SEC Filing | Replimune

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repl-20211231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended December 31, 2021


☐			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 001-38596

REPLIMUNE GROUP, INC.

(Exact name of registrant as specified in its charter)


Delaware			82-2082553
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

500 Unicorn Park

Woburn MA 01801

(Address of principal executive offices)

(Zip Code)

(781) 222-9600

(Registrant’s telephone number, including area code)

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

REPL

The Nasdaq Stock Market LLC (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.


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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐

No ☒

The number of shares of the registrant’s Common Stock, par value $0.001 per share, outstanding as of January 31, 2022 was 47,209,545.

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REPLIMUNE GROUP, INC.

FORM 10-Q

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			Page No.
PART I FINANCIAL INFORMATION			3

	Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3

		Condensed Consolidated Balance Sheets	3

		Condensed Consolidated Statements of Operations	4

		Condensed Consolidated Statements of Comprehensive Loss	5

		Condensed Consolidated Statements of Stockholders’ Equity	6

		Condensed Consolidated Statements of Cash Flows	7

		Notes to Unaudited Condensed Consolidated Financial Statements	8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40

	Item 4.	Controls and Procedures	40

PART II OTHER INFORMATION			41

	Item 1.	Legal Proceedings	41

	Item 1A.	Risk Factors	41

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	74

	Item 3.	Defaults Upon Senior Securities	74

	Item 4.	Mine Safety Disclosure	74

	Item 5.	Other Information	74

	Item 6.	Exhibits	75

SIGNATURES			76

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

REPLIMUNE GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share amounts)

(Unaudited)


	December 31, 2021		March 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	132,275	$	182,518
Short-term investments	287,897		293,784
Research and development incentives receivable	2,210		2,953
Prepaid expenses and other current assets	5,413		4,492
Total current assets	427,795		483,747
Property, plant and equipment, net	7,412		7,442
Restricted cash	1,636		1,636
Right-to-use asset - operating leases	5,738		5,751
Right-to-use asset - financing leases	42,701		44,522
Total assets	$	485,282	$	543,098

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	3,922	$	2,355
Accrued expenses and other current liabilities	10,754		8,735
Operating lease liabilities, current	1,072		970
Financing lease liabilities, current	2,543		2,487
Total current liabilities	18,291		14,547
Operating lease liabilities, non-current	4,981		5,078
Financing lease liabilities, non-current	24,501		24,745
Total liabilities	$	47,773	$	44,370
Commitments and contingencies (Note 12)
Stockholders' equity
Common stock, $0.001 par value; 150,000,000 shares authorized as of December 31, 2021 and March 31, 2021; 47,206,316 and 46,566,481 shares issued and outstanding as of December 31, 2021 and March 31, 2021, respectively	47		47
Additional paid-in capital	717,151		692,243
Accumulated deficit	(279,508)		(193,168)
Accumulated other comprehensive loss	(181)		(394)
Total stockholders' equity	437,509		498,728
Total liabilities and stockholders' equity	$	485,282	$	543,098

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

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REPLIMUNE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Operating expenses:
Research and development	$	19,353	$	14,322	$	57,809	$	40,529
General and administrative	10,345		5,953		28,517		17,242
Total operating expenses	29,698		20,275		86,326		57,771
Loss from operations	(29,698)		(20,275)		(86,326)		(57,771)
Other income (expense):
Research and development incentives	733		550		2,246		1,991
Investment income	87		116		259		821
Interest expense on finance lease liability	(555)		(560)		(1,670)		(1,683)
Interest expense on debt obligations	—		(247)		—		(817)
Loss on extinguishment of debt	—		(913)		—		(913)
Other (expense) income	(241)		(454)		(849)		(999)
Total other income (expense), net	24		(1,508)		(14)		(1,600)
Net loss	$	(29,674)	$	(21,783)	$	(86,340)	$	(59,371)
Net loss per common share, basic and diluted	$	(0.57)	$	(0.44)	$	(1.66)	$	(1.34)
Weighted average common shares outstanding, basic and diluted	52,319,877		49,382,213		52,104,548		44,436,680

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

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REPLIMUNE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Amounts in thousands)

(Unaudited)


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Net loss	$	(29,674)	$	(21,783)	$	(86,340)	$	(59,371)
Other comprehensive loss:
Foreign currency translation gain	161		548		604		1,162
Net unrealized loss on short-term investments, net of tax of $0	(351)		(53)		(391)		(296)
Comprehensive loss	$	(29,864)	$	(21,288)	$	(86,127)	$	(58,505)

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

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REPLIMUNE GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Amounts in thousands, except share amounts)

(Unaudited)


	Common stock				Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total stockholders’ equity
	Shares		Amount
Balances as of March 31, 2021	46,566,481		$	47	$	692,243	$	(193,168)	$	(394)	$	498,728
Foreign currency translation adjustment	—		—		—		—		224		224
Unrealized loss on short-term investments	—		—		—		—		(40)		(40)
Exercise of stock options	163,970		—		1,173		—		—		1,173
Stock-based compensation expense	—		—		6,250		—		—		6,250
Net loss	—		—		—		(27,311)		—		(27,311)
Balances as of June 30, 2021	46,730,451		47		699,666		(220,479)		(210)		479,024
Foreign currency translation adjustment	$	—	—		—		—		219		219
Unrealized loss on short-term investments	—		—		—		—		—		—
Exercise of stock options	124,880		—		1,211		—		—		1,211
Stock-based compensation expense	—		—		6,313		—		—		6,313
Net loss	—		—		—		(29,355)		—		(29,355)
Balances as of September 30, 2021	46,855,331		47		707,190		(249,834)		9		457,412
Foreign currency translation adjustment	—		—		—		—		161		161
Unrealized loss on short-term investments	—		—		—		—		(351)		(351)
Exercise of stock options	350,985		—		4,043		—		—		4,043
Stock-based compensation expense	—		—		5,918		—		—		5,918
Net loss	—		—		—		(29,674)		—		(29,674)
Balances as of December 31, 2021	47,206,316		$	47	$	717,151	$	(279,508)	$	(181)	$	437,509

