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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 10-Q
______________________
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                       to                      
Commission File Number: 001-40045
______________________
NEXIMMUNE, INC.
(Exact Name of Registrant as Specified in its Charter)
______________________
Delaware42-2518457
(State or other jurisdiction of
incorporation or organization)
(IRS Employer
Identification No.)
 
9119 Gaither Road
Gaithersburg,MD20877
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (301) 825-9810
______________________
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 shareNEXIThe Nasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated fileroAccelerated filero
Non-accelerated filerxSmaller reporting companyx
Emerging growth companyx
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 7(a)(2)(B) of the Securities Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of July 31, 2022, the registrant had 24,155,551 shares of common stock, $0.0001 par value per share, outstanding.


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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these words or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:
our ability to obtain and maintain regulatory approval of NEXI-001, NEXI-002, and NEXI-003 and/or our other product candidates;
our ability to successfully commercialize and market NEXI-001, NEXI-002, and NEXI-003 and/or our other product candidates, if approved;
our ability to contract with third-party suppliers, manufacturers and other service providers and their ability to perform adequately;
the potential market size, opportunity and growth potential for NEXI-001, NEXI-002, and NEXI-003 and/or our other product candidates, if approved;
our ability to build our own sales and marketing capabilities, or seek collaborative partners, to commercialize NEXI-001, NEXI-002, and NEXI-003 and/or our other product candidates, if approved;
our ability to obtain funding for our operations;
the initiation, timing, progress and results of our preclinical studies and clinical trials, and our research and development programs;
the timing of anticipated regulatory filings;
the timing of availability of data from our clinical trials;
the impact of the ongoing COVID-19 pandemic and our response to it;
the accuracy of our estimates regarding expenses, capital requirements and needs for additional financing;
our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;
our ability to advance product candidates into, and successfully complete, clinical trials;
our ability to recruit and enroll suitable patients in our clinical trials;
the timing or likelihood of the accomplishment of various scientific, clinical, regulatory and other product development objectives;
the pricing and reimbursement of our product candidates, if approved;
the rate and degree of market acceptance of our product candidates, if approved;
the implementation of our business model and strategic plans for our business, product candidates and technology;
the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;
developments relating to our competitors and our industry;
the accuracy of our estimates regarding expenses, capital requirements and needs for additional financing;
the development of major public health concerns, including the novel coronavirus outbreak or other pandemics arising globally, and the future impact of it and COVID-19 on our clinical trials, business operations and funding requirements; and
our financial performance.
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the “Risk Factors” section and elsewhere in this Form 10-Q. 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,
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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 Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable as of the date of this Form 10-Q, 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 Form 10-Q to conform these statements to new information, actual results or to changes in our expectations, except as required by law.
You should read this Form 10-Q and the documents that we reference in this Form 10-Q and have filed with the Securities and Exchange Commission, or SEC, as exhibits to this Form 10-Q with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
NEXIMMUNE, INC.
BALANCE SHEETS
June 30,
2022
December 31,
2021
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$40,644,227 $30,326,352 
Marketable securities12,484,305 51,491,942 
Restricted cash105,000 67,500 
Prepaid expenses and other current assets6,355,781 4,394,916 
Total current assets59,589,313 86,280,710 
Property and equipment, net4,709,036 4,427,307 
Operating lease right-of-use assets1,221,668  
Other non-current assets146,013 324,099 
Total assets$65,666,030 $91,032,116 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$1,652,435 $1,045,159 
Accrued expenses6,871,039 6,170,709 
Operating lease liabilities, current590,313  
Total current liabilities9,113,787 7,215,868 
Operating lease liabilities, net of current portion699,562  
Deferred rent, net of current portion 55,581 
Total liabilities9,813,349 7,271,449 
Commitments and contingencies
Stockholders’ equity
Common Stock, $0.0001 par value, 250,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 22,893,551 and 22,828,904 shares issued and outstanding as of June 30, 2022 and December 31, 2021
2,289 2,283 
Additional paid-in-capital214,486,976 211,498,827 
Accumulated other comprehensive (loss) income(9,335)3,012
Accumulated deficit(158,627,249)(127,743,455)
Total stockholders’ equity55,852,681 83,760,667 
Total liabilities and stockholders’ equity$65,666,030 $91,032,116 
The accompanying notes are an integral part of these unaudited financial statements.
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NEXIMMUNE, INC.
STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Revenue$ $ $ $ 
Operating expenses:
Research and development11,837,519 8,124,973 22,286,362 14,137,581 
General and administrative4,088,445 4,038,050 8,693,124 8,095,642 
Total operating expenses15,925,964 12,163,023 30,979,486 22,233,223 
Loss from operations(15,925,964)(12,163,023)(30,979,486)(22,233,223)
Other income (expense):
Interest income84,221 6,851 117,314 10,464 
Change in fair value of derivative liability  2,424,877 
Interest expense (101) (904,220)
Other expense(19,046)(25,974)(21,622)(26,696)
Other income (expense)65,175 (19,224)95,692 1,504,425 
Net loss$(15,860,789)$(12,182,247)$(30,883,794)$(20,728,798)
Accumulated dividends on Redeemable Convertible Preferred Stock   (377,562)
Net loss attributable to common stockholders$(15,860,789)$(12,182,247)$(30,883,794)$(21,106,360)
Basic and diluted net loss attributable to common stockholders per common share$(0.69)$(0.54)$(1.35)$(1.20)
Basic and diluted weighted-average number of common shares outstanding22,871,369 22,608,866 22,854,311 17,648,551 

The accompanying notes are an integral part of these unaudited financial statements.
