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 ☐

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

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

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

As of ~~May 17, 2021,~~November 3, 2023, the registrant had ~~40,117,598~~3,116,729 shares of common stock, $0.01 par value per share, outstanding.

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

Condensed Consolidated Statements of ~~Convertible Preferred Stock and~~Changes in Stockholders’ Equity

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

Cash and the Company expects its operations in all locations to be affected as the virus continues to proliferate. The Company has adjusted certain aspects of its operations to protect employees and customers while still meeting customers’ needs for vital technology. The Company will continue to monitor the situation closely and it is possible that further measures will be implemented. In light of the uncertainty as to the severity and duration of the pandemic, the impact on the financial position is uncertain at this time.Cash Equivalents

Cash and cash equivalents

~~The Company considers all~~ consist of cash and highly liquid investments ~~purchased~~ with original maturities of three months or less ~~from~~at the ~~purchase~~ date of purchase. The carrying amounts approximate fair value due to ~~be cash equivalents.~~the short maturities of these investments. Cash equivalents consist primarily of amounts invested in money market funds and ~~commercial paper~~certificates of deposit and are stated at fair value.

Restricted Cash

Restricted cash represents collateral provided under the Company's credit card program.

Marketable ~~securities~~Securities

The Company’s investments in marketable securities are maintained by investment managers and consist of ~~corporate debt~~asset backed securities with original maturities of over 90 ~~days~~, days, all of which are considered available-for-sale debt securities. The Company classifies its available-for-sale securities as short-term marketable securities on the ~~consolidated balance sheets,~~Condensed Consolidated Balance Sheets, even though the stated maturity date may be one year or more beyond the current ~~consolidated balance sheet~~Condensed Consolidated Balance Sheets date, as the Company views those securities as available for use in current operations, if needed.

Available-for-sale securities are carried at fair value with their unrealized gains and losses included in accumulated other comprehensive loss within stockholders’ ~~(deficit)~~ equity, until such gains and losses are realized in other (expense) income, ~~(expense),~~ net, within the ~~consolidated statements~~Condensed Consolidated Statements of ~~operations~~Operations and ~~comprehensive loss or until an unrealized loss is considered other-than-temporary.~~Comprehensive Loss, except for the changes in allowance for expected credit losses, which are recorded in other (expense) income, net, within the Condensed Consolidated Statements of Operations and Comprehensive Loss. Realized gains and losses are determined using the specific identification method.

The Company ~~evaluates~~conducts periodic reviews to identify and evaluate each investment in its ~~investments with~~portfolio that has an unrealized ~~losses for other-than-temporary impairment. When assessing investments for other-than-temporary declines in value,~~loss to determine whether a credit loss exists. An unrealized loss exists when the ~~Company considers such factors as, among other things, how significant the decline in value is as a percentage of the original cost, how long the market~~current fair value of ~~the investment has been~~an individual security is less than its ~~original~~amortized cost basis.

A credit loss is estimated by considering available information relevant to the Company’s ability and intent to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value and market conditions. If the Company determines from this analysis that it does not expect to receive cash flows sufficient to recover the entire amortized costcollectability of the security and information about past events, current conditions and reasonable and supportable forecasts. Any credit loss is recorded as a charge to other (expense) income, net, not to exceed the amount of the unrealized loss. Unrealized losses other than the credit loss are recognized in accumulated other comprehensive loss. When determining whether a credit loss exists, the ~~impairment~~Company considers several factors, including whether the Company has the intent to sell the security or whether it is ~~considered other-than-temporary~~more likely than not that the Company will be required to sell the security prior to recovery of its amortized cost basis. If the Company has an intent to sell, or if it is more likely than not that the Company will be required to sell a debt security in an unrealized loss position before recovery of its amortized cost basis, the Company will write down the security to its fair value and ~~is recognized~~record the corresponding charge as a component of other (expense) income, net. No declines in value were deemed to be credit losses as of January 1, 2023, the ~~consolidated statements~~adoption date of ~~operations~~Accounting Standards Update (“ASU”) 2016-13—Financial Instruments (Topic 326) Measurement of Credit Losses on Financial Instrument (“ASU 2016-23”), or during the three and ~~comprehensive loss.~~nine months ended September 30, 2023.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash, cash equivalents and marketable securities. Bank deposits are held by accredited financial institutions, and these deposits are often in excess of insured limits. The Company limits its credit risk associated with cash and cash equivalents by placing them with financial institutions it believes are of high quality.

The Company’s available-for-sale investments primarily consist of high-grade asset-backed securities and potentially subject the Company to concentrations of credit risk. The Company has adopted investment guidelines that limit the amounts the Company may invest in any one type of investment and requires all investments held by the Company to be highly rated, thereby reducing credit risk exposure.

Research and ~~development expenses~~Development Expenses

~~Research and development expenses consist primarily of costs incurred for the development of the Company’s lead clinical product candidates BT-11, NX-13 and other pipeline therapeutic assets.~~ Research and development costs consist primarily of external costs related to clinical development, contract manufacturing and discovery as well as personnel costs. ~~Personnel costs consist of salaries and employee benefits.~~ The Company estimates preclinical and clinical study and research expenses based on the services performed, pursuant to contracts with research institutions that conduct and manage ~~preclinical~~nonclinical and clinical studies and research services on its behalf. The Company records the costs of research and development activities based upon the estimated amount of services provided but not yet invoiced and includes these costs in accrued liabilities in the ~~consolidated balance sheets.~~Condensed Consolidated Balance Sheets. These costs are a component of the Company’s research and development expenses. The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with its third-party service providers under the service agreements. The Company makes significant judgments and estimates in determining the accrued liabilities balance in each reporting period. As actual costs become known, the Company adjusts its accrued liabilities.

Government Assistance Tax Credits

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) provided refundable employee retention credits ("ERC"), which are used to offset payroll tax liabilities. During the three months ending June 30, 2023, the Company determined that it qualified for an ERC in the amount of $0.6 million related to labor costs recognized during the years ended December 31, 2020 and 2021 and filed its amended employment tax returns to claim this credit. The Company has ~~not experienced any material differences between accrued costs~~recorded $0.4 million of the offset as a reduction to research and ~~actual costs incurred.~~development expense and $0.2 million as a reduction to general and administrative expense in the accompanying Condensed Consolidated Statement of Operations and Comprehensive Loss. In August 2023, the Company received all $0.6 million of refunds.

~~Basic and diluted net loss~~Net Loss per ~~share~~Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock together with the number of additional shares of common stock that would have been outstanding if all potentially dilutive shares of common stock had been issued. ~~Since~~The Company included the ~~Company was~~weighted-average number of pre-funded warrants issued in ~~a loss position~~its private placement in the number of outstanding shares for ~~the periods presented,~~calculating basic ~~net loss per share is the same as~~and diluted net loss per share ~~since~~because the ~~effects~~shares issuable upon exercise of the pre-funded warrants will be issued for little to no consideration. The following table sets forth the computation of basic and diluted net loss per share during the periods presented (in thousands, except share and per share amounts):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Numerator:
Net loss	$	(5,860	)	$	(7,896	)	$	(15,816	)	$	(34,044	)
Denominator:
Weighted-average shares of common stock issued and outstanding		3,116,729			4,025,489			3,309,835			4,025,489
Weighted-average pre-funded warrants outstanding		3,090,909			—			2,989,011			—
Weighted-average shares used to calculate net loss per common share, basic and diluted		6,207,638			4,025,489			6,298,846			4,025,489
Net loss per common stock, basic and diluted	$	(0.94	)	$	(1.96	)	$	(2.51	)	$	(8.46	)

The following outstanding shares of potentially dilutive securities have been excluded from diluted net loss per common share for the periods presented, because their inclusion would be anti-dilutive:


	Nine Months Ended September 30,
	2023		2022
Stock options to purchase common stock		494,716		340,473
Restricted stock units		99,807		—
Total		594,523		340,473

Comprehensive Loss

The Company’s comprehensive loss is currently comprised of changes in unrealized loss on available-for-sale securities.

Segment Reporting

Operating segments are ~~antidilutive.~~identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment.

Emerging ~~growth company status~~Growth Company Status

The Company is an emerging growth company (“EGC”), as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an EGC or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these ~~combined and~~condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

3. Fair ~~value measurement~~Value Measurement

Financial assets and liabilities are recorded at fair value on a recurring basis in the ~~consolidated balance sheet.~~Condensed Consolidated Balance Sheets. The carrying values of the Company’s financial assets and liabilities, including cash and cash equivalents, prepaids and other current assets, accounts payable and accrued expenses approximate their fair value due to the short-term maturity of these instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. Assets and liabilities recorded at fair value in the condensed consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels are directly related to the amount of subjectivity with the inputs to the valuation of these assets or liabilities as follows:

Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2—Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable inputs for similar assets or liabilities. These include quoted prices for identical or similar assets or liabilities in active markets and quoted prices for identical or similar assets of liabilities in markets that are not active;

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or ~~liabilities~~liabilities.

