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

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

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

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

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

As of ~~August 8,~~November 6, 2023, the registrant had ~~39,216,931~~48,437,001 shares of common stock, $0.0001 par value per share, outstanding.


	June 30,			December 31,			September 30,			December 31,
	2023			2022			2023			2022
Assets
Current assets:
Cash and cash equivalents	$	158,375		$	279,401		$	208,502		$	279,401
Marketable securities		85,675			—			115,908			—
Prepaid expenses and other current assets (includes related party amounts of $48 and $0, respectively)		8,989			11,212
Prepaid expenses and other current assets (includes related party amounts of $77 and $0, respectively)								8,785			11,212
Total current assets		253,039			290,613			333,195			290,613
Property and equipment, net		13,143			5,586			13,744			5,586
Operating lease right-of-use assets		18,686			19,359			18,377			19,359
Restricted cash		1,631			1,631			1,631			1,631
Other assets		23			22			22			22
Total assets	$	286,522		$	317,211		$	366,969		$	317,211
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable (includes related party amounts of $0 and $141, respectively)	$	151		$	4,744		$	3,287		$	4,744
Accrued expenses (includes related party amounts of $12 and $140, respectively)		17,648			8,210
Accrued expenses (includes related party amounts of $0 and $140, respectively)								12,889			8,210
Accrued interest		102			55			128			55
Current portion of operating lease liability		437			37			2,654			37
Total current liabilities		18,338			13,046			18,958			13,046
Operating lease liability, net of current portion		23,664			21,569			23,247			21,569
Long-term debt, net of debt discount		24,835			14,792			25,038			14,792
Other long-term liabilities		922			575			1,096			575
Total liabilities		67,759			49,982			68,339			49,982
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.0001 par value; authorized shares— 50,000,000 at June 30, 2023 and December 31, 2022; no shares issued and outstanding at June 30, 2023 and December 31, 2022		—			—
Common stock, $0.0001 par value; authorized shares— 500,000,000 at June 30, 2023 and December 31, 2022; issued shares—39,216,931 and 39,240,746 at June 30, 2023 and December 31, 2022, respectively; outstanding shares—38,049,186 and 37,656,037 at June 30, 2023 and December 31, 2022, respectively		4			4
Preferred stock, $0.0001 par value; authorized shares— 50,000,000 at September 30, 2023 and December 31, 2022; no shares issued and outstanding at September 30, 2023 and December 31, 2022								—			—
Common stock, $0.0001 par value; authorized shares— 500,000,000 at September 30, 2023 and December 31, 2022; issued shares—48,417,931 and 39,240,746 at September 30, 2023 and December 31, 2022, respectively; outstanding shares—47,418,350 and 37,656,037 at September 30, 2023 and December 31, 2022, respectively								5			4
Additional paid-in capital		538,865			532,499			650,567			532,499
Accumulated other comprehensive loss		(322	)		(281	)		(343	)		(281	)
Accumulated deficit		(319,784	)		(264,993	)		(351,599	)		(264,993	)
Total stockholders’ equity		218,763			267,229			298,630			267,229
Total liabilities and stockholders’ equity	$	286,522		$	317,211		$	366,969		$	317,211


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022			2023			2022			2023			2022
Operating expenses:
Research and development (includes related party amounts of $29, $172, $197, and $1,594, respectively)	$	22,953		$	8,826		$	46,117		$	15,037
Research and development (includes related party amounts of $55, $719, $252, and $2,313, respectively)													$	27,308		$	13,315		$	73,425		$	28,352
In-process research and development - related party		—			—			—			2,500			—			—			—			2,500
General and administrative (includes related party amounts of $3, $8, $6, and $34, respectively)		7,231			3,982			13,026			6,585
General and administrative (includes related party amounts of $0, $3, $0, and $37, respectively)														6,603			4,577			19,629			11,162
Total operating expenses		30,184			12,808			59,143			24,122			33,911			17,892			93,054			42,014
Loss from operations		(30,184	)		(12,808	)		(59,143	)		(24,122	)		(33,911	)		(17,892	)		(93,054	)		(42,014	)
Other income (expense):
Interest income		2,453			334			5,027			340			1,690			1,317			6,717			1,657
Interest expense (includes related party amounts of $0, $188, $0, and $717, respectively)		(500	)		(888	)		(949	)		(2,952	)
Change in fair value of convertible promissory notes (includes related party amounts of $0, $8,818, $0 and $13,196, respectively)		—			(34,396	)		—			(51,469	)
Interest expense (includes related party amounts of $0, $0, $0, and $717, respectively)														(717	)		(205	)		(1,666	)		(3,157	)
Change in fair value of convertible promissory notes (includes related party amounts of $0, $0, $0 and $13,196, respectively)														—			—			—			(51,469	)
Change in fair value of warrant liabilities - related party		—			(6,151	)		—			(43,575	)		—			—			—			(43,575	)
Other income (expense)		329			(20	)		274			(38	)		1,123			(25	)		1,397			(63	)
Total other income (expense)		2,282			(41,121	)		4,352			(97,694	)		2,096			1,087			6,448			(96,607	)
Net loss	$	(27,902	)	$	(53,929	)	$	(54,791	)	$	(121,816	)	$	(31,815	)	$	(16,805	)	$	(86,606	)	$	(138,621	)
Other comprehensive loss:
Unrealized loss on marketable securities		(37	)		—			(37	)		—			(28	)		—			(65	)		—
Pension and other postemployment benefits		(3	)		—			(4	)		—			7			—			3			—
Total comprehensive loss	$	(27,942	)	$	(53,929	)	$	(54,832	)	$	(121,816	)	$	(31,836	)	$	(16,805	)	$	(86,668	)	$	(138,621	)
Net loss per share, basic and diluted	$	(0.74	)	$	(2.03	)	$	(1.45	)	$	(7.30	)	$	(0.81	)	$	(0.45	)	$	(2.26	)	$	(5.86	)
Weighted-average shares of common stock outstanding, basic and diluted		37,951,735			26,512,881			37,853,176			16,685,372			39,039,553			37,323,626			38,252,981			23,640,388


	Common Stock															Common Stock
	Shares		Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity (Deficit)			Shares		Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity (Deficit)
Balance at March 31, 2023		37,841,987	$	4	$	535,221	$	(282	)	$	(291,882	)	$	243,061
Balance at June 30, 2023																	38,049,186	$	4	$	538,865	$	(322	)	$	(319,784	)	$	218,763
Vesting of restricted shares		170,304		—		—		—			—			—			168,164		—		—		—			—			—
Stock—based compensation		—		—		3,246		—			—			3,246			—		—		3,946		—			—			3,946
Exercise of common stock options		10,000		—		80		—			—			80			1,000		—		7		—			—			7
Issuance of common stock under stock purchase plan		26,895		—		318		—			—			318
Issuance of common stock in connection with underwritten public offering, net																	9,200,000		1		107,749		—			—			107,750
Unrealized loss on marketable securities		—		—		—		(37	)		—			(37	)		—		—		—		(28	)		—			(28	)
Pension and other postemployment benefits		—		—		—		(3	)		—			(3	)		—		—		—		7			—			7
Net loss		—		—		—		—			(27,902	)		(27,902	)		—		—		—		—			(31,815	)		(31,815	)
Balance at June 30, 2023		38,049,186	$	4	$	538,865	$	(322	)	$	(319,784	)	$	218,763
Balance at September 30, 2023																	47,418,350	$	5	$	650,567	$	(343	)	$	(351,599	)	$	298,630

Balance at March 31, 2022		6,897,450	$	1	$	4,698	$	—		$	(173,071	)	$	(168,372	)
Issuance of common stock in connection with initial public offering, net of issuance costs of $20,491		13,529,750		1		209,514		—			—			209,515
Conversion of August 2021 Notes and accrued interest into common shares		10,672,138		1		215,363		—			—			215,364
Conversion of Takeda Warrant liability into equity		—		—		100,020		—			—			100,020
Balance at June 30, 2022																	31,311,387	$	3	$	530,151	$	—		$	(227,000	)	$	303,154
Vesting of restricted shares		212,049		—		—		—			—			—			251,999		—		—		—			—			—
Stock—based compensation		—		—		556		—			—			556			—		—		844		—			—			844
Net loss		—		—		—		—			(53,929	)		(53,929	)		—		—		—		—			(16,805	)		(16,805	)
Balance at June 30, 2022		31,311,387	$	3	$	530,151	$	—		$	(227,000	)	$	303,154
Balance at September 30, 2022																	31,563,386	$	3	$	530,995	$	—		$	(243,805	)	$	287,193

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) - (Continued)


	Common Stock											��				Common Stock
	Shares		Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity (Deficit)			Shares		Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity (Deficit)
Balance at December 31, 2022		37,656,037	$	4	$	532,499	$	(281	)	$	(264,993	)	$	267,229			37,656,037	$	4	$	532,499	$	(281	)	$	(264,993	)	$	267,229
Vesting of restricted shares		344,872		—		—		—			—			—			513,036		—		—		—			—			—
Stock—based compensation		—		—		5,888		—			—			5,888			—		—		9,834		—			—			9,834
Exercise of common stock options																	22,382		—		167		—			—			167
Issuance of common stock under stock purchase plan		26,895		—		318		—			—			318			26,895		—		318		—			—			318
Exercise of common stock options		21,382		—		160		—			—			160
Issuance of common stock in connection with underwritten public offering, net																	9,200,000		1		107,749		—			—			107,750
Unrealized loss on marketable securities		—		—		—		(37	)		—			(37	)		—		—		—		(65	)		—			(65	)
Pension and other postemployment benefits		—		—		—		(4	)		—			(4	)		—		—		—		3			—			3
Net loss		—		—		—		—			(54,791	)		(54,791	)		—		—		—		—			(86,606	)		(86,606	)
Balance at June 30, 2023		38,049,186	$	4	$	538,865	$	(322	)	$	(319,784	)	$	218,763
Balance at September 30, 2023																	47,418,350	$	5	$	650,567	$	(343	)	$	(351,599	)	$	298,630

Balance at December 31, 2021		6,599,886	$	1	$	4,426	$	—		$	(105,184	)	$	(100,757	)		6,599,886	$	1	$	4,426	$	—		$	(105,184	)	$	(100,757	)
Issuance of common stock in connection with initial public offering, net of issuance costs of $20,491		13,529,750		1		209,514		—			—			209,515			13,529,750		1		209,514		—			—			209,515
Conversion of August 2021 Notes and accrued interest into common shares		10,672,138		1		215,363		—			—			215,364			10,672,138		1		215,363		—			—			215,364
Conversion of Takeda Warrant liability into equity		—		—		100,020		—			—			100,020			—		—		100,020		—			—			100,020
Vesting of restricted shares		509,613		—		—		—			—			—			761,612		—		—		—			—			—
Stock—based compensation		—		—		828		—			—			828			—		—		1,672		—			—			1,672
Net loss		—		—		—		—			(121,816	)		(121,816	)		—		—		—		—			(138,621	)		(138,621	)
Balance at June 30, 2022		31,311,387	$	3	$	530,151	$	—		$	(227,000	)	$	303,154
Balance at September 30, 2022																	31,563,386	$	3	$	530,995	$	—		$	(243,805	)	$	287,193


