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 001-39138

JASPER THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware

84-2984849

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

2200 Bridge Pkwy Suite #102

Redwood City, CA

94065

(Address of Principal Executive Offices)

(Zip Code)

(650) 549-1400

(Registrant’s telephone number, including area code)

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

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Voting Common Stock, par value $0.0001 per share	JSPR	The Nasdaq Stock Market LLC
Redeemable Warrants, each whole warrant exercisable for one share of Voting Common Stock at an exercise price of $11.50	JSPRW	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, 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 October 31, 2023, the number of shares of the issuer’s common stock outstanding was 111,575,261 shares of voting common stock, $0.0001 par value per share, and no shares of non-voting common stock, $0.0001 par value per share.

JASPER THERAPEUTICS, INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED

SEPTEMBER 30, 2023

TABLE OF CONTENTS

		PAGE
	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1

	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	1

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022	2

	Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022	3

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	4

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37

Item 4	Controls and Procedures	37

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	38

Item 1A.	Risk Factors	38

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48

Item 3.	Defaults Upon Senior Securities	48

Item 4	Mine Safety Disclosures	48

Item 5.	Other Information	48

Item 6	Exhibits	49

SIGNATURES		50

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

JASPER THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)

	September 30,			December 31,
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	103,867		$	38,250
Other receivables		—			663
Prepaid expenses and other current assets		1,351			2,818
Total current assets		105,218			41,731
Property and equipment, net		2,780			3,568
Operating lease right-of-use assets		1,579			1,886
Restricted cash		417			417
Other non-current assets		411			759
Total assets	$	110,405		$	48,361
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,256		$	1,768
Current portion of operating lease liabilities		945			865
Current portion of earnout liability		28			—
Accrued expenses and other current liabilities		7,677			4,432
Total current liabilities		11,906			7,065
Non-current portion of operating lease liabilities		2,069			2,786
Common stock warrant liability		—			150
Non-current portion of earnout liability		—			18
Other non-current liabilities		2,297			2,353
Total liabilities		16,272			12,372

Commitments and contingencies (Note 8)
Stockholders’ equity
Preferred stock: $0.0001 par value — 10,000,000 shares authorized at September 30, 2023 and December 31, 2022; none issued and outstanding at September 30, 2023 and December 31, 2022		—			—
Common stock: $0.0001 par value — 492,000,000 shares authorized at September 30, 2023 and December 31, 2022; 110,850,413 and 38,045,677 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		11			4
Additional paid-in capital		247,141			141,120
Accumulated deficit		(153,019	)		(105,135	)
Total stockholders’ equity		94,133			35,989
Total liabilities and stockholders’ equity	$	110,405		$	48,361

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

JASPER THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(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	$	14,848		$	9,022		$	37,950		$	25,345
General and administrative		4,514			3,686			13,186			12,104
Total operating expenses		19,362			12,708			51,136			37,449
Loss from operations		(19,362	)		(12,708	)		(51,136	)		(37,449	)
Interest income		1,433			259			3,965			353
Change in fair value of earnout liability		334			422			(10	)		5,640
Change in fair value of common stock warrant liability		—			155			(575	)		7,050
Other income (expense), net		51			9			(128	)		(68	)
Total other income, net		1,818			845			3,252			12,975
Net loss and comprehensive loss	$	(17,544	)	$	(11,863	)	$	(47,884	)	$	(24,474	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.16	)	$	(0.32	)	$	(0.47	)	$	(0.67	)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted		109,720,741			36,565,650			102,351,140			36,425,000

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

JASPER THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)

	Common Stock					Additional Paid-In			Accumulated			Total Stockholders’
	Shares			Amount		Capital			Deficit			Equity
Balance as of December 31, 2022		38,045,677		$	4	$	141,120		$	(105,135	)	$	35,989
Issuance of common stock upon exercise of stock options		44,413			—		32			—			32
Issuance of common stock through underwritten offering, net of discounts and commissions and issuance costs of $6.6 million		69,000,000			7		96,923			—			96,930
Issuance of common stock through ATM offering, net of commissions and offering costs of $0.1 million		2,337,496			—		4,509			—			4,509
Reclassification of common stock warrants from liability to equity (Note 7)		—			—		725			—			725
Settlement of restricted stock units		625			—		—			—			—
Vesting of founders’ restricted stock		—			—		6			—			6
Stock-based compensation expense		—			—		1,267			—			1,267
Net loss		—			—		—			(14,260	)		(14,260	)
Balance as of March 31, 2023		109,428,211			11		244,582			(119,395	)		125,198
Issuance of common stock upon exercise of stock options		451,403			—		320			—			320
Issuance of common stock pursuant to Employee Stock Purchase Plan		65,001			—		36			—			36
Settlement of restricted stock units		1,308,731			—		—			—			—
Shares withheld for taxes		(452,933	)		—		(661	)		—			(661	)
Vesting of founders’ restricted stock		—			—		1			—			1
Stock-based compensation expense		—			—		1,391			—			1,391
Net loss		—			—		—			(16,080	)		(16,080	)
Balance as of June 30, 2023		110,800,413			11		245,669			(135,475	)		110,205
Issuance of common stock upon exercise of stock options		50,000			—		36			—			36
Reversal of excess accrued issuance costs		—			—		40			—			40
Vesting of founders’ restricted stock		—			—		1			—			1
Stock-based compensation expense		—			—		1,395			—			1,395
Net loss		—			—		—			(17,544	)		(17,544	)
Balance as of September 30, 2023		110,850,413		$	11	$	247,141		$	(153,019	)	$	94,133

	Common Stock				Additional Paid-In		Accumulated			Total Stockholders’
	Shares		Amount		Capital		Deficit			Equity
Balance as of December 31, 2021		37,855,114	$	4	$	136,964	$	(67,450	)	$	69,518
Issuance of common stock upon exercise of stock options		19,073		—		13		—			13
Issuance of common stock upon exercise of common stock warrants		20		—		—		—			—
Vesting of founders’ restricted stock		—		—		3		—			3
Stock-based compensation expense		—		—		778		—			778
Net loss		—		—		—		(2,207	)		(2,207	)
Balance as of March 31, 2022		37,874,207		4		137,758		(69,657	)		68,105
Issuance of common stock upon exercise of stock options		17,138		—		13		—			13
Settlement of restricted stock units		89,972		—		—		—			—
Vesting of founders’ restricted stock		—		—		2		—			2
Stock-based compensation expense		—		—		1,065		—			1,065
Net loss		—		—		—		(10,404	)		(10,404	)
Balance as of June 30, 2022		37,981,317		4		138,838		(80,061	)		58,781
Issuance of common stock upon exercise of stock options		1,176		—		1		—			1
Settlement of restricted stock units		1,875		—		—		—			—
Vesting of founders’ restricted stock		—		—		2		—			2
Stock-based compensation expense		—		—		644		—			644
Net loss		—		—		—		(11,863	)		(11,863	)
Balance as of September 30, 2022		37,984,368	$	4	$	139,485	$	(91,924	)	$	47,565

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

JASPER THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine Months Ended September 30,
	2023			2022
Cash flows from operating activities
Net loss	$	(47,884	)	$	(24,474	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization expense		825			702
Non-cash lease expense		307			241
Stock-based compensation expense		4,053			2,487
Change in fair value of common stock warrant liability		575			(7,050	)
Change in fair value of earnout liability		10			(5,640	)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		1,467			1,669
Other receivables		663			—
Other non-current assets		348			102
Accounts payable		1,488			(802	)
Accrued expenses and other current liabilities		3,245			(132	)
Operating lease liability		(637	)		(386	)
Other non-current liabilities		(48	)		71
Net cash used in operating activities		(35,588	)		(33,212	)
Cash flows used in investing activities
Purchases of property and equipment		(37	)		(494	)
Net cash used in investing activities		(37	)		(494	)
Cash flows from financing activities
Proceeds from issuance of common stock through ATM and underwritten offerings, net		101,479			—
Proceeds from issuance of common stock pursuant to Employee Stock Purchase Plan		36			—
Taxes withheld and paid related to net share settlement of equity awards		(661	)		—
Proceeds from exercise of common stock options		388			27
Net cash provided by financing activities		101,242			27
Net increase (decrease) in cash, cash equivalents and restricted cash		65,617			(33,679	)
Cash, cash equivalents and restricted cash at beginning of the period		38,667			85,046
Cash, cash equivalents and restricted cash at end of the period	$	104,284		$	51,367

Supplemental and non-cash items reconciliations:
Reclassification of common stock warrant liability to equity	$	725		$	—
Vesting of founders’ restricted stock	$	8		$	7
Right-of-use asset obtained in exchange for lease liabilities	$	—		$	1,074
Non-cash leasehold improvements	$	—		$	281

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

JASPER THERAPEUTICS, INC.

