0001558370-23-002698 | 10-K | XBRL Viewer

Term Loan	12 Months Ended
Dec. 31, 2022
Term Loan
Term Loan	9. Term Loan In April 2016, we entered into a $1.0 million term loan, or the “Term Loan”. In January 2019, we amended the Term Loan to increase our borrowing capacity to $5.0 million, which was secured by our certificates of deposit, money market account, investment property and deposit or investment accounts. In August 2021, we fully paid the remaining principal on the Term Loan, and there are no outstanding payments due from us.

Term Loan

12 Months Ended

Dec. 31, 2022

9. Term Loan

In April 2016, we entered into a $1.0 million term loan, or the “Term Loan”. In January 2019, we amended the Term Loan to increase our borrowing capacity to $5.0 million, which was secured by our certificates of deposit, money market account, investment property and deposit or investment accounts. In August 2021, we fully paid the remaining principal on the Term Loan, and there are no outstanding payments due from us.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

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+ Details

Marketable Securities (Tables)

12 Months Ended

Dec. 31, 2022

Marketable Securities

Schedule of marketable securities


	December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
(in thousands)	Cost		Gain		Loss		Fair Value
Corporate bonds	$	133,163	$	—	$	(1,457)	$	131,706
U.S. Government agencies		1,612		—		(37)		1,575
Total	$	134,775	$	—	$	(1,494)	$	133,281


	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
(in thousands)	Cost		Gain		Loss		Fair Value
Corporate bonds	$	207,917	$	3	$	(666)	$	207,254
Total	$	207,917	$	3	$	(666)	$	207,254

Schedule of available-for-sale maturities


	December 31, 2022
			Fair
(in thousands)	Cost		Value
Maturities:
Within 1 year	$	105,930	$	104,660
Between 1 to 2 years		28,845		28,621
Total investments available-for-sale	$	134,775	$	133,281

Commitments and Contingencies	12 Months Ended
Dec. 31, 2022
Commitments and Contingencies
Commitments and Contingencies	8. Commitments and Contingencies Legal Proceedings The Company, from time to time, is a party to litigation or legal proceedings arising in the ordinary course of business. The Company is not a party to any litigation or legal proceedings, nor is management aware of any pending or threatened litigation that, in the opinion of the Company’s management, are likely to have a material adverse effect on the Company’s business. At each reporting date, the Company evaluates whether a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses the costs related to its legal proceedings as incurred. On September 21, 2020, a putative stockholder class action was filed in the U.S. District Court for the Southern District of New York styled Ye Zhou v. NextCure, Inc., et. al., Case 1:20-cv-0772 (S.D.N.Y.). On February 26, 2021, the Lead Plaintiff filed a consolidated amended complaint that asserts claims against us, certain of our officers and members of our board of directors, and the underwriters in our May 2019 initial public offering and November 2019 underwritten secondary public offering. The complaint alleges that the defendants violated provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Securities Act of 1933, as amended, with respect to statements made regarding our product candidate, NC318, and the FIND-IO platform. The complaint seeks unspecified damages on behalf of a purported class of purchasers of our securities between May 8, 2019 and July 14, 2020. Defendants filed a motion to dismiss the consolidated amended complaint on April 27, 2021, and discovery is stayed pending resolution of that motion. On March 24, 2021, a purported shareholder derivative lawsuit was filed in the U.S. District Court for the District of Maryland, Southern Division, styled Zach Liu v. Richman et. al., Case:21-cv-00754, alleging breaches of fiduciary duty by officers and/or directors, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and violations of the Exchange Act and the Securities Act of 1933. The Complaint seeks unspecified damages, attorneys’ fees and costs, declaratory relief, corporate governance changes, and restitution. On May 17, 2021, the Court granted the parties’ joint motion to stay the derivative lawsuit pending resolution of the Ye Zhou action’s motion to dismiss. On December 14, 2021, a purported misappropriation of certain trade secrets lawsuit was filed in Federal District Court for the District of Delaware, styled Immunaccel, LLC v. NextCure, Inc., Case No. 1:21-cv-01755-UNA. The lawsuit alleges that the Company misappropriated certain trade secrets belonging to Immunaccel related to a drug discovery and screening platform named IMMUNE 3D. The complaint alleges two causes of action, one under the Delaware Uniform Trade Secrets Act and another under the Federal Defend Trade Secrets Act, and seeks unspecified monetary damages, a permanent injunction and other miscellaneous relief. The Company intends to vigorously defend the Ye Zhou, Liu and Immunaccel actions. Based on the Company’s assessment of the facts underlying these claims, the uncertainty of litigation, and the preliminary stage of these cases, the Company cannot estimate the reasonably possible loss or range of loss that may result from these actions.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies

Commitments and Contingencies

8. Commitments and Contingencies

Legal Proceedings

The Company, from time to time, is a party to litigation or legal proceedings arising in the ordinary course of business. The Company is not a party to any litigation or legal proceedings, nor is management aware of any pending or threatened litigation that, in the opinion of the Company’s management, are likely to have a material adverse effect on the Company’s business. At each reporting date, the Company evaluates whether a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses the costs related to its legal proceedings as incurred.

On September 21, 2020, a putative stockholder class action was filed in the U.S. District Court for the Southern District of New York styled Ye Zhou v. NextCure, Inc., et. al., Case 1:20-cv-0772 (S.D.N.Y.). On February 26, 2021, the Lead Plaintiff filed a consolidated amended complaint that asserts claims against us, certain of our officers and members of our board of directors, and the underwriters in our May 2019 initial public offering and November 2019 underwritten secondary public offering. The complaint alleges that the defendants violated provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Securities Act of 1933, as amended, with respect to statements made regarding our product candidate, NC318, and the FIND-IO platform. The complaint seeks unspecified damages on behalf of a purported class of purchasers of our securities between May 8, 2019 and July 14, 2020. Defendants filed a motion to dismiss the consolidated amended complaint on April 27, 2021, and discovery is stayed pending resolution of that motion.

On March 24, 2021, a purported shareholder derivative lawsuit was filed in the U.S. District Court for the District of Maryland, Southern Division, styled Zach Liu v. Richman et. al., Case:21-cv-00754, alleging breaches of fiduciary duty by officers and/or directors, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and violations of the Exchange Act and the Securities Act of 1933. The Complaint seeks unspecified damages, attorneys’ fees and costs, declaratory relief, corporate governance changes, and restitution. On May 17, 2021, the Court granted the parties’ joint motion to stay the derivative lawsuit pending resolution of the Ye Zhou action’s motion to dismiss.

On December 14, 2021, a purported misappropriation of certain trade secrets lawsuit was filed in Federal District Court for the District of Delaware, styled Immunaccel, LLC v. NextCure, Inc., Case No. 1:21-cv-01755-UNA. The lawsuit alleges that the Company misappropriated certain trade secrets belonging to Immunaccel related to a drug discovery and screening platform named IMMUNE 3D. The complaint alleges two causes of action, one under the Delaware Uniform Trade Secrets Act and another under the Federal Defend Trade Secrets Act, and seeks unspecified monetary damages, a permanent injunction and other miscellaneous relief.

The Company intends to vigorously defend the Ye Zhou, Liu and Immunaccel actions. Based on the Company’s assessment of the facts underlying these claims, the uncertainty of litigation, and the preliminary stage of these cases, the Company cannot estimate the reasonably possible loss or range of loss that may result from these actions.

Fair Value Measurements

12 Months Ended

Dec. 31, 2022

Fair Value Measurements

Fair Value Measurements

4. Fair Value Measurements

The Company has certain financial assets recorded at fair value, which have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements.

Level 1—Quoted market prices in active markets for identical assets or liabilities.

Level 2—Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted market prices, interest rates and yield curves.

Level 3—Unobservable inputs developed using estimates of assumptions developed by the Company, which reflect those that a market participant would use.

To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair values requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized as Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The following tables set forth the fair value of the Company’s financial assets by level within the fair value hierarchy as of December 31, 2022 and 2021:


	December 31, 2022
					Significant
			Quoted Prices in		Other
			Active Markets or		Observable		Significant
			Identical Assets		Inputs		Unobservable
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Cash equivalents:
Money market funds	$	6,782	$	6,782	$	—	$	—
Marketable securities:
Corporate bonds		131,706		—		131,706		—
U.S. Government agencies		1,575		—		1,575		—
Total	$	140,063	$	6,782	$	133,281	$	—


	December 31, 2021
					Significant
			Quoted Prices in		Other
			Active Markets or		Observable		Significant
			Identical Assets		Inputs		Unobservable
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Cash equivalents:
Money market funds	$	2,680	$	2,680	$	—	$	—
Marketable securities:
Corporate bonds		207,254		—		207,254		—
Total	$	209,934	$	2,680	$	207,254	$	—

The Company did not transfer any assets measured at fair value on a recurring basis between levels during the years ended December 31, 2022 and 2021.