~~Financial~~The following table presents information about the Company’s financial assets ~~and liabilities subject to~~measured at fair value ~~measurements~~ on a recurring basis and indicates the level of ~~inputs used in~~the fair value hierarchy utilized to determine such ~~measurements~~fair values as of September 30, 2023 (in thousands):


	September 30, 2023
	Level 1		Level 2		Level 3		Aggregate Fair Value
Assets:
Money market fund	$	30,220	$	—	$	—	$	30,220
Certificates of deposit		12,000		—		—		12,000
Asset backed securities		—		62		—		62
Total assets	$	42,220	$	62	$	—	$	42,282

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values as of December 31, 2022 (in thousands):


	December 31, 2022
	Level 1		Level 2		Level 3		Aggregate Fair Value
Assets:
U.S. government treasury securities	$	25,442	$	—	$	—	$	25,442
Fixed income securities		—		6,639		—		6,639
Asset backed securities		—		1,123		—		1,123
Total assets	$	25,442	$	7,762	$	—	$	33,204

The contractual maturities of available-for-sale securities as of September 30, 2023 are as follows (in thousands):

March 31, 2021

Level 1

Level 2

Level 3

Aggregate
fair value

Assets:

Money market funds

$
7,233

$
0

$
0

$
7,233

Fixed income securities

0

71,512

0

71,512

Asset backed securities

0

26,274

0

26,274

Total assets

$
7,233

$
97,786

$
0

$
105,019

December 31, 2020

Level 1

Level 2

Level 3

Aggregate
fair value

Assets:

Money market funds

$
265

$
—

$
—

$
265

Fixed income securities

—

23,343

—

23,343

Asset backed securities

—

2,375

—

2,375

Total assets

$
265

$
25,718

$
—

$
25,983


Within one year	$	—
Within one to five years		62
Total contractual maturities	$	62

~~The contractual maturities of available for sale securities of March 31, 2021 are as follows:~~

As of March 31,

2021

(in thousands)

Within one year

$
44,963

Within one to five years

52,823

Total contractual maturities

$
97,786

The Company’s financial instruments consist of Level 1 and Level 2 assets. The Company values its Level 1 assets based on quoted prices in active markets for identical instruments. Level 1 assets consist primarily of highly liquid money market funds, certificates of deposit and U.S. government treasury securities that are included in cash equivalents. The Company values its Level 2 assets consisting of ~~certificates of deposits,~~ fixed income securities and asset backed securities with the help of a third-party pricing service using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. The Company uses such pricing data as the primary input, to which no material adjustments have been made during the periods presented, to make its determination and assessments as to the ultimate valuation of these assets. The fair values of these instruments approximate amortized cost.

There were no transfers into or out of Level 3 securities during the nine months ended September 30, 2023.

6. Equity and Stock-Based Compensation

Securities Purchase Agreement

In January 2023, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with the institutional accredited investors named therein (the “Investors”), pursuant to which the Company issued and sold to the Investors in a private placement (the “Private Placement”) pre-funded warrants (the “Pre-Funded Warrants”) to purchase an aggregate of 3,090,909 shares (the “Warrant Shares”) of the Company’s common stock. Each Pre-Funded Warrant has an exercise price of $0.10 per Warrant Share. The purchase price per Pre-Funded Warrant was $5.40. The Company received net proceeds of $16.6 million in the Private Placement, after deducting $0.1 million of offering expenses.

The Pre-Funded Warrants issued in the Private Placement provide that the holder of the Pre-Funded Warrants will not have the right to exercise any portion of its Pre-Funded Warrants if such holder, together with its affiliates and any other persons whose beneficial ownership of common stock would be aggregated with the holder for purposes of Section 13(d) or Section 16 of the Securities Exchange Act of 1934, as amended, would beneficially own in excess of 35% of the number of shares of common stock outstanding immediately after giving effect to such exercise. The Warrant Shares will also be subject to certain registration rights under the Company’s Amended and Restated Investors’ Rights Agreement. As of September 30, 2023, none of the Pre-Funded Warrants have been exercised.

Treasury Stock

In February 2023, in connection with entering into the Purchase Agreement with its founder, a related party who is the former chief executive officer of the Company and a greater than 5% owner of the Company's common stock at the time of the transaction, and other stockholders, the Company repurchased 908,644 shares of common stock for an aggregate price of $3.0 million. The repurchased common stock was subsequently retired in March 2023. The Company recorded the shares repurchased using the cost method.

2019 Equity Incentive Plan

In December 2019, the board of directors of the Company (the “Board”) adopted the 2019 Equity Incentive Plan (the “2019 Plan”). The 2019 Plan provides for the grant of share-based awards, including stock options and restricted stock units, to employees, directors and non-employee service providers of the Company. ~~In December 2019, the Board authorized 3,657,019~~The number of shares ~~for future issuance under the 2019 Plan. All such shares authorized~~of common stock reserved for issuance under the 2019 Plan ~~have been reserved.~~automatically increases on January 1 of each calendar year, starting on January 1, 2020 and continuing through January 1, 2029, in an amount equal to the least of (i) 5

~~On January 27, 2021,~~% of the ~~Company’s Board~~total number of ~~Directors approved a 1.8249-for-1 stock split~~shares of the Company’s capital stock issued and outstanding ~~common shares. On~~on the last day of the calendar month before the date of each automatic increase; (ii) 100,000 shares; or (iii) a lesser number of shares determined by the Company’s board of directors. Subject to this provision, the Company added 182,490 shares available for grant to the 2019 Plan effective January ~~29,~~1, 2023. As of September 30, 2023, there were approximately 610,959 shares available for future grants under the 2019 Plan.

2021 Employee Stock Purchase Plan

In January 2021, the ~~Company amended its Amended~~Board adopted the 2021 Employee Stock Purchase Plan (the “2021 ESPP”). The purpose of the 2021 ESPP is to secure the services of new employees, to retain the services of existing employees and ~~Restated Certificate~~to provide incentives for such individuals to exert maximum efforts toward the Company’s success. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of ~~Incorporation to affect~~Section 423 of the Code for U.S. employees. The number of shares of common stock ~~split.~~ ~~The stock split resulted~~reserved for issuance under the 2021 ESPP automatically increases on January 1 of each calendar year, starting on January 1, 2022 and continuing through January 1, 2031, in an ~~adjustment~~amount equal to the ~~preferred share conversion price to reflect a proportional increase in~~lesser of (i) 1% of the total number of ~~common~~ shares ~~to be issued upon conversion. The accompanying financial statements and notes to financial statements give retroactive effect to the stock split for all periods presented.~~

~~A summary~~ of the Company’s capital stock ~~option activity is as follows:~~issued and outstanding on the last day of the calendar month before the date of each automatic increase; or (ii) a lesser number of shares determined by the Board. Subject to this provision, the Company added 40,254 shares available for grant to the 2021 ESPP effective January 1, 2023. As of September 30, 2023, there were approximately 119,379 shares available for future grants under the 2021 ESPP. As of September 30, 2023, no shares of common stock had been purchased under the 2021 ESPP.

Number
of Shares

Number of Options Outstanding

Weighted
Average
Exercise
Price

Weighted
Remaining
Contract
Term
(in years)

Aggregate
Intrinsic
Value
(in thousands)

Balances as of December 31, 2020

2,003,587

1,249,218

$
0

—

$
-

Authorized

0

—

$
—

—

Granted

(349,650
)

349,650

$
16.00

—

Exercised

0

(299,282
)

$
1.86

—

Forfeited

0

—

$
0

—

Balances as of March 31, 2021

1,653,937

1,299,586

$
5.67

9.67

$
5,151

Options exercisable at March 31, 2021

256,478

$
6.68

9.66

$
756

Options vested and expected to vest at March 31, 2021

1,299,586

$
5.67

9.67

$
5,151

2022 Inducement Plan

In March 2022, the Board adopted the 2022 Inducement Plan. The ~~total intrinsic value~~2022 Inducement Plan is a non-stockholder approved stock plan under which the Company may grant equity awards to induce highly-qualified prospective officers and employees who are not currently employed by the Company to accept employment and provide them with a proprietary interest in the Company. The Company intends that the 2022 Inducement Plan be reserved for persons to whom the Company may issue securities without stockholder approval as an inducement pursuant to Nasdaq Marketplace Rule 5635(c)(4). The number of ~~options exercised~~shares of common stock reserved for issuance under the 2022 Inducement Plan was ~~$2.3 million~~initially determined to be 100,000 shares. As of September 30, 2023, there were 100,000 shares available for future grants under the ~~three-months ended March 31, 2021.~~2022 Inducement Plan.

Stock Option Awards

The weighted average fair value per share of options to purchase common stock granted was ~~$9.38 in~~$3.83 and $9.00 for the ~~three~~nine months ended ~~March 31, 2021.~~

~~The fair value of each stock option award is estimated on the grant-date using the Black-Scholes option pricing model. The inputs used below are subjective~~September 30, 2023 and ~~require significant judgment to determine.~~2022, respectively.


	~~Three Months Ended March 31, 2021~~
~~Expected term (in years)~~		~~5.9~~
~~Risk-free interest rate~~		~~0.46~~	%
~~Expected volatility~~		~~66.55~~	%
~~Dividend rate~~		—	%

~~The following table summarizes stock-based compensation expense for employees, which was included in the statements of operations and comprehensive loss as follows (in thousands):~~

Three Months Ended March 31, 2021

Research and development

$
778

General and administrative

245

Total stock-based compensation expense

$
1,023

At ~~March 31, 2021,~~September 30, 2023, the total compensation cost related to unvested stock-based awards granted ~~to employees~~ under the 2019 Plan but not yet recognized was approximately ~~$3.1 million. This cost will~~$1.8 million, which is expected to be ~~amortized on~~recognized over a ~~straight-line basis over the remaining vesting period. The~~ weighted-average ~~remaining recognition~~ period isof approximately ~~1.6~~2.8 years.

~~Early Exercise of Employee Options~~Restricted Stock Units

~~The terms of~~At September 30, 2023, the total compensation cost related to unvested restricted stock units granted under the 2019 Plan ~~permit certain option holders~~but not yet recognized was approximately $0.3 million, which is expected to ~~exercise options before their options are vested.~~ be recognized over a weighted-average period of approximately 2.4 years.

