3 million and a pro rata portion of his target annual bonus for 2024 of $0.1 million. During the three months ended September 30, 2024, the Company recorded an accrued liability and recognized expense of $0.6 million related to the departure of the former chief operating officer. As of September 30, 2024, the ending accrued liability was $0.7 million and is presented within the Condensed Consolidated Balance Sheets under Accrued expenses and other current liabilities. Additionally, the separation agreement provided that the time for Mr. Yoon to exercise any outstanding equity award that is vested as of the separation date shall continue to April 30, 2025. As a result of the change in terms for these option grants to Mr. Yoon, the Company recognized an additional $0.6 million in stock-based compensation expense during the three months ended September 30, 2024. The expenses were recognized as operating expenses within the Condensed Consolidated Statements of Operations and Comprehensive Loss under General and administrative.

In July 2024, Dr. Vignola entered into a transition agreement with the Company. The transition agreement provides for Dr. Vignola’s continued service as chief financial officer for a transition period until the date of his separation from employment, anticipated to be February 1, 2025. Pursuant to the transition agreement, Dr. Vignola is entitled to receive severance in the amount of $0.5 million, equivalent to 12 months of his annual base salary, the remaining unpaid portion of his retention award of $0.5 million, his target annual bonus for 2024 of $0.2 million and, as applicable based on the separation date, a pro rata portion of his target annual bonus for 2025. In addition, the Company has agreed to pay Dr. Vignola an additional retention bonus in the amount of $0.5 million, provided Dr. Vignola remains employed until February 1, 2025, with such additional retention bonus being payable in a pro rata amount under certain conditions per the transition agreement. During the three months ended September 30, 2024, the Company recorded an accrued liability and recognized expense of $0.8 million related to the planned transition of the chief financial officer. As of September 30, 2024, the ending accrued liability was $0.9 million and is presented within the Condensed Consolidated Balance Sheets under Accrued expenses and other current liabilities. Additionally, the transition agreement provided that the time for Dr. Vignola to exercise any outstanding equity award that is vested as of the separation date shall continue to the end of the 12th month following the separation date. As a result of the change in terms for these option grants to Dr. Vignola, the Company recognized an additional $0.4 million in stock-based compensation expense during the three months ended September 30, 2024. The expenses were recognized as operating expenses within the Condensed Consolidated Statements of Operations and Comprehensive Loss under General and administrative.

In November 2023, Erin Quirk, M.D., former president and head of research & development, received a retention award payable in cash in the aggregate amount of $0.6 million and a recognition bonus in the aggregate amount of $0.1 million. The retention award was payable in two installments of 33% of the award on February 1, 2024, and 67% of the award on August 1, 2024, and the recognition bonus was payable on January 1, 2024, subject to Dr. Quirk's continued employment with the Company through such date. Expense was recognized on a straight-line basis over the requisite service period. On May 7, 2024, Dr. Quirk entered into a separation agreement with the Company. Pursuant to the separation agreement, Dr. Quirk was entitled to receive severance in the amount of $0.2 million and the remaining unpaid portion of her recognition bonus of $0.4 million. As of June 30, 2024, there was no ending accrued liability as all balances have been paid. As of June 30, 2024, the vesting of each equity award held by Dr. Quirk was accelerated with respect to the number of shares of common stock that would have become vested had Dr. Quirk remained employed at the Company through August 31, 2024, and the time for Dr. Quirk to exercise any vested stock options shall continue up to November 30, 2024. As a result of the change in terms for these option grants to Dr. Quirk, in May 2024, the Company recognized $0.4 million in stock-based compensation expense during the nine months ended September 30, 2024. The expenses were recognized as operating expenses within the Condensed Consolidated Statements of Operations and Comprehensive Loss under Research and development.

In August 2023, the Company and Senthil Sundaram, former chief executive officer, entered into a separation agreement. Pursuant to the separation agreement, Mr. Sundaram was entitled to receive severance in the amount of $0.6 million and 100% of his annual target discretionary bonus for 2023 in the amount of $0.3 million. During the year ended December 31, 2023, the Company recorded an accrued liability and recognized expense of $0.9 million related to the departure of the former chief executive officer. As of September 30, 2024, the ending accrued liability was $0.1 million and is presented within the Condensed Consolidated Balance Sheets under Accrued expenses and other current liabilities. The vesting of each equity award held by Mr. Sundaram was fully accelerated as of December 31, 2023. As a result of the change in service period for all outstanding unvested option grants to the Company’s former chief executive officer in August 2023, the Company recognized $10.5 million in stock-based compensation expense during the three and nine months ended September 30, 2023. The expense was recognized as operating expenses within the Condensed Consolidated Statements of Operations and Comprehensive Loss under General and administrative.

Income Taxes

The provision for income taxes primarily relates to projected federal, state and foreign income taxes. To determine the quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is generally based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates. In addition, the tax effects of certain significant or unusual items are recognized discretely in the quarter during which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

Income taxes are computed using the asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements. In estimating future tax consequences, the Company considers all expected future events including the enactment of changes in tax laws or rates. A valuation allowance is recorded, if necessary, to reduce net deferred tax assets to their realizable values if management does not believe it is more likely than not that the net deferred tax assets will be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, and ongoing prudent and feasible tax planning strategies in assessing the amount of the valuation allowance. When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made.

The Company assesses accounting for uncertainty in income taxes by modeling for the recognition, measurement and disclosure in financial statements any uncertain income tax positions that the Company has taken or expects to take on a tax return. The Company accrues interest and related penalties, if applicable, on all tax exposures for which reserves have been established consistent with jurisdictional tax laws. The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes.

The Company recorded income tax expense for the three months ended September 30, 2024 and 2023 of $0.1 million. The Company recorded income tax expense for the nine months ended September 30, 2024 and 2023 of $0.2 million. The expenses are primarily related to foreign income tax expenses from China.

Comprehensive Loss

Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources.

Stock-Based Compensation

Stock-based compensation expense relates to stock options, restricted stock units (RSUs) with service conditions, and RSUs with market conditions issued under the Company’s equity incentive plan and rights to acquire stock granted under the Company’s employee stock purchase plan (ESPP). Grants are measured at the grant date based on the fair value of the awards and is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. Forfeitures are recognized as they occur.

The Black-Scholes option pricing model estimates the fair value of stock options with time-based vesting and rights to acquire stock under the ESPP. The Company lacks sufficient company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The Company estimates risk-free rates using the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term and dividend yield using the Company’s expectations and historical data. The Company uses the simplified method to calculate the expected term of stock option grants as the Company has limited historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. Under the simplified method, the expected term is estimated to be the mid-point between the vesting date and the contractual term of the option. The fair value is calculated based upon the Company’s common stock valuation on the date of the grant.

The fair value of RSUs with service conditions is based upon the Company’s common stock valuation on the date of the grant.

The Monte Carlo simulation model estimates the fair value of the RSUs with market conditions, using inputs for the common stock valuation on the date of the grant, volatility, the risk-free interest rate, and the dividend yield. Compensation expense is recognized on a straight-line basis over the derived service period commencing on the grant date. The derived service period is the median duration of the successful stock price paths to meet the price goal for each tranche as simulated in the Monte Carlo valuation model. If the related market condition is achieved earlier than its estimated derived service period, the stock-based compensation expense is accelerated, and a cumulative catch-up expense is recorded during the period in which the market condition is met.

Pre-funded Warrants

Pre-funded warrants are classified as a component of permanent stockholders’ equity within additional paid-in capital and are recorded at the issuance date using a relative fair value allocation method. The pre-funded warrants are equity classified because they (i) are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, (ii) are immediately exercisable, (iii) do not embody an obligation for the Company to repurchase its shares, (iv) permit the holders to receive a fixed number of shares of common stock upon exercise, (v) are indexed to the Company’s common stock and (vi) meet the equity classification criteria. In addition, such pre-funded warrants do not provide any guarantee of value or return. The value of the pre-funded warrants is known at issuance, as their sales price approximates their fair value, and net proceeds from the sale are recorded as a component of additional paid-in capital.

Net Loss Per Share of Common Stock

Basic net income (loss) per share of common stock is computed by dividing the net income (loss) per share of common stock by the weighted average number of shares of common stock outstanding for the period. The weighted-average shares of common stock outstanding as of September 30, 2024 included pre-funded warrants, as the warrants were issued for minimal consideration and were immediately exercisable.

Diluted net income (loss) per share of common stock is computed by adjusting net income (loss) to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share of common stock is computed by dividing the diluted net loss by the weighted average number of shares of common stock outstanding for the period, including potentially dilutive shares.

The Company reported a net loss for the three and nine months ended September 30, 2024 and 2023. In periods in which the Company reported a net loss, diluted net loss per share of common stock was the same as basic net loss per share of common stock, since dilutive shares were not assumed to have been issued if their effect is anti-dilutive. The Company excluded the following potential shares of common stock, presented based on amounts outstanding at each period end, from the computation of diluted net loss attributable to common stockholders per share of common stock for the periods indicated because including them would have had an anti-dilutive effect:


	September 30,
	2024		2023
Options to purchase common stock		10,964,022		8,295,869
Unvested restricted stock units with service conditions		580,104		364,594
Unvested restricted stock units with market conditions		150,000		—
Shares issuable under employee stock purchase plan		50,646		54,900
Total		11,744,772		8,715,363

Deferred Offering Costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated.

After consummation of the equity financing, these costs are recorded as a reduction to the carrying value of stockholders’ equity as a reduction of additional paid-in capital or equity generated as a result of such offering. Should an in-process equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statements of operations and comprehensive loss.

Commitments and Contingencies

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. For all periods presented, the Company was not a party to any pending material litigation or other material legal proceedings.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. The Company is an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, as amended (JOBS Act). Under the JOBS Act, emerging growth companies have extended transition periods available for complying with new or revised accounting standards. The Company has elected to use this exemption to delay adopting new or revised accounting standards until such time as those standards apply to private companies. Where allowable, the Company has early adopted certain standards as described below.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires additional income tax disclosures in the annual consolidated financial statements. The amendments in ASU 2023-09 are intended to enhance the transparency and decision usefulness of income tax disclosures. For public entities, ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. For non-public entities, ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2025. Under the JOBS Act, emerging growth companies have extended transition periods available for complying with new or revised accounting standards. The Company is currently evaluating the impact of ASU 2023-09 on its financial statements and related disclosures.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), which expands segment disclosures by requiring disclosure of significant segment expenses and other segment items, including incremental qualitative disclosures, that are regularly provided to the chief operating decision maker to allocate resources and assess performance and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The disclosures required under ASU 2023-07 are also required for public entities with a single reportable segment. ASU 2023-07 is effective for the Company’s fiscal year beginning after December 15, 2023 and for interim periods within the Company’s fiscal year beginning after December 15, 2024, with early adoption permitted. The Company does not expect the adoption of ASU 2023-07 to have a material impact on its financial statements and related disclosures.

2. Cash Equivalents and Marketable Securities

The amortized cost and fair value of cash equivalents and marketable securities by major security type is as follows:


	September 30, 2024
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	148,244	$	—	$	—		$	148,244
U.S. government securities		102,306		337		(2	)		102,641
Total	$	250,550	$	337	$	(2	)	$	250,885

Classified as:
Cash equivalents								$	148,244
Marketable securities									102,641
Total								$	250,885

	December 31, 2023
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	33,788	$	—	$	—		$	33,788
U.S. government securities		183,357		219		(62	)		183,514
Total	$	217,145	$	219	$	(62	)	$	217,302

Classified as:
Cash equivalents								$	33,788
Marketable securities									183,514
Total								$	217,302

The aggregate fair value of the Company’s available-for-sale marketable securities that have been in a continuous unrealized loss position for less than twelve months or twelve months or longer is as follows:


	September 30, 2024
	Less than 12 months					12 months or longer					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. government securities	$	—	$	—		$	4,011	$	(2	)	$	4,011	$	(2	)
Total	$	—	$	—		$	4,011	$	(2	)	$	4,011	$	(2	)

	December 31, 2023
	Less than 12 months					12 months or longer					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. government securities	$	80,461	$	(62	)	$	—	$	—		$	80,461	$	(62	)
Total	$	80,461	$	(62	)	$	—	$	—		$	80,461	$	(62	)

At September 30, 2024, the Company had 2 available-for-sale marketable securities in an unrealized loss position without an allowance for credit losses. The Company does not intend to sell these securities and the Company believes it is more likely than not that marketable securities in an unrealized loss position will be held until maturity and that the Company will not be required to sell these securities before recovery of their amortized cost basis. The Company believes that an allowance for credit losses is unnecessary as the securities are of high credit quality and the decline in fair value is due to market conditions and/or changes in interest rates.

3. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three levels of inputs that may be used to measure fair value are defined below:

•

Level 1—Quoted prices in active markets for identical assets or liabilities at the measurement date.

•

Level 2—Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•

Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The carrying values of the Company’s other assets, accounts payable and accrued expenses and other current liabilities approximate their fair values due to the short-term nature of these assets and liabilities.

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis:


	Fair Value at September 30, 2024
(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents
Cash in bank balances	$	121,892	$	—	$	—	$	121,892
Money market funds		148,244		—		—		148,244
Total cash and cash equivalents	$	270,136	$	—	$	—	$	270,136
Marketable securities
U.S. government securities	$	—	$	102,641	$	—	$	102,641
Total marketable securities	$	—	$	102,641	$	—	$	102,641

	Fair Value at December 31, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents
Cash in bank balances	$	46,138	$	—	$	—	$	46,138
Money market funds		33,788		—		—		33,788
Total cash and equivalents	$	79,926	$	—	$	—	$	79,926
Marketable securities
U.S. government securities	$	—	$	183,514	$	—	$	183,514
Total marketable securities	$	—	$	183,514	$	—	$	183,514

The aggregate amortized cost and fair value of marketable securities as of September 30, 2024, by contractual maturity, are as follows:


(in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	102,306	$	102,641
Due after one year through two years		—		—
Total marketable securities	$	102,306	$	102,641

There were no transfers between Level 1, Level 2 and Level 3 during the periods presented.

4. Leases

In March 2019, the Company entered into a lease agreement for office space in Foster City, California which was set to expire in October 2024. In July 2024, the Company amended the lease agreement to extend for three years commencing as of November 1, 2024, and expiring on October 31, 2027. The Company has the option to extend the amended lease agreement for an additional three years. The other terms of the amendment are substantially the same as the original lease agreement and annual lease payments are approximately $0.5 million. Additionally, the Company leases office space in Shanghai and Suzhou, China.

Components of lease cost are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Operating lease cost	$	143	$	160	$	466	$	482
Short-term cost		5		4		12		12
Total lease cost	$	148	$	164	$	478	$	494

Weighted-average remaining lease term								3.00
Weighted-average discount rate								9.99	%

The Company's future minimum lease payments are as follows:


(in thousands)	Operating Leases
2024	$	11
2025		525
2026		545
2027		465
2028 and thereafter		—
Total lease payments		1,546
Less: Imputed interest		(241	)
Present value of lease liabilities		1,305
Less: Current portion of lease liabilities		(272	)
Total lease liabilities, non-current	$	1,033

5. Common Stock and Stock-Based Compensation

The Company is authorized to issue 150,000,000 shares of common stock and 10,000,000 shares of preferred stock. All classes of stock have a par value of $0.0001. There were no shares of preferred stock outstanding as of September 30, 2024 and December 31, 2023.

The Company had reserved shares of common stock for issuance in connection with the following:


	September 30, 2024		December 31, 2023
Options outstanding under incentive award plans		10,964,022		8,349,922
Unvested restricted stock units with service conditions		580,104		365,892
Unvested restricted stock units with market conditions		150,000		—
Shares available for future grant under incentive award plans		3,662,967		1,005,587
Shares available for future grant under employee stock purchase plans		614,588		701,671
Shares available for future grant under employment inducement award plans		2,816,835		3,291,000
Pre-funded warrants		6,260,534		9,751,500
Total shares reserved		25,049,050		23,465,572

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, if any, as may be declared by the Company’s board of directors. Through September 30, 2024, no cash dividends have been declared or paid by the Company.