The carrying value of financial instruments, including trade receivables, accounts payable and accrued liabilities approximate fair value because of the short-term maturity of these items. The estimated fair values may not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized in the future.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Accrued Liabilities and Other Liabilities

12 Months Ended

Dec. 31, 2022

Accrued Liabilities and Other Liabilities

Accrued Liabilities and Other Liabilities

6. Accrued Liabilities and Other Liabilities

Accrued liabilities consist of the following:


	December 31,		December 31,
(in thousands)	2022		2021
Payroll and related benefits	$	1,639	$	1,751
Clinical trial costs		1,531		727
Sponsored research		417		1,315
Lease liabilities, current portion		518		—
Operating expenses		647		656
Other		105		217
Total accrued liabilities and other liabilities	$	4,857	$	4,666

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2022

Fair Value Measurements

Summary of fair value of the Company's financial assets


	December 31, 2022
					Significant
			Quoted Prices in		Other
			Active Markets or		Observable		Significant
			Identical Assets		Inputs		Unobservable
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Cash equivalents:
Money market funds	$	6,782	$	6,782	$	—	$	—
Marketable securities:
Corporate bonds		131,706		—		131,706		—
U.S. Government agencies		1,575		—		1,575		—
Total	$	140,063	$	6,782	$	133,281	$	—


	December 31, 2021
					Significant
			Quoted Prices in		Other
			Active Markets or		Observable		Significant
			Identical Assets		Inputs		Unobservable
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Cash equivalents:
Money market funds	$	2,680	$	2,680	$	—	$	—
Marketable securities:
Corporate bonds		207,254		—		207,254		—
Total	$	209,934	$	2,680	$	207,254	$	—

Stock-Based Compensation - Stock options (Details) - USD ($)		12 Months Ended
	May 03, 2019	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Share Based Compensation Expense Not Recognized
Unrecognized compensation cost		$ 14,700,000
Compensation expense recognition period		2 years 7 months 6 days
2015 Plan
Number of Shares
Outstanding at the beginning (in shares)		4,545,794	3,112,376
Granted (in shares)		1,739,350	2,020,718
Exercised (in shares)		(50,420)	(105,731)
Forfeitures (in shares)		(972,545)	(481,569)
Outstanding at the end (in shares)		5,262,179	4,545,794	3,112,376
Exercisable at the end (in shares)		2,790,206
Weighted Average Exercise Price
Outstanding at the beginning (in dollars per share)		$ 14.15	$ 16.95
Granted (in dollars per share)		5.34	10.89
Exercised (in dollars per share)		1.32	1.62
Forfeited (in dollars per share)		13.77	21.33
Outstanding at the end (in dollars per share)		11.44	$ 14.15	$ 16.95
Exercisable at the end (in dollars per share)		$ 12.97
Weighted Average Remaining Contractual Life (Years) And Aggregate Intrinsic Value
Outstanding (in years)		7 years 7 months 6 days	8 years 1 month 6 days	8 years 2 months 12 days
Exercisable at the end (in years)		6 years 7 months 6 days
Outstanding at the beginning (in dollars)		$ 2,860,000	$ 10,810,000
Outstanding at the end (in dollars)		115,000	$ 2,860,000	$ 10,810,000
Exercisable at the end (in dollars)		$ 115,000
Weighted average grant date fair value per share of stock options granted		$ 3.69	$ 7.47
Aggregate intrinsic value of stock options exercised		$ 13,000	$ 500,000
Aggregate grant date fair value		$ 11,000,000.0	$ 13,400,000
Omnibus Incentive Plan
Stock Based Compensation
Number of shares reserved for issuance under the plan	2,900,000
Annual increase in number of share reserved for issuance (as percent)	4.00%
2015 Plan and 2019 Employee Stock Purchase Plan
Stock Based Compensation
Vesting period		4 years
Expiration period		10 years
Number of shares reserved for issuance under the plan		2,653,867
2019 Employee Stock Purchase Plan
Stock Based Compensation
Number of shares issued		49,583
Number of shares reserved for issuance under the plan	240,000	741,097
Annual increase in number of share reserved for issuance (as percent)	1.00%
Maximum annual increase in shares available for issuance under the plan	480,000

Income Taxes

12 Months Ended

Dec. 31, 2022

Income Taxes

Income Taxes

14. Income Taxes

The reconciliation of federal statutory income tax rate to the Company’s effective income tax rate is as follows:


	December 31,
	2022		2021
Expected income tax benefit at the federal statutory rate	21.0	%	21.0	%
State taxes, net of federal benefit	6.5		6.5
Research and development credit, net	3.4		3.2
Non-deductible items	(1.7)		(1.8)
Prior year provision to return adjustments	(0.1)		(0.4)
Change in valuation allowance	(29.1)		(28.5)
Total	—	%	—	%

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

The principal components of the Company’s deferred tax assets consisted of the following as of December 31, 2021 and 2020:


	December 31,
(in thousands)		2022		2021
Deferred tax assets:
Federal and state net operating loss carryforwards	$	49,789	$	44,451
Research and development tax credits		11,395		8,862
Capitalized R&D Costs		12,424		—
Operating lease liabilities		1,960		—
Share-based compensation		4,389		3,184
Accruals and other		1,305		1,291
Gross deferred tax assets		81,262		57,788
Less: valuation allowance		(79,724)		(57,705)
Total deferred tax assets	$	1,538	$	83
Deferred tax liabilities:
Depreciation and amortization	$	—	$	(83)
Operating lease assets		(1,538)		—
Gross deferred tax liabilities	$	(1,538)	$	(83)
Net deferred tax assets	$	—	$	—

Based on the Company’s history of losses, the Company recorded a full valuation allowance against its deferred tax assets as of December 31, 2022. The Company increased its valuation allowance by approximately $21.9 million for the year ended December 31, 2022. The Company intends to maintain a valuation allowance until sufficient positive evidence exists to support a reversal of the allowance.

As of December 31, 2022, the Company had federal and state net operating loss carryforwards of $180.2 million and $183.1 million, respectively, some of which begin to expire in the year ending December 31, 2036. Approximately $157.5 million of the federal net operating loss carryforwards do not expire. The Company had federal and state research and development tax credit carryforwards of approximately $11.3 million and $0.1 million, respectively, as of December 31, 2022. The federal credits begin to expire in the year ending December 31, 2036, and the state credits begin to expire in the year ending December 31, 2024.

Under the provisions of Sections 382 and 383 of the Internal Revenue Code (the “IRC”), certain substantial changes in the Company’s ownership may have limited, or may limit in the future, the amount of net operating loss and credit carryforwards that can be used to reduce future income taxes if there has been a significant change in ownership of the Company, as defined by the IRC. Future owner or equity shifts could result in limitations on net operating loss and credit carryforwards.

The Company files income tax returns in the U.S. federal jurisdiction as well as in Maryland. The tax years 2019 to 2021 remain open to examination by the major jurisdictions in which the Company is subject to tax. Fiscal years outside the normal statute of limitation remain open to audit by tax authorities due to tax attributes generated in those early years, which have been carried forward and may be audited in subsequent years when utilized.

The Company evaluates tax positions for recognition using a more-likely-than-not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information. As of December 31, 2022, the Company had no unrecognized income tax benefits that would affect the Company’s effective tax rate if recognized.

The Coronavirus Aid, Relief, and Economic Security Act, or “CARES Act”, and the Consolidated Appropriations Act, 2021, or “Stimulus Bill”, signed into law on March 27, 2020 and December 27, 2020, respectively, have resulted in significant changes to the U.S. federal corporate tax law. Several states have also enacted tax legislation changes. We have considered the applicable tax law changes and determined there was no significant impact to the tax provision of the Company.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

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-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

STATEMENTS OF STOCKHOLDERS EQUITY (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
STATEMENTS OF STOCKHOLDERS EQUITY
Unrealized gain (loss) on marketable securities, tax expense (benefit)	$ 0	$ 0

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2022

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements include the accounts of the Company. The Company’s financial statements have been prepared in accordance with United States generally accepted accounting principles (‘‘GAAP’’). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting

Standards Codification (‘‘ASC’’) and Accounting Standards Update (‘‘ASU’’) of the Financial Accounting Standards Board (‘‘FASB’’).

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the period presented. Although actual results could differ from those estimates, management does not believe that such differences would be material.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. The Company deposits its cash primarily in checking, sweep account and money market accounts. Cash equivalents are stated at amortized cost, plus accrued interest, which approximates fair value.

Restricted Cash

In August 2021, the Company fully paid the remaining principal balance of $2.4 million of its $5.0 million term loan (the “Term Loan”). As a result of this payment, the Company has no restricted cash held in support of the Term Loan.

