Cyteir Therapeutics, Inc. - Quarter Report: 2023 March (Form 10-Q)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

10-Q

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 March 31, 2023


☐	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: 001-40499

Cyteir Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	45-5429901
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
99 Hayden Ave., Building B, Suite 450 Lexington, MA	02421
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 857-285-4140

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, par value $0.001 per share

CYT

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ 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 May 4, 2023, the registrant had 35,512,837 shares of common stock, $0.001 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	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited 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	24
Item 4.	Controls and Procedures	24
PART II.	OTHER INFORMATION	25
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	26
Item 6.	Exhibits	27
Signatures		28

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements with respect to, among other things, our operations and financial performance. 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 and financial position, business strategy and plans and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” "estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “could,” “target,” “predict,” “seek” and similar expressions are intended to identify forward-looking statements. We include forward-looking information in our discussion of the following, among other topics, the initiation, timing, progress and results of our current and future clinical trials, including disclosing initial or preliminary data from our CYT-0851 combination cohorts with capecitabine and gemcitabine in mid-2023, advancing CYT-0851 into one or more expansion cohorts in 2023, advancing CYT-0851 into a randomized phase 2 clinical trial with registrational intent in platinum resistant ovarian cancer; and our estimates regarding our cash runway, expenses, future revenue, capital requirements and needs for additional financing.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those referenced in the section titled “Risk Factors,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the U.S. Securities and Exchange Commission on March 23, 2023, which could cause actual results to differ materially. 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 or implied by 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.

The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this report. You should not rely upon forward-looking statements as predictions of future events. 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. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. 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 actual results or reflect interim developments, except as required by law.

Some of the key factors that could cause actual results to differ include that:

• Our announced strategic prioritization and workforce reduction may not result in CYT-0851 being successfully advanced, may not result in anticipated savings, and may disrupt our business, and we may pursue additional strategic alternatives.

• We have a limited operating history and have no products approved for commercial sale, which may make it difficult for you to evaluate our current business and predict our future success and viability.

• We have incurred significant losses since inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.

• We will need substantial additional funding. If we are unable to raise capital when needed, we will be forced to delay, reduce, or eliminate our research and product development programs or future commercialization efforts.

• We have never successfully completed any clinical trials, and we may be unable to do so for CYT-0851 or any future drug candidates we develop.

• Our clinical trials may fail to demonstrate adequately the safety and efficacy of CYT-0851 or any future drug candidates, which would delay or prevent further clinical development of those candidates, or prevent marketing approval from FDA or similar regulatory authorities.

• Positive results from the clinical trials and preclinical studies of our drug candidates are not necessarily predictive of the results of later clinical trials or preclinical studies. If we cannot replicate the positive results from our clinical trials and preclinical studies of our drug candidates in our later clinical trials preclinical studies, we may be unable to successfully develop, obtain regulatory approval for and commercialize our drug candidates.

• Our clinical trials may fail to demonstrate adequately the safety and efficacy of any of our drug candidates, which would delay or prevent further clinical development of those candidates, or prevent marketing approval from FDA or similar regulatory authorities.

• We are developing CYT-0851 for use in combination with other therapies, which exposes us to additional risks.

• If we are unable to successfully develop and commercialize companion diagnostic tests for our drug candidates, or experience significant delays in doing so, we may not realize the full commercial potential of our drug candidates.

• Synthetic lethality represents an emerging class of precision medicine targets, and negative perceptions of the efficacy, safety or tolerability of this class of targets, including any that we develop, could adversely affect our ability to conduct our business, advance our drug candidates or obtain regulatory approvals.

• If we are unable to adequately protect and enforce our intellectual property or obtain and maintain patent protection for our technology and products or if the scope of the patent protection obtained is not sufficiently broad, our competitors or other third parties could develop and commercialize technology and products similar or identical to ours, and our ability to successfully develop and commercialize our technology and products may be impaired.

• Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CYTEIR THERAPEUTICS, INC.

Condensed consolidated balance sheets


(in thousands, except share and per share amounts) (unaudited)	March 31, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	137,204		$	147,120
Prepaid expenses and other current assets		1,190			2,089
Total current assets	$	138,394		$	149,209
Property and equipment, net		323			1,699
Other assets		259			2,324
Total assets	$	138,976		$	153,232
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	674		$	1,128
Accrued expenses and other current liabilities		3,287			4,187
Total current liabilities	$	3,961		$	5,315
Other long term liabilities		39			1,631
Total liabilities	$	4,000		$	6,946
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, $0.001 par value: 40,000,000 shares authorized as of March 31, 2023 and December 31, 2022; no shares issued and outstanding as of March 31, 2023 and December 31, 2022		—			—
Common stock, $0.001 par value: 280,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 35,658,429 and 35,575,694 shares issued as of March 31, 2023 and December 31, 2022, respectively; 35,624,127 and 35,516,249 shares outstanding as of March 31, 2023 and December 31, 2022, respectively		35			35
Additional paid-in capital		285,541			284,365
Accumulated deficit		(150,600	)		(138,114	)
Total stockholders’ equity		134,976			146,286
Total liabilities and stockholders’ equity	$	138,976		$	153,232

See accompanying notes to condensed consolidated financial statements.

CYTEIR THERAPEUTICS, INC.

Condensed consolidated statements of operations


	Three Months Ended March 31,
(in thousands, except share and per share amounts) (unaudited)	2023			2022
Operating expenses:
Research and development	$	9,312		$	10,088
General and administrative		4,110			4,043
Total operating expenses		13,422			14,131
Loss from operations		(13,422	)		(14,131	)
Other income (expense):
Interest income		1,543			29
Loss on disposal of property and equipment		(925	)		-
Gain on lease terminations and modification		318			-
Total other income (expense)		936			29
Net loss	$	(12,486	)	$	(14,102	)
Net loss per share—basic and diluted	$	(0.35	)	$	(0.40	)
Weighted-average common stock outstanding—basic and diluted		35,587,806			35,241,251

See accompanying notes to condensed consolidated financial statements.

CYTEIR THERAPEUTICS, INC.