Balances as of March 31, 2020	36,668,743		$	37	$	296,961	$	(112,298)	$	(982)	$	183,718
Issuance of prefunded warrants to purchase common stock, net of $2,100 issuance costs	—		—		32,900		—		—		32,900
Issuance of common stock, net of issuance costs and underwriter fees of $5,117	3,478,261		3		74,879						74,882
Foreign currency translation adjustment	—		—		—		—		(12)		(12)
Unrealized loss on short-term investments	—		—		—		—		(196)		(196)
Exercise of stock options	133,416		—		1,547		—		—		1,547
Stock-based compensation expense	—		—		2,468		—		—		2,468
Net loss	—		—		—		(17,493)		—		(17,493)
Balances as of June 30, 2020	40,280,420		40		408,755		(129,791)		(1,190)		277,814
Foreign currency translation adjustment	—		—		—		—		626		626
Unrealized loss on short-term investments	—		—		—		—		(47)		(47)
Exercise of stock options	31,852		—		291		—		—		291
Stock-based compensation expense	—		—		2,801		—		—		2,801
Net loss	—		—		—		(20,095)		—		(20,095)
Balances as of September 30, 2020	40,312,272		40		411,847		(149,886)		(611)		261,390
Foreign currency translation adjustment	0		0		0		0		548		548
Unrealized loss on short-term investments	—		—		—		—		(53)		(53)
Exercise of stock options	447,403		1		3,068		—		—		3,069
Issuance of prefunded warrants to purchase common stock, net of $3,750 issuance costs	—		—		58,750		—		—		58,750
Issuance of common stock, net of issuance costs and underwriter fees of $13,775	5,625,000		5		211,220						211,225
Stock-based compensation expense	—		—		3,049		—		—		3,049
Net loss	—		—		—		(21,783)		—		(21,783)
Balances as of December 31, 2020	46,384,675		$	46	$	687,934	$	(171,669)	$	(116)	$	516,195

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

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REPLIMUNE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


	Nine Months Ended December 31,
	2021		2020
Cash flows from operating activities:
Net loss	$	(86,340)	$	(59,371)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	18,481		8,318
Depreciation and amortization	1,598		1,217
Net amortization of premiums and discounts on short-term investments	1,792		841
Noncash interest expense	—		181
Loss on extinguishment of debt	—		913
Changes in operating assets and liabilities:
Research and development incentives receivable	700		1,078
Prepaid expenses and other current assets	(934)		(1,238)
Operating lease, right-of-use-asset	(29)		341
Finance lease, right-of-use-asset	1,821		1,795
Accounts payable	1,193		(1,018)
Accrued expenses and other current liabilities	2,047		1,919
Operating lease liabilities	48		(237)
Net cash used in operating activities	(59,623)		(45,261)
Cash flows from investing activities:
Purchases of property, plant and equipment	(1,184)		(1,622)
Purchase of short-term investments	(192,546)		(225,029)
Proceeds from sales and maturities of short-term investments	196,250		164,148
Net cash provided by (used in) investing activities	2,520		(62,503)
Cash flows from financing activities:
Payments of debt issuance costs	—		(100)
Proceeds from issuance of common stock in follow-on public offering, net of underwriting fees and discounts	—		286,107
Proceeds from issuance of prefunded warrants to purchase common stock, net of underwriting fees and discounts	—		91,650
Principal payment of long-term debt	—		(10,000)
Payment of long-term debt extinguishment costs	—		(795)
Principal payment of finance lease obligation	(188)		(92)
Proceeds from exercise of stock options	6,427		4,907
Net cash provided by financing activities	6,239		371,677
Effect of exchange rate changes on cash, cash equivalents and restricted cash	621		1,062
Net increase (decrease) in cash, cash equivalents and restricted cash	(50,243)		264,975
Cash, cash equivalents and restricted cash at beginning of period	184,154		61,136
Cash, cash equivalents and restricted cash at end of period	$	133,911	$	326,111
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	—	$	636
Cash paid for income taxes, net	$	55	$	—

Supplemental disclosure of non-cash investing and financing activities:
Purchases of property and equipment included in accounts payable	491		99
Lease assets obtained in exchange for new operating lease liabilities	365		1,580

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

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REPLIMUNE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

1. Nature of the business

Replimune Group, Inc. (the “Company”) is a clinical-stage biotechnology company committed to applying our leading expertise in the field of oncolytic immunotherapy to transform the lives of cancer patients through our novel tumor-directed oncolytic immunotherapies. Our proprietary tumor-directed oncolytic immunotherapy product candidates are designed and intended to maximally activate the immune system against cancer. Replimune Group, Inc., whose predecessor was founded in 2015, is the parent company of its wholly owned, direct and indirect subsidiaries: Replimune Limited (“Replimune UK”); Replimune, Inc. (“Replimune US”); Replimune Securities Corporation; and Replimune (Ireland) Limited.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance and reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

Basis of presentation

The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. The Company has incurred recurring losses since its inception, including net losses of $29,674 and $21,783 for the three months ended December 31, 2021 and 2020, respectively, and net losses of $86,340 and $59,371 for the nine months ended December 31, 2021 and 2020, respectively. In addition, as of December 31, 2021, the Company had an accumulated deficit of $279,508. The Company expects to continue to generate operating losses for the foreseeable future. As of the issuance date of these consolidated financial statements, the Company expects that its cash and cash equivalents and short-term investments will be sufficient to fund its operating expenses and capital expenditure requirements through at least 12 months from the issuance of these consolidated financial statements.

