thrx-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_______________________________________

FORM 10-Q

_______________________________________

(Mark One)


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

For the quarterly period ended March 31, 2023


o			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: 001-40869

_______________________________________

THESEUS PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in its Charter)

_______________________________________


Delaware			83-0712806
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

314 Main Street Cambridge, Massachusetts			02142
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (857) 400-9491

_______________________________________

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

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

THRX

The Nasdaq Global Market, LLC

(Nasdaq Global Select Market)

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

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 x No o

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


Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	x	Smaller reporting company	x

		Emerging growth company	x

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. o

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

As of May 5, 2023, the registrant had 43,576,534 shares of common stock, $0.0001 par value per share, outstanding.

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		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	25
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
Signatures		30

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or Quarterly Report, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, as well as information included in oral statements or other written statements made or to be made by us, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that involve substantial risks and uncertainties. All statements contained in this Quarterly Report other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” and similar expressions are intended to identify forward-looking statements.

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

•the ability of our preclinical studies and clinical trials to demonstrate safety and efficacy of product candidates and other positive results;

•the initiation, timing, progress, results and cost of our research and development programs and our current and future preclinical studies and clinical trials for current product candidates and other product candidates we may develop, and related preparatory work;

•the timing, scope and likelihood of regulatory filings and approvals, including timing of investigational new drug applications and final approval by the US Food and Drug Administration, or the FDA, of our current product candidates and any future product candidates we may develop;

•our ability to develop and advance our current product candidates and development programs into, and successfully complete, clinical trials;

•our manufacturing, commercialization, and marketing capabilities and strategy;

•our plans relating to commercializing product candidates, if approved, including the geographic areas of focus and sales strategy;

•the need to hire additional personnel and our ability to attract and retain such personnel;

•the size of the market opportunity for our product candidates and development programs, including our estimates of the number of patients who suffer from the diseases we are targeting;

•our competitive position and the success of competing therapies that are or may become available;

•the beneficial characteristics, and the potential safety, efficacy and therapeutic effects of product candidates;

•the potential advantages of our integrated research and development approach;

•existing regulations and laws and regulatory developments in the United States, Europe and other jurisdictions;

•our expectations regarding the impact of the COVID-19 pandemic on our business and the timing and enrollment of our clinical trials;

•our intellectual property position, including the scope of protection we are able to establish and maintain for intellectual property rights covering our current product candidates and other product candidates we may develop, including the extensions of existing patent terms where available, the validity of intellectual property rights held by third parties, and our ability not to infringe, misappropriate or otherwise violate any third-party intellectual property rights;

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•our continued reliance on third parties to conduct additional preclinical studies and clinical trials of product candidates;

•our ability to contract with third-party suppliers and manufacturers for the manufacture of product candidates for preclinical studies and clinical trials and their ability to perform timely and adequately as a result of supply chain constraints or otherwise;

•our ability to obtain, and negotiate favorable terms of, any collaboration, licensing or other arrangements that may be necessary or desirable to develop, manufacture or commercialize product candidates;

•the pricing and reimbursement of current product candidates and other product candidates we may develop, if approved;

•the rate and degree of market acceptance and clinical utility of current product candidates and other product candidates we may develop;

•our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•our anticipated use of our existing cash resources and use of proceeds from sales of our common stock in “at-the-market” offerings and the period over which such proceeds, together with existing cash, will be sufficient to meet our operating needs;

•our financial performance;

•the period over which we estimate our existing cash, cash equivalents, and marketable securities will be sufficient to fund our future operating expenses and capital expenditure requirements;

•our expectations regarding the period during which we will remain an emerging growth company, or EGC, under the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act;

•developments relating to our competitors, our industry or the economy, the impact of the instability in the global financial markets and the disruptions of the financial services industry; and

•other risks and uncertainties, including those listed in the section titled “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 Securities and Exchange Commission, or the SEC, on March 9, 2023, or the Annual Report.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report.