Marketable Securities

Marketable securities primarily consist of government debt securities, corporate bonds and agency bonds. These marketable securities are classified as available-for-sale, and as such, are carried at fair value as determined by prices for identical or similar securities at the balance sheet date. Marketable securities consist of Level 2 financial instruments in the fair-value hierarchy. The Company’s policy is to classify all investments with contractual maturities within one year as current. At each reporting date, the Company evaluates the classification of its investments with maturities beyond one year based on the nature of the investment securities and whether the investments are considered available for use in current operations. Investment income is recognized when earned and reported net of investment expenses. Unrealized holding gains and losses are reported within accumulated other comprehensive income (loss) as a separate component of stockholders’ equity. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and interest on securities are included in other income, net, on the Company’s statements of operations.

At each balance sheet date, the Company assesses available-for-sale securities in an unrealized loss position to determine whether the unrealized loss is other-than-temporary. If a decline in the fair value of a marketable security below the Company’s cost basis is determined to be other-than-temporary, such marketable security is written down to its estimated fair value as a new cost basis and the amount of the write-down is included in earnings as an impairment charge. The Company considers factors including the significance of the decline in value compared to the cost basis, underlying factors contributing to a decline in the prices of securities in a single asset class, the length of time the market value of the security has been less than its cost basis, the security's relative performance versus its peers, sector or asset class, expected market volatility and the market and economy in general. The Company also evaluates whether it is more likely than not that it will be required to sell a security prior to recovery of its fair value. The cost of securities sold is based on the specific identification method.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk primarily consist of cash and cash equivalents. The Company maintains its cash and cash equivalents at one accredited financial institution that is federally insured. While balances deposited often exceed federally insured limits, the Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company's investment policy limits investments to certain types of debt securities issued by the U.S. government, its agencies and institutions with investment-grade credit ratings and places restrictions on maturities and concentration by type and issuer. The counterparties are various corporations, financial institutions and government agencies of high credit standing.

Fair Value of Financial Instruments

ASC Topic 820, Fair Value Measurement (“ASC 820”), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier value hierarchy that distinguishes between the following:

Level 1—Quoted market prices in active markets for identical assets or liabilities.

Level 2—Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted market prices, interest rates and yield curves.

Level 3—Unobservable inputs developed using estimates of assumptions developed by the Company, which reflect those that a market participant would use. Use of these inputs involves significant and subjective judgments to be made by a reporting entity – e.g., determining an appropriate adjustment to a discount factor for illiquidity associated with a given security.

Property and Equipment, Net

Property and equipment are valued at cost less accumulated depreciation. Depreciation is recognized on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the useful life or term of the lease. Upon retirement or disposal, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is recorded to general and administrative expenses in the accompanying statement of operations and comprehensive loss. Routine expenditures for maintenance and repairs are expensed as incurred.

Estimated useful lives for property and equipment are as follows:


		Estimated Useful Life
Computers and peripherals		3 years
Equipment		5 years
Furniture and fixtures		7 years
Leasehold improvements		Lesser of estimated useful life or remaining lease term

The Company reviews long-lived assets, which primarily consist of property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be fully recoverable based on the criteria for accounting for the impairment or disposal of long-lived assets under ASC Topic 360, Property, Plant and Equipment. These events or changes in circumstances may include a significant deterioration of operating results, changes in business plans, or changes in anticipated future cash flows. If an impairment indicator is present, the Company evaluates recoverability by comparing the carrying amount of the assets group to future undiscounted net cash flows expected to be generated by the assets group. Assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of the cash flows generated by other asset groups. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, an impairment loss is recognized for the difference between the fair value and carrying value of assets within the group. Fair value is generally determined by estimates of discounted cash flows. The discount rate used in any estimate of discounted cash flows would

be the rate required for a similar investment of like risk. No impairment losses were recognized during the years ended December 31, 2022 or 2021.

Construction in progress (Note 5) is carried at cost and consists of specifically identifiable direct and indirect development and construction costs. While under construction, costs of the property are included in construction in progress until the property is placed in service, at which time costs are transferred to the appropriate property and equipment account including, but not limited to, leasehold improvements or other such accounts.

Leases

On January 1, 2022 (Adoption Date), the Company adopted Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) (ASU No. 2016-02), as amended, using the modified retrospective approach, which provides a method for recording existing leases at adoption and does not require restating comparative financial information. The Company also elected the package of practical expedients permitted under the transition guidance under ASU No. 2016-02, which among other things, permits the Company to maintain the lease classification for any existing leases, as well as maintain the Company’s determination on whether any expired or existing contracts are or contain leases and initial direct costs for any existing leases. The Company did not elect the hindsight practical expedient to determine the lease term for existing leases. In addition, the Company elected the additional transition method permitted under ASU No. 2018-11‒Leases (Topic 842): Targeted Improvements, under which the Company initially applied the new lease standard, Accounting Standards Codification (ASC) 842, at adoption and there was no cumulative-effect adjustment to the opening balance of retained earnings on January 1, 2022. For the comparative period presented in these financial statements, lease-related disclosures continue to be in accordance with the legacy ASC 840. Adoption of ASC 842 did not materially impact the Company’s statements of operations and cash flows.

The Company determines if an arrangement is a lease or implicitly contains a lease at inception based on the lease definition and also determines if the lease is classified as an operating lease or finance lease, each in accordance with ASC 842. Operating leases are included in operating lease right-of-use (ROU) assets and operating lease liabilities in its balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date or the Adoption Date for existing leases based on the present value of lease payments over the lease term using an estimated discount rate. As the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date or the Adoption Date in determining the present value of lease payments over a similar term. In determining the estimated incremental borrowing rate, the Company considered a rate obtained from its primary banker for discussion purposes of a potential collateralized loan with a term similar to the lease term and the Company’s historical borrowing capability in the market. For operating leases, lease expense is recognized on a straight-line basis over the lease term. Lease and non-lease components within a contract are generally accounted for separately.

Preferred Stock

The Company did not have any outstanding preferred stock as of December 31, 2022 and 2021.

Research and Development Costs, Including Clinical Trial Accruals

Research costs consist of employee-related costs, contractor expenses, laboratory supplies and facility costs, for research and development of product candidates are expensed as incurred. Development costs, including clinical trial-related expenses, incurred by third parties, such as clinical research organizations (“CROs”), are expensed as the contracted work is performed. Where contingent milestone payments are due to third parties under research and development arrangements, the milestone payment obligations are expensed when the milestone results are probable of being achieved. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies, including the phase or completion of events, invoices received and contracted costs.

Clinical trial expenses are a significant component of research and development expenses, and the Company outsources a significant portion of these costs to third parties. Third-party clinical trial expenses include investigator fees, site and patient costs, CRO costs, and costs for central laboratory testing and data management. The accrual for site and patient costs includes inputs such as estimates of patient enrollment, patient cycles incurred, clinical site activations, and

other pass-through costs. These inputs are required to be estimated due to a lag in receiving the actual clinical information from third parties. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected on the balance sheets as a prepaid asset or accrued expenses. These third-party agreements are generally cancelable, and related costs are recorded as research and development expenses as incurred. Non-refundable advance clinical payments for goods or services that will be used or rendered for future research and development activities are recorded as a prepaid asset and recognized as expense as the related goods are delivered or the related services are performed. When evaluating the adequacy of the accrued expenses, the Company analyzes progress of the studies, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates may be made in determining the accrued balances at the end of any reporting period. Actual results could differ from the estimates made. The historical clinical accrual estimates have not been materially different from the actual costs.

Patent Costs

All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses in the accompanying statement of operations and comprehensive loss.

Stock Based Compensation

Stock-Based Compensation

The Company accounts for its stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation (“ASC 718”). ASC 718 requires all share-based payments to employees, consultants and directors, including grants of incentive stock options, nonqualified stock options, restricted stock awards, unrestricted stock awards or restricted stock units to employees, consultants and directors of the Company, to be recognized as expense in the statement of operations and comprehensive loss based on their grant date fair values. The Company estimates the fair value of options granted using the Black-Scholes option pricing model (“Black-Scholes”) for stock option grants to both employees and non-employees and the fair value of common stock to determine the fair value of restricted stock.

The Black-Scholes option pricing model requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. Due to the lack of a public market for the Company’s common stock and lack of company-specific historical and implied volatility data, the Company has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to the Company, including stage of product development and life science industry focus. The historical volatility is calculated based on a period of time commensurate with expected term assumption. The Company uses the simplified method as prescribed by the SEC Staff Accounting Bulletin No. 107, Share-Based Payment, to calculate the expected term for options granted to employees as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The expected term is applied to the stock option grant group as a whole, as the Company does not expect substantially different exercise or post-vesting termination behavior among its employee population. For options granted to non-employees, the Company utilizes the simplified method also as the basis for the expected term assumption. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The expected dividend yield is assumed to be zero because the Company has never paid dividends and has no current plans to pay any dividends on its common stock. The Company recognizes forfeitures as they occur as allowed by ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”).

There are significant judgments and estimates inherent in the determination of the fair value of the Company’s common stock. These estimates and assumptions include a number of objective and subjective factors, including external market conditions, the prices at which the Company sold shares of preferred stock, the superior rights and preferences of securities senior to its common stock at the time of a liquidity event, such as the IPO or a sale, and the likelihood of such an event.