Impact of the COVID-19 coronavirus

In December 2019, a novel strain of coronavirus, which causes the disease known as COVID-19, was reported to have surfaced in Wuhan, China. Since then, COVID-19 coronavirus has spread globally and recently identified variants of COVID-19, Delta and Omicron, which appear to be more transmissible and contagious than previous COVID-19 variants, have caused an increase in the number of COVID-19 cases globally. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic and the U.S. government imposed travel restrictions on travel between the United States, Europe and certain other countries. The impact of this pandemic has been, and may continue to be, extensive in many aspects of society, which has resulted, and may continue to result, in significant disruptions to the global economy as well as businesses and capital markets around the world.

In response to public health directives and orders and to help minimize the risk of the virus to employees, the Company has taken precautionary measures, including implementing work-from-home policies for the Company’s employees, other than those in its laboratory, those performing manufacturing functions and certain other employees as deemed appropriate from time to time. For those employees, the Company has implemented stringent safety measures designed to comply with applicable federal, state and local guidelines instituted in response to the COVID-19 pandemic. The Company continues to evolve its work-from-home policies toward return-to-office policies, as applicable under the circumstances while following local, state and federal guidelines and safety practices. The Company has taken these and other precautionary steps while maintaining business continuity in order to continue to progress its programs. While there has been no prolonged material disruption to the Company’s business to date, the impact of the virus, including work-from-home policies, may negatively impact productivity, disrupt the Company’s business, and delay its preclinical research and clinical trial activities and its development program timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on the Company’s ability to conduct its business in the ordinary course. Other impacts to the Company’s business may include temporary closures of its suppliers and disruptions or restrictions on its employees’ ability to travel. Any

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prolonged material disruption to the Company’s employees or suppliers could adversely impact the Company’s preclinical research and clinical trial activities, financial condition and results of operations, including its ability to obtain financing.

2. Summary of significant accounting policies

Principles of consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and include the accounts of the Company and its direct and indirect wholly owned subsidiaries, Replimune UK, Replimune US, Replimune Securities Corporation and Replimune (Ireland) Limited after elimination of all intercompany accounts and transactions.

Use of estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the accrual for research and development expenses and the valuation of stock-based awards. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances.

The full extent to which the COVID-19 pandemic, including evolving COVID-19 viral strains, will directly or indirectly impact our business, results of operations and financial condition, including, expenses, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19. We have made estimates of the impact of COVID-19 within our financial statements and there may be changes to those estimates in future periods.

Estimates are periodically reviewed in light of reasonable changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates or assumptions.

Unaudited interim financial information

The accompanying consolidated balance sheet as of December 31, 2021, the consolidated statements of operations, of comprehensive loss and of stockholders’ equity for the three and nine months ended December 31, 2021 and 2020 and the consolidated statements of cash flows for the nine months ended December 31, 2021 and 2020 are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited annual consolidated 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 as of December 31, 2021 and the results of its operations for the three and nine months ended December 31, 2021 and 2020 and its cash flows for the nine months ended December 31, 2021 and 2020. The financial data and other information disclosed in these consolidated notes related to the three and nine months ended December 31, 2021 and 2020 are unaudited. The results for the three and nine months ended December 31, 2021 are not necessarily indicative of results to be expected for the year ending March 31, 2022, any other interim periods or any future year or period. The financial information included herein should be read in conjunction with the financial statements and notes in the Company's Annual Report on Form 10-K for the year ended March 31, 2021, which was filed with the Securities and Exchange Commission on May 20, 2021 (the "Annual Report").

During the three and nine months ended December 31, 2021, there have been no changes to the Company’s significant accounting policies as described in the Annual Report, except as described below.

Recently adopted accounting pronouncements

In December 2019, the Financial Accounting Standards Board ("FASB") issued ASU No. 2019-12 Income Taxes (Topic 740)-Simplifying the Accounting for Income Taxes (ASU 2019-12), which is intended to simplify the accounting for income taxes. ASU 2019-12 removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of GAAP. The

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new standard was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We adopted ASU 2019-12 effective April 1, 2021. The adoption of ASU 2019-12 did not have a material impact on our consolidated financial statements.

Recently issued accounting pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments- Credit Losses (Topic 326). The standard changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which clarifies and corrects certain unintended applications of the guidance contained in each of the amended Topics. Additionally, in May 2019, the FASB issued ASU No. 2019-05, Financial Instruments - Credit Losses (Topic 326), which provides an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost. The standard is effective for fiscal years and interim periods beginning after December 15, 2022. Early adoption is permitted for all periods beginning after December 15, 2018. The adoption of ASU 2016-13 is not expected to have a material impact on the Company's consolidated financial statements.

3. Fair value of financial assets and liabilities

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


	Fair Value Measurements as of December 31, 2021 Using:
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	—	$	101,786	$	—	$	101,786
US Government Agency bonds	—		30,842		—		30,842
US Treasury bonds	—		257,055		—		257,055
	$	—	$	389,683	$	—	$	389,683


	Fair Value Measurements as of March 31, 2021 Using:
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	—	$	150,734	$	—	$	150,734
US Government Agency bonds	—		67,012		—		67,012
US Treasury bonds	—		226,772		—		226,772
	$	—	$	444,518	$	—	$	444,518

The underlying securities in the money market funds held by the Company are all government backed securities.

During the three and nine months ended December 31, 2021 and 2020, there were no transfers between levels.

Valuation of cash equivalents and short-term investments

Money market funds, U.S. Government Agency bonds and U.S. Treasury bonds were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 2 measurement within the fair value hierarchy. Cash equivalents consisted of money market funds at December 31, 2021 and March 31, 2021.