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Description of Business

Jasper Therapeutics, Inc. and its consolidated subsidiary (collectively, “Jasper” or the “Company”), is a clinical-stage biotechnology company focused on developing therapeutics targeting mast cell driven diseases such as Chronic Spontaneous Urticaria, Chronic Inducible Urticaria, as well as diseases where targeting hematopoietic stem cells can provide benefits, such as Lower to Intermediate Risk Myelodysplastic Syndrome, and novel stem cell transplant conditioning regimens. The Company is headquartered in Redwood City, California.

On September 24, 2021 (the “Closing Date”), the Company consummated the previously announced business combination (the “Business Combination” or “Reverse Recapitalization” for accounting purposes) pursuant to the terms of the Business Combination Agreement, dated as of May 5, 2021 (the “BCA”), by and among Amplitude Healthcare Acquisition Corporation (“AMHC”), Ample Merger Sub, Inc., a then-wholly-owned subsidiary of AMHC (“Merger Sub”), and the pre-Business Combination Jasper Therapeutics, Inc. (now named Jasper Tx Corp.) (“Old Jasper”). Pursuant to the terms of the BCA, on the Closing Date, (i) Merger Sub merged with and into Old Jasper, with Old Jasper as the surviving company in the Business Combination, and, after giving effect to such Business Combination, Old Jasper became a wholly owned subsidiary of AMHC and changed its name to “Jasper Tx Corp.”, and (ii) AMHC changed its name to “Jasper Therapeutics, Inc.”.

Liquidity and Going Concern

The Company has incurred significant losses and negative cash flows from operations since its inception. During the three and nine months ended September 30, 2023, the Company incurred net losses of $17.5 million and $47.9 million, respectively. During the three and nine months ended September 30, 2022, the Company incurred net losses of $11.9 million and $24.5 million, respectively. During the nine months ended September 30, 2023 and 2022, the Company had negative operating cash flows of $35.6 million and $33.2 million, respectively. As of September 30, 2023 and December 31, 2022, the Company had an accumulated deficit of $153.0 million and $105.1 million, respectively. The Company expects to continue to incur substantial losses, and its ability to achieve and sustain profitability will depend on the successful development, approval, and commercialization of product candidates and on the achievement of sufficient revenues to support the Company’s cost structure.

As of September 30, 2023, the Company had cash and cash equivalents of $103.9 million. The Company’s management expects that the existing cash and cash equivalents will be sufficient to fund the Company’s operating plans for at least twelve months from the issuance date of these condensed consolidated financial statements. The Company will need to raise additional financing to continue its products’ development for the foreseeable future, and expects to continue doing so until it becomes profitable. The Company’s management plans to monitor expenses and raise additional capital through a combination of public and private equity, debt financings, strategic alliances, and licensing arrangements. The Company’s ability to access capital when needed is not assured and, if capital is not available to the Company when, and in the amounts needed, the Company may be required to significantly curtail, delay or discontinue one or more of its research or development programs or the commercialization of any product candidate, or be unable to expand its operations or otherwise capitalize on the Company’s business opportunities, as desired, which could materially harm the Company’s business, financial condition and results of operations.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The condensed consolidated financial statements and accompanying notes are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting.

The accompanying condensed financial statements are consolidated and include the accounts of Jasper Therapeutics, Inc. and its wholly-owned subsidiary, Jasper Tx Corp. All intercompany transactions and balances have been eliminated upon consolidation.

Certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2022 included in the Company’s Annual Report on the Form 10-K filed with the SEC on March 8, 2023. The information as of December 31, 2022, included in the condensed consolidated balance sheets was derived from the Company’s audited financial statements. These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for a fair statement of the Company’s consolidated financial statements. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or for any other interim period or for any other future year.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions and judgements that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of income and expenses during the reporting periods. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to, the determination of the accrued research and development expenses, valuation of earnout liability and the measurement of stock-based compensation expense. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates.

Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash and restricted cash reported within the condensed consolidated balance sheets that sum to the total amount shown in the condensed consolidated statements of cash flows (in thousands):

	September 30,		December 31,
	2023		2022
Cash and cash equivalents	$	103,867	$	38,250
Restricted cash		417		417
Total cash, cash equivalents and restricted cash	$	104,284	$	38,667

Cash and cash equivalents consist of cash held in operating accounts and investments in money market funds with an original maturity of three months or less at the time of purchase. Restricted cash relates to the letter of credit secured in conjunction with the operating lease (Note 8). Cash balances are held at financial institutions and account balances may exceed federally insured limits. To date, the Company has not experienced any losses on its cash, cash equivalents and marketable securities’ balances and periodically evaluates the creditworthiness of its financial institutions.

On March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. On March 12, 2023 the FDIC transferred all deposits, both insured and uninsured, and substantially all assets from the former SVB to a newly created, full-service FDIC-operated “bridge bank”, Silicon Valley Bridge Bank, N.A. (“SVBB”) and the FDIC, Treasury Department, and Federal Reserve announced that all deposits will be fully protected, whether or not they had been insured by the FDIC. On March 27, 2023, First-Citizens Bank & Trust Company assumed all of SVBB’s customer deposits and certain other liabilities and acquired substantially all of SVBB’s loans and certain other assets from the FDIC. As of September 30, 2023, the Company had $1.0 million of cash and cash equivalents and $3.4 million of marketable securities at SVBB. As of the date of the issuance of these condensed consolidated financial statements, the Company has full access to and control over all of its cash, cash equivalents and marketable securities.

Segment Reporting

The Company has determined it operates as a single operating and reportable segment. The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s operations on a consolidated basis for the purposes of allocating resources. All long-lived assets are located in the United States.

New Accounting Pronouncements Not Yet Adopted

In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sales Restrictions, which (1) clarifies the guidance in Topic 820 on the fair value measurement of an equity security that is subject to contractual restrictions that prohibit the sale of an equity security and (2) requires specific disclosures related to such an equity security. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company does not expect the adoption of this ASU to have a significant impact on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU were effective for all entities as of March 12, 2020 through December 31, 2022; however, in December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which extended the sunset date from December 31, 2022 to December 31, 2024. An entity may elect to apply the amendments for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from the date that the financial statements are available to be issued. Once elected for a Topic or an Industry Subtopic, the amendments must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic. The Company is currently evaluating the effect of ASU No. 2020-04 on its consolidated financial statements.

NOTE 3. FAIR VALUE MEASUREMENTS

The Company measures certain financial assets and liabilities at fair value on a recurring basis. Fair value is an 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 such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

●

Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

●

Level 2 – Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

●

Level 3 – Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

The fair value of Level 1 securities is determined using quoted prices in active markets for identical assets. As of December 31, 2022, Level 1 securities consisted of highly liquid money market funds and common stock warrant liability. In addition, restricted cash collateralized by money market funds is a financial asset measured at fair value and is a Level 1 financial instrument under the fair value hierarchy. As of September 30, 2023, Level 1 securities included money market funds. As a result of the warrant liability being reclassified to equity during the nine months ended September 30, 2023, the common stock warrants are no longer securities that are measured at fair value at period end (see Note 7).

Financial assets and liabilities are considered Level 2 when their fair values are determined using inputs that are observable in the market or can be derived principally from or corroborated by observable market data, such as pricing for similar securities, recently executed transactions, cash flow models with yield curves, and benchmark securities. In addition, Level 2 financial instruments are valued using comparisons to like-kind financial instruments and models that use readily observable market data as their basis. The Company had no financial instruments classified at Level 2 as of September 30, 2023 and December 31, 2022.

Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques and at least one significant model assumption or input is unobservable. Level 3 liabilities that are measured at fair value on a recurring basis included the earnout liability, which was recognized in connection with the Business Combination in September 2021 (Note 7).

During the periods presented, the Company has not changed the manner in which it values liabilities that are measured at estimated fair value using Level 3 inputs. There were no transfers within the hierarchy during the three and nine months ended September 30, 2023 and 2022.

