SEC Filing | IN8bio, Inc.

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2023


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

Commission File Number: 001-39692

IN8BIO, INC.

(Exact name of Registrant as specified in its Charter)


Delaware	82-5462585
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

350 5th Avenue, Suite 5330 New York, New York	10118
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (646) 600-6438

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	INAB	The Nasdaq Stock Market LLC

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

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

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

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

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

The number of shares of Registrant’s Common Stock outstanding as of November 6, 2023 was 31,991,130.

Table of Contents


		Page
PART I	FINANCIAL INFORMATION
Item 1.	Condensed Financial Statements (Unaudited)	1
	Condensed Balance Sheets	1
	Condensed Statements of Operations	2
	Condensed Statements of Stockholders’ Equity	3
	Condensed Statements of Cash Flows	4
	Notes to Condensed Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3.	Defaults Upon Senior Securities	68
Item 4.	Mine Safety Disclosures	68
Item 5.	Other Information	68
Item 6.	Exhibits	68
	Signatures

PART I—FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

IN8BIO, INC.

CONDENSED BALANCE SHEETS

(In thousands, except share and per share data)


	September 30,
	2023			December 31,
	(unaudited)			2022
Assets				(Note 2)
Current assets
Cash	$	12,854		$	18,182
Prepaid expenses and other current assets		3,695			4,052
Total Current Assets		16,549			22,234
Non-current assets
Property and equipment, net		3,738			4,397
Construction in progress		145			29
Restricted cash		254			252
Right-of-use assets - finance leases		1,579			1,691
Right-of-use assets - operating leases		3,688			4,181
Other non-current assets		255			255
Total Non-Current Assets		9,659			10,805
Total Assets	$	26,208		$	33,039
Liabilities and Stockholders' Equity
Liabilities
Current liabilities
Accounts payable	$	748		$	2,091
Accrued expenses and other current liabilities		2,440			2,342
Short-term finance lease liability		715			682
Short-term operating lease liability		783			707
Total Current Liabilities		4,686			5,822
Long-term finance lease liability		695			811
Long-term operating lease liability		3,069			3,674
Total Non-Current Liabilities		3,764			4,485
Total Liabilities		8,450			10,307
Stockholders' Equity
Preferred stock, par value $0.0001 per share; 10,000,000 shares authorized at September 30, 2023 and December 31, 2022, respectively. No shares issued and outstanding		—			—
Common stock, par value $0.0001 per share; 490,000,000 shares authorized at September 30, 2023 and December 31, 2022; 31,975,929 and 24,545,157 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		4			3
Additional paid-in capital		101,375			83,941
Accumulated deficit		(83,621	)		(61,212	)
Total Stockholders' Equity		17,758			22,732
Total Liabilities and Stockholders' Equity	$	26,208		$	33,039

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

IN8BIO, INC.

CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Operating expenses:
Research and development	$	3,786		$	4,255		$	12,305		$	10,140
General and administrative		3,383			3,144			10,434			10,583
Total operating expenses		7,169			7,399			22,739			20,723
Other income		—			—			330			—
Loss from operations		(7,169	)		(7,399	)		(22,409	)		(20,723	)
Net loss	$	(7,169	)	$	(7,399	)	$	(22,409	)	$	(20,723	)
Net loss per share – basic and diluted	$	(0.23	)	$	(0.34	)	$	(0.79	)	$	(1.05	)
Weighted-average number of shares used in computing net loss per common share, basic and diluted		31,545,783			21,661,544			28,275,193			19,774,070

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

IN8BIO INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)


	Common Stock				Additional Paid-In		Accumulated			Total
	Shares		Amount		Capital		Deficit			Stockholders' Equity
Balance at December 31, 2021		18,781,242	$	2	$	70,872	$	(32,691	)	$	38,183
Stock option exercises		31,025		—		33		—			33
Stock-based compensation expense		—		—		764		—			764
Net loss		—		—		—		(6,145	)		(6,145	)
Balance at March 31, 2022		18,812,267	$	2	$	71,669	$	(38,836	)	$	32,835
Stock option exercises		26,204		—		28		—			28
Stock-based compensation expense		—		—		884		—			884
Net loss		—		—		—		(7,179	)		(7,179	)
Balance at June 30, 2022		18,838,471	$	2	$	72,581	$	(46,015	)	$	26,568
Issuance of common stock, net of issuance cost		5,663,686		1		9,497		—			9,498
Stock-based compensation expense		—		—		897		—			897
Net loss		—		—		—		(7,399	)		(7,399	)
Balance at September 30, 2022		24,502,157	$	3	$	82,975	$	(53,414	)	$	29,564