Stock-Based Compensation Plans

The Company has three stock-based compensation plans, the 2017 Incentive Award Plan (the 2017 Plan), the 2021 Incentive Award Plan (the 2021 Plan) and the 2022 Employment Inducement Award Plan (the 2022 Inducement Plan). Although awards made under the 2017 Plan continue to be governed by its terms, the 2017 Plan was terminated at the time of the Company’s IPO and no further awards are made under this plan. The 2021 Plan, while effective, authorizes the granting of equity awards to employees and directors of the Company, as well as non-employee consultants. The 2022 Inducement Plan authorizes the granting of equity awards to newly hired employees of the Company.

2021 Incentive Award Plan

In January 2021, the Company's board of directors approved the 2021 Plan which permits the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance bonus awards, performance stock unit awards and other stock awards to employees, directors, officers and consultants. In February 2021, 2,400,007 shares were authorized for issuance under the 2021 Plan, which shall be cumulatively increased on the first day of each year beginning in 2022 and ending in 2031 equal to the lesser of (i) the amount equal to 5% of the number of shares issued and outstanding on the last day of the immediately preceding fiscal year or (ii) such lower number of shares as may be determined by the Company’s board of directors. The 2021 Plan is the successor to the 2017 Incentive Award Plan and no additional awards may be issued from the 2017 Plan. However, the 2017 Plan will continue to govern the terms and conditions of the outstanding awards granted under this plan. Shares of common stock subject to awards granted under the 2017 Plan that are forfeited or lapse unexercised and which following the effective date of the 2021 Plan are not issued under the 2017 Plan will be available for issuance under the 2021 Plan. The number of authorized shares reserved for issuance under the 2021 Plan was increased by 3,228,835 shares effective as of January 1, 2024. As of September 30, 2024, 3,662,967 shares of the Company’s common stock were available for future grants under the 2021 Plan.

2021 Employee Stock Purchase Plan

The 2021 Employee Stock Purchase Plan (the 2021 ESPP) was approved by the Company’s board of directors in January 2021. In February 2021, a total of 240,000 shares were initially reserved for issuance under this plan, which shall be cumulatively increased on the first day of each year beginning in 2022 and ending in 2031 equal to the lesser of (i) 1% of the shares outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (ii) such number of shares as may be determined by the Company’s board of directors. The number of authorized shares reserved for issuance under the 2021 ESPP was increased by 645,767 shares effective as of January 1, 2024. As of September 30, 2024, 614,588 shares of the Company’s common stock were available for future grants under the 2021 ESPP.

Under the 2021 ESPP, eligible employees may select a rate of payroll deduction up to 15% of their eligible compensation subject to certain maximum purchase limitations. The duration for each offering period is 24 months and is divided into four purchase periods of approximately six months in length. Offerings are concurrent. The purchase price of the shares under the offering is the lesser of 85% of the fair market value of the shares on the offering date or 85% of the fair market value of the shares on the purchase date. A look-back feature in the 2021 ESPP causes the offering period to automatically reset if the fair value of the Company’s common stock on the last day of the purchase period is less than that on the original offering date. 2021 ESPP purchases by employees are settled with newly-issued common stock from the 2021 ESPP’s previously authorized and available pool of shares.

As of September 30, 2024, there was $0.5 million of unrecognized stock-based compensation expense related to unvested employee stock purchases. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 1.13 years as of September 30, 2024. There were 87,083 and 114,739 shares purchased by employees under the 2021 ESPP during the nine months ended September 30, 2024 and 2023, respectively.

2022 Employment Inducement Award Plan

In September 2022, the Company's compensation committee approved the 2022 Inducement Plan which authorized 1,400,000 shares of common stock to be issued and permitted the granting of nonqualified stock options, stock appreciation rights, restricted stock awards and restricted stock unit awards to newly hired employees and officers. In August 2024 and September 2023, the Company approved amendments to the 2022 Inducement Plan which increased the number of authorized shares reserved for issuance by 2,250,000 and 3,113,250 shares, respectively. As of September 30, 2024, 2,816,835 shares of the Company's common stock were available for future grants under the 2022 Inducement Plan.

Pre-Funded Warrants

In September 2024, the Company sold pre-funded warrants to purchase 2,380,952 shares of common stock at a price of $10.4999 per pre-funded warrant. The purchase price per share of each pre-funded warrant represents the per share public offering price for the common stock sold in the same offering, minus the $0.0001 per share exercise price of such pre-funded warrant. As of September 30, 2024, no pre-funded warrants have been exercised.

In August 2022, the Company sold pre-funded warrants to purchase 14,630,000 shares of common stock at a price of $2.4199 per pre-funded warrant. The purchase price per share of each pre-funded warrant represents the per share offering price for the common stock, minus the $0.0001 per share exercise price of such pre-funded warrant. As of September 30, 2024, 10,750,418 pre-funded warrants have been exercised.

Stock Options

Stock options granted to employees and non-employees under the plans generally vest over four years and allow the holder of the option to purchase common stock at a stated exercise price. Options granted under the plans generally expire ten years after the date of grant. The Company recognizes the stock-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period.

The following table summarizes the stock option activity for all stock plans during the nine months ended September 30, 2024:


	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
						(in years)		(in thousands)
Outstanding as of December 31, 2023		8,349,922		$	9.04		6.82	$	2,225
Granted		4,389,813			6.72
Exercised		(175,081	)		6.09				673
Forfeited		(1,600,632	)		8.54
Outstanding as of September 30, 2024		10,964,022		$	8.23		6.31	$	10,640
Exercisable, September 30, 2024		5,777,098		$	8.98		3.68	$	3,750
Vested and expected to vest, September 30, 2024		10,964,022		$	8.23		6.31	$	10,640

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.

As of September 30, 2024, there was $23.7 million of unrecognized stock-based compensation expense related to unvested stock options which is estimated to be recognized over a period of 2.97 years.

Restricted Stock Units with Service Conditions

RSUs with service conditions granted to employees under the plans generally vest over four years. The number of shares issued on the date the RSUs vest is net of the minimum statutory tax withholdings, which are paid in cash to the appropriate taxing authorities on behalf of the Company’s employees. The Company recognizes the stock-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period.

The following table summarizes the RSUs with service conditions activity for all stock plans during the nine months ended September 30, 2024:


	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested restricted stock units as of December 31, 2023		365,892		$	8.79
Granted		635,650			6.16
Vested		(142,227	)		8.58
Forfeited		(279,211	)		6.36
Unvested restricted stock units as of September 30, 2024		580,104		$	7.13

As of September 30, 2024, there was $3.5 million of unrecognized stock-based compensation expense related to RSUs with service conditions which is estimated to be recognized over a period of 2.81 years.

Restricted Stock Units with Market Conditions

In March 2024, the Company granted 150,000 RSUs with market conditions, which are subject to the achievement of certain escalating stock price thresholds established by the Company's compensation committee of the board of directors. The RSUs with market conditions vest in equal installments upon the achievement of escalating stock price thresholds of $15.00 and $20.00, respectively, calculated based on the average price per share of the Company’s common stock for a period of 30 consecutive trading days equaling or exceeding the applicable price threshold, with vesting occurring as of the last day of the 30 consecutive trading day period. The escalating stock price thresholds can be met any time after the first anniversary of employment of the recipient but prior to the fourth anniversary of the date of grant.

The Company estimated the fair value of RSUs with market conditions granted using a Monte Carlo simulation model with the following assumptions:


	Nine Months Ended September 30, 2024
Expected volatility		78.45	%
Risk-free interest rate		4.27	%
Fair value of underlying common stock	$	7.31
Weighted average grant-date fair value per share	$	5.39

As of September 30, 2024, none of the escalating stock price thresholds had been met for any of the RSUs with market conditions, resulting in no shares vested.

As of September 30, 2024, there was $0.5 million of unrecognized stock-based compensation expense related to RSUs with market conditions which is estimated to be recognized over a period of 1.05 years.

Stock-Based Compensation Expense

The Company estimated the fair value of options granted and rights to acquire stock granted under the Company’s employee stock purchase plan using a Black-Scholes option pricing model with the following assumptions presented on a weighted average basis:


	Nine Months Ended September 30,
	2024			2023
Stock Option Plans
Expected term (years)		6.04			6.05
Expected volatility		77.15	%		73.79	%
Risk-free interest rate		4.23	%		3.58	%
Fair value of underlying common stock	$	6.72		$	9.68
Weighted average grant-date fair value per share	$	4.69		$	6.53
Employee Stock Purchase Plans
Expected term (years)		1.22			1.26
Expected volatility		83.43	%		86.49	%
Risk-free interest rate		5.10	%		4.85	%
Fair value of underlying common stock	$	6.01		$	11.30
Weighted average grant-date fair value per share	$	3.03		$	5.82

Stock-based compensation expense was classified in the condensed consolidated statements of operations and comprehensive loss as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Research and development expense	$	1,266	$	1,400	$	5,444	$	4,324
General and administrative expense		2,892		12,683		7,162		17,930
Total stock-based compensation expense	$	4,158	$	14,083	$	12,606	$	22,254

6. Assignment, License and Collaboration Agreements

Assignment Agreement

In June 2019, the Company entered into an assignment agreement with Vintagence Biotechnology Ltd. (Vintagence) (Vintagence 2019 Assignment Agreement). Under the terms of the Vintagence 2019 Assignment Agreement, Vintagence assigned and agreed to assign to the Company any and all worldwide rights, title, and interest in and to the Vintagence technology and gave Terns a sublicensing right that allows the Company to grant sublicenses to any of its affiliates and/or to licensees or contractors to perform any portion of the development, manufacture, and/or commercialization of covered compounds or covered products. The Company will remain directly responsible for all amounts owed to Vintagence under this agreement, regardless of sublicenses. The Company is required to use commercially reasonable efforts to commercialize the covered product in the field in the major markets.

In June 2019, the Company paid Vintagence an upfront payment of $0.7 million. In addition, pursuant to the terms of the Vintagence 2019 Assignment Agreement, the Company agreed to pay Vintagence up to CNY 205.0 million in development milestones for the first covered product. The term of the Vintagence 2019 Assignment Agreement will continue in effect on a country-by-country basis until all milestone payments are made. The Company has the right to terminate the agreement in its entirety or on a covered product-by-covered product and country-by-country basis, in its sole discretion by giving 60 days advance written notice to Vintagence. As of September 30, 2024, the Company has paid $4.4 million to Vintagence which includes a milestone payment of $1.5 million in connection with the Company’s IND filing for TERN-501 in December 2020 and a milestone payment of $2.2 million in connection with the initiation of dosing in the Phase 2a DUET trial in July 2022. The Company has not recognized any research and development expense during the three and nine months ended September 30, 2024 and 2023 related to this agreement.

Hansoh Option and License Agreement

In July 2020, the Company entered into an exclusive option and license agreement with Hansoh (Shanghai) Healthtech Co., Ltd. (Hansoh Healthtech) and Jiangsu Hansoh Pharmaceutical Group Company Ltd. (Jiangsu Hansoh) (collectively, Hansoh) (Hansoh 2020 Option and License Agreement). Under the terms of the Hansoh 2020 Option and License Agreement, the Company granted Hansoh an exclusive, non-transferable, non-sublicensable, fully-paid, royalty-free license to conduct preliminary studies on the licensed compound (TERN-701, formerly known as TRN-000632) with an option to exclusively license the same for development and commercialization of licensed products in all prophylactic, palliative, therapeutic and/or diagnostic uses in connection with all human diseases and disorders (including development and research activities on animal models thereof) in the field of oncology, including all types of cancers (Field) in mainland China, Taiwan, Hong Kong and Macau (collectively, the Territory).

In November 2021, Hansoh exercised its option and was granted an exclusive, royalty-bearing license, with the right to sublicense to exploit licensed compound and licensed products in the Field and in the Territory. In connection with Hansoh’s exercise of its option, the Company recognized $1.0 million in license fee revenue within the consolidated statements of operations and comprehensive loss during the year ended December 31, 2021. In addition, Hansoh has agreed to pay the Company up to $67.0 million in pre-specified clinical, regulatory and sales milestones. Hansoh must also pay the Company royalties in the mid-single digits based on net sales of all licensed products. The term of the Hansoh 2020 Option and License Agreement will continue until the end of the last-to-expire royalty term. As of September 30, 2024, no milestones have been met and future payments are all constrained.

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on March 14, 2024. In addition to historical financial information, this discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Special Note Regarding Forward-Looking Statements” and “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Our fiscal year ends on December 31 each year.

Overview

We are a clinical-stage biopharmaceutical company developing a portfolio of small-molecule product candidates to address serious diseases, including oncology and obesity. Our programs are based on mechanisms of action that have achieved proof-of-concept in clinical trials in indications with significant unmet medical needs. We are advancing multiple drug candidates we believe have the potential to deliver improved clinical outcomes in the target indication as either single-agent or combination therapies. The most advanced product candidates in our pipeline – TERN-701, TERN-601 and TERN-501 – were internally discovered. Additionally, we have an ongoing discovery effort for the TERN-800 series of small-molecule glucose-dependent insulinotropic polypeptide receptor (GIPR) modulators for obesity, which have the potential to be combined with glucagon-like peptide-1 (GLP-1) receptor agonists.

TERN-701 is our proprietary, oral, potent, allosteric BCR-ABL inhibitor. Allosteric BCR-ABL inhibitors are a novel class of therapy for chronic myeloid leukemia (CML) that has demonstrated superior efficacy and safety compared to traditional active-site tyrosine kinase inhibitors (TKIs). In April 2024, we announced that in a Phase 1 healthy volunteer study, pharmacokinetic (PK) data showed no clinically significant difference in exposure between fed and fasted dosing. The ability to dose without regard to food represents a key potential differentiator within the allosteric BCR-ABL inhibitor class. Across the dose ranges administered to date (20 mg to 160 mg), TERN-701 PK was linear with a median half-life ranging from 8 to 12 hours. At the 80 mg and 160 mg doses, TERN-701 exposures over 24 hours met or exceeded the predicted efficacious concentrations based on preclinical data, consistent with observed clinical activity and safety at these doses in the ongoing clinical trial conducted by our partner, Hansoh. Additionally, the PK profile of TERN-701 in Western participants was generally consistent with that observed in the Phase 1 clinical study in Chinese CML patients. Enrollment of our global Phase 1 trial, the CARDINAL trial, continues and includes sites from the United States, Europe and other countries. We expect interim data from initial cohorts in the CARDINAL trial in early December 2024. TERN-701 received Orphan Drug Designation for the treatment of CML in March 2024.

TERN-601 is our small-molecule GLP-1 receptor agonist program that is intended to be orally administered for obesity. In September 2024, we announced positive top-line results from our Phase 1 trial of TERN-601. The Phase 1 trial was a randomized, double-blind, placebo-controlled single and multiple-ascending dose (SAD and MAD) trial in healthy adults with obesity or overweight. The primary endpoint of the trial was to evaluate safety and tolerability of TERN-601 administered once-daily (QD) for 28 days. Secondary endpoints included pharmacokinetics, efficacy as measured by body weight loss following 28 days of treatment with TERN-601, and other exploratory markers. The clinical trial results showed TERN-601 was well tolerated and demonstrated dose-dependent, statistically significant placebo-adjusted mean weight loss across all three doses evaluated in the 28-day MAD study, with maximum placebo-adjusted mean weight loss of 4.9% (p<0.0001) at the highest dose of 740 mg QD. Additionally, 67% of participants lost 5% or more of their baseline body weight at the top dose. TERN-601 was well tolerated with no treatment-related dose interruptions, reductions or discontinuations at any dose, despite fast titration to high doses. The majority (>95%) of treatment emergent adverse events (AEs) were mild. All gastrointestinal events were mild to moderate and consistent with the GLP-1R agonist class. Importantly, there were no clinically meaningful changes in liver enzymes, vital signs or electrocardiograms observed. The absence of treatment-related dose interruptions, reductions, or discontinuations with mostly mild AEs, despite aggressive titration to high doses in this 28-day study, indicates potential for further improved tolerability in subsequent studies with slower titration. Terns plans to initiate a Phase 2 clinical trial in early second quarter of 2025 with initial 12-week data expected in the second half of 2025. The trial will begin with a 12-week portion to optimize dose titration and inform subsequent cohorts.