Condensed consolidated statements of stockholders’ equity




	Common stock
(in thousands, except share and per share amounts) (unaudited)	Shares		Amount		Additional paid-in capital		Accumulated deficit			Total stockholders’ equity
Balance At December 31, 2021		35,219,834	$	35	$	279,310	$	(92,053	)	$	187,292
Exercise of common stock options		19,575		—		19		—			19
Vesting of early exercised options		32,605		—		39		—			39
Stock-based compensation expense		—		—		1,255		—			1,255
Net loss		—		—		—		(14,102	)		(14,102	)
Balance At March 31, 2022		35,272,014	$	35	$	280,623	$	(106,155	)	$	174,503



	Common stock
(in thousands, except share and per share amounts) (unaudited)	Shares		Amount		Additional paid-in capital		Accumulated deficit			Total stockholders’ equity
Balance At December 31, 2022		35,516,249	$	35	$	284,365	$	(138,114	)	$	146,286
Exercise of common stock options		41,588		—		42		—			42
Vesting of early exercised options		25,144		—		31		—			31
Issuance of common stock under ESPP		41,146		—		61		—			61
Stock-based compensation expense		—		—		1,042		—			1,042
Net loss		—		—		—		(12,486	)		(12,486	)
Balance At March 31, 2023		35,624,127	$	35	$	285,541	$	(150,600	)	$	134,976

See accompanying notes to condensed consolidated financial statements.

CYTEIR THERAPEUTICS, INC.

Condensed consolidated statements of cash flows


	Three Months Ended March 31,
(in thousands) (unaudited)	2023			2022
Cash flows from operating activities:
Net loss	$	(12,486	)	$	(14,102	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		150			159
Stock-based compensation		1,042			1,255
Non-cash lease expense		158			154
Loss on disposal of property and equipment		925			—
Gain on lease terminations and modification		(318	)		—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		1,051			(322	)
Accounts payable		(454	)		1,713
Accrued expenses and other current liabilities		(235	)		(1,025	)
Net cash used in operating activities	$	(10,167	)	$	(12,168	)
Cash flows from investing activities:
Purchases of property and equipment		—			(191	)
Proceeds from sales of property and equipment		150			—
Net cash provided by (used) in investing activities	$	150		$	(191	)
Cash flows from financing activities:
Proceeds from issuance of common stock under ESPP		61			—
Proceeds from exercise of stock options		42			19
Net cash provided by financing activities	$	103		$	19
Net decrease in cash, cash equivalents, and restricted cash		(9,914	)		(12,340	)
Cash, cash equivalents and restricted cash at beginning of period		147,377			189,979
Cash, cash equivalents and restricted cash at end of period	$	137,463		$	177,639
Supplemental disclosure of cash flows
Property and equipment purchases in accounts payable	$	—		$	11
Remeasurement of operating lease liabilities and right-of-use assets due to lease modification	$	(1,908	)		—
Vesting of early exercised options	$	31		$	39

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


	Three Months Ended March 31,
	2023		2022
Cash and cash equivalents	$	137,204	$	177,383
Restricted cash (included in other assets)		259		256
Total cash, cash equivalents, and restricted cash	$	137,463	$	177,639

See accompanying notes to condensed consolidated financial statements.

CYTEIR THERAPEUTICS, INC.

Notes to condensed consolidated financial statements – (unaudited)

1. Nature of the business

Cyteir Therapeutics, Inc., (the “Company”) is a clinical-stage oncology company that is focused on the development of CYT-0851, an oral investigational drug candidate that inhibits monocarboxylate transporters. Cyteir’s current priority in CYT-0851 development is in combination with capecitabine or gemcitabine in a phase 1/2 clinical study, including patients with advanced ovarian cancer or other solid tumors, respectively. Through 2022, the Company used its expertise in DNA damage response biology and a disciplined approach to select targets for other novel, differentiated programs with the aim of building a patient-centric portfolio of effective cancer therapies. In January 2023, the Company announced a strategic prioritization that included the discontinuation of these preclinical efforts.

The Company was formed as a Delaware corporation on June 4, 2012, pursuant to the General Corporation Law of the State of Delaware. The Company has a principal office in Lexington, Massachusetts.

Liquidity

The Company has incurred net operating losses since inception and has funded its operations primarily with proceeds from the sale of redeemable convertible preferred stock and the issuance of common stock in its initial public offering, or IPO. As of March 31, 2023, the Company had cash and cash equivalents of $137.2 million and an accumulated deficit of $150.6 million. The Company expects its operating losses and negative operating cash flows to continue into the foreseeable future.

The Company expects that its cash and cash equivalents as of March 31, 2023 will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the date these condensed consolidated financial statements are available to be issued.

The Company will need additional funding to support its planned operating activities. There can be no assurances, however, that the current operating plan will be achieved or that additional funding will be available on terms acceptable to the Company, or at all. If the Company is unable to obtain sufficient funding, it could be required to delay its development efforts, limit activities and reduce research and development costs, which could adversely affect its business prospects.

COVID-19 considerations

The development of the Company’s product candidates could be disrupted and materially adversely affected in by a pandemic, epidemic or outbreak of an infectious disease, such as the ongoing COVID-19 pandemic. These disruptions related to the COVID pandemic could affect the Company’s business, including, but not limited to, the ability of the Company's clinical research organizations, or CROs, to conduct clinical trials in countries outside of the United States, the Company’s ability to identify suitable clinical sites or open those sites for enrollment due to competing business needs, the Company’s ability to enroll patients due to their fear of coming into medical facilities and their perceived risk of becoming infected at such facilities, and the Company’s ability to monitor the clinical data generated at its clinical sites, required for completion of clinical trials.

2. Summary of significant accounting policies

The Company's significant accounting policies are disclosed in the audited consolidated financial statements for the years ended December 31, 2022 and 2021 ("audited financial statements"), which are included in the Company's Annual Report on Form 10-K that was filed with the SEC on March 23, 2023. Since the date of the financial statements, there have been no changes to the Company's significant accounting policies, except as noted below.

