10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended September 30, 2021

OR

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

For the transition period from ______________ to ______________

Commission File Number: 001-39575

 

ONCORUS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

47-3779757

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

 

 

50 Hampshire Street, Suite 401

Cambridge, Massachusetts

 

02139

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (857) 320-6400

 

 

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

 

Title of each class

 

 

Trading

Symbol(s)

 

 

Name of each exchange

on which registered

 

Common Stock, $0.0001 par value per share

 

ONCR

 

The Nasdaq Stock Market LLC

 

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

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

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

 

Large accelerated filer

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

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

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

As of October 27, 2021, the registrant had 25,809,006 shares of common stock, $0.0001 par value per share, outstanding.

 


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

3

Item 1.

Financial Statements (Unaudited)

3

 

Condensed Consolidated Balance Sheets

3

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

4

 

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

5

 

Condensed Consolidated Statements of Cash Flows

6

 

Notes to Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4.

Controls and Procedures

27

 

 

 

PART II.

OTHER INFORMATION

28

Item 1.

Legal Proceedings

28

Item 1A.

Risk Factors

28

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

28

Item 3.

Defaults Upon Senior Securities

28

Item 4.

Mine Safety Disclosures

28

Item 5.

Other Information

28

Item 6.

Exhibits

29

Signatures

30

 

 

 

i


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “hope,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

 

the impact of the COVID-19 pandemic on our business and operations, results of operations and financial performance, including impacts on initiation, patient enrollment, development and operation of our preclinical studies and clinical trials and manufacturing efforts;
the initiation, timing, progress and expected results of our preclinical studies, clinical trials and our research and development programs, including our ongoing Phase 1 clinical trial for our lead product candidate, ONCR-177;
the continued research and development of ONCR-021 and ONCR-788, the first clinical candidates developed from our synthetic viral RNA immunotherapy platform, or Synthetic vRNA Immunotherapy Platform;
our success in identifying and developing future potential candidates from our oncolytic HSV-1 platform, or oHSV Platform, and our Synthetic vRNA Immunotherapy Platform;
our ability to advance our product candidates into, and successfully complete, clinical trials;
the timing or likelihood of our ability to receive the required regulatory approvals and clearances to successfully market and sell our products in the United States and certain other countries;
the commercialization of our product candidates, if approved;
our expectations regarding the potential market size and the rate and degree of market acceptance for any product candidates that we develop;
the potential benefits of strategic collaboration agreements and our ability to enter into strategic arrangements;
the effects of competition with respect to ONCR-177 or any of our other current or future product candidates, as well as innovations by current and future competitors in our industry;
our ability to fund our working capital requirements;
our intellectual property position, including the scope of protection we are able to establish, maintain and enforce for intellectual property rights covering our product candidates;
our financial performance and our ability to effectively manage our anticipated growth; and
the sufficiency of our existing funding and our ability to obtain additional funding for our operations.

These forward-looking statements are based on our management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate, and management’s beliefs and assumptions and are not guarantees of future performance or development. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 and under similar captions in our periodic reports filed with the SEC from time to time. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

1


 

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this report. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to new information, actual results or changes in our expectations, except as required by law.

2


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ONCORUS, INC.

Condensed Consolidated Balance Sheets

(in thousands, except for par value data)

(unaudited)

 

 

 

SEPTEMBER 30,
2021

 

 

DECEMBER 31,
2020

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

145,603

 

 

$

130,305

 

Prepaid expenses and other current assets

 

 

2,108

 

 

 

3,086

 

Total current assets

 

 

147,711

 

 

 

133,391

 

Property and equipment, net

 

 

14,093

 

 

 

4,173

 

Right-of-use asset

 

 

37,428

 

 

 

41,372

 

Restricted cash

 

 

2,877

 

 

 

2,877

 

Other assets

 

 

618

 

 

 

450

 

Total assets

 

$

202,727

 

 

$

182,263

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,425

 

 

$

1,245

 

Accrued expenses

 

 

9,778

 

 

 

3,738

 

Lease liability - current portion

 