TERN-501 is our thyroid hormone receptor beta (THR-β) agonist initially developed for metabolic dysfunction-associated steatohepatitis (MASH) for which we announced positive top-line data from the Phase 2a DUET trial in August 2023. We have decided to limit spend in MASH given the current regulatory and clinical development requirements for the indication. We continue to evaluate opportunities for TERN-501 in metabolic diseases. Based on non-clinical studies, THR-β is an orthogonal mechanism to GLP-1, potentially providing broader metabolic and liver benefits in addition to increased weight loss. In June 2024, we highlighted preclinical data supporting TERN-501 in combination with a GLP-1R agonist for obesity at the American Diabetes Association 84th Scientific Sessions. TERN-501 significantly improved the efficacy of a GLP-1 receptor agonist in an obese mouse model by normalizing energy expenditure, resulting in greater weight loss, increased fat mass loss and relative preservation of lean mass compared to the GLP-1R agonist alone.

The TERN-800 series is our ongoing discovery efforts to discover small molecule GIPR modulators for obesity, which we believe has the potential for combination with GLP-1 receptor agonists. We are prioritizing our discovery efforts towards nominating a GIPR antagonist development candidate based on in-house discoveries and growing scientific rationale supporting the potential of GLP-1 receptor agonist and GIPR antagonist combinations for obesity.

Since the commencement of our operations, we have devoted substantially all of our resources to research and development activities, organizing and staffing our company, business planning, raising capital, establishing and maintaining our intellectual property portfolio, conducting preclinical studies and clinical trials and providing general and administrative support for these operations.

Results of operations

The following table summarizes our results of operations for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,									Nine Months Ended September 30,
(in thousands)	2024			2023			Change			2024			2023			Change
Results of operations
Operating expenses:
Research and development	$	15,169		$	14,831		$	338		$	52,108		$	46,038		$	6,070
General and administrative		9,770			18,353			(8,583	)		23,814			32,462			(8,648	)
Total operating expenses		24,939			33,184			(8,245	)		75,922			78,500			(2,578	)
Loss from operations		(24,939	)		(33,184	)		8,245			(75,922	)		(78,500	)		2,578
Other income:
Interest income		3,088			3,480			(392	)		9,146			9,568			(422	)
Other expense, net		(32	)		(5	)		(27	)		(58	)		(69	)		11
Total other income, net		3,056			3,475			(419	)		9,088			9,499			(411	)
Loss before income taxes		(21,883	)		(29,709	)		7,826			(66,834	)		(69,001	)		2,167
Income tax expense		(62	)		(58	)		(4	)		(220	)		(190	)		(30	)
Net loss	$	(21,945	)	$	(29,767	)	$	7,822		$	(67,054	)	$	(69,191	)	$	2,137

Revenue

To date, we have not generated, and do not expect to generate for the foreseeable future, any revenue from the sale of products. We may generate revenue from pre-specified clinical, regulatory and sales milestones as part of an exclusive option and license agreement for TERN-701 in greater China with Hansoh.

Research and development expenses

Research and development expenses account for a significant portion of our operating expenses and consist primarily of external and internal expenses incurred in connection with the discovery and development of our product candidates. To date, our research and development expenses have related primarily to discovery efforts, and preclinical and clinical development of our product candidates. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. Costs for certain activities, such as manufacturing and preclinical studies and clinical trials, are generally recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and collaborators.

External expenses include:

•

expenses incurred in connection with the discovery and preclinical and clinical development of our product candidates, including those incurred under agreements with third parties, such as consultants and CROs;

•

the cost of manufacturing products for use in our preclinical studies and clinical trials, including payments to contract manufacturing organizations (CMOs) and consultants;

•

the costs of funding research performed by third-party vendors for performing preclinical testing on our behalf;

•

the costs of purchasing lab supplies and non-capital equipment used in designing, developing and manufacturing preclinical study and clinical trial materials;

•

costs associated with consultants for chemistry, manufacturing and controls development, regulatory, statistics and other services;

•

expenses related to regulatory activities, including filing fees paid to regulatory agencies; and

•

expenses incurred in connection with the acquisition or in-licensing of assets from other parties.

Internal expenses include:

•

personnel-related expenses, including salaries, benefits and stock-based compensation expense for personnel engaged in research and development functions. We use internal resources primarily to oversee the research and discovery as well as for managing our preclinical development, process development, manufacturing and clinical development activities; and

•

other expenses include rent, depreciation, maintenance and allocated overhead.

The following table summarizes our research and development expenses for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,							Nine Months Ended September 30,
(in thousands)	2024		2023		Change			2024		2023		Change
Research and development expenses
External expenses by program:
TERN-701	$	4,202	$	1,615	$	2,587		$	10,770	$	3,257	$	7,513
TERN-601		3,249		1,585		1,664			12,507		4,000		8,507
TERN-501		129		3,202		(3,073	)		780		16,980		(16,200	)
Other programs		2,295		2,819		(524	)		8,148		6,264		1,884
Total external expenses		9,875		9,221		654			32,205		30,501		1,704
Unallocated internal expenses:
Personnel-related expenses		4,991		5,246		(255	)		18,959		14,657		4,302
Other expenses		303		364		(61	)		944		880		64
Total research and development expenses	$	15,169	$	14,831	$	338		$	52,108	$	46,038	$	6,070

The increase in research and development expenses for the three months ended September 30, 2024, compared to the same period in 2023, was primarily due to a $0.7 million increase in clinical and preclinical program expenses, partially offset by a $0.3 million decrease in personnel-related expenses.

The increase in research and development expenses for the nine months ended September 30, 2024, compared to the same period in 2023, was primarily due to a $4.3 million increase in personnel-related expenses and a $1.7 million increase in clinical and preclinical program expenses.

General and administrative expenses

General and administrative expenses consist of personnel-related expenses, including salaries, benefits and stock-based compensation expense, for personnel in administrative functions. General and administrative expenses also include professional fees for legal, patent, consulting, investor and public relations, accounting and tax services.

The decrease in general and administrative expenses for the three months ended September 30, 2024, compared to the same period in 2023, was primarily due to a $8.6 million decrease in personnel-related expenses.

The decrease in general and administrative expenses for the nine months ended September 30, 2024, compared to the same period in 2023, was primarily due to a $8.4 million decrease in personnel-related expenses and a $0.2 million decrease in expenses primarily related to insurance costs.

Interest income

Interest income primarily consists of interest income on our cash equivalents and marketable securities.

Interest income for the three months ended September 30, 2024 was $3.1 million, compared to $3.5 million for the same period in 2023. The decrease in interest income was primarily due to a decrease in marketable securities.

Interest income for the nine months ended September 30, 2024 was $9.1 million, compared to $9.6 million for the same period in 2023. The decrease in interest income was primarily due to a decrease in marketable securities.

Other expense, net

Other expense, net for the three and nine months ended September 30, 2024 and 2023 was less than $0.1 million.

Income tax expense

Income tax expense for the three months ended September 30, 2024 and 2023 was $0.1 million.

Income tax expense for the nine months ended September 30, 2024 and 2023 was $0.2 million.

Liquidity and capital resources

Uses of cash

Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures and general and administrative expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.

We believe that our existing cash and cash equivalents will be sufficient to fund our planned operating expenses and capital expenditure requirements into 2028, including key clinical data readouts from our lead programs in CML and obesity. However, we continue to anticipate that our research and development expenses, general and administrative expenses and capital expenditures will remain significant to support our ongoing and planned activities. We expect to continue to incur net operating losses for at least the next several years.

Sources of liquidity

We have primarily funded our operations through proceeds from the sale of shares of our common stock. We have devoted substantially all of our resources to research and development activities, organizing and staffing our company, raising capital, establishing and maintaining our intellectual property portfolio, conducting preclinical studies and clinical trials and providing general and administrative support for these operations.

Since our inception, we have not generated any revenue from product sales and we have incurred significant operating losses and negative cash flows from our operations. As of September 30, 2024, we had an accumulated deficit of approximately $399.7 million and cash, cash equivalents and marketable securities of $372.8 million. For the nine months ended September 30, 2024, we had a net loss of approximately $67.1 million and negative cash flows from operations of approximately $55.4 million.

In March 2022, we entered into a Sales Agreement with Cowen and Company, LLC (Cowen), as sales agent, pursuant to which we have the ability to offer and sell, from time to time, through Cowen, shares of our common stock having an aggregate offering price of up to $75.0 million in an at-the-market offering. The shares are offered pursuant to our shelf registration statement on Form S-3 filed with the Securities and Exchange Commission (SEC), which became effective in March 2022. As of September 30, 2024, there were 9,781,673 shares of our common stock sold for aggregate net proceeds of $66.6 million after deducting commissions and offering expenses pursuant to this agreement.

In May 2023, we entered into a Sales Agreement with Cowen, as sales agent, pursuant to which we have the ability to offer and sell, from time to time, through Cowen, shares of our common stock having an aggregate offering price of up to $150.0 million in an at-the-market offering. The shares are offered pursuant to our shelf registration statement on Form S-3 filed with the SEC, which became effective in February 2023. There were no sales of our common stock pursuant to this agreement through September 30, 2024.

In September 2024, we issued 14,064,048 shares of our common stock at a public offering price of $10.50 per share and, to certain investors in lieu of common stock, pre-funded warrants to purchase 2,380,952 shares of common stock at a public offering price of $10.4999 per pre-funded warrant in an underwritten public offering. The purchase price per share of each pre-funded warrant represents the per share public offering price for the common stock, minus the $0.0001 per share exercise price of such pre-funded warrant. Aggregate net proceeds were $161.9 million after deducting underwriting discounts and commissions and offering expenses.

We believe that our existing cash and cash equivalents will be sufficient to fund our planned operating expenses and capital expenditure requirements into 2028. We will need substantial additional funding to support our operating activities.

Future funding requirements

We expect to incur significant expenses and operating losses for the foreseeable future as we advance the preclinical and clinical development of our product candidates. We expect that our research and development and general and administrative costs will remain significant for the foreseeable future in connection with conducting additional preclinical studies and clinical trials for our current and future research programs and product candidates, contracting with CROs and CMOs to support preclinical studies and clinical trials, expanding our intellectual property portfolio, and providing general and administrative support for our operations. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements or other sources.

Our primary uses of cash are to fund our research and development activities, business planning, establishing and maintaining our intellectual property portfolio, hiring personnel, raising capital and providing general and administrative support for these operations.

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, continue or initiate clinical trials of, and seek marketing approval for, our product candidates. In addition, if we obtain marketing approval for our product candidates, we expect to incur significant commercialization expenses related to any approved products, marketing, manufacturing and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential collaborators. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce, or eliminate our research and development programs or future commercialization efforts.

Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive, and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of product candidates that we do not expect to be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all.

Cash flows

Operating activities

Net cash used in operating activities during the nine months ended September 30, 2024 was $55.4 million and consisted primarily of our net loss of $67.1 million, a $0.8 million decrease from changes in operating assets and liabilities primarily attributable to the timing of expenses incurred and payments issued as well as a non-cash adjustment of $0.9 million due to net accretion on marketable securities. This was partially offset by non-cash adjustments of $12.6 million of stock-based compensation, $0.4 million in amortization of operating lease assets and $0.3 million of depreciation.

Net cash used in operating activities during the nine months ended September 30, 2023 was $48.1 million and consisted primarily of our net loss of $69.2 million as well as a non-cash adjustment of $3.5 million net accretion on marketable securities. This was partially offset by a $1.6 million increase from changes in operating assets and liabilities, non-cash adjustments of $22.3 million of stock-based compensation, $0.4 million in amortization of operating lease assets and $0.2 million of depreciation.

Investing activities

Net cash provided by investing activities during the nine months ended September 30, 2024 was $81.9 million and consisted primarily of proceeds from the sale and maturity of investments of $132.6 million, partially offset by $50.6 million in purchases of investments.

Net cash used in investing activities during the nine months ended September 30, 2023 was $85.2 million and consisted primarily of $270.8 million in purchases of investments, partially offset by proceeds from the sale and maturity of investments of $185.6 million.

Financing activities

Net cash provided by financing activities during the nine months ended September 30, 2024 was $163.7 million and consisted of $162.3 million in proceeds from the issuance of common stock and pre-funded warrants in connection with the September 2024 underwritten public offering, $1.1 million in proceeds from stock option exercises and $0.4 million in proceeds from the issuance of common stock under our employee stock purchase plan. This was partially offset by $0.1 million in payments of deferred offering costs.

Net cash provided by financing activities during the nine months ended September 30, 2023 was $28.1 million and consisted primarily of $27.9 million in net proceeds from the issuance of common stock in an at-the-market offering, $0.2 million in proceeds from the issuance of common stock under our employee stock purchase plan and $0.3 million in proceeds from stock option exercises. This was partially offset by $0.3 million in payments of deferred offering costs.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and use of estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023. For a discussion of our critical accounting policies and use of estimates, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Estimates in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023.

Recent Accounting Pronouncements

We are subject to several recently issued accounting pronouncements. Note 1 – Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies – Recent Accounting Pronouncements which is contained in Part I, Item 1 of this Quarterly Report on Form 10-Q, describes these new accounting pronouncements and is incorporated herein by reference.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements (as defined by applicable regulations of the SEC) that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes to the information provided under Item 7A. "Quantitative and Qualitative Disclosures About Market Risk" which is included and described in our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 4. Controls and Procedures.

Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures

As of September 30, 2024, management, with the supervision and participation of our chief executive officer and the chief financial officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our chief executive officer and the chief financial officer concluded that, as of September 30, 2024, the design and operation of our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes. There were no changes during the quarter ended September 30, 2024 to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may be involved in legal proceedings or subject to claims incident to the ordinary course of business. While the outcome of any such proceedings cannot be predicted with certainty, as of September 30, 2024, we were not a party to any litigation or legal proceedings that, in the opinion of our management, are probable to have a material adverse effect on our business. Regardless of the outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources, reputational harm, and other factors, and there can be no assurances that favorable outcomes will be obtained.

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K for the year ended December 31, 2023 may not be the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

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

Unregistered Sales of Equity Securities

None.

Issuer Purchases of Equity Securities

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

Rule 10b5-1 Trading Plans

During the three months ended September 30, 2024, the entities identified in the below table entered into a Rule 10b5-1 trading arrangement that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), in each case as defined in Item 408 of Regulation S-K. Carl L. Gordon is a member of our board of directors and a member of OrbiMed Advisors LLC (OrbiMed Advisors):


Name	Date of Adoption	Nature of Trading Arrangement	Aggregate Number of Securities to Be Purchased or Sold	Duration
OrbiMed Private Investments VII, LP(1)	September 27, 2024	Sale	Up to 2,419,700 shares	December 31, 2025, or such earlier date upon which all transactions are completed or expire without execution
OrbiMed Asia Partners III, L.P.(2)	September 27, 2024	Sale	Up to 983,960 shares	December 31, 2025, or such earlier date upon which all transactions are completed or expire without execution
OrbiMed Genesis Master Fund, L.P.(3)	September 27, 2024	Sale	Up to 377,820 shares	December 31, 2025, or such earlier date upon which all transactions are completed or expire without execution

(1) OrbiMed Private Investments VII, LP (OPI VII) is a limited partnership organized under the laws of Delaware. OrbiMed Capital GP VII LLC (GP VII) is the general partner of OPI VII, pursuant to the terms of the limited partnership agreement of OPI VII. OrbiMed Advisors is the managing member of GP VII, pursuant to the terms of the limited liability company agreement of GP VII. As a result, OrbiMed Advisors and GP VII share power to direct the vote and disposition of shares of our common stock held by OPI VII and may be deemed directly or indirectly, including by reason of their mutual affiliation, to be the beneficial owners of shares of our common stock held by OPI VII. OrbiMed Advisors exercises this investment and voting power through a management committee which includes, amongst others, Carl L. Gordon, a member of our board of directors. Carl L. Gordon disclaims beneficial ownership of shares of our common stock held by OPI VII.