Interim Financial Information

The accompanying condensed consolidated balance sheet at March 31, 2023, and the condensed consolidated statements of operations, statements of changes in stockholders’ equity for the three months ended March 31, 2023 and 2022 and condensed consolidated statements of cash flows for the three months ended March 31, 2023 and 2022 are unaudited. The condensed consolidated interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the Company’s financial position at March 31, 2023 and the results of its operations for the three months ended March 31, 2023 and 2022 and its cash flows for the three months ended March 31, 2023 and 2022. The financial data and other information disclosed in these notes related to the three months ended March 31, 2023 and 2022 are also unaudited. The results for the three months ended March 31, 2023 are not necessarily indicative of results to be expected for the full year or for any other subsequent interim period.

3. Fair value measurement

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis (in thousands):


			March 31, 2023
Assets:	Total		Quoted prices in active markets for identical assets (level 1)		Significant other observable inputs (level 2)		Significant other observable inputs (level 3)
Cash equivalents:
Money market funds	$	136,975	$	136,975	$	—	$	—
Total assets	$	136,975	$	136,975	$		$


			December 31, 2022
Assets	Total		Quoted prices in active markets for identical assets (level 1)		Significant other observable inputs (level 2)		Significant other observable inputs (level 3)
Cash equivalents:
Money market funds	$	146,870	$	146,870	$	—	$	—
Total assets	$	146,870	$	146,870	$	—	$	—

During the three months ended March 31, 2023 and the year ended December 31, 2022, there were no transfers between levels. The fair values of the Company’s cash equivalents, consisting of its standard checking accounts and money market funds, are based on quoted market prices in active markets without any valuation adjustment.

The Company uses the carrying amounts of its restricted cash, prepaid expenses and other current assets, accounts payable and accrued expenses and other current liabilities to approximate their fair value due to the short-term nature of these amounts.

4. Prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	March 31, 2023		December 31, 2022
Prepaid research and development expenses	$	273	$	786
Prepaid insurance		452		982
Prepaid other		213		304
Other receivables		252		17
Total	$	1,190	$	2,089

5. Property and equipment, net

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


Acquisition cost	Laboratory and computer equipment			Leasehold improvements			Total
As of December 31, 2022	$	1,846		$	1,675		$	3,521
Disposals		(1,752	)		(1,266	)		(3,018	)
As of March 31, 2023	$	94		$	409		$	503

Accumulated depreciation and amortization	Laboratory and computer equipment			Leasehold improvements			Total
As of December 31, 2022	$	(827	)	$	(995	)	$	(1,822	)
Depreciation expense		(56	)		(94	)		(150	)
Disposals		866			926			1,792
As of March 31, 2023	$	(17	)	$	(163	)	$	(180	)

Carrying amount	Laboratory and computer equipment			Leasehold improvements			Total
As of December 31, 2022	$	1,019		$	680		$	1,699
As of March 31, 2023	$	77		$	246		$	323

For both the three months ended March 31, 2023 and 2022, depreciation and amortization expense related to property and equipment was $0.2 million.

6. Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	March 31, 2023		December 31, 2022
Accrued research and development expenses	$	1,394	$	1,356
Accrued compensation		1,229		1,510
Accrued other		566		432
Operating lease liabilities		98		889
Total accrued expenses and other current liabilities	$	3,287	$	4,187

7. Common stock

The voting, dividend and liquidation rights of the holders of the Company’s common stock are subject to and qualified by the rights, powers and preferences of the holders of the preferred stock as set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

The holders of the common stock are entitled to one vote for each share of common stock held submitted to a vote of stockholders, and there are not any cumulative voting rights. Holders of common stock are entitled to receive proportionately any dividends as may be declared by our board of directors subject to any preferential dividend rights of any series of preferred stock that the Company may designate and issue in the future.

As of March 31, 2023 and December 31, 2022, the Company has reserved the following shares of common stock for the potential exercise of stock options:


	March 31,		December 31,
	2023		2022
Options to purchase common stock		4,208,336		3,460,897
Remaining shares reserved for future issuance		6,697,386		5,706,345
Total		10,905,722		9,167,242

8. Stock-based compensation

2012 Stock Incentive Plan

The Company adopted the 2012 Stock Incentive Plan (the “2012 Plan”) in November 2012 pursuant to which the Company can issue incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and other stock awards. Recipients of stock options or stock appreciate rights shall be eligible to purchase shares of the Company’s common stock at an exercise price equal to the estimated fair market value of such stock on the date of grant. The exercise price may be less than fair market value if the stock award is granted pursuant to an assumption or substitution for another stock award in the event of a merger or sale of the Company. The maximum term of options granted under the 2012 Plan is ten years, and stock options typically vest over a four-year period. The Board may assign vesting terms to the stock option grants as deemed appropriate. The Company also has the right of refusal to purchase any proposed disposition of shares issued under the 2012 Plan. The 2012 Plan allows for early exercise of all stock option grants if authorized by the Board at the time of grant. The shares of common stock issued from the early exercise of stock options are restricted and vest over time. The Company has the option to repurchase any unvested shares at the original purchase price upon any voluntary or involuntary termination. At the discretion of the Board, unvested shares held by employees may accelerate vesting in the event of a change of control of the Company unless assumed or substituted by the acquirer or surviving entity. The 2012 Plan has been subsequently amended and provides for the issuance of up to 6,941,421 shares of common stock as of March 31, 2023, of which 2,732,632 shares of common stock remained available for future grant under the 2012 Plan upon the effectiveness of the 2021 Equity Incentive Plan (the “2021 Plan”) and were made available for future issuance under the 2021 Plan.

2021 Equity Incentive Plan

In June 2021, the Company’s board of directors adopted and the Company’s stockholders approved the 2021 Plan, which became effective immediately prior to the effectiveness of the registration statement for the IPO. The 2021 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. Upon effectiveness of the 2021 Plan, the number of shares of common stock reserved for issuance under the 2021 Plan was 5,932,632, which represents 3,200,000 shares along with 2,732,632 shares of common stock reserved for issuance under the 2012 Plan that remained available for grant under the 2012 Plan immediately prior to the effectiveness of the 2021 Plan. Shares of the Company's common stock subject to outstanding awards granted under the 2012 Plan that expire unexercised or are terminated, surrendered, cancelled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right will become available for issuance under the 2021 Plan. Upon adoption of the 2021 Plan, the Company ceased the grant of additional awards under the 2012 Plan. The 2021 Plan includes an "evergreen" provision, which provides for an annual increase to be added on January 1st of each year beginning in 2022 and continuing through and including 2031 by the lesser of (i) 5% of the number of shares of Stock outstanding as of such date and (ii) an amount determined by the board of directors. On January 1, 2023, the number of shares of Common Stock reserved and available for issuance under the 2021 Plan increased by 1,778,784 shares.