 

1,132

 

 

 

993

 

Other current liabilities

 

 

 

 

 

8

 

Total current liabilities

 

 

12,335

 

 

 

5,984

 

Lease liability - net of current portion

 

 

42,329

 

 

 

41,615

 

Other liabilities

 

 

221

 

 

 

 

Total liabilities

 

 

54,885

 

 

 

47,599

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; authorized — 10,000 shares at September 30, 2021 and December 31, 2020; issued and outstanding — no shares at September 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common stock, $0.0001 par value; authorized — 100,000 shares at September 30, 2021 and December 31, 2020; issued and outstanding — 25,758 and 22,599 shares at September 30, 2021 and December 31, 2020, respectively

 

 

3

 

 

 

2

 

Additional paid-in capital

 

 

322,583

 

 

 

264,487

 

Accumulated deficit

 

 

(174,744

)

 

 

(129,825

)

Total stockholders’ equity

 

 

147,842

 

 

 

134,664

 

Total liabilities and stockholders’ equity

 

$

202,727

 

 

$

182,263

 

 

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

3


 

ONCORUS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share data)

(unaudited)

 

 

 

THREE MONTHS ENDED
SEPTEMBER 30,

 

 

NINE MONTHS ENDED
SEPTEMBER 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

11,299

 

 

$

6,927

 

 

$

30,406

 

 

$

19,560

 

General and administrative

 

 

5,440

 

 

 

1,973

 

 

 

14,550

 

 

 

6,032

 

Total operating expenses

 

 

16,739

 

 

 

8,900

 

 

 

44,956

 

 

 

25,592

 

Loss from operations

 

 

(16,739

)

 

 

(8,900

)

 

 

(44,956

)

 

 

(25,592

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of Series B tranche rights

 

 

 

 

 

(10,631

)

 

 

 

 

 

(11,256

)

Other expense

 

 

 

 

 

(2

)

 

 

(1

)

 

 

(22

)

Interest income

 

 

11

 

 

 

2

 

 

 

38

 

 

 

138

 

Total other income (expense), net

 

 

11

 

 

 

(10,631

)

 

 

37

 

 

 

(11,140

)

Net loss and comprehensive loss

 

$

(16,728

)

 

$

(19,531

)

 

$

(44,919

)

 

$

(36,732

)

Accretion of discount and dividends on redeemable convertible
   preferred stock

 

 

 

 

 

(2,848

)

 

 

 

 

 

(8,298

)

Net loss attributable to common stockholders

 

$

(16,728

)

 

$

(22,379

)

 

$

(44,919

)

 

$

(45,030

)

Net loss per share attributable to common stockholders—basic and
   diluted

 

$

(0.65

)

 

$

(21.73

)

 

$

(1.79

)

 

$

(44.58

)

Weighted-average number of common shares outstanding—basic
   and diluted

 

 

25,748

 

 

 

1,030

 

 

 

25,153

 

 

 

1,010

 

 

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

4


 

ONCORUS, INC.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

(unaudited)

 

 

SERIES A-1
REDEEMABLE
CONVERTIBLE
PREFERRED
STOCK

 

 

SERIES B
REDEEMABLE
CONVERTIBLE
PREFERRED STOCK

 

 

COMMON STOCK

 

 

 

 

 

 

 

 

 

 

 

SHARES

 

 

AMOUNT

 

 

SHARES

 

 

AMOUNT

 

 

SHARES

 

 

AMOUNT

 

 

ADDITIONAL
PAID-IN
CAPITAL

 

 

ACCUMULATED
DEFICIT

 

 

TOTAL
STOCKHOLDERS’
EQUITY (DEFICIT)

 

Balance at December 31, 2019

 

76,499,992

 

 

$

63,494

 

 

 

62,535,183

 

 

$

53,138

 

 

 

988,700

 

 

$

 

 

$

 

 

$

(74,297

)

 

$

(74,297

)

Series A-1 and Series B preferred stock dividends and accretion

 

 

 

 

3,140

 

 

 

 

 

 

2,310

 