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NEXIMMUNE, INC.
STATEMENTS OF COMPREHENSIVE LOSS
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Net loss$(15,860,789)$(12,182,247)$(30,883,794)$(20,728,798)
Other comprehensive loss:
Unrealized gain (loss) on available-for-sale marketable securities, net of tax11,243 (2,917)(12,347)(2,917)
Comprehensive loss$(15,849,546)$(12,185,164)$(30,896,141)$(20,731,715)
The accompanying notes are an integral part of these unaudited financial statements.
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STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
For the Three Months Ended June 30, 2022 and 2021 (unaudited)

Redeemable Convertible Preferred Stock
Stockholders’ Equity
Series A
Series A-2
Series A-3
Common Stock
Additional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income/ (Loss)
Total
Stockholders
Equity
Shares
Amount
Shares
Amount
Shares
Amount
SharesAmount
Balance at April 1, 2022$$$22,841,794 $2,284 $213,177,933 $(142,766,460)$(20,578)$70,393,179 
Cashless exercise of options for common stock51,7575(5) 
Stock-based compensation1,309,048 1,309,048 
Change in unrealized gain on marketable available-for-sale securities11,243 11,243 
Net loss(15,860,789)(15,860,789)
Balance at June 30, 2022$$$22,893,551 $2,289 $214,486,976 $(158,627,249)$(9,335)$55,852,681 
Balance at April 1, 2021— $— — $— — $— 22,579,219 $2,258 $205,847,571 $(85,388,498)$$120,461,331 
Exercise of stock options48,7885149,767 149,772 
Stock-based compensation1,483,481 1,483,481 
Change in unrealized gains available-for-sale securities(2,917)(2,917)
Net loss(12,182,247)(12,182,247)
Balance at June 30, 2021— $— — $— — $— 22,628,007 $2,263 $207,480,819 $(97,570,745)(2,917)$109,909,420 
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STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
For the Six Months Ended June 30, 2022 and 2021 (unaudited)
Redeemable Convertible Preferred Stock
Stockholders’ Equity
Series A
Series A-2
Series A-3
Common Stock
Additional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income/ (Loss)
Total
Stockholders
Equity
Shares
Amount
Shares
Amount
Shares
Amount
SharesAmount
Balance at January 1, 2022 $  $  $ 22,828,904 $2,283 $211,498,827 $(127,743,455)$3,012 $83,760,667 
Exercise of stock options— — — — — — 12,890 1 33,254 — — 33,255 
Stock-based compensation— — — — — — — — 2,954,900 — — 2,954,900 
Cashless exercise of options for common stock— — — — — — 51,7575(5) 
Change in unrealized loss on marketable available-for-sale securities— — — — — — — — — — (12,347)(12,347)
Net loss— — — — — — — — — (30,883,794)— (30,883,794)
Balance at June 30, 2022 $  $  $ 22,893,551 $2,289 $214,486,976 $(158,627,249)(9,335)$55,852,681 
Balance at January 1, 2021121,735,303 $35,047,435 22,047,361 $7,685,865 31,209,734 $10,887,449 1,256,609 $126 $8,206,938 $(77,582,005) $(69,374,941)
Cumulative effect of adoption of accounting standard— — — — — — — — (2,277,332)740,058 — (1,537,274)
Issuance of Series A redeemable preferred stock upon exercise of warrants145,000 1,450 — — — — — — — — —  
Conversion of preferred stock into common stock(121,880,303)(35,048,885)(22,047,361)(7,685,865)(31,209,734)(10,887,449)10,144,041 1,014 53,621,185 — — 53,622,199 
Conversion of convertible debt into common stock— — — — — — 3,669,010 367 30,251,689 — — 30,252,056 
Issuance of common stock in connection with the initial public offering. net of transaction costs— — — — — — 7,441,650 744 114,550,571 — — 114,551,315 
Exercise of stock options— — — — — — 113,801 12 446,843 — — 446,855 
Exercise of warrants— — — — — — 2,896 — — — — — 
Stock-based compensation— — — — — — — — 2,680,925 — — 2,680,925 
Change in unrealized loss on marketable available-for-sale securities— — — — — — — — — — (2,917)(2,917)
Net loss— — — — — — — — — (20,728,798)— (20,728,798)
Balance at June 30, 2021 $  $  $ 22,628,007 $2,263 $207,480,819 $(97,570,745)$(2,917)$109,909,420 


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NEXIMMUNE, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
20222021
Cash flows from operating activities
Net loss$(30,883,794)$(20,728,798)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization469,829 393,875 
Accretion income on available-for-sale marketable securities, net5,229  
Loss (gain) on asset disposal5,145 (464)
Stock-based compensation2,954,900 2,680,925 
Non-cash lease expense245,917  
Non-cash interest expense 903,919 
Change in fair value of derivative liability (2,424,877)
Changes in operating assets and liabilities:
Prepaid expenses and other assets(1,782,778)(5,985,891)
Accounts payable286,999 172,566 
Accrued expenses, deferred rent and other732,331 219,163 
Operating lease liabilities(233,292) 
Net cash used in operating activities(28,199,514)(24,769,582)
Cash flows from investing activities
Purchase of property and equipment(468,426)(1,634,586)
Proceeds from disposal of equipment 464 
Purchase of marketable securities(21,509,940)(38,981,461)
Proceeds from maturities of available-for-sale marketable securities59,000,000 
Proceeds from redemption of available-for-sale marketable securities1,500,000  
Net cash provided by (used in) investing activities38,521,634 (40,615,583)
Cash flows from financing activities
Proceeds from initial public offering, net of transaction costs 114,721,518
Proceeds from the exercise of stock options33,255 446,855
Proceeds from the exercise of warrants 1,450
Principal payments on capital leases (10,524)
Proceeds from the issuance of convertible notes from related parties 56,500 
