February 21, 2024

Overview

initiate and conduct clinical trials for exoSTING, exoIL-12, exoASO-STAT6 and any other engEx product candidates we identify and choose to develop;

continue our current research programs and preclinical development of our potential engEx product candidates;

seek to identify additional research programs and additional engEx product candidates;

further develop and expand the capabilities of our engEx Platform;

secure supply chain capacity sufficient to support our planned preclinical studies and early-stage clinical trials;

maintain, expand and protect our intellectual property portfolio;

hire additional clinical, scientific, manufacturing, and general and administrative personnel;

acquire or in-license other biologically active molecules, potential engEx product candidates or technologies;

seek regulatory approvals for any engEx product candidates that successfully complete clinical trials;

establish a sales, marketing and distribution infrastructure to commercialize any engEx products for which we may obtain regulatory approval;


take temporary precautionary measures to minimize the risk of COVID-19 to our employees, contractors and those who may participate in our studies.
Financial operations overview
Revenue
Operating expenses
Research and development expense
The nature of our business and primary focus of our activities generate a significant amount of research and development costs. Research and development expenses represent costs incurred by us for the following:

conduct of the clinical development of exoSTING in a Phase 1/2 clinical trial;

conduct of the clinical development of exoIL-12 in a Phase 1 clinical trial;

conduct of the clinical development of exoASO-STAT6 in a Phase 1 clinical trial;

costs to develop our engEx Platform;

discovery efforts leading to the selection and advancement of engEx product candidates for clinical development;

preclinical development costs for our programs; and

costs to develop our manufacturing technology and infrastructure.
The costs above comprise the following categories:

personnel-related expenses, including salaries, benefits and stock-based compensation expense;

expenses incurred under agreements with third parties, such as contract research organizations (“CROs”), that conduct our preclinical studies;

licensing costs;

costs of acquiring, developing and manufacturing materials for preclinical studies, including both internal manufacturing and third-party contract manufacturing organizations (“CMOs”);

costs of outside consultants and advisors, including their fees, stock-based compensation and related travel expenses;

expenses incurred for the procurement of materials, laboratory supplies and non-capital equipment used in the research and development process; and

facilities, depreciation, amortization and other direct and allocated expenses incurred as a result of research and development activities.
The following table reflects our research and development expenses for each period presented (in thousands):
1,870 2,214 Total research and development expenses $ 12,798 $ 15,419 $ 27,045 $ 31,968

our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize, our engEx product candidates;

our successful enrollment in and completion of clinical trials, including our ability to generate positive data from any such clinical trials;

the costs associated with the development of any additional development programs we identify in-house or acquire through collaborations;

our ability to add and retain key research and development personnel;

our ability to establish an appropriate safety profile with IND-enabling toxicology and other preclinical studies;

our ability to discover, develop and utilize biomarkers to demonstrate target engagement, pathway engagement and the impact on disease progression, as applicable, of our engEx product candidates;



our ability to maintain our collaborative arrangement with Jazz and earn milestone payments thereunder;

the terms and timing of any additional collaborations, license or other arrangements, including the terms and timing of any milestone payments thereunder;


our receipt of marketing approvals from applicable regulatory authorities; and

the continued acceptable safety profiles of any engEx product following approval.
A change in any of these variables with respect to the development of any of our engEx product candidates would significantly change the costs, timing and viability associated with the development of that engEx product candidate.
General and administrative expense
Interest income
Interest income consists of interest income earned from our cash, cash equivalents and investments.
Interest expense
Interest expense consists of interest expense incurred from our term loan facility with Hercules.
Other income
Other income primarily consists of the sublease income under the sublease portion of our 35 CambridgePark Drive office and laboratory space and 4 Hartwell Place manufacturing facility.
Results of operations
The following table summarizes our condensed consolidated statements of operations for each period presented (in thousands):
Total other income (expense), net 242 (343 ) 464
Comparison of the three months ended June 30, 2022 and 2021
Collaboration revenue
Research and development expense
Other research and development expenses 2,871 3,208
Total research and development expenses $ 12,798 $ 15,419 $
The decrease in research and development expenses was primarily due to a

$1.4 million decrease in personnel-related costs primarily due to a lower number of employees related to the disposition of the CMF facility to Lonza;


These decreases were slightly offset by a $0.4 million increase in exoASO-STAT6 expenses driven by the initiation of clinical trials for this product candidate.
General and administrative expense
427
The increase in general and administrative expenses was primarily due to professional services driven by legal fees for intellectual property rights.
Interest income
Interest expense
Other income
Comparison of the six months ended June 30, 2022 and 2021
Collaboration revenue
Research and development expense
The decrease in research and development expenses was primarily due to

$3.1 million decrease in engEx Platform expenses, driven mainly by decreases in lab expenses and a decrease of contractors and consultants, which were both primarily related to the disposition of the CMF facility to Lonza;

$2.0 million decrease in personnel-related costs primarily due to a lower number of employees related to the disposition of the CMF facility to Lonza;


These decreases were slightly offset by

$0.6 million increase in exoIL-12 expenses driven by increases in clinical manufacturing expenses; and

$0.6 million increase in exoSTING expenses driven by increases in external studies.
General and administrative expense
546
The increase in general and administrative expenses was primarily due to professional services, which were driven by legal fees for intellectual property rights.
There was an immaterial change of less than $0.1 million in interest income between the six months ended June 30, 2021 and the six months ended June 30, 2022. All of our investments matured prior to the six months ended June 30, 2022. As of June 30, 2022, we did not hold any investments.
Interest expense
Other income
Other income increased by $1.0 million from $0.7 million for the six months ended June 30, 2021 to $1.7 million for six months ended June 30, 2022. The increase in other income was driven by the annual increase in rental income received from our 35 CambridgePark Drive sublease as well as the sublease at 4 Hartwell Place, which commenced in November 2021.
Hercules Loan Agreement
Historical cash flows
The following table provides information regarding our cash flows for each period presented (in thousands):
Investing activities
During the six months ended June 30, 2022 and June 30, 2021, net cash used in investing activities was $0.4 million and $2.4 million, respectively, for purchases of property.
Financing activities
Plan of operation and future funding requirements

the rate of progress in the development of our engEx Platform, engEx product candidates and development programs;

the scope, progress, results and costs of preclinical studies and clinical trials for any engEx product candidates and development programs;

the number and characteristics of programs and technologies that we develop or may in-license;

the costs and timing of future commercialization activities, including manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval;



the continuation of our existing strategic collaborations and licensing arrangements and entry into new collaborations and licensing arrangements;

the costs we incur in maintaining business operations;

the costs associated with being a public company;

the revenue, if any, received from commercial sales of our engEx product candidates for which we receive marketing approval;

the effect of competing technological and market developments; and

the extent to which we acquire or invest in businesses, products and technologies, including entering into licensing or collaboration arrangements for product candidates.
Off-balance sheet arrangements
Critical accounting policies and significant judgments and estimates
Emerging growth company and smaller reporting company status
Recently issued accounting pronouncements
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