The ~~shares of common stock granted upon early exercise that have not vested are subject to repurchase by the Company~~following table summarizes stock-based compensation expense, which was included in the ~~event~~Condensed Consolidated Statements of ~~termination of the purchaser’s employment, at the price paid by the purchaser. While such shares have been issued, they are not considered outstanding for accounting purposes until they vest~~Operations and are therefore excluded from shares used in determining loss per share until the repurchase right lapses and the shares are no longer subject to the repurchase feature. The liability is reclassified into common stock and additional paid-in capitalComprehensive Loss as the shares vest and the repurchase right lapses. Accordingly, the Company has recorded the unvested portion of the early exercise proceeds of $467 thousand as a liability in the accompanying balance sheets as of March 31, 2021. As of March 31, 2021, the Company recorded $255 thousand in other current liabilities and $212 thousand in other long term liabilities related to shares that were subject to repurchase.follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Research and development	$	92	$	46	$	250	$	596
General and administrative		156		154		476		1,179
Total stock-based compensation expense	$	248	$	200	$	726	$	1,775

The Company enters into contracts in the normal course of business with third-party contract organizations for clinical trials, preclinical studies, manufacturing and other services and products for operating purposes. These contracts generally provide for termination following a certain period after notice and therefore the Company believes that its non-cancelable obligations under these agreements are not material.

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto as of December 31, ~~2020~~2022 and ~~2019~~2021 and for each of the two years in the ~~period~~periods ended December 31, ~~2020~~2022 and 2021 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on March ~~30, 2021.~~23, 2023. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “the company,” “we,” “us,” and “our” refer to Landos Biopharma, Inc. together with its subsidiaries.

~~The information in this discussion~~This report contains forward-looking statements ~~and information~~ 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, ~~which are subject to the “safe harbor” created by those sections. These~~that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. Theby the words ~~“anticipates,” “believes,” “estimates,” “expects,” “intends,”~~ “may,” ~~“plans,” “projects,~~“might,” “will,” ~~“would”~~“could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue” and ~~similar expressions are~~“ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking ~~statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed~~statements. You should refer to “Item 1A. Risk Factors” in our ~~forward-looking statements~~Annual Report on Form 10-K for the year ended December 31, 2022 and ~~you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed~~ in ~~the forward-looking statements~~“Item 1a. Risk Factors” below for a discussion of important factors that ~~we make. These forward-looking statements involve risks and uncertainties that could~~may cause our actual results to differ materially from those ~~in the forward-looking statements, including, without limitation, the risks set forth in Part I, Item 1A, “Risk Factors” in~~expressed or implied by our Annual Report on Form 10-K and in our other filings with the SEC. Such risks and uncertainties may be amplified by the COVID-19 pandemic and its potential impact on our business and the global economy. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.

We are a clinical-stage biopharmaceutical company focused on the ~~discovery and~~ development of novel, oral, once-daily therapeutics for patients with ~~autoimmune diseases that are the first to target novel mechanisms of action, including the LANCL2, NLRX1 and PLXDC2 immunometabolic pathways.~~certain immunology diseases. Our core expertise is in the development of ~~therapeutic candidates~~compounds that target novel pathways at the interface of immunity and metabolism. Based on our understanding of the role that cellular metabolic pathways have on modulating inflammatory responses, we aim to inhibit these inflammatory responses by changing the metabolic processes in target cells. We ~~leverage our proprietary AI-based precision medicine platform~~believe the therapeutics we develop, if approved, could have a significant positive impact on the quality of life of patients suffering from immunology diseases.

Our current focus and ~~growing reference datasets, which we refer to~~lead candidate is NX-13, a novel, oral gut-selective NLRX1 agonist. We are developing NX-13 as ~~our LANCE platform, to identify novel therapeutic targets and biomarkers based on predictions of immunometabolic function and create therapeutic candidates~~a once-daily oral treatment for autoimmune disease to engage those targets in areas of unmet medical need. Through our LANCE platform, we have identified seven novel immunometabolic targets and product candidates to date across 14 indications, including ulcerative colitis, or UC, ~~Crohn’s disease,~~that targets NOD-like receptor X1, or CD, lupus, rheumatoid arthritis, nonalcoholic steatohepatitis, multiple sclerosis, Alzheimer’s disease, asthma, psoriasis, atopic dermatitis, eosinophilic esophagitis, chronic obstructive pulmonary disease, diabetic neuropathyNLRX1, a mitochondria-associated receptor that has been associated with the modulation of inflammatory cytokines for UC. NX-13 is designed to target NLRX1 and ~~type 1 diabetes.~~

·~~Omilancor~~ ~~(BT-11), a small molecule targeting the LANCL2 pathway that is~~induce anti-inflammatory effects in ~~clinical development for the treatment of ulcerative colitis and Crohn’s disease.~~

~~We expect to advance BT-104 into a Phase 1a clinical trial in the~~ fourth quarter of ~~2021~~2024.

In addition to NX-13, we have discovered several preclinical product candidates, comprising the following:

•

LABP-73, an oral, small molecule NLRX1 pathway agonist in development for ~~systemic lupus erythematosus~~the treatment of asthma and ~~rheumatoid arthritis.~~Chronic Obstructive Pulmonary Disease, or COPD,

o•

~~We expect to establish a Clinical Advisory Board for lupus in the second half of 2021.~~

~~We have continued to efficiently develop our pipeline, including four additional preclinical product candidates:~~



~~PX-69, a~~LABP-66, an oral, small molecule ~~designed to target~~NLRX1 pathway agonist in development for the treatment of multiple sclerosis, or MS, and ~~activate the~~Alzheimer’s disease; and

•

LABP-69, an oral, small molecule PLXDC2 pathway ~~that is~~agonist in ~~preclinical testing~~development for the treatment of diabetic nephropathy and rheumatoid ~~arthritis.~~arthritis, or RA.

~~We have generated preclinical data demonstrating efficacy~~In May 2023, our stockholders approved a reverse stock split at the annual meeting of ~~PX-69 in mouse~~stockholders, and ~~rat models~~subsequently, we effected a one-for-ten (1-for-10) reverse stock split, or the Reverse Stock Split, of rheumatoid arthritis. Please refer to the press release dated April 26, 2021 for further details on preclinical findings demonstrating the ability of PX-69 to provide protection against rheumatoid arthritis in ratsour outstanding common stock and ~~mice through immunometabolic mechanisms.~~

~~We are currently performing scale up manufacturing for PX-69.~~

~~We expect to commence IND-enabling studies~~a corresponding reduction in the ~~second half~~total number of ~~2021~~

~~We expect~~authorized shares of our common stock from 200,000,000 to ~~file an IND for PX-69~~20,000,000. All historical share and per share amounts reflected in ~~rheumatoid arthritis in~~this report have been adjusted to reflect the ~~first half of 2022.~~



~~BT-111,~~ a small molecule designed to target and activate LANCL2 for the treatment of non-alcoholic steatohepatitis and type 1 diabetes. We have generated preclinical data demonstrating efficacy of BT-111 in mouse models of NASH and type 1 diabetes.

~~o We have demonstrated that therapeutic dosing of BT-111 (10 mg/kg) for six weeks between weeks six and 12 of CDAA diet, reduced lipid accumulation and liver fibrosis (n = 10,~~ P ~~≤ 0.05). Liver fibrosis, assessed by percent positive area in liver histology by Masson’s trichrome staining, was approximately normalized to standard diet controls.~~

~~o We have demonstrated that BT-111 maintained ß cell mass in a NOD mouse model and reduced apoptosis of human islet cells in response to oxidative and inflammatory stress~~ ~~in vitro~~.



~~NX-66~~, a small molecule designed to target NLRX1 currently in preclinical testing in mouse models of multiple sclerosis and Alzheimer’s disease. NX-66 is highly systemically distributed and penetrates the blood brain barrier.

o We have demonstrated that therapeutic dosing of oral NX-66 (20 mg/kg), between days 14 and 23 post-challenge, ameliorated disease severity in a MOG-induced model of EAE. NX-66 provided a greater than 50% reduction in disease activity four days after the initiation of treatment (n = 10, P ≤ 0.05). NX-66 treatment decreased Tnf and IL1b expression in the spinal cords of EAE mice.

~~o Testing of the preclinical efficacy of NX-66 in mouse models of Alzheimer’s disease is also underway.~~Reverse Stock Split.



~~NX-73, a small molecule designed to target NLRX1 currently in preclinical testing in mouse models of asthma and chronic obstructive pulmonary disease.~~

We have identified and implemented 4 models of allergic asthma using 4 of the most clinically relevant and ubiquitous allergens. These models indicate enhanced eosinophilia, neutrophilia, Th2 and Th17 mediated immune signaling in the absence of Nlrx1.

~~We are using four validated models of allergy and asthma using~~ ~~Aspergillus fumigatus~~, ~~Alternaria alternata, ragweed pollen, and house dust mite extract to assess efficacy of NX-73 in suppressing Th2-mediated responses post-sensitization and providing protection from asthma and allergy in mice.~~

~~LANCE Platform~~

We leverage our proprietary AI-based precision medicine platform, our LANCE platform, to identify novel therapeutic targets based on predictions of immunometabolic function and create therapeutic candidates to engage those targets in areas of unmet medical need. We expect that recent augmentations in Artificial Intelligence (A.I.) coupled with growth of our ~~Shadowfax~~ High Performance Computing (HPC) environment at Landos will continue to catalyze the LANCE platform for precision autoimmune disease drug development. We have continued to develop our HPC-driven, A.I.- and modeling-based advanced computational platform for precision autoimmune disease drug development. Several enhancements to the LANCE platform encompassing natural language processing, NLP, and graph-based analytics are designed to allow for the processing of millions of articles and billions of data points. We believe these critical enhancements to the LANCE platform will facilitate a higher degree of data processing and integration to quickly identify the next generation of therapeutic targets and biomarkers plus scout for new indications. Some of the recent enhancements to the LANCE platform include:



~~Developing a new sensitivity analysis framework to capture many features of our computational models of the immune response.~~



Incorporating NLP of primary biomedical literature to augment novel candidate discovery and characterization. This proprietary NLP framework allows Landos researchers to rapidly assess the quality of primary literature associated with initial candidates derived from system-wide analysis of large-scale clinical datasets.