(2) OrbiMed Asia Partners III, L.P. (OAP III) is an exempted limited partnership organized under the laws of the Cayman Islands. OrbiMed Asia GP III, L.P. (OAP GP III) is the general partner of OAP III, pursuant to the terms of the limited partnership agreement of OAP III. OrbiMed Advisors III Limited (Advisors III) is the general partner of OAP GP III, pursuant to the terms of the limited partnership agreement of OAP GP III. OrbiMed Advisors is the advisory company to OAP III, pursuant to the terms of the limited partnership agreement of OAP III. As a result, OAP GP III, Advisors III, and OrbiMed Advisors share power to direct the vote and disposition of shares of our common stock held by OAP III and may be deemed directly or indirectly, including by reason of their mutual affiliation, to be the beneficial owners of shares of our common stock held by OAP III. OrbiMed Advisors exercises this investment and voting power through a management committee which includes, amongst others, Carl L. Gordon, a member of our board of directors. Carl L. Gordon disclaims beneficial ownership of shares of our common stock held by OAP III.

(3) OrbiMed Genesis Master Fund, L.P. (Genesis) is a limited partnership organized under the laws of the Cayman Islands. OrbiMed Genesis GP LLC (OrbiMed Genesis) is the general partner of Genesis, pursuant to the terms of the limited partnership agreement of Genesis. OrbiMed Advisors is the managing member of OrbiMed Genesis, pursuant to the terms of the limited liability company agreement of OrbiMed Genesis. As a result, OrbiMed Advisors and OrbiMed Genesis share power to direct the vote and disposition of shares of our common stock held by Genesis and may be deemed, directly or indirectly, including by reason of their mutual affiliation, to be the beneficial owners of shares of our common stock held by Genesis. OrbiMed Advisors exercises this investment and voting power through a management committee which includes, amongst others, Carl L. Gordon, a member of our board of directors. Carl L. Gordon disclaims beneficial ownership of shares of our common stock held by Genesis.

Item 6. Exhibits.


		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Date	Number	Filed Herewith

3.1	Amended and Restated Certificate of Incorporation.	8-K	2/9/2021	3.1

3.2	Amended and Restated Bylaws.	8-K	10/10/2023	3.1

4.1	Form of Common Stock Certificate.	S-1/A	2/1/2021	4.2

4.2	Form of Pre-Funded Warrant (August 2022).	8-K	8/16/2022	4.1

4.3	Amended and Restated Investors' Rights Agreement, dated December 29, 2020, by and among the Registrant and the investors listed therein.	S-1	1/15/2021	10.1

4.4	Form of Pre-Funded Warrant (September 2024).	8-K	9/12/2024	4.1

10.1#	Separation Agreement between Terns, Inc. and Bryan Yoon dated July 23, 2024.				X

10.2#	Transition Agreement between Terns, Inc. and Mark Vignola dated July 23, 2024.				X

10.3#	Amendment No. 2 to 2022 Employment Inducement Award Plan.				X

10.4	First Amendment to Office Lease dated July 1, 2024.	8-K	7/3/2024	10.1

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

32.1^	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X

32.2^	Certification of 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				X

101.SCH	Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents				X

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


#	Indicates management contract or compensatory plan.
^	The certification that accompanies this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is not deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	TERNS PHARMACEUTICALS, INC.

Date: November 12, 2024	By:	/s/Amy Burroughs
		Amy Burroughs
		Chief Executive Officer and Director (Principal Executive Officer)

Date: November 12, 2024	By:	/s/ Mark Vignola
		Mark Vignola, Ph.D.
		Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit 10.1

July 23, 2024

PERSONAL AND CONFIDENTIAL

BY EMAIL

Bryan Yoon

Dear Bryan:

The purpose of this separation agreement (the “Agreement”) is to confirm the terms of your transition and separation from Terns Pharmaceuticals, Inc. and any affiliates, including without limitation, Terns, Inc. (collectively, the “Company”). This Agreement outlines the terms of certain benefits and payments to you in connection with your separation, provided you execute and do not revoke this Agreement, or the Supplemental Release provided for in this Agreement, all as set forth herein.

Transition Period and Separation. . Upon the execution of this Agreement, you will assume the title of Chief Operating Officer and Special Counsel of the Company and you will cease to be General Counsel and Secretary of the Company. Your employment as Chief Operating Officer and Special Counsel will terminate and you will cease to hold any positions at the Company as of September 3, 2024 (the “Separation Date”). You agree to deliver such resignations or written confirmations of such change in titles and employment as the Company may request. The period after you execute and return this Agreement to the Company until the Separation Date is the “Transition Period”. During the Transition Period, as Chief Operating Officer and Special Counsel, you will attend to the transition of your job duties in cooperation with the Company. During the Transition Period, so long as you attend to the transition of your job duties, the Company agrees that you may engage in employment, consulting, exploration of new business opportunities or other business activities outside of your employment with the Company.

Effect of Separation from Employment. On and after the Separation Date, you will not be eligible to remain in the Company’s benefit programs, except as provided in this Agreement. In addition, and regardless of whether you sign this Agreement, on the Separation Date, you will receive payment for all wages that are due and accrued as of the Separation Date. Given that the Company has a policy of unlimited vacation, there will be no payment for accrued but untaken vacation. Your right to participate in the Company’s health insurance program will terminate on September 30, 2024; thereafter, your right to continued participation in such program is contingent upon your election of COBRA coverage; you will receive your election notice after the Separation Date. You will submit any reimbursable business expenses to the Company consistent with Company policy no later than October 31, 2024.

Separation Benefits. Subject to your continuing compliance with the covenants set forth in this Agreement, and subject to your execution (and non-revocation) of this Agreement and the Supplemental Release referred to in Section 6 below (the “Supplemental Release”), the Company will pay and provide you with the following (the “Separation Benefits”) pursuant to the provisions of your Employment Agreement relating to an Involuntary Termination:

(i)

Severance: Severance in the amount of $490,700, less applicable payroll withholdings (the “Severance”), which is equivalent to twelve (12) months of your Base Salary. The Severance will be paid on a pro rata payroll basis, commencing with the first Company payroll date that is at least ten (10) days after the Effective Date of the Supplemental Release (the “Payment Date”) and continuing on a regular payroll basis thereafter until fully paid.

(ii)

Retention Bonus: The Company will pay you the balance of your retention bonus as provided in Section 4 of your Employment Agreement (the “Retention Bonus”), in the sum of $301,500, less applicable payroll withholdings, which Retention Bonus will be paid in the Company’s first payroll after August 1, 2024.

(iii)

Pro-Rata Annual Bonus. The Company will pay you a pro rata portion of your Target Annual Bonus (equivalent to 40% of your Base Salary) based upon the number of days of work you complete as of September 3, 2024 (the “Pro Rata Bonus”). The Pro Rata Bonus will be paid, less applicable payroll withholdings, on or before March 15, 2025.

(iv)

COBRA Reimbursement: If you timely elect COBRA, the Company will provide you with COBRA reimbursement as set forth in Section 5(b)(v) of your Employment Agreement, for a period of up to twelve (12) months following the Separation Date (but for avoidance of doubt, any fees charged to the Company for COBRA continuation cannot be passed on to you).

(v)

Vesting of Equity Awards/Extended Exercise. You shall continue to vest in each outstanding Company equity award (each, an “Equity Award”) to and including the Separation Date. Any unvested Equity Award as of the Separation Date that is not vested shall be cancelled and terminated as of the Separation Date and shall be of no further force or effect. In addition, but contingent on the Supplemental Release becoming effective, the time for you to exercise any Equity Award that is vested as of the Separation Date shall continue to and include April 30, 2025 (but in no event later than the original expiration date of any Equity Award), and any options shall be treated as a nonqualified stock option for tax purposes even if such option was intended to be an incentive stock option at the time of grant. Except as otherwise set forth in this Section 3(v), all Equity Awards shall remain subject to the terms of the applicable equity award agreement and the plan under which each such Equity Award was granted. A statement of your vested and unvested equity as of the Separation Date is attached hereto as Exhibit A

Page 2 of 9

Covenants

(a)

You acknowledge that as of the date you execute this Agreement (the “Execution Date”), you have not filed any complaints, claims, charges, actions, grievances or arbitrations against the Company or otherwise contacted any U.S. federal, state or local governmental agency or commission that has applicable jurisdiction to regulate the Company (each a “Government Agency”) regarding the Company.

(b)

You agree that, on or before September 3, 2024, you will return to the Company all Company documents (whether in hard copy or electronic form and any copies thereof, with the exception of documents relating to your compensation) and property (including, without limitation, all cell phones, laptops and other company equipment); provided, however, that you may keep your current Company-provided laptop, which you agree will be reformatted to factory settings by the Company’s information technology team upon the close of business on the Separation Date.

(c)

You shall abide by the provisions of the Invention Assignment Agreement you previously executed (the “Invention Agreement”), the terms of which shall survive the signing of this Agreement. Further, you agree that you will abide by any and all common law and/or statutory obligations relating to protection and non-disclosure of the Company’s trade secrets and/or confidential and proprietary documents and information. You shall not be deemed to be in breach of this confidentiality provision (i) in the event such information is already in the public domain, (ii) in the event that you are required to disclose confidential information in connection with a judicial or special proceeding or pursuant to court order, (iii) if you share this information with any Government Agency or participate in a government investigation, or (iv) if you obtain the Company’s prior written permission to disclose such information. Also, notwithstanding any provision of this Agreement prohibiting the disclosure of trade secrets or other confidential information, you may not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (1) in confidence to a Federal, State or local government official, either directly or indirectly, or to an attorney, and (2) solely for the purpose of reporting or investigating a suspected violation of law, or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, if you file a lawsuit or other court proceeding against the Company for retaliating against you for reporting a suspected violation of law, you may disclose the trade secret to the attorney representing you and use the trade secret in the court proceeding, if you file any document containing the trade secret under seal and do not disclose the trade secret, except pursuant to court order.

(d)

You agree that after the date of this Agreement, you shall not make any statements that are professionally or personally disparaging about, or adverse to, the interests of the Company (and all other related entities and subsidiaries and their former or current officers, directors, employees and consultants) including, but not limited to, any statements that disparage any person, product, pipeline, pipeline candidate, service, finances, financial condition, capability or any other aspect of the business of the Company, and that you will not engage in any conduct which could reasonably be expected to harm professionally or personally the business or reputation of the Company (and all other related entities and subsidiaries and their former or current officers, directors, employees and consultants). Further, you agree that you shall take no action to disrupt

Page 3 of 9

or impair the Company’s business operations, including, without limitation, disrupting or impairing the Company’s employment relationship with its employees.

(e)

You agree that nothing in this Agreement prevents you from: (i) discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful; (ii) if applicable, engaging in protected activities under Section 7 of the National Labor Relations Act (“NLRA”), including filing unfair labor practice charges, assisting Company employees in filing unfair labor practice charges, discussing the improvement of terms and conditions of employment (including regarding the terms of this Agreement) with former and current Company employees or union representatives or other third parties for the purpose of engaging in concerted activity under Section 7 of the NLRA; or (iii) making any necessary disclosures as otherwise required by law.

(f)

You acknowledge that the Company’s insider trading policy provides that: “If a person ceases to be a Director or employee of the Company at a time when he or she is aware of material nonpublic information concerning the Company, the prohibition on purchases, sales or donations of Company securities in [this Section] shall continue to apply to such person until that information has become public or is no longer material.” You understand and agree that you will abide by this policy after the Separation Date.

(g)

You agree that by entering into this Agreement, the Company is not admitting to and specifically denies any wrongdoing or violation of any law, and further, the Company by agreeing to provide you the Separation Benefits is not admitting any liability and specifically denies any liability or that you suffered any damages.

(h)

You acknowledge that as of the Execution Date you have received all leave to which you are entitled under any applicable Federal or state law, and you have been paid in full for all wages and compensation and you are not aware of any injuries that would qualify as workplace injuries for purposes of workers compensation.

(i)

The Company will instruct its Csuite, members of the human resources department, and members of the Board of Directors (collectively, the “Employer Group”) not to make, after the date of this Agreement, any statements that are professionally or personally disparaging about or adverse to you or engage in any conduct which could reasonably be expected to harm professionally or personally your business or reputation. Nothing herein shall be construed as requiring the Company to issue an instruction limiting or restricting such individuals from disclosing events or circumstances in such manner as they or the Company deem necessary to comply with or satisfy their or the Company’s disclosure, reporting or other obligations under applicable law.

(j)

The Company will not contest any application you may make for unemployment benefits after the Separation Date and you may apply for unemployment benefits directly from the State of New Jersey.

Your Release of Claims. You hereby agree and acknowledge that by signing this Agreement and accepting the Separation Benefits in Section 3 and for other good and valuable consideration, you are waiving your right to assert any and all forms of legal claims against the

Page 4 of 9

Company of any kind whatsoever, whether known or unknown, arising from the beginning of time through the Execution Date. Except as set forth below, your waiver and release herein is intended to bar any form of legal claim, complaint or any other form of action by you, including but not limited to a class or collective action, whether you seek to participate as a party plaintiff or as a class member (each a “Claim” and jointly referred to as “Claims”) against the Company seeking any form of relief including, without limitation, equitable relief (whether declaratory, injunctive or otherwise), the recovery of any damages, or any other form of monetary recovery whatsoever (including, without limitation, back pay, front pay, compensatory damages, emotional distress damages, punitive damages, attorneys’ fees and any other costs) against the Company, for any alleged action, inaction or circumstance existing or arising through the Execution Date.

Without limiting the foregoing general waiver and release, you specifically waive and release the Company from any Claim arising from or related to your prior employment relationship with the Company or the termination thereof, including, without limitation:

** Claims under any local, state or federal discrimination, fair employment practices or other employment-related statute, regulation or executive order (as they may have been amended through the Execution Date) prohibiting discrimination or harassment based upon any protected status including, without limitation, race, national origin, age, gender, marital status, disability, veteran status or sexual orientation. Without limitation, specifically included in this paragraph are any Claims arising under the federal Age Discrimination in Employment Act, the Civil Rights Acts of 1866 and 1871, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Federal Worker Adjustment and Retraining Notification Act; and any similar New Jersey, California, or other state, federal, or local statute.

** Claims under any other local, state or federal employment related statute, regulation or executive order (as they may have been amended through the Execution Date) relating to any other terms and conditions of employment.

** Claims under any state or federal common law theory including, without limitation, wrongful discharge, breach of express or implied contract, promissory estoppel, unjust enrichment, breach of a covenant of good faith and fair dealing, violation of public policy, defamation, interference with contractual relations, intentional or negligent infliction of emotional distress, invasion of privacy, misrepresentation, deceit, fraud or negligence.

** Any other Claim arising under local, state or federal law.

Page 5 of 9

**Unknown Claims, Waiver of California Civil Code Section 1542. You understand and expressly agree that this Agreement extends to all claims of every nature and kind, known or unknown, suspected or unsuspected, past, present, or future, arising from or attributable to any conduct of the Company, whether set forth in any claim or demand referred to in this Agreement or not, and that any and all rights granted to you under Section 1542 of the California Civil Code or any analogous state law or federal law or regulation, are expressly WAIVED. Section 1542 of the California Civil Code reads as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, AND THAT IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASING PARTY.

In waiving the provisions of Section 1542 of the California Civil Code, you acknowledge you may later discover facts in addition to or different from those you now believe to be true with respect to the matters released in this Agreement. You, however, agree you have taken that possibility into account in reaching this Agreement, and that the release in this Agreement will remain in effect as a full and complete release notwithstanding the discovery or existence of additional or different facts.

It is the Company’s desire and intent to make certain that you fully understand the provisions and effects of this Agreement. To that end, you have been encouraged and given the opportunity to consult with legal counsel for the purpose of reviewing the terms of this Agreement. Also, because you are over the age of 40, and consistent with the provisions of the Age Discrimination in Employment Act, which prohibits discrimination on the basis of age, the Company is providing you with twenty-one (21) days in which to consider and accept the terms of this Agreement by signing below and returning it to Amy Burroughs at the Company (aburroughs@ternspharma.com). In addition, you may rescind your assent to this Agreement if, within seven (7) days after you sign this Agreement, you deliver by hand or send by mail or confirmed receipt email (if by mail, certified, return receipt and postmarked within such 7-day period) a notice of rescission to Amy Burroughs. The eighth day following your signing of this Agreement without rescission is the “Effective Date” of this Agreement.