These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in the section titled “Risk Factors” in Part II, Item 1A of our Annual Report and elsewhere in this Quarterly Report. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance or achievements. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report or to conform these statements to actual results or to changes in our expectations, except as required by law.

iii

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In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report and the documents that we reference in this Quarterly Report and have filed with the SEC with the understanding that our actual future results, performance and events and circumstances may be materially different from what we expect.

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PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Theseus Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(Unaudited)


	MARCH 31, 2023		DECEMBER 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	109,698	$	94,605
Short-term marketable securities	126,936		103,374
Prepaid expenses and other current assets	5,763		4,137
Total current assets	242,397		202,116
Property and equipment, net	407		416
Operating lease right-of-use asset	4,198		4,334
Long-term marketable securities	6,979		13,817
Other assets	1,639		1,764
Total assets	$	255,620	$	222,447
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,185	$	4,973
Accrued expenses and other current liabilities	3,691		5,414
Operating lease liability, current portion	748		743
Total current liabilities	6,624		11,130
Operating lease liability, net of current portion	3,129		3,236
Restricted stock liability, net of current portion	379		466
Total liabilities	10,132		14,832
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 50,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 0 shares issued and outstanding as of March 31, 2023 and December 31, 2022	—		—
Common stock, $0.0001 par value; 500,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 43,576,534 and 38,734,446 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	4		4
Additional paid-in capital	372,415		320,183
Accumulated deficit	(126,772)		(112,186)
Accumulated other comprehensive loss	(159)		(386)
Total stockholders’ equity	245,488		207,615
Total liabilities and stockholders’ equity	$	255,620	$	222,447

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

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Theseus Pharmaceuticals, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

(Unaudited)


	THREE MONTHS ENDED MARCH 31,
		2023		2022
Operating expenses:
Research and development		$	12,401	$	6,548
General and administrative		4,654		4,031
Total operating expenses		17,055		10,579
Loss from operations		(17,055)		(10,579)
Other income, net		2,469		82
Total other income, net		2,469		82
Net loss		$	(14,586)	$	(10,497)
Net loss attributable to common stockholders—basic and diluted		$	(14,586)	$	(10,497)
Weighted-average common stock outstanding—basic and diluted		42,371,206		38,247,970
Net loss per share attributable to common stockholders—basic and diluted		$	(0.34)	$	(0.27)

Comprehensive loss:
Net loss		$	(14,586)	$	(10,497)
Other comprehensive loss:
Unrealized gain (loss) on marketable securities		$	227	$	(129)
Total comprehensive loss		$	(14,359)	$	(10,626)

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

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Theseus Pharmaceuticals, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(Unaudited)


	COMMON STOCK $0.0001 PAR VALUE			ADDITIONAL PAID-IN CAPITAL		ACCUMULATED OTHER COMPREHENSIVE LOSS		ACCUMULATED DEFICIT		TOTAL STOCKHOLDERS’ EQUITY
	SHARES	AMOUNT
Balance at December 31, 2022	38,422,621	$	4	$	320,183	$	(386)	$	(112,186)	$	207,615
Vesting of restricted stock	66,015	—		—		—		—		—
Stock-based compensation	—	—		2,993		—		—		2,993
Vesting of early exercised options	21,620	—		87		—		—		87
Issuance of common stock upon exercise of stock options	17,880	—		48		—		—		48
Vesting of restricted stock units, less shares withheld and retired to satisfy tax obligations	7,907	—		—		—		—		—
Issuance of common stock, net of issuance costs of $1,343	4,816,301	—		49,104		—		—		49,104

Unrealized gain on marketable securities	—	—		—		227		—		227
Net loss	—	—		—		—		(14,586)		(14,586)
Balance at March 31, 2023	43,352,344	$	4	$	372,415	$	(159)	$	(126,772)	$	245,488