	Six Months Ended June 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Cash flows from operating activities
Net loss	$	(54,791	)	$	(121,816	)	$	(86,606	)	$	(138,621	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		106			—			450			—
Stock-based compensation		5,888			828			9,834			1,672
Change in fair value of convertible promissory notes (includes related party amounts of $0 and $13,196, respectively)		—			51,469			—			51,469
Change in fair value of warrant liabilities - related party		—			43,575			—			43,575
Amortization of operating lease right-of-use assets		673			431			982			836
Amortization of debt discount		255			81			410			182
Issuance of PIK interest debt		205			21			375			48
Acquired in-process research and development - related party		—			2,500			—			2,500
Net amortization of premiums and discounts on marketable securities		(603	)		—			(1,876	)		—
Loss on disposal of property and equipment		—			42			—			42
Changes in operating assets and liabilities:
Prepaid expenses and other current assets (includes related party amounts of $48 and $(692), respectively)		2,223			(4,750	)
Accounts payable, accrued expenses and other long-term liabilities (includes related party amounts of $(269) and $(2,531), respectively)		5,131			550
Prepaid expenses and other current assets (includes related party amounts of $77 and $0, respectively)								2,427			(7,951	)
Accounts payable, accrued expenses and other long-term liabilities (includes related party amounts of $(281) and $(4,137), respectively)								4,459			(713	)
Accrued interest (includes related party amounts of $0 and $717, respectively)		47			2,821			73			2,823
Operating lease right-of-use assets and liabilities		2,495			323			4,295			666
Net cash used in operating activities		(38,371	)		(23,925	)		(65,177	)		(43,472	)
Cash flows from investing activities
Cash paid for purchased in-process research and development		—			(2,500	)		—			(2,500	)
Purchases of property and equipment		(7,824	)		—			(10,010	)		(185	)
Purchases of marketable securities		(85,109	)		—			(129,097	)		—
Proceeds from sales or maturities of marketable securities								15,000			—
Net cash used in investing activities		(92,933	)		(2,500	)		(124,107	)		(2,685	)
Cash flows from financing activities
Proceeds from issuances of stock under ESPP		318			—			318			—
Proceeds from issuance of common stock in initial public offering		—			230,006			—			230,006
Payment of initial public offering costs		—			(16,569	)		—			(19,389	)
Proceeds from issuance of common stock in underwritten public offering, net of issuance costs								108,100			—
Proceeds from issuance of long-term debt, net of issuance costs		9,800			4,665			9,800			4,665
Proceeds from exercise of stock options		160			—			167			—
Net cash provided by financing activities		10,278			218,102			118,385			215,282
Net increase (decrease) in cash, cash equivalents and restricted cash		(121,026	)		191,677			(70,899	)		169,125
Cash, cash equivalents and restricted cash—beginning of period		281,032			124,566			281,032			124,566
Cash, cash equivalents and restricted cash—end of period	$	160,006		$	316,243		$	210,133		$	293,691
Supplemental disclosure of cash flow information
Cash paid for interest	$	461		$	30		$	1,121		$	104
Supplemental disclosure of noncash investing and financing activities
Operating lease	$	—		$	20,317		$	—		$	20,317
Unpaid initial public offering costs	$	—		$	1,724		$	—		$	313
Unpaid underwritten public offering costs							$	350		$	—
Unpaid property and equipment purchases	$	1,412		$	—		$	171		$	415
Conversion of convertible promissory notes and interest into common stock	$	—		$	215,364		$	—		$	215,364
Conversion of warrant liability into equity	$	—		$	100,020		$	—		$	100,020
Accreted final interest payment fees	$	217		$	70		$	339		$	158

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company's financial statements include the accounts of HilleVax Security Corporation, a wholly-owned subsidiary formed in Massachusetts, and HilleVax GmbH, a wholly-owned subsidiary formed in Zurich, Switzerland. The functional currency of the Company, HilleVax Security Corporation and HilleVax GmbH is the U.S. dollar. The Company’s assets and liabilities that are not denominated in the functional currency are remeasured into U.S. dollars at foreign currency

exchange rates in effect at the balance sheet date except for nonmonetary assets, which are remeasured at historical foreign currency exchange rates in effect at the date of transaction. Net realized and unrealized gains and losses from foreign currency transactions and remeasurement are reported in other income (expense), in the condensed consolidated statements of operations and were not material for the periods presented. All intercompany transactions have been eliminated in consolidation.

Unaudited Interim Financial Information

The unaudited condensed consolidated financial statements as of ~~June~~September 30, 2023, and for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), and with U.S. generally accepted accounting principles (“GAAP”) applicable to interim financial statements. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s audited financial statements and include all adjustments, consisting of only normal recurring accruals, which in the opinion of management are necessary to present fairly the Company’s financial position as of the interim date and results of operations for the interim periods presented. Interim results are not necessarily indicative of results for a full year or future periods. The condensed consolidated balance sheet data as of December 31, 2022 was derived from the Company’s audited financial statements but does not include all disclosures required by GAAP. These unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 17, 2023.

Use of Estimates

The preparation of the Company’s unaudited condensed consolidated financial statements requires it to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in the Company’s condensed consolidated financial statements and accompanying notes. The most significant estimates in the Company’s unaudited condensed consolidated financial statements relate to accruals for research and development expenses, and prior to the Company's IPO, the valuation of convertible promissory notes, warrant liabilities and various other equity instruments. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results could differ materially from those estimates and assumptions.

Fair Value Option

As permitted under Accounting Standards Codification (“ASC”) 825, Financial Instruments, (“ASC 825”), the Company has elected the fair value option to account for its convertible promissory notes issued through May 2022, when the convertible promissory notes converted into equity in connection with the Company's IPO. In accordance with ASC 825, the Company recorded these convertible promissory notes at fair value with changes in fair value recorded in the condensed consolidated statements of operations. As a result of applying the fair value option, direct costs and fees related to the convertible promissory notes were recognized in earnings as incurred and not deferred.

Fair Value Measurements

The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets.

Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly.

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. Cash and cash equivalents include cash in readily available checking accounts and money market funds.

Restricted Cash

Restricted cash consists of a money market account securing a standby letter of credit issued in connection with the Company’s Boston Lease (as defined and described in Note 6).

Marketable Securities

Marketable securities represent holdings of available-for-sale marketable debt securities in accordance with the Company’s investment policy. The Company has classified its investments with maturities beyond one year as current, based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations.

Investments in marketable securities are recorded at fair value, with any unrealized gains and losses reported within accumulated other comprehensive income (loss) as a separate component of stockholders’ equity (deficit) until realized or until a determination is made that an other-than-temporary decline in market value has occurred. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion, together with interest on securities sold, is determined based on the specific identification method and any realized gains or losses on the sale of investments are reflected as a component of other income (expense).

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, marketable securities, and restricted cash. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

Property and Equipment, Net

Property and equipment are stated at cost and depreciated on a straight-line basis over the estimated useful life of the related assets as follows:


		Estimated Useful Life
Computer equipment		3 years
Lab equipment		5 years
Furniture and fixtures		5 years
Leasehold improvements		3 – 10 years or term of lease

Repairs and maintenance costs are charged to expense as incurred.

Leases

At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. Lease terms are determined at the commencement date by considering whether renewal options and termination options are reasonably assured of exercise. For its long-term operating leases, the Company recognizes a lease liability and a right-of-use (“ROU”) asset on its balance sheet and recognizes lease expense on a straight-line basis over the lease term. The lease liability is determined as the present value of future lease payments, reduced by any reimbursements for tenant improvements, using the discount rate implicit in the lease or, if the implicit rate is not readily determinable, an estimate of the Company’s incremental borrowing rate. The ROU asset is based on the lease liability, adjusted for any prepaid or deferred rent, and reduced by any reimbursements for tenant improvements. The Company aggregates all lease and non-lease components for each class of underlying assets into a single lease component and variable charges for common area maintenance and other variable costs are recognized as expense as incurred. The Company has elected to not recognize a lease liability or ROU asset in connection with short-term operating leases and recognizes lease expense for short-term operating leases on a straight-line basis over the lease term. The Company does not have any financing leases.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, such as property and equipment, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Fair value would be assessed using discounted cash flows or other appropriate measures of fair value. The Company has not recognized any impairment losses through ~~June~~September 30, 2023.

Research and Development Expenses and Accruals

All research and development costs are expensed in the period incurred and consist primarily of salaries, payroll taxes, employee benefits, stock-based compensation charges for those individuals involved in research and development efforts, external research and development costs incurred under agreements with contract research organizations and consultants to conduct and support the Company’s clinical trials of HIL-214.

The Company has entered into various research and development contracts with clinical research organizations, clinical manufacturing organizations and other companies. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and payments made in advance of performance are reflected in the accompanying balance sheets as prepaid expenses. The Company records accruals for estimated costs incurred for ongoing research and development activities. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the services, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates may be made in determining the prepaid or accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates.

In-Process Research and Development

The Company evaluates whether acquired intangible assets are a business under applicable accounting standards. Additionally, the Company evaluates whether the acquired assets have a future alternative use. Intangible assets that do not have future alternative use are considered acquired in-process research and development. When the acquired in-process research and development assets are not part of a business combination, the value of the consideration paid is expensed on the acquisition date.

Patent Costs

Costs related to filing and pursuing patent applications are recorded as general and administrative expenses and expensed as incurred since recoverability of such expenditures is uncertain.

Stock-Based Compensation

Stock-based compensation expense represents the cost of the grant date fair value of equity awards, primarily consisting of stock options, restricted common stock, and employee stock purchase rights, recognized on a straight-line basis over the requisite service period for stock options and restricted common stock, and over the respective offering period for employee stock purchase plan rights. The Company recognizes forfeitures as they occur.

Benefit plans

The Company has established a defined contribution savings plan for its employees in the United States under Section 401(k) of the Internal Revenue Code, and a defined benefits plan for its employees outside of the United States.

The defined benefits plan is valued by an independent actuary using the projected unit credit method. The liabilities correspond to the projected benefit obligations of which the discounted net present value is calculated based on years of employment, expected salary increase, and pension adjustments. The Company reviews its actuarial assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends. This plan is recognized under ASC 715, Compensation - Retirement Benefits.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the

differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the condensed consolidated statements of operations in the period that includes the enactment date.

The Company recognizes net deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their net recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions on the basis of a two-step process whereby (i) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense in the condensed consolidated statements of operations. Any accrued interest and penalties are included within the related tax liability in the condensed consolidated balance sheets. The Company did not recognize any interest or penalties during the periods presented.

Comprehensive Loss

Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. For the three and ~~six~~nine months ended ~~June~~September 30, 2023, comprehensive loss included ~~losses~~gains on the Company's pension benefit obligation and unrealized losses on marketable securities. For the three and ~~six~~nine months ended ~~June~~September 30, 2022, the Company’s comprehensive loss was the same as its reported net loss.