 

 

 

 

 

 

 

 

(624

)

 

 

(4,826

)

 

 

(5,450

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

619

 

 

 

 

 

 

619

 

Vesting of restricted common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

14,026

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of options to purchase common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

1,562

 

 

 

 

 

 

5

 

 

 

 

 

 

5

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,201

)

 

 

(17,201

)

Balance at June 30, 2020

 

76,499,992

 

 

 

66,634

 

 

 

62,535,183

 

 

 

55,448

 

 

 

1,004,288

 

 

 

 

 

 

 

 

 

(96,324

)

 

 

(96,324

)

Issuance of Series B preferred stock

 

 

 

 

 

 

 

41,690,117

 

 

 

35,826

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A-1 and Series B preferred stock dividends and accretion

 

 

 

 

1,586

 

 

 

 

 

 

1,262

 

 

 

 

 

 

 

 

 

(446

)

 

 

(2,402

)

 

 

(2,848

)

Settlement of Series B Tranche Rights

 

 

 

 

 

 

 

 

 

 

13,132

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

340

 

 

 

 

 

 

340

 

Vesting of restricted common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

5,171

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of options to purchase common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

62,500

 

 

 

 

 

 

106

 

 

 

 

 

 

106

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,531

)

 

 

(19,531

)

Balance at September 30, 2020

 

76,499,992

 

 

$

68,220

 

 

 

104,225,300

 

 

$

105,668

 

 

 

1,071,959

 

 

$

 

 

$

 

 

$

(118,257

)

 

$

(118,257

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

22,599,048

 

 

 

2

 

 

 

264,487

 

 

 

(129,825

)

 

 

134,664

 

Proceeds from issuance of common stock, net of issuance costs of $4,017

 

 

 

 

 

 

 

 

 

 

 

 

 

3,000,000

 

 

 

 

 

 

52,983

 

 

 

 

 

 

52,983

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,828

 

 

 

 

 

 

2,828

 

Vesting of restricted common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

10,341

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of options to purchase common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

131,683

 

 

 

 

 

 

347

 

 

 

 

 

 

347

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(28,191

)

 

 

(28,191

)

Balance at June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

25,741,072

 

 

 

3

 

 

 

320,645

 

 

 

(158,016

)

 

 

162,632

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,889

 

 

 

 

 

 

1,889

 

Vesting of restricted common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

5,171

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of options to purchase common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

11,816

 

 

 

 

 

 

49

 

 

 

 

 

 

49

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,728

)

 

 

(16,728

)

Balance at September 30, 2021

 

 

 

$

 

 

 

 

 

$

 

 

 

25,758,059

 

 

$

3

 

 

$

322,583

 

 

$

(174,744

)

 

$

147,842

 

 

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

5


 

ONCORUS, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

NINE MONTHS ENDED
SEPTEMBER 30,

 

 

 

2021

 

 

2020

 

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(44,919

)

 

$

(36,732

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

1,332

 

 

 

983

 

Stock-based compensation

 

 

4,717

 

 

 

959

 

Change in fair value of Series B tranche rights

 

 

 

 

 

11,256

 

Changes in:

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

803

 

 

 

(840

)

Operating lease right-of-use asset

 

 

2,208

 

 

 

354

 

Tenant improvement allowance reimbursements

 

 

1,737

 

 

 

 

Accounts payable

 

 

109

 

 

 

103

 

Accrued expenses and other current liabilities

 

 

1,773

 

 

 

(885

)

Operating lease liability

 

 

854

 

 

 

(825

)

Net cash used in operating activities

 

 

(31,386

)

 

 

(25,627

)

Investing activities

 

 

 

 

 

 

Purchase of property and equipment

 

 

(6,695

)

 

 

(1,014

)

Net cash used in investing activities

 

 

(6,695

)

 

 

(1,014

)

Financing activities

 

 

 

 

 

 

Proceeds from issuance of Series B preferred stock and tranche liability

 

 

 

 

 

35,826

 

Proceeds from issuance of common stock, net of issuance costs

 

 