Also, consistent with the provisions of local, state and federal discrimination laws, nothing in this release shall be deemed to prohibit you from challenging the validity of this release under such discrimination laws (the “Discrimination Laws”) or from filing a charge or complaint of age or other employment related discrimination with the Equal Employment Opportunity Commission (“EEOC”) or state or local equivalent, or from participating in any investigation or proceeding conducted by the EEOC or state or local equivalent (or seeking the recovery of any governmental bounty). Further, nothing in this release or Agreement shall be deemed to limit the Company’s right to seek immediate dismissal of such charge or complaint on the basis that your signing of this Agreement constitutes a full release of any individual rights under the Discrimination Laws, or to seek restitution to the extent permitted by law of the economic benefits provided to you under this Agreement in the event that you successfully challenge the validity of this release and prevail in any claim under the Discrimination Laws.

Page 6 of 9

Supplemental Release. On the Separation Date, you will be provided with a Supplemental Release of Claims that will reflect the agreements and releases in Sections 4 and 5 of this Agreement, and will confirm the payment terms set forth in Section 3. The payment of the Separation Benefits set forth in Section 3 will be made on the Payment Date or as set forth in in Section 3 of this Agreement.

Entire Agreement/Modification/Waiver/Choice of Law/Enforceability. You acknowledge and agree that this Agreement supersedes any and all prior or contemporaneous oral and/or written agreements between you and the Company including without limitation your Amended Employment Agreement with the Company, dated as of November 14, 2023 (with the exception of the Invention Agreement and Mutual Arbitration Agreement with the Company dated as of November 10, 2023, which shall survive and continue by their terms). You agree that this Separation Agreement sets forth the entire agreement between you and the Company regarding your separation from the Company. No variations or modifications hereof shall be deemed valid unless reduced to writing and signed by the parties hereto. The failure of the Company to seek enforcement of any provision of this Agreement in any instance or for any period of time shall not be construed as a waiver of such provision or of the Company’s right to seek enforcement of such provision in the future. This Agreement shall be deemed to have been made in the State of California and shall be construed in accordance with the laws of California without giving effect to conflict of law principles. The provisions of this Agreement are severable, and if for any reason any part hereof shall be found to be unenforceable, the remaining provisions shall be enforced in full, provided, however, that if any or all of the release is held unenforceable, this Agreement shall be deemed null and void.

By executing this Agreement, you are acknowledging that: (1) you have carefully read and understand the terms and effects of this Agreement, including the Section entitled Your Release of Claims; (2) you understand that the Your Release of Claims is legally binding and by signing this Agreement, you give up certain rights; (3) you have been afforded sufficient time to understand the terms and effects of this Agreement; (4) your agreements and obligations hereunder are made voluntarily, knowingly and without duress; and (5) neither the Company nor its agents or representatives have made any representations inconsistent with the provisions of this Agreement. This Agreement may be signed on one or more copies, each of which when signed will be deemed to be an original, and all of which together will constitute one and the same Agreement. The Company will counter-sign this Agreement once it receives it from you. This Agreement will remain valid for 21 days after its delivery to you.

[SIGNATURE PAGE FOLLOWS]

Page 7 of 9

Terns, Inc.

By: /s/ Amy Burroughs

Name: Amy Burroughs

Its: Chief Executive Officer

Terns Pharmaceuticals, Inc.

By: /s/ Amy Burroughs
Name: Amy Burroughs
Its: Chief Executive Officer

Confirmed, Agreed and Acknowledged:

/s/ Bryan Yoon

Bryan Yoon

Dated: July 23, 2024

Page 8 of 9

Exhibit A

Equity Statement

Page 9 of 9

Exhibit 10.2

July 23, 2024

PERSONAL AND CONFIDENTIAL

BY EMAIL

Mark Vignola

Dear Mark:

The purpose of this transition agreement (the “Agreement”) is to confirm the terms of your transition and separation from Terns Pharmaceuticals, Inc. and any affiliates, including without limitation, Terns, Inc. (collectively, the “Company”). This Agreement outlines the Company’s expectations regarding the transition period and the terms of certain benefits and payments to you in connection with your separation, provided you execute and do not revoke this Agreement, or the Supplemental Release provided for in this Agreement, all as set forth herein.

Transition Period and Separation. You and the Company have agreed, in consideration for your continued services to the Company, that the Company will provide certain payments and benefits to you. The period from the date of this Agreement until your separation from employment as described below (the “Separation Date”) is the “Transition Period.” During the Transition Period, you will continue to perform your position as the Company’s Chief Financial Officer (“CFO”), and continue to devote your full business time and efforts to the business and affairs of the Company and discharge those duties with the same level of professionalism with which you have performed your duties to the Company to date. During the Transition Period, in addition to fulfilling your job duties as the Company’s CFO, you will attend to the transition of your job duties in cooperation with the Company and may, to the extent such activities do not interfere with your CFO duties, engage in the exploration of new employment, consulting or other opportunities. Nothing herein shall preclude you from engaging in educational, religious, civic, charitable or similar types of activities, and/or from managing personal investments. The Company will cooperate with you in preparing a mutually agreeable statement regarding your transition and any statements by the Company regarding your departure shall be consistent with that statement.

Anticipated Separation from Employment. Your Separation Date is anticipated to be February 1, 2025 and shall be construed as an involuntary termination for all relevant purposes. During the Transition Period, you will continue to receive your current base salary and you will remain eligible to participate in all of the Company’s benefit programs. You will also receive payment for the Retention Bonus provided for in Section 4 of your Amended and Restated Employment Agreement with the Company dated as of November 14, 2023 (the “Restated Employment Agreement”) in the amount of $452,250 (less applicable payroll withholdings) on the first Company payroll date after August 2, 2024. In addition, and regardless of whether you sign this Agreement, on the Separation Date, you will receive payment for all wages that are due and accrued as of the Separation Date. Given that the Company has a policy of unlimited vacation, there will be no payment for accrued but untaken vacation. Your right to participate in the Company’s health insurance program will terminate on the last day of the month in which your Separation Date occurs; thereafter, your right to continued participation in such program is contingent upon your election of COBRA coverage. You will receive your election notice after the Separation Date.

Agreement to Deliver Necessary Documents/Retention Bonus. During the Transition Period and prior to the Separation Date, you agree to deliver such necessary documents, such as resignations or written confirmations of such change in titles and employment as the Company may request. If you execute and do not revoke this Agreement, on August 2, 2024, you will become eligible to receive a retention bonus in the amount of $500,000 (the “Transition Retention Bonus”), which Transition Retention Bonus shall be paid, less applicable payroll withholdings, on the Company’s first regular payroll date following February 1, 2025 (the “Payment Date”), provided that you remain employed with the Company until the Payment Date (except in the case of a Termination without Cause as defined in the Restated Employment Agreement). Notwithstanding the foregoing, if you resign for Good Reason (as such term is defined in the Restated Employment Agreement), are terminated without Cause (as such term is defined in the Restated Employment Agreement) or your employment is terminated due to your death or disability prior to February 1, 2025, the Transition Retention Bonus will be pro-rated based on the period you remained employed between August 2, 2024 and February 1, 2025 (and payment for such Transition Retention Bonus in such case shall be made on the first payroll date following the date of the Supplemental Release referred to below).

Separation Benefits. Subject to your continuing compliance with the covenants set forth in this Agreement, and subject to your execution (and non-revocation) of this Agreement and the Supplemental Release referred to in Section 7 below (the “Supplemental Release”), the Company will pay and provide you with the following (the “Separation Benefits”) pursuant to the Restated Employment Agreement:

(i)

Severance: Severance in the amount of $475,000 less applicable payroll withholdings (the “Severance”), which is equivalent to twelve (12) months of your Base Salary. The Severance will be paid on a pro rata payroll basis, commencing with the first Company payroll date that is at least ten (10) days after the Effective Date of the Supplemental Release (the “Severance Payment Date”) and continuing on a regular payroll basis thereafter until fully paid.

(ii)

Annual Bonus (2024). The Company will pay you your Target Annual Bonus (equivalent to 40% of your Base Salary) for the full calendar year 2024 (the “Annual Bonus”). The Annual Bonus will be paid, less applicable payroll withholdings, on or before March 15, 2025.

(iii)

Pro-Rata Annual Bonus (2025). Provided you perform services for the Company in 2025, the Company will pay you a pro-rata Target Annual Bonus (equivalent to 40% of your Base Salary) for the time you work in 2025. The Annual Bonus will be paid, less applicable payroll withholdings, on or before March 15, 2025.

(iv)

Page 2 of 10

(v)

Vesting of Equity Awards/Extended Exercise. You shall continue to vest in each outstanding Company equity award (each, an “Equity Award”) to and including the Separation Date. Any unvested Equity Award as of the Separation Date that is not vested shall be cancelled and terminated as of the Separation Date and shall be of no further force or effect. In addition, but contingent on the Supplemental Release becoming effective, the time for you to exercise any Equity Award that is vested as of the Separation Date shall continue to and include the end of the twelfth month after the Separation Date (but in no event later than the original expiration date of any Equity Award), and any options shall be treated as a nonqualified stock option for tax purposes even if such option was intended to be an incentive stock option at the time of grant. Except as otherwise set forth in this Section 4(v), all Equity Awards shall remain subject to the terms of the applicable equity award agreement and the plan under which each such Equity Award was granted. A statement of your vested and unvested equity as of the Separation Date is attached hereto as Exhibit A.

(vi)

The Company shall pay up to $10,000 in attorney’s fees in relation to the preparation of this Agreement, subject to documentation of same. These fees shall be paid and reported as a Form 1099 payment with no payroll withholdings directly to your attorney, Outten & Golden LLP within fifteen (15) days of the Effective Date of this Agreement, subject also to the prompt delivery to the Company of a Form W9.

Other than as set forth in this Section, you are not eligible for any other payment from the Company, including without limitation, wages, bonuses, benefits, vacation, paid time off, compensation or equity. The Company will not contest any application you may make for unemployment benefits after the Separation Date and you may apply for unemployment benefits directly from the State of New York.

Covenants

(a)

(b)

You agree that, on or before the Separation Date, you will return to the Company all Company documents (whether in hard copy or electronic form and any copies thereof, with the exception of documents relating to your compensation) and property (including, without limitation, all cell phones, and other company equipment). Notwithstanding the foregoing, you may keep your Company-issued laptop provided it is wiped of all Company-related information.

(c)

Page 3 of 10

obligations relating to protection and non-disclosure of the Company’s trade secrets and/or confidential and proprietary documents and information. You shall not be deemed to be in breach of this confidentiality provision (i) in the event such information is already in the public domain, (ii) in the event that you are required to disclose confidential information in connection with a judicial or special proceeding or pursuant to court order, (iii) if you share this information with any Government Agency or participate in a government investigation, or (iv) if you obtain the Company’s prior written permission to disclose such information. Also, notwithstanding any provision of this Agreement prohibiting the disclosure of trade secrets or other confidential information, you may not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (1) in confidence to a Federal, State or local government official, either directly or indirectly, or to an attorney, and (2) solely for the purpose of reporting or investigating a suspected violation of law, or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, if you file a lawsuit or other court proceeding against the Company for retaliating against you for reporting a suspected violation of law, you may disclose the trade secret to the attorney representing you and use the trade secret in the court proceeding, if you file any document containing the trade secret under seal and do not disclose the trade secret, except pursuant to court order.

(d)

(e)

(f)

Page 4 of 10

(g)

(h)

You acknowledge that as of the Execution Date you have received all leave to which you are entitled under any applicable Federal or state law, and you have been paid in full for all wages and compensation (other than compensation and benefits provided for under this Agreement) and you are not aware of any injuries that would qualify as workplace injuries for purposes of workers compensation.

(i)

The Company will instruct its Csuite, members of the Human Resources Department, and members of the Board of Directors not to make, after the date of this Agreement, any statements that are professionally or personally disparaging about or adverse to you or engage in any conduct which could reasonably be expected to harm professionally or personally your business or reputation. Nothing herein shall be construed as requiring the Company to issue an instruction limiting or restricting such individuals from disclosing events or circumstances in such manner as they or the Company deem necessary to comply with or satisfy their or the Company’s disclosure, reporting or other obligations under applicable law. The Company is not presently aware of any claims that the Company may have against you.

Your Release of Claims. You hereby agree and acknowledge that by signing this Agreement and accepting the Separation Benefits in Section 4 and for other good and valuable consideration, you are waiving your right to assert any and all forms of legal claims against the Company of any kind whatsoever, whether known or unknown, arising from the beginning of time through the Execution Date. Except as set forth below, your waiver and release herein is intended to bar any form of legal claim, complaint or any other form of action by you, including but not limited to a class or collective action, whether you seek to participate as a party plaintiff or as a class member (each a “Claim” and jointly referred to as “Claims”) against the Company seeking any form of relief including, without limitation, equitable relief (whether declaratory, injunctive or otherwise), the recovery of any damages, or any other form of monetary recovery whatsoever (including, without limitation, back pay, front pay, compensatory damages, emotional distress damages, punitive damages, attorneys’ fees and any other costs) against the Company, for any alleged action, inaction or circumstance existing or arising through the Execution Date.

Page 5 of 10

Rights Act of 1991, the Americans With Disabilities Act, the Federal Worker Adjustment and Retraining Notification Act; and any similar New York, California, or other state, federal, or local statute.

** Any other Claim arising under local, state or federal law.

Notwithstanding the foregoing, this section does not release the Company from any obligation expressly set forth in this Agreement. Moreover, this section does not release any claims or entitlements you may have to indemnification from the Company or the benefit of coverage under any D&O or other policies of insurance applicable to the period for which you served as a Company officer or attorney. This Agreement and release also does not affect, waive or limit any rights or claims which may arise after the date you sign this Agreement, your entitlement to unemployment, worker’s compensation, or COBRA benefits, your right to any accrued and vested employee benefits, stock options, restricted shares, or other benefits under any employee plan in which you are a participant on or before the Separation Date, or any other rights or claims that cannot be waived as a matter of law. You acknowledge and agree that, but for providing this waiver and release, you would not be receiving the economic benefits being provided to you under the terms of this Agreement.

In waiving the provisions of Section 1542 of the California Civil Code, you acknowledge you may later discover facts in addition to or different from those you now believe to be true with

Page 6 of 10

respect to the matters released in this Agreement. You, however, agree you have taken that possibility into account in reaching this Agreement, and that the release in this Agreement will remain in effect as a full and complete release notwithstanding the discovery or existence of additional or different facts.

Supplemental Release. On the Separation Date, you will be provided with a Supplemental Release of Claims that will reflect the agreements and releases in Sections 5 and 6 of this Agreement, and will confirm the payment terms set forth in Section 4. The payment of the Separation Benefits set forth in Section 4 will be made on the Payment Date or as set forth in in Section 4 of this Agreement.

Page 7 of 10

provision in the future. This Agreement shall be deemed to have been made in the State of California and shall be construed in accordance with the laws of California without giving effect to conflict of law principles. The provisions of this Agreement are severable, and if for any reason any part hereof shall be found to be unenforceable, the remaining provisions shall be enforced in full, provided, however, that if any or all of the release is held unenforceable, this Agreement shall be deemed null and void.

[SIGNATURE PAGE FOLLOWS AT PAGE 8]

Page 8 of 10

Terns, Inc.

By: /s/ Amy Burroughs

Name: Amy Burroughs

Its: Chief Executive Officer

Terns Pharmaceuticals, Inc.

By: /s/ Amy Burroughs
Name: Amy Burroughs
Its: Chief Executive Officer

Confirmed, Agreed and Acknowledged:

/s/ Mark Vignola

Mark Vignola

Dated: July 23, 2024

Page 9 of 10

Exhibit A

Equity Statement

Page 10 of 10

Exhibit 10.3

AMENDMENT NO. 2 TO

2022 EMPLOYMENT INDUCEMENT AWARD PLAN

TERNS PHARMACEUTICALS, INC.

The 2022 Employment Inducement Award Plan, as amended (the “Plan”) of Terns Pharmaceuticals, Inc. (the “Company”) is hereby further amended as follows (all capitalized terms used and not defined herein shall have the respective meanings ascribed to such terms in the Plan):

1. Section 5.1 of the Plan be and hereby is deleted in its entirety and the following is inserted in lieu thereof:

5.1 Number of Shares. Subject to adjustment under Article IX and the terms of this Article V, Awards may be made under the Plan covering up to 6,763,250 Shares. Shares issued or delivered under the Plan may consist of authorized but unissued Shares, Shares purchased on the open market or treasury Shares.