Proceeds from the issuance of convertible notes 8,974,980 
Issuance costs associated with convertible notes (20,587)
Net cash provided by financing activities33,255 124,170,192 
Net increase in cash, cash equivalents and restricted cash10,355,375 58,785,027 
Net cash, cash equivalents and restricted cash at beginning of period30,393,852 5,098,579 
Net cash, cash equivalents and restricted cash at end of period$40,749,227 $63,883,606 
Supplemental disclosure of cash flow information:
Cash paid during the year for interest$ $300 
Supplemental disclosure of noncash investing and financing activities:
Property and equipment purchases included in accounts payable and accrued expenses$375,118 $80,905 
The accompanying notes are an integral part of these unaudited financial statements.
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NEXIMMUNE, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1.Nature of the Business
NexImmune, Inc. (“Company”, “we”, “us” or “NexImmune”), a Delaware corporation headquartered in Gaithersburg, Maryland, was incorporated on June 7, 2011. The Company is an emerging biopharmaceutical company advancing a new generation of immunotherapies based on its proprietary Artificial Immune Modulation, or AIMTM, technology. The AIM nanotechnology platform, originally developed at Johns Hopkins University, is the foundation for an innovative approach to immunotherapy in which the body’s own immune system is stimulated to orchestrate a targeted T cell response against a disease. Central to the AIM technology are AIM nanoparticles, which act as synthetic dendritic cells. These AIM nanoparticles can be programmed to present specific antigens and co-stimulatory signals to specific T cells, generating an immune response that can be directed toward any foreign substance or cell type in a patient’s body. The Company’s first two products, both for the treatment of different types of cancer, entered clinical trials in 2020. Data is expected to be generated throughout 2022 from these trials and the Company will share this data in the appropriate scientific forums.
Going Concern
Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 205-40, Presentation of Financial Statements - Going Concern ("ASC 205-40"), requires management to assess the Company’s ability to continue as a going concern for one year after the date the financial statements are issued. Under ASC 205-40, management has the responsibility to evaluate whether conditions and/or events raise substantial doubt about the Company’s ability to meet future financial obligations as they become due within one year after the date that the financial statements are issued. As required by this standard, management’s evaluation shall initially not take into consideration the potential mitigating effects of management’s plans that have not been fully implemented as of the date the financial statements are issued.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred recurring operating losses and negative cash flows from operations. The financial statements do not include any adjustments relating to the realization of the carrying value of assets or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
As of June 30, 2022, the Company had an accumulated deficit of $158.6 million, negative cash flows from operating activities for the period ended June 30, 2022, and significant ongoing research and development expenses. While we have no outstanding debt and $53.1 million in cash, cash equivalents, and marketable securities as of June 30, 2022, the Company expects its negative cash flows from operating activities to continue and thus has determined that its losses and negative cash flows from operations and uncertainty in generating sufficient cash to meet our obligations and sustain our operations raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the issuance date of these financial statements.
As our research and development activities mature and develop over the next year, the Company will likely require substantial funds to continue such activities, depending upon events that are difficult to predict at this time. In this regard, management plans to raise additional capital through financing activities that may include public offerings and private placements of our common stock, preferred stock offerings, collaborations and licensing arrangements and issuances of debt and convertible debt instruments. In the absence of additional capital, the Company plans to strategically manage its uncommitted spend, execute its priorities and implement cost saving measures to reduce research and development and general and administrative expenditures which could include minimizing staff costs and delaying or terminating manufacturing and clinical trial costs. There are inherent uncertainties associated with fundraising activities and activities to manage our uncommitted spending and the successful execution of these activities may not be within the Company’s control. There are no assurances that such additional funding will be obtained and that the Company will succeed in its future operations. If the Company cannot successfully raise additional capital and implement its strategic development plan, its liquidity, financial condition and business prospects will be materially and adversely affected. The Company is continually looking into further capital planning and the evaluation of strategic alternatives. There is substantial doubt about the Company’s ability to continue as a going concern.