Balance at December 31, 2021	37,872,604	$	4	$	308,008	$	—	$	(61,578)	$	246,434
Vesting of restricted stock	85,431	—		—		—		—		—
Stock-based compensation	—	—		2,044		—		—		2,044
Unrealized (loss) on marketable securities	—	—		—		(129)		—		(129)
Net loss	—	—		—		—		(10,497)		(10,497)
Balance at March 31, 2022	37,958,035	$	4	$	310,052	$	(129)	$	(72,075)	$	237,852

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

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Theseus Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


	THREE MONTHS ENDED MARCH 31,
	2023		2022
Cash flows from operating activities:
Net loss	$	(14,586)	$	(10,497)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	20		1
Stock-based compensation expense	2,993		2,044
Amortization and accretion of marketable securities	(813)		2
Non-cash interest income	80		(162)
Non-cash operating lease expense	135		—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(1,961)		394
Other assets	125		98
Accounts payable	(2,799)		423
Accrued expenses and other current liabilities	(1,723)		13
Operating lease liability	(101)		—
Net cash used in operating activities	(18,630)		(7,684)
Cash flows from investing activities:
Purchases of short-term and long-term marketable securities	(56,640)		(90,670)
Sales and maturities of short-term and long-term marketable securities	40,877		—
Purchases of property and equipment	—		(27)
Net cash used in investing activities	(15,763)		(90,697)
Cash flows from financing activities:
Proceeds from issuance of common stock through ATM sales, net of offering costs	49,438		—
Proceeds from exercise of stock options	48		—



Net cash provided by financing activities	49,486		—
Net increase (decrease) in cash, cash equivalents and restricted cash	15,093		(98,381)
Cash, cash equivalents and restricted cash at beginning of year	94,984		245,041
Cash, cash equivalents and restricted cash at end of period	$	110,077	$	146,660
Supplemental disclosure of cash flows:

Obtaining a right-of-use asset in exchange for an operating lease liability	$	—	$	4,721

Purchases of property and equipment in accounts payable	$	11	$	—

The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of each of the dates shown below:


	THREE MONTHS ENDED MARCH 31,
	2023		2022
Cash and cash equivalents	$	109,698	$	146,281
Restricted cash (included in other assets)	379		379
Total cash, cash equivalents, and restricted cash	$	110,077	$	146,660

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

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Theseus Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Nature of the Business

Theseus Pharmaceuticals, Inc. (“Theseus” or the “Company”) is a clinical-stage biopharmaceutical company focused on improving the lives of cancer patients through the discovery, development and commercialization of transformative targeted therapies. The Company was incorporated in December 2017 under the laws of the State of Delaware, and its principal offices are in Cambridge, Massachusetts.

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative US GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The accompanying condensed consolidated financial statements and footnotes to the condensed consolidated financial statements have been prepared on the same basis as the most recently audited annual consolidated financial statements and, in the opinion of management, reflect all normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of March 31, 2023 and the results of its operations and its cash flows for the interim periods presented. The results for the three months ended March 31, 2023 are not necessarily indicative of results to be expected for the year ending December 31, 2023, any other interim periods, or any future year or period. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2022.

Liquidity

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. The Company’s product candidates and development programs will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Because of the numerous risks and uncertainties associated with product development, the Company is unable to predict the timing or amount of increased expenses, or when or if the Company will be able to achieve or maintain profitability. Even if the Company is able to generate revenue from product sales, the Company may not become profitable. If the Company fails to become profitable or is unable to sustain profitability on a continuing basis, then the Company may be unable to continue its operations at planned levels and be forced to reduce or terminate its operations. The Company expects to incur substantial operating losses and negative cash flows from operations for the foreseeable future.

In accordance with ASC 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. As of March 31, 2023, the Company had an accumulated deficit of $126.8 million. During the three months ended March 31, 2023, the Company incurred a loss of $14.6 million and utilized $18.6 million of cash in operations. The Company expects to continue to generate operating losses for the foreseeable future. The Company expects that its cash, cash equivalents, and marketable securities of $243.6 million at March 31, 2023 will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next twelve months from issuance of the accompanying condensed consolidated financial statements.