Balance at December 31, 2022		24,545,157	$	3	$	83,941	$	(61,212	)	$	22,732
Issuance of common stock, net of issuance cost		415,712		—		722		—			722
Stock-based compensation expense		—		—		859		—			859
Net loss		—		—		—		(7,525	)		(7,525	)
Balance at March 31, 2023		24,960,869	$	3	$	85,522	$	(68,737	)	$	16,788
Issuance of common stock, net of issuance cost		5,645,250		1		11,706		—			11,707
Stock-based compensation expense		—		—		1,019		—			1,019
Net loss		—		—		—		(7,715	)		(7,715	)
Balance at June 30, 2023		30,606,119	$	4	$	98,247	$	(76,452	)	$	21,799
Issuance of common stock, net of issuance cost		1,369,810		—		1,888		—			1,888
Stock-based compensation expense		—		—		1,240		—			1,240
Net loss		—		—		—		(7,169	)		(7,169	)
Balance at September 30, 2023		31,975,929	$	4	$	101,375	$	(83,621	)	$	17,758

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

IN8BIO, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2023			2022
Operating activities
Net loss	$	(22,409	)	$	(20,723	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		725			71
Non-cash stock-based compensation		3,118			2,545
Amortization of finance lease right-of-use assets		656			341
Amortization of operating lease right-of-use assets		493			340
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		357			(48	)
Other non-current assets		—			(73	)
Accounts payable		(1,181	)		710
Accrued expenses and other current liabilities		280			969
Short-term operating lease liabilities		76			45
Long-term operating lease liabilities		(605	)		(349	)
Net cash used in operating activities		(18,490	)		(16,172	)
Investing activities
Purchases of property and equipment		(407	)		(48	)
Construction in progress		(121	)		(2,394	)
Net cash used in investing activities		(528	)		(2,442	)
Financing activities
Proceeds from the issuance of common stock, net of offering costs		14,317			9,498
Principal payments on finance leases		(625	)		(318	)
Exercise of common stock options		—			61
Net cash provided by financing activities		13,692			9,241
Net decrease in cash and restricted cash		(5,326	)		(9,373	)
Cash and restricted cash at beginning of period		18,434			37,272
Cash and restricted cash at end of period	$	13,108		$	27,899

Cash, end of period	$	12,854		$	27,647
Restricted cash, end of period		254			252
Cash and restricted cash, end of period	$	13,108		$	27,899

Supplemental disclosure of non-cash financing and investing activities:
Initial measurement of financing lease right-of-use assets and liabilities	$	536		$	—
Construction in progress in accounts payable and accrued expenses	$	24		$	676
Lease modification of financing lease right-of-use assets and liabilities	$	7		$	—
Initial measurement of operating lease right-of-use assets and liabilities	$	—		$	3,046

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

IN8BIO, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1. ORGANIZATION AND NATURE OF OPERATIONS

Organization and Business

IN8bio, Inc. (the “Company”) is a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of gamma-delta T cell product candidates for solid and liquid tumors. The Company’s lead product candidate, INB-400, is currently in a company-sponsored Phase 2 clinical trial in which autologous genetically modified gamma-delta T cells will be assessed in newly diagnosed glioblastoma (“GBM”) patients at centers across the United States. In addition, the Company has two programs in Phase 1 clinical trials: INB-200, for the treatment of patients with newly diagnosed GBM, and INB-100, for the treatment of patients with hematologic malignancies that are undergoing hematopoietic stem cell transplantation (“HSCT”). In addition, the Company’s DeltEx platform has yielded a broad portfolio of preclinical programs, including INB-300 and INB-500, focused on addressing GBM and other solid and hematological tumor types.

Incysus, Inc. (“Incysus”) was a corporation formed in the State of Delaware on November 23, 2015 and Incysus, Ltd. was incorporated in Bermuda on February 8, 2016. Incysus was the wholly-owned United States subsidiary of Incysus, Ltd. On May 7, 2018, Incysus, Ltd. reincorporated in the United States in a domestication transaction (the “Domestication”) in which Incysus, Ltd. converted into a newly formed Delaware corporation, Incysus Therapeutics, Inc. (“Incysus Therapeutics”). On July 24, 2019, Incysus Therapeutics merged with Incysus. Incysus Therapeutics subsequently changed its name to IN8bio, Inc. in August 2020. Following the Domestication in May 2018 and the merging of Incysus Therapeutics and Incysus in July 2019, the Company does not have any subsidiaries to consolidate. The Company is headquartered in New York, New York.