The Company expenses the fair value of its share-based compensation awards on a straight-line basis over the requisite service period, which is generally the vesting period.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities, which relate primarily to the carrying amount of the Company’s its net operating loss carryforwards, are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax expense or benefit is the result of changes in the deferred tax assets and liabilities. Valuation allowances are established when necessary to reduce deferred tax assets where, based upon the available evidence, the Company concludes that it is more-likely-than-not that the deferred tax assets will not be realized. In evaluating its ability to recover deferred tax assets, the Company considers all available positive and negative evidence, including its operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction-by-jurisdiction basis. Because of the uncertainty of the realization of deferred tax assets, the Company has recorded a full valuation allowance against its deferred tax assets as of December 31, 2022 and 2021.

Reserves are provided for tax benefits for which realization is uncertain. Such benefits are only recognized when the underlying tax position is considered more-likely-than-not to be sustained on examination by a taxing authority, assuming they possess full knowledge of the position and facts. Interest and penalties related to uncertain tax positions are recognized in the provision of income taxes; however, the Company currently has no interest or penalties related to uncertain income tax benefits.

Comprehensive Income (Loss)

Comprehensive income (loss) is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) includes net income (loss) and the change in accumulated other comprehensive income (loss) for the period. Accumulated other comprehensive income (loss) consisted entirely of unrealized gains and losses on available-for-sale marketable securities at December 31, 2022 and 2021.

Net Loss per Share

Basic loss per common share is determined by dividing loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted loss per share is computed by dividing the loss attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period. The treasury stock method is used to determine the dilutive effect of the Company's stock option grants.

Recently Issued Accounting Pronouncements

The Company qualifies as an emerging growth company (“EGC”) as defined under the Jumpstart Our Business Startups Act (the “JOBS Act”). Using exemptions provided under the JOBS Act provided to EGCs, the Company has elected to defer compliance with new or revised financial accounting standards until it is required to comply with such standards, which is generally consistent with required adoption dates of private companies.

The Company considers the applicability and impact of all ASUs issued by the FASB. All other ASUs issued subsequent to the filing of the Company’s Annual Report were assessed and determined to be either inapplicable or not expected to have a material impact on the Company’s financial position or results of operations.

Common Stock (Details)	12 Months Ended
Common Stock (Details)	Dec. 31, 2022 Vote $ / shares shares	Dec. 31, 2021 $ / shares shares	May 13, 2019 $ / shares shares
Common Stock.
Common stock, number of shares authorized	100,000,000	100,000,000	100,000,000
Common stock, par value per share \| $ / shares	$ 0.001	$ 0.001	$ 0.001
Common stock, shares issued	27,774,536	27,680,997
Common stock, shares outstanding	27,774,536	27,680,997	15,560,569
Number of votes per share \| Vote	1
Dividends declared \| $ / shares	$ 0

Nature of the Business and Basis of Presentation - Public Offerings and Common Stock (Details) $ / shares in Units, $ in Millions	Dec. 02, 2019 USD ($) $ / shares shares	Nov. 19, 2019 $ / shares shares	May 13, 2019 USD ($) $ / shares shares	May 03, 2019	Dec. 31, 2022 $ / shares shares	Dec. 31, 2021 $ / shares shares
Nature of the Business
Reverse stock split ratio				0.1245
Issuance of common stock (in shares) \| shares	611,578	4,077,192
Share price \| $ / shares	$ 36.75	$ 36.75
Proceeds from issuance of preferred stock, net of issuance costs \| $	$ 160.9
Underwriting discounts and commissions \| $	10.3
Offering expenses \| $	$ 1.0
Common stock, shares outstanding \| shares			15,560,569		27,774,536	27,680,997
Preferred stock, shares outstanding \| shares			0		0	0
Common stock, number of shares authorized \| shares			100,000,000		100,000,000	100,000,000
Common stock, par value per share \| $ / shares			$ 0.001		$ 0.001	$ 0.001
Preferred stock, number of shares authorized \| shares			10,000,000		10,000,000	10,000,000
Preferred stock, par value per share \| $ / shares			$ 0.001		$ 0.001	$ 0.001
IPO
Nature of the Business
Issuance of common stock (in shares) \| shares			5,750,000
Share price \| $ / shares			$ 15.00
Proceeds from issuance of shares, net \| $			$ 77.0
Underwriting discounts and commissions \| $			6.0
Offering expenses \| $			$ 3.4

Summary of Significant Accounting Policies - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	May 13, 2019
Preferred Stock
Preferred stock, shares outstanding	0	0	0
Impairment of Long Lived Assets
Impairment loss recognized	$ 0	$ 0
Income Taxes
Uncertain income tax benefits, interest or penalties	$ 0

Fair Value Measurements - (Details) - USD ($)	12 Months Ended
Fair Value Measurements - (Details) - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Fair value of the Company's financial assets
Marketable Securities	$ 133,281,000	$ 207,254,000
Assets transferred into level 3	0	0
Assets transferred out of level 3	0	0
Assets transferred from level 1 to level 2	0	0
Assets transferred from level 2 to level 1	0	0
Corporate bonds
Fair value of the Company's financial assets
Marketable Securities	131,706,000	207,254,000
U.S. Government agencies
Fair value of the Company's financial assets
Marketable Securities	1,575,000
Fair Value
Fair value of the Company's financial assets
Total financial assets	140,063,000	209,934,000
Fair Value \| Quoted Prices in Active Markets (Level 1)
Fair value of the Company's financial assets
Total financial assets	6,782,000	2,680,000
Fair Value \| Significant Other Observable Inputs (Level 2)
Fair value of the Company's financial assets
Total financial assets	133,281,000	207,254,000
Money market funds (cash equivalents) \| Fair Value
Fair value of the Company's financial assets
Money market funds (cash equivalents)	6,782,000	2,680,000
Money market funds (cash equivalents) \| Fair Value \| Quoted Prices in Active Markets (Level 1)
Fair value of the Company's financial assets
Money market funds (cash equivalents)	6,782,000	2,680,000
Agency bonds \| Fair Value
Fair value of the Company's financial assets
Marketable Securities	1,575,000
Agency bonds \| Fair Value \| Significant Other Observable Inputs (Level 2)
Fair value of the Company's financial assets
Marketable Securities	1,575,000
Corporate bonds \| Fair Value
Fair value of the Company's financial assets
Marketable Securities	131,706,000	207,254,000
Corporate bonds \| Fair Value \| Significant Other Observable Inputs (Level 2)
Fair value of the Company's financial assets
Marketable Securities	$ 131,706,000	$ 207,254,000

Common Stock

12 Months Ended

Dec. 31, 2022

Common Stock.

Common Stock

11. Common Stock

As of December 31, 2022, the Company’s Certificate of Incorporation, as amended and restated, authorized the Company to issue 100,000,000 shares of $0.001 par value common stock, of which 27,774,536 were issued and outstanding.

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, as may be declared by the board of directors, if any, subject to the preferential dividend rights of any preferred stock. No dividends have been declared or paid by the Company through December 31, 2022.

In the event of any liquidation or dissolution of the Company, the holders of common stock are entitled to the remaining assets of the Company legally available for distribution after the payment of the full liquidation preference for any preferred stock.

Marketable Securities

12 Months Ended

Dec. 31, 2022

Marketable Securities

Marketable Securities

3. Marketable Securities

Marketable securities consist of the following:


	December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
(in thousands)	Cost		Gain		Loss		Fair Value
Corporate bonds	$	133,163	$	—	$	(1,457)	$	131,706
U.S. Government agencies		1,612		—		(37)		1,575
Total	$	134,775	$	—	$	(1,494)	$	133,281


	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
(in thousands)	Cost		Gain		Loss		Fair Value
Corporate bonds	$	207,917	$	3	$	(666)	$	207,254
Total	$	207,917	$	3	$	(666)	$	207,254

The Company uses the specific identification method when calculating realized gains and losses. For the years ended December 31, 2022 and 2021, respectively, the Company recorded $9 thousand and $57 thousand in realized gains on available-for-sale securities, which is included in other income on the statements of operations and comprehensive loss.

The Company reviewed all investments which were in a loss position at the respective balance sheet dates, as well as the remainder of the portfolio. As of December 31, 2022, the Company had investments with a total fair market value of $133.3 million in an unrealized loss position, of which $91.8 million were in a continuous unrealized loss position for more than twelve months. The Company analyzed the unrealized losses and determined that market conditions were the primary factor driving these changes, and such unrealized losses are temporary as the Company anticipates a full recovery of the amortized cost basis of these securities at maturity. After analyzing the securities in an unrealized loss position, the portion of these losses that relate to changes in credit quality is insignificant. The Company does not intend to sell these securities, nor is it more likely than not that the Company will be required to sell them prior to the end of their contractual terms. Furthermore, the Company does not believe that these securities expose the Company to undue market risk or counterparty credit risk.