Segment Reporting

Operating segments are 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 on how to allocate resources and assess performance. The Company views its operations and manages its business as one operating segment.

Net Loss Per Share

Basic net loss per share is computed by dividing the consolidated net loss by the weighted-average number of common shares outstanding for the period, without consideration for potentially dilutive securities. The Company included 5,883,500 shares of common stock under the Takeda Warrant (as defined below) in the calculation of basic weighted-average common shares outstanding from the time the Takeda Warrant became exercisable upon the Company’s IPO because the Takeda Warrant was exercisable for minimal consideration. The Company has excluded weighted-average unvested shares of ~~1,317,580~~1,149,612 shares, ~~2,218,351~~1,954,126 shares, ~~1,404,701~~1,318,737 shares, and ~~2,346,789~~2,214,463 shares from the basic weighted-average number of common shares outstanding for the three months ended ~~June~~September 30, 2023 and 2022 and the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. Diluted net loss per share is computed by dividing the consolidated net loss by the weighted-average number of common shares and dilutive common stock equivalents outstanding for the period determined using the treasury-stock and if-converted methods. Potentially dilutive common stock equivalents are comprised of unvested common stock, common stock options, contingently issuable shares under the Company's employee stock purchase plan, and common stock warrants. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding as inclusion of the potentially dilutive common stock equivalents would be antidilutive.

Potentially dilutive securities not included in the calculation of diluted net loss per share, because to do so would be anti-dilutive, are as follows (in common stock equivalent shares):


	June 30,				September 30,
	2023		2022		2023		2022
Common stock options		3,699,332		1,515,447		3,770,701		1,795,989
Unvested common stock		1,921,342		2,115,822		1,742,090		1,781,874
ESPP shares		6,246		5,175		16,767		7,186
Total potentially dilutive shares		5,626,920		3,636,444		5,529,558		3,585,049

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (“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 irrevocably elected to avail itself of this exemption from new or revised accounting standards and, therefore, will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Recently Adopted Accounting Standards

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments – Credit Losses (Topic 326), to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held

by a reporting entity at each reporting date. To achieve this objective, the amendments in Topic 326 replace the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. We adopted Topic 326 on January 1, 2023. The adoption did not have a material impact on our unaudited condensed consolidated financial statements’.

Recently Issued Accounting Pronouncements

The Company assesses the adoption impacts of recently issued accounting standards by the Financial Accounting Standards Board or other standard setting bodies on the Company's condensed consolidated financial statements as well as material updates to previous assessments, if any. Although there were several other new accounting pronouncements issued or proposed by the FASB, the Company does not believe any of those accounting pronouncements have had or will have a material impact on its financial position or operating results.

3. Fair Value Measurements

The Company’s cash, cash equivalents, marketable securities, and restricted cash are carried at fair value, determined according to the fair value hierarchy discussed in Note 2. The carrying values of the Company's prepaid expenses and other current assets, accounts payable, and accrued liabilities, approximate fair value due to their short maturities. The estimated fair value of the Company’s long-term debt approximated the carrying amount given its floating interest rate basis. Warrant liabilities and convertible promissory notes were recorded at fair value on a recurring basis until they converted to equity in connection with the Company's IPO, which closed in May 2022.

The following tables present the Company’s fair value hierarchy for its assets that are measured at fair value on a recurring basis and indicate the level within the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value (in thousands):

Fair Value Measurements at
June 30, 2023 Using:

Total

Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Cash equivalents

Money market funds

$
151,387

$
151,387

$
—

$
—

Marketable securities:

U.S. treasury notes

4,823

—

4,823

—

U.S government agency bonds

80,852

—

80,852

—

Total

$
237,062

$
151,387

$
85,675

$
—


			Fair Value Measurements at September 30, 2023 Using:
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents
Money market funds	$	201,473	$	201,473	$	—	$	—
Marketable securities:
U.S. treasury notes		31,396		31,396		—		—
U.S government agency bonds		84,512		—		84,512		—
Total	$	317,381	$	232,869	$	84,512	$	—


			Fair Value Measurements at December 31, 2022 Using:
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents
Money market funds	$	277,043	$	277,043	$	—	$	—
Total	$	277,043	$	277,043	$	—	$	—

U.S. government money market funds were valued by the Company based on quoted market prices, which represent a Level 1 measurement within the fair value hierarchy.

As of ~~June~~September 30, 2023, the Company’s marketable securities consisted of U.S. Treasury notes which were valued based on Level 1 inputs and agency bonds which were valued based on Level 2 inputs. In determining the fair value of its ~~U.S. Treasury notes and~~ agency bonds, the Company relied on quoted prices for similar securities in active markets or other inputs that are observable or can be corroborated by observable market data.

None of the Company’s non-financial assets or liabilities are recorded at fair value on a non-recurring basis. No transfers between levels have occurred during the periods presented.

5. Other Balance Sheet Details

Property and Equipment

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


	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Computer equipment	$	79	$	-	$	103	$	-
Furniture and equipment		363		11		372		11
Leasehold improvements		11,029		378		11,870		378
Lab equipment						1,844		—
Construction in progress		1,778		5,198		5		5,198
Total property and equipment, at cost		13,249		5,587		14,194		5,587
Less accumulated depreciation		106		1		450		1
Property and equipment, net	$	13,143	$	5,586	$	13,744	$	5,586

Depreciation expense for the three and ~~six~~nine months ended ~~June~~September 30, 2023 was $~~0.1~~0.4 ~~million.~~and $0.5 million, respectively. Depreciation expense for the three and ~~six~~nine months ended ~~June~~September 30, 2022 was not material.

Accrued Expenses

Accrued expenses consisted of the following (in thousands):


	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Accrued external research and development costs	$	12,818	$	3,510	$	8,118	$	3,510
Accrued payroll and payroll-related costs		2,667		4,018		3,729		4,018
Accrued professional costs		1,106		307		498		307
Other		1,057		375		544		375
Total accrued expenses	$	17,648	$	8,210	$	12,889	$	8,210

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash recorded within the accompanying condensed consolidated balance sheets that sum to the amounts shown in the condensed consolidated statements of cash flows (in thousands):


	June 30,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Cash and cash equivalents	$	158,375	$	279,401	$	208,502	$	279,401
Restricted cash		1,631		1,631		1,631		1,631
Total cash, cash equivalents and restricted cash	$	160,006	$	281,032	$	210,133	$	281,032

6. Leases

Operating Leases

In August 2021, the Company entered into a five-year noncancelable operating lease for a facility in Switzerland, which it determined was an operating lease at the inception of the lease contract. The lease commencement date occurred in September 2021 when the Company gained access to the facility. The Company is obligated to make monthly rental payments that periodically escalate during the lease term and is subject to additional charges for common area maintenance and other costs. The Company has an option to extend the lease for a period of five years which the Company is not reasonably certain to exercise.

In March 2022, the Company entered into a lease for office and laboratory space located in Boston, Massachusetts (the “Boston Lease”), which it determined was an operating lease at the inception of the lease contract. The Boston Lease commenced in April 2022 with base rental payments beginning in January 2023. The Boston Lease includes certain tenant improvement allowances for the reimbursement of up to $6.3 million of costs incurred by the Company, and an option for the Company to extend the lease for a period of five years, which the Company is not reasonably certain to

exercise. The Company determined that it owns the leasehold improvements related to the Boston Lease and, as such, reflected the $6.3 million lease incentive as a reduction of the rental payments used to measure the operating lease liability, and, in turn, the operating lease right-of-use asset as of the lease commencement date in April 2022. Between the lease commencement date and ~~June~~September 30, 2023, the Company recorded increases of $~~3.4~~5.6 million to the operating lease liability as and when such leasehold improvements were paid for by the landlord. The Company expects to receive all tenant improvement reimbursements during the year ending December 31, 2023. Under the terms of the Boston Lease, the Company provided the lessor with an irrevocable standby letter of credit secured by restricted cash in the amount of $1.6 million.

The following table summarizes operating lease expense for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022		2023		2022		2023		2022
Lease expense:
Operating lease expense	$	779	$	800	$	1,559	$	800	$	780	$	779	$	2,339	$	1,573

The Company incurred an immaterial amount of expense related to short-term leases and variable lease costs during the three and ~~six~~nine months ended ~~June~~September 30, 2023 and the three and ~~six~~nine months ended ~~June~~September 30, 2022.

The following table summarizes the lease term and discount rate for operating leases:


	June 30,			December 31,			September 30,			December 31,
	2023			2022			2023			2022
Other information:
Weighted-average remaining lease term		9.50			9.96			9.20			9.96
Weighted-average discount rate		7.4	%		7.4	%		7.4	%		7.4	%

As there was not an implicit rate within the leases, management estimated the incremental borrowing rate based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term as well as by using a set of peer companies' incremental borrowing rates.

The following table summarizes the cash paid for amounts included in the measurement of lease liabilities (in thousands):

June 30,
2023

Cash paid for amounts included in the measurement of operating lease liabilities (operating cash flows)

$
1,742


	September 30, 2023
Cash paid for amounts included in the measurement of operating lease liabilities (operating cash flows)	$	2,613

At ~~June~~September 30, 2023, the future minimum noncancelable operating lease payments were as follows (in thousands):


	June 30, 2023			September 30, 2023
Years ending December 31:
2023	$	1,743		$	871
2024		3,584			3,584
2025		3,688			3,688
2026		3,784			3,784
2027		3,860			3,860
Thereafter		21,075			21,075
Total undiscounted operating lease payments		37,734			36,862
Present value adjustment		(10,647	)		(10,175	)
Tenant improvement reimbursements		(2,986	)		(786	)
Operating lease liability		24,101			25,901
Less current portion of operating lease liability		437			2,654
Operating lease liability, net of current portion	$	23,664		$	23,247

9. Convertible Promissory Notes and Long-Term Debt

Frazier Convertible Note Financings

During 2019, 2020 and 2021, the Company issued the Frazier Notes for an aggregate of $8.5 million bearing interest at per annum rates ranging from 0.12% to 2.52%. An aggregate of $0.9 million of the Frazier Notes were issued in April, May and September of 2019 (the “2019 Frazier Notes”), an aggregate of $1.3 million of the Frazier Notes were issued in March, August and October of 2020 (the “2020 Frazier Notes”) and an aggregate of $6.3 million of Frazier Notes were issued from April to July 2021 (the “2021 Frazier Notes”). The Frazier Notes were generally scheduled to mature 12 to 18 months from the date of issuance. The Company recorded changes in the fair value of the Frazier Notes in the condensed consolidated statements of operations. The Frazier Notes were exchanged for convertible promissory notes newly issued in connection with the August 2021 convertible note financing described below.