~~Improved~~In February 2023, we entered into an Asset Purchase and Redemption Agreement, or the ~~multiscale modeling capabilities~~Purchase Agreement, with Dr. Bassaganya-Riera, a related party who is our former chief executive officer and a greater than 5% owner of our ~~HPC-based agent-based modeling tool~~ ~~ENISI (Enteric Immunity Simulator) by incorporating cellular metabolic networks~~common stock at the ~~single-cell level.~~



~~Utilizing~~time of the transaction, Raquel Hontecillas and certain other stockholders, or together the Purchasers, whereby the Purchasers acquired (i) all of our right, title and interest in omilancor, LABP-104 and LABP-111 and any such derivatives and analogs that target LANCL proteins, or together the Acquired Compounds, (ii) a ~~variety~~worldwide, perpetual, irrevocable, fully-paid up, royalty-free, exclusive, sublicensable and transferable license grant under the intellectual property rights retained by us and necessary or useful for the development, manufacture and commercialization of ~~graph-based techniques centered~~the Acquired Compounds, (iii) a royalty agreement providing, among other things, for the payment by us to the Purchasers of a royalty of 2% of all net sales by us of any products containing certain compounds that we retained following the closing under the Purchase Agreement and (iv) $3,000,000 in cash in exchange for (x) 908,644 shares of our common stock held by the Purchasers and (y) a royalty agreement providing, among other things, for the payment by the Purchasers to us of a royalty of 6% of all net sales by the Purchasers of any products containing any of the Acquired Compounds in consideration for the acquired intellectual property rights.

In May 2021, we entered into an exclusive collaboration and license agreement, or the LianBio Agreement, with LianBio Respiratory Limited, or Lian, pursuant to which we granted Lian an exclusive license, or the License, to develop, manufacture and commercialize NX-13 and omilancor. In February 2023, we amended the LianBio Agreement to no longer cover omilancor and developmental milestones events were amended to reflect the transfer of omilancor. Subsequent to the amendment, we are eligible to receive development milestone payments of up to $40.0 million as well as sales milestone payments of up to $105.0 million. We are also eligible to receive tiered low-double-digit royalties based on ~~information propagation via homology modeling to utilize data from well-studied model systems, and biochemical pathway analysis to identify novel sites~~future net sales of ~~convergence between immune and metabolic pathways.~~



~~Incorporating advanced machine learning strategies to further enhance scalability and efficiency, including extending our library of algorithms and models while supporting increased model complexity~~NX-13 in the ~~intersection~~territory comprising the People’s Republic of ~~immunity~~China, Hong Kong, Macau, Taiwan, Cambodia, Indonesia, Myanmar, Philippines, Singapore, South Korea, Thailand and ~~metabolism.~~

Vietnam, subject to reductions in specified circumstances.



~~Establishing large-scale parallel computing systems for implementing parallel simulation frameworks for massively and dynamically interacting large-scale models.~~



~~Developing~~We have a ~~user-friendly web-based environment to support and HPC-driven infrastructure for drug development.~~



~~Developing and calibrating unique, detailed immunometabolic models of the immune system.~~



Increasing the number of relevant autoimmune disease genomic, metabolomic and biomarker datasets (ulcerative colitis, Crohn’s disease, rheumatoid arthritis, lupus, multiple sclerosis, type 1 diabetes, psoriasis, atopic dermatitis, asthma, allergy, COPD).



~~Further enhancing integration across A.I., agent-based modeling (ABM), partial differential equations (PDE) and ordinary differential equation (ODE) based modeling within the LANCE platform.~~



~~Identifying and validating novel therapeutic targets and biomarkers of response based on the iterative systems biology approach in LANCE.~~



~~Elucidating novel mechanistic insights for the newly identified therapeutic targets.~~



Establishing robust verification and validation methods for confirming model predictions based on clustering analytics, improved big data management through digital libraries and experimental validation.



Utilizing the clinical, translational and immunological data from our clinical trials to enhance our model calibration databases and increase the predictive power of our computational and mathematical models.



~~Increasing our computational and HPC capabilities by establishing a data room with a new~~ ~~Shadowfax~~ HPC system containing 1,536 cores in 64 compute nodes (12 CPUs and 2 cores per CPU), two high memory nodes with 10 cores each, 2 login nodes, 1 head node, on a private VPN plus 500 TB of storage. This on-premise computing environment can seamlessly scale to cloud compute environments when needed.

limited operating history. Since ~~our~~ inception, ~~in 2017,~~ our operations have focused on developing our clinical and preclinical product candidates, ~~and our LANCE platform,~~ organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio and conducting clinical trials and preclinical studies. We do not have any product candidates approved for sale and have not generated any revenue from product sales. We

Since our inception in 2017, we have funded our operations ~~primarily~~ through the ~~sale~~issuance of ~~equity securities. Since inception, we have raised an aggregate of $170.0 million of gross~~convertible preferred stock and convertible promissory notes, through proceeds from our initial public offering, or IPO, through the upfront payment from a license and collaboration agreement with a related party and through the sale of ~~shares of our preferred stock and convertible promissory notes.~~

~~Since inception, we have incurred significant operating losses. Our net loss was $9.8 million and $5.8 million for the three months ended March 31, 2021 and 2020, respectively.~~pre-funded warrants in a private placement. As of ~~March 31, 2021,~~September 30, 2023, we had an accumulated deficit of ~~$65.5 million. We~~$149.2 million and we expect to ~~continue to~~ incur ~~significant expenses and~~substantial operating losses for at least the ~~foreseeable~~next several years. As such, we will need to raise additional capital to initiate and complete our ongoing and planned clinical trials, to continue and expand our research and development operations that support our ongoing and planned development and clinical and regulatory activities, and to adequately prepare for commercialization of our product candidates that may achieve regulatory approval in the future. As of September 30, 2023, we had cash, cash equivalents and marketable securities of $42.5 million. We believe that our existing cash, cash equivalents and marketable securities as of September 30, 2023 will be sufficient to fund our operating expenses and capital requirements into the first half of 2025. We anticipate that our expenses ~~will~~may increase significantly in connection with our ongoing activities, as we:

•

conduct our ongoing and planned clinical trials of ~~omilancor and NX-13, as well as initiate and complete additional clinical trials, as needed;~~NX-13;

•

pursue regulatory approval of ~~omilancor and NX-13 for the treatment of UC and CD;~~our product candidates;

•

~~leverage our LANCE platform~~seek to discover and develop additional clinical and preclinical product ~~candidates for the treatment of autoimmune diseases;~~candidates;

•

scale up our clinical and regulatory capabilities;

•

establish a commercialization infrastructure and scale up external manufacturing and distribution capabilities to commercialize any product candidates for which we may obtain regulatory ~~approval, including omilancor and NX-13;~~approval;

•

adapt our regulatory compliance efforts to incorporate requirements applicable to marketed products;

•

maintain, expand and protect our intellectual property portfolio;

•

hire additional clinical, manufacturing and scientific personnel;

•

add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts; and

•

incur additional legal, accounting and other expenses in operating as a public company.

~~Recent Developments: LianBio Agreement~~

On May 14, 2021, the Company entered into an exclusive license and collaboration agreement, or the LianBio Agreement, with Lian Respiratory Limited, a Hong Kong entity, for the development, manufacture and commercialization of the Company’s proprietary compounds, omilancor and NX-13, or the Licensed Products, within The People’s Republic of China, Macau, Hong Kong, Thailand, Taiwan, South Korea, Myanmar, Vietnam, Cambodia, Indonesia, Philippines, and Singapore, or the Territory. Under the terms of the LianBio Agreement, the Company will receive an upfront payment of $18.0 million in connection with the execution of the LianBio Agreement and will be eligible to receive development milestone payments of up to $95.0 million and sales milestone payments of up to $105.0 million. The Company is also eligible to receive tiered low- to mid-double-digit royalties based on net sales of Licensed Products in the Territory, subject to reduction in specified circumstances.16

Consistent with our strategy, we intend to continue to pursue territory deals that enable partnering on commercialization of lead therapeutic assets outside of the U.S. and European markets. Moreover, we will consider partnering with strategics to develop some of the follow on therapeutic assets as a means of monetizing some of our pipeline assets.

~~Liquidity and Capital Resources~~

On February 3, 2021, we completed our IPO in which we issued and sold 6,250,000 shares of our common stock at a public offering and received net proceeds of $90.5 million, after deducting underwriters’ discounts and commissions and expenses payable by us.

We have further strengthened our capital position and operating runway through our IPO and business development activities. Based on our current expectation for operations, research, development, and clinical trials plans - we believe that the $106.4 million in cash and marketable securities (not including the 18.0 million upfront payment due to us under the LianBio Agreement) will be sufficient to support our operating costs through 2023.

Components of our ~~results~~Results of ~~operations~~Operations

Research and ~~development expenses~~Development Expenses

Research and development expenses consist primarily of costs incurred in connection with our research activities, including our discovery efforts and the development of our product candidates, and include:

•

salaries, benefits, stock-based compensation and other related costs for personnel engaged in research and development functions;

•

expenses incurred under agreements with third parties, including contract research organizations, or CROs, and other third parties that conduct research, preclinical activities and clinical trials on our behalf, as well as contract manufacturing organizations, or CMOs, that manufacture drug material for use in our clinical trials and preclinical studies;

•

costs of outside consultants, including their fees and related travel expenses;

•

the costs of laboratory supplies and acquiring, developing and manufacturing preclinical and clinical trial ~~supply;~~supplies; and

•

allocated expenses for rent and maintenance of facilities and other operating costs.

We expense research and development costs as incurred. We track external development costs by product candidate or development program, but we do not allocate personnel costs or certain other ~~internal~~ costs to specific development programs or product candidates.

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have a higher development ~~costs~~cost than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will ~~continue~~be lower in 2023 relative to ~~increase substantially for~~2022 as a result of wind down of previous clinical trial activities. However, in the ~~foreseeable future~~long term, we expect that they will increase and will comprise a larger percentage of our total expenses as we progress and complete our ongoing clinical trials, initiate new clinical trials, continue to discover and develop additional product candidates and prepare regulatory filings for any product candidates that successfully complete clinical ~~development.~~trials.