2.Basis of Presentation
The accompanying unaudited financial statements were prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the
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information required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the ASC and Accounting Standards Updates (“ASU”) of the FASB. These financial statements should be read in conjunction with our audited financial statements and the accompanying notes to our financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 9, 2022.
In management’s opinion, the accompanying financial statements contain all adjustments, including normal, recurring adjustments, necessary to fairly present our financial position as of June 30, 2022 and December 31, 2021, and our statements of operations and comprehensive loss, statements of changes in redeemable convertible preferred stock and stockholders’ equity (deficit), and statements of cash flows for the three and six month periods ended June 30, 2022 and 2021. Interim results are not necessarily indicative of results for an entire year.
Recent Accounting Standards and Pronouncements
Recently Adopted
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), as subsequently amended (collectively “ASC 842”). The guidance amends the existing accounting standards for lease accounting, including requirements for lessees to recognize assets and liabilities related to long-term leases on the balance sheet and expanding disclosure requirements regarding leasing arrangements. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. In July 2018, the FASB issued additional guidance, which offers a transition option to entities adopting ASC 842 in which entities can elect to apply the new guidance using a modified retrospective approach at the beginning of the year in which the new lease standard is adopted. In November 2019, the FASB issued ASU 2019-10 deferring the effective date for private entities for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021. In June 2020, the FASB issued ASU 2020-05 which further defers the effective date for private entities for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022.

As an emerging growth company ("EGC"), the Company adopted the new leasing guidance effective January 1, 2022 utilizing the modified retrospective approach that uses the effective date as the initial date of application whereby financial information for prior periods presented before the ASC 842 effective date will not be updated. ASC 842 provides a number of optional practical expedients in transition. By applying the ‘package of practical expedients’ permitted under the transition guidance, the Company is not required to reassess i) whether existing or expired arrangements contain a lease, ii) the lease classification of existing or expired leases, or iii) whether previous initial direct costs would qualify for capitalization under the new lease standard. The Company completed its evaluation and recognized $1.5 million in operating right-of-use assets and $0.6 million and $1.0 million in operating lease liabilities, current and non-current, respectively, on January 1, 2022. The Adoption of ASC 842 did not have a material impact on the Company’s Statements of Operations and Statements of Cash Flows.
Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which modifies the measurement of expected credit losses on certain financial instruments ("ASU 2016-13"). In addition, for available-for-sale debt securities, the standard eliminates the concept of other-than-temporary impairment and requires the recognition of an allowance for credit losses rather than reductions in the amortized cost of the securities. The standard is effective for fiscal year beginning after December 15, 2022, and interim periods beginning after December 15, 2022 and requires a modified-retrospective approach with a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period. Early adoption is permitted. Based on the composition of the Company’s investment portfolio, current market conditions and historical credit loss activity, the adoption of ASU 2016-13 is not expected to have a material impact on its financial position, results of operations or the related disclosures.
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3.Cash and Cash Equivalents, Restricted Cash, and Marketable Securities
The following table presents the Company’s cash, cash equivalents and restricted cash as of June 30, 2022 and December 31, 2021:
June 30, 2022December 31, 2021Recurring Fair
Value Measurement
Cash and cash equivalents:
Cash$6,010,083 $2,702,393 
Money market funds20,677,014 22,124,003 Level 1
Fixed income debt securities13,957,130 5,499,956 Level 2
Total cash and cash equivalents40,644,227 30,326,352 
Restricted cash105,000 67,500 
Total cash, cash equivalents, and restricted cash$40,749,227 $30,393,852 
The Company considers all investments in highly liquid financial instruments with an original maturity of ninety days or less at the date of purchase to be cash equivalents. Cash equivalents are stated at amortized cost, plus accrued interest, which approximates fair value.
Amounts included in restricted cash represent those required as collateral on corporate credit cards.
Marketable Securities
Marketable securities consist of fixed-income debt securities with an original maturity in excess of ninety days. These investments are classified as available-for-sale and are carried at fair value. Unrealized gains and losses, net of taxes, are reported as a component of other comprehensive income or loss. Realized gains and losses are reported as other income (expense) within the statement of operations. The specific identification method is used to determine the cost basis of the marketable securities sold. There were no realized gains or losses on the sale of marketable securities for the three and six month ended periods ended June 30, 2022 and 2021. The Company regularly monitors and evaluates the fair value of its investments to identify other-than-temporary declines in value. The Company determined that any decline in fair value of these investments is temporary as the Company does not intend to sell these securities and it is not likely that the Company will be required to sell the securities before the recovery of their amortized cost basis.