At March 31, 2023, 6,697,386 shares of common stock remained available for future grant under the 2021 Plan.

2021 Employee Stock Purchase Plan

In June 2021, the Company’s board of directors adopted, and the Company’s stockholders approved, the 2021 Employee Stock Purchase Plan (the “ESPP”), which became effective immediately prior to the effectiveness of the registration statement for the IPO. The ESPP is administered by the compensation committee of the Company’s board of directors, except that the Company’s board of directors may at any time act as the administrator of the ESPP. The ESPP provides participating employees with the opportunity to purchase shares of common stock, with an initial aggregate share pool of 300,000 shares of common stock. The number of shares of common stock reserved for issuance under the ESPP will automatically increase on January 1st of each year beginning in 2022 and continuing through and including 2031 by the least of (i) 1% of the number of shares of Stock outstanding as of such date, (ii) 600,000 shares of Stock and (iii) the number of shares of Stock determined by the Company’s board of directors on or prior to such date for such year, up to a maximum of 6,300,000 shares in the aggregate. On January 1, 2023, the number of shares of Common Stock reserved and available for issuance under the ESPP increased by 355,756 shares.

The ESPP allows eligible employees to authorize payroll deductions of between 1% and 15% of their regular base salary or wages to be applied toward the purchase of shares of the Company's common stock on the last trading day of the offering period, subject to certain limitations contained in the ESPP. Participating employees will purchase shares of the Company's common stock at a discount of 15% on the lesser of the closing price of the Company's common stock on the Nasdaq Global Select Market (i) on the first trading day of the offering period or (ii) the last trading day of the offering period. The Company utilizes the Black Scholes option pricing model to compute the fair market value of the shares subject to outstanding options under the ESPP and compensation expense is recognized over the offering period.

Participation in the ESPP is voluntary. Eligible employees become participants in the ESPP by enrolling in the plan and authorizing payroll deductions in accordance with the terms of the ESPP. At the end of each offering period, accumulated payroll deductions are used to purchase the Company’s shares at the discounted price. The Company makes no contributions to the ESPP. A participant may withdraw from the ESPP or reduce contributions to the ESPP during an offering period. If the participant elects to withdraw during an offering period, all contributions are refunded as soon as administratively practicable. If a participant elects to withdraw during an offering period, the participant may not re-enroll in the current offering but may elect to participate in future offerings, subject to the terms of the ESPP. Only whole shares of the Company may be purchased under the ESPP.

The Company issued 41,147 common shares under the ESPP during the three months ended March 31, 2023 at an average price per share of $1.49. Cash received from purchases under the ESPP for the three months ended March 31, 2023 was $0.1 million. The Company recognized an immaterial amount of compensation expense for the ESPP during the three months ended March 31, 2023.

Early exercise of unvested stock options

Shares purchased by employees pursuant to the early exercise of stock options are not deemed, for accounting purposes, to be outstanding shares until those shares vest according to their respective vesting schedules. Cash received from employee exercises of unvested options is included in long-term liabilities on the condensed consolidated balance sheets. Amounts recorded are reclassified to common stock and additional paid-in capital as the shares vest. As of March 31, 2023 and December 31, 2022, there were 34,302 and 59,446 unvested shares related to early exercises of stock options, respectively.

Stock option valuation

The assumptions that the Company used in the Black Scholes option-pricing model to determine the grant date fair value of stock options granted were as follows:


	March 31, 2023	December 31, 2022
Risk-free interest rate range	3.65%	1.89%-4.23%
Dividend yield	0.0%	0.0%
Expected life of options (years)	6.0	6.0
Volatility rate range	93.3%	92.4%-93.3%

The following table summarizes the Company’s stock option activity during the three months ended March 31, 2023:


	Number of shares			Weighted average exercise price		Weighted average remaining contractual term (in years)		Aggregate intrinsic value (in thousands)
Outstanding as of December 31, 2022		3,460,897		$	5.60		8.23	$	375
Granted		1,049,357		$	1.69		—		—
Exercised		(41,588	)	$	1.02		—		—
Forfeited or cancelled		(260,330	)	$	5.50		—		—
Outstanding as of March 31, 2023		4,208,336		$	4.68		6.68	$	586
Options vested and exercisable as of March 31, 2023		1,800,643		$	5.75		5.23	$	343

As of March 31, 2023, there was $6.8 million of unrecognized stock-based compensation expense related to the share-based compensation arrangements under the 2012 Plan. The Company expects to recognize this amount over a weighted-average period of 2.5 years.

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the common stock as of the end of the reporting period. The weighted-average grant date fair value of the Company’s stock options granted during the three months ended March 31, 2023 and 2022 was $1.31 and $4.52, respectively.

The total fair value of options vested during the three months ended March 31, 2023 and 2022 was $1.5 million and $1.1 million, respectively.

Stock-based compensation expense

Stock-based compensation expense included in the Company’s condensed consolidated statements of operations is as follows (in thousands):


	Three Months Ended March 31,
	2023		2022
Research and development	$	422	$	425
General and administrative		620		830
Total stock-based compensation expense	$	1,042	$	1,255

9. Net loss per share

The Company’s potentially dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following shares from the computation of diluted net loss per share attributable to common stockholders as of March 31, 2023 and 2022 because including them would have had an anti-dilutive effect:


	Three Months Ended March 31,
	2023		2022
Options to purchase common stock		4,208,336		3,421,653
Unvested shares from early exercises		34,302		137,015

10. Commitments and Contingencies

Legal proceedings

From time to time, in the ordinary course of business, the Company is subject to litigation and regulatory examinations as well as information gathering requests, inquiries and investigations. As of March 31, 2023, there were no matters which would have a material impact on the Company’s financial results.