The following table summarizes maturities of the Company’s investments available-for-sale as of December 31, 2022:


	December 31, 2022
			Fair
(in thousands)	Cost		Value
Maturities:
Within 1 year	$	105,930	$	104,660
Between 1 to 2 years		28,845		28,621
Total investments available-for-sale	$	134,775	$	133,281

The Company has classified all of its investments available-for-sale, including those with maturities beyond one year, as current assets on the accompanying balance sheets based on the highly liquid nature of these investment securities and because these investment securities are considered available for use in current operations.

The Company has elected to report interest receivable from its marketable securities with prepaid expenses and other current assets on its balance sheet. Interest receivable included in prepaid expenses and other current assets totaled $0.7 million and $1.0 million as of December 31, 2022 and 2021, respectively.

Preferred Stock

12 Months Ended

Dec. 31, 2022

Preferred Stock.

Preferred Stock

10. Preferred Stock

As of December 31, 2022, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue 10,000,000 shares of $0.001 par value preferred stock, and there were no shares of preferred stock issued or outstanding. The Company can fix the price, rights, preferences, privileges and restrictions of the preferred stock without any further vote or action by its stockholders.

Nature of the Business and Basis of Presentation - Liquidity (Details)	12 Months Ended
	Dec. 31, 2022 segment
Nature of the Business and Basis of Presentation
Number of operating segment	1

Summary of Significant Accounting Policies - Property and Equipment and Leases (Details)	12 Months Ended
	Dec. 31, 2022
Property, plant and equipment
Lease, Practical Expedients, Package [true false]	true
Lease, Practical Expedient, Use of Hindsight [true false]	false
Computer equipment
Property, plant and equipment
Property, Plant and Equipment, Estimated Useful Lives	P3Y
Equipment
Property, plant and equipment
Property, Plant and Equipment, Estimated Useful Lives	P5Y
Furniture and fixtures
Property, plant and equipment
Property, Plant and Equipment, Estimated Useful Lives	P7Y

Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2022

Stock-Based Compensation

Summary of stock option activity


	Options Outstanding and Exercisable
				Weighted
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
	Number of	Exercise		Contractual	Value⁽¹⁾
	Shares	Price		Life (Years)	(in thousands)
Outstanding as of January 1, 2021	3,112,376	$	16.95	8.2	$	10,810
Granted	2,020,718	$	10.89	—		—
Exercised	(105,731)	$	1.62	—		—
Forfeitures	(481,569)	$	21.33	—		—
Outstanding as of December 31, 2021	4,545,794	$	14.15	8.1	$	2,860
Granted	1,739,350	$	5.34	—		—
Exercised	(50,420)	$	1.32	—		—
Forfeitures	(972,545)	$	13.77	—		—
Outstanding as of December 31, 2022	5,262,179	$	11.44	7.6	$	115
Exercisable as of December 31, 2022	2,790,206	$	12.97	6.6	$	115

(1)

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that were in the money at December 31, 2022 and 2021.

Summary of stock based compensation expense recorded


	December 31,

(in thousands)	2022		2021
Research and development	$	3,056	$	4,081
General and administrative		6,452		6,207
Total stock-based compensation expense	$	9,508	$	10,288

Summary of assumptions used in the Black Scholes option pricing model for stock options granted


	Year Ended
	December 31,
	2022		2021
Expected term	5.5 - 6.1	years	5.3 - 6.1	years
Expected volatility	79.7 - 81.4	%	79.7	%
Risk free interest rate	1.8 - 4.2	%	0.8 - 1.4	%
Expected dividend yield	—	%	—	%

Property and Equipment, Net

12 Months Ended

Dec. 31, 2022

Property and Equipment, Net

Property and Equipment, Net

5. Property and Equipment, Net

Property and equipment consist of the following:


	December 31,		December 31,
(in thousands)	2022		2021

Research equipment	$	17,244	$	16,482
Leasehold improvements		9,336		8,566
Computer equipment		908		1,143
Furniture and fixtures		186		167
Construction in progress		853		371
Property and equipment, gross		28,527		26,729
Less: accumulated depreciation and amortization		(16,630)		(12,737)
Property and equipment, net	$	11,897	$	13,992

Construction in progress at December 31, 2022 and 2021 consists of the costs incurred for research equipment and for the build-out of additional lab and office space.

Depreciation and amortization expense was $4.1 million and $4.3 million for the years ended December 31, 2022 and 2021, respectively.

STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Cash flows from operating activities:
Net loss	$ (74,733)	$ (69,389)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	4,124	4,177
Amortization of premiums and discounts on marketable securities	3,047	3,019
Stock-based compensation	9,508	10,288
Noncash operating lease expense	356
Loss on disposal of property and equipment	87
Changes in operating assets and liabilities:
Prepaid expenses and other assets	2,038	(4,928)
Accounts payable	2,328	(1,959)
Accrued liabilities and other liabilities	(641)	(178)
Other long-term liabilities		1,687
Net cash used in operating activities	(53,886)	(57,283)
Cash flows from investing activities:
Sales and maturities of marketable securities	104,739	195,438
Purchases of marketable securities	(34,644)	(156,477)
Purchases of property and equipment	(2,116)	(2,360)
Net cash provided by investing activities	67,979	36,601
Cash flows from financing activities:
Proceeds from exercise of stock options	66	208
Proceeds from shares issued under ESPP	134
Payments of the term loan		(3,473)
Net cash provided by (used in) financing activities	200	(3,265)
Net increase (decrease) in cash and cash equivalents	14,293	(23,947)
Cash and cash equivalents - beginning of period	12,337	36,284
Cash and cash equivalents - end of period	26,630	12,337
Supplemental disclosures of cash flow information:
Cash paid for interest	90	$ 162
Supplemental disclosures of noncash investing and financing activities:
Right-o-use assets obtained in exchange for operating lease liabilities	6,047
Recognition of initial lease liabilities	$ 7,549

Marketable Securities - (Details) - USD ($) $ in Thousands	12 Months Ended
Marketable Securities - (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Investments
Amortized Cost	$ 134,775	$ 207,917
Gross Unrealized Gain		3
Gross Unrealized Loss	(1,494)	(666)
Estimated Fair Value	133,281	207,254
Unrealized losses in a continuous loss position for more than twelve consecutive months	91,800
Gross realized gains	9	57
Interest income	700	1,000
Cost Maturities:
Within 1 year	105,930
Between 1 to 2 years	28,845
Total investments available for sale	134,775
Fair Value Maturities:
Within 1 year	104,660
Between 1 to 2 years	28,621
Total investments available for sale	133,281
Corporate bonds
Investments
Amortized Cost	133,163	207,917
Gross Unrealized Gain		3
Gross Unrealized Loss	(1,457)	(666)
Estimated Fair Value	131,706	$ 207,254
U.S. Government agencies
Investments
Amortized Cost	1,612
Gross Unrealized Loss	(37)
Estimated Fair Value	$ 1,575

BALANCE SHEETS - (Parenthetical) - $ / shares	Dec. 31, 2022	Dec. 31, 2021	May 13, 2019
BALANCE SHEETS
Preferred stock, par value per share	$ 0.001	$ 0.001	$ 0.001
Preferred stock, number of shares authorized	10,000,000	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0	0
Common stock, par value per share	$ 0.001	$ 0.001	$ 0.001
Common stock, number of shares authorized	100,000,000	100,000,000	100,000,000
Common stock, shares issued	27,774,536	27,680,997
Common stock, shares outstanding	27,774,536	27,680,997	15,560,569

Employee Benefit Plan

12 Months Ended

Dec. 31, 2022

Employee Benefit Plan

Employee Benefit Plan

15. Employee Benefit Plan

The Company sponsors a 401(k) plan which stipulates that eligible employees can elect to contribute to the 401(k) plan, subject to certain limitations, up to the lesser of the statutory maximum or 100% of eligible compensation on a pre-tax basis. For the year ended December 31, 2022, the Company made matching contributions of $0.3 million. No contributions were made for year ended December 31, 2021.

- Definition

The entire disclosure for retirement benefits.

+ References

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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Leases - Other Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Leases
Lease, Practical Expedients, Package [true false]	true
Lease, Practical Expedient, Use of Hindsight [true false]	false
Lease extension period	5 years
Lessee, Operating Lease, Existence of Option to Extend [true false]	true
Operating lease expense	$ 1.0
Operating cash flows used for operating leases	$ 0.9
Weighted=average remaining lease term	7 years 3 months
Weighted average discount rate (as a percent)	7.46%
Rent expenses operating leases		$ 1.0

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2022

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

Standards Codification (‘‘ASC’’) and Accounting Standards Update (‘‘ASU’’) of the Financial Accounting Standards Board (‘‘FASB’’).

Use of Estimates

Cash and Cash Equivalents

Restricted Cash

Marketable Securities

Concentration of Credit Risk

Fair Value of Financial Instruments

Level 1—Quoted market prices in active markets for identical assets or liabilities.

Level 2—Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted market prices, interest rates and yield curves.