As of June 30, 2022 and December 31, 2021, the Company’s marketable securities consisted of only fixed-income securities that mature within one year. The amortized cost and estimated fair value of these securities amounted to $12.5 million and $51.5 million as of June 30, 2022 and December 31, 2021, respectively. The gross unrealized gains and losses on these marketable securities were not material as of June 30, 2022 and December 31, 2021. All marketable securities are measured as Level 2 investments.
4.Fair Value Measurements
The Company’s financial instruments include cash, cash equivalents, marketable securities, accounts payable, accrued expenses, convertible notes and derivative liabilities. The fair values of the cash, cash equivalents, accounts payable and accrued expenses approximated their carrying values as of June 30, 2022 and December 31, 2021 due to their short-term maturities. The Convertible Notes as discussed in Note 9 contained embedded derivative features that were required to be bifurcated and remeasured to fair value at each reporting period while those instruments were outstanding.
The Company accounts for recurring and nonrecurring fair value measurements in accordance with ASC 820, Fair Value Measurements (“ASC 820”). ASC 820 defines fair value, establishes a fair value hierarchy for assets and liabilities measured at fair value, and requires expanded disclosures about fair value measurements. The ASC hierarchy ranks the quality of reliability
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of inputs, or assumptions, used in the determination of fair value, and requires assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories:
Level 1 -Fair value is determined by using unadjusted quoted prices that are available in active markets for identical assets and liabilities.
Level 2 -Fair value is determined by using inputs, other than Level 1 quoted prices that are directly and indirectly observable. Inputs can include quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets and liabilities in inactive markets. Related inputs can also include those used in valuation or other pricing models that can be corroborated by observable market data.
Level 3 -Fair value is determined by inputs that are unobservable and not corroborated by market data. Use of these inputs involves significant judgments to be made by a reporting entity.
In instances where the determination of the fair value measurement is based on inputs from different levels of fair value hierarchy, the fair value measurement will fall within the lowest level input that is significant to the fair value measurement in its entirety. The Company periodically evaluates financial assets and liabilities subject to fair value measurements to determine the appropriate level at which to classify them each reporting period. This determination requires the Company to make judgments as to the significance of inputs used in determining fair value and where such inputs lie within the ASC 820 hierarchy.
There were no Level 3 recurring fair value measurements as of June 30, 2022 and December 31, 2021.
The following table represents the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis:
June 30, 2022December 31, 2021
Level 1Level 2Level 3Level 1Level 2Level 3
Assets
Money market funds$20,677,014 $$$22,124,003$$
Fixed income debt securities 26,441,435 56,991,897
$20,677,014 $26,441,435 $ $22,124,003 $56,991,897 $ 
5.Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following at June 30, 2022 and December 31, 2021:
June 30,
2022
December 31,
2021
Prepaid research and development expenses$3,913,124 $3,375,388 
Prepaid maintenance agreements141,001 132,104 
Prepaid insurance1,872,428 479,393 
Prepaid other358,832 308,842 
Other current assets70,396 99,189 
Total prepaid expenses and other current assets$6,355,781 $4,394,916 
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6.Property and Equipment
Property and equipment consist of the following at June 30, 2022 and December 31, 2021:
June 30,
2022
December 31,
2021
Laboratory equipment$6,604,817 $5,943,501 
Computer equipment and software516,974 486,822 
Furniture and fixtures47,877 47,877 
Leasehold improvements282,782 230,148 
7,452,450 6,708,348 
Less accumulated depreciation and amortization(2,743,414)(2,281,041)
Total Property and equipment, net$4,709,036 $4,427,307 
Depreciation and amortization expense was $0.2 million for each of the three months ended June 30, 2022 and 2021, and $0.5 million and $0.4 million for the six months ended June 30, 2022 and 2021, respectively. Laboratory equipment includes $0.7 million in equipment received but not yet placed into service as of June 30, 2022.
7.Accrued Expenses
A summary of the components of accrued expenses is as follows as of June 30, 2022 and December 31, 2021:
June 30,
2022
December 31,
2021
Accrued research and development costs$4,056,540 $2,611,380 
Accrued salaries, benefits and related expenses2,350,068 3,143,602 
Accrued professional fees291,159 384,254 
Other accrued expenses173,272 31,473 
Total accrued expenses$6,871,039 $6,170,709 
8.Commitments and Contingencies
Maryland Biotechnology Center Grant
The Company entered into a Translational Research Award Agreement effective May 23, 2012 with the Department of Business & Economic Development with the State of Maryland, Maryland Biotechnology Center (“MBC”). The mission of MBC is to integrate entrepreneurial strategies to stimulate the transformation of scientific discovery and intellectual assets into capital formation and business development. Under the agreement and as amended in 2013, MBC provided $325,000 to NexImmune for research on its artificial artificial Antigen Presenting Cell ("aAPC") for cancer immunotherapy.
The Company must repay the funds through annual payments calculated at 3% of annual revenues for the preceding year. Payments shall continue for 10 years after the first payment date and may total up to 200% of the total grant amount. The end date of the agreement is defined as January 31, 2024, or when any and all repayments due to MBC have been made. If the Company does not earn any revenue, the grant does not need to be repaid. Through June 30, 2022, no revenue has been recorded, therefore, no payments to MBC are due.