11. Leases

Operating Lease

In August 2018, the Company entered into an operating lease agreement (the "Lease") for office and laboratory space within the building complex located in Lexington, Massachusetts. The Lease commenced in November 2018, and as subsequently amended, is approximately 14,636 rentable square feet (“Original Premises”) and has a maturity date of October 31, 2023. In July 2021, the Company entered into the second amendment of the Lease and expanded the office space by approximately 5,531 square feet (the “Expansion Premises”), and extended the maturity date to December 31, 2025 for both the Original Premises and Expansion Premises. Lease payments are made monthly, subject to a 3% annual rent increase, and the Company pays for its proportionate share of building operating costs such as maintenance, utilities, and insurance that are treated as variable costs and excluded from the measurement of the Lease.

On March 29, 2023, the Company entered into a Lease Amendment and Termination Agreement (the “Amendment”) with respect to the operating lease with 99 Hayden LLC, which covers certain laboratory and office space at Ledgemont Technology Center at 99 Hayden Avenue, Lexington, Massachusetts (the “Premises”). The Amendment amends the terms of the Lease to terminate the Lease as of March 31, 2023, subject to completion of the requisite surrender requirements, with respect to approximately 14,636 rentable square feet consisting of office and lab space located on two floors of the Premises, and 140 rentable square feet of storage space located on the Premises. Under the terms of the Amendment, the Company will retain and consolidate into the remaining 5,531 rentable square feet of office space under the Lease at the Premises, which will serve as the Company's principal executive office, until October 31, 2023, at which time the Lease will terminate in its entirety. Prior to the expiration of the Lease, the Company intends to assess its real estate needs and plan appropriately. The Company recognized a gain on lease terminations and modification of $0.3 million for the three months ended March 31, 2023 on the condensed consolidated statement of operations and derecognized $2.2 million in lease liabilities and $1.9 million in right of use assets on the condensed consolidated balance sheets.

The following table summarizes the presentation of the Company's operating leases on its consolidated balance sheet:


Leases	Balance sheet classification	March 31, 2023		December 31, 2022
Assets
Operating lease assets	Other assets	$	—	$	2,066
Liabilities
Current
Operating lease liabilities	Accrued expenses and other current liabilities	$	98	$	889
Noncurrent
Operating lease liabilities	Other long term liabilities		—		1,560
Total lease liabilities		$	98	$	2,449

The components of lease cost under ASC 842 included in the Company’s condensed consolidated statement of operations for the three months ended March 31, 2023 and 2022 were as follows:


		Three Months Ended March 31,
Lease Cost	Statement of operations classification	2023		2022
Operating lease cost	Research and development	$	136	$	146
Operating lease cost	General and administrative		51		47
Variable lease cost	Research and development		92		113
Variable lease cost	General and administrative		35		36
Total lease cost		$	314	$	342

The weighted average remaining lease term and weighted average discount rate of the operating leases was 0.6 years and 5.0%, respectively, at March 31, 2023. The Company made cash payments for amounts included in the measurement of operating liabilities of $0.2 million for the three months ended March 31, 2023.

Future minimum lease payments under non-cancellable operating leases as of March 31, 2023 were as follows (in thousands):


Maturity of lease liabilities	Amount
2023 (excluding the three months ended March 31, 2023)	$	100
2024		—
2025		—
2026		—
2027		—
Total lease payments		100
Less: interest		(2	)
Present value of operating lease liabilities	$	98

12. Employee benefit plans

The Company has a 401(k) retirement plan for its employees, which is designed to be qualified under Section 401(k) of the Internal Revenue Code. Eligible employees are permitted to contribute to the 401(k) plan within statutory and 401(k) plan limits. The Company implemented a matching contribution in 2022 and has made $0.1 million matching contributions for the three months ended March 31, 2023.

13. Restructuring

On January 19, 2023, the Company announced a strategic prioritization of clinical development of CYT-0851, which included the discontinuation of preclinical efforts and a workforce reduction by approximately 70% of the Company's workforce. For the three months ended March 31, 2023, the Company estimated and incurred $2.3 million of restructuring charges related to termination benefits and other related charges of which $1.6 million and $0.7 million, respectively, were recorded in research and development expenses and general and administrative expenses in the Company's condensed consolidated statements of operations. Non-cash expenses related to the strategic prioritization, consisting of an estimated $0.9 million loss on disposal of property and equipment and a gain of $0.3 million on lease terminations and modification and were recorded in other income (expense) in the Company's condensed consolidated statements of operations. The Company made $1.7 million of cash payments related to this restructuring during the three months ended March 31, 2023. As of March 31, 2023, the restructuring accrual was approximately $0.6 million and was recorded in accrued expenses and other current liabilities in the Company's condensed consolidated balance sheet.

The following table outlines our restructuring activities for the three months ended March 31, 2023 (in thousands):


Opening Balance - December 31, 2022	$	-
Employee termination-related charges		2,318
Payments		(1,742	)
Balance - March 31, 2023	$	576

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and notes thereto for the year ended December 31, 2021, included in our Annual Report on Form 10-K that was filed on March 23, 2023 with the U.S. Securities and Exchange Commission, or SEC.

In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Some of the numbers included herein have been rounded for the convenience of presentation. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Overview

We are a clinical-stage oncology company focused on the development of CYT-0851, an oral investigational drug candidate that inhibits monocarboxylate transporters.

CYT-0851 is an investigational monocarboxylate transporter inhibitor, or MCT inhibitor, initially evaluated in a phase 1/2 study to treat patients with hematologic malignancies and solid tumors as a monotherapy and in combination with standard of care therapies. Inhibiting MCT function in glycolytic cancer cells leads to an accumulation of intracellular lactate that impairs glycolysis and inhibits tumor cell growth, making MCTs an attractive target for cancer therapy.