The successful development of our product candidates is highly uncertain. At this time, we cannot determine with certainty the duration and costs of our existing and future clinical trials of our product candidates or any other product candidate we may develop or

if, when, or to what extent we will generate revenue from the potential commercialization and sale of any product candidate for which we obtain marketing approval. We may never succeed in obtaining marketing approval for any product candidate. The duration, costs and timing of clinical trials and development of our product candidates and any other product candidate we may develop in the future will depend on a variety of factors, including:

•

per patient trial costs;

•

the number of patients who enroll in each trial;

•

the number of trials required for approval;

•

the number of sites included in the trials;

•

the countries in which the trials are conducted;

•

the length of time required to enroll eligible patients;

•

the drop-out or discontinuation rates of patients;

•

potential additional safety monitoring requested by regulatory agencies;

•

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

•

our ability to secure adequate supply of our product candidates for our trials;

•

the phase of development of the product candidate; and

•

the efficacy and safety profile of the product candidate.

Our expenditures are subject to additional uncertainties, ~~including the terms~~ and ~~timing of regulatory approvals, and the expense of filing, prosecuting, defending and enforcing any patent claims or other intellectual property rights. We~~we may never succeed in achieving regulatory approval for our product candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of our product candidates. A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the U.S. Food and Drug Administration, or FDA, or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, or if we experience significant delays in our clinical trials due to patient enrollment or other reasons, we would be required to expend significant additional financial resources and time on the completion of clinical development.

General and ~~administrative expenses~~Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs for personnel in our executive, finance, business development and administrative functions. General and administrative expenses also include legal fees relating to intellectual property and corporate matters, professional fees for accounting, auditing, tax and consulting ~~services;~~services, insurance costs, travel expenses and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.

We expect that our general and administrative expenses will ~~increase~~be slightly lower in 2023 relative to 2022 as we focus our resources toward the development of NX-13. However, in the ~~future~~long term, we expect that they will increase as we increase our personnel headcount to support our expanded infrastructure, including the development of a commercialization infrastructure for any product candidates for which we may obtain regulatory approval. ~~We also expect~~Our expenditures are subject to ~~incur increased expenses associated with being a public company,~~uncertainties, including ~~costs~~the terms and timing of ~~accounting, audit, legal,~~ regulatory approvals, and ~~tax-related services associated with maintaining compliance with stock exchange~~the expense of filing, prosecuting, defending and SEC requirements, director and officer insurance costs and investor and public relations costs. We anticipate the additional costs for these services will increase our general and administrative expenses by between $1.0 million and $2.0 million on an annual basis.enforcing any patent claims or other intellectual property rights.

Interest ~~expense~~and Other (Expense) Income, net

Interest ~~expense~~and other (expense) income, net, primarily consists of grant expense related to a grant agreement with the National Institutes of Health, or NIH, and interest ~~due on~~income received from available-for-sale marketable securities. In 2020, we were awarded a grant by the NIH for a phase 2 proof-of-concept efficacy study of omilancor in Crohn's disease patients. The grant award provided for reimbursement of actual, allowable costs incurred. As of the three months ended September 30, 2023, we had received $1.2 million of funding under the grant, which was used to reimburse expenses incurred under our ~~convertible promissory notes that were outstanding~~phase 2 study of omilancor in patients with Crohn’s disease during the ~~period prior~~grant funding periods. In February 2023, we transferred omilancor and certain other assets to our scientific founder, however the NIH did not approve the transfer of the grant to the ~~conversion~~founder. During the three months ended September 30, 2023, we made the decision to terminate the grant and repay the grant proceeds to the NIH due to an evaluation of the ~~notes into Series B convertible preferred stock~~ongoing effort to continue the grant relative to the benefit of maintaining the grant. As a result of this decision, we determined that repayment of the grant is probable, which resulted in ~~August 2019.~~a change in estimate and the recording of a liability of $1.2 million in accrued liabilities on the Condensed Consolidated Balance Sheet as of September 30, 2023 and a corresponding charge for $1.2 million included in interest and other (expense) income, net on the Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2023. In connection with the termination of the grant, we are conducting certain close-out procedures, in which the NIH may review our performance, cost structures and compliance with applicable laws, regulations, policies and standards and the terms and conditions of the grant. If any of our expenditures are found to be unallowable or allocated improperly, we may incur additional costs.

~~Income taxes~~

Since our inception in January 2017, we have generated cumulative federal and state net operating loss for which we have not recorded any net tax benefit due to uncertainty around utilizing these tax attributes within their respective carryforward periods.

As of March 31, 2021, we had federal net operating loss carryforwards, or NOLs, of $43.9 million and state NOLs of $43.9 million that may be available to offset future taxable income. The federal NOLs include $2.1 million available to reduce 100% of future taxable income, which will begin to expire in 2037, if not utilized, and $41.8 million, which can be carried forward indefinitely. The state NOLs will begin to expire in 2037, if not utilized.

Utilization of the net operating losses and credits may be subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code of 1986, as amended. The annual limitation may result in the expiration of our net operating losses and credits before we can use them. We have recorded a valuation allowance on our net deferred tax assets, including our deferred tax assets related to our net operating loss and research and development tax credit carryforwards.

~~Other income, net~~

~~Other income, net consists of interest income received from marketable securities.~~

Results of ~~operations~~Operations

Comparison of the three and nine months ended ~~March 31, 2021~~September 30, 2023 and ~~2020~~2022

The following table summarizes our results of operations for the ~~years~~three and nine months ended ~~March 31, 2021~~September 30, 2023 and ~~2020:~~2022 (in thousands):

Three Months Ended March 31,

2021

2020

(in thousands)

Operating expenses

Research and development

$
7,254

$
4,690

General and administrative

$
2,646

$
1,080

Total operating expenses

$
9,900

$
5,770

Loss from operations

(9,900
)

(5,770
)
Other income (expense);

Interest expense

—

(1
)
Gain (loss) from foreign exchange

18

(222
)
Other income, net

64

197

Other income (expense), net

82

(26
)
Net loss

(9,818
)

(5,796
)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Operating expenses:
Research and development	$	3,063		$	4,862		$	8,852		$	22,266
General and administrative		2,136			2,967			7,265			11,782
Total operating expenses		5,199			7,829			16,117			34,048
Loss from operations		(5,199	)		(7,829	)		(16,117	)		(34,048	)
Other income:
(Loss) gain from foreign exchange		(3	)		—			(47	)		26
Interest and other (expense) income, net		(658	)		(67	)		348			(22	)
Other (expense) income, net		(661	)		(67	)		301			4
Net loss	$	(5,860	)	$	(7,896	)	$	(15,816	)	$	(34,044	)

Research and ~~development expenses~~Development Expenses

Research and development expenses were ~~$7.3~~$3.1 million for the three months ended ~~March 31, 2021~~September 30, 2023 compared to ~~$4.7~~$4.9 million for the three months ended ~~March 31, 2020.~~September 30, 2022. The ~~increase~~decrease of ~~$2.6~~$1.8 million was primarily attributable to ~~increased costs associated with ongoing~~reduced clinical activities due to the wind down of the omilancor and LABP-104 programs, which were transferred in February 2023 pursuant to the Purchase Agreement, and also due to reduced NX-13 Phase 1b clinical trial costs, partially offset by the initiation of the NEXUS trial. Additionally, there were increases in compensation costs, partially offset by a decrease in consulting costs.

Research and development expenses were $8.9 million for the nine months ended September 30, 2023 compared to $22.3 million for the nine months ended September 30, 2022. The decrease of $13.4 million was primarily attributable to reduced clinical activities ~~for~~due to the wind down of the omilancor and ~~NX-13.~~LABP-104 programs, which were transferred in February 2023 pursuant to the Purchase Agreement, and also due to reduced NX-13 Phase 1b clinical trial costs, partially offset by the initiation of the NEXUS trial. Additionally, there were decreases in consulting costs and depreciation expense.

The following table summarizes our research and development expenses by product candidate ~~or development program~~ for the three and nine months ended ~~March 31, 2021~~September 30, 2023 and ~~2020:~~2022 (in thousands):

Three Months Ended March 31,

2021

2020

(in thousands)

Omilancor

$
5,005

$
3,630

NX-13

1,370

780

BT-104

585

—

Other discovery pipeline, LANCE platform and unallocated costs

294

280

Total research and development expenses

$
7,254

$
4,690


	Three Months Ended September 30,					Nine Months Ended September 30,
	2023			2022		2023			2022
External costs by clinical program:
Omilancor	$	—		$	1,118	$	(58	)	$	7,366
NX-13		1,535			2,124		4,672			6,471
LABP-104		(15	)		182		2			1,472
Total external costs by clinical program:		1,520			3,424		4,616			1,539
Compensation		1,240			796		3,297			3,333
Other		303			642		939			3,624
Total research and development expenses	$	3,063		$	4,862	$	8,852		$	22,266

General and ~~administrative expenses~~Administrative Expenses

General and administrative expenses were ~~$2.6~~$2.1 million for the three months ended ~~March 31, 2021~~September 30, 2023 compared to ~~$1.1~~$3.0 million for the three months ended ~~March 31, 2020.~~September 30, 2022. The ~~increase~~decrease of ~~$1.5~~$0.9 million was primarily attributable to ~~increases~~a decrease in ~~patent~~consulting costs ~~related legal fees~~ and ~~other outside professional services.~~Directors and Officers, or D&O, insurance.

~~Other Income (expense), net~~General and administrative expenses were $7.3 million for the nine months ended September 30, 2023 compared to $11.8 million for the nine months ended September 30, 2022. The decrease of $4.5 million was primarily attributable to a decrease in compensation costs, recruiting and consulting costs, D&O insurance, and a one-time charge incurred in connection with a lease termination in the prior year.

Other income, net was $82 thousand for the three months ended March 31, 2021 compared to other expense, net of $26 thousand for the three months ended March 31, 2020. The decrease was due to amortization of bond premium from investment activity and the gains (losses) from foreign exchange.