The following tables set forth the fair value of the Company’s financial assets and liabilities measured on a recurring basis by level within the fair value hierarchy (in thousands):

	September 30, 2023
	Level 1		Level 2		Level 3		Total

Financial assets
Money market funds	$	102,867	$	—	$	—	$	102,867
Total fair value of assets	$	102,867	$	—	$	—	$	102,867

Financial liabilities
Earnout liability	$	—	$	—	$	28	$	28
Total fair value of financial liabilities	$	—	$	—	$	28	$	28

	December 31, 2022
	Level 1		Level 2		Level 3		Total

Financial assets
Money market funds	$	37,250	$	—	$	—	$	37,250
Total fair value of assets	$	37,250	$	—	$	—	$	37,250

Financial liabilities
Common stock warrant liability	$	150	$	—	$	—	$	150
Earnout liability		—		—		18		18
Total fair value of financial liabilities	$	150	$	—	$	18	$	168

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities (in thousands):

	Earnout Liability

Fair Value as of December 31, 2022	$	18
Change in the fair value included in other expense		764
Fair Value as of March 31, 2023		782
Change in the fair value included in other income		(420	)
Fair Value as of June 30, 2023		362
Change in the fair value included in other income		(334	)
Fair Value as of September 30, 2023	$	28

Fair Value as of December 31, 2021	$	5,743
Change in the fair value included in other income		(4,593	)
Fair Value as of March 31, 2022		1,150
Change in the fair value included in other income		(625	)
Fair Value as of June 30, 2022		525
Change in the fair value included in other income		(422	)
Fair Value as of September 30, 2022	$	103

The estimated fair value of the earnout liability is determined using a Monte Carlo simulation model, which uses a distribution of potential outcomes on a monthly basis over the earnout period prioritizing the most reliable information available. The assumptions utilized in the calculation are based on the achievement of certain stock price milestones, including the Company’s current common stock price, expected volatility, risk-free rate and expected term. The estimates of fair value are uncertain and changes in any of the estimated inputs used as of the date of this report could have resulted in significant adjustments to the fair value.

The following table presents quantitative information about the inputs and valuation methodologies used for the Company’s fair value measurement classified in Level 3 of the fair value hierarchy at September 30, 2023:

	Fair value (in thousands)		Valuation methodology	Significant unobservable input
Earnout liability	$	28	Monte Carlo Simulation	Common stock price	$	0.70
				Expected term (in years)		0.98
				Expected volatility		128.0	%
				Risk-free interest rate		5.32	%

	Fair value (in thousands)		Valuation methodology	Significant unobservable input
Earnout liability	$	18	Monte Carlo Simulation	Common stock price	$	0.48
				Expected term (in years)		1.73
				Expected volatility		105.0	%
				Risk-free interest rate		4.40	%

NOTE 4. CONDENSED CONSOLIDATED BALANCE SHEET COMPONENTS

Prepaid expenses and other current assets

The following table summarizes the details of prepaid expenses and other current assets as of the dates set forth below (in thousands):

	September 30,		December 31,
	2023		2022
Research and development prepaid expenses	$	481	$	842
Prepaid insurance		191		1,362
Payroll tax credit receivable		250		250
Other receivables		18		118
Other prepaid expenses and current assets		411		246
Total	$	1,351	$	2,818

Property and equipment, net

The following table summarizes the details of property and equipment, net as of the dates set forth below (in thousands):

	September 30,			December 31,
	2023			2022
Leasehold improvements	$	2,477		$	2,477
Lab equipment		1,743			1,706
Office furniture & fixtures		502			502
Computer equipment		145			145
Capitalized software		90			90
Property and equipment, gross		4,957			4,920
Less: accumulated depreciation and amortization		(2,177	)		(1,352	)
Property and equipment, net	$	2,780		$	3,568

Depreciation and amortization expense was $0.3 million for each of the three months ended September 30, 2023 and 2022, and $0.8 million and $0.7 million for the nine months ended September 30, 2023 and 2022, respectively.

Accrued expenses and other current liabilities

The following table summarizes the details of accrued expenses and other current liabilities as of the dates set forth below (in thousands):

	September 30,		December 31,
	2023		2022
Research and development accrued expenses	$	5,883	$	2,651
Accrued employee and related compensation expenses		1,402		1,587
Other		392		194
Total	$	7,677	$	4,432

Other non-current liabilities

The following table summarizes the details of other non-current liabilities as of the dates set forth below (in thousands):

	September 30,		December 31,
	2023		2022
CIRM grant liability	$	2,264	$	2,264
Restricted stock liability		1		9
Other non-current liabilities		32		80
Total	$	2,297	$	2,353

NOTE 5. CIRM GRANT

In November 2020, California Institute for Regenerative Medicine (“CIRM”) awarded the Company $2.3 million in support of the research project related to a monoclonal antibody that depletes blood stem cells and enables chemotherapy-free transplants. The award was payable to the Company upon achievement of milestones over the next three years that were primarily based on patient enrollment in the Company’s clinical trials. CIRM may permanently cease disbursements if milestones are not met within four months of the scheduled completion date. Additionally, if CIRM determines, in its sole discretion, that the Company has not complied with the terms and conditions of the grant, CIRM may suspend or permanently cease disbursements. Funds received under this grant may only be used for allowable project costs specifically identified with the CIRM-funded project. Such costs can include, but are not limited to, salary for personnel, itemized supplies, consultants, and itemized clinical study costs. Under the terms of the grant, both CIRM and the Company will co-fund the research project and the amount of the Company’s co-funding requirement is predetermined as a part of the award. Under the terms of the CIRM grant, the Company is obligated to pay royalties and licensing fees based on 0.1% of net sales of CIRM-funded product candidates or CIRM-funded technology per $1.0 million of CIRM grant. As an alternative to revenue sharing, the Company has the option to convert the award to a loan. In the event the Company exercises its right to convert the award to a loan, it would be obligated to repay the loan within ten business days of making such election. Repayment amounts vary dependent on when the award is converted to a loan, ranging from 60% of the award granted to amounts received plus interest at the rate of the three-month LIBOR rate plus 25% per annum. Since the Company may be required to repay some or all of the amounts awarded by CIRM, the Company accounted for this award as a liability. Given the uncertainty in amounts due upon repayment, the Company has recorded amounts received without any discount or interest recorded, and upon determination of amounts that would become due, the Company will adjust accordingly. In the absence of explicit U.S. GAAP guidance on contributions received by business entities from government entities, the Company has applied to the CIRM grant the recognition and measurement guidance in Accounting Standards Codification Topic 958-605 by analogy. The Company has received an aggregate of $2.3 million from CIRM through September 30, 2023, of which $0.7 million was received during the nine months ended September 30, 2023. As of September 30, 2023, $50,000 is available for future distribution to the Company under the grant upon the achievement of a future milestone.

NOTE 6. SIGNIFICANT AGREEMENTS

Amgen License Agreement

In November 2019, the Company entered into a worldwide exclusive license agreement with Amgen, Inc. (“Amgen”) for briquilimab (formerly known as AMG-191 and JSP191) that also includes translational science and materials from The Board of Trustees of the Leland Stanford Junior University (“Stanford”) (the “Amgen License Agreement”). The Company was assigned and accepted Amgen’s rights and obligations, effective November 21, 2019, under the Investigator Sponsored Research Agreement (the “ISRA”), entered into in June 2013, between Amgen and Stanford, and the Quality Agreement between Amgen and Stanford, effective as of October 7, 2015. Under the ISRA, the Company received an option to negotiate a definitive license with Stanford for rights to certain Stanford intellectual property related to the study of briquilimab in exchange for an option exercise fee of $1.0 million, payable over a two-year period (the “Option”). The Company exercised the Option on June 2, 2020. As a result, the Company has worldwide exclusive rights to develop and commercialize briquilimab.

The Amgen License Agreement terminates on a country-by-country basis on the 10th anniversary of the date on which the exploitation of the licensed products is no longer covered by a valid claim under a licensed patent in such country. On a country-by-country basis, upon the expiration of the term in each country with respect to the licensed products, the licenses to the Company by Amgen become fully paid and non-exclusive. The Company and Amgen have the right to terminate the agreement for a material breach as specified in the agreement.