In January 2023, we reported encouraging preliminary clinical activity in a small number of patients observed in the phase 1 dose-escalation cohort with CYT-0851 in combination with capecitabine in advanced ovarian cancer. In this combination dose-escalation cohort, we enrolled a total of thirteen patients at dose levels of 100 mg to 400 mg of CYT-0851, which included five patients with advanced ovarian cancer. Based on preliminary data for these five patients, we observed one confirmed partial response, two disease stabilizations and two patients that were non-evaluable. Overall, CYT-0851 was generally well tolerated. At the highest tested dose, no dose-limiting toxicities were observed. Based on these results, we determined that 400 mg of CYT-0851 was the recommended phase 2 dose in combination with capecitabine, and we expanded enrollment in the CYT-0851 and capecitabine combination cohort to enroll additional patients with advanced ovarian cancer. Enrollment is ongoing and we expect to disclose initial data from these additional patients in mid-2023. If the data from these additional patients further support our focus on ovarian cancer, we intend to add a phase 2 expansion cohort of this combination and, if warranted, pursue further development and potential registration of CYT-0851 in combination with capecitabine as an all-oral treatment for platinum resistant ovarian cancer.

We also continue to evaluate CYT-0851 in combination with gemcitabine in phase 1 dose-escalation cohorts, and we expect to disclose preliminary results from these cohorts in mid-2023. In January 2023, we announced the suspension of enrollment in the CYT-0851 phase 2 monotherapy cohort due to insufficient activity observed with CYT-0851 alone. In addition to prioritizing CYT-0851 development as a potential combination therapy to treat advanced ovarian cancer, we deferred all other research and development activities and reduced our headcount to 15 employees.

Since our inception in 2012, we have focused primarily on organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio and performing research and development of novel therapeutics. We do not have any drug candidates approved for sale and have not generated any revenue from product sales. Since our inception, we have funded our operations primarily with proceeds from the sale of securities, including an aggregate of approximately $141.0 million of gross proceeds from the sale of redeemable convertible preferred stock and approximately $149.1 million of gross proceeds from the sale of common stock in our IPO, as of March 31, 2023.

We have incurred significant operating losses since inception, including net losses of $12.5 million and $14.1 million for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023 and December 31, 2022 we had an accumulated deficit of $150.6 million and $138.1 million, respectively. These losses have resulted primarily from costs incurred in connection with research and development activities and general and administrative costs associated with our operations. We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future as we:

•

continue the research and development of CYT-0851;

•

initiate and conduct clinical trials for CYT-0851;

•

further develop and refine the manufacturing processes for our drug candidates;

•

seek regulatory approvals and pursue commercialization for any of our drug candidates that successfully complete clinical trials;

•

obtain, maintain, protect and enforce our intellectual property portfolio; and

•

experience delays or encounter issues with any of the above.

We will not generate any revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for one or more of our drug candidates, if ever. If we obtain regulatory approval for any of our drug candidates, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing and distribution.

As of March 31, 2023, we had cash and cash equivalents of $137.2 million. We believe that our existing cash and cash equivalents as of March 31, 2023 will enable us to fund our operating expenses and capital expenditure requirements into 2026. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See “—Liquidity and Capital Resources.”

Components of results of operations

Revenue

To date, we have not generated any revenue from product sales. If our development efforts for our drug candidates and preclinical programs are successful and result in regulatory approval, we may generate revenue in the future from product sales.

Operating expenses

Research and development expenses

Research and development expenses consist primarily of costs incurred in connection with the preclinical and clinical development and manufacture of our drug candidates, and include:

•

personnel-related expenses, including salaries, bonuses, benefits, stock-based compensation and other related costs for individuals involved in research and development activities;

•

external research and development expenses incurred under agreements with CROs as well as investigative sites and consultants that conduct our clinical trials and other scientific development services;

•

costs incurred under agreements with CMOs for developing and manufacturing material for our preclinical studies and clinical trials;

•

costs of outside consultants, including their fees, stock-based compensation and related travel expenses;

•

costs related to compliance with regulatory requirements;

•

costs of laboratory supplies and acquiring, developing and manufacturing study materials; and

•

facilities and other allocated expenses, which include direct and allocated expenses for rent, insurance and other operating costs.

Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors and our clinical investigative sites. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our consolidated financial statements as prepaid or accrued research and development expenses. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses and expensed as the related goods are delivered or the services are performed.

A significant portion of our research and development costs have been external costs, which we tracked on a program-by-program basis after a clinical drug candidate was been identified. Our internal research and development costs are primarily personnel-related costs, internal lab costs and other indirect costs. The majority of our external research and development expenses to date have been incurred in connection with CYT-0851.

We do not allocate employee costs, costs associated with our discovery efforts, and facilities, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources and third-party consultants primarily to conduct our research and discovery activities as well as for managing our process development, manufacturing and clinical development activities.

We cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development and commercialization of our future drug candidates. Our level of costs may be highly variable on a quarterly basis. However, we generally expect research and development expenses to decrease in the near-term compared to prior periods due to the strategic prioritization of CYT-0851 development and the corresponding deferral of other research and development activities and the reduction in headcount announced in January 2023. We are also unable to predict when, if ever, material net cash inflows will commence from the sale of CYT-0851 or potential future drug candidates, if approved. This is due to the numerous risks and uncertainties associated with developing drug candidates, including the uncertainty of:

•

the scope, rate of progress and expenses of our ongoing research activities and clinical trials and other research and development activities;

•

successful patient enrollment in, and the initiation and completion of, clinical trials;

•

establishing an appropriate safety profile;

•

whether our drug candidates show safety and efficacy in our clinical trials;

•

receipt of marketing approvals from applicable regulatory authorities;

•

establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;

•

obtaining, maintaining, protecting and enforcing patent and trade secret protection and regulatory exclusivity for our drug candidates;

•

commercializing drug candidates, if and when approved, whether alone or in collaboration with others; and

•

continued acceptable safety profile of the products following any regulatory approval.

Any changes in the outcome of any of these variables with respect to the development of our drug candidates in preclinical and clinical development could mean a significant change in the costs and timing associated with the development of these drug candidates. We may never succeed in achieving regulatory approval for any of our drug candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some drug candidates or focus on others. For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development of that drug candidate.

General and administrative expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, corporate and business development and administrative functions. General and administrative expenses also include professional fees for legal, patent, accounting, auditing, tax and consulting services, and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.

We expect that our general and administrative expenses may increase in the future as we increase our general and administrative headcount to support our continued research activities and development of our drug candidates.

Other income (expense)

Other income (expense) primarily consists of interest income earned on cash equivalents that generate interest on a monthly basis.