Going Concern

To date, the Company has funded its operations primarily with proceeds from various public and private offerings of its common and preferred stock. The Company has incurred recurring losses and negative operating cash flows since its inception, including net losses of $22.4 million and $20.7 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, the Company had an accumulated deficit of $83.6 million.

On August 16, 2022, the Company completed an underwritten public offering of 5,394,737 shares of its common stock at a public offering price of $1.90 per share, for net proceeds of approximately $9.0 million, after deducting underwriting discounts, commissions and offering expenses. On August 19, 2022, the underwriter partially exercised their option to purchase an additional 268,949 shares at the public offering price of $1.90 per share, resulting in additional net proceeds of approximately $0.4 million, after deducting underwriting discounts, commissions and offering expenses, increasing the aggregate net proceeds from the offering to approximately $9.4 million.

In November 2022, the Company filed a shelf registration statement on Form S-3 (File No. 333-268288) (the “Shelf Registration Statement”) with the Securities and Exchange Commission (“SEC”), which permits the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $200.0 million of its common stock and preferred stock, various series of debt securities and/or warrants to purchase any of such securities, of which $50.0 million of common stock may be issued and sold pursuant to an at-the-market offering program (“ATM”). The Company entered into a Controlled Equity OfferingSM sales agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor Fitzgerald”) and Truist Securities, Inc. (“Truist”) under which Cantor Fitzgerald and Truist agreed to act as sales agents to sell shares of the Company’s common stock, from time to time, through the ATM program. Under current SEC regulations, if at any time the Company's public float is less than $75.0 million, and for so long as the Company's public float remains less than $75.0 million, the amount the Company can raise through primary public offerings of securities in any 12-month period using shelf registration statements is limited to an aggregate of one-third of the Company's public float, which is referred to as the baby shelf rules. As of September 30, 2023, the Company's calculated public float was less than $75.0 million. During the nine months ended September 30, 2023, the Company sold an aggregate of 7,430,772 shares of common stock under the ATM, resulting in net proceeds of approximately $14.3 million, after deducting fees and expenses.

The Company has not yet generated product sales and as a result has experienced operating losses since inception. The Company expects to incur additional losses in the future as it advances its product candidates through clinical trials, seeks to expand its product candidate portfolio through developing additional product candidates, grows its clinical, regulatory and quality capabilities, and incurs costs associated with operating as a public company, and, based on the Company’s business strategy, its existing cash of $12.9 million as of September 30, 2023 will not be sufficient to fund the Company’s projected operating expenses and capital expenditure requirements beyond May 2024. Accordingly, there is substantial doubt about the Company’s ability to continue to operate as a going concern. To continue to fund the operations of the Company beyond this time period, management has developed plans, which primarily consist of raising additional capital through some combination of public equity offerings, including through ATM offerings, and identifying strategic collaborations, licensing or other arrangements to support development of the Company’s product candidates. There is no

assurance, however, that any additional financing or any revenue-generating collaboration will be available when needed, that management of the Company will be able to obtain financing or enter into a collaboration on terms acceptable to the Company, or that any additional financing or revenue generated through third party collaborations will be sufficient to fund our operations through this time period. If additional capital is not available, the Company will have to significantly delay, scale back or discontinue research and development programs or future commercialization efforts. The actual amount of cash that the Company will need to operate is subject to many factors. The accompanying financial statements have been prepared on the basis that the Company will continue as a going concern and do not include adjustments that might result from the outcome of this uncertainty.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies

The Company’s significant accounting policies, which are disclosed in the audited financial statements for the year ended December 31, 2022 and the notes thereto, are included in the Company’s Annual Report on Form 10-K (the “Annual Report”) that was filed with the Securities and Exchange Commission (“SEC”) on March 30, 2023. Since the date of that filing, there have been no material changes to the Company’s significant accounting policies.

Basis of Presentation

The Company has prepared the accompanying condensed financial statements in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”).

Unaudited Interim Financial Information

The condensed financial statements of the Company included herein have been prepared pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from these condensed financial statements, as is permitted by such rules and regulations. Accordingly, these condensed financial statements should be read in conjunction with the financial statements and notes thereto in the Company's Annual Report. The results for any interim period are not necessarily indicative of results for any future period. In the opinion of the Company’s management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair statement of the results for the interim periods presented have been included.