Stanford License Agreement

In March 2021, the Company entered into an exclusive license agreement with Stanford (the “Stanford License Agreement”). In July 2023, the Company entered into an amendment to the Stanford License Agreement to modify certain milestones set forth thereunder. The Company received a worldwide, exclusive license, with a right to sublicense, for briquilimab in the field of depleting endogenous blood stem cells in patients for whom hematopoietic cell transplantation is indicated. Stanford transferred to the Company certain know-how and patents related to briquilimab (together, the “Licensed Technology”). Under the terms of this agreement, the Company will use commercially reasonable efforts to develop, manufacture, and sell licensed product and to develop markets for a licensed product. In addition, the Company will use commercially reasonable efforts to meet the milestones as specified in the agreement over the six years from execution of the Stanford License Agreement and must notify Stanford in writing as each milestone is met.

The Company will pay annual license maintenance fees, beginning on the first anniversary of the effective date of the agreement and ending upon the first commercial sale of a product, method, or service in the licensed field of use, as follows: $25,000 for each first and second year, $35,000 for each third and fourth year and $50,000 at each anniversary thereafter ending upon the first commercial sale. The Company is also obligated to pay late-stage clinical development milestone payments and first commercial sales milestone payments of up to $9.0 million in total. The Company will also pay low single-digit royalties on net sales of licensed products, if approved. The Company paid a $25,000 license maintenance fee in each of March 2023 and 2022, which was recognized as research and development expense in the condensed statements of operations and comprehensive loss for the nine months ended September 30, 2023 and 2022.

The Stanford License Agreement expires on a country-by-country basis on the last-to-expire valid claim of a licensed patent in such country. The Company may terminate the agreement by giving Stanford written notice at least 12 months in advance of the effective date of termination. The Company may also terminate the agreement solely with respect to any particular patent application or patent by giving Stanford written notice at least 60 days in advance of the effective date of termination. Stanford may terminate the agreement after 90 days from a written notice by Stanford, specifying a problem, including a delinquency on any report required pursuant to the agreement or any payment, missing a milestone or a material breach, unless the Company remediates the problem in that 90-day period.

NOTE 7. DERIVATIVE FINANCIAL INSTRUMENTS

Common Stock Warrants

The warrants to purchase shares of the Company’s common stock (the “Common Stock Warrants”) assumed in the Business Combination are traded on the Nasdaq Capital Market and may only be exercised for a whole number of shares. The Common Stock Warrants became exercisable on October 24, 2021 and will expire on September 24, 2026, unless early redeemed or if the Company extends the exercise period.

As long as the Company continued to have shares of non-voting common stock outstanding, the Common Stock Warrants did not meet the equity classification guidance and were accounted for as liabilities at fair value. In January, 2023, a holder converted all its 911,022 outstanding shares of non-voting common stock into shares of voting common stock and thereafter the Company no longer had any outstanding shares of non-voting common stock. As of September 30, 2023, the outstanding Common Stock Warrants for 4,999,863 shares of common stock met equity classification criteria and were reclassified to equity at the fair value of $0.7 million at the conversion date.

The Company recognized a loss of zero and $0.6 million for the three and nine months ended September 30, 2023, respectively, and a gain of $0.2 million and $7.1 million for the three and nine months ended September 30, 2022, respectively, classified within change in fair value of common stock warrant liability in the condensed consolidated statements of operations and comprehensive loss. The Common Stock Warrants’ fair value was $0.2 million as of December 31, 2022.

Contingent Earnout Liability

Upon the closing of the Business Combination and pursuant to the Sponsor Support Agreement, dated May 5, 2021 and amended on September 24, 2021, by and among the Company, Amplitude Healthcare Holdings LLC (the “Sponsor”) and Old Jasper, the Sponsor agreed to place 1,050,000 shares of the Company’s common stock that were previously issued to the Sponsor (the “Earnout Shares”) into escrow, which will be released as follows: (a) 250,000 Earnout Shares will be released if, during the period from and after September 24, 2021 until September 24, 2024 (the “Earnout Period”), over any twenty trading days within any thirty day consecutive trading day period, the volume-weighted average price of the Company’s common stock (the “Applicable VWAP”) is greater than or equal to $11.50, (b) 500,000 Earnout Shares will be released if, during the Earnout Period, the Applicable VWAP is greater than or equal to $15.00 and (c) 300,000 Earnout Shares will be released if, during the Earnout Period, the Applicable VWAP is greater than or equal to $18.00 (the “triggering events”).

The Earnout Shares placed in escrow are legally issued and outstanding shares that participate in voting and dividends. The Earnout Shares (along with related escrowed dividends, if any) will be forfeited and not released from escrow at the end of the Earnout Period unless the triggering events described above are achieved during the Earnout Period. Upon the closing of the Business Combination, the contingent obligation to release the Earnout Shares was accounted for as a liability-classified financial instrument upon their initial recognition because the triggering events that determine the number of shares required to be released from escrow include events that were not solely indexed to the common stock of the Company. The earnout liability is remeasured each reporting period with changes in fair value recognized in earnings.

The estimated fair value of the earnout liability was less than $0.1 million as of each of September 30, 2023 and December 31, 2022, based on a Monte Carlo simulation model. Assumptions used in the valuations are described in Note 3. No triggering event occurred as of September 30, 2023. The Company recognized a gain of $0.3 million and a loss of less than $0.1 million for the three and nine months ended September 30, 2023, respectively, and a gain of $0.4 million and $5.6 million for the three and nine months ended September 30, 2022, respectively, classified within change in fair value of earnout liability in the condensed consolidated statements of operations and comprehensive loss.

NOTE 8. COMMITMENTS AND CONTINGENCIES

Operating Leases

In August 2020, the Company leased 7,781 square feet and in January 2022, the Company leased an additional 5,611 square feet of laboratory and office space in Redwood City, California. The Company’s operating lease will expire in August 2026. In March 2022, the Company entered into an agreement for 5,144 square feet of temporary office space in Redwood City, California, for use while the extra space leased in January 2022 was under construction. The Company paid $26,000 monthly for the temporary office space rent through July 2022.

In conjunction with signing the lease, the Company secured a letter of credit in favor of the lessor in the amount of $0.4 million. The funds related to this letter of credit are presented as restricted cash on the Company’s condensed consolidated balance sheets. The lease agreement includes an escalation clause for increased base rent and a renewal provision allowing the Company to extend this lease for an additional 60 months at the prevailing rental rate, which the Company is not reasonably certain to exercise. In addition to base rent, the Company pays its share of operating expenses and taxes.

To complete certain leasehold improvements, the lessor agreed to provide the Company a tenant improvement allowance of $1.5 million as well as an option to take an additional allowance of $0.4 million to be repaid over the lease term at an interest rate of 9% per annum, which the Company exercised. The Company recognized the full $1.9 million in leasehold improvements covered by these allowances during the 2021 and 2022 fiscal years. In accordance with the lease agreement, the lessor managed and supervised the construction of the improvements. In exchange for these services, the Company paid the lessor a fee equal to 5% of total construction costs. As of September 30, 2023 and December 31, 2022, the leasehold improvements constructed are presented under property and equipment on the Company’s condensed consolidated balance sheets and will be depreciated on a straight-line basis over the remaining lease term.

In addition to the construction management and supervision fee noted above, the Company pays variable costs related to its share of operating expenses and taxes. These variable costs are recorded as lease expense as incurred and presented as operating expenses in the condensed consolidated statements of operations and comprehensive loss.

The components of lease costs, which were included in the Company’s condensed statements of operations and comprehensive loss, are as follows (in thousands):

	Nine Months Ended September 30,
	2023		2022
Lease cost
Operating lease cost	$	504	$	454
Short-term lease cost		2		129
Total lease cost	$	506	$	583

Supplemental information related to the Company’s operating leases is as follows:

	Nine Months Ended September 30,
	2023			2022

Cash paid for amounts included in the measurement of lease liabilities (in thousands)	$	834		$	594
Weighted average remaining lease term (years)		2.9			3.9
Weighted average discount rate		8.00	%		8.00	%

The following table summarizes a maturity analysis of the Company’s operating lease liabilities showing the aggregate lease payments as of September 30, 2023 (in thousands):

Year ending December 31,	Amount
2023 (remainder of the year)	$	285
2024		1,153
2025		1,187
2026		740
Total undiscounted lease payments		3,365
Less imputed interest		(351	)
Total discounted lease payments		3,014
Less current portion of lease liability		(945	)
Noncurrent portion of lease liability	$	2,069

Stanford Sponsored Research Agreement

In September 2020, the Company entered into a sponsored research agreement with Stanford for a research program related to the treatment of Fanconi Anemia patients in Bone Marrow Failure requiring allogeneic transplant with non-sibling donors at Stanford Lucile Packard Children’s Hospital using briquilimab (the “Research Project”). Stanford will perform the Research Project and is fully responsible for costs and operations related to the Research Project. In addition, Stanford owns the entire right, title, and interest in and to all technology developed using Stanford facilities and by Stanford personnel through the performance of the Research Project under this agreement (the “Fanconi Anemia Research Project IP”). Under this agreement, Stanford granted the Company an exclusive option to license Stanford’s rights in the Fanconi Anemia Research Project IP (the “Fanconi Anemia Option”) in the field of commercialization of briquilimab. There is no license granted or other intellectual property transferred under this agreement until the Fanconi Anemia Option is exercised. As of September 30, 2023, the Company has not yet exercised the Fanconi Anemia Option.