Results of operations

Comparison of the three months ended March 31, 2023 and 2022

The following table summarizes our results of operations:


	Three Months Ended March 31,
(in thousands)	2023			2022			Change
Operating expenses:
Research and development	$	9,312		$	10,088		$	(776	)
General and administrative		4,110			4,043			67
Total operating expenses		13,422			14,131			(709	)
Loss from operations		(13,422	)		(14,131	)		709
Other income(expense):
Interest income		1,543			29			1,514
Loss on disposal of property and equipment		(925	)		—			(925	)
Gain on lease terminations and modification		318			—			318
Total other income(expense)		936			29			907
Net loss	$	(12,486	)	$	(14,102	)	$	1,616

Research and development expenses

The following table summarizes our research and development costs for each of the periods presented:


	Three Months Ended March 31,
(in thousands)	2023		2022		Change
Direct research and development expenses by program:
MCT inhibitor programs	$	3,892	$	5,510	$	(1,618	)
Unallocated research and development expenses:
Personnel expenses (including stock-based compensation)		4,137		2,916		1,221
Other expenses		1,283		1,662		(379	)
Total research and development expenses	$	9,312	$	10,088	$	(776	)

Research and development expenses for the three months ended March 31, 2023 were $9.3 million, which decreased by $0.8 million from $10.1 million for the three months ended March 31, 2022. The decrease in research and development expenses was primarily attributable to the following:

•

a $1.6 million decrease in costs related to our monocarboxylate transporter, or MCT, inhibitor programs driven by decreased costs in external research activities, partially offset by increased costs related to our ongoing clinical trial;

•

a $0.4 million decrease in other research and development operational expenses, including facilities and lab-related costs as well as costs related to our discovery efforts; and

•

a $1.2 million increase in personnel-related costs, including stock-based compensation expense, primarily due to severance-related costs associated with our strategic prioritization.

General and administrative expenses

General and administrative expenses for the three months ended March 31, 2023 were $4.1 million, which increased by $0.1 million from $4.0 million for the three months ended March 31, 2022. The increase in general and administrative expenses was primarily attributable to the following:

•

a $0.3 million increase in personnel costs, including stock-based compensation expense, primarily due to severance-related costs associated with our strategic prioritization; and

•

a $0.2 million decrease in other general and administrative expenses, including insurance and state taxes.

Total other income (expense)

Total other income (expense) for the three months ended March 31, 2023 was $0.9 million, which increased by $0.9 million from an immaterial amount for the three months ended March 31, 2022. The increase in other income (expense) was attributable to the following:

•

a $1.5 million increase in interest income due to higher interest rates on our cash equivalents, which are primarily invested in money market funds;

•

a $0.3 million increase due to gain on lease terminations and modification; and

•

a $0.9 million decrease due to loss on disposal of property and equipment.

Liquidity and capital resources

Sources of liquidity

Since our inception, we have not recognized any product revenue and have incurred operating losses and negative cash flows from our operations. We have not yet commercialized any product and we do not expect to generate revenue from sales of any products for several years, if at all.

We have funded our operations primarily with proceeds from the sale of redeemable convertible preferred stock and the sale of our common stock in our IPO. From inception through March 31, 2023, we have raised an aggregate of approximately $141.0 million from the sale of redeemable convertible preferred stock and $136.1 million in net proceeds from the sale of our common stock with the completion of the IPO.

Funding requirements

As of March 31, 2023, our cash and cash equivalents on hand were $137.2 million. We believe that our existing cash and cash equivalents as of March 31, 2023 will enable us to fund our operating expenses and capital expenditure requirements into 2026. We have based this estimate on assumptions that may prove to be wrong, and we could expend our capital resources sooner than we expect.

We expect to incur significant expenses and operating losses for the foreseeable future as we advance CYT-0851 through clinical development, seek regulatory approval and pursue commercialization of any approved drug candidates. We expect our operating expenses to decrease in the near-term compared to prior periods due to the strategic prioritization of CYT-0851 development and the corresponding deferral of other research and development activities and the reduction in headcount announced in January 2023. If we receive regulatory approval for CYT-0851 or any of our future drug candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize. We may also require additional capital to pursue in-licenses or acquisitions of other drug candidates.

Because of the numerous risks and uncertainties associated with research, development and commercialization of our drug candidates, we are unable to estimate the exact amount of our working capital requirements. Our future capital requirements will depend on many factors, including:

•

the continuation, timing, costs, progress and results of our planned clinical trials of CYT-0851;

•

the scope, progress, results and costs of our program and development of any additional drug candidates that we may pursue;

•

the development requirements of other drug candidates that we may pursue;

•

the outcome, timing and cost of meeting regulatory requirements established by the FDA and other regulatory authorities;

•

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

•

the cost of expanding, maintaining, protecting and enforcing our intellectual property portfolio, including filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;

•

the cost of defending potential intellectual property disputes, including patent infringement actions brought by third parties against us or any of our drug candidates;

•

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

•

the ongoing costs of operating as a public company.

Until such time, if ever, as we can generate substantial product revenue to support our cost structure, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations 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 shareholders could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common shareholders. 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, future revenue streams, research programs or drug 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 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 drug candidates even if we would otherwise prefer to develop and market such drug candidates ourselves.

Cash flows

The following table summarizes our cash flows for each of the periods presented:


	Three Months Ended March 31,
(in thousands)	2023			2022
Net cash used in operating activities	$	(10,167	)	$	(12,168	)
Net cash provided (used) in investing activities		150			(191	)
Net cash provided by financing activities		103			19
Net decrease in cash, cash equivalents and restricted cash	$	(9,914	)	$	(12,340	)

Operating activities

Net cash used in operating activities for the three months ended March 31, 2023 was $10.2 million, compared to $12.2 million for the same period in 2022. Significant factors in the $2.0 million decrease in net cash used in operating activities include:

•

a decrease in net loss of $1.6 million due to a decrease in research and development expense of $0.8 million offset by an increase in general and administrative expenses of $0.1 million and an increase of total other income of $0.9 million;

•

an offsetting net change in our net operating assets and liabilities, primarily due to a $0.8 million increase in accrued expenses and other current liabilities and a $1.4 million increase in prepaids and other current assets; offset by a $2.2 million decrease in accounts payable; and

•

offset by an increase in non-cash charges of $0.6 million, consisting of a $0.9 million increase from loss on disposal of property and equipment offset by a $0.3 million decrease in stock-based compensation expense.