Use of Estimates

The preparation of condensed financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed financial statements, and the reported amounts of expenses during the reporting periods presented. Such estimates and assumptions are used for, but are not limited to, the accrual of research and development expenses, deferred tax assets and liabilities and related valuation allowance, stock-based compensation, and the useful lives of property and equipment. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to significant concentrations of credit risk consist primarily of cash. All of the Company’s cash is deposited in accounts with major financial institutions. Such deposits are in excess of the federally insured limits.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation and amortization of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets. Significant replacements and improvements are

capitalized, while maintenance and repairs, which do not improve or extend the life of the respective assets, are charged to expense as incurred. The estimated useful lives of the Company’s respective assets are as follows:


			Estimated Useful Life
Furniture			5 years
Machinery and equipment			3-5 years
Software			3 years
Leasehold improvements			The shorter of the useful life of the leasehold improvement or the remaining term of the lease

Costs for capital assets not yet placed into service are capitalized as construction in progress and depreciated and amortized in accordance with the above guidelines once placed into service. Upon retirement or disposal of property and equipment, the cost and related accumulated depreciation and amortization are removed from the balance sheet and any gain or loss is reflected in the statement of operations.

Capitalized Software

The Company capitalizes the application development phase costs of internal use software in accordance with Accounting Standards Codification (“ASC”) 350-40, Intangibles-Goodwill and Other-Internal Use Software. Capitalized costs will be amortized on a straight-line basis over the estimated useful life of the asset upon completion.

Recently Issued Accounting Standards Updates

The Company did not adopt any new accounting guidance during the nine months ended September 30, 2023, that as of the date of this report had a material impact on the condensed financial statements or disclosures. Additionally, there is no pending accounting guidance that the Company expects to have a material impact on the condensed financial statements.

3. PREPAID EXPENSES AND OTHER CURRENT ASSETS

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


	September 30, 2023		December 31, 2022
Prepaid research and development	$	2,303	$	2,562
Prepaid insurance		1,130		1,258
Other		262		232
Total prepaid expenses and other current assets	$	3,695	$	4,052

4. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following (in thousands):


	September 30, 2023			December 31, 2022
Machinery and equipment	$	364		$	358
Furniture and fixtures		370			335
Software		126			126
Leasehold improvements		3,924			3,899
Less accumulated depreciation and amortization		(1,046	)		(321	)
Property and equipment, net	$	3,738		$	4,397

Depreciation and amortization expense was $0.2 million and $33,000 for the three months ended September 30, 2023 and 2022, respectively, and was $0.7 million and $0.1 million for the nine months ended September 30, 2023 and 2022, respectively.

5. CONSTRUCTION IN PROGRESS

Construction in progress consists of the following (in thousands):


	September 30, 2023		December 31, 2022
Furniture	$	—	$	29
Internal use software not yet in service		145		—
Total construction in progress	$	145	$	29

6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following (in thousands):


	September 30, 2023		December 31, 2022
Accrued clinical trials	$	759	$	253
Accrued compensation		1,284		1,460
Accrued legal		78		211
Accrued other		319		418
Total accrued expenses and other current liabilities	$	2,440	$	2,342

7. STOCKHOLDERS' EQUITY

The Company’s authorized capital stock consists of 500,000,000 shares, all with a par value of $0.0001 per share, of which 490,000,000 shares are designated as common stock and 10,000,000 shares are designated as preferred stock. There were no shares of preferred stock outstanding as of September 30, 2023 or December 31, 2022.

8. STOCK-BASED COMPENSATION

2018 Equity Incentive Plan

On May 7, 2018, the Company established and adopted the 2018 Equity Incentive Plan (the “2018 Plan”) providing for the granting of stock awards for employees, directors and consultants to purchase shares of the Company’s common stock. Upon the effectiveness of the 2020 Plan (as defined below), the 2018 Plan was terminated and no further issuances were made under the 2018 Plan, although it continues to govern the terms of any equity grants that remain outstanding under the 2018 Plan.

2020 Equity Incentive Plan

The 2020 Equity Incentive Plan (the “2020 Plan”) was approved by the Board of Directors and the Company’s stockholders and became effective on July 29, 2021. The number of shares initially reserved for issuance under the 2020 Plan was 4,200,000, which automatically increases on January 1 of each year for a period of 10 years, beginning on January 1, 2022 and continuing through January 1, 2031, in an amount equal to 5% of the total number of shares of common stock outstanding on the last day of the immediately preceding year, or a lesser number of shares determined by the Board of Directors no later than the last day of the immediately preceding year. Pursuant to the terms of the 2020 Plan, the number of shares available under the 2020 Plan was increased by 1,227,257 shares effective January 1, 2023. Upon the effectiveness of the 2023 Plan (as defined below), the 2020 Plan was terminated and no further issuances were made under the 2020 Plan, although it continues to govern the terms of any equity grants that remain outstanding under the 2020 Plan.