As consideration for the services performed by Stanford under this sponsored research agreement, the Company agreed to pay Stanford a total of $0.9 million over approximately three years upon the achievement of development and clinical milestones, including the U.S. Food and Drug Administration (the “FDA”) filings and patient enrollment. The first milestone in the amount of $0.3 million was achieved in 2020. The second milestone in the amount of $0.3 million was achieved in February 2022 and recognized as a research and development expense in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2022. The third and final milestone in the amount of $0.3 million was achieved in July 2023 and recognized as a research and development expense in the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2023.

License Agreements

In March 2021, the Company entered into the Stanford License Agreement (Note 6), which was amended in July 2023, pursuant to which the Company is required to pay annual license maintenance fees, clinical development and commercial sales milestone payments and low single-digit royalties on net sales of licensed products. All products were in development as of September 30, 2023, and no royalties were due as of such date. The Company paid a $25,000 license maintenance fee in each of March 2023 and 2022 and recognized this as a research and development expense in the condensed statements of operations and comprehensive loss for each of the nine months ended September 30, 2023 and 2022. No expenses were recognized for each of the three months ended September 30, 2023 and 2022.

Legal Proceedings

The Company, from time to time, may be party to litigation arising in the ordinary course of business. The Company was not subject to any material legal proceedings during the nine months ended September 30, 2023 and the year ended December 31, 2022, and, to the best of its knowledge, no material legal proceedings are currently pending.

Guarantees and Indemnifications

In the normal course of business, the Company enters into agreements that contain a variety of representations and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. As of September 30, 2023 and December 31, 2022, the Company does not have any material indemnification claims that are probable or reasonably possible and consequently has not recorded related liabilities.

NOTE 9. COMMON STOCK

The Company is authorized to issue 490,000,000 shares of voting common stock, 2,000,000 shares of non-voting common stock, and 10,000,000 shares of undesignated preferred stock. There were 110,850,413 shares of voting common stock, no shares of non-voting common stock and no shares of preferred stock issued and outstanding as of September 30, 2023.

As of September 30, 2023 and December 31, 2022, the Company had shares of its common stock reserved for future issuance as follows:

	September 30,		December 31,
	2023		2022
Outstanding and issued common stock options		10,272,369		6,169,180
Common stock warrants		4,999,863		4,999,863
Outstanding restricted stock units		1,076,814		2,617,445
Shares available for grant under 2021 Employee Stock Purchase Plan		1,184,572		869,117
Shares available for grant under 2021 Equity Incentive Plan		1,086,589		1,383,661
Shares available for grant under 2022 Inducement Equity Incentive Plan		1,196,841		1,295,672
Total shares of common stock reserved		19,817,048		17,334,938

Shelf Registration Statement and Public Offering

In October 2022, the Company filed a shelf registration statement on Form S-3 (the “Prior S-3”) with the SEC. The Company could sell from time to time up to $150.0 million of common stock, preferred stock, debt securities, warrants, rights, units or depositary shares comprised of any combination of these securities, for the Company’s own account in one or more offerings under the Prior S-3. In April 2023, the Company filed a new shelf registration statement on Form S-3 (“New S-3”) with the SEC, which was declared effective on May 5, 2023 and superseded the Prior S-3. The Company can sell from time to time up to $250.0 million of common stock, preferred stock, debt securities, warrants, rights, units or depositary shares comprised of any combination of these securities, for the Company’s own account in one or more offerings under the New S-3. The terms of any offering under the New S-3 will be established at the time of such offering and will be described in a prospectus supplement to the New S-3 filed with the SEC prior to the completion of any such offering.

In January 2023, the Company entered into an underwriting agreement with Credit Suisse Securities (USA) LLC, William Blair & Company, L.L.C. and Oppenheimer & Co. Inc., as the representatives of the several underwriters named therein (the “Underwriters”), relating to an underwritten public offering (the “Offering”). In January 2023, the Company sold 69,000,000 shares of common stock, including 9,000,000 shares issued as a result of the exercise of the Underwriters’ option to purchase 9,000,000 shares, and received net proceeds of $96.9 million.

ATM Offering

In November 2022, the Company entered into a Controlled Equity Offering^SM Sales Agreement with Cantor Fitzgerald & Co. (the “Agent”), pursuant to which the Company may offer and sell through or to the Agent, as sales agent or principal, shares of the Company’s common stock from time to time (the “ATM Offering”). On November 10, 2022, the Company filed with the SEC a prospectus supplement under the Prior S-3 in connection with the ATM Offering, pursuant to which the Company could offer and sell shares of common stock having an aggregate offering price of up to $15.5 million. In January 2023, the Company issued and sold an aggregate of 2,337,496 shares of common stock for net proceeds of $4.5 million.

On May 5, 2023, the Company filed with the SEC a prospectus under the New S-3 in connection with the ATM Offering, pursuant to which the Company can now offer and sell shares of common stock having an aggregate offering price of up to $75.0 million.

As of September 30, 2023, $175.0 million remained available and unallocated under the New S-3 and $75.0 million remained available under the ATM Offering.

NOTE 10. STOCK-BASED COMPENSATION

On September 23, 2021, the 2021 Equity Incentive Plan (“2021 Plan”) and the 2021 Employee Stock Purchase Plan (“ESPP”) became effective. The 2021 Plan and ESPP provide for annual automatic increases in the number of shares reserved under each plan on January 1 of each year, beginning on January 1, 2022 and through January 1, 2031. The number of shares available for issuance under the 2021 Plan will increase annually in an amount equal to the least of (i) 2,750,000 shares, (ii) a number of shares equal to 4% of the total number of shares of all classes of common stock of the Company outstanding on the last day of the immediately preceding fiscal year, or (iii) such lesser number of shares determined by the Company’s Board of Directors (“Board”) no later than the last day of the immediately preceding fiscal year. The number of shares of common stock available for issuance under the ESPP will increase annually in an amount equal to the least of (i) 550,000 shares of common stock, (ii) a number of shares of common stock equal to 1% of the total number of shares of all classes of common stock of the Company on the last day of the immediately preceding fiscal year, or (iii) such number of shares determined by the Board. As of September 30, 2023, 6,403,566 shares were reserved for issuance under the 2021 Plan, of which 1,086,589 shares were available for future grant and 5,316,977 shares were subject to outstanding options and restricted stock units (“RSUs”), including performance-based awards. As of September 30, 2023, 124,435 shares have been issued under the ESPP and 1,184,572 shares were reserved and available for future issuance.

On March 14, 2022, the Compensation Committee of the Board adopted the 2022 Inducement Equity Incentive Plan (the “2022 Inducement Plan”) under which the Company may grant equity awards to new employees. The only persons eligible to receive grants under the 2022 Inducement Plan are individuals who satisfy the standards for inducement grants under Nasdaq guidance. As of September 30, 2023, 5,500,000 shares were reserved for issuance under the 2022 Inducement Plan, of which 1,196,841 shares were available for future grant and 4,303,159 shares were subject to outstanding stock options.

Under the 2021 Plan, the Company can grant incentive stock options, nonstatutory stock options, restricted stock awards, stock appreciation rights, restricted stock units, performance awards and other awards to employees, directors and consultants. Under the 2022 Inducement Plan, the Company can grant nonstatutory stock options, restricted stock awards, stock appreciation rights, RSUs, performance awards and other awards, but only to an individual, as a material inducement to such individual to enter into employment with the Company or an affiliate of the Company, who (i) has not previously been an employee or director of the Company or (ii) is rehired following a bona fide period of non-employment with the Company. Under the ESPP, the Company can grant purchase rights to employees to purchase shares of common stock at a purchase price which is equal to 85% of the fair market value of common stock on the offering date or on the exercise date, whichever is lower.