Investing activities

Net cash provided by investing activities for the three months ended March 31, 2023 and 2022 was $0.2 million due to sale of property and equipment.

Net cash used in investing activities for during the three months ended March 31, 2022. was $0.2 million due to purchases of property and equipment.

Financing activities

Net cash provided by financing activities for the three months ended March 31, 2023 was $0.1 million, consisting of proceeds from issuance of common stock under our ESPP and proceeds from exercise of stock options.

Critical accounting estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our financial statements.

We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

There have been no significant changes to our critical accounting policies from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Annual Report on Form 10-K for the year ended December 31, 2022.

Emerging growth company status

We are an “emerging growth company”, or EGC, under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Section 107 of the JOBS Act provides that an EGC can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of delayed adoption of new or revised accounting standards and, therefore, we will be subject to the same requirements to adopt new or revised accounting standards as private entities.

As an EGC, we have elected to take advantage of certain exemptions and reduced reporting requirements under the JOBS Act. Subject to certain conditions, as an EGC:

•

we may present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations;

•

we may avail ourselves of the exemption from providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

•

we may avail ourselves of the exemption from complying with any requirement that may be adopted by the Public Company Accounting Oversight Board, or PCAOB, regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis;

•

we may provide reduced disclosure about our executive compensation arrangements; and

•

we may not require nonbinding advisory votes on executive compensation or stockholder approval of any golden parachute payments.

We will remain an EGC until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the completion of our IPO, (ii) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more, (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the previous rolling three-year period or (iv) the date on which we are deemed to be a large accelerated filer under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest rate risk

Our primary exposure to market risk is interest rate sensitivity, which is impacted by changes to the general level of U.S. interest rates, particularly because our cash equivalents are in the form of money market funds that are invested in U.S. Treasury securities. As of March 31, 2023 and December 31, 2022, we had cash, cash equivalents and restricted cash of $137.5 million and $149.4 million, respectively. Interest income is sensitive to changes in the general level of interest rates; however, due to the nature of these investments, an immediate 10% change in interest rates would not have a material effect on the fair market value of our investment portfolio.

As of March 31, 2023 and December 31, 2022, we had no debt outstanding, and therefore we are not subject to interest rate risk related to debt.

Foreign currency exchange risk

We are not currently exposed to significant market risk related to changes in foreign currency exchange rates.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our President and Chief Executive Officer and our Chief Financial Officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2023. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclose by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2023, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal three months ended March 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in litigation or other legal proceedings. We are not currently a party to any litigation or legal proceedings that, in the opinion of our management, are probable to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on our business, financial condition, results of operations and prospects because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors.

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described in the section titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 together with all of the other information contained in this Quarterly Report on Form 10-Q, including our consolidated financial statements and related notes appearing in this Quarterly Report on Form 10-Q, before deciding to invest in our common stock.

There have been no material changes to our risk factors as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Use of Proceeds

On June 22, 2021, we completed our IPO pursuant to which we issued and sold 7,400,000 shares of our common stock at a public offering price of $18.00 per share. On July 1, 2021, we sold an additional 885,644 shares of our common stock at a public offering price of $18.00 per share. The offer and sale of all of our common shares were registered under the Securities Act pursuant to a registration statement on Form S-1, as amended (File No. 333-256601), which was declared effective by the SEC on June 17, 2021.

Our planned use of the net proceeds from the IPO as described in our final prospectus dated June 17, 2021 has changed due to the prioritization of development of our CYT-0851 program and suspension of internal research. As a result, we currently expect to use our cash and cash equivalents, which include the net proceeds from our IPO, to advance the clinical development of CYT-0851 through the enrollment period of a randomized phase 2 trial with registrational intent as a combination therapy in combination with capecitabine or gemcitabine, and for working capital and other general corporate purposes.

Based on our planned use our existing cash and cash equivalents, we estimate that such funds will be sufficient to fund our operating expenses and capital expenditure requirements into 2026. We expect that the completion of the randomized phase 2 combination trial with CYT-0851 or any further development or commercialization of CYT-0851 will require substantial additional capital. The sources of this additional required capital may include subsequent equity or debt financings, and/or funding from potential partnerships with biopharmaceutical companies to develop and commercialize one or more of our drug candidate programs. We have based these estimates on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we expect.

Our expected use of our cash and cash equivalents represents our current intentions based upon our present plans and business condition and we cannot predict with complete certainty all of the particular uses for our proceeds. We may find it necessary or advisable to use our cash and cash equivalents for other purposes, and we have broad discretion in the application of these proceeds.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.


Exhibit Number		Description
3.1		Sixth Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K (File No. 001-40499) filed with the SEC on June 25, 2021)
3.2		Second Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K (File No. 001-40499) filed with the SEC on June 25, 2021)
10.1+		Employment Agreement between Cyteir Therapeutics, Inc. and David Gaiero, dated January 17, 2023 (incorporated by reference to Exhibit 10.12 to the Registrant's Annual Report on Form 10-K (File No. 001-40499) filed with the SEC on March 23, 2023)
10.2*+		Employment Agreement between Cyteir Therapeutics, Inc. and Adam Veness, dated April 15, 2022
10.3		Lease Amendment and Termination Agreement, by and between 99 Hayden LLC and Cyteir Therapeutics, Inc., dated as of March 29, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001-40499) filed with the SEC on April 3, 2023)
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
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
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
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
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.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

** Furnished herewith.

+ Indicates management contract or compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on

its behalf by the undersigned thereunto duly authorized.


	Cyteir Therapeutics, Inc.

Date: May 10, 2023	By:	/s/ Markus Renschler
		Markus Renschler, M.D.
		President and Chief Executive Officer (Principal Executive Officer)

Date: May 10, 2023	By:	/s/ David Gaiero
		David Gaiero
		Chief Financial Officer and Treasurer (Principal Financial Officer)