Liquidity and ~~capital resources~~Capital Resources

Since our inception, we have incurred significant operating losses and negative cash flows from our operations. We expect to incur significant expenses and operating losses for the foreseeable future as we advance the preclinical and clinical development of our research programs and product candidates. We expect that our research and development and general and administrative costs will increase in connection with conducting additional preclinical studies and clinical trials for our current and future research programs and product candidates, including omilancor and NX-13, discovering and developing new product candidates using the LANCE precision medicine platform, contracting with CMOs to support preclinical studies and clinical trials, expanding our intellectual property portfolio, and providing general and administrative support for our operations. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements or other sources.

We do not currently have any approved products and have never generated any revenue from product sales. To date, we have financed our operations primarily through ~~equity financings.~~the issuance of convertible preferred stock and convertible promissory notes, proceeds from our IPO, the upfront payment from the LianBio Agreement and the sale of pre-funded warrants in a private placement.

In March 2022, we filed a shelf registration statement on Form S-3, or the 2022 Shelf Registration Statement, with the SEC. The 2022 Shelf Registration Statement became effective in August 2022. The 2022 Shelf Registration Statement permits the offering, issuance and sale by us of up to a maximum aggregate offering price of $200.0 million of common stock, preferred stock, debt securities and warrants in one or more offerings and in any combination. As of ~~March 31, 2021,~~September 30, 2023, we had ~~$106.4~~$200.0 million of common stock remaining that can be sold under the 2022 Shelf Registration Statement, although this amount will be limited for as long as we are subject to General Instruction I.B.6 of Form S-3, which limits the amount of funds we can raise through primary public offerings of securities in any twelve-month period using a registration statement on Form S-3 to one-third of the aggregate market value of the shares of our common stock held by non-affiliates. Therefore, we will be limited in the amount of proceeds we are able to raise by selling shares of our common stock using Form S-3, including the 2022 Shelf Registration Statement, until such time as our public float held by non-affiliates exceeds $75.0 million.

In January 2023, we entered into a securities purchase agreement, or the Securities Purchase Agreement, with the institutional accredited investors named therein, or the Investors, pursuant to which we issued and sold to the Investors in a private placement, or the Private Placement, pre-funded warrants, or the Pre-Funded Warrants, to purchase an aggregate of 3,090,909 shares, or the Warrant Shares, of our common stock. Each Pre-Funded Warrant has an exercise price of $0.10 per Warrant Share. The purchase price per Pre-Funded Warrant was $5.40. The Pre-Funded Warrants issued in the Private Placement are exercisable at any time but provide that the holder of the Pre-Funded Warrants will not have the right to exercise any portion of its Pre-Funded Warrants if such holder, together with its affiliates and any other persons whose beneficial ownership of common stock would be aggregated with the holder for purposes of Section 13(d) or Section 16 of the Securities Exchange Act of 1934, as amended, would beneficially own in excess of 35% of the number of shares of common stock outstanding immediately after giving effect to such exercise. The Warrant Shares will also be subject to certain registration rights under our Amended and Restated Investors’ Rights Agreement. We received net proceeds of $16.6 million in the Private Placement, after deducting $0.1 million of offering expenses.

As of September 30, 2023, we had approximately $42.5 million in cash, cash equivalents and marketable securities and an accumulated deficit of ~~$65.5~~$149.2 million. We had no indebtedness as of ~~March 31, 2021.~~

~~On February 3, 2021, we completed our IPO in which we issued and sold 6,250,000shares of our common stock and received net proceeds of $90.5 million, after deducting underwriters’ discounts and commissions and expenses payable by us.~~September 30, 2023.

The following table summarizes our sources and uses of cash for each of the periods set forth below (in thousands):


	Three Months Ended March 31,						Nine Months Ended September 30,
	2021			2020			2023			2022
Net cash used in operating activities	$	(12,560	)	$	(3,368	)	$	(15,508	)	$	(42,072	)
Net cash provided by (used in) investing activities		(72,048	)		1,707
Net cash provided by investing activities								7,712			62,589
Net cash provided by financing activities		90,764			—			13,567			—
Net increase (decrease) in cash and cash equivalents	$	6,156		$	(1,661	)
Net change in cash, cash equivalents and restricted cash							$	5,771		$	20,517

Operating ~~activities~~Activities

During the nine months ended September 30, 2023, we used cash in operating activities of $15.5 million, reflecting a net loss of $15.8 million and a net change of $0.5 million in our operating assets and liabilities, partially offset by non-cash charges of $0.8 million. The non-cash charges consist primarily of stock-based compensation expense. The net change in our operating assets and liabilities was primarily due to a net decrease in accounts payable and other liabilities.

During the nine months ended September 30, 2022, we used cash in operating activities of $42.1 million, reflecting a net loss of $34.0 million, partially offset by non-cash charges of $3.4 million and a net change of $11.4 million in our operating assets and liabilities. The non-cash charges consist primarily of $1.8 million of stock-based compensation expense, $1.1 million related to the amortization of the premium on marketable securities and $0.6 million of depreciation expense. The net change in our operating assets and liabilities was primarily due to a decrease in accounts payable and other liabilities.

Investing Activities

Net cash ~~used in operating~~provided by investing activities ~~for~~during the ~~three~~nine months ended ~~March 31, 2021~~September 30, 2023 was ~~$12.6~~$7.7 million, consisting primarily of our net loss of $9.8 million as we incurred expenses associated with research activities for our lead product candidates and incurred general and administrative expenses. Net cash used in operating activities for the three months ended March 31, 2020 was $3.4 million, consisting primarily of our net loss of $5.8 million as we incurred expenses associated with research activities for our lead product candidates and incurred general and administrative expenses.

~~Investing activities~~

~~Net cash used in investing activities for the three months ended March 31, 2021 was $72.0 million, consisting of purchases of available-for-sale marketable securities offset by~~ proceeds from sales and maturities of marketable securities. Net cash provided by investing activities for the ~~three~~nine months ended ~~March 31, 2020~~September 30, 2022 was ~~$1.7~~$62.6 million, consisting primarily of proceeds from sales and maturities of marketable securities, partially offset by purchases of available-for-sale marketable securities.

Financing ~~activities~~Activities

Net cash provided by financing activities induring the ~~three~~nine months ended ~~March 31, 2021~~September 30, 2023 of ~~$90.8~~$13.6 million was primarily related to net proceeds received from ~~our IPO. There was no net cash provided~~the issuance of pre-funded warrants for the purchase of common stock, partially offset by ~~financing activities in~~ the ~~three months ended March 31, 2020.~~repurchase and retirement of common stock.

Funding ~~requirements~~Requirements

To date, we have not generated any revenues from the commercial sale of approved drug products, and we do not expect to generate substantial revenue for at least the next few years. If we fail to complete the development of our product candidates in a timely manner or fail to obtain their regulatory approval, our ability to generate future revenue will be compromised. We do not know when, or if, we will generate any revenue from our product candidates, and we do not expect to generate significant revenue unless and until we obtain regulatory approval of, and commercialize, our product candidates. Further, we do not know when, or if, we will generate any additional revenue under the LianBio Agreement or pursuant to the royalty rights under the Purchase Agreement as future payments are conditioned upon the achievement of development and commercialization milestones that are uncertain as of this date. We expect our expenses to proportionately increase in connection with our ongoing activities, particularly as we continue the research and development of, continue or initiate clinical trials of, and seek marketing approval for, our product candidates. In addition, if we obtain approval for any of our product candidates, we expect to incur significant commercialization expenses related to sales, marketing, manufacturing and distribution. ~~Furthermore, we expect to incur additional costs associated with operating as a public company.~~ We anticipate that we will need substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain

marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of product candidates that we do not expect to be commercially available in the near term, if at all.

We believe that ~~the~~our existing cash, ~~and~~ cash equivalents and marketable securities as of September 30, 2023 will ~~enable us~~be sufficient to fund our operating expenses and capital ~~expenditure~~ requirements into ~~2023.~~the first half of 2025. We have based these estimates on assumptions that may prove to be imprecise, and we could utilize our available capital resources sooner than we expect.

Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical drugs, it is difficult to estimate with certainty the amount of our working capital requirements. Our future funding requirements will depend on many factors, including:

•

the scope, progress, costs and results of our ongoing and planned clinical trials of ~~omilancor and~~ NX-13;



~~the costs and results of discovery work using our LANCE precision medicine platform;~~

•

the scope, progress, costs and results of preclinical development, laboratory testing and clinical trials for any future product candidates we may decide to pursue;

•

the extent to which we in-license or acquire rights to other products, product candidates or technologies;

•

the costs and timing of process development and manufacturing scale-up activities associated with our product candidates and other programs as we advance them through preclinical and clinical development;

•

the number and development requirements of other product candidates that we may pursue;

•

the costs, timing and outcome of regulatory review of our product candidates;

•

the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution for any of our product candidates for which we receive marketing approval;

•

the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;

•

our ability to establish and maintain strategic collaborations, licensing or other agreements and the financial terms of such agreements; and

•

the costs and timing of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against any intellectual property-related claims.

Further, our operating results may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.

Our future commercial revenue, if any, will be derived from sales of products that we do not expect to be commercially available for several years, if at all. Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaboration agreements, other third-party funding, strategic alliances, licensing arrangements and marketing and distribution arrangements. Adequate additional financing may not be available to us on acceptable terms, or at all. We currently have no credit facility or committed sources of capital. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ~~your~~the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect ~~your~~the rights ~~as a~~of existing stockholders. Pursuant to the Securities Purchase Agreement, the Investors are entitled to exercise the pre-funded warrants to purchase an aggregate of 3,090,909 shares of our common ~~stockholder.~~stock. If the Investors were to exercise their outstanding Pre-Funded Warrants, existing stockholders will recognize significant dilution. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through other third-party funding, collaboration agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.