Stock options under the 2021 Plan and the 2022 Inducement Plan may be granted for periods of up to 10 years and at prices no less than 100% of the fair market value of the shares on the date of grant, provided, however, that the exercise price of an incentive stock option (which cannot be granted pursuant to the 2022 Inducement Plan) granted to a 10% stockholder may not be less than 110% of the fair market value of the shares. Stock options granted to employees and non-employees generally vest ratably over four years.

Stock Option Activity

The following table summarizes the stock option activity, including performance-based stock options, under the 2021 Plan, the 2022 Inducement Plan and the Company’s 2019 Equity Incentive Plan (the “2019 Plan”) for the nine months ended September 30, 2023:

	Options Outstanding
	Number of Shares			Weighted Average Exercise Price		Weighted - Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value (in thousands)
Balance, December 31, 2022		6,169,180		$	2.25		7.80	$	—
Options granted		5,570,696		$	1.64
Options exercised		(545,816	)	$	0.71
Options cancelled/forfeited		(921,691	)	$	1.84
Balance, September 30, 2023		10,272,369		$	2.04		8.77	$	3
Vested and expected to vest, September 30, 2023		10,272,369		$	2.04		8.77	$	3
Exercisable, September 30, 2023		2,938,989		$	1.99		7.54	$	1

The aggregate intrinsic value represents the difference between the estimated fair value of the underlying common stock and the exercise price of outstanding, in-the-money options. The total intrinsic value of the options exercised during the three and nine months ended September 30, 2023 was less than $0.1 million and $0.4 million, respectively, and during the three and nine months ended September 30, 2022 was less than $0.1 million and $0.1 million, respectively.

The total fair value of options that vested during the nine months ended September 30, 2023 and 2022 was $2.7 million and $1.0 million, respectively. The weighted-average grant date fair value of options granted during the nine months ended September 30, 2023 and 2022 was $1.35 and $1.88 per share, respectively.

Unamortized stock-based compensation for granted options as of September 30, 2023 was $10.5 million, which is expected to be recognized over a weighted-average period of 2.96 years, including $0.1 million related to performance-based stock options, which is expected to be recognized over a weighted-average period of 0.50 years.

Performance-based stock options

The following table summarizes the performance-based stock options activity under the 2021 Plan and the 2019 Plan, which are included in the stock option activity table above, for the nine months ended September 30, 2023:

	Options Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Balance, December 31, 2022		463,959		$	1.42		8.06	$	—
Options granted		50,000		$	1.92
Options cancelled/forfeited		(50,000	)	$	1.92
Balance, September 30, 2023		463,959		$	1.42		7.31	$	—
Vested and expected to vest, September 30, 2023		463,959		$	1.42		7.31	$	—
Exercisable, September 30, 2023		313,959		$	0.78		6.71	$	—

Restricted Stock Units (“RSUs”)

The following table provides a summary of RSU activity under the 2021 Plan during the nine months ended September 30, 2023:

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested restricted stock units at December 31, 2022		2,617,445		$	0.79
Granted		50,000		$	1.50
Vested		(1,309,356	)	$	0.79
Forfeited		(281,275	)	$	0.92
Unvested restricted stock units at September 30, 2023		1,076,814		$	0.79
Outstanding restricted stock units at September 30, 2023		1,076,814		$	0.79

The total fair value of RSUs that vested during the nine months ended September 30, 2023 was $1.0 million. Unamortized stock-based compensation for RSUs as of September 30, 2023 was $0.1 million, which is expected to be recognized over a weighted-average period of 0.03 years.

In October 2023, 1,076,814 RSUs vested and the Company released 724,848 shares of the common stock, net of tax withholdings, to the RSU holders.

Employee Stock Purchase Plan

The Company issued zero and 65,001 shares of common stock under the ESPP during the three and nine months ended September 30, 2023, respectively, and recognized less than $0.1 million and $0.1 million compensation expense related to the ESPP during the three and nine months ended September 30, 2023, respectively. Unamortized stock-based compensation for shares issuable under the ESPP as of September 30, 2023 was less than $0.1 million, which is expected to be recognized over a weighted-average period of 0.19 years. The Company recorded $0.1 million in accrued expenses and other current liabilities related to contributions withheld as of September 30, 2023.

Stock-Based Compensation Expense

The following table presents stock-based compensation expenses related to options and RSUs granted to employees and non-employees, ESPP awards and restricted common stock shares issued to founders (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
General and administrative	$	1,014	$	475	$	2,713	$	1,511
Research and development		381		169		1,340		976
Total	$	1,395	$	644	$	4,053	$	2,487

The Company recognized stock-based compensation income of $0.1 million and expense of less than $0.1 million related to performance-based options and RSUs during the three and nine months ended September 30, 2023, respectively, and stock-based compensation expense of $0.1 million during each of the three and nine months ended September 30, 2022.

Valuation of Stock Options

The grant date fair value of stock options was estimated using a Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Expected term (in years)		5.46 – 6.08			6.01 – 6.08			5.25 – 6.08			1.00-6.08
Expected volatility		108.08% – 108.88	%		105.64% – 105.99	%		103.31% – 108.98	%		63.41% – 105.99	%
Risk-free interest rate		4.12% – 4.55	%		2.99% – 3.27	%		3.45% – 4.55	%		1.40% – 3.27	%
Expected dividend yield		—			—			—			—

Valuation of ESPP Awards

The grant date fair value of ESPP awards was estimated using a Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023			2022
Expected term (in years)		—		—		0.50			0.50
Expected volatility		—		—		266.24	%		75.60	%
Risk-free interest rate		—		—		5.39	%		1.81	%
Expected dividend yield		—		—		—			—

NOTE 11. NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Numerator:
Net loss attributable to common stockholders	$	(17,544	)	$	(11,863	)	$	(47,884	)	$	(24,474	)
Denominator:
Weighted average common shares outstanding		110,813,456			37,983,458			103,495,180			37,913,135
Less: Weighted-average unvested restricted shares		(42,715	)		(367,808	)		(94,040	)		(438,135	)
Less: Shares subject to earnout		(1,050,000	)		(1,050,000	)		(1,050,000	)		(1,050,000	)
Weighted average shares used to compute basic and diluted net loss per share		109,720,741			36,565,650			102,351,140			36,425,000

Net loss per share attributable to common stockholders – basic and diluted	$	(0.16	)	$	(0.32	)	$	(0.47	)	$	(0.67	)

The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have had an antidilutive effect were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Outstanding and issued common stock options		10,272,369		6,279,930		10,272,369		6,279,930
Common stock warrants		4,999,863		4,999,863		4,999,863		4,999,863
Unvested restricted common stock		23,532		329,441		23,532		329,441
Outstanding restricted stock units		1,076,814		3,125		1,076,814		3,125
Total		16,372,578		11,612,359		16,372,578		11,612,359

NOTE 12. RELATED PARTIES

The Company entered into consulting agreements with two founders, one of whom is also a member of the Board, and each of whom also received founders’ common stock shares for services and assigned patents. The Company recorded $0.1 million for the founders’ advisory and consulting services performed for each of the three months ended September 30, 2023 and 2022. The Company recorded $0.2 million and $0.4 million for the founders’ advisory and consulting services performed for the nine months ended September 30, 2023 and 2022, respectively. These expenses were recorded as research and development expenses in the condensed consolidated statements of operations and comprehensive loss. Also, the Company’s licensed technology from Stanford (see Note 6) was created in the Stanford laboratory of Professor Judith Shizuru, one of the Company’s founders and a member of the Board.