52,983

 

 

 

 

Proceeds from exercise of options to purchase common stock

 

 

396

 

 

 

111

 

Payment of deferred offering costs

 

 

 

 

 

(563

)

Net cash provided by financing activities

 

 

53,379

 

 

 

35,374

 

Increase in cash and cash equivalents

 

 

15,298

 

 

 

8,733

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

133,182

 

 

 

45,286

 

Cash, cash equivalents and restricted cash at end of period

 

$

148,480

 

 

$

54,019

 

Supplemental disclosure of non-cash investing and financing activities

 

 

 

 

 

 

Purchase of property and equipment in accrued expenses and accounts payable

 

$

4,551

 

 

$

 

Accretion of discount and dividends on preferred stock

 

$

 

 

$

8,298

 

Deferred offering costs in accounts payable and accrued expenses

 

$

 

 

$

944

 

Settlement of Series B tranche rights

 

$

 

 

$

13,132

 

 

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

6


 

ONCORUS, INC.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

(in thousands, except share and per share amounts, unless otherwise noted)

1. Nature of the Business and Liquidity

Oncorus, Inc. (the “Company”) is a clinical-stage biopharmaceutical company focused on developing next-generation viral immunotherapies to transform outcomes for cancer patients. Using its two platforms, the Company is developing a pipeline of intratumorally and intravenously administered product candidates designed to selectively attack and kill tumor cells.

The Company’s operations to date have focused on organization and staffing, business planning, raising capital, acquiring and developing the Company’s technology, establishing the Company’s intellectual property portfolio, identifying potential product candidates and undertaking preclinical studies, commencing a clinical trial and manufacturing scale-up activities. The Company does not have any product candidates approved for sale and has not generated any revenue from product sales. The Company’s product candidates are subject to long development cycles and the Company may be unsuccessful in its efforts to develop, obtain regulatory approval for or market its product candidates.

On September 25, 2020, the Company effected a 1-for-12.0874 reverse stock split of its issued and outstanding common stock and a proportional adjustment to the existing conversion ratios for the outstanding shares of Series A-1 redeemable convertible preferred stock (“Series A-1”) and Series B redeemable convertible preferred stock (“Series B”). Accordingly, all share and per share amounts for all periods presented in the accompanying unaudited interim condensed consolidated financial statements and notes thereto have been retroactively adjusted, where applicable, to reflect the reverse stock split, including reclassification of par, additional paid-in capital and accumulated deficit amounts as a result of the split adjustment.

On October 6, 2020, the Company completed an initial public offering (“IPO”), in which the Company issued and sold 5,800,000 shares of its common stock at a public offering price of $15.00 per share. On October 14, 2020, the Company sold an additional 757,991 shares of common stock at $15.00 per share pursuant to the underwriters’ partial exercise of their option to purchase additional shares of common stock. The total gross proceeds from the IPO were $98.4 million and the Company raised $88.3 million in net proceeds after deducting underwriting discounts and commissions and offering expenses payable by the Company.

Upon the closing of the IPO, all of the outstanding shares of convertible preferred stock automatically converted into 14,951,554 shares of common stock at the applicable conversion ratio then in effect. Subsequent to the closing of the IPO, there were no shares of preferred stock outstanding.

In February 2021, the Company completed a follow-on public offering of its common stock in which it sold 3,000,000 shares at an offering price of $19.00 per share, resulting in gross proceeds of $57.0 million and net proceeds of $53.0 million, after deducting underwriting discounts and commissions and offering expenses payable by the Company.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, possible failure of preclinical studies or clinical trials, the need to obtain marketing approval for its product candidates, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, the need to successfully commercialize and gain market acceptance of any of the Company’s products that are approved and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing, and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure, and extensive compliance-reporting capabilities. Even if the Company’s drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales. The Company expects to continue to incur losses from operations for the foreseeable future and additional capital will be required to fund future operations. The Company expects that its cash and cash equivalents as of September 30, 2021 will be sufficient to fund its operating expenses and capital expenditure requirements through at least the next 12 months from the date these financial statements were issued.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (“ASC”) and as amended by Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