4. Short-term investments

Short-term investments by investment type consisted of the following:

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	December 31, 2021
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
US Government agency bonds	$	30,887	$	—	$	(45)	$	30,842
US Treasury bonds	257,356		—		(301)		257,055
	$	288,243	$	—	$	(346)	$	287,897


	March 31, 2021
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
US Government agency bonds	67,017		12		(17)		67,012
US Treasury bonds	226,722		55		(5)		226,772
	$	293,739	$	67	$	(22)	$	293,784

5. Property, plant and equipment, net

Property, plant and equipment, net consisted of the following:


	December 31, 2021		March 31, 2021
Office equipment	$	916	$	830
Computer equipment	1,714		1,695
Plant and laboratory equipment	7,374		6,369
Leasehold improvements	785		784
Construction in progress	869		412
	11,658		10,090
Less: Accumulated depreciation and amortization	(4,246)		(2,648)
	$	7,412	$	7,442

Depreciation and amortization expense was $548 and $1,598 for the three and nine months ended December 31, 2021, respectively, and $402 and $1,217 for the three and nine months ended December 31, 2020, respectively. Depreciation and amortization expense are recorded within research and development and general and administrative expenses in the consolidated statement of operations.

6. Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following:


	December 31, 2021		March 31, 2021
Accrued research and development costs	$	4,845	$	3,862
Accrued compensation and benefits costs	4,509		3,952
Accrued professional fees	473		407
Other	927		514
Total accrued expenses and other current liabilities	$	10,754	$	8,735

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7. Long-term debt

For the periods ended December 31, 2021 and March 31, 2021, there are no debt balances outstanding.

Hercules Loan Agreement

On August 8, 2019, (the “Closing Date”) the Company and certain of its affiliates entered into a Loan and Security Agreement (as amended, the “Hercules Loan Agreement”) with Hercules Capital, Inc. (“Hercules”) pursuant to which Hercules agreed to make available to the Company a secured term loan facility in the amount of $30,000 (the “Term Loan Facility”), subject to certain terms and conditions. The Company borrowed $10,000 under the Hercules Loan Agreement in one advance as a single tranche term loan on the Closing Date upon which the Company paid a $225 facility charge and incurred $130 in additional closing and legal fees.

On June 1, 2020, the Company entered into the First Amendment to the Hercules Loan Agreement (the “Hercules First Amendment”), to, among other things, increase the aggregate principal amount of the secured term loan facility from $30,000 to $40,000. Pursuant to the Hercules First Amendment, subject to the achievement of certain milestones, the Company could have borrowed three tranches of up to $10,000 between October 1, 2020 and December 15, 2020, July 1, 2020 and June 30, 2021, and July 1, 2021 and December 15, 2021, respectively. The Company incurred $100 in additional closing and legal fees in connection with Hercules First Amendment which were capitalized and were amortized as part of the effective yield.

On December 15, 2020, the Company entered into a payoff letter with respect to the Hercules Loan Agreement (the "Payoff Letter"), which resulted in a loss on extinguishment of debt of $913 including both cash and non-cash expense. Pursuant to the Payoff Letter, the Company paid a total of $10,839 to Hercules, representing $10,000 in outstanding principal, $495 end of term charge, $300 early termination fee and $44 in accrued interest. In connection with the execution of the Payoff Letter and the repayment of the Company’s outstanding obligations under the Hercules Loan Agreement, the Hercules Loan Agreement and the related loan documents were terminated.

The Term Loan Facility was secured by substantially all of the Company’s assets, but excluding its intellectual property, and subject to certain exceptions and exclusions. All liens on the Company’s assets held by Hercules were released in connection with the execution of the Payoff Letter.

In connection with entering into the Hercules Loan Agreement and the Hercules First Amendment, the Company paid Hercules $355 and $100 of upfront fees, respectively. Such upfront fees included closing costs and legal fees associated with entering into the respective agreements, and were recorded as a debt discount.

The Company did not recognize any aggregate interest expense under the Hercules Loan Agreement during the three and nine months ended December 31, 2021. During the three and nine months ended December 31, 2020, the Company recognized aggregate interest expense under the Hercules Loan Agreement of $247 and $817, respectively, which included non-cash interest expense of $55 and $181, respectively. Non-cash interest expense related to the amortization of the debt discount was $0 during the three and nine months ended December 31, 2021 and $26 and $82, respectively, during the three and nine months ended December 31, 2020. The accretion of the final payment was $0 for the three and nine months ended December 31, 2021 and $29 and $99 for the three and nine months ended December 31, 2020, respectively.

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8 Stockholders’ equity

Common stock

As of December 31, 2021 and March 31, 2021, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue up to 150,000,000 shares of common stock, par value $0.001 per share.

As of December 31, 2021 and March 31, 2021, the Company had reserved 16,524,815 and 14,572,115 shares of common stock for the exercise of outstanding stock options and the vesting of restricted share units, the number of shares remaining available for grant under the Company’s 2018 Omnibus Incentive Compensation Plan and the Company’s Employee Stock Purchase Plan (see Note 9) and the exercise of the outstanding warrants to purchase shares of common stock, respectively.

Undesignated preferred stock

As of December 31, 2021, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue up to 10,000,000 shares of undesignated preferred stock, par value $0.001 per share. There were no undesignated preferred shares issued or outstanding as of December 31, 2021.

ATM program

In August 2019, the Company entered into a Sales Agreement (as amended, the “2019 Sales Agreement”) with SVB Leerink LLC (the “Agent”), pursuant to which the Company could sell, from time to time, at its option, up to an aggregate amount of $75,000 of shares of the Company’s common stock, $0.001 par value per share, through the Agent, as the Company’s sales agent. In June 2020, the 2019 Sales Agreement was amended to reduce the aggregate offering amount under the 2019 Sales Agreement from $75,000 of shares to $30,000 of shares.

On August 11, 2020, the 2019 Sales Agreement was terminated by the execution by the Company and the Agent of a new sales agreement, which was subsequently amended on October 21, 2020 (as amended, the “2020 Sales Agreement”). Under the 2020 Sales Agreement the Company may sell, from time to time, at its option, up to an aggregate of $62,500 of shares of the Company’s common stock, $0.001 par value per share (the “Shares”), through the Agent, as the Company’s sales agent.