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

You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q (this “Quarterly Report”) and with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission on March 8, 2023. Certain of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section entitled “Risk Factors”, in Part I - Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 8, 2023, as updated by the factors described under the heading “Risk Factors” in Part II - Item 1A of this Quarterly Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. You should carefully read the section entitled “Risk Factors” to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see “Cautionary Note Regarding Forward-Looking Statements” below. The events and circumstances reflected in our forward-looking statements may not be achieved or may not occur, and actual results could differ materially from those described in or implied by the forward-looking statements contained in the following discussion and analysis. As a result of these risks, you should not place undue reliance on these forward-looking statements. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Throughout this Quarterly Report, unless the context otherwise requires, the terms “Jasper,” “we,” “us” and “our” in this Quarterly Report refer to Jasper Therapeutics, Inc. and its consolidated subsidiary.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report may constitute “forward-looking statements” for purposes of federal securities laws. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions (including the negative of any of the foregoing) may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

Forward-looking statements in this Quarterly Report may include, for example, but are not limited to, statements about:

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our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future;

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our ability to research, discover and develop additional product candidates;

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the success, cost and timing of our product development activities and clinical trials;

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the potential attributes and benefits of our product candidates;

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our ability to obtain and maintain regulatory approval for our product candidates;

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our ability to obtain funding for our operations;

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our projected financial information, anticipated growth rate and market opportunity;

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our ability to maintain the listing of our public securities on the Nasdaq Capital Market;

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our public securities’ potential liquidity and trading;

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our success in retaining or recruiting, or changes required in, officers, key employees or directors;

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our ability to grow and manage growth profitably;

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the implementation, market acceptance and success of our business model, developments and projections relating to our competitors and industry;

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our ability to obtain and maintain intellectual property protection and not infringe on the rights of others;

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our ability to identify, in-license or acquire additional technology; and

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our ability to maintain our existing license agreements and manufacturing arrangements.

These forward-looking statements are based on current expectations and beliefs concerning future developments and their potential effects. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in Part I - Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 8, 2023, as updated by the factors described under the heading “Risk Factors” in Part II - Item 1A of this Quarterly Report. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some of these risks and uncertainties may in the future be amplified, and there may be additional risks that we consider immaterial or which are unknown. It is not possible to predict or identify all such risks. Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them and to the risk factors. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Overview

We are a clinical-stage biotechnology company focused on developing therapeutics targeting mast cell driven diseases such as Chronic Spontaneous Urticaria (“CSU”) and, Chronic Inducible Urticaria (“CIndU”), as well as diseases where targeting hemopoietic stem cells can provide benefits, such as Lower to Intermediate Risk Myelodysplastic Syndrome (“LR-MDS”), and novel stem cell transplant conditioning regimens.

Our lead product candidate, briquilimab, is a monoclonal antibody designed to block stem cell factor (“SCF”) from binding to and signaling through the CD117 receptor on mast and stem cells. The SCF/CD117 pathway is a survival signal for mast cells and we believe that blocking this pathway may lead to depletion of these cells from skin, which could lead to significant clinical benefit for patients with mast-cell driven diseases such as chronic urticarias. To that end, we are commencing clinical studies in both CSU and CIndU and are evaluating the potential for briquilimab in other mast cell driven diseases. We also believe that blocking SCF binding and signaling with briquilimab can result in depletion of diseased hematopoietic stem cells (“HSCs”) from the bone marrow in certain hematologic malignancies such as myelodysplastic syndrome (“MDS”), and as a result we are currently enrolling a Phase 1 trial evaluating briquilimab as a second-line therapy in patients with LR-MDS. We are also developing briquilimab as a one-time conditioning therapy in various stem cell transplant settings such as severe combined immunodeficiency (“SCID”) for which we are currently conducting a Phase 1/2 clinical trial in patients who have failed a previous stem cell transplant. Briquilimab is also being studied by our academic and institutional partners, Stanford University and National Institutes of Health, in other transplant settings, including Fanconi Anemia, sickle cell disease (“SCD”), chronic granulomatous disease and GATA-2 Type MDS.

We intend to become a fully integrated discovery, development and commercial company in the field of mast and stem cell therapeutics. We are developing briquilimab to be used both as a monothereapy in certain indications and in combination with other therapeutic agents in other indications. Our goal is to advance our product candidates through regulatory approval and bring them to the commercial market based on the data from our clinical trials and communications with regulatory agencies and payor communities. We expect to continue to advance our pipeline and innovate through our research platform.

We have an exclusive license agreement with Amgen Inc. (“Amgen”) for the development and commercialization of the briquilimab monoclonal antibody in all indications and territories worldwide. We also have an exclusive license agreement with Stanford University for the right to use briquilimab in the clearance of stem cells prior to the transplantation of HSCs. We also entirely own the intellectual property for our engineered hematopoietic stem cells product candidates reprogrammed using mRNA delivery, which has been internally developed.

Since our inception, we have devoted substantially all of our resources to performing research and development, enabling manufacturing activities in support of our product development efforts, hiring personnel, acquiring and developing our technology and product candidates, performing business planning, establishing our intellectual property portfolio, raising capital and providing general and administrative support for these activities. We do not have any products approved for sale and have not generated any revenue from product sales. We expect to continue to incur significant and increasing expenses and substantial losses for the foreseeable future as we continue our development of and seek regulatory approvals for our product candidates and commercialize any approved products, seek to expand our product pipeline and invest in our organization. We expect to incur increased expenses associated with operating as a public company, including significant legal, audit, accounting, regulatory, tax-related, director and officer insurance, investor relations and other expenses.

We have incurred significant losses and negative cash flows from operations since our inception. During the nine months ended September 30, 2023 and 2022, we incurred net losses of $47.9 million and $24.5 million, respectively. We generated negative operating cash flows of $35.6 million and $33.2 million during the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, we had an accumulated deficit of $153.0 million.

We had cash and cash equivalents of $103.9 million as of September 30, 2023. Management expects that our existing cash and cash equivalents will be sufficient to fund our operating plan for at least twelve months from the date of filing of this Quarterly Report. We expect to continue to incur substantial losses for the foreseeable future, and our transition to profitability will depend upon successful development, approval and commercialization of our product candidates and upon achievement of sufficient revenues to support our cost structure. We do not expect to generate any revenue from commercial product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates. We may never achieve profitability, and unless we do and until then, we will need to continue to raise additional capital.

Our management plans to monitor expenses and raise additional capital through a combination of public and private equity, debt financings, strategic alliances, and licensing arrangements. Our ability to access capital when needed is not assured and, if capital is not available to us when, and in the amounts, needed, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product candidate, or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially harm our business, financial condition and results of operations.

We expect our expenses will increase substantially in connection with our ongoing and planned activities, as we:

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advance product candidates through preclinical studies and clinical trials;

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procure the manufacture of supplies for our preclinical studies and clinical trials;

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acquire, discover, validate, and develop additional product candidates;

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attract, hire and retain additional personnel;

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operate as a public company;

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implement operational, financial and management systems;

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pursue regulatory approval for any product candidates that successfully complete clinical trials;

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establish a sales, marketing, and distribution infrastructure to commercialize any product candidate for which we may obtain marketing approval and related commercial manufacturing build-out; and

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obtain, maintain, expand, and protect our portfolio of intellectual property rights.

We do not currently own or operate any manufacturing facility. We rely on contract manufacturing organizations (“CMOs”) to produce our drug candidates in accordance with the FDA’s current good manufacturing practices (“cGMP”) regulations for use in our clinical studies. The manufacture of pharmaceuticals is subject to extensive cGMP regulations, which impose various procedural and documentation requirements and govern all areas of record keeping, production processes and controls, personnel and quality control. Under our license agreement with Amgen, we have received a substantial amount of drug product to support initiation of our planned clinical trials of briquilimab. In November 2019, we entered into development and manufacturing agreements with Lonza Sales AG (“Lonza”) relating to the manufacturing of briquilimab and product quality testing. The facility of Lonza in Slough, United Kingdom is responsible for production and testing of drug substance. The facility of Lonza in Stein, Switzerland is responsible for production and testing of drug product. Labelling, packaging and storage of finished drug product is provided by PCI Pharma Services, in San Diego, California. Our agreement with Lonza includes certain limitations on our ability to enter into supply arrangements with any other supplier without Lonza’s consent. In addition, Lonza has the right to increase the prices it charges us for certain supplies depending on a number of factors, some of which are outside of our control.

We do not currently have sales and marketing infrastructure to support commercial launch of our product candidates, if approved. We may build such capabilities in North America prior to potential launch of briquilimab. Outside of North America, we may rely on licensing, co-sale and co-promotion agreements with strategic partners for the commercialization of our product candidates. If we build a commercial infrastructure to support marketing in North America, such commercial infrastructure could be expected to include a targeted sales force supported by sales management, internal sales support, an internal marketing group and distribution support. To develop the appropriate commercial infrastructure internally, we would have to invest financial and management resources, some of which would have to be deployed prior to any confirmation that briquilimab will be approved.

Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenue from the sale of our product candidates, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and may be forced to reduce our operations.