~~Contractual obligations, commitments~~Critical Accounting Policies and ~~contingencies~~

~~We enter into contracts in the normal course of business with third-party contract organizations for clinical trials, preclinical studies, manufacturing~~Significant Judgements and other services and products for operating purposes. These contracts generally provide for termination following a certain period after notice and therefore we believe that our non-cancelable obligations under these agreements are not material.

~~Off-balance sheet arrangements~~

~~We have not entered into any off-balance sheet arrangements.~~

~~Critical accounting policies and significant judgments and estimates~~Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the ~~United States.~~U.S. The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

~~While our~~Our significant accounting policies are described in ~~more detail in the notes~~Note 1 to our consolidated financial statements appearing elsewhere in this Quarterly Report, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

~~Research and development expenses~~

The majority of our operating expenses to date have been incurred in research and development activities. As part of the process of preparing our consolidated financial statements, we estimate our accrued research and development expenses at each consolidated balance sheet date. This process involves reviewing purchase orders and open contracts, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated costs incurred for the services when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met; however, some require advance payments. We make estimates of our accrued expenses as of each consolidated balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments as necessary. The significant estimates in our accrued research and development expenses include the costs incurred for services performed by CROs with research and development activities for which we have not yet been invoiced.

We base our expenses related to research and development activities on our estimates of the services received and efforts expended pursuant to quotes and contracts with vendors that conduct research and development on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the research and development expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid accordingly.

~~Stock-Based Compensation~~

We account for share-based compensation awards in accordance with FASB ASC Topic 18, Compensation—Stock Compensation (ASC 718). ASC 718 requires all share-based payments, including grants of stock options, to be recognized in the consolidated statements of operations and comprehensive income (loss) based on their respective fair values.

The fair value of our stock options has been determined using the Black-Scholes option-pricing model. The Black-Sholes option-pricing model requires the input of subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. Due to the lack of historical and implied volatility data of our common stock, the expected stock price volatility has been estimated based on the historical volatilities of a specified group of companies in our industry for a period equal to the expected life of the option. We selected companies with comparable characteristics, including enterprise value, risk profiles and position within the industry and with historical share price information sufficient to meet the expected term of the stock options. The historical volatility data has been computed using the daily closing prices for the selected companies.

The expected life of the options granted represents the period of time that options granted are expected to be outstanding and is calculated using the simplified method, which is the mid-point between the vesting date and the end of the contractual term for each option. The risk-free interest rate is based on a zero coupon, United States Treasury instrument whose term is consistent with the expected life of the stock option. We have not paid, and do not anticipate paying, cash dividends on our shares of common stock; therefore, the expected dividend yield is zero.

We recognize the grant-date fair value of an award as compensation expense on a straight-line basis over the requisite service period, which typically corresponds to the vesting period for the award. In certain circumstances the amount of compensation cost recognized is adjusted to be at least equal to the portion of the grant-date value of the award that was vested at the balance sheet date. We have elected to account for forfeitures as they occur and, upon forfeiture of an award prior to vesting, we reverse any previously recognized compensation expense related to that award.

~~Emerging growth company status~~

We qualify as an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or JOBS Act. As an “emerging growth company” we may take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:



the option to present only two years of audited consolidated financial statements and only two years of related “Management’s discussion and analysis of financial condition and results of operations”;



~~not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended;~~



not being required to comply with any requirements that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the consolidated financial statements ~~(i.e., an auditor discussion and analysis);~~



~~reduced disclosure obligations regarding executive compensation~~included in our ~~periodic reports, proxy statements and registration statements; and~~



~~exemptions from~~Annual Report on Form 10-K for the ~~requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.~~

~~We may take advantage of these provisions until~~fiscal year ended December 31, ~~2026, the last day~~2022. The accounting policies and estimates that are most critical to a full understanding and evaluation of our reported financial results are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of our Annual Report on Form 10-K for the fiscal year ~~following~~ended December 31, 2022. There were no material changes to our critical accounting policies and estimates during the fifth anniversary of the completion of our IPO. However, if any of the following events occur prior to the end of such five-year period, (i) our annual gross revenue exceeds $1.07 billion, (ii) we issue more than $1.0 billion of non-convertible debt in any three-year period or (iii) we become a “large accelerated filer,” (as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act), we will cease to be an emerging growth company prior to the end of such five-year period. We will be deemed to be a “large accelerated filer” at such time that we (a) have an aggregate worldwide market value of common equity securities held by non-affiliates of $700.0 million or more as of the last business day of our most recently completed second fiscal quarter, (b) have been required to file annual and quarterly reports under the Exchange Act, for a period of at least 12nine months and (c) have filed at least one annual report pursuant to the Exchange Act. Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” which would allow us to take advantage of many of the same exemptions from disclosure requirements including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.ended September 30, 2023.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. We have elected to take advantage of this extended transition period.

~~Furnish the information required by Item 303 of Regulation S-K (§ 229.303 of this chapter).~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer ~~who also serves as our~~(our principal executive officer and principal financial ~~officer and our principal accounting officer,~~officer), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report. Based on such evaluation, our Chief Executive Officer has concluded that as of ~~March 31, 2021,~~September 30, 2023, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in this Quarterly Report was (a) reported within the time periods specified by SEC rules and regulations, and (b) communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding any required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended ~~March 31, 2021~~September 30, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Internal Controls

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Our management, including our Chief Executive Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud.

PART II—OTHER INFORMATION

Item ~~2. Unregistered Sales~~1. Legal Proceedings

In the ordinary course of ~~Equity Securities~~business, we may be involved in various legal or regulatory proceedings. We are not currently subject to any material legal or regulatory proceedings.

Item 1A. Risk Factors

An investment in our common stock involves a high degree of risk. You should consider carefully the risks and ~~Use~~uncertainties described under Item 1A of ~~Proceeds.~~

~~(a) Recent Sales of Unregistered Equity Securities~~

~~On February 8, 2021, upon the closing~~Part I of our ~~initial public offering,~~Annual Report on Form 10-K, together with all ~~shares of~~other information contained or incorporated by reference in this report before you decide to invest in our ~~then-outstanding convertible preferred stock were automatically converted into 20,549,478 shares of~~ common stock. ~~The issuance of such shares of common stock was exempt from registration under Section 3(a)(9)~~If any of the ~~Securities Act.~~

~~(b) Use~~Risk Factors were to actually occur, our business, financial condition, results of ~~Proceeds~~

~~On February 3, 2021,~~operations and our ~~Registration Statement on Form S-1, as amended (File No. 333-252083), was declared effective in connection with our initial public offering, in which we issued~~potential future growth prospects could be materially and ~~sold 6,250,000 shares~~adversely affected. Under the circumstances, the trading price of our common stock ~~at a public offering~~could decline, and ~~received net proceeds~~you may lose all or part of $90.5 million, after deducting underwriters' discounts and commissions and expenses payable by us. The joint book-running managers of our initial public offering were J.P. Morgan Securities LLC, Jefferies LLC and SVB Leerink LLC, and Raymond James & Associates, Inc. acted as lead manager.your investment. There ~~has~~have been no material ~~change~~changes in the ~~planned use of proceeds from our initial public offering as~~risk factors described in “Item 1A. Risk Factors” of our ~~prospectus filed pursuant to Rule 424(b)(4) under~~Annual Report on Form 10-K for the ~~Securities Act with the SEC on February 4, 2021.~~year ended December 31, 2022.

~~c) Issuer Purchases of Equity Securities~~

~~None.~~24

Item 6. Exhibits.

The exhibits listed on the Exhibit Index are either filed or furnished with this report or incorporated herein by reference.


Exhibit Number		Description
3.1		Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K (File No. ~~00139971)~~001-39971), filed with the Securities and Exchange Commission on ~~February 8, 2021)~~May 30, 2023).
3.2		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.4 to the Company’s to the Company’s Registration Statement on Form S-1 (File No. 333-252083), filed with the Securities and Exchange Commission on January 28, 2021).
~~10.1~~31.1*		Form of Indemnification Agreement with Executive Officers and Directors (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1 (File No. 333-252083), filed with the Securities and Exchange Commission on January 28, 2021).
~~10.2+~~		2021 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.5 to the Company's Registration Statement on Form S-1 (File No. 333-252083), filed with the Securities and Exchange Commission on January 28, 2021.
~~10.3+~~		Non-Employee Director Compensation Policy (incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K (File No. 001-39971), filed with the Securities and Exchange Commission on March 30, 2021).
31.1*		Certification of Principal Executive and Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*#		Certification of Principal Executive and Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
~~101.INS~~101.INS*		Inline XBRL Instance ~~Document~~Document. – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
~~101.SCH~~101.SCH*		Inline XBRL Taxonomy Extension Schema ~~Document~~Document.
~~101.CAL~~101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase ~~Document~~Document.
~~101.DEF~~101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase ~~Document~~Document.
~~101.LAB~~101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase ~~Document~~Document.
~~101.PRE~~101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase ~~Document~~Document.
~~104~~104*		Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

~~+ Indicates management contract or compensatory plan.~~

# This certification is being furnished solely to accompany this Quarterly Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Landos Biopharma, Inc.