Any Shares to be offered and sold under the 2020 Sales Agreement will be issued and sold (i) by methods deemed to be an “at the market offering” (“ATM”) as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended or in negotiated transactions, if authorized by the Company, and (ii) pursuant to, and only upon the effectiveness of, a registration statement on Form S-3 filed by the Company with the Securities and Exchange Commission on August 11, 2020 for an offering of up to $350,000 of various securities, including shares of the Company’s common stock, preferred stock, debt securities, warrants and/or units for sale to the public in one or more public offerings.

Subject to the terms of the 2020 Sales Agreement, the Agent will use reasonable efforts to sell the Shares from time to time, based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company cannot provide any assurances that it will issue any Shares pursuant to the 2020 Sales Agreement. The Company will pay the Agent a commission of up to 3.0% of the gross proceeds from the sale of the Shares, if any. The Company has also agreed to provide the Agent with customary indemnification rights.

The Company did not issue or sell any shares under the 2020 Sales Agreement during the three and nine months ended December 31, 2021 or during the year ended March 31, 2021.

Equity offerings

In November 2019, pursuant to an underwriting agreement (the “November 2019 Underwriting Agreement”) with J.P. Morgan Securities LLC and SVB Leerink LLC, as representatives of the several underwriters named therein (the “November 2019 Underwriters”), the Company issued and sold to the November 2019 Underwriters (a) 4,516,561 shares of the Company’s common stock (the “November 2019 Shares”), inclusive of the November 2019 Underwriters partially exercised 30-day option to purchase 838,530 shares of the Company’s common stock, and (b) pre-funded warrants to purchase 2,200,000 shares of the Company’s common stock (the “November 2019 Pre-Funded Warrants”). The November 2019 shares were sold to the November 2019 Underwriters (the “November 2019 Offering”) at the public offering price of $13.61 per share and the November 2019 Pre-Funded Warrants were sold at a public offering price of $13.6099 per November 2019 Pre-Funded

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Warrant, which represented the per share public offering price for the November 2019 Shares less a $0.0001 per share exercise price for each such November 2019 Pre-Funded Warrant. The Company received aggregate net proceeds of approximately $85,598 in the November 2019 Offering, after deducting underwriting discounts, commissions and other offering expenses payable by the Company of approximately $5,814.

Funds affiliated with Redmile Group, LLC purchased all of the November 2019 Pre-Funded Warrants. The November 2019 Pre-Funded Warrants are exercisable at any time after the date of issuance. A holder of November 2019 Pre-Funded Warrants may not exercise the November 2019 Pre-Funded Warrant if the holder, together with its affiliates, would beneficially own more than 9.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to such exercise.

In June 2020, pursuant to an underwriting agreement (the “June 2020 Underwriting Agreement”) with J.P. Morgan Securities LLC and SVB Leerink LLC, as representatives of the several underwriters named therein (the "June 2020 Underwriters”), the Company sold to the June 2020 Underwriters (a) 3,478,261 shares of the Company’s common stock (the “June 2020 Shares”), inclusive of the June 2020 Underwriters fully exercised 30-day option to purchase 652,173 shares of the Company's common stock, and (b) pre-funded warrants to purchase 1,521,738 shares of the Company’s common stock (the “June 2020 Pre-Funded Warrants”). The June 2020 Shares were sold to the June 2020 Underwriters at the public offering price of $23.00 per share and the June 2020 Pre-Funded Warrants were sold at a public offering price of $22.9999 per June 2020 Pre-Funded Warrant, which represented the per share public offering price for the June 2020 Shares less a $0.0001 per share exercise price for each such June 2020 Pre-Funded Warrant. The Company received aggregate net proceeds of approximately $107,782 after deducting underwriting discounts, commissions and other offering expenses payable by the Company of approximately $7,217.

Funds affiliated with Redmile Group, LLC and funds affiliated with a second institutional investor purchased all of the June 2020 Pre-Funded Warrants. The June 2020 Pre-Funded Warrants are exercisable at any time after the date of issuance. A holder of June 2020 Pre-Funded Warrants may not exercise the June 2020 Pre-Funded Warrants if the holder, together with its affiliates, would beneficially own more than 9.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to such exercise. A holder of June 2020 Pre-Funded Warrants may increase or decrease this percentage up to 19.99% by providing at least 61 days’ prior notice to the Company.

In October 2020, pursuant to an underwriting agreement with J.P. Morgan Securities LLC and SVB Leerink LLC, as representatives of the several underwriters named therein, the Company issued and sold to such underwriters (a) 5,625,000 shares of the Company’s common stock, inclusive of the underwriters fully exercised 30-day option to purchase 937,500 shares of the Company’s common stock, and (b) pre-funded warrants to purchase 1,562,500 shares of the Company’s common stock (the “October 2020 Pre-Funded Warrants”). Such shares of the Company’s common stock were sold to such underwriters at the public offering price of $40.00 per share and the October 2020 Pre-Funded Warrants were sold at a public offering price of $39.9999 per October 2020 Pre-Funded Warrant, which represented the per share public offering price for the Company’s common stock less a $0.0001 per share exercise price for each October 2020 Pre-Funded Warrant. The Company received aggregate net proceeds of approximately $269,975 after deducting underwriting discounts, commissions and other offering expenses payable by the Company of approximately $17,525.

Funds affiliated with Redmile Group, LLC and funds affiliated with a second institutional investor purchased all of the October 2020 Pre-Funded Warrants. The October 2020 Pre-Funded Warrants are exercisable at any time after the date of issuance. A holder of October 2020 Pre-Funded Warrants may not exercise the October 2020 Pre-Funded Warrants if the holder, together with its affiliates, would beneficially own more than 9.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to such exercise. A holder of October 2020 Pre-Funded Warrants may increase or decrease this percentage up to 19.99% by providing at least 61 days’ prior notice to the Company.