Business Impact of the Geopolitical Events

We are unable to predict the effect that geopolitical events, including global military conflicts, global inflation and rising interest rates, may have on our operations. To the extent that geopolitical events adversely affect our business prospects, financial condition, and results of operations, they may also have the effect of exacerbating many of the other risks described or referenced in the section titled “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 8, 2023, as updated by the risks described in the section of this Quarterly Form 10-Q titled “Risk Factors,” such as those relating to the supply of materials for our product candidates, and the timing and possible disruptions of our ongoing and future preclinical studies and clinical trials, and our access to the financial markets.

Amgen License Agreement

In November 2019, we entered into a worldwide exclusive license agreement with Amgen for briquilimab (formerly known as AMG-191 and JSP191) that also includes translational science and materials from Stanford University. We were assigned and accepted Amgen’s rights and obligations, effective November 21, 2019, for the Investigator Sponsored Research Agreement (the “ISRA”), entered into in June 2013, between Amgen and The Board of Trustees of the Leland Stanford Junior University (“Stanford”) and Quality Agreement between Amgen and Stanford, effective as of October 7, 2015. Under the ISRA, we received an option to negotiate a definitive license with Stanford for rights to certain Stanford intellectual property related to the study of briquilimab in exchange for an option exercise fee of $1.0 million, payable over a two-year period (the “Option”). We exercised the Option to Stanford docket S06-265 “Antibody-based clearance of endogenous stem cell niches prior to transplantation of bone marrow or hematopoietic stem cells (c-kit)” granted by Stanford under the ISRA on June 2, 2020. As a result, we have worldwide exclusive rights to develop and commercialize briquilimab. The issued U.S. patents would be expected to expire in 2027, absent any applicable patent term extensions.

Stanford License Agreement

In March 2021, we entered into an exclusive license agreement with respect to the use of briquilimab from the Stanford Office of Technology Licensing to license U.S. Patent Application Serial Number 60/856,435, filed on November 3, 2006, and U.S. Patent Application Serial Number 12/447,634 (publication number US 2010/0226927 Al) and know-how for the purpose of depleting endogenous blood stem cells in patients for whom hematopoietic cell transplantation is indicated. In July 2023, we entered into an amendment to this exclusive license agreement to modify certain milestones set forth thereunder.

Collaboration and Clinical Trial Agreements

Collaboration with Stanford University

Effective September 2020, we entered into a sponsored research agreement with Stanford, pursuant to which Stanford will execute a Phase 1/2 clinical trial utilizing briquilimab to treat Fanconi Anemia patients in Bone Marrow Failure requiring allogeneic transplant with non-sibling donors at Stanford Lucile Packard Children’s Hospital. As consideration for the services performed by Stanford under this agreement, we agreed to pay Stanford a total of $0.9 million over approximately three years upon the achievement of the first development and clinical milestone, including FDA filings and patient enrollment. The first $0.3 million milestone was achieved in 2020 and paid by us in February 2021. The second $0.3 million milestone was achieved in February 2022 and paid by us in March 2022. The third and final milestone in the amount of $0.3 million was achieved in July 2023.

Other Collaboration and Clinical Trial Agreements

We have a clinical trial agreement with the National Cancer Institute (“NCI”) for the clinical development of briquilimab for the treatment of GATA2 deficiency, whereby NCI will perform the preclinical studies and submit an investigational new drug application (“IND”) for this indication to the FDA, and we will provide materials to use in such studies.

We have also entered into clinical trial agreements with the National Heart, Lung, and Blood Institute (“NHLBI”) and the National Institute of Allergy and Infectious Diseases (“NIAID”), pursuant to which NHLBI and NIAID will serve as the IND sponsors of a Phase 1/2 clinical trial to evaluate briquilimab as a targeted, non-toxic conditioning regimen prior to allogeneic transplant for SCD and for chronic granulomatous disease, respectively. Each party incurs its own costs under these agreements.

Components of Results of Operations

Operating Expenses

Research and Development

The largest component of our total operating expenses since our inception has been research and development activities, including the preclinical and clinical development of our product candidates. Research and development expenses consist primarily of compensation and benefits for research and development employees, including stock-based compensation; expenses incurred under agreements with clinical research organizations (“CROs”) and investigative sites that conduct preclinical and clinical studies; the costs of acquiring and manufacturing clinical study materials and other supplies with CMOs; payments under licensing and research and development agreements; other outside services and consulting costs; and facilities, information technology and overhead expenses. Research and development costs are expensed as incurred.

External research and development costs include:

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costs incurred under agreements with third-party CROs, CMOs and other third parties that conduct preclinical and clinical activities on our behalf and manufacture our product candidates;

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costs associated with acquiring technology and intellectual property licenses that have no alternative future uses;

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consulting fees associated with our research and development activities; and

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other costs associated with our research and development programs, including laboratory materials and supplies.

Internal research and development costs include:

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employee-related costs, including salaries, benefits and stock-based compensation expense for our research and development personnel; and

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other expenses and allocated overheads incurred in connection with our research and development programs.

We expect our research and development expenses to increase substantially for the foreseeable future as we advance our product candidates into and through preclinical studies and clinical trials, pursue regulatory approval of our product candidates and expand our pipeline of product candidates. The process of conducting the necessary preclinical and clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidates may be affected by a variety of factors, including the safety and efficacy of our product candidates, early clinical data, investment in our clinical programs, competition, manufacturing capability and commercial viability. We may never succeed in achieving regulatory approval for any of our product candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or if, when and to what extent we will generate revenue from the commercialization and sale of our product candidates, if approved.

Our future research and development costs may vary significantly based on factors, such as:

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the scope, rate of progress, expense and results of our discovery and preclinical development activities;

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the costs and timing of our chemistry, manufacturing and controls activities, including fulfilling cGMP-related standards and compliance, and identifying and qualifying suppliers;

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per-patient clinical trial costs;

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the number of trials required for approval;

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the number of sites included in our clinical trials;

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the countries in which the trials are conducted;

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delays in adding a sufficient number of trial sites and recruiting suitable patients to participate in our clinical trials;

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the number of patients that participate in the trials;

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the number of doses that patients receive;

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patient drop-out or discontinuation rates;

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potential additional safety monitoring requested by regulatory agencies;

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the duration of patient participation in the trials and follow up;

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the cost and timing of manufacturing our product candidates;

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the phase of development of our product candidates;

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the efficacy and safety profile of our product candidates;

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the timing, receipt, and terms of any approvals from applicable regulatory authorities, including the FDA and non-U.S. regulators;

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maintaining a continued acceptable safety profile of our product candidates following approval, if any, of our product candidates;

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significant and changing government regulation and regulatory guidance;

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changes in the standard of care on which a clinical development plan was based, which may require new or additional trials;

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the extent to which we establish additional strategic collaborations or other arrangements; and

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the impact of any business interruptions to our operations or to those of the third parties with whom we work.

General and Administrative

General and administrative expenses consist primarily of personnel costs and expenses, including salaries, employee benefits, and stock-based compensation for our executive and other administrative personnel; legal services, including relating to intellectual property and corporate matters; accounting, auditing, consulting and tax services; insurance; and facility and other allocated costs not otherwise included in research and development expenses. We expect our general and administrative expenses to increase substantially for the foreseeable future as we anticipate an increase in our personnel headcount to support expansion of research and development activities, as well as to support our operations generally. We also expect to continue to incur significant expenses associated with being a public company, including costs related to accounting, audit, legal, regulatory, and tax-related services associated with maintaining compliance with applicable Nasdaq and SEC requirements; additional director and officer insurance costs; and investor and public relations costs.

Other (Expense) Income, Net

Other (expense) income, net includes changes in the fair value of common stock warrant liability and earnout liability, foreign currency transactions gains and losses, and interest income. These financial instruments were classified as liabilities in our consolidated balance sheets and re-measured at each reporting period end until they are exercised, reclassified into equity, settled, or have expired.

Results of Operations

Three Months Ended September 30, 2023 and 2022

The following table summarizes our results of operations for the three months ended September 30, 2023 and 2022 (in thousands, except percentages):

	Three Months Ended September 30,						Change			Change
	2023			2022			$			%
Operating expenses
Research and development	$	14,848		$	9,022		$	5,826			65
General and administrative		4,514			3,686			828			22
Total operating expenses		19,362			12,708			6,654			52
Loss from operations		(19,362	)		(12,708	)		(6,654	)		52
Interest income		1,433

SEC Form 10-Q filed by Jasper Therapeutics Inc.