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2. Summary of Significant Accounting Policies

The significant accounting policies and estimates used in the preparation of the accompanying condensed consolidated financial statements are described in the Company’s audited consolidated financial statements, which were included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 9, 2023 (“Annual Report”). There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2023, except as noted below.

Unaudited Interim Financial Information

The accompanying condensed consolidated financial statements and the accompanying notes as of March 31, 2023 and December 31, 2022 and for the three months ended March 31, 2023 and 2022 are unaudited. The condensed consolidated interim financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of March 31, 2023 and the results of its operations for the three months ended March 31, 2023 and 2022 and its cash flows for the three months ended March 31, 2023 and 2022.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Estimates and judgments are based on historical information and other market-specific or various relevant assumptions, including in certain circumstances, future projections, that management believes to be reasonable under the circumstances. Actual results could differ materially from estimates. Significant estimates and assumptions are used for, but not limited to, the accruals for research and development expenses.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents, and marketable securities. Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality and have not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Such deposits have and will continue to exceed federally insured limits. The Company has not experienced any losses on its cash deposits. The Company’s short-term and long-term marketable securities are invested in high grade securities with limited concentration in any one issuer, and as a result, the Company believes represent minimal credit risk.

Recently Issued and Adopted Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its condensed consolidated financial statements and disclosures.

In June 2016, the FASB issued ASU No. 2016‑13, Financial Instruments—Credit Losses (Topic 326)—Measurement of Credit Losses on Financial Instruments, which has been subsequently amended (“ASU 2016‑13”). This updated accounting guidance significantly changes the impairment model for most financial assets and certain other instruments. ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on trade receivables, loans and other financial instruments. This update is effective for the Company’s fiscal year beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted this new standard on January 1, 2023, and the adoption had no material impact on the Company's consolidated financial statements.

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3. Fair Value Measurements

The carrying values of other current assets, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of these instruments. The Company’s marketable securities, which may include both short-term and long-term marketable securities consisting of high-quality, marketable debt instruments of corporations are measured at fair value in accordance with the fair value hierarchy.

Assets measured at fair value on a recurring basis are as follows (in thousands):



	FAIR VALUE MEASUREMENTS AT MARCH 31,2023
	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
Cash equivalents:
Money market funds	$	31,910	$	—	$	—	$	31,910

Marketable securities:
Commercial paper	—		49,206		—		49,206
Corporate debt securities	—		30,518		—		30,518
Asset-backed securities	—		9,425		—		9,425
Government securities	—		44,766		—		44,766
Total financial assets	$	31,910	$	133,915	$	—	$	165,825



	FAIR VALUE MEASUREMENTS AT DECEMBER 31,2022
	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
Cash equivalents:
Money market funds	$	6,846	$	—	$	—	$	6,846
Commercial paper	—		3,989		—		3,989
Marketable securities:
Commercial paper	—		25,187		—		25,187
Corporate debt securities	—		45,673		—		45,673
Asset-backed securities	—		13,574		—		13,574
Government securities	—		32,757		—		32,757
Total financial assets	$	6,846	$	121,180	$	—	$	128,026

During the three months ended March 31, 2023 and the year ended December 31, 2022, there were no transfers between fair value levels.

4. Marketable Securities

The Company’s investment policy defines allowable investments and establishes guidelines relating to credit quality, diversification, and maturities of its marketable securities to preserve principal and maintain liquidity. In accordance with the Company’s investment policy, it has invested funds in marketable securities as of March 31, 2023 and December 31, 2022. The Company’s marketable securities are classified as available-for-sale investments.