Johns Hopkins University Exclusive License Agreement
The Company entered into an Exclusive License Agreement with Johns Hopkins University (“JHU”) effective June 2011, which was amended and restated in January 2017, referred to as the A&R JHU License Agreement, under which there are license fees, royalties, and milestone payments. As part of the agreement, the Company acquired a perpetual, exclusive license from JHU covering its invention related to Antigen Specific T cells.
JHU was also entitled to milestone fees of $75,000 in connection with clinical trial milestones. For the first licensed product or licensed service in the therapeutic field, the Company may be required to pay JHU additional aggregate milestone fees of $1.6 million for clinical and regulatory milestone fees. The Company may be required to pay JHU reduced milestone
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fees for the second and third licensed products or licensed services in the therapeutic field in connection with clinical and regulatory milestones. In the diagnostic field, the Company may be required to pay JHU aggregate milestone fees of $0.4 million for the first licensed product, or licensed service and reduced milestone fees for the second and third licensed products, or licensed services in connection with regulatory and commercial milestones. The Company may be required to pay JHU aggregate milestone fees of $100,000 for commercial milestones for the first licensed product or licensed service in the non-clinical field. In the aggregate, the Company may be required to pay JHU additional milestone fees of up to $4.2 million for all clinical, regulatory and commercial milestones for all licensed products or licensed services in the therapeutic field, the diagnostic field and the non-clinical field. The Company may also be required to pay royalties in the low to upper mid-single digits on net sales of therapeutic products, diagnostic products and non-clinical products. The Company may also be required to pay royalties in the low to upper single digits on net sales of licensed services in therapeutic products, diagnostic products and non-clinical products.
The Company is required to make minimum annual royalty payments of $100,000 to JHU under the A&R JHU License Agreement. The Company may also be required to pay JHU a low double digit percentage not to exceed 15%, of any non-royalty sublicense consideration the Company receives.
The Company will record a liability when such events become probable of occurring. The Company has not reached any of the milestones or transacted its first commercial sale as of June 30, 2022.
The Company must make minimum royalty payments, which began upon the fourth anniversary of the agreement and upon every anniversary thereafter during the term of the agreement, which offset future royalties per above owed to JHU.
The Company has incurred $475,000 in cumulative minimum royalties from inception. Future annual minimum royalties consist of $100,000 due each year during the remaining term of the A&R JHU License Agreement. The Company records milestones, royalties and minimum royalties at the time when payments become probable. During each of the three and six months ended June 30, 2022 and 2021, the Company incurred $25,000 and $50,000, respectively, related to minimum royalties owed, included in research and development expenses on the accompanying statement of operations. The Company has accrued royalties of $100,000 as of June 30, 2022 and $50,000 as of December 31, 2021.
Paycheck Protection Program Loan
On April 23, 2020, the Company applied for an unsecured $843,619 loan under the Paycheck Protection Program (“PPP Loan”). The Paycheck Protection Program (or “PPP”) was established under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and is administered by the U.S. Small Business Administration (“SBA”). On May 1, 2020, the PPP Loan was approved and funded. The Company entered into a promissory note of $843,619, which was recorded within other current liabilities in the accompanying balance sheet. The Company treated the PPP Loan as debt under ASC 470. The use of loan proceeds was required to be used for payroll costs, payment of interest on covered mortgage obligations, rent and utility costs over either an eight-week or 24-week period, at the Company’s option.
The Company submitted the PPP Loan forgiveness application to the SBA in March 2021 and received full forgiveness of the $843,619 PPP Loan in July 2021. The Company did not carry a PPP loan balance as of June 30, 2022 and December 31, 2021.
Contingencies
From time to time, the Company may be subject to various litigation and related matters arising in the ordinary course of business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred and the amount can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount. As of June 30, 2022 and December 31, 2021, the Company was not involved in any material legal proceedings.
9.Convertible Notes
In April 2020, the Company entered into Convertible Note Purchase Agreement (“Agreement”) for the sale of up to $15,000,000 of convertible promissory notes with 6% interest rate (“Convertible Notes”). The Agreement specified an initial closing date of April 23, 2020 and allowed additional closings within 90 days of the initial closing. The Convertible Notes were scheduled to mature on April 23, 2021.
The terms of the Convertible Notes require a mandatory conversion upon certain qualified financing events (“Mandatory Conversion”) and allowed for conversion at the option of the holder upon certain non-qualified financing events (“Optional
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Conversion 1”). Upon Mandatory Conversion and Optional Conversion 1, the outstanding principal amount and all accrued and unpaid interest would automatically convert into the Company’s preferred stock of the same series issued in such equity financing and will be equal to the number of preferred stock obtained by dividing (a) all principal and accrued but unpaid interest under such Convertible Note by (b) the price per share paid by the other purchasers of the preferred stock sold in such equity financing multiplied by 80%.