August 2021 Convertible Note Financing

On August 31, 2021, the Company entered into a note purchase agreement under which it issued the August 2021 Notes for an aggregate of $139.52 million. Of the August 2021 Notes, $103.75 million were issued to new investors, $25.0 million were issued to Frazier for cash and $10.77 million were issued to Frazier in exchange for the then outstanding principal and accrued interest on the Frazier Notes. The August 2021 Notes carried interest at a rate of 6% per annum, compounded annually. The principal and accrued interest on the August 2021 Notes automatically converted into 10,672,138 shares of the Company's common stock immediately prior to the completion of the IPO. Of these shares, 2,736,234 were issued to Frazier.

For the ~~three and six~~nine months ended ~~June~~September 30, 2022, the Company recognized a $~~34.4~~ ~~million and $~~51.5 million ~~respectively,~~ change in fair value of convertible promissory notes and recognized $~~0.7~~ ~~million and $~~2.8 million ~~respectively,~~ of interest expense in connection with convertible promissory notes.

1716

Long-Term Debt

The Company’s Term Loan consists of the following (in thousands):


	June 30, 2023			September 30, 2023
Long-term debt	$	25,000		$	25,000
Accumulated PIK interest		293			463
Total principal (including PIK interest)		25,293			25,463
Unamortized debt discount		(458	)		(425	)
Long-term debt, net of debt discount	$	24,835		$	25,038

On April 18, 2022, the Company entered into a Loan and Security Agreement (the “Existing Loan Agreement” and, as amended by the First Amendment (as defined below) the "Loan Agreement") with Hercules Capital, Inc., as administrative and collateral agent (in such capacity, "Hercules"), and the lenders from time to time party thereto (the "Lenders"), providing for term loans (“Term Loans”) of up to $75.0 million. Prior to June 16, 2023, the Company had borrowed $15.0 million in term loans under the Existing Loan Agreement and had the right thereunder to borrow (i) an additional $15.0 million of term loans until June 30, 2023 (“Term Loan Tranche 1”), (ii) an additional $20.0 million of term loans until June 30, 2023 (“Term Loan Tranche 2”), and (iii) subject to the achievement of certain clinical development milestones by the Company, an additional $25.0 million until March 31, 2024 ("Term Loan Tranche 3”).

On June 16, 2023, the Company entered into a First Amendment to Loan and Security Agreement (the "First Amendment") with Hercules and the Lenders party thereto, which amended the Existing Loan Agreement. In connection with the First Amendment, the Company borrowed $10.0 million under Term Loan Tranche 1. Additionally, the First Amendment, among other things, amended the following: (i) with respect to the remaining $5.0 million under Term Loan Tranche 1, modified the period during which the Company may borrow thereunder to start on December 1, 2023 and end May 31, 2024 (or such earlier date if Lenders elect in their sole discretion), (ii) with respect to Term Loan Tranche 2, modified the period during which the Company may borrow thereunder to start on December 1, 2023 and end May 31, 2024 (or such earlier date if Lenders elect in their sole discretion) and (iii) with respect to Term Loan Tranche 3, (a) added as a new condition to borrow thereunder that (x) the Company’s Phase 2b clinical trial evaluating the safety, immunogenicity and efficacy of HIL-214 in infants ("NEST-IN1”) has achieved the protocol-specified primary efficacy endpoint and (y) HIL-214 has demonstrated acceptable safety results in the NEST-IN1 clinical trial, and, as a result, the Company supports the initiation of a Phase 3 registrational trial as the next immediate step in the development of HIL-214 (the “Tranche 3 Milestone”) and (b) modified the period during which the Company may borrow thereunder to start on the date the Company achieves the Tranche 3 Milestone and end on the earlier of (x) June 15, 2024 and (y) 30 days following the date the Company achieves the Tranche 3 Milestone. All Term Loans are subject to a minimum draw amount of $5.0 million and no event of default under the Loan Agreement having occurred and continuing. The borrowings under the Loan Agreement are collateralized by substantially all of the Company’s assets, including intellectual property and certain other assets. The First Amendment was accounted for as a debt modification; as such, the financing costs of $0.2 million were reflected as additional debt discount and is amortized as an adjustment to interest expense over the term of the First Amendment.

The Term Loans bear (a) cash interest at a floating rate of the higher of (i) the Wall Street Journal prime rate (or 5.00% if less) plus 1.05%, or (ii) 4.55% (interest rate of 6.05% as of ~~June~~September 30, 2023), and (b) additional interest ("PIK Interest") at a per annum rate equal to 2.85%, with such interest being added to the outstanding principal balance of the Term Loans on a monthly basis. The monthly payments consist of interest-only through June 1, 2025 or, if prior to April 30, 2025, the Company achieves the Tranche 3 Milestone, subject to reasonable verification by Hercules, through June 1, 2026. Subsequent to the interest-only period, the Term Loans will be payable in equal monthly installments of principal, plus accrued and unpaid interest, through the maturity date of May 1, 2027. In addition, the Company is obligated to pay a final payment fee equal to the greater of (i) $2.145 million and (ii) 7.15% of the original principal amount of the Term Loans (which is $2.1 million as of ~~June~~September 30, 2023). The final payment fee is recorded as a debt discount amortized over the life of the debt. The Company may elect to prepay all or a portion of the Term Loans prior to maturity, subject to a prepayment fee of up to 1.00% of the then outstanding principal balance and the pro rata application of such payment to the final payment fee. After repayment, no Term Loan amounts may be borrowed again.

1817

incur additional indebtedness and liens, merge with other companies or consummate certain changes of control, acquire other companies or businesses, make certain investments, pay dividends, transfer or dispose of assets, amend certain material agreements, including the Takeda License, or enter into various specified transactions. Upon the occurrence of an event of default, subject to any specified cure periods, all amounts owed by the Company would begin to bear interest at a rate that is 4.00% above the rate effective immediately before the event of default and may be declared immediately due and payable by Hercules, as collateral agent.

As of ~~June~~September 30, 2023, the Company had borrowed $25.0 million pursuant to the Loan Agreement. During the three months ended ~~June~~September 30, 2023, the Company recognized interest expense of $~~0.5~~1.0 million related to the Term Loans using the effective interest method. Included in such expense was $0.1 million, related to accretion of the final payment fee to other long-term liabilities, $~~0.1~~0.2 million of PIK interest, $~~0.3~~0.4 million of coupon interest, and an immaterial amount of debt discount amortization. During the ~~six~~nine months ended ~~June~~September 30, 2023, the Company recognized interest expense of $~~0.9~~1.7 million related to the Term Loans using the effective interest method. Included in such expense was $~~0.2~~0.3 million related to accretion of the final payment fee to other long-term liabilities, $~~0.2~~0.4 million of PIK interest, $~~0.5~~0.9 million of coupon interest, and an immaterial amount of debt discount amortization.

Future minimum principal and interest payments, including the final payment fee, as of ~~June~~September 30, 2023 are as follows (in thousands):


	June 30, 2023			September 30, 2023
Years ending December 31:
2023	$	719		$	390
2024		1,599			1,599
2025		8,433			8,433
2026		13,303			13,303
2027		10,645			10,645
Total principal payments, interest payments and final payment fee		34,699			34,370
Less: interest, PIK interest and final payment fee		(9,406	)		(8,907	)
Long-term debt	$	25,293		$	25,463

10. Stockholders’ Equity

Initial Public Offering

On May 3, 2022, the Company completed its IPO whereby it sold 13,529,750 shares of common stock at a public offering price of $17.00 per share, for net proceeds of approximately $209.5 million, after deducting underwriting discounts, commissions and offering costs of approximately $20.5 million. In connection with the Company's IPO, the Company increased the number of authorized shares of the Company's common stock and preferred stock to 500,000,000 shares and 50,000,000 shares, respectively.

At-the-Market-Offering

On May 12, 2023, the Company entered into an At-the-Market Equity Offering Sales Agreement (the "Sales Agreement") with Stifel, Nicolaus & Company, Incorporated (the “Agent”), pursuant to which the Company may offer and sell shares of the Company’s common stock having an aggregate offering price of up to $100.0 million from time to time, in “at the market” offerings through the Agent. Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of sale, or as otherwise agreed with the Agent. The Agent will receive a commission from the Company of up to 3.0% of the gross proceeds of any shares of common stock sold under the Sales Agreement. The Company is not obligated to sell, and the Agent is not obligated to buy or sell, any shares of common stock under the Sales Agreement. As of ~~June~~September 30, 2023, no sales have been made pursuant to the Sales Agreement.

Underwritten Public Offering

On September 22, 2023, the Company completed an underwritten public offering whereby it sold 9,200,000 shares of common stock, which included the exercise in full by the underwriters of their option to purchase 1,200,000 shares, at a public offering price of $12.50 per share for total net proceeds of approximately $107.8 million, after underwriting discounts and commissions and estimated offering costs.

2021 Equity Incentive Plan

On February 8, 2021, the Company’s board of directors and stockholders approved and adopted the HilleVax, Inc. 2021 Equity Incentive Plan (the “2021 Plan”). The term of the 2021 Plan is ten years from the adoption date. Under the 2021 Plan, the Company may grant stock options, restricted stock, restricted stock units, and other stock-based awards to employees, directors or consultants of the Company and its subsidiaries. The stock options granted under the plan generally vest over a four-year period from the vesting commencement date. Upon the effectiveness of the 2022 Plan

defined and described below, no further grants will be made under the 2021 Plan, and any outstanding awards granted under the 2021 Plan will remain subject to the terms of the 2021 Plan and applicable award agreements.

2022 Incentive Award Plan

In April 2022, the Company’s board of directors and stockholders approved the 2022 Incentive Award Plan (the “2022 Plan,” and together with the 2021 Plan, the "Plans") under which the Company may grant stock options, restricted stock, dividend equivalents, restricted stock units, stock appreciation rights, and other stock or cash-based awards to its employees, consultants and directors. The 2022 Plan became effective in connection with the Company’s IPO and will remain in effect until the tenth anniversary of its effective date, which will be April 28, 2032, unless earlier terminated by the Company’s board of directors. The number of shares of the Company's common stock initially available for issuance under awards granted pursuant to the 2022 Plan was the sum of (1) 4,900,000 shares of the Company’s common stock, plus (2) 216,849 shares remaining available for issuance under the 2021 Plan as of the effective date of the 2022 Plan, plus (3) any shares subject to outstanding awards under the 2021 Plan as of the effective date of the 2022 Plan that become available for issuance under the 2022 Plan thereafter in accordance with its terms. The number of shares initially available for issuance will be increased by an annual increase on January 1 of each calendar year ending in and including 2032, equal to the lesser of (1) 5% of the shares of common stock outstanding on the final day of the immediately preceding calendar year and (2) such smaller number of shares as determined by the Company’s board of directors. As of ~~June~~September 30, 2023, ~~7,147,737~~7,197,502 shares were reserved for issuance under the 2022 Plan, of which ~~3,824,146~~3,762,865 shares remained available for future issuance.