Property and Equipment, Net

Estimated useful lives for property and equipment are as follows:


		Estimated Useful Life
Computers and peripherals		3 years
Equipment		5 years
Furniture and fixtures		7 years
Leasehold improvements		Lesser of estimated useful life or remaining lease term

be the rate required for a similar investment of like risk. No impairment losses were recognized during the years ended December 31, 2022 or 2021.

Leases

Preferred Stock

The Company did not have any outstanding preferred stock as of December 31, 2022 and 2021.

Research and Development Costs, Including Clinical Trial Accruals

Patent Costs

Stock-Based Compensation

The Company expenses the fair value of its share-based compensation awards on a straight-line basis over the requisite service period, which is generally the vesting period.

Income Taxes

Comprehensive Income (Loss)

Net Loss per Share

Recently Issued Accounting Pronouncements

Income Taxes - Reconciliation (Details)	12 Months Ended
Income Taxes - Reconciliation (Details)	Dec. 31, 2022	Dec. 31, 2021
Reconciliation of federal statutory income tax rate to the Company's effective income tax rate
Expected income tax benefit at the federal statutory rate (as a percent)	21.00%	21.00%
State taxes, net of federal benefit (as a percent)	6.50%	6.50%
Research and development credit, net (as a percent)	3.40%	3.20%
Non-deductible items (as a percent)	(1.70%)	(1.80%)
Prior year provision to return adjustments (as a percent)	(0.10%)	(0.40%)
Change in valuation allowance (as a percent)	(29.10%)	(28.50%)

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2022	Feb. 24, 2023	Jun. 30, 2022
Cover Abstract
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2022
Document Transition Report	false
Entity File Number	001-38905
Entity Registrant Name	NextCure, Inc.
Entity Central Index Key	0001661059
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-5231247
Entity Address, Address Line One	9000 Virginia Manor Road, Suite 200
Entity Address, City or Town	Beltsville
Entity Address, State or Province	MD
Entity Address, Postal Zip Code	20705
City Area Code	240
Local Phone Number	399-4900
Title of 12(b) Security	Common Stock, $0.001 par value per share
Trading Symbol	NXTC
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Public Float			$ 115.5
Entity Common Stock, Shares Outstanding		27,774,536
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Amendment Flag	false
Auditor Name	Ernst & Young LLP
Auditor Firm ID	42
Auditor Location	Baltimore, MD

STATEMENTS OF STOCKHOLDERS EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Total
Balance at the beginning at Dec. 31, 2020	$ 28	$ 410,551	$ 779	$ (117,637)	$ 293,721
Balance at the beginning (in shares) at Dec. 31, 2020	27,568,802
Increase (Decrease) in Stockholders' Deficit
Stock based compensation		10,288			10,288
Exercise of stock options		208			208
Exercise of stock options (in shares)	112,195
Unrealized gain (loss) on marketable securities, net of tax $0			(1,442)		(1,442)
Net loss				(69,389)	(69,389)
Balance at the end at Dec. 31, 2021	$ 28	421,047	(663)	(187,026)	$ 233,386
Balance at the end (in shares) at Dec. 31, 2021	27,680,997				27,680,997
Increase (Decrease) in Stockholders' Deficit
Stock based compensation		9,508			$ 9,508
Exercise of stock options		66			66
Exercise of stock options (in shares)	50,420
Issuance of shares under ESPP		134			134
Issuance of shares under ESPP (in shares)	43,119
Unrealized gain (loss) on marketable securities, net of tax $0			(831)		(831)
Net loss				(74,733)	(74,733)
Balance at the end at Dec. 31, 2022	$ 28	$ 430,755	$ (1,494)	$ (261,759)	$ 167,530
Balance at the end (in shares) at Dec. 31, 2022	27,774,536				27,774,536

Preferred Stock (Details) - $ / shares	Dec. 31, 2022	Dec. 31, 2021	May 13, 2019
Preferred Stock.
Preferred stock, number of shares authorized	10,000,000	10,000,000	10,000,000
Preferred stock, par value per share	$ 0.001	$ 0.001	$ 0.001
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0	0

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2022

Summary of Significant Accounting Policies

Summary of estimated useful lives for property and equipment


		Estimated Useful Life
Computers and peripherals		3 years
Equipment		5 years
Furniture and fixtures		7 years
Leasehold improvements		Lesser of estimated useful life or remaining lease term

Term Loan - Other (Details) - USD ($)	Dec. 31, 2022	Jan. 31, 2019	Apr. 30, 2016
Term Loan
Face amount	$ 5,000,000.0	$ 5,000,000.0	$ 1,000,000.0
Outstanding balance	$ 0

- Definition

Amount, excluding unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands	1 Months Ended
	Aug. 31, 2021	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Jan. 31, 2019	Apr. 30, 2016
Restricted Cash
Repayment of principal debt balance	$ 2,400
Face amount		$ 5,000			$ 5,000	$ 1,000
Restricted cash required reserve		0
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract]
Cash and cash equivalents		26,630	$ 12,337
Total		$ 26,630	$ 12,337	$ 36,284

Leases

12 Months Ended

Dec. 31, 2022

Leases

Leases

7. Leases

The Company's lease portfolio consists of office space and laboratory facilities. All of the Company's leases are classified as operating leases. The terms of the Company's lease agreements that have commenced currently extend through March 2030 and provide the Company with an option for a five-year extension. Under the terms of the leases, the Company pays base annual rent subject to fixed dollar increases each year and other normal operating expenses such as taxes, repairs, and maintenance. The Company evaluates renewal options at lease inception and on an ongoing basis and considers renewal options that the Company is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities in accordance with ASC 842. The leases do not require variable lease payments or residual value guarantees and do not contain restrictive covenants.

The leases do not provide an implicit rate, therefore the Company uses its incremental borrowing rate as the discount rate when measuring the operating lease liability. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease.

Operating lease expense was $1.0 million for the year ended December 31, 2022. Operating cash flows used for operating leases during the year ended December 31, 2022 were $0.9 million. As of December 31, 2022, the weighted-average remaining lease term was 7.25 years, and the weighted average discount rate was 7.46%.

Rent expense under operating leases was $1.0 million for the year ended December 31, 2021.

As of December 31, 2022, the maturities of the Company’s operating lease liabilities were as follows (in thousands), which are included in Accrued liabilities and other liabilities and Lease liabilities, long term in the accompanying balance sheet:



Year Ending December 31,
2023	$	1,032
2024		1,127
2025		1,214
2026		1,355
2027		1,396
Thereafter		3,295
Total future minimum payments		9,419
Less: present value discount		(2,296)
Present value of lease liabilities	$	7,123

Leases (Tables)

12 Months Ended

Dec. 31, 2022

Leases

Schedule of future minimum lease payments under non-cancellable leases



Year Ending December 31,
2023	$	1,032
2024		1,127
2025		1,214
2026		1,355
2027		1,396
Thereafter		3,295
Total future minimum payments		9,419
Less: present value discount		(2,296)
Present value of lease liabilities	$	7,123

Property and Equipment, Net - (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Property and Equipment, Net
Property and equipment, gross	$ 28,527	$ 26,729
Less: accumulated depreciation and amortization	(16,630)	(12,737)
Property and equipment, net	11,897	13,992
Depreciation and amortization expense	4,100	4,300
Research equipment
Property and Equipment, Net
Property and equipment, gross	17,244	16,482
Leasehold improvements
Property and Equipment, Net
Property and equipment, gross	9,336	8,566
Computer equipment
Property and Equipment, Net
Property and equipment, gross	908	1,143
Furniture and fixtures
Property and Equipment, Net
Property and equipment, gross	186	167
Construction in progress
Property and Equipment, Net
Property and equipment, gross	$ 853	$ 371

Employee Benefit Plan (Details) - USD ($) $ in Millions	12 Months Ended
Employee Benefit Plan (Details) - USD ($) $ in Millions	Dec. 31, 2022	Dec. 31, 2021
Employee Benefit Plan
Employer contributions amount	$ 0.3	$ 0.0

Nature of the Business and Basis of Presentation

12 Months Ended

Dec. 31, 2022

Nature of the Business and Basis of Presentation

Nature of the Business and Basis of Presentation

NEXTCURE, INC.

NOTES TO FINANCIAL STATEMENTS

1. Nature of the Business and Basis of Presentation

Organization

NextCure, Inc. (“NextCure” or the “Company”) was incorporated in Delaware in September 2015 and is headquartered in Beltsville, Maryland. The Company is a clinical-stage biopharmaceutical company committed to discovering and developing novel, first-in-class immunomedicines to treat cancer and other immune-related diseases by restoring normal immune function. Through its proprietary Functional, Integrated, NextCure Discovery in Immuno-Oncology (“FIND-IO”) platform, the Company studies various immune cells in order to discover and understand targets and structural components of immune cells and their functional impact in order to develop immunomedicines. Since inception, the Company has devoted substantially all of its efforts and financial resources to organizing and staffing the Company, identifying business development opportunities, raising capital, securing intellectual property rights related to the Company’s product candidates, building and optimizing the Company’s manufacturing capabilities and conducting discovery, research and development activities for the Company’s product candidates, discovery programs and its FIND-IO platform.

