nltx-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

__________________________________________________

FORM 10-Q

__________________________________________________

(Mark One)


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

For the quarterly period ended September 30, 2022


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

For the transition period from ________ to ________

Commission file number: 001-36327

__________________________________________________

Neoleukin Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

__________________________________________________


Delaware						98-0542593
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

188 East Blaine Street, Suite 450

Seattle, Washington 98102

(Address of principal executive offices, including zip code)

(Registrant’s telephone number, including area code): (866) 245-0312

__________________________________________________

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.000001	NLTX	The Nasdaq Global Market

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

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

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


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

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

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

As of November 11, 2022, there were 42,594,602 shares of the registrant’s common stock outstanding.

Table of Contents

NEOLEUKIN THERAPEUTICS, INC.

Quarterly Report on Form 10-Q

For the Quarter Ended September 30, 2022

INDEX



			Page
		PART I. FINANCIAL INFORMATION (Unaudited)

Item 1.		Condensed Balance Sheets	2

		Condensed Statements of Operations and Comprehensive Income (Loss)	3

		Condensed Statements of Cash Flows	4

		Condensed Statements of Stockholders’ Equity	5

		Notes to Condensed Financial Statements	7

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3.		Quantitative and Qualitative Disclosures About Market Risk	20

Item 4.		Controls and Procedures	20

		PART II. OTHER INFORMATION

Item 1.		Legal Proceedings	21

Item 1A.		Risk Factors	21

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	71

Item 3.		Defaults Upon Senior Securities	71

Item 4.		Mine Safety Disclosures	71

Item 5.		Other Information	71

Item 6.		Exhibits	72

	SIGNATURES		72

Except as otherwise indicated herein or as the context otherwise requires, references in this report to, “the Company,” “we,” “us,” “our” and similar references refer to Neoleukin Therapeutics, Inc. (formerly Aquinox Pharmaceuticals, Inc.), a Delaware corporation. The name “Neoleukin” is a trademark of the Company in the United States. This report also contains references to registered marks, trademarks, and trade names of other companies that are property of their respective holders.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

NEOLEUKIN THERAPEUTICS, INC.

Condensed Balance Sheets

(Unaudited)

(In thousands of U.S. dollars, except per share and share amounts)


	September 30, 2022		December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	40,335	$	142,467
Short-term investments	66,543		—
Other current assets	1,979		1,522
Total current assets	108,857		143,989

Property and equipment, net	5,817		6,452
Operating lease right-of-use assets	9,990		10,766
Intangible asset, net	—		128
Other non-current assets	1,912		1,928
Total assets	$	126,576	$	163,263

Liabilities
Current liabilities
Accounts payable and accrued liabilities	$	8,858	$	7,415
Operating lease liabilities	1,320		1,166
Finance lease liabilities	59		55
Total current liabilities	10,237		8,636

Non-current operating lease liabilities	10,683		11,696
Non-current finance lease liabilities	9		67
Total liabilities	20,929		20,399

Stockholders’ equity
Common stock - $0.000001 par value - authorized, 100,000,000 as of September 30, 2022 and December 31, 2021; issued and outstanding, 42,594,602 as of September 30, 2022 and 42,457,471 as of December 31, 2021	—		—
Preferred stock - $0.000001 par value - authorized, 5,000,000 as of September 30, 2022 and December 31, 2021; issued and outstanding, 0 as of September 30, 2022 and December 31, 2021	—		—
Additional paid-in capital	543,348		536,362
Accumulated other comprehensive income (loss)	(92)		—
Accumulated deficit	(437,609)		(393,498)
Total stockholders’ equity	105,647		142,864
Total liabilities and stockholders’ equity	$	126,576	$	163,263

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

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NEOLEUKIN THERAPEUTICS, INC.

Condensed Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

(In thousands of U.S. dollars, except per share and share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Operating expenses
Research and development	$	9,471	$	9,896	$	31,128	$	29,402
General and administrative	4,138		5,556		13,718		16,122
Total operating expenses	13,609		15,452		44,846		45,524
Loss from operations	(13,609)		(15,452)		(44,846)		(45,524)
Interest income	559		6		766		14
Other income (loss), net	(22)		—		(32)		(15)
Net loss	$	(13,072)	$	(15,446)	$	(44,112)	$	(45,525)
Comprehensive income (loss):
Unrealized loss on available-for-sale securities	(20)		—		(92)		—
Comprehensive loss	$	(13,092)	$	(15,446)	$	(44,204)	$	(45,525)

Net loss per share – basic and diluted	$	(0.24)	$	(0.28)	$	(0.80)	$	(0.83)
Basic and diluted weighted average common shares outstanding	55,251,039		55,087,777		55,199,822		55,020,059

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

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NEOLEUKIN THERAPEUTICS, INC.

Condensed Statements of Cash Flows

(Unaudited)

(In thousands of U.S. dollars)


	Nine Months Ended September 30,
	2022		2021
Operating activities
Net loss	$	(44,112)	$	(45,525)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	6,789		8,548
Depreciation and amortization	1,193		916
Amortization of operating lease right-of-use assets	776		730
Amortization and accretion of premiums/discounts on available-for-sale securities	(105)		—
Loss on disposal of property and equipment	108		—
Changes in operating assets and liabilities:
Other current assets and other non-current assets	(287)		36
Accounts payable and accrued liabilities	1,823		332
Operating lease liabilities	(859)		(427)
Net cash used in operating activities	(34,674)		(35,390)

Investing activities
Purchases of property and equipment	(1,006)		(2,867)
Purchases of available-for-sale securities	(81,595)		—
Proceeds from maturities of available-for-sale securities	15,000		—
Net cash used in investing activities	(67,601)		(2,867)

Financing activities
Proceeds from exercise of stock options	134		408
Payment on finance lease obligations	(54)		(2)
Proceeds from the issuance of common stock under Employee Stock Purchase Plan	63		219
Net cash provided by financing activities	143		625

Net change in cash, cash equivalents, and restricted cash during the period	(102,132)		(37,632)
Cash, cash equivalents, and restricted cash, beginning of period	143,345		193,434

Cash, cash equivalents, and restricted cash, end of period	$	41,213	$	155,802

Supplemental disclosure of non-cash investing and financing activities:
Operating lease liabilities arising from obtaining ROU asset	$	—	$	1,584
Purchases of property and equipment unpaid at period-end	$	28	$	297

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

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NEOLEUKIN THERAPEUTICS, INC.

Condensed Statements of Stockholders’ Equity

(Unaudited)

(In thousands of U.S. dollars, except share amounts)


	Common Stock			Additional Paid-In		Accumulated Other Comprehensive		Accumulated		Total Stockholders'
	Number	Amount		Capital		Income (Loss)		Deficit		Equity
Balances, December 31, 2021	42,457,471	$	—	$	536,362	$	—	$	(393,498)	$	142,864
Shares issued upon exercises of stock options	36,500	—		134		—		—		134
Stock-based compensation	—	—		2,446		—		—		2,446
Net loss