The cost, gross unrealized holding gains, gross unrealized holding losses and fair value of marketable securities by types and classes of security consisted of the following (in thousands):

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	MARCH 31, 2023
	MATURITY IN YEARS	AMORTIZED COST		UNREALIZED GAIN		UNREALIZED LOSS		FAIR VALUE
Commercial paper	less than 1	$	49,206	$	—	$	—	$	49,206
Corporate debt securities	less than 1	28,599		7		(95)		28,511
Asset-backed securities	less than 1	4,462		—		(9)		4,453
Government securities	less than 1	44,807		49		(90)		44,766
Short-term marketable securities		$	127,074	$	56	$	(194)	$	126,936

Corporate debt securities	1 - 2	1,993		14		—		2,007
Asset backed securities	1 - 2	5,007		—		(35)		4,972

Long-term marketable securities		$	7,000	$	14	$	(35)	$	6,979


	DECEMBER 31, 2022
	MATURITY IN YEARS	AMORTIZED COST		UNREALIZED GAIN		UNREALIZED LOSS		FAIR VALUE
Commercial paper	less than 1	$	25,187	$	—	$	—	$	25,187
Corporate debt securities	less than 1	39,071		9		(185)		38,895
Asset-backed securities	less than 1	8,555		2		(10)		8,547
Government securities	less than 1	30,892		8		(155)		30,745
Short-term marketable securities		$	103,705	$	19	$	(350)	$	103,374

Corporate debt securities	1 - 2	6,783		—		(5)		6,778
Asset backed securities	1 - 2	5,074		—		(47)		5,027
Government securities	1 - 2	2,015		—		(3)		2,012
Long-term marketable securities		$	13,872	$	—	$	(55)	$	13,817

The Company has recorded marketable securities at fair value in its condensed consolidated balance sheets and unrealized gains and losses are reported as a component of accumulated other comprehensive income (loss). The amount of realized gains and losses reclassified into earnings are based on the specific identification of the securities sold or securities that reached maturity date. The amount of realized gains and losses reclassified into earnings have not been material to the Company’s condensed consolidated statements of operations. The Company generally does not intend to sell any marketable securities prior to recovery of their amortized cost basis for any marketable securities in an unrealized loss position.

The Company has determined that there were no material declines in fair value of its marketable securities due to credit-related factors as of March 31, 2023 and December 31, 2022.

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5. Property and Equipment, net

Property and equipment, net consisted of the following as of March 31, 2023 and as of December 31, 2022 (in thousands):


	MARCH 31, 2023		DECEMBER 31, 2022
Computer equipment	$	50	$	50
Furniture and fixtures	341		341
Office equipment	87		76
Property and equipment	478		467
Less: accumulated depreciation	(71)		(51)
Property and equipment, net	$	407	$	416

Depreciation expense for the three months ended March 31, 2023 and 2022 was approximately $20,153 and $1,000, respectively. There were no impairments recorded to date.

6. Accrued Expenses

Accrued expenses consisted of the following as of March 31, 2023 and as of December 31, 2022 (in thousands):


	MARCH 31, 2023		DECEMBER 31, 2022
Accrued research and development	$	1,679	$	1,498
Accrued legal	184		164
Accrued compensation and benefits	1,188		3,130
Accrued other	291		273
Restricted stock liability, current	349		349
Total accrued expenses and other current liabilities	$	3,691	$	5,414

7. License Agreement

During the three months ended March 31, 2023, there were no changes to the Company’s license agreement with ARIAD Pharmaceuticals, Inc. (“ARIAD”). For a summary of the terms of the license agreement, including the Company’s accounting treatment, please refer to Note 7 to the Company’s audited consolidated financial statements for the year ended December 31, 2022, included in the Company’s Annual Report.

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8. Leases

The following table presents future lease payments under the terms of the Company’s operating leases as of March 31, 2023, including a reconciliation to the present value of operating lease liabilities recognized in the condensed consolidated balance sheet (in thousands):


Fiscal Year	Operating Lease
Remainder of 2023	$	585
2024	797
2025	821
2026	846

SEC Form 10-Q filed by Theseus Pharmaceuticals Inc.