2022 Employee Stock Purchase Plan

In April 2022, the Company’s board of directors and stockholders approved the 2022 Employee Stock Purchase Plan (the “2022 ESPP”). The 2022 ESPP became effective in connection with the Company’s IPO. The 2022 ESPP permits eligible employees who elect to participate in an offering under the ESPP to have up to a specified percentage of their eligible earnings withheld, subject to certain limitations, to purchase shares of common stock pursuant to the 2022 ESPP. The price of common stock purchased under the 2022 ESPP is equal to 85% of the lower of the fair market value of the common stock on the first trading day of the offering period or the relevant purchase date. A total of 410,000 shares of the Company’s common stock was initially reserved for issuance under the 2022 ESPP. In addition, the number of shares available for issuance under the 2022 ESPP will be annually increased on January 1 of each calendar year, ending in and including 2032, by an amount equal to the lesser of (1) 1% of the shares outstanding on the final day of the immediately preceding calendar year and (2) such smaller number of shares as is determined by the Company’s board of directors, provided that no more than 10,000,000 shares of the Company’s common stock may be issued under the 2022 ESPP. ~~Stock-based compensation expense related to the ESPP for the three and six months ended June 30, 2023 was not material.~~

A summary of the Company’s stock option activity under the Plans is as follows (in thousands, except share and per share data):


	Number of Outstanding Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value		Number of Outstanding Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Balance at December 31, 2022		2,111,989		$	10.62		9.33	$	13,330		2,111,989		$	10.62		9.33	$	13,330
Granted		1,682,225			17.68						1,842,225			17.68
Exercised		(21,382	)		7.49						(22,382	)		7.49
Cancelled		(73,500	)		13.02						(161,131	)		13.02
Balance at June 30, 2023		3,699,332		$	13.78		9.21	$	14,070
Vested and expected to vest at June 30, 2023		3,699,332		$	13.78		9.19	$	14,070
Exercisable at June 30, 2023		493,438		$	8.28		8.61	$	4,395
Balance at September 30, 2023											3,770,701		$	13.78		9.21	$	14,070
Vested and expected to vest at September 30, 2023											3,770,701		$	13.78		9.19	$	14,070
Exercisable at September 30, 2023											769,785		$	8.28		8.61	$	4,395

2019

Stock-Based Compensation Expense

The assumptions used in the Black-Scholes option pricing model to determine the fair value of stock option grants were as follows:

Three Months Ended
June 30,

Six Months Ended
June 30,

Three Months Ended
September 30,

Nine Months Ended
September 30,

2023

2022

2023

2022

2023

2022

2023

2022

Risk-free interest rate

3.5%–4.0%

2.9%–3.4%

3.5%–4.1%

1.9%–3.4%

4.1%–4.6%

2.7%–4.0%

3.5%–4.6%

1.9%–4.0%

Expected volatility

92.6%–95.9%

83.4%–92.9%

91.7%–95.9%

83.4%–92.9%

94.5%–95.1%

92.9%–94.3%

91.7%–95.9%

83.4%–94.3%

Expected term (in years)

5.5–6.1

6.0–6.1

5.5–6.1

6.1

5.3–6.1

5.5–6.1

5.3–6.1

Expected dividend yield

Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero coupon U.S. Treasury notes with maturities similar to the expected term of the awards.

Expected volatility. Given the Company's limited historical stock price volatility data, the expected volatility assumption is based on volatilities of a peer group of similar companies whose share prices are publicly available. The peer group was developed based on companies in the biotechnology industry. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available.

Expected term. The expected term represents the period of time that options are expected to be outstanding. Because the Company does not have historical exercise behavior, it determines the expected life assumption using the simplified method, for employees, which is an average of the contractual term of the option and its vesting period.

Expected dividend yield. The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends and, therefore, used an expected dividend yield of zero.

Stock-based compensation expense has been reported in the condensed consolidated statements of operations as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022		2023		2022		2023		2022
Research and development	$	1,539	$	179	$	2,816	$	578	$	1,894	$	456	$	4,710	$	1,034
General and administrative		1,707		377		3,072		250		2,052		388		5,124		638
Total	$	3,246	$	556	$	5,888	$	828	$	3,946	$	844	$	9,834	$	1,672

The weighted average grant date fair value per share of option grants for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 was $~~16.77~~13.69, $~~9.36~~11.11, $17.68, and $~~7.31~~8.49, respectively. As of ~~June~~September 30, 2023, total unrecognized stock-based compensation cost related to stock options was approximately $~~31.6~~29.7 million, which is expected to be recognized over a remaining weighted-average period of approximately ~~3.0~~2.9 years.

A summary of the Company’s unvested shares is as follows:


	Number of Unvested Shares			Weighted Average Grant-Date Fair Value		Number of Unvested Shares			Weighted Average Grant-Date Fair Value
Balance at December 31, 2022		1,584,709		$	0.001		1,584,709		$	0.001
Shares granted		759,266			18.000		759,266			18.000
Shares forfeited		(77,761	)		0.001		(88,849	)		0.001
Share vested		(344,872	)		0.001		(513,036	)		0.001
Balance at June 30, 2023		1,921,342			—
Balance at September 30, 2023							1,742,090			—

The Company did not issue any shares of restricted common stock during the three months ended ~~June~~September 30, 2023. The Company issued shares of restricted common stock during the ~~six~~nine months ended ~~June~~September 30, 2023, which consisted only of restricted stock units. The Company did not issue any shares of restricted common stock during the three and ~~six~~nine months ended ~~June~~September 30, 2022. The weighted average grant date fair value per share of restricted common stock grants for the ~~six~~nine months ended ~~June~~September 30, 2023 was $18.00. As of ~~June~~September 30, 2023, total unrecognized stock-based compensation cost related to restricted stock was approximately $~~12.2~~11.1 million, which is expected to be recognized over a remaining weighted-average period of approximately ~~3.6~~3.3 years. For accounting

purposes, unvested shares of restricted common

stock are not considered outstanding until they vest. As of ~~June~~September 30, 2023 and December 31, 2022, the Company had no material repurchase liability related to the unvested shares in the table above.

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance consists of the following:


	~~June~~September 30, 2023
Common stock options outstanding		~~3,699,332~~3,770,701
Shares available for issuance under the Plans		~~3,824,146~~3,762,865
Shares available for issuance under the ESPP		747,679
		~~8,271,157~~8,281,245

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

The following discussion and analysis and the unaudited interim financial statements included in this Quarterly Report on Form 10-Q should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2022 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission (SEC) on March 17, 2023 (the 2022 Form 10-K).

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, research and development plans, the anticipated timing, costs, design and conduct of our ongoing and planned preclinical studies and clinical trials for our product candidates, the timing and likelihood of regulatory filings and approvals for our product candidates, our ability to commercialize our product candidates, if approved, plans and objectives of management for future operations and future results of anticipated product development efforts, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “continue” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target” or “will” or the negative of these terms or other similar expressions. These forward-looking statements are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of risks, uncertainties and assumptions, including, without limitation, the risk factors described in Part II, Item 1A, “Risk Factors” of this Quarterly Report. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

We are a clinical-stage biopharmaceutical company focused on developing and commercializing novel vaccines. Our initial program, HIL-214, is a virus-like particle (VLP) based vaccine candidate for the prevention of moderate-to-severe acute gastroenteritis (AGE) caused by norovirus infection. It is estimated that norovirus causes nearly 700 million cases of illness and more than 200,000 deaths worldwide per year, as well as significant additional economic and social burden. To date, HIL-214 has been studied in nine clinical trials conducted by Takeda and LigoCyte, which collectively generated safety data from more than 4,500 subjects and immunogenicity data from more than 2,200 subjects, including safety and immunogenicity data from more than 800 pediatric subjects. A randomized, placebo-controlled Phase 2b field efficacy trial enrolled 4,712 adult subjects, and HIL-214 was well tolerated and demonstrated clinical proof of concept in preventing moderate-to-severe cases of AGE from norovirus infection. In September 2021, an open investigational new drug (IND) application was transferred to us from Takeda, under which we initiated a Phase 2b clinical trial, NEST-IN1 (Norovirus Efficacy and Safety Trial in Infants, or NOR-212), in May 2022 to evaluate the safety, immunogenicity, and efficacy of HIL-214 in infants. In May 2022, we completed enrollment of the prespecified 200 subject run-in for NEST-IN1. We resumed enrollment in NEST-IN1 in August 2022, following the prespecified safety assessment by the clinical trial's data monitoring committee. In December 2022, we reported positive interim immunogenicity results for the first 200 subjects of NEST-IN1. We expect to report top-line safety and clinical efficacy data in mid-2024. We believe HIL-214 has the potential to be the first ever vaccine approved for norovirus-related illness and will help grow HilleVax into a leading global vaccines company.

We commenced our operations in 2019 and have devoted substantially all of our resources to date to organizing and staffing our company, business planning, raising capital, in-licensing intellectual property related to our initial vaccine candidate, HIL-214, preparing for and managing our clinical trials of HIL-214, and providing other general and administrative support for our operations. We have funded operations to date primarily through the issuance of convertible promissory notes, commercial bank debt and the sale of common stock in our initial public offering (IPO) which closed in May 2022. As of ~~June~~September 30, 2023, we had cash, cash equivalents and marketable securities of ~~$244.1~~$324.4 million. From inception to ~~June~~September 30, 2023, we raised aggregate gross proceeds of $137.2 million from the issuance of convertible

promissory notes, ~~and, on May 3, 2022,~~ we completed our IPO in May 2022, whereby we sold 13,529,750 shares of common stock at a public offering price of $17.00 per share, for net proceeds of approximately $209.5 million, after deducting underwriting discounts, commissions and offering costs of approximately $20.5 million, we borrowed $25.0 million in commercial bank debt and we completed an underwritten public offering in September 2023, whereby we sold 9,200,000 shares of our common stock, which included the exercise in full by the underwriters of their option to purchase 1,200,000 shares, at a public offering price of $12.50 per share, for total net proceeds of approximately $107.8 million.

We do not have any products approved for sale, have not generated any revenue and have incurred net losses since our inception. Our net losses for the three months ended ~~June~~September 30, 2023 and 2022 and the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 were ~~$27.9~~$31.8 million, ~~$53.9~~$16.8 million, ~~$54.8~~$86.6 million, and ~~$121.8~~$138.6 million, respectively. As of ~~June~~September 30, 2023, we had an accumulated deficit of ~~$319.8~~$351.6 million. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical development activities, other research and development activities and pre-commercialization activities. We expect our expenses and operating losses will increase substantially as we advance HIL-214 through clinical trials, seek regulatory approval for HIL-214, expand our clinical, regulatory, quality, manufacturing and commercialization capabilities, incur significant commercialization expenses for marketing, sales, manufacturing and distribution in anticipation of obtaining potential marketing approval for HIL-214, obtain, maintain, protect and enforce our intellectual property, expand our general and administrative support functions, including hiring additional personnel.

Based on our current operating plan, we believe that our existing cash, cash equivalents and marketable securities will be sufficient to meet our anticipated cash requirements through at least the next 12 months. We have never generated any revenue and do not expect to generate any revenue from product sales unless and until we successfully complete development of, and obtain regulatory approval for, HIL-214, which will not be for several years, if ever. Accordingly, until such time as we can generate significant revenue from sales of HIL-214, if ever, we expect to finance our cash needs through equity offerings, our existing Loan Agreement, debt financings, or other capital sources, including potential collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market vaccine candidates that we would otherwise prefer to develop and market ourselves.