2. Except as set forth herein, the Plan shall remain in full force and effect.

* * *

Approved by the Compensation Committee of the Board of Directors on August 19, 2024.

Exhibit 31.1

CERTIFICATION 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, Amy Burroughs, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Terns Pharmaceuticals, 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:

(a)

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;

(b)

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;

(c)

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

(d)

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):

(a)

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

(b)

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: November 12, 2024	By:	/s/ Amy Burroughs
		Amy Burroughs
		Chief Executive Officer and Director (Principal Executive Officer)

Exhibit 31.2

CERTIFICATION 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, Mark Vignola, certify that:

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

(a)

(b)

(c)

(d)

(a)

(b)

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: November 12, 2024	By:	/s/ Mark Vignola
		Mark Vignola
		Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit 32.1

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 of Terns Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

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

(2)

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


Date: November 12, 2024	By:	/s/ Amy Burroughs
		Amy Burroughs
		Chief Executive Officer and Director (Principal Executive Officer)

Exhibit 32.2

CERTIFICATION PURSUANT TO

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

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(1)

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

(2)

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


Date: November 12, 2024	By:	/s/ Mark Vignola
		Mark Vignola
		Chief Financial Officer (Principal Financial and Accounting Officer)

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2024	Nov. 08, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2024
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Entity Registrant Name	Terns Pharmaceuticals, Inc.
Entity Central Index Key	0001831363
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding		84,938,855
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity File Number	001-39926
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	98-1448275
Entity Address Address Line1	1065 East Hillsdale Blvd
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	Foster City
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94404
City Area Code	650
Local Phone Number	525-5535
Document Quarterly Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common Stock, $0.0001 par value per share
Trading Symbol	TERN
Security Exchange Name	NASDAQ

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 270,136	$ 79,926
Marketable securities	102,641	183,514
Prepaid expenses and other current assets	3,729	3,992
Total current assets	376,506	267,432
Property and equipment, net	295	506
Operating lease assets	1,376	523
Other assets	56	56
Total assets	378,233	268,517
Current liabilities:
Accounts payable	1,787	2,515
Accrued expenses and other current liabilities	9,353	8,826
Current portion of operating lease liabilities	272	603
Total current liabilities	11,412	11,944
Taxes payable, non-current	1,318	1,206
Operating lease liabilities, non-current	1,033	0
Total liabilities	13,763	13,150
Commitments and contingencies
Stockholders' equity:
Common stock, $0.0001 par value, 150,000,000 shares authorized at September 30, 2024 and December 31, 2023; 84,916,975 and 64,576,719 shares issued and outstanding at September 30 , 2024 and December 31, 2023, respectively	8	6
Additional paid-in capital	763,984	588,008
Accumulated other comprehensive income (loss)	160	(19)
Accumulated deficit	(399,682)	(332,628)
Total stockholders' equity	364,470	255,367
Total liabilities and stockholders' equity	$ 378,233	$ 268,517

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, authorized	150,000,000	150,000,000
Common stock, shares issued	84,916,975	64,576,719
Common stock, shares outstanding	84,916,975	64,576,719

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Operating expenses:
Research and development	$ 15,169	$ 14,831	$ 52,108	$ 46,038
General and administrative	9,770	18,353	23,814	32,462
Total operating expenses	24,939	33,184	75,922	78,500
Loss from operations	(24,939)	(33,184)	(75,922)	(78,500)
Other income:
Interest income	3,088	3,480	9,146	9,568
Other expense, net	(32)	(5)	(58)	(69)
Total other income, net	3,056	3,475	9,088	9,499
Loss before income taxes	(21,883)	(29,709)	(66,834)	(69,001)
Income tax expense	(62)	(58)	(220)	(190)
Net loss	$ (21,945)	$ (29,767)	$ (67,054)	$ (69,191)
Net loss per share, basic	$ (0.28)	$ (0.42)	$ (0.89)	$ (0.98)
Net loss per share, diluted	$ (0.28)	$ (0.42)	$ (0.89)	$ (0.98)
Weighted average common stock outstanding, basic	77,819,658	71,530,180	75,567,851	70,897,320
Weighted average common stock outstanding, diluted	77,819,658	71,530,180	75,567,851	70,897,320
Other comprehensive loss:
Net loss	$ (21,945)	$ (29,767)	$ (67,054)	$ (69,191)
Unrealized gain (loss) on available-for-sale securities, net of tax	586	(33)	178	87
Foreign exchange translation adjustment, net of tax	17	(28)	1	(101)
Comprehensive loss	$ (21,342)	$ (29,828)	$ (66,875)	$ (69,205)

Condensed Consolidated Statements of Stockholders Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional paid-in capital	Accumulated Other Comprehensive Loss	Accumulated deficit
Balances at Dec. 31, 2022	$ 276,943	$ 5	$ 520,178	$ (822)	$ (242,418)
Balance at Beginning of period (in shares) at Dec. 31, 2022		53,723,171
Issuance of common stock in at-the-market offering	27,924		27,924
Issuance of common stock in at-the-market offering, Shares		2,929,922
Vesting of restricted stock units with service conditions (in shares)		16,503
Stock-based compensation expense	3,938		3,938
Unrealized gain on available-for-sale securities	418			418
Foreign exchange translation adjustment	(12)			(12)
Net Income (Loss)	(21,528)				(21,528)
Balances at Mar. 31, 2023	287,683	$ 5	552,040	(416)	(263,946)
Balance at end of period (in shares) at Mar. 31, 2023		56,669,596
Balances at Dec. 31, 2022	276,943	$ 5	520,178	(822)	(242,418)
Balance at Beginning of period (in shares) at Dec. 31, 2022		53,723,171
Foreign exchange translation adjustment	(101)
Balances at Sep. 30, 2023	258,425	$ 6	570,864	(836)	(311,609)
Balance at end of period (in shares) at Sep. 30, 2023		61,785,216
Balances at Mar. 31, 2023	287,683	$ 5	552,040	(416)	(263,946)
Balance at Beginning of period (in shares) at Mar. 31, 2023		56,669,596
Exercise of stock options	248		248
Exercise of stock options (in shares)		95,176
Issuance of common stock under employee stock purchase plan	241		241
Issuance of common stock under employee stock purchase plan (in shares)		114,739
Issuance of common stock in connection with exercise of pre-funded warrants		$ 1	(1)
Issuance of common stock in connection with exercise of pre-funded warrants, shares		4,174,960
Vesting of restricted stock units with service conditions (in shares)		10,552
Stock-based compensation expense	4,233		4,233
Unrealized gain on available-for-sale securities	(298)			(298)
Foreign exchange translation adjustment	(61)			(61)
Net Income (Loss)	(17,896)				(17,896)
Balances at Jun. 30, 2023	274,150	$ 6	556,761	(775)	(281,842)
Balance at end of period (in shares) at Jun. 30, 2023		61,065,023
Exercise of stock options	20		20
Exercise of stock options (in shares)		9,000
Issuance of common stock in connection with exercise of pre-funded warrants, shares		703,486
Vesting of restricted stock units with service conditions (in shares)		7,707
Stock-based compensation expense	14,083		14,083
Unrealized gain on available-for-sale securities	(33)			(33)
Foreign exchange translation adjustment	(28)			(28)
Net Income (Loss)	(29,767)				(29,767)
Balances at Sep. 30, 2023	258,425	$ 6	570,864	(836)	(311,609)
Balance at end of period (in shares) at Sep. 30, 2023		61,785,216
Balances at Dec. 31, 2023	255,367	$ 6	588,008	(19)	(332,628)
Balance at Beginning of period (in shares) at Dec. 31, 2023		64,576,719
Vesting of restricted stock units with service conditions (in shares)		74,974
Stock-based compensation expense	4,028		4,028
Unrealized gain on available-for-sale securities	(293)			(293)
Foreign exchange translation adjustment	(9)			(9)
Net Income (Loss)	(22,373)				(22,373)
Balances at Mar. 31, 2024	236,720	$ 6	592,036	(321)	(355,001)
Balance at end of period (in shares) at Mar. 31, 2024		64,651,693
Balances at Dec. 31, 2023	255,367	$ 6	588,008	(19)	(332,628)
Balance at Beginning of period (in shares) at Dec. 31, 2023		64,576,719
Foreign exchange translation adjustment	1
Balances at Sep. 30, 2024	364,470	$ 8	763,984	160	(399,682)
Balance at end of period (in shares) at Sep. 30, 2024		84,916,975
Balances at Mar. 31, 2024	236,720	$ 6	592,036	(321)	(355,001)
Balance at Beginning of period (in shares) at Mar. 31, 2024		64,651,693
Exercise of stock options	12		12
Exercise of stock options (in shares)		4,000
Issuance of common stock under employee stock purchase plan	387		387
Issuance of common stock under employee stock purchase plan (in shares)		87,083
Issuance of common stock in connection with exercise of pre-funded warrants		$ 1	(1)
Issuance of common stock in connection with exercise of pre-funded warrants, shares		5,564,904
Vesting of restricted stock units with service conditions (in shares)		27,956
Stock-based compensation expense	4,420		4,420
Unrealized gain on available-for-sale securities	(115)			(115)
Foreign exchange translation adjustment	(7)			(7)
Net Income (Loss)	(22,736)				(22,736)
Balances at Jun. 30, 2024	218,681	$ 7	596,854	(443)	(377,737)
Balance at end of period (in shares) at Jun. 30, 2024		70,335,636
Issuance of common stock and pre-funded warrants, net of issuance costs, shares		14,064,048
Issuance of common stock and pre-funded warrants, net of issuance costs	161,918	$ 1	161,917
Exercise of stock options	1,055		1,055
Exercise of stock options (in shares)		171,081
Issuance of common stock in connection with exercise of pre-funded warrants, shares		306,913
Vesting of restricted stock units with service conditions (in shares)		39,297
Stock-based compensation expense	4,158		4,158
Unrealized gain on available-for-sale securities	586			586
Foreign exchange translation adjustment	17			17
Net Income (Loss)	(21,945)				(21,945)
Balances at Sep. 30, 2024	$ 364,470	$ 8	$ 763,984	$ 160	$ (399,682)
Balance at end of period (in shares) at Sep. 30, 2024		84,916,975

Condensed Consolidated Statements of Stockholders Equity (Unaudited) (Parenthetical) - Pre-Funded Warrants [Member] $ in Thousands	3 Months Ended
	Sep. 30, 2024 USD ($)
Payment of Stock issuance cost	$ 394
Payment of stock issuence cost	$ 394

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash flows from operating activities:
Net loss	$ (67,054)	$ (69,191)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	12,606	22,254
Depreciation expense	253	220
Net accretion on marketable securities	(929)	(3,530)
Change in deferred taxes and uncertain tax positions	102	96
Amortization of operating lease assets	429	441
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	263	(1,784)
Accounts payable	(782)	1,959
Accrued expenses and other current liabilities	261	1,957
Operating lease liabilities	(581)	(496)
Net cash used in operating activities	(55,432)	(48,074)
Cash flows from investing activities:
Purchase of property and equipment	(42)	(8)
Purchase of investments	(50,594)	(270,763)
Proceeds from sales and maturities of investments	132,574	185,552
Net cash provided by (used in) investing activities	81,938	(85,219)
Cash flows from financing activities:
Net proceeds from the issuance of common stock and pre-funded warrants	162,312	0
Payment of deferred offering costs	(75)	(344)
Net proceeds from issuance of common stock in at-the-market offering	0	27,924
Proceeds from stock option exercises	1,067	268
Proceeds from issuance of common stock under employee stock purchase plan	387	241
Net cash provided by financing activities	163,691	28,089
Effect of exchange rate changes on cash and cash equivalents	13	(138)
Net increase (decrease) in cash and cash equivalents	190,210	(105,342)
Cash and cash equivalents at beginning of period	79,926	143,235
Cash and cash equivalents at end of period	270,136	37,893
Supplemental disclosure of cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	618	540
Supplemental disclosure of non-cash activities:
Right-of-use assets obtained in exchange for lease liabilities	1,282	65
Deferred offering costs included in accounts payable and accrued expense	$ 319	$ 0

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (21,945)	$ (22,736)	$ (22,373)	$ (29,767)	$ (17,896)	$ (21,528)

Insider Trading Arrangements

3 Months Ended

Sep. 30, 2024

Trading Arrangements, by Individual

Material Terms of Trading Arrangement

Rule 10b5-1 Trading Plans


Name	Date of Adoption	Nature of Trading Arrangement	Aggregate Number of Securities to Be Purchased or Sold	Duration
OrbiMed Private Investments VII, LP(1)	September 27, 2024	Sale	Up to 2,419,700 shares	December 31, 2025, or such earlier date upon which all transactions are completed or expire without execution
OrbiMed Asia Partners III, L.P.(2)	September 27, 2024	Sale	Up to 983,960 shares	December 31, 2025, or such earlier date upon which all transactions are completed or expire without execution
OrbiMed Genesis Master Fund, L.P.(3)	September 27, 2024	Sale	Up to 377,820 shares	December 31, 2025, or such earlier date upon which all transactions are completed or expire without execution

Name

Carl L. Gordon

Title

board of directors and a member of OrbiMed Advisors LLC (OrbiMed Advisors):

Non-Rule 10b5-1 Arrangement Adopted

false

Rule 10b5-1 Arrangement Terminated

false

Non-Rule 10b5-1 Arrangement Terminated

false

OrbiMed Private Investments VII, LP [Member]

Trading Arrangements, by Individual

Name

OrbiMed Private Investments VII, LP(

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

September 27, 2024

Arrangement Duration

456 days

Aggregate Available

2,419,700

OrbiMed Asia Partners III, L.P. [Member]

Trading Arrangements, by Individual

Name

OrbiMed Asia Partners III, L.P

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

September 27, 2024

Arrangement Duration

456 days

Aggregate Available

983,960

OrbiMed Genesis Master Fund, L.P. [Member]

Trading Arrangements, by Individual

Name

OrbiMed Genesis Master Fund, L.P

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

September 27, 2024

Arrangement Duration

456 days

Aggregate Available

377,820

Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies

1. Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies

Nature of the Business

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.

Basis of Presentation

Unaudited Interim Financial Information

At-the-Market Offering

September 2024 Financing

Summary of Significant Accounting Policies

Use of Estimates

Cash, Cash Equivalents and Marketable Securities

Operating Leases and Rent Expense

Research and Development Expenses

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities included the following:


(in thousands)	September 30, 2024		December 31, 2023
Research and development costs	$	2,342	$	2,010
Compensation and benefit costs		4,280		5,683
Accrued professional fees		2,254		855
Other		477		278
Total accrued expenses and other current liabilities	$	9,353	$	8,826

Executive Leadership Transition

Income Taxes

Comprehensive Loss

Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources.

Stock-Based Compensation

The fair value of RSUs with service conditions is based upon the Company’s common stock valuation on the date of the grant.

Pre-funded Warrants

Net Loss Per Share of Common Stock


	September 30,
	2024		2023
Options to purchase common stock		10,964,022		8,295,869
Unvested restricted stock units with service conditions		580,104		364,594
Unvested restricted stock units with market conditions		150,000		—
Shares issuable under employee stock purchase plan		50,646		54,900
Total		11,744,772		8,715,363

Deferred Offering Costs

Commitments and Contingencies

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

Cash Equivalents and Marketable Securities

9 Months Ended

Sep. 30, 2024

Investments, Debt and Equity Securities [Abstract]

Cash Equivalents and Marketable Securities

2. Cash Equivalents and Marketable Securities

The amortized cost and fair value of cash equivalents and marketable securities by major security type is as follows:


	September 30, 2024
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	148,244	$	—	$	—		$	148,244
U.S. government securities		102,306		337		(2	)		102,641
Total	$	250,550	$	337	$	(2	)	$	250,885

Classified as:
Cash equivalents								$	148,244
Marketable securities									102,641
Total								$	250,885

	December 31, 2023
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	33,788	$	—	$	—		$	33,788
U.S. government securities		183,357		219		(62	)		183,514
Total	$	217,145	$	219	$	(62	)	$	217,302

Classified as:
Cash equivalents								$	33,788
Marketable securities									183,514
Total								$	217,302


	September 30, 2024
	Less than 12 months					12 months or longer					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. government securities	$	—	$	—		$	4,011	$	(2	)	$	4,011	$	(2	)
Total	$	—	$	—		$	4,011	$	(2	)	$	4,011	$	(2	)

	December 31, 2023
	Less than 12 months					12 months or longer					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. government securities	$	80,461	$	(62	)	$	—	$	—		$	80,461	$	(62	)
Total	$	80,461	$	(62	)	$	—	$	—		$	80,461	$	(62	)

Fair Value Measurements

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

3. Fair Value Measurements

•

Level 1—Quoted prices in active markets for identical assets or liabilities at the measurement date.