7


 

In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals and estimates that impact the financial statements) which are considered necessary to present fairly the Company’s financial position as of September 30, 2021, its results of operations for the three and nine months ended September 30, 2021 and 2020, its changes in redeemable preferred convertible preferred stock and stockholders’ equity (deficit) for the three and nine months ended September 30, 2021 and 2020 and its cash flows for the nine months ended September 30, 2021 and 2020.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2020, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K (the "Annual Report") filed with the Securities and Exchange Commission (the “SEC”) on March 10, 2021. The condensed consolidated balance sheet data as of December 31, 2020 presented for comparative purposes was derived from the Company’s audited consolidated financial statements but does not include all disclosures required by GAAP. The results for the three and nine months ended September 30, 2021 are not necessarily indicative of the operating results to be expected for the full year or for any other subsequent interim period.

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2020, included in its Annual Report and, since that date, there have been no changes to the Company’s significant accounting policies.

COVID-19 Pandemic

With the ongoing COVID-19 global pandemic, the Company has implemented business continuity plans designed to address and mitigate the impact of the COVID-19 pandemic on its employees and its business, including its preclinical studies, its ongoing clinical trial, and its regulatory filings. The Company has taken measures to secure its research and development activities, while work in its laboratories and facilities has been re-organized to reduce risks of COVID-19 transmission. Given the global impact and the other risks and uncertainties associated with the pandemic, the Company’s business, financial condition and results of operations could be materially adversely affected. The Company continues to closely monitor the COVID-19 pandemic and evolve its business continuity plans, clinical development plans and response strategy to mitigate any potential impact. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. Actual results could differ from those estimates, and any such differences may be material to the Company’s financial statements.

Going Concern

At each reporting period, the Company evaluates whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The Company is required to make certain additional disclosures if it concludes substantial doubt exists and it is not alleviated by the Company’s plans or when its plans alleviate substantial doubt about the Company’s ability to continue as a going concern.

Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements of the Company include the accounts of its wholly owned subsidiary, Oncorus Securities Corporation. All intercompany transactions have been eliminated in consolidation. The Company has one operating segment.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, the Company’s management evaluates its estimates, which include, but are not limited to, the estimated fair value of the Company’s common stock and share-based awards utilized for stock-based compensation purposes, accrued expenses, and amounts of expenses during the reported period. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions.

8


 

Deferred Offering Costs

The Company capitalizes certain legal, professional, accounting and other third-party fees that are directly associated with in-process equity issuances as deferred offering costs until such equity issuances are consummated. After consummation of the equity issuance, these costs are recorded as a reduction in the capitalized amount associated with the equity issuance.

Concentration of Credit Risk and of Significant Suppliers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company has all of its cash at one financial institution, that management believes to be of high credit quality, in amounts that exceed federally insured limits. Cash equivalents consist of money market funds that invest primarily in U.S. government-backed securities and treasuries.

The Company is dependent upon a third-party contract manufacturer and third-party contract research organizations for the performance of portions of its testing for pre-clinical and clinical studies. The Company believes that its relationships with these organizations are satisfactory, and that alternative suppliers of these services are available in the event of the loss of one or more of these suppliers.

Restricted Cash

The Company maintains a balance in a segregated bank account in connection with a letter of credit for the benefit of the landlord in connection with an operating lease. As of September 30, 2021, restricted cash consisted of $2.9 million held for the benefit of the landlord. This amount has been classified as part of non-current assets on the Company's unaudited interim condensed consolidated balance sheets.

The Company includes its restricted cash balance in the cash, cash equivalents and restricted cash reconciliation of operating, investing, and financing activities in the unaudited interim condensed consolidated statements of cash flows. The following table provides a reconciliation of cash, cash equivalents and restricted cash in the unaudited interim condensed consolidated balance sheets that sum to the total of the same such amounts shown in the unaudited interim condensed consolidated statements of cash flows (in thousands):

 

 

 

September 30,

 

 

 

2021

 

 

2020