Our financial statements include the accounts of HilleVax (formerly MokshaCo, Inc. and also the receiving entity), North Bridge V, Inc. (North Bridge V) and YamadaCo III, Inc. (YamadaCo III), prior to being merged into a single entity effective February 8, 2021. Our financial statements also include the accounts of our wholly-owned subsidiary HilleVax GmbH subsequent to its formation in May 2021 and our wholly-owned subsidiary HilleVax Security Corporation subsequent to its formation in December 2021. The functional currency of our Company, HilleVax GmbH and HilleVax Security Corporation is the U.S. dollar. HilleVax, North Bridge V and YamadaCo III were entities under common control of Frazier Life Sciences X, L.P. or its affiliates (Frazier), as a result of, among other things, Frazier’s: (i) ownership of a majority of the outstanding capital stock of each of the companies; (ii) financing of each of the companies; (iii) control of board of directors of each of the companies; and (iv) management of each of the companies. All of the companies were formed for the purpose of identifying potential assets around which to form an operating company. As the merged entities were under common control, the financial statements report the financial position, results of operations and cash flows of the merged companies for all periods presented. All intercompany transactions have been eliminated in consolidation.

On July 2, 2021, we and Takeda Vaccines, Inc. (Takeda), a subsidiary of Takeda Pharmaceutical Company Limited, entered into a license agreement (the Takeda License), pursuant to which we exclusively in-licensed certain intellectual property rights to commercialize HIL-214 products worldwide (excluding Japan) (the Territory). We will be responsible, at our cost, for the development, manufacture and commercialization of HIL-214 products. We are obligated to use commercially reasonable efforts to develop and commercialize HIL-214 products in the Territory, and to seek regulatory approval for such products throughout the world.

We paid Takeda upfront consideration consisting of 840,500 shares of our common stock and a warrant to purchase 5,883,500 shares of our common stock (the Takeda Warrant). We further agreed that, in the event that Takeda’s fully-diluted ownership, including the Takeda Warrant, represents less than a certain specified percentage of our fully-diluted capitalization, including shares issuable upon conversion of outstanding convertible promissory notes, calculated immediately prior to the closing of our IPO, we would issue an additional warrant to purchase shares of common stock

such that Takeda would hold a certain specified percentage of the fully-diluted capitalization immediately before the closing of our IPO (the Takeda Warrant Right). The Takeda Warrant was fully exercised in November 2022. The Takeda Warrant Right expired in connection with our IPO and no additional warrant was issued. We also paid Takeda $2.5 million in cash upon the consummation of our convertible note financing in August 2021 and paid Takeda $2.5 million in March

2022 upon release of certain drug products and completion of certain regulatory activities. We are required to make to Takeda a one-time payment of $7.5 million upon achievement of a specified development milestone and commercial milestone payments of up to $150.0 million in the aggregate if certain annual sales targets for HIL-214 products are met in the Territory. We agreed to pay Takeda tiered high-single digit to low-teen percentage royalties on net sales of HIL-214 products in the Territory, subject to specified offsets and reductions, and Takeda agreed to pay us tiered mid-single digit to low-double digit percentage royalties on net sales of HIL-214 products in Japan, subject to specified offsets and reductions. Royalties will be payable, on a product-by-product and country-by-country basis beginning on the first commercial sale of such product in such country, until the later of (i) the expiration of the licensed patents covering the applicable product, (ii) the expiration of regulatory exclusivity in such country, or (iii) 20 years following the first commercial sale of such product in such country.

As contemplated by the Takeda License, on December 17, 2021, we and Takeda entered into a Transitional Services Agreement (the TSA). Pursuant to the TSA, Takeda has agreed to provide, on a transitional basis following the effective date of the Takeda License, certain services related to research and development and regulatory assistance services, oversight and management of ongoing clinical and research studies, and maintenance of certain third-party vendor contracts. In consideration for the services provided under the TSA, we have agreed to pay certain specified amounts to Takeda in cash for such services and certain pass-through costs. For the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, we incurred ~~$29,000, $0.2~~$55,000, $0.7 million, ~~$0.2~~$0.3 million, and ~~$1.6~~$2.3 million, respectively, of research and development expenses for Takeda’s services.

During 2023 and 2022, our research and development expenses have primarily been related to the development of HIL-214. Research and development expenses are recognized as incurred, and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

We plan to substantially increase our research and development expenses for the foreseeable future as we continue the development of HIL-214. We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future preclinical studies and clinical trials of HIL-214 or any future vaccine candidates due to the inherently unpredictable nature of clinical and preclinical development. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations. In addition, we cannot forecast whether HIL-214 or any future vaccine candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.

In-process research and development expenses for the ~~six~~nine months ended ~~June~~September 30, 2022 relate to the Takeda License, and include an aggregate $2.5 million contingent payment upon the release of certain drug products and the completion of certain regulatory activities, which have no alternative future use. We did not incur any in-process research and development expenses during the three and ~~six~~nine months ended ~~June~~September 30, 2023.

General and administrative expenses consist of salaries and employee-related costs for personnel in executive, finance and other administrative functions, legal fees relating to intellectual property and corporate matters, and professional fees for accounting, auditing and consulting services. We anticipate that our general and administrative expenses will increase substantially in the future to support our research and development activities, pre-commercial preparation activities for HIL-214 and, if any vaccine candidate receives marketing approval, commercialization activities. We also anticipate increased expenses related to audit, legal, regulatory, and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums, and investor relations costs associated with operating as a public company.

Interest income consists of interest earned on our cash, cash equivalents and marketable securities.

Interest expense consists of interest on our then outstanding convertible promissory notes and our term loan facility.

In connection with the Takeda License, we issued the Takeda Warrant and Takeda Warrant Right (together, the Takeda Warrants). The Takeda Warrants were accounted for as liabilities until they met all the conditions for equity classification due to (i) insufficient authorized shares for the Takeda Warrant and (ii) the Takeda Warrant Right is not indexed to our own stock. Prior to our IPO, we adjusted the carrying value of the Takeda Warrants to their estimated fair value at each reporting date, with any change in fair value of the warrant liabilities recorded as an increase or decrease to change in fair value of warrant liabilities in the condensed consolidated statements of operations. The Takeda Warrant, which became exercisable upon our IPO, was for the purchase of 5,883,500 shares of our common stock at an exercise price of $0.0000595 per share and was fully exercised in November 2022. As a result of increasing our authorized shares of common stock in the second quarter of 2022, the Takeda Warrant met the requirements to be equity classified, and we reclassified the fair value of the Takeda Warrant to stockholders' equity. The Takeda Warrant Right expired upon the closing of our IPO without effect to the financial statements since no fair value was allocated to it at that time. Prior to the

reclassification to stockholders' equity, the fair value of the Takeda Warrants was derived from the model used to estimate the fair value of our common stock and, upon reclassification, the fair value was based on our IPO price.

We issued convertible promissory notes in 2019, 2020 and 2021 for which we elected the fair value option. We adjusted the carrying value of our convertible promissory notes to their estimated fair value at each reporting date, with any change in fair value of the convertible promissory notes recorded as an increase or decrease to change in fair value of convertible promissory notes in our condensed consolidated statements of operations. All outstanding convertible promissory notes and related accrued interest converted into shares of our common stock immediately prior to the closing of our IPO.

Prior to our IPO, the fair value of our convertible promissory notes was estimated using a scenario-based analysis that estimated the fair value of the convertible promissory notes based on the probability-weighted present value of expected future investment returns, considering possible outcomes available to the noteholders, including various IPO, settlement, equity financing, corporate transactions and dissolution scenarios. The conversion date fair value of the convertible promissory notes was reclassified to stockholders' equity using our publicly traded closing price on the date the convertible promissory notes were converted to common stock.

The following table summarizes our results of operations for the periods indicated (in thousands):


	Three Months Ended June 30,									Three Months Ended September 30,
	2023			2022			Change			2023			2022			Change
Operating expenses:
Research and development	$	22,953		$	8,826		$	14,127		$	27,308		$	13,315		$	13,993
General and administrative		7,231			3,982			3,249			6,603			4,577			2,026
Total operating expenses		30,184			12,808			17,376			33,911			17,892			16,019
Loss from operations		(30,184	)		(12,808	)		(17,376	)		(33,911	)		(17,892	)		(16,019	)
Other income (expense):
Interest income	$	2,453			334			2,119		$	1,690			1,317			373
Interest expense		(500	)		(888	)		388			(717	)		(205	)		(512	)
Change in fair value of convertible promissory notes		—			(34,396	)		34,396
Change in fair value of warrant liabilities		—			(6,151	)		6,151
Other income (expense)		329			(20	)		349			1,123			(25	)		1,148
Total other income (expense)		2,282			(41,121	)		43,403
Total other income											2,096			1,087			1,009
Net loss	$	(27,902	)	$	(53,929	)	$	26,027		$	(31,815	)	$	(16,805	)	$	(15,010	)

Research and development expenses. Research and development expenses were ~~$23.0~~$27.3 million and ~~$8.8~~$13.3 million for the three months ended ~~June~~September 30, 2023 and 2022, respectively. The increase of ~~$14.1~~$14.0 million primarily consisted of ~~$10.3~~$9.7 million of clinical development expenses ~~for~~related to HIL-214, ~~$3.3~~$3.4 million of personnel-related expenses, primarily due to the increase in headcount, including ~~$1.5~~$1.4 million of stock-based compensation expense, and ~~$0.5~~$0.6 million of facility and other expenses.

General and administrative expenses. General and administrative expenses were ~~$7.2~~$6.6 million and ~~$4.0~~$4.6 million for the three months ended ~~June~~September 30, 2023 and 2022, respectively. The increase of ~~$3.2~~$2.0 million primarily consisted of ~~$1.9~~$2.0 million of personnel-related expenses, primarily due to the increase in headcount, including $1.7 million of stock-based compensation expense, ~~$0.7~~and $0.6 million of facility and other expenses, ~~and~~partially offset by a decrease of $0.6 million in professional services ~~expenses, primarily due to D&O insurance as well as accounting, audit, tax, valuation and other services incurred as we began operating as a public company.~~expenses.

Other income (expense). Other income of ~~$2.3~~$2.1 million for the three months ended ~~June~~September 30, 2023 primarily consisted of ~~$2.5~~$1.7 million of interest income on our cash, cash equivalents and marketable securities and ~~$0.3~~$1.1 million of other income primarily related to the accretion of discounts to maturity on our marketable securities, partially offset by ~~$0.5~~$0.7 million of interest expense on our term loan facility. Other ~~expense~~income of ~~$41.1~~$1.1 million for the three months ended ~~June~~September 30, 2022 primarily consisted of $34.4 million of other expense related to the increase in fair value of our convertible promissory notes, $6.2 million of other expense related to the increase in fair value of the Takeda Warrant,

~~$0.7 million~~primarily consisted of ~~interest expense on our outstanding convertible promissory notes and $0.1 million of interest expense on our term loan facility, offset by $0.3~~$1.3 million of interest income on our cash and cash ~~equivalents.~~equivalents, offset by $0.2 million of interest expense on our term loan facility.