•

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis:


	Fair Value at September 30, 2024
(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents
Cash in bank balances	$	121,892	$	—	$	—	$	121,892
Money market funds		148,244		—		—		148,244
Total cash and cash equivalents	$	270,136	$	—	$	—	$	270,136
Marketable securities
U.S. government securities	$	—	$	102,641	$	—	$	102,641
Total marketable securities	$	—	$	102,641	$	—	$	102,641

	Fair Value at December 31, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents
Cash in bank balances	$	46,138	$	—	$	—	$	46,138
Money market funds		33,788		—		—		33,788
Total cash and equivalents	$	79,926	$	—	$	—	$	79,926
Marketable securities
U.S. government securities	$	—	$	183,514	$	—	$	183,514
Total marketable securities	$	—	$	183,514	$	—	$	183,514

The aggregate amortized cost and fair value of marketable securities as of September 30, 2024, by contractual maturity, are as follows:


(in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	102,306	$	102,641
Due after one year through two years		—		—
Total marketable securities	$	102,306	$	102,641

There were no transfers between Level 1, Level 2 and Level 3 during the periods presented.

Leases

9 Months Ended

Sep. 30, 2024

Leases [Abstract]

Leases

4. Leases

Components of lease cost are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Operating lease cost	$	143	$	160	$	466	$	482
Short-term cost		5		4		12		12
Total lease cost	$	148	$	164	$	478	$	494

Weighted-average remaining lease term								3.00
Weighted-average discount rate								9.99	%

The Company's future minimum lease payments are as follows:


(in thousands)	Operating Leases
2024	$	11
2025		525
2026		545
2027		465
2028 and thereafter		—
Total lease payments		1,546
Less: Imputed interest		(241	)
Present value of lease liabilities		1,305
Less: Current portion of lease liabilities		(272	)
Total lease liabilities, non-current	$	1,033

Common Stock and Stock-Based Compensation

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

Common Stock and Stock-Based Compensation

5. Common Stock and Stock-Based Compensation

The Company had reserved shares of common stock for issuance in connection with the following:


	September 30, 2024		December 31, 2023
Options outstanding under incentive award plans		10,964,022		8,349,922
Unvested restricted stock units with service conditions		580,104		365,892
Unvested restricted stock units with market conditions		150,000		—
Shares available for future grant under incentive award plans		3,662,967		1,005,587
Shares available for future grant under employee stock purchase plans		614,588		701,671
Shares available for future grant under employment inducement award plans		2,816,835		3,291,000
Pre-funded warrants		6,260,534		9,751,500
Total shares reserved		25,049,050		23,465,572

Stock-Based Compensation Plans

2021 Incentive Award Plan

2021 Employee Stock Purchase Plan

2022 Employment Inducement Award Plan

Pre-Funded Warrants

Stock Options

The following table summarizes the stock option activity for all stock plans during the nine months ended September 30, 2024:


	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
						(in years)		(in thousands)
Outstanding as of December 31, 2023		8,349,922		$	9.04		6.82	$	2,225
Granted		4,389,813			6.72
Exercised		(175,081	)		6.09				673
Forfeited		(1,600,632	)		8.54
Outstanding as of September 30, 2024		10,964,022		$	8.23		6.31	$	10,640
Exercisable, September 30, 2024		5,777,098		$	8.98		3.68	$	3,750
Vested and expected to vest, September 30, 2024		10,964,022		$	8.23		6.31	$	10,640

As of September 30, 2024, there was $23.7 million of unrecognized stock-based compensation expense related to unvested stock options which is estimated to be recognized over a period of 2.97 years.

Restricted Stock Units with Service Conditions

The following table summarizes the RSUs with service conditions activity for all stock plans during the nine months ended September 30, 2024:


	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested restricted stock units as of December 31, 2023		365,892		$	8.79
Granted		635,650			6.16
Vested		(142,227	)		8.58
Forfeited		(279,211	)		6.36
Unvested restricted stock units as of September 30, 2024		580,104		$	7.13

Restricted Stock Units with Market Conditions

The Company estimated the fair value of RSUs with market conditions granted using a Monte Carlo simulation model with the following assumptions:


	Nine Months Ended September 30, 2024
Expected volatility		78.45	%
Risk-free interest rate		4.27	%
Fair value of underlying common stock	$	7.31
Weighted average grant-date fair value per share	$	5.39

As of September 30, 2024, none of the escalating stock price thresholds had been met for any of the RSUs with market conditions, resulting in no shares vested.

Stock-Based Compensation Expense


	Nine Months Ended September 30,
	2024			2023
Stock Option Plans
Expected term (years)		6.04			6.05
Expected volatility		77.15	%		73.79	%
Risk-free interest rate		4.23	%		3.58	%
Fair value of underlying common stock	$	6.72		$	9.68
Weighted average grant-date fair value per share	$	4.69		$	6.53
Employee Stock Purchase Plans
Expected term (years)		1.22			1.26
Expected volatility		83.43	%		86.49	%
Risk-free interest rate		5.10	%		4.85	%
Fair value of underlying common stock	$	6.01		$	11.30
Weighted average grant-date fair value per share	$	3.03		$	5.82

Stock-based compensation expense was classified in the condensed consolidated statements of operations and comprehensive loss as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Research and development expense	$	1,266	$	1,400	$	5,444	$	4,324
General and administrative expense		2,892		12,683		7,162		17,930
Total stock-based compensation expense	$	4,158	$	14,083	$	12,606	$	22,254

Assignment, License and Collaboration Agreements

9 Months Ended

Sep. 30, 2024

Assignment License And Collaboration Agreements [Abstract]

Assignment, License and Collaboration Agreements

6. Assignment, License and Collaboration Agreements

Assignment Agreement

Hansoh Option and License Agreement

Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Basis of Presentation

Unaudited Interim Financial Information

At-the-Market Offering

September 2024 Financing

Use of Estimates

Cash, Cash Equivalents and Marketable Securities

Operating Leases and Rent Expense

Research and Development Expenses

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities included the following:


(in thousands)	September 30, 2024		December 31, 2023
Research and development costs	$	2,342	$	2,010
Compensation and benefit costs		4,280		5,683
Accrued professional fees		2,254		855
Other		477		278
Total accrued expenses and other current liabilities	$	9,353	$	8,826

Executive Leadership Transition

Income Taxes

Comprehensive Loss

Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources.

Stock-Based Compensation

The fair value of RSUs with service conditions is based upon the Company’s common stock valuation on the date of the grant.

Pre-funded Warrants

Net Loss Per Share of Common Stock


	September 30,
	2024		2023
Options to purchase common stock		10,964,022		8,295,869
Unvested restricted stock units with service conditions		580,104		364,594
Unvested restricted stock units with market conditions		150,000		—
Shares issuable under employee stock purchase plan		50,646		54,900
Total		11,744,772		8,715,363

Deferred Offering Costs

Commitments and Contingencies

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Schedule of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities included the following:


(in thousands)	September 30, 2024		December 31, 2023
Research and development costs	$	2,342	$	2,010
Compensation and benefit costs		4,280		5,683
Accrued professional fees		2,254		855
Other		477		278
Total accrued expenses and other current liabilities	$	9,353	$	8,826

Schedule of Antidilutive Securities Excluded from Computation of Net Loss per Share


	September 30,
	2024		2023
Options to purchase common stock		10,964,022		8,295,869
Unvested restricted stock units with service conditions		580,104		364,594
Unvested restricted stock units with market conditions		150,000		—
Shares issuable under employee stock purchase plan		50,646		54,900
Total		11,744,772		8,715,363

Cash Equivalents and Marketable Securities (Tables)

9 Months Ended

Sep. 30, 2024

Investments, Debt and Equity Securities [Abstract]

Schedule of Fair Value And Amortized Cost of Marketable Securities

The amortized cost and fair value of cash equivalents and marketable securities by major security type is as follows:


	September 30, 2024
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	148,244	$	—	$	—		$	148,244
U.S. government securities		102,306		337		(2	)		102,641
Total	$	250,550	$	337	$	(2	)	$	250,885

Classified as:
Cash equivalents								$	148,244
Marketable securities									102,641
Total								$	250,885

	December 31, 2023
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	33,788	$	—	$	—		$	33,788
U.S. government securities		183,357		219		(62	)		183,514
Total	$	217,145	$	219	$	(62	)	$	217,302

Classified as:
Cash equivalents								$	33,788
Marketable securities									183,514
Total								$	217,302

Schedule of Available-for-sale Marketable Securities for Unrealized Loss Position


	September 30, 2024
	Less than 12 months					12 months or longer					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. government securities	$	—	$	—		$	4,011	$	(2	)	$	4,011	$	(2	)
Total	$	—	$	—		$	4,011	$	(2	)	$	4,011	$	(2	)

	December 31, 2023
	Less than 12 months					12 months or longer					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. government securities	$	80,461	$	(62	)	$	—	$	—		$	80,461	$	(62	)
Total	$	80,461	$	(62	)	$	—	$	—		$	80,461	$	(62	)

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis:


	Fair Value at September 30, 2024
(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents
Cash in bank balances	$	121,892	$	—	$	—	$	121,892
Money market funds		148,244		—		—		148,244
Total cash and cash equivalents	$	270,136	$	—	$	—	$	270,136
Marketable securities
U.S. government securities	$	—	$	102,641	$	—	$	102,641
Total marketable securities	$	—	$	102,641	$	—	$	102,641

	Fair Value at December 31, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents
Cash in bank balances	$	46,138	$	—	$	—	$	46,138
Money market funds		33,788		—		—		33,788
Total cash and equivalents	$	79,926	$	—	$	—	$	79,926
Marketable securities
U.S. government securities	$	—	$	183,514	$	—	$	183,514
Total marketable securities	$	—	$	183,514	$	—	$	183,514

Schedule of Aggregate Fair Value of Marketable Securities

The aggregate amortized cost and fair value of marketable securities as of September 30, 2024, by contractual maturity, are as follows:


(in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	102,306	$	102,641
Due after one year through two years		—		—
Total marketable securities	$	102,306	$	102,641

Leases (Tables)

9 Months Ended

Sep. 30, 2024

Leases [Abstract]

Schedule of components of lease cost

Components of lease cost are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Operating lease cost	$	143	$	160	$	466	$	482
Short-term cost		5		4		12		12
Total lease cost	$	148	$	164	$	478	$	494

Weighted-average remaining lease term								3.00
Weighted-average discount rate								9.99	%

Schedule of future minimum lease payments required under operating leases

The Company's future minimum lease payments are as follows:


(in thousands)	Operating Leases
2024	$	11
2025		525
2026		545
2027		465
2028 and thereafter		—
Total lease payments		1,546
Less: Imputed interest		(241	)
Present value of lease liabilities		1,305
Less: Current portion of lease liabilities		(272	)
Total lease liabilities, non-current	$	1,033

Common Stock and Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of Common Stock Shares Reserved for Issuance

The Company had reserved shares of common stock for issuance in connection with the following:


	September 30, 2024		December 31, 2023
Options outstanding under incentive award plans		10,964,022		8,349,922
Unvested restricted stock units with service conditions		580,104		365,892
Unvested restricted stock units with market conditions		150,000		—
Shares available for future grant under incentive award plans		3,662,967		1,005,587
Shares available for future grant under employee stock purchase plans		614,588		701,671
Shares available for future grant under employment inducement award plans		2,816,835		3,291,000
Pre-funded warrants		6,260,534		9,751,500
Total shares reserved		25,049,050		23,465,572

Summary of Stock Option Activity

The following table summarizes the stock option activity for all stock plans during the nine months ended September 30, 2024:


	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
						(in years)		(in thousands)
Outstanding as of December 31, 2023		8,349,922		$	9.04		6.82	$	2,225
Granted		4,389,813			6.72
Exercised		(175,081	)		6.09				673
Forfeited		(1,600,632	)		8.54
Outstanding as of September 30, 2024		10,964,022		$	8.23		6.31	$	10,640
Exercisable, September 30, 2024		5,777,098		$	8.98		3.68	$	3,750
Vested and expected to vest, September 30, 2024		10,964,022		$	8.23		6.31	$	10,640

Schedule of Stock Options Weighted Average Assumptions


	Nine Months Ended September 30,
	2024			2023
Stock Option Plans
Expected term (years)		6.04			6.05
Expected volatility		77.15	%		73.79	%
Risk-free interest rate		4.23	%		3.58	%
Fair value of underlying common stock	$	6.72		$	9.68
Weighted average grant-date fair value per share	$	4.69		$	6.53
Employee Stock Purchase Plans
Expected term (years)		1.22			1.26
Expected volatility		83.43	%		86.49	%
Risk-free interest rate		5.10	%		4.85	%
Fair value of underlying common stock	$	6.01		$	11.30
Weighted average grant-date fair value per share	$	3.03		$	5.82

Summary of Restricted Stock Award Activity

The following table summarizes the RSUs with service conditions activity for all stock plans during the nine months ended September 30, 2024:


	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested restricted stock units as of December 31, 2023		365,892		$	8.79
Granted		635,650			6.16
Vested		(142,227	)		8.58
Forfeited		(279,211	)		6.36
Unvested restricted stock units as of September 30, 2024		580,104		$	7.13

Schedule Of Estimated the Fair Value of RSUs with Market Conditions

The Company estimated the fair value of RSUs with market conditions granted using a Monte Carlo simulation model with the following assumptions:


	Nine Months Ended September 30, 2024
Expected volatility		78.45	%
Risk-free interest rate		4.27	%
Fair value of underlying common stock	$	7.31
Weighted average grant-date fair value per share	$	5.39

Schedule of Stock-based Compensation Expense

Stock-based compensation expense was classified in the condensed consolidated statements of operations and comprehensive loss as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Research and development expense	$	1,266	$	1,400	$	5,444	$	4,324
General and administrative expense		2,892		12,683		7,162		17,930
Total stock-based compensation expense	$	4,158	$	14,083	$	12,606	$	22,254

Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended				3 Months Ended			9 Months Ended
	May 07, 2024	Sep. 30, 2024	Jul. 31, 2024	Aug. 31, 2023	May 31, 2023	Sep. 30, 2024	Sep. 30, 2023	Mar. 31, 2022	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023	Nov. 30, 2023
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Other Accrued Liabilities, Current		$ 477				$ 477			$ 477		$ 278
Income tax expense						$ 62	$ 58		$ 220	$ 190
Common stock, par value		$ 0.0001				$ 0.0001			$ 0.0001		$ 0.0001
Foreign Country [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Income tax expense						$ 100	100		$ 200	200
Mr. Sundaram
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Severance Costs				$ 600
Other Accrued Liabilities, Current		$ 100				100			100		$ 900
Stock-Based Compensation Expense							$ 10,500			$ 10,500
Discretionary Bonus				100.00%
Discretionary Bonus Amount				$ 300
Mr. Yoon
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Severance Costs			$ 500
Product Liability Accrual Period Expense						600
Other Accrued Liabilities, Current		700				700			700
Retention awards payable				500
Stock-based compensation expense						600
Amount Equivalent to Annual Basic Salary			12 months
Unpaid Retention Award			$ 300
Target Annual Bonus			100
Dr. Vignola
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Severance Costs			$ 500
Product Liability Accrual Period Expense						800
Other Accrued Liabilities, Current		900				900			900
Retention awards payable				$ 700
Stock-based compensation expense						400
Amount Equivalent to Annual Basic Salary			12 months
Unpaid Retention Award			$ 500
Target Annual Bonus			200
Additional Retention Bonus			$ 500
Mr. Yoon and Dr. Vignola
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Other Accrued Liabilities, Current		$ 700				$ 700			700
Erin Quirk [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Severance Costs	$ 200
Retention awards payable												$ 600
Recognition bonus aggregate amount												$ 100
Unpaid Recognition Bonus portion	$ 400
Stock-based compensation expense									$ 400
At-the-Market Offering [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Offer price								$ 75,000
At-the-Market Offering [Member] \| Common Stock
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Number of shares issued									9,781,673
Net proceeds from issuance of common stock									$ 66,600
Sales Agreement With Cowen
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Offer price					$ 150,000
September 2024 Financing [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Number of shares issued		14,064,048
Net proceeds from issuance of common stock allocated to pre-funded warrants		$ 23,400
Shares issued, price per share		$ 10.5				$ 10.5			$ 10.5
Pre-funded warrants to purchase		2,380,952				2,380,952			2,380,952
Pre-funded warrant price		$ 10.4999				$ 10.4999			$ 10.4999
Common stock, par value		$ 0.0001				$ 0.0001			$ 0.0001
Aggregate net proceeds after deducting underwriting discounts and commissions and other offering expenses common stock		$ 161,900

Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Accounting Policies [Abstract]
Research and development costs	$ 2,342	$ 2,010
Compensation and benefit costs	4,280	5,683
Accrued professional fees	2,254	855
Other	477	278
Total accrued expenses and other current liabilities	$ 9,353	$ 8,826

Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Net Loss per Share (Details) - shares	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	11,744,772	8,715,363
Options to Purchase Common Stock
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	10,964,022	8,295,869
Unvested Restricted Stock Units With Service Conditions
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	580,104	364,594
Unvested Restricted Stock Units With Market Conditions
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	150,000	0
Shares Issuable Under Employee Stock Purchase Plan
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	50,646	54,900

Cash Equivalents and Marketable Securities - Schedule of Fair Value And Amortized Cost of Marketable Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Marketable Securities [Line Items]
Amortized Cost	$ 250,550	$ 217,145
Unrealized Gains	337	219
Unrealized Losses	(2)	(62)
Fair Value	250,885	217,302
Cash equivalents	148,244	33,788
Marketable securities	102,641	183,514
Total	250,885	217,302
Money market funds
Marketable Securities [Line Items]
Amortized Cost	148,244	33,788
Unrealized Gains	0	0
Unrealized Losses	0	0
Fair Value	148,244	33,788
U.S. government securities
Marketable Securities [Line Items]
Amortized Cost	102,306	183,357
Unrealized Gains	337	219
Unrealized Losses	(2)	(62)
Fair Value	$ 102,641	$ 183,514

Cash Equivalents and Marketable Securities - Schedule of Available-for-sale Marketable Securities for Unrealized Loss Position (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Marketable Securities [Line Items]
Less than 12 months, fair value	$ 0	$ 80,461
Less than 12 months, unrealized losses	0	(62)
12 months or longer, fair value	4,011	0
12 months or longer, unrealized losses	(2)	0
Total fair value	4,011	80,461
Total unrealized losses	(2)	(62)
U.S. government securities
Marketable Securities [Line Items]
Less than 12 months, fair value	0	80,461
Less than 12 months, unrealized losses	0	(62)
12 months or longer, fair value	4,011	0
12 months or longer, unrealized losses	(2)	0
Total fair value	4,011	80,461
Total unrealized losses	$ (2)	$ (62)

Cash Equivalents and Marketable Securities (Additional Information) (Details)	Sep. 30, 2024 Position
Investments, Debt and Equity Securities [Abstract]
Securities, available-for-sale, unrealized loss position, number of positions	2

Fair Value Measurements - Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Assets:
Marketable securities	$ 102,641
Recurring
Assets:
Total cash and cash equivalents	270,136	$ 79,926
Marketable securities	102,641	183,514
Recurring \| Cash in bank balances
Assets:
Total cash and cash equivalents	121,892	46,138
Recurring \| Money market funds
Assets:
Total cash and cash equivalents	148,244	33,788
Recurring \| U.S. government securities
Assets:
Marketable securities	102,641	183,514
Recurring \| Level 1
Assets:
Total cash and cash equivalents	270,136	79,926
Recurring \| Level 1 \| Cash in bank balances
Assets:
Total cash and cash equivalents	121,892	46,138
Recurring \| Level 1 \| Money market funds
Assets:
Total cash and cash equivalents	148,244	33,788
Recurring \| Level 2
Assets:
Marketable securities	102,641	183,514
Recurring \| Level 2 \| U.S. government securities
Assets:
Marketable securities	$ 102,641	$ 183,514

Fair Value Measurements - Schedule of Aggregate Amortized Cost and Fair Value of Marketable Securities (Details) $ in Thousands	Sep. 30, 2024 USD ($)
Fair Value Disclosures [Abstract]
Due in one year or less	$ 102,306
Due after one year through two years	0
Total marketable securities	102,306
Due in one year or less	102,641
Due after one year through two years	0
Total marketable securities	$ 102,641

Fair Value Measurements - Additional Information (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Fair Value Disclosures [Abstract]
Liabilities, Transfers into Level 3	$ 0
Liabilities, Transfers out of Level 3	0
Assets, Transfers into Level 3	0
Assets, Transfers out of Level 3	$ 0

Leases (Additional Information) (Details) $ in Millions	9 Months Ended
Leases (Additional Information) (Details) $ in Millions	Sep. 30, 2024 USD ($)
Lessor, Lease, Description [Line Items]
Option to extend	In July 2024, the Company amended the lease agreement to extend for three years commencing as of November 1, 2024, and expiring on October 31, 2027. The Company has the option to extend the amended lease agreement for an additional three years.
Lease Agreements [Member] \| Foster City, California
Lessor, Lease, Description [Line Items]
Annual lease payments	$ 0.5

Leases - Schedule of Components of lease cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Leases [Abstract]
Operating lease cost	$ 143	$ 160	$ 466	$ 482
Short-term cost	5	4	12	12
Total lease cost	$ 148	$ 164	$ 478	$ 494
Weighted-average remaining lease term		3 years		3 years
Weighted-average discount rate		9.99%		9.99%

Leases - Schedule of maturities of operating leases (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Operating Leases
2024	$ 11
2025	525
2026	545
2027	465
2028 and thereafter	0
Total lease payments	1,546
Less: Imputed interest	(241)
Present value of lease liabilities	1,305
Less: Current portion of lease liabilities	(272)	$ (603)
Total lease liabilities, non-current	$ 1,033

Common Stock and Stock-Based Compensation - Schedule of Common Stock Shares Reserved for Issuance (Details) - shares	Sep. 30, 2024	Dec. 31, 2023
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	25,049,050	23,465,572
Options Outstanding Under Incentive Award Plans
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	10,964,022	8,349,922
Unvested Restricted Stock Units With Service Conditions
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	580,104	365,892
Unvested Restricted Stock Units With Market Conditions
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	150,000	0
Shares Available For Future Grant Under Incentive Award Plans
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	3,662,967	1,005,587
Shares Available For Future Grant Under Employee Stock Purchase Plans
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	614,588	701,671
Shares Available For Future Grant Under Employment Inducement Award Plans
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	2,816,835	3,291,000
Pre-Funded Warrants
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	6,260,534	9,751,500

Common Stock and Stock-Based Compensation - Additional Information (Details)		1 Months Ended			3 Months Ended	9 Months Ended
	Jan. 01, 2024 shares	Aug. 31, 2024 shares	Sep. 30, 2023 shares	Feb. 28, 2021 shares	Mar. 31, 2024 USD ($) shares	Sep. 30, 2024 USD ($) Vote Plan $ / shares shares	Sep. 30, 2023 shares	Dec. 31, 2023 $ / shares shares	Sep. 30, 2022 shares	Aug. 31, 2022 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock, voting rights						Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends
Number of voting rights per share \| Vote						1
Cash dividends declared or paid \| $						$ 0
Number of stock-based compensation plans \| Plan						3
Number of shares authorized						150,000,000		150,000,000
Preferred stock, shares authorized						10,000,000
Preferred stock, par or stated value per share \| $ / shares						$ 0.0001
Common stock, par value \| $ / shares						$ 0.0001		$ 0.0001
Preferred Stock, Shares Outstanding						0		0
Total shares reserved						25,049,050		23,465,572
Employee Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares available for future grants						4,389,813
Unrecognized stock-based compensation expense related to unvested stock options \| $						$ 23,700,000
Unrecognized stock-based compensation expense recognized period						2 years 11 months 19 days
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized stock-based compensation expense related to unvested stock options \| $						$ 3,500,000
Unrecognized stock-based compensation expense recognized period						2 years 9 months 21 days
Number of Shares, Granted						635,650
Restricted Stock Units with Market Conditions
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized stock-based compensation expense related to unvested stock options \| $						$ 500,000
Unrecognized stock-based compensation expense recognized period						1 year 18 days
Number of Shares, Granted					150,000
Stock Price Thresholds , Minimum \| $					$ 15
Stock Price Thresholds , Maximum \| $					$ 20
2021 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment award, number of shares authorized				2,400,007
Increase of number of authorized shares reserved for issuance under the 2021 Plan	3,228,835
Share-based payment award, shares available for future grants						3,662,967
Increase of authorized shares, percent of common stock outstanding				5.00%
2017 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Increase of number of authorized shares reserved for issuance under the 2021 Plan				0
2021 Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Increase of number of authorized shares reserved for issuance under the 2021 Plan	645,767
Share-based payment award, shares available for future grants						614,588
Total shares reserved				240,000
Shares purchased by employees under the ESPP						87,083	114,739
Increase of authorized shares, percent of common stock outstanding				1.00%
Unrecognized stock-based compensation expense recognized period						1 year 1 month 17 days
Percentage of fair market value of the shares on the offering date						85.00%
Percentage of fair market value of the shares on the purchase date						85.00%
Unrecognized stock-based compensation expense related to unvested employee stock purchases \| $						$ 500,000
2021 Employee Stock Purchase Plan \| Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share Based Compensation Rate of Payroll Deduction						15.00%
2022 Inducement Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares authorized									1,400,000
Increase of number of authorized shares reserved for issuance under the 2021 Plan		2,250,000	3,113,250
Shares available for future grants						2,816,835
Pre-Funded Warrants
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Pre Funded warrants exercised						10,750,418
Common stock, par value \| $ / shares						$ 0.0001				$ 0.0001
Pre-funded warrants to purchase						2,380,952				14,630,000
Pre-funded warrant price \| $ / shares						$ 10.4999				$ 2.4199

Common Stock and Stock-Based Compensation - Summary of Stock Option Activity (Details) - Employee Stock Option $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2024 USD ($) $ / shares shares	Dec. 31, 2023 USD ($) $ / shares shares
Number of Shares
Number of Shares, Outstanding beginning balance \| shares	8,349,922
Number of Shares, Granted \| shares	4,389,813
Number of Shares, Exercised \| shares	(175,081)
Number of Shares, Forfeited \| shares	(1,600,632)
Number of Shares, Outstanding ending balance \| shares	10,964,022	8,349,922
Number of Shares, Exercisable \| shares	5,777,098
Number of Shares, Vested and expected to vest \| shares	10,964,022
Weighted-Average Exercise Price
Weighted-Average Exercise Price, Outstanding beginning balance \| $ / shares	$ 9.04
Weighted-Average Exercise Price, Granted \| $ / shares	6.72
Weighted-Average Exercise Price, Exercised \| $ / shares	6.09
Weighted-Average Exercise Price, Forfeited \| $ / shares	8.54
Weighted-Average Exercise Price, Outstanding ending balance \| $ / shares	8.23	$ 9.04
Weighted-Average Exercise Price, Exercisable \| $ / shares	8.98
Weighted-Average Exercise Price, Vested and expected to vest \| $ / shares	$ 8.23
Weighted-Average Remaining Contractual Term and Aggregate Intrinsic Value
Weighted-Average Remaining Contractual Term, Outstanding	6 years 3 months 21 days	6 years 9 months 25 days
Weighted-Average Remaining Contractual Term, Exercisable	3 years 8 months 4 days
Weighted-Average Remaining Contractual Term, Vested and expected to vest	6 years 3 months 21 days
Aggregate Intrinsic Value, Outstanding, beginning balance \| $	$ 2,225
Aggregate Intrinsic Value, Exercised \| $	673
Aggregate Intrinsic Value, Outstanding, ending balance \| $	10,640	$ 2,225
Aggregate Intrinsic Value, Exercisable \| $	3,750
Aggregate Intrinsic Value, Vested and expected to vest \| $	$ 10,640

Common Stock and Stock-Based Compensation - Summary of Restricted Stock Award Activity (Details) - Restricted Stock	9 Months Ended
	Sep. 30, 2024 $ / shares shares
Number of Shares
Number of Shares, Unvested restricted common stock, beginning balance \| shares	365,892
Number of Shares, Granted \| shares	635,650
Number of Shares, Vested \| shares	(142,227)
Number of Shares, Forfeited \| shares	(279,211)
Number of Shares, Unvested restricted common stock, ending balance \| shares	580,104
Grant-Date Fair Value
Grant-Date Fair Value, Unvested restricted common stock, beginning balance \| $ / shares	$ 8.79
Grant-Date Fair Value, Granted \| $ / shares	6.16
Grant-Date Fair Value, Vested \| $ / shares	8.58
Grant-Date Fair Value, Forfeited \| $ / shares	6.36
Grant-Date Fair Value, Unvested restricted common stock, ending balance \| $ / shares	$ 7.13

Common Stock and Stock-Based Compensation - Schedule of Estimated the Fair value of RSUs with Market Conditions (Details) - Restricted Stock Units with Market Conditions	9 Months Ended
	Sep. 30, 2024 $ / shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Expected volatility	78.45%
Risk-free interest rate	4.27%
Fair value of underlying common stock	$ 7.31
Weighted average grant-date fair value per share	$ 5.39

Common Stock and Stock-Based Compensation - Schedule of Stock Options Weighted Average Assumptions (Details) - $ / shares	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Employee Stock Purchase Plans
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Expected term (years)	1 year 2 months 19 days	1 year 3 months 3 days
Expected volatility	83.43%	86.49%
Risk-free interest rate	5.10%	4.85%
Fair value of underlying common stock	$ 6.01	$ 11.3
Weighted average grant-date fair value per share	$ 3.03	$ 5.82
Employee Stock Option
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Expected term (years)	6 years 14 days	6 years 18 days
Expected volatility	77.15%	73.79%
Risk-free interest rate	4.23%	3.58%
Fair value of underlying common stock	$ 6.72	$ 9.68
Weighted average grant-date fair value per share	$ 4.69	$ 6.53

Common Stock and Stock-Based Compensation - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation expense	$ 4,158	$ 14,083	$ 12,606	$ 22,254
Research and Development Expense
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation expense	1,266	1,400	5,444	4,324
General and Administrative Expense
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation expense	$ 2,892	$ 12,683	$ 7,162	$ 17,930

Assignment, License and Collaboration Agreements - Additional Information (Details) $ in Thousands, ¥ in Millions	1 Months Ended				3 Months Ended		9 Months Ended		12 Months Ended
	Jul. 31, 2022 USD ($)	Dec. 31, 2020 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2019 CNY (¥)	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Dec. 31, 2021 USD ($)
License Fee [Member]
Assignment License And Collaboration Agreements [Line Items]
License revenue									$ 1,000
Assignment Agreement
Assignment License And Collaboration Agreements [Line Items]
Aggregate pre-specified development milestones for the first covered product \| ¥				¥ 205.0
Research and development expense					$ 0	$ 0	$ 0	$ 0
Amount paid under the agreement							$ 4,400
Number of days advance written notice							60 days
Milestone payment		$ 1,500
Assignment Agreement \| Research and Development Expense
Assignment License And Collaboration Agreements [Line Items]
Upfront payment			$ 700
Hansoh Option and License Agreement \| Maximum
Assignment License And Collaboration Agreements [Line Items]
Amount agree to pay in pre-specified clinical, regulatory and sales milestones							$ 67,000
Phase 2a DUET
Assignment License And Collaboration Agreements [Line Items]
Milestone payment	$ 2,200