If the Mandatory Conversion and Optional Conversion 1 did not occur by the maturity date, the outstanding principal amount plus all accrued and unpaid interest would be converted at the option of the holder into Company’s common stock at the price per share obtained by dividing $85.0 million by the Company’s fully-diluted capitalization (“Optional Conversion 2”).
If the Company (i) consummates a change in control or (ii) the Company’s common stock becomes publicly listed on a stock exchange, the outstanding principal amount plus all accrued and unpaid interest would automatically convert into shares of the Company’s most senior series of capital stock outstanding at the time of such change in control or public listing, at a price equal to the lower of (a) 90% of the price per share paid by the purchasers of such stock in such a transaction and (b) the price per share obtained by dividing $125.0 million by the Company’s fully-diluted capitalization (“Change in Control”).
The Agreement was amended in July 2020 to increase the aggregate principal amount to $50,000,000 convertible notes and to allow for additional closings within 150 days of the initial closing date. The Agreement was amended in September 2020 to allow for additional closings within 190 days of the initial closing date. In addition, the provisions of Mandatory Conversion and Optional Conversion 1 were amended to allow for conversion upon an equity financing at a price equal to the lower of (a) 80% of the price per share paid by the purchasers of such stock in such a transaction and (b) the price per share obtained by dividing $125,000,000 by the Company’s fully-diluted capitalization. The Company evaluated the amendments and concluded that the amendments represented a debt modification.
In October 2020, the Agreement was further amended to allow additional closings through December 31, 2020, and in January 2021 it was amended again to allow closings through January 31, 2021. In January 2021, the Company issued convertible notes with a principal amount of $9.0 million.
The Company evaluated the Convertible Notes and determined that the Mandatory Conversion feature, Optional Conversion 1 feature and Change in Control meet the definition of an embedded derivative liability that is required to be bifurcated from the host instrument and measured at fair value. The fair value of the derivative liability for the convertible notes issued in January 2021 was $0.7 million.
The Company amortized the debt issuance costs of $0.3 million and debt discount of $4.2 million, comprising of the initial value of the derivative liability of $2.0 million and the BCF of $2.2 million, prior to the adoption of ASU 2020-06, over the term of the Convertible Notes using the effective interest method. Upon adoption of this standard, the beneficial conversion feature was no longer separately accounted. As a result of applying the modified retrospective method, the Company recognized a transition adjustment of $0.7 million recorded in accumulated deficit, a reduction of additional paid-in capital of $2.3 million and an increase to the carrying value of the convertible notes of $1.5 million on January 1, 2021.
The debt issuance costs and debt discount amortization expense for the three and six months ended June 30, 2021 was $0.6 million and is included in interest expense in the accompanying statements of operations. The interest expense at 6% of the Convertible Notes’ principal amount for the three and six months ended June 30, 2021 was $0.2 million. The effective interest rate during the three and six months ended June 30, 2021 was 25%.
The Company completed an initial public offering ("IPO") on February 11, 2021, which triggered the mandatory conversion of all the outstanding Convertible Notes plus accrued interest into 3,669,010 shares of common stock (Note 10). Upon conversion of the Convertible Notes, the outstanding Convertible notes principal plus accrued interest thereon, net of unamortized debt discounts totaling $30.3 million was reclassified to stockholders’ equity (deficit).
10.Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
Issuances of Common Stock
On February 11, 2021, the Company completed its IPO, pursuant to which it issued and sold 7,441,650 shares of its common stock at a public offering price of $17.00 per share, resulting in net proceeds of $114,551,315, after deducting underwriting discounts and commissions and other offering expenses. Upon the closing of the IPO, all of the 175,137,398 outstanding shares of the Company’s Redeemable Convertible Preferred Stock automatically converted into 10,144,052 shares of common stock after giving effect to the reverse stock split, and all of the outstanding convertible debt and accrued but unpaid
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interest thereon of $31,272,224 converted to 3,669,010 shares of common stock. Upon completion of the offering on February 11, 2021, the Company’s authorized capital stock consists of 250,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share, all of which shares of preferred stock are undesignated.
In January 2021, 145,000 warrants were exercised at an exercise price of $0.01 and 145,000 shares of Series A redeemable convertible stock were issued and then converted into common stock upon the closing of the IPO. The remaining outstanding warrants were exercised and settled in January 2021 with 2,896 shares of common stock issued in a cashless exercise.
In June 2022, the Company entered into a Controlled Equity Offering Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. and BTIG, LLC (together, the “Agents”), pursuant to which the Company may offer and sell shares of its common stock, $0.0001 par value per share, having an aggregate offering price of up to $50.0 million (the "Shares") from time to time through the Agents (the "Offering"). Subject to the terms and conditions of the Sales Agreement, any such sales made through the Agents can be made, based upon the Company's instructions, by methods deemed an “at-the-market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act. The Company agreed to pay the Agents a commission of 3.0% of the gross proceeds of any sales of shares sold pursuant to the Sales Agreement. During the three and six months ended June 30, 2022, the Company did not issue any shares under the Sales Agreement.