Public Offerings of Common Stock

On May 13, 2019, the Company closed its initial public offering (“IPO”), in which the Company issued and sold 5,750,000 shares of common stock at a public offering price of $15.00 per share, for net proceeds to the Company of approximately $77.0 million after deducting underwriting discounts and commissions of $6.0 million and offering expenses of $3.4 million.

In preparation for the IPO, on May 3, 2019, the Company effected a 1-for-8.0338 reverse stock split of its issued and outstanding common stock. The par value and authorized shares of common stock were not adjusted as a result of the reverse stock split. All of the share and per share information presented in the accompanying financial statements has been adjusted to reflect the reverse common stock split on a retroactive basis for all periods and as of all dates presented.

Upon the closing of the IPO, all of the outstanding shares of the Company’s convertible preferred stock automatically converted into 15,560,569 shares of common stock at the applicable conversion ratio then in effect. Subsequent to the closing of the IPO, there were no shares of preferred stock outstanding. Additionally, the Company’s certificate of incorporation was amended and restated to provide for 100,000,000 authorized shares of common stock with a par value of $0.001 per share and 10,000,000 authorized shares of preferred stock with a par value of $0.001 per share.

On November 19, 2019, the Company completed an underwritten public offering, in which the Company issued and sold 4,077,192 shares of common stock at a public offering price of $36.75 per share. On December 2, 2019, the underwriters exercised in full their option to purchase an additional 611,578 shares of common stock at the public offering price of $36.75, for total net proceeds to the Company of $160.9 million after deducting underwriting discounts and commissions of $10.3 million and offering expenses of $1.0 million.

Liquidity

The Company has not generated any revenue to date from product sales and does not expect to generate any revenues from product sales in the foreseeable future. Through December 2022, the Company has funded its operations primarily with proceeds from public offerings of its common stock, private placements of its preferred stock and upfront fees received under the Company’s former agreement with Eli Lilly and Company. The Company expects to incur additional operating losses and negative operating cash flows for the foreseeable future.

As of the issuance date of the financial statements for the year ended December 31, 2022, the Company expects that its cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements to mid-2025. The future viability of the Company beyond that date may depend on its ability to raise additional capital to finance its operations.

The Company plans to seek additional funding through public or private equity offerings, debt financings, marketing and distribution arrangements, other collaborations, strategic alliances, licensing arrangements or other methods. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain funding, the Company could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its business prospects.

Although management continues to pursue these funding plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company, if at all, to fund continuing operations past two years from the issuance date of these financial statements.

Risks and Uncertainties

The Company is subject to risks common to early-stage companies in the biotechnology industry including, but not limited to: having a limited operating history and no products approved for commercial sale; having a history of significant losses; its need to obtain additional financing; dependence on its ability to advance its current and future product candidates through clinical trials, marketing approval and commercialization; the unproven approach to the discovery and development of product candidates based on the Company’s FIND-IO platform; the lengthy and expensive nature and uncertain outcomes of the clinical development process; the lengthy, time-consuming and unpredictable nature of the regulatory approval process; the results of preclinical studies and early-stage clinical trials that may not be predictive of future results; dependence on its key personnel; its limited manufacturing experience as an organization and with its manufacturing facility; risks related to patent protection and the Company’s pending patent applications; dependence on third-party collaborators for the discovery, development and commercialization of current and future product candidates; and significant competition from other biotechnology and pharmaceutical companies. Pursuit of the Company’s business efforts will require significant amounts of additional capital, adequate personnel, infrastructure and extensive compliance-reporting capabilities. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

COVID-19

The impact of the COVID-19 pandemic (including the impact of emerging variant strains of the COVID-19 virus) on the Company’s business and financial performance is uncertain and depends on various factors, including the scope and duration of the pandemic, the efficacy and global distribution of vaccines, government restrictions and other actions, including relief measures, implemented to address the impact of the pandemic, and resulting impacts on the financial markets and overall economy. The imposition of “lockdown,” “social distancing” and “shelter in place” directives and other restrictions on business operations, travel and gatherings by state and federal governments in the United States, as well as governments in other regions of the world in response to the COVID-19 pandemic, has placed significant strain on the Company’s clinical trial sites, has raised concerns around monitoring patient safety, and has caused enrollment to slow in the Company’s clinical trials. Any rise of COVID-19 infection rates, especially in the United States, could continue to negatively affect enrollment going forward. The Company continues to closely monitor the COVID-19 situation and any potential impact to the Company’s planned activities.

Segment and Geographic Information

Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The chief operating decision maker views the operations and manage the business in one operating segment that operates exclusively in the United States.

Accrued Liabilities and Other Liabilities (Tables)

12 Months Ended

Dec. 31, 2022

Accrued Liabilities and Other Liabilities

Summary of accrued liabilities and other liabilities


	December 31,		December 31,
(in thousands)	2022		2021
Payroll and related benefits	$	1,639	$	1,751
Clinical trial costs		1,531		727
Sponsored research		417		1,315
Lease liabilities, current portion		518		—
Operating expenses		647		656
Other		105		217
Total accrued liabilities and other liabilities	$	4,857	$	4,666

Stock-Based Compensation - Assumptions (Details)	12 Months Ended
Stock-Based Compensation - Assumptions (Details)	Dec. 31, 2022	Dec. 31, 2021
Fair value assumptions
Expected volatility		79.70%
Minimum
Fair value assumptions
Expected term	5 years 6 months	5 years 3 months 18 days
Expected volatility	79.70%
Risk free interest rate	1.80%	0.80%
Maximum
Fair value assumptions
Expected term	6 years 1 month 6 days	6 years 1 month 6 days
Expected volatility	81.40%
Risk free interest rate	4.20%	1.40%

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Taxes

Summary of reconciliation of federal statutory income tax rate to the Company's effective income tax rate


	December 31,
	2022		2021
Expected income tax benefit at the federal statutory rate	21.0	%	21.0	%
State taxes, net of federal benefit	6.5		6.5
Research and development credit, net	3.4		3.2
Non-deductible items	(1.7)		(1.8)
Prior year provision to return adjustments	(0.1)		(0.4)
Change in valuation allowance	(29.1)		(28.5)
Total	—	%	—	%

Summary of components of deferred tax assets


	December 31,
(in thousands)		2022		2021
Deferred tax assets:
Federal and state net operating loss carryforwards	$	49,789	$	44,451
Research and development tax credits		11,395		8,862
Capitalized R&D Costs		12,424		—
Operating lease liabilities		1,960		—
Share-based compensation		4,389		3,184
Accruals and other		1,305		1,291
Gross deferred tax assets		81,262		57,788
Less: valuation allowance		(79,724)		(57,705)
Total deferred tax assets	$	1,538	$	83
Deferred tax liabilities:
Depreciation and amortization	$	—	$	(83)
Operating lease assets		(1,538)		—
Gross deferred tax liabilities	$	(1,538)	$	(83)
Net deferred tax assets	$	—	$	—

Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

Stock-Based Compensation

Stock-Based Compensation

12. Stock-Based Compensation

Employee Equity Plans

The NextCure, Inc. 2015 Omnibus Incentive Plan (the “2015 Plan”) was adopted in December 2015 and provides for the grant of awards of stock options, restricted stock awards, unrestricted stock awards and restricted stock units to employees, consultants and directors of the Company. The 2015 Plan is administered by the board of directors or, at the discretion of the board of directors, by a committee of the board of directors.

On May 3, 2019, the Company’s stockholders approved the NextCure, Inc. 2019 Omnibus Incentive Plan (as amended, the “2019 Plan”), which became effective on May 8, 2019, the date on which the Company’s Registration Statement on Form S-1 (Reg. No. 333-230837) was declared effective (the “Effective Date”). The Company’s board of directors (the “Board”) determined not to make additional awards under the 2015 Plan following the effectiveness of the 2019 Plan. The 2019 Plan provides for the grant of awards of stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, unrestricted stock, dividend equivalent rights, other equity-based awards and

cash bonus awards to the Company’s officers, employees, non-employee directors and other key persons (including consultants). The number of shares of common stock reserved for issuance under the 2019 Plan is 2,900,000 plus the number of shares of stock related to awards outstanding under the 2015 Plan that subsequently terminate by expiration or forfeiture, cancellation or otherwise without the issuance of such shares. The number of shares reserved for issuance under the 2019 Plan will automatically increase each January 1^st during the term of the 2019 Plan by 4% of the number of shares of the Company’s common stock outstanding on December 31^st of the preceding calendar year or such lesser number of shares determined by the Board.

As of December 31, 2022, 2,653,867 shares were reserved for future issuance under the 2019 Plan.

Stock options granted under the 2015 Plan and 2019 Plan (together, the “Plans”) to employees generally vest over four years and expire after 10 years.