Other than as set forth in Note 9 and Note 10 to these consolidated financial statements, the 5,284,238 Pre-Funded Warrants are not included in the number of issued and outstanding shares of the Company’s common stock set forth herein. As of December 31, 2021, none of the November 2019 Pre-Funded Warrants, the June 2020 Pre-Funded Warrants, or the October 2020 Pre-Funded Warrants had been exercised.

9 Stock-based compensation

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Stock-based compensation expense

Stock-based compensation expense was classified in the consolidated statements of operations as follows:


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Research and development	$	1,829	$	1,454	$	6,514	$	3,750
General and administrative	4,089		1,595		11,967		4,568
	$	5,918	$	3,049	$	18,481	$	8,318

The following table summarizes stock-based compensation expense by award type for the three months ended December 31, 2021 and 2020:


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Stock options	$	4,517	$	3,049	$	14,785	$	8,318
Restricted stock units	1,401		—		3,696		—
	$	5,918	$	3,049	$	18,481	$	8,318

2015 Enterprise Management Incentive Share Option Plan

The 2015 Enterprise Management Incentive Share Option Plan of Replimune UK (the “2015 Plan”) provided for Replimune UK to grant incentive stock options, non-statutory stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. Incentive stock options were granted under the 2015 Plan only to the Company’s employees, including officers and directors who were also employees. Non-statutory stock options were granted under the 2015 Plan to employees, members of the board of directors, outside advisors and consultants of the Company.

2017 Equity Compensation Plan

In July 2017, in conjunction with reorganization by Replimune Limited, pursuant to which each shareholder thereof exchanged their outstanding shares in Replimune Limited for shares in Replimune Group, Inc., on a one-for-one basis (the "Reorganization"), the 2015 Plan was terminated, and all awards were cancelled with replacement awards issued under the 2017 Equity Compensation Plan (the “2017 Plan”). Subsequent to the Reorganization, no additional grants have been or will be made under the 2015 Plan and any outstanding awards under the 2015 Plan have continued, and will continue with their original terms. The Company concluded that the cancellation of the 2015 Plan and issuance of replacement awards under the 2017 Plan was a modification with no change in the material rights and preferences and therefore no recorded change in the fair value of each respective award.

The Company’s 2017 Plan provides for the Company to grant incentive stock options or non-statutory stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. Incentive stock options were granted under the 2017 Plan only to the Company’s employees, including officers and directors who were also employees. Restricted stock awards and non-statutory stock options were granted under the 2017 Plan to employees, officers, members of the board of directors, advisors and consultants of the Company. The maximum number of common shares that may be issued under the 2017 Plan was 2,659,885, of which none remained available for future grants as of December 31, 2021. Shares with respect to which awards have expired, terminated, surrendered or cancelled under the 2017 Plan without having been fully exercised will be available for future awards under the 2018 Plan referenced below. In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for the grant of awards.

2018 Omnibus Incentive Compensation Plan

On July 9, 2018, the Company’s board of directors adopted, and the Company’s stockholders approved the 2018 Omnibus Incentive Compensation Plan (the “2018 Plan”), which became effective immediately prior to the effectiveness of the registration statement for the Company’s initial public offering. The 2018 Plan provides for the issuance of incentive stock options, non-qualified stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. The

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number of shares of common stock initially reserved for issuance under the 2018 Plan is 3,617,968 shares. If any options or stock appreciation rights, including outstanding options and stock appreciation rights granted under the 2017 Plan (up to 2,520,247 shares), terminate, expire, or are canceled, forfeited, exchanged, or surrendered without having been exercised, or if any stock awards, stock units or other stock-based awards, including outstanding awards granted under the 2017 Plan, are forfeited, terminated, or otherwise not paid in full in shares of common stock, the shares of the Company’s common stock subject to such grants will be available for purposes of our 2018 Plan. The number of shares reserved for issuance under the 2018 Plan will increase automatically on the first day of each April equal to 4.0% of the total number of shares of Company stock outstanding on the last trading day in the immediately preceding fiscal year, or such lesser amount as determined by the Board. On April 1, 2021, the number of shares reserved for issuance under the 2018 Plan automatically increased by 2,074,028 shares pursuant to the terms of the 2018 Plan and based on total number of shares of Company stock outstanding on March 31, 2021, including the November 2019 Pre-Funded Warrants, the June 2020 Pre-Funded Warrants and the October 2020 Pre-Funded Warrants. On April 1, 2020, the number of shares reserved for issuance under the 2018 Plan automatically increased by 1,466,749 shares pursuant to the terms of the 2018 Plan. As of December 31, 2021, 1,715,467 shares remained available for future grants under the 2018 Plan.

The 2015 Plan, the 2017 Plan and the 2018 Plan are administered by the board of directors or, at the discretion of the board of directors, by a committee of the board of directors. However, the board of directors shall administer and approve all grants made to non-employee directors. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, except that the exercise price per share of incentive stock options may not be less than 100% of the fair market value of the common stock on the date of grant (or 110% of fair value in the case of an award granted to employees who hold more than 10% of the total combined voting power of all classes of stock at the time of grant) and the term of stock options may not be greater than five years for an incentive stock option granted to a 10% stockholder and greater than ten years for all other options granted. Stock options awarded under both plans expire ten years after the grant date, unless the board of directors sets a shorter term. Vesting periods for the plans are determined at the discretion of the board of directors. Incentive stock options granted to employees and non-statutory options granted to employees, officers, members of the board of directors, advisors, and consultants of the Company typically vest over four years. In 2021 the board of directors initiated the award of restricted stock units ("RSUs"), under the 2018 Plan in addition to stock option awards available as part of the Company's equity incentive for employees, officers, advisors and consultants of the Company. The RSUs typically vest over four approximately equal annual installments with the first such installment occurring on a designated vesting date that is approximately on the one year anniversary of the date of grant and the subsequent installments occurring on the subsequent three annual anniversaries of the designated vesting date.