11.Stock-Based Compensation
During January 2017, the Company adopted the 2017 Equity Incentive Plan (“2017 Plan”), which provides for granting of restricted stock, options to purchase shares of common stock and other awards to employees, directors and consultants. In March 2017, the Company amended the 2017 Plan to increase the number of available shares to 660,838. In September 2018, the Company adopted the 2018 Equity Incentive Plan (“2018 Plan”) which provides for granting of restricted stock, options to purchase shares of common stock, and other awards to employees, directors and consultants, and reserved 1,741,770 shares for this purpose. The 2018 Plan was amended in July 2018 to increase the number of available shares to 1,809,143. In February 2021, the Company adopted the 2021 Equity Incentive Plan (“2021 Plan”) and has reserved a total of 3,898,701 shares under the plan. No further shares will be issued under the 2017 and 2018 plans. There are 1,579,167 shares available for issuance under the 2021 plan as of June 30, 2022.
The number of options to be granted under the 2021 Plan, the option exercise prices, and other terms of the options are determined by the Board of Directors in accordance with the terms of the 2021 Plan. Generally, stock options are granted at fair value, become exercisable over a period of one to four years, expire in ten years or less and are subject to the employee’s continued employment.
Stock-based compensation expense was recorded in the following financial statement line items within the statement of operations for the period ended June 30, 2022 and 2021:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Research and development expenses$871,307 $648,783 $2,004,069 $853,114 
General and administrative expenses437,741 834,698 950,831 1,827,811 
Total stock-based compensation expense$1,309,048 $1,483,481 $2,954,900 $2,680,925 
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The following is a summary of option activity under the Company’s Stock Option Plans:
Stock
Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term (years)
Aggregate
Intrinsic Value
(in millions)
Outstanding as of January 1, 20223,305,291 $9.62 7.7$2.3 
Granted1,604,665 3.53 
Exercised(362,886)2.52 
Cancelled(247,941)7.93 
Forfeited(322,818)15.55 
Outstanding as of June 30, 2022
3,976,311 $7.44 8.5 
Vested or expected to vest as of June 30, 2022
3,976,311 $7.44 8.5 
Exercisable as of June 30, 2022
1,594,562 $7.76 7.0 
Shares unvested as of June 30, 2022
2,381,749 $7.22 9.4$ 
The weighted average fair value of the options granted during the six months ended June 30, 2022 and 2021 was $2.45 and $11.68, respectively. The options were valued using the Black-Scholes option-pricing model for the six months ended June 30, 2022 and 2021 with the following assumptions:
20222021
Expected volatility
78.6% to 81.3%
79.5% to 81.1%
Risk-free interest rate
1.5% to 3.6%
0.6% to 1.1%
Expected dividend yield0 %0 %
Expected term
5.5 to 6.1 years
5.5 to 6.0 years
The total fair value of stock options vested during the six months ended June 30, 2022 and 2021 was approximately $6.7 million, and $1.0 million, respectively. The intrinsic value of stock options exercised for the six months ended June 30, 2022 and 2021 was $0.2 million and $1.0 million, respectively.
As of June 30, 2022, there was $11.0 million of total unrecognized compensation expense related to unvested options that will be recognized over a weighted average period of 2.8 years.
12.Net Loss Per Share Attributable to Common Stockholders
Basic net loss per common share is determined by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common stock and common stock equivalents outstanding for the period. The Company adjusts net loss to arrive at the net loss attributable to common stockholders to reflect the amount of dividends accumulated during the period on the Company’s redeemable convertible preferred stock. Such dividends are only payable if and when declared by the Board of Directors. The treasury stock method is used to determine the dilutive effect of the Company’s stock option grants and warrants and the if-converted method is used to determine the dilutive effect of the Company’s redeemable convertible preferred stock and Convertible Notes. For the three and six months ended June 30, 2022 and 2021, the Company had a net loss attributable to common stockholders, and as such, all outstanding stock options, shares of redeemable convertible preferred stock, and warrants were excluded from the calculation of diluted loss per share. Under the if-converted method, convertible instruments that are in the money, are assumed to have been converted as of the beginning of the period or when issued, if later.
Additionally, the effects of any interest expense and changes in fair value of bifurcated derivatives is added back to the numerator of the diluted net loss per share calculation if the conversion of the Convertible Notes is dilutive. The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2022 and 2021:
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Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Net loss$(15,860,789)$(12,182,247)$(30,883,794)$(20,728,798)
Accumulated dividends on Redeemable Convertible Preferred Stock   (377,562)
Net loss attributable to common stockholders$(15,860,789)$(12,182,247)$(30,883,794)$(21,106,360)
Basic and diluted net loss per common share$(0.69)$(0.54)$(1.35)$(1.20)
Basic and diluted weighted average common shares outstanding22,871,369 22,608,866 22,854,311 17,648,551 
The following potentially dilutive securities have been excluded from the computation of diluted weighted average common shares outstanding at June 30, 2022 and 2021 as the effect would be anti-dilutive:
Three Months Ended June 30,Six Months Ended June 30,
202220212022