A summary of stock option activity for awards under the Plans is presented below:


	Options Outstanding and Exercisable
				Weighted
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
	Number of	Exercise		Contractual	Value⁽¹⁾
	Shares	Price		Life (Years)	(in thousands)
Outstanding as of January 1, 2021	3,112,376	$	16.95	8.2	$	10,810
Granted	2,020,718	$	10.89	—		—
Exercised	(105,731)	$	1.62	—		—
Forfeitures	(481,569)	$	21.33	—		—
Outstanding as of December 31, 2021	4,545,794	$	14.15	8.1	$	2,860
Granted	1,739,350	$	5.34	—		—
Exercised	(50,420)	$	1.32	—		—
Forfeitures	(972,545)	$	13.77	—		—
Outstanding as of December 31, 2022	5,262,179	$	11.44	7.6	$	115
Exercisable as of December 31, 2022	2,790,206	$	12.97	6.6	$	115

(1)

The weighted average grant date fair value per share of stock options granted during the years ended December 31, 2022 and 2021 was $3.69 and $7.47 respectively. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2022 and 2021 was $13,000 and $0.5 million, respectively.

The aggregate grant date fair value of stock options and restricted stock vested during the year ended December 31, 2022 and 2021 was approximately $11.0 million and $13.4 million, respectively.

On May 3, 2019, the Company’s stockholders approved the NextCure, Inc. 2019 Employee Stock Purchase Plan (the “ESPP”), which became effective on the Effective Date. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423(b) of the Internal Revenue Code. A total of 240,000 shares of common stock were reserved for issuance under this plan. In addition, the number of shares of common stock that may be issued under the ESPP will automatically increase each January 1^st until expiration of the ESPP, in an amount equal to the lesser of (i) 1% of the number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year, (ii) 480,000 shares of common stock and (iii) a number of shares of common stock determined by the administrator of the ESPP. As of December 31, 2022, 49,583 shares of common stock had been issued pursuant to the ESPP and 741,097 shares were reserved for future issuance thereunder.

Stock-Based Compensation

The Company recorded stock-based compensation expense of $9.5 million and $10.3 million during the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, there was $14.7 million of unrecognized

compensation cost related to unvested stock-based compensation arrangements granted under the Plans. This remaining compensation expense is expected to be recognized over a weighted-average period of 2.6 years as of December 31, 2022.

Stock-based compensation expense recorded as research and development and general and administrative expenses is as follows:


	December 31,

(in thousands)	2022		2021
Research and development	$	3,056	$	4,081
General and administrative		6,452		6,207
Total stock-based compensation expense	$	9,508	$	10,288

The assumptions used in the Black-Scholes option-pricing model for stock options granted were as follows:


	Year Ended
	December 31,
	2022		2021
Expected term	5.5 - 6.1	years	5.3 - 6.1	years
Expected volatility	79.7 - 81.4	%	79.7	%
Risk free interest rate	1.8 - 4.2	%	0.8 - 1.4	%
Expected dividend yield	—	%	—	%

BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 26,630	$ 12,337
Marketable securities	133,281	207,254
Prepaid expenses and other current assets	4,072	8,226
Total current assets	163,983	227,817
Property and equipment, net	11,897	13,992
Right of use assets	5,016
Other assets	3,265	577
Total assets	184,161	242,386
Current liabilities:
Accounts payable	4,270	1,942
Accrued liabilities and other liabilities	4,857	4,666
Total current liabilities	9,127	6,608
Lease liabilities, long term	6,605
Other long-term liabilities	899	2,392
Total liabilities	16,631	9,000
Stockholders' equity
Preferred stock; par value of $0.001 per share; 10,000,000 shares authorized at December 31, 2022 and December 31, 2021, No shares issued and outstanding at December 31, 2022 and December 31, 2021
Common stock, par value of $0.001 per share; 100,000,000 shares authorized at December 31, 2022 and December 31, 2021. 27,774,536 and 27,680,997 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively	28	28
Additional paid-in capital	430,755	421,047
Accumulated other comprehensive loss	(1,494)	(663)
Accumulated deficit	(261,759)	(187,026)
Total stockholders' equity	167,530	233,386
Total liabilities and stockholders' equity	$ 184,161	$ 242,386

Net Loss per Share Attributable to Common Stockholders (Tables)

12 Months Ended

Dec. 31, 2022

Net Loss per Share Attributable to Common Stockholders

Summary of shares excluded from the computation of diluted net loss per share


	December 31,
	2022		2021
Outstanding options to purchase common stock		5,262,179	4,545,794
Total		5,262,179	4,545,794

Stock-Based Compensation - Stock based compensation expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Stock based compensation expense
Total stock-based compensation expense	$ 9,508	$ 10,288
Research and development
Stock based compensation expense
Total stock-based compensation expense	3,056	4,081
General and administrative
Stock based compensation expense
Total stock-based compensation expense	$ 6,452	$ 6,207

Net Loss per Share Attributable to Common Stockholders

12 Months Ended

Dec. 31, 2022

Net Loss per Share Attributable to Common Stockholders

Net Loss per Share Attributable to Common Stockholders

13. Net Loss per Share Attributable to Common Stockholders

The Company’s potential dilutive securities, which include common stock options, have been excluded from the computation of diluted net loss per share as the effect would be anti-dilutive. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at period end, from the computation of diluted net loss per share attributable to common stockholders for the period indicated because including them would have had an anti-dilutive effect:


	December 31,
	2022		2021
Outstanding options to purchase common stock		5,262,179	4,545,794
Total		5,262,179	4,545,794

Leases - Maturities (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Future minimum lease payments
2023	$ 1,032
2024	1,127
2025	1,214
2026	1,355
2027	1,396
Thereafter	3,295
Total future minimum payments	9,419
Less: present value discount	(2,296)
Present value of lease liabilities	$ 7,123

Property and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2022

Property and Equipment, Net

Summary of property and equipment


	December 31,		December 31,
(in thousands)	2022		2021

Research equipment	$	17,244	$	16,482
Leasehold improvements		9,336		8,566
Computer equipment		908		1,143
Furniture and fixtures		186		167
Construction in progress		853		371
Property and equipment, gross		28,527		26,729
Less: accumulated depreciation and amortization		(16,630)		(12,737)
Property and equipment, net	$	11,897	$	13,992

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Operating expenses:
Research and development	$ 54,199	$ 50,192
General and administrative	21,710	20,573
Total operating expenses	75,909	70,765
Loss from operations	(75,909)	(70,765)
Other income, net	1,176	1,376
Net loss	$ (74,733)	$ (69,389)
Net loss per common share
Basic (in dollars per share)	$ (2.69)	$ (2.51)
Diluted (in dollars per share)	$ (2.69)	$ (2.51)
Weighted average shares outstanding
Basic (in shares)	27,744,209	27,615,977
Diluted (in shares)	27,744,209	27,615,977
Comprehensive loss:
Net loss	$ (74,733)	$ (69,389)
Unrealized (loss) on marketable securities	(831)	(1,442)
Total comprehensive loss	$ (75,564)	$ (70,831)

Net Loss per Share Attributable to Common Stockholders - Anti-dilutive effect (Details) - shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Antidilutive Securities
Antidilutive securities excluded from computation of diluted net loss per share	5,262,179	4,545,794
Option to purchase common stock
Antidilutive Securities
Antidilutive securities excluded from computation of diluted net loss per share	5,262,179	4,545,794

Accrued Liabilities and Other Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Accrued Liabilities and Other Liabilities
Payroll and related benefits	$ 1,639	$ 1,751
Clinical trial costs	1,531	727
Sponsored research	417	$ 1,315
Lease liabilities, current portion	$ 518
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Total accrued liabilities and other liabilities	Total accrued liabilities and other liabilities
Operating expenses	$ 647	$ 656
Other	105	217
Total accrued liabilities and other liabilities	$ 4,857	$ 4,666

Income Taxes - Deferred tax assets (Details) - USD ($)	12 Months Ended
Income Taxes - Deferred tax assets (Details) - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Deferred tax assets:
Federal and state net operating loss carryforwards	$ 49,789,000	$ 44,451,000
Research and development tax credits	11,395,000	8,862,000
Capitalized R&D Costs	12,424,000
Operating lease liabilities	1,960,000
Share-based compensation	4,389,000	3,184,000
Accruals and other	1,305,000	1,291,000
Gross deferred tax assets	81,262,000	57,788,000
Less: valuation allowance	(79,724,000)	(57,705,000)
Total deferred tax assets	1,538,000	83,000
Deferred tax liabilities:
Depreciation and amortization		(83,000)
Operating lease assets	(1,538,000)
Gross deferred tax liabilities	(1,538,000)	$ (83,000)
Increase in valuation allowance	21,900,000
Federal net operating loss carryforwards	180,200,000
State net operating loss carryforwards	183,100,000
Federal net operating loss carryforwards that do not expire	157,500,000
Federal research and development tax credit carryforwards	11,300,000
State research and development tax credit carryforwards	100,000
Unrecognized income tax benefits	$ 0