Amended and Restated 2023 Equity Incentive Plan

The Amended and Restated 2023 Equity Incentive Plan (the “2023 Plan”) was approved by the Board of Directors and the Company’s stockholders and became effective on June 15, 2023. The Board of Directors, or a committee thereof, is authorized to administer the 2023 Plan. The 2023 Plan provides for the grant of Incentive Stock Options (“ISO”) within the meaning of Section 422 of the Internal Revenue Code (“IRC”) as amended, to employees, and for the grant of non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of awards to the Company’s employees, directors and consultants and any Company affiliates’ employees and consultants. The number of shares initially reserved for issuance

under the 2023 Plan was 7,400,000, which automatically increases on January 1 of each year for a period of 10 years, beginning on January 1, 2024 and continuing through January 1, 2033, in an amount equal to 5% of the total number of shares of common stock outstanding on the last day of the immediately preceding year, or a lesser number of shares determined by the Board of Directors no later than the last day of the immediately preceding year. The maximum number of shares of common stock that may be issued upon the exercise of ISOs under the 2023 Plan is 41,000,000 shares. As of September 30, 2023, 6,860,524 shares were available for grant pursuant to the 2023 Plan.

2020 Employee Stock Purchase Plan

The 2020 Employee Stock Purchase Plan (the “2020 ESPP”) was approved by the Company’s Board of Directors and the Company’s stockholders and became effective on July 29, 2021. A total of 200,000 shares of common stock were initially reserved for issuance under this plan, which automatically increases on January 1 of each year by the lesser of (i) 1% of the outstanding number of shares of common stock on the immediately preceding December 31 and (ii) 400,000, or such lesser number of shares as determined by our Board of Directors. The Board of Directors acted not to increase the number of shares of common stock reserved for future issuance under the ESPP as of January 1, 2023. As of September 30, 2023, no shares of common stock had been issued under the 2020 ESPP and 387,812 shares remained available for future issuance under the 2020 ESPP. The Company’s Board of Directors or designated committee has not set an offering period.

Stock Option Activity

The following is a summary of the stock option award activity during the nine months ended September 30, 2023:


	Number of Stock Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2022		4,003,294		$	4.90		8.28	$	860
Granted		2,915,275			1.59
Exercised		—			—
Forfeited		(169,040	)		2.27
Outstanding at September 30, 2023		6,749,529		$	3.53		8.63	$	642
Exercisable at September 30, 2023		2,033,070		$	5.62		7.62	$	—
Options expected to vest as of September 30, 2023		4,716,459		$	2.63		9.07	$	642

The weighted-average grant date fair value of options granted during the nine months ended September 30, 2023 and 2022 was $1.59 and $3.69, respectively. The aggregate intrinsic value is calculated as the difference between the exercise price and the market price of the Company’s common stock at September 30, 2023 and December 31, 2022.

Stock-Based Compensation Expense

For the nine months ended September 30, 2023 and 2022, the Company utilized the Black-Scholes option-pricing model for estimating the fair value of the stock options. The following table presents the assumptions and the Company’s methodology for developing each of the assumptions used:


	September 30, 2023	September 30, 2022
Volatility	91.91% - 95.08%	86.91% - 89.16%
Expected life (years)	5.27 - 6.08	5.27 - 6.08
Risk-free interest rate	3.58% - 4.43%	1.99% - 3.39%
Dividend rate	—	—

•

Volatility—The Company estimates the expected volatility of its common stock at the date of grant based on the historical volatility of comparable public companies over the expected term.

•

Expected life—The expected term represents the period that the Company’s stock option grants are expected to be outstanding. The expected term of the options granted to employees and non-employee directors by the Company has been

determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. Under this approach, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option.

•

Risk-free interest rate—The risk-free rate for periods within the estimated life of the stock award is based on the U.S. Treasury yield curve in effect at the time of grant.

•

Dividend rate—The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future.

Stock-based compensation expense was recorded in the following line items in the condensed statements of operations for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Research and development	$	479	$	365	$	1,310	$	1,015
General and administrative		761		532