The following table summarizes our results of operations for the periods indicated (in thousands):


	Six Months Ended June 30,									Nine Months Ended September 30,
	2023			2022			Change			2023			2022			Change
Operating expenses:
Research and development	$	46,117		$	15,037		$	31,080		$	73,425		$	28,352		$	45,073
In-process research and development		—			2,500			(2,500	)		—			2,500			(2,500	)
General and administrative		13,026			6,585			6,441			19,629			11,162			8,467
Total operating expenses		59,143			24,122			35,021			93,054			42,014			51,040
Loss from operations		(59,143	)		(24,122	)		(35,021	)		(93,054	)		(42,014	)		(51,040	)
Other income (expense):
Interest income	$	5,027			340			4,687		$	6,717			1,657			5,060
Interest expense		(949	)		(2,952	)		2,003			(1,666	)		(3,157	)		1,491
Change in fair value of convertible promissory notes		—			(51,469	)		51,469			—			(51,469	)		51,469
Change in fair value of warrant liabilities		—			(43,575	)		43,575			—			(43,575	)		43,575
Other income (expense)		274			(38	)		312			1,397			(63	)		1,460
Total other income (expense)		4,352			(97,694	)		102,046			6,448			(96,607	)		103,055
Net loss	$	(54,791	)	$	(121,816	)	$	67,025		$	(86,606	)	$	(138,621	)	$	52,015

Research and development expenses. Research and development expenses were ~~$46.1~~$73.4 million and ~~$15.0~~$28.4 million for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. The increase of ~~$31.1~~$45.1 million primarily consisted of ~~$22.6~~$32.3 million of clinical development expenses ~~for~~related to HIL-214, ~~$6.9~~$10.3 million of personnel-related expenses, primarily due to the increase in headcount, including ~~$2.8~~$3.7 million of stock-based compensation expense, ~~and $1.6~~$1.7 million of facility and other expenses, and $0.8 million of consulting related expenses.

In-process research and development expenses. We had $2.5 million of in-process research and development expenses for the three months ended March 31, 2022 related to the Takeda License, which was entered into in 2021. We did not incur any in-process research and development expenses for the three and ~~six~~nine months ended ~~June~~September 30, 2023.

General and administrative expenses. General and administrative expenses were ~~$13.0~~$19.6 million and ~~$6.6~~$11.2 million for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. The increase of ~~$6.4~~$8.5 million primarily consisted of ~~$4.0~~$6.0 million of personnel-related expenses, primarily due to the increase in headcount, including ~~$3.0~~$4.5 million of stock-based compensation expense, ~~$1.5~~$2.1 million of facility and other expenses, and ~~$0.9~~$0.4 million in professional services expenses, primarily due to D&O insurance as well as accounting, audit, tax, valuation and other services ~~incurred as we began operating as a public company.~~incurred.

Other income (expense). Other income of ~~$4.4~~$6.4 million for the ~~six~~nine months ended ~~June~~September 30, 2023 primarily consisted of ~~$5.0~~$6.7 million of interest income on our cash, cash equivalents and marketable securities and ~~$0.3~~$1.4 million of other income primarily related to the accretion of discounts to maturity on our marketable securities, partially offset by ~~$0.9~~$1.7 million of interest expense on our term loan facility. Other expense of ~~$97.7~~$96.6 million for the ~~six~~nine months ended ~~June~~September 30, 2022 primarily consisted of $51.5 million of other expense related to the increase in fair value of our convertible promissory notes, $43.6 million of other expense related to the increase in fair value of the Takeda Warrant, $2.8 million of interest expense on our outstanding convertible promissory notes and ~~$0.1~~$0.3 million of interest expense on our term loan facility, offset by ~~$0.3~~$1.6 million of interest income on our cash and cash equivalents.

We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future as we continue the development and potential commercialization of HIL-214, and may never become profitable. We have funded our operations to date primarily through the issuance of convertible promissory notes, the net proceeds raised from our IPO and an underwritten public offering in September 2023 and borrowings under our term loan facility. As of ~~June~~September 30, 2023, we had cash, cash equivalents and marketable securities of ~~$244.1~~$324.4 million.

On April 18, 2022, we entered into a Loan and Security Agreement (the Existing Loan Agreement and, as amended by the First ~~Amendment~~and Second Amendments (as defined below), the Loan Agreement) with Hercules Capital, Inc., as administrative and collateral agent (in such capacity, Hercules), and the lenders from time to time party thereto (the Lenders)¸ providing for term loans (Term Loans) of up to $75.0 million. Prior to June 16, 2023, we had borrowed $15.0 million in term loans under the Existing Loan Agreement and had the right thereunder to borrow (i) an additional $15.0 million of term loans until June 30, 2023 (Term Loan Tranche 1), (ii) an additional $20.0 million of term loans until June 30, 2023 (Term Loan Tranche 2), and (iii) subject to the achievement of certain clinical development milestones by the Company, an additional $25.0 million until March 31, 2024 (Term Loan Tranche 3).

On June 16, 2023, we entered into a First Amendment to Loan and Security Agreement (the First Amendment) with Hercules and the Lenders party thereto, which amended the Existing Loan Agreement. In connection with the First Amendment, we borrowed $10.0 million under Term Loan Tranche 1. Additionally, the First Amendment, among other things, amended the following: (i) with respect to the remaining $5.0 million under Term Loan Tranche 1, modified the period during which the Company may borrow thereunder to start on December 1, 2023 and end May 31, 2024 (or such earlier date if Lenders elect in their sole discretion), (ii) with respect to Term Loan Tranche 2, modified the period during which we may borrow thereunder to start on December 1, 2023 and end May 31, 2024 (or such earlier date if Lenders elect in their sole discretion) and (iii) with respect to Term Loan Tranche 3, (a) added as a new condition to borrow thereunder that (x) our Phase 2b clinical trial evaluating the safety, immunogenicity and efficacy of HIL-214 in infants (NEST-IN1) has achieved the protocol-specified primary efficacy endpoint and (y) HIL-214 has demonstrated acceptable safety results in the NEST-IN1 clinical trial, and, as a result, we support the initiation of a Phase 3 registrational trial as the next immediate step in the development of HIL-214 (the Tranche 3 Milestone) and (b) modified the period during which we may borrow thereunder to start on the date we achieve the Tranche 3 Milestone and end on the earlier of (x) June 15, 2024 and (y) 30 days following the date we achieve the Tranche 3 Milestone.

On November 9, 2023, the Company entered into a Second Amendment to Loan and Security Agreement (the "Second Amendment") with Hercules and the Lenders party thereto, which amended the Existing Loan Agreement. The Second Amendment amended the following: (i) with respect to the remaining $5.0 million under Term Loan Tranche 1, modified the period during which the Company may borrow thereunder to start on January 1, 2024 and end July 19, 2024 (or such earlier date if Lenders elect in their sole discretion), (ii) with respect to Term Loan Tranche 2, modified the period during which the Company may borrow thereunder to start on January 1, 2024 and end July 19, 2024 (or such earlier date if Lenders elect in their sole discretion) and (iii) with respect to Term Loan Tranche 3, modified the period during which the Company may borrow thereunder to end on the earlier of (x) September 15, 2024 and (y) 30 days following the date the Company achieves the Tranche 3 Milestone. The Company did not incur any fees in connection with the Second Amendment. All Term Loans are subject to a minimum draw amount of $5.0 million and no event of default under the Loan Agreement having occurred and is continuing. The borrowings under the Loan Agreement are collateralized by substantially all of our assets, including intellectual property and certain other assets.

The Term Loans bear (a) cash interest at a floating rate of the higher of (i) the Wall Street Journal prime rate (or 5.00% if less) plus 1.05%, or (ii) 4.55% (interest rate of 6.05% as of ~~June~~September 30, 2023), and (b) additional interest (PIK Interest) at a per annum rate equal to 2.85%, with such interest being added to the outstanding principal balance of the Term Loans on a monthly basis. The monthly payments consist of interest-only through June 1, 2025 or, if prior to April 30, 2025, we achieve the Tranche 3 Milestone, subject to reasonable verification by Hercules, through June 1, 2026. Subsequent to the interest-only period, the Term Loans will be payable in equal monthly installments of principal, plus accrued and unpaid interest, through the maturity date of May 1, 2027. In addition, we are obligated to pay a final payment fee equal to the greater of (i) $2.145 million and (ii) 7.15% of the original principal amount of the Term Loans. We may elect to prepay all or a portion of the Term Loans prior to maturity, subject to a prepayment fee of up to 1.00% of the then outstanding principal balance and the pro rata application of such payment to the final payment fee. After repayment, no Term Loan amounts may be borrowed again.

The Loan Agreement contains certain customary affirmative and negative covenants and events of default. The affirmative covenants include, among others, covenants requiring us to maintain our legal existence and governmental approvals, deliver certain financial reports, maintain insurance coverage and satisfy certain requirements regarding our operating accounts. The negative covenants include, among others, limitations on our ability to incur additional indebtedness and liens, merge with other companies or consummate certain changes of control, acquire other companies or businesses, make certain investments, pay dividends, transfer or dispose of assets, amend certain material agreements, including the Takeda License, or enter into various specified transactions. Upon the occurrence of an event of default, subject to any specified cure periods, all amounts owed by us would begin to bear interest at a rate that is 4.00% above the rate effective immediately before the event of default and may be declared immediately due and payable by Hercules, as collateral agent.

As of ~~June~~September 30, 2023, the total outstanding borrowings, including PIK interest, under the Loan Agreement were ~~$25.3~~$25.5 million. As of ~~June~~September 30, 2023, future minimum principal, interest and final payment fees due under the Loan Agreement were approximately ~~$34.7~~$34.4 million, with ~~$0.7~~$0.4 million payable for the year ending December 31, 2023. See Item 1 of Part I, “Notes to Condensed Consolidated Financial Statements — Note 9 — Convertible Promissory Notes and Long-Term Debt” of this Quarterly Report.

From inception to July 2021, we issued an aggregate of $8.5 million of convertible promissory notes to Frazier (the Frazier Notes), bearing interest at per annum rates ranging from 0.12% to 2.52%. In August 2021, these notes and related accrued interest were exchanged for the August 2021 Notes described below.

On August 31, 2021, we entered into a note purchase agreement under which we issued $139.5 million of unsecured convertible promissory notes (the August 2021 Notes). Of the August 2021 Notes, $103.8 million were issued to new investors, $25.0 million were issued to Frazier for cash and $10.7 million were issued to Frazier in exchange for the then outstanding principal and accrued interest on the Frazier Notes. The August 2021 Notes bore interest at a rate of 6% per annum, compounded annually. The August 2021 Notes automatically converted into 10,672,138 shares of our common stock immediately prior to the completion of our IPO.