Date: ~~May 17, 2021~~November 9, 2023	By:	/s/ ~~Josep Bassaganya-Riera, Ph.D.~~Gregory Oakes
		~~Josep Bassaganya-Riera, Ph.D.~~	Gregory Oakes
		~~Chairman,~~	President and Chief Executive Officer
		(Principal Executive and Financial ~~and Accounting~~
		Officer)


Delaware	81-5085535
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
~~1800 Kraft Drive~~, ~~Suite 216~~P.O. Box 11239 Blacksburg, Virginia	~~24060~~24062
(Address of principal executive offices)	(Zip Code)


	March 31,			December 31,
	2021			2020
Assets
Current assets:
Cash and cash equivalents	$	8,572		$	2,416
Marketable securities, available for sale		97,786			25,718
Incentive and tax receivables		1			154
Prepaid expenses and other current assets		3,386			202
Deferred offering costs		0			1,398
Total current assets		109,745			29,888
Property, plant and equipment-net		465			444
Total assets	$	110,210		$	30,332
Liabilities, convertible preferred stock and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	8,200		$	8,606
Accrued liabilities		364			1,939
Other current liabilities		255			489
Total current liabilities		8,819			11,034
Other liabilities		212			276
Total liabilities		9,031			11,310

Commitments and Contingencies		—			—
Convertible preferred stock, $0.01 par value; 0 shares authorized, issued or outstanding as of March 31, 2021; 11,260,608 shares authorized, issued and outstanding as of December 31, 2020: aggregate liquidation preference of $70,254 as of December 31, 2020		0			73,037

Stockholders’ equity (deficit):
Preferred stock, $0.01 par value; 10,000,000 shares authorized, 0 shares issued or outstanding as of March 31, 2021; 0 shares authorized, issued or outstanding as of December 31, 2020 Common stock, $0.01 par value; 200,000,000 shares authorized, 39,866,669 shares issued and outstanding as of March 31, 2021; 37,410,450 shares authorized, 12,767,909 shares issued and outstanding as of December 31, 2020		399			71
Additional paid-in-capital		166,429			1,633
Accumulated other comprehensive (loss) gain		(102	)		10
Accumulated deficit		(65,547	)		(55,729	)
Total stockholders' equity (deficit)		101,179			(54,015	)
Total liabilities, convertible preferred stock and stockholders’ equity	$	110,210		$	30,332


	September 30,			December 31,
	2023			2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	42,408		$	36,640
Marketable securities, available-for-sale		62			7,762
Restricted cash		50			—
Prepaid expenses and other current assets		710			851
Total current assets		43,230			45,253
Total assets	$	43,230		$	45,253

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,135		$	3,435
Accrued liabilities		4,431			2,687
Total current liabilities		5,566			6,122
Total liabilities		5,566			6,122
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $0.01 par value; 10,000,000 shares authorized, no shares issued and outstanding as of September 30, 2023 and December 31, 2022		—			—
Common stock, $0.01 par value; 20,000,000 shares authorized, 3,116,729 and 4,025,489 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		31			40
Additional paid-in capital		186,877			172,575
Accumulated other comprehensive loss		(1	)		(57	)
Accumulated deficit		(149,243	)		(133,427	)
Total stockholders’ equity		37,664			39,131
Total liabilities and stockholders’ equity	$	43,230		$	45,253


	Three Months Ended
	March 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	9,818		$	5,796
Adjustments to reconcile net earnings to net cash used in operating activities:
Compensation expense related to vesting of common stock issued to Xontogeny		0			13
Depreciation of property and equipment		43			29
Accrued interest on marketable securities		426			12
Stock-based compensation expense		1,023			0
Net realized gain/(loss) on sale of marketable securities		0			28
Net (accretion of discount) amortization of premium on marketable securities		(196	)		36
Gain/(loss) from foreign exchange		18			(223	)
Changes in operating assets and liabilities:
Incentive and tax receivables		153			0
Prepaid expenses and other assets		(2,212	)		56
Accounts payable		(422	)		2,792
Other liabilities		(1,575	)		(315	)
Net cash (used in) operating activities		(12,560	)		(3,368	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(64	)		(20	)
Purchase of available-for-sale marketable securities		(81,379	)		(1,251	)
Proceeds from sales and maturities of marketable securities		9,395			2,978
Net cash provided by (used in) investing activities		(72,048	)		1,707
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from initial public offering		90,506
Proceeds from exercise of stock options		258			—
Net cash provided by (used in) financing activities		90,764			—
Net change in cash and cash equivalents		6,156			(1,661	)
Cash and cash equivalents at beginning of period		2,416			9,808
Cash and cash equivalents at end of period	$	8,572		$	8,147

Supplemental non-cash disclosure: NONCASH INVESTING AND FINANCING ACTIVITY:
Deferred offering costs included in accounts payable and accrued liabilities	$	0		$	59
Purchases of fixed assets in accounts payable		0			23
Reclassification of par to additional paid-in-capital		2			0
Reclassification of series A and B convertible preferred stock to common stock		72,925			0
Unrealized loss on available-for-sale marketable securities		112			686


	Nine Months Ended September 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(15,816	)	$	(34,044	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		—			577
Stock-based compensation expense		726			1,775
Amortization of premium on marketable securities		44			1,055
Non-cash loss on termination of lease		—			137
Gain on sale of equipment		—			(147	)
Changes in operating assets and liabilities:
Prepaid expenses and other assets		141			(231	)
Accounts payable		(2,372	)		(9,762	)
Other liabilities		1,769			(1,432	)
Net cash used in operating activities		(15,508	)		(42,072	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		—			(7	)
Proceeds from sale of property and equipment		—			173
Purchase of available-for-sale marketable securities		—			(3,671	)
Proceeds from sales and maturities of marketable securities		7,712			66,094
Net cash provided by investing activities		7,712			62,589
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of pre-funded warrants for the purchase of common stock, net of issuance costs		16,567			—
Repurchase and retirement of common stock		(3,000	)		—
Net cash provided by financing activities		13,567			—
Net change in cash, cash equivalents, and restricted cash		5,771			20,517
Cash, cash equivalents, and restricted cash at beginning of period		36,640			8,305
Effect of exchange rates on cash		47			58
Cash, cash equivalents, and restricted cash at end of period	$	42,458		$	28,880

Supplemental non-cash disclosure: NONCASH INVESTING AND FINANCING ACTIVITIES:
Non-cash gain on sale of fixed assets	$	—		$	14
Operating right-of-use asset obtained in exchange for operating lease liability	$	—		$	824
Derecognition of operating right-of-use asset and operating lease liability upon termination of lease	$	—		$	714
Unrealized gain (loss) on available-for-sale marketable securities	$	56		$	(14	)


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


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


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒


		Page

PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss	4
	Condensed Consolidated Statements of Cash Flows	5
	Condensed Consolidated Statements of ~~Convertible Preferred Stock and~~Changes in Stockholders’ Equity	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1315
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23

PART II.	OTHER INFORMATION	24

Item 2.1.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 6.	Exhibits	2425
Signatures		26


	Convertible preferred stock						Convertible preferred stock				Common stock
	Shares			Amounts			Shares		Amounts		Shares		Amounts		Additional paid-in capital		Tranche right		Accumulated deficit			Accumulated other comprehensive loss			Total stockholders’ deficit
Balance at December 31, 2019		11,260,608			73,037			—		—		11,784,148	$	63	$	16		—	$	(25,585	)	$	(77	)	$	(25,583	)
Compensation expense related to vesting of common stock issued to Xontogeny		—			—			—		—		193,182		2		12		—		—			—			14
Unrealized gain / (loss) on available-for-sale securities		—			—			—		—		—		—		—		—		—			(686	)		(686	)
Net loss		—			—			—		—		—		—		—		—		(5,796	)		—			(5,796	)
Balance at March 31, 2020		11,260,608			73,037							11,977,330		65		28		—		(31,381	)		(763	)		(32,051	)

��	Convertible preferred stock						Convertible preferred stock				Common stock
	Shares			Amounts			Shares		Amounts		Shares		Amounts		Additional paid-in capital		Tranche right		Accumulated deficit			Accumulated other comprehensive loss			Total stockholders’ deficit
Balance at December 31, 2020		11,260,608		$	73,037			—	$	—		12,767,909	$	71	$	1,633		—	$	(55,729	)	$	10		$	(54,015	)
Conversion of preferred stock to common stock upon closing of the initial public offering		(11,260,608	)		(73,037	)		—		—		20,549,478		262		72,775		—		—			—			73,037
Issuance of common stock, net of issuance costs		—			—			—		—		6,250,000		63		90,443		—		—			—			90,506
Stock compensation expense		—			—			—		—		—		—		1,023		—		—			—			1,023
Exercise of Stock Options		—			—			—		—		299,282		3		555		—		—			—			558
Unrealized gain / (loss) on available-for-sale securities																							(112	)		(112	)
Net loss		—			—			—		—		—		—		—		—		(9,818	)		—			(9,818	)
Balance at March 31, 2021		—		$	—							39,866,669	$	399	$	166,429			$	(65,547	)	$	(102	)	$	101,179


	March 31, 2021
	Level 1		Level 2		Level 3		Aggregate fair value
Assets:
Money market funds	$	7,233	$	0	$	0	$	7,233
Fixed income securities		0		71,512		0		71,512
Asset backed securities		0		26,274		0		26,274
Total assets	$	7,233	$	97,786	$	0	$	105,019


	December 31, 2020
	Level 1		Level 2		Level 3		Aggregate fair value
Assets:
Money market funds	$	265	$	—	$	—	$	265
Fixed income securities		—		23,343		—		23,343
Asset backed securities		—		2,375		—		2,375
Total assets	$	265	$	25,718	$	—	$	25,983


	As of March 31,
	2021
	(in thousands)
Within one year	$	44,963
Within one to five years		52,823
Total contractual maturities	$	97,786


	Number of Shares			Number of Options Outstanding			Weighted Average Exercise Price		Weighted Remaining Contract Term (in years)		Aggregate Intrinsic Value (in thousands)
Balances as of December 31, 2020		2,003,587			1,249,218		$	0		—	$	-
Authorized		0			—		$	—		—
Granted		(349,650	)		349,650		$	16.00		—
Exercised		0			(299,282	)	$	1.86		—
Forfeited		0			—		$	0		—
Balances as of March 31, 2021		1,653,937			1,299,586		$	5.67		9.67	$	5,151
Options exercisable at March 31, 2021					256,478		$	6.68		9.66	$	756
Options vested and expected to vest at March 31, 2021					1,299,586		$	5.67		9.67	$	5,151


	Three Months Ended March 31, 2021
Research and development	$	778
General and administrative		245
Total stock-based compensation expense	$	1,023