Employee Stock Purchase Plan

On July 9, 2018, the Company’s board of directors adopted and the Company’s stockholders approved the Employee Stock Purchase Plan (the “ESPP”), which became effective immediately prior to the effectiveness of the registration statement for the Company’s IPO. The total shares of common stock initially reserved for issuance under the ESPP is 348,612 shares. In addition, as of the first trading day of each fiscal year during the term of the ESPP (excluding any extensions), an additional number of shares of the Company’s common stock equal to 1% of the total number of shares outstanding on the last trading day in the immediately preceding fiscal year, including the November 2019 Pre-Funded Warrants, the June 2020 Pre-Funded Warrants, and the October 2020 Pre-Funded Warrants, or 697,224 shares, whichever is less (or such lesser amount as determined by the Company’s board of directors) will be added to the number of shares authorized under the ESPP. In accordance with the terms of the ESPP, on April 1, 2021 and 2020, the number of shares reserved for issuance under the ESPP automatically increased by 518,507 and 366,687 shares respectively, for a total of 1,550,375 shares reserved for the ESPP. If the total number of shares of common stock to be purchased pursuant to outstanding purchase rights on any particular date exceed the number of shares then available for issuance under the ESPP, then the plan administrator will allocate the available shares pro-rata and refund any excess payroll deductions or other contributions to participants. The Company’s ESPP is not currently active.

Out-of-Plan Inducement Grant

In May 2021, the Company granted an equity award to a newly hired executive as a material inducement to enter into employment with the Company. The grant constitutes an "employment inducement grant" in accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules and was issued outside of the 2018 Plan and each of the other stock incentive plans described above. The inducement grant included a nonqualified stock option to purchase up to 125,000 shares of the Company's common stock, as well as a restricted stock unit grant representing 88,333 shares of the Company's common stock. These stock option and restricted stock unit inducement grants have terms and conditions consistent with those set forth under the 2018 Plan and vest under the same respective vesting schedules as stock option and restricted stock unit awards granted under the 2018 Plan. The inducement grant is included in the stock option and RSU award tables below.

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Stock option valuation

The fair value of stock option grants is estimated using the Black-Scholes option-pricing model. As the Company has limited company-specific historical and implied volatility information, the expected stock volatility is based on a combination of Replimune volatility and the historical volatility of a set of publicly traded peer companies. For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

The following table presents, on a weighted-average basis, the assumptions that the Company used to determine the grant-date fair value of stock options granted to employees and directors:


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Risk-free interest rate	1.27	%	0.31	%	1.12	%	1.01	%
Expected term (in years)	6.0		6.1		6.0		6.4
Expected volatility	78.3	%	76.3	%	80.0	%	74.8	%
Expected dividend yield	0	%	0	%	0	%	0	%

Stock options

The following table summarizes the Company’s stock option activity:


	Number of Shares	Weighted Average Exercise Price		Weighted Average Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding as of March 31, 2021	6,460,184	$	13.26	7.95	$	116,193
Granted	1,476,507	$	32.09
Exercised	(639,835)	$	10.05		$	14,552
Cancelled	(601,469)	$	26.24
Outstanding as of December 31, 2021	6,695,387	$	16.55	7.44	$	81,838
Options exercisable as of March 31, 2021	2,698,708	$	8.38	6.79	$	59,717
Options exercisable as of December 31, 2021	3,492,076	$	9.96	6.47	$	60,493

As of December 31, 2021, there was $42.8 million of unrecognized compensation cost related to unvested common stock options, which is expected to be recognized over a weighted average period of 2.5 years.

The weighted average grant-date fair value of stock options granted during the nine months ended December 31, 2021 and 2020 was $21.95 and $10.06, respectively. The aggregate intrinsic value of stock options exercised during the nine months ended December 31, 2021 was $14.6 million.

Restricted stock units

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A summary of the changes in the Company's RSUs during the nine months ended December 31, 2021 is as follows:


	Number of Restricted Shares	Weighted Average Grant Date Fair Value
Outstanding as of March 31, 2021	15,975	34.15
Granted	803,151	32.35
Vested	—	—
Cancelled	(37,122)	32.09
Outstanding as of December 31, 2021	782,004	32.40

As of December 31, 2021, there was $21.6 million of unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized over a weighted average period of 3.4 years. As of December 31, 2020, there was no unrecognized compensation cost related to unvested restricted stock units.

10 Net loss per share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows:


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Numerator:
Net loss attributable to common stockholders	$	(29,674)	$	(21,783)	$	(86,340)	$	(59,371)
Denominator:
Weighted average common shares outstanding, basic and diluted	52,319,877		49,382,213		52,104,548		44,436,680
Net loss per share attributable to common stockholders, basic and diluted	$	(0.57)	$	(0.44)	$	(1.66)	$	(1.34)

The November 2019 Pre-Funded Warrants, the June 2020 Pre-Funded Warrants and the October 2020 Pre-Funded Warrants are included as outstanding common stock in the calculation of basic and diluted net loss per share attributable to common stockholders.

The Company’s potentially dilutive securities, which include stock options and warrants to purchase shares of common stock that resulted from the conversion of warrants to purchase shares of series seed preferred stock existing before the Company's IPO, 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 potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:


	Three and Nine Months Ended December 31,
	2021	2020
Options to purchase common stock	6,695,387	6,326,577
Warrants to purchase common stock	497,344	497,344
	7,192,731	6,823,921

11 Significant agreements

Agreement with Bristol-Myers Squibb Company

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In February 2018, the Company entered into an agreement with Bristol-Myers Squibb Company (“BMS”). Pursuant to the agreement, BMS will provide to the Company, at no cost, a compound for use in the Company’s ongoing clinical trial of RP1. Under the agreement, the Company will sponsor, fund and conduct the clinical trial in accordance with an agreed-upon protocol. BMS granted the Company a non-exclusive, non-transferrable, royalty-free license (with a right to sublicense) under its intellectual property to its compound in the clinical trial and agreed to supply its compound, at no cost to the Company, for use in the clinical trial. In January 2020, this agreement was expanded to cover an additional cohort of 125 patients with anti-PD-1 failed melanoma.