On May 12, 2023, we entered into an At-the-Market Equity Offering Sales Agreement (Sales Agreement) with Stifel, Nicolaus & Company, Incorporated (the Agent), under which we may, from time to time at prevailing market prices, sell shares of our common stock having an aggregate offering price of up to $100.0 million in "at the market" offerings through the Agent. As of ~~June~~September 30, 2023, no sales have been made pursuant to the Sales Agreement.

On September 22, 2023, we completed an underwritten public offering, whereby we sold 9,200,000 shares of common stock, which included the exercise in full by the underwriters of their option to purchase 1,200,000 shares, at a public offering price of $12.50 per share for total net proceeds of $107.8 million.

Based on our current operating plan, we believe that our existing cash, cash equivalents and marketable securities will be sufficient to meet our anticipated cash requirements through at least the next 12 months. In particular, we expect that our existing cash, cash equivalents and marketable securities will allow us to complete enrollment and dosing in, and report top-line safety and clinical efficacy data for, our Phase 2b NEST-IN1 study and technical transfer and manufacturing readiness for producing clinical trial supply for a Phase 3 study. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. Additionally, the process of testing vaccine candidates in clinical trials is costly, and the timing of progress and expenses in these trials is uncertain.

Until such time, if ever, as we can generate substantial product revenues to support our cost structure, we expect to finance our cash needs through equity offerings, the Loan Agreement, debt financings, or other capital sources, including potential collaborations, licenses and other similar arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and 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 funds through collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, intellectual property, future revenue streams, research programs or vaccine candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. 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 our vaccine candidates even if we would otherwise prefer to develop and market such vaccine candidates ourselves.

The following table sets forth a summary of the net cash flow activity for each of the periods indicated (in thousands):


	Six Months Ended June 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Net cash provided by (used in):
Operating activities	$	(38,371	)	$	(23,925	)	$	(65,177	)	$	(43,472	)
Investing activities		(92,933	)		(2,500	)		(124,107	)		(2,685	)
Financing activities		10,278			218,102			118,385			215,282
Net increase (decrease) in cash, cash equivalents and restricted cash	$	(121,026	)	$	191,677		$	(70,899	)	$	169,125

Net cash used in operating activities of ~~$38.4~~$65.2 million for the ~~six~~nine months ended ~~June~~September 30, 2023 was primarily due to our net loss of ~~$54.8~~$86.6 million, partially offset by a net change of ~~$9.9~~$11.3 million in our operating assets and liabilities and ~~$6.5~~$10.2 million of noncash charges primarily related to ~~$5.9~~$9.8 million of stock-based compensation, ~~$0.7~~$1.0 million related to the amortization of operating lease right-of-use assets, ~~$0.3~~$0.4 million related to amortization of debt discount, ~~$0.2~~$0.4 million related to issuance of PIK interest debt and ~~$0.1~~$0.5 million related to depreciation expense, partially offset by ~~$0.6~~$1.9 million related to net amortization of premiums and discounts on marketable securities. The net change in operating assets and liabilities was primarily due to an increase of ~~$2.5~~$4.3 million related to operating lease liabilities due to leasehold

improvement reimbursements, ~~$2.2~~$2.4 million in prepaid expenses and other current assets and ~~$5.1~~$4.5 million in accounts payable and accrued expenses in support of the growth in our operating activities.

Net cash used in operating activities of ~~$23.9~~$43.5 for the ~~six~~nine months ended ~~June~~September 30, 2022 was primarily due to our net loss of ~~$121.8~~$138.6 million and a net change of ~~$1.1~~$4.4 million in our operating assets and liabilities, offset by ~~$98.9~~$99.5 million of noncash charges primarily related to the $51.5 million change in fair value of the August 2021 Notes, the $43.6 million change in fair value of the Takeda Warrants, $2.5 million related to acquired in-process research and development, ~~$0.8~~$1.7 million of stock-based compensation ~~$0.4 million related to the amortization of operating lease right-of-use assets~~ and ~~$0.1~~$0.2 million of noncash interest related to our term loan facility.

Net cash used in investing activities of ~~$92.9~~$124.1 million for the ~~six~~nine months ended ~~June~~September 30, 2023 was due to ~~$85.1~~$129.1 million in purchases of marketable securities and ~~$7.8~~$10.0 million in purchases of property and ~~equipment.~~equipment, partially offset by $15.0 million in proceeds from sales or maturities of marketable securities.

Net cash used in investing activities of ~~$2.5~~$2.7 million for the ~~six~~nine months ended ~~June~~September 30, 2022 was primarily due to ~~the~~ $2.5 million ~~contingent payment we~~of cash paid ~~under~~for purchased in-process research and development and $0.2 million due to the ~~Takeda License.~~purchase of property and equipment.

Net cash provided by financing activities of ~~$10.3~~$118.4 million for the ~~six~~nine months ended ~~June~~September 30, 2023 was due to $108.1 million of net proceeds from the issuance of common stock in our underwritten public offering, $9.8 million of net proceeds in borrowings under our term loan facility, $0.3 million in proceeds from the issuance of stock under our stock purchase plan and $0.2 million in proceeds from the exercise of common stock options.

Net cash provided by financing activities of ~~$218.1~~$215.3 million for the ~~six~~nine months ended ~~June~~September 30, 2022 was primarily due to ~~$213.4~~$210.6 million of net proceeds from our IPO and $4.7 million of net proceeds from borrowings under our term loan facility.

As of ~~June~~September 30, 2023, there have been no material changes outside the ordinary course of our business to the contractual obligations we reported in “Management’s discussion and analysis of financial condition and results of operations – Contractual obligations and commitments,” included in the 2022 Form 10-K.

Our management’s discussion and analysis of our 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 (GAAP). The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements and accompanying notes. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

As of ~~June~~September 30, 2023, there have been no material changes to our critical accounting policies and estimates from those disclosed in “Management’s discussion and analysis of financial condition and results of operations – Critical accounting policies and estimates,” included in the 2022 Form 10-K.

As an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the JOBS Act), we can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. We intend to rely on other exemptions provided by the JOBS Act, including without limitation, not being required to comply

with the auditor attestation requirements of Section 404(b) of Sarbanes-Oxley. As a result, our condensed consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the consummation of our IPO, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year, or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

We are also a smaller reporting company as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

See Item 1 of Part I, “Notes to Condensed Consolidated Financial Statements — Note 2 — Summary of Significant Accounting Policies” of this Quarterly Report.

Our management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer, have evaluated 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 on Form 10-Q. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended ~~June~~September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We are not currently subject to any material legal proceedings. From time to time, we may be involved in legal proceedings or subject to claims incident to the ordinary course of business. Regardless of the outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained.

There have been no material changes to the risk factors disclosed in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022.

On April 28, 2022, our registration statement on Form S-1 (File No. 333-264159) was declared effective by the SEC for our IPO. At the closing of the offering on May 3, 2022, we sold 13,529,750 shares of common stock, which included the exercise in full by the underwriters of their option to purchase 1,764,750 additional shares, at an initial public offering price of $17.00 per share and received gross proceeds of $230.0 million, which resulted in net proceeds to us of approximately $209.5 million, after deducting underwriting discounts and commissions of approximately $16.1 million and offering-related transaction costs of approximately $4.4 million. None of the expenses associated with the initial public offering were paid to directors, officers, persons owning ten percent or more of any class of equity securities, or to their associates, or to our affiliates. J.P. Morgan Securities LLC, SVB Securities LLC, Stifel, Nicolaus & Company, Incorporated and Guggenheim Securities, LLC acted as joint book-running managers for the offering.

There has been no material change in the planned use of proceeds from our IPO from that described in the prospectus for the IPO. As of ~~June~~September 30, 2023, we estimate that we have used approximately ~~$97.1~~$126.1 million of the proceeds from our IPO for general corporate purposes, including to fund the clinical development of HIL-214.

* This certification is deemed not filed for purpose of section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

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.


Delaware	85-0545060
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
~~75 State Street~~, ~~Suite 100 - #9995~~321 Harrison Avenue, Boston, Massachusetts	~~02109~~02118
(Address of principal executive offices)	(Zip Code)


		Page
PART I	FINANCIAL INFORMATION	1

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Stockholders' Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2322
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3332
Item 4.	Controls and Procedures	3332

PART II	OTHER INFORMATION	3332

Item 1.	Legal Proceedings	3332
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
Signatures		36



Exhibit Number	Exhibit Description	Incorporated by Reference			Filed Herewith
		Form	Date	Number
3.1	Amended and Restated Certificate of Incorporation of HilleVax, Inc.	8-K	5/3/22	3.1
3.2	Amended and Restated Bylaws of HilleVax, Inc.	8-K	5/3/22	3.2
10.1	At-the-Market Equity Offering Sales Agreement, dated May 12, 2023, by and between the Company and Stifel, Nicolaus & Company, Incorporated	S-3	5/12/23	1.2
10.2	First Amendment to Loan and Security Agreement, dated June 16, 2023, by and between the Company and Hercules Capital, Inc.				X
10.3#	Non-Employee Director Compensation Program				X
31.1	Certification of Principal Executive 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.				X
31.2	Certification of Principal 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.				X
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.				X
101.SCH	Inline XBRL Taxonomy Extension Schema Document				X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document				X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document				X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document				X
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)				X



Exhibit Number	Exhibit Description	Incorporated by Reference			Filed Herewith
		Form	Date	Number
3.1	Amended and Restated Certificate of Incorporation of HilleVax, Inc.	8-K	5/3/22	3.1
3.2	Amended and Restated Bylaws of HilleVax, Inc.	8-K	5/3/22	3.2
10.1	Second Amendment to Loan and Security Agreement, dated November 9, 2023, by and between the Company and Hercules Capital, Inc.				X
31.1	Certification of Principal Executive 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.				X
31.2	Certification of Principal 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.				X
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.				X
101.SCH	Inline XBRL Taxonomy Extension Schema Document				X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document				X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document				X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document				X
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)				X


	HilleVax, Inc.

Date: ~~August 14,~~November 9, 2023	By:	/s/ Robert Hershberg, M.D., Ph.D.
		Robert Hershberg, M.D., Ph.D.
		Chairman, President and Chief Executive Officer (Principal Executive Officer)

Date: ~~August 14,~~November 9, 2023	By:	/s/ Shane Maltbie
		Shane Maltbie
		Chief Financial Officer (Principal Financial and Accounting Officer)


☒	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 FOR THE TRANSITION PERIOD FROM TO


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


	June 30, 2023									September 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Marketable securities:
U.S. treasury notes	$	80,879	$	18	$	(45	)	$	80,852	$	31,417	$	-	$	(21	)	$	31,396
U.S. government agency bonds		4,833		—		(10	)		4,823		84,556		3		(47	)		84,512
Total	$	85,712	$	18	$	(55	)	$	85,675	$	115,973	$	3	$	(68	)	$	115,908


	June 30, 2023
Cash paid for amounts included in the measurement of operating lease liabilities (operating cash flows)	$	1,742