Unless earlier terminated, the agreement will remain in effect until (i) the completion of the clinical trial, (ii) all related clinical trial data have been delivered to both parties and (iii) the completion of any statistical analyses and bioanalyses contemplated by the clinical trial protocol or any analysis otherwise agreed upon by the parties. The agreement may be terminated by either party (x) in the event of an uncured material breach by the other party, (y) in the event the other party is insolvent or in bankruptcy proceedings or (z) for safety reasons. Upon termination, the licenses granted to the Company to use BMS’s compound in the clinical trial will terminate.

In April 2019, the Company entered into a separate agreement with BMS on terms similar to the terms set forth in the agreement described above, pursuant to which BMS will provide to the Company, at no cost, nivolumab for use in the Company’s Phase 1 clinical trial of RP2 in combination with nivolumab.

Agreement with Regeneron Pharmaceuticals, Inc.

In May 2018, the Company entered into an agreement with Regeneron Pharmaceuticals, Inc. (“Regeneron”). The Company and Regeneron are each independently developing compounds for the treatment of certain tumor types. Pursuant to the agreement, the Company and Regeneron will undertake one or more clinical trials using a combination of the compounds being developed by each entity. Under the agreement, each study will be conducted under terms set out in a separately agreed upon study plan that will identify the name of the sponsor and which party will manage the particular clinical trial, and include the protocol, the budget and a schedule of clinical obligations. In June 2018, under the terms of the agreement between the Company and Regeneron, the parties agreed to the first study plan. The Company and Regeneron have agreed to the protocol, budget, sample testing and clinical obligations schedule under the study plan. Development and supply costs associated with the study plan will be split equally between the Company and Regeneron.

Pursuant to the terms of the agreement, each party granted the other party a non-exclusive license under its respective intellectual property and agreed to contribute the necessary resources needed to fulfill its respective obligations, in each case, under the terms of the agreed-upon or to-be agreed upon study plans. Development costs of a particular clinical trial will be split equally between the Company and Regeneron in accordance with the agreed upon study plan.

The agreement may be terminated by either party if (i) there is no active study plan for which a final study report has not been completed and the parties have not entered into a study plan for an additional clinical trial within a period of time after the delivery of the most recent final study report or (ii) in the event of a material breach.

The agreement with Regeneron is accounted for under ASC 808, Collaborative Arrangements (“ASC 808”), as both parties are active participants and each party pays its own compound costs and share equally in development costs. The Company will account for costs incurred as part of the study, including costs to supply compounds for use in the study, as research and development expenses within the consolidated statement of operations. The Company will recognize any amounts received from Regeneron in connection with this agreement as an offset to research and development expense within the consolidated statement of operations.

Under the terms of the agreement, on a quarterly basis the Company and Regeneron true-up costs of the study and make corresponding payments to the party that incurred the majority of the costs. During the three and nine months ended December 31, 2021 and 2020, the Company did not make any payments to Regeneron under the terms of the agreement. As of December 31, 2021 and March 31, 2021, the Company recorded $1.9 million and $1.3 million of receivables from Regeneron in connection with this agreement in prepaid expenses and other current assets in the consolidated balance sheet, respectively.

12 Commitments and contingencies

Leases

The Company leases real estate assets and equipment, and determination if an arrangement is a lease occurs at inception. For leases with terms greater than 12 months, the Company records a related right-of-use (“ROU”) asset and lease

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liability at the present value of lease payments over the term. Many leases include fixed rental escalation clauses, renewal options and/or termination options that are factored into the determination of lease payments when appropriate. The Company’s leases do not provide an implicit rate, and thus the Company estimated the incremental borrowing rate in calculating the present value of the lease payments. The Company has elected not to record a ROU asset and lease obligation for short-term leases (with terms less than 12 months) or separate non-lease components from associated lease components for its real estate lease assets. As a result, all contract consideration is allocated to the single lease component.

In October 2021, the Company entered into an agreement to lease approximately 2,951 square feet of research and development, office and laboratory space in Abingdon, Oxfordshire, United Kingdom. Pursuant to the lease agreement, the lease term commenced on November 1, 2021 with rental payments scheduled to commence on February 1, 2022. The lease term is for five years with no option for renewal. Annual lease payments are approximately $0.1 million. The Company recorded a right-of-use asset and a lease liability of approximately $0.4 million upon commencement of the lease and the lease is classified as an operating lease.

The Company’s leases have remaining lease terms of eight years to eighteen years. Some of our leases include one or more options to renew with renewal terms that can extend the lease for additional years, or options to terminate the leases, both at the Company’s discretion. The Company’s lease terms include options to extend or terminate leases when the Company concludes it is reasonably certain that it would exercise those options. Lease expense for minimum lease payments is recognized on a straight-line basis based on the fixed components of a lease arrangement. The Company amortizes this expense over the term of the lease beginning with the date of initial possession, which is the date the Company can enter the leased space and begin to make improvements in preparation for its intended use. Variable lease components represent amounts that are not fixed in nature and are not tied to an index or rate, and are recognized as incurred.

The table below presents the lease-related assets and liabilities recorded on the consolidated balance sheet as of December 31, 2021:


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Lease cost
Finance lease costs:
Amortization of right-to-use asset	$	607	$	607	$	1,821	$	1,821
Interest on lease liabilities	555		560		1,670		1,683
Operating lease costs	249		239		736		705
Total lease cost	$	1,411	$	1,406	$	4,227	$	4,209

The Company incurred finance lease amortization costs of $607 and $1,821 for the three and nine months ended December 31, 2021, respectively, of which $518 and $1,553 are recognized in research and development expenses. For the three and nine months ended December 31, 2020, the Company incurred finance lease amortization costs of $607 and $1,821, respectively, of which $518