Absci Corporation

11/12/2025 | Press release | Distributed by Public on 11/12/2025 15:14

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
We are a clinical-stage biopharmaceutical company advancing potential breakthrough antibody therapeutics with generative AI. Our Integrated Drug Creation platform comprises, in part, cutting edge generative AI models aimed at designing better antibody therapeutics, including against hard-to-drug targets.
Antibody therapeutics represent a growing market and significant medical opportunity, yet the biopharmaceutical industry faces challenges in bringing these potentially life-changing medicines to patients. Leveraging our synthetic biology roots, we expect our Integrated Drug Creation platform to improve upon traditional biologic drug discovery by using AI to simultaneously optimize multiple drug characteristics that may be important to development and therapeutic benefit. Through these efforts, we aim to shorten time to clinic, while increasing the probability of success. Our approach expands the possibilities in biopharmaceuticals - shifting from a paradigm of drug discovery to drug creation - with the goal of bringing best-in-class and first-in-class antibody therapeutics to the patients who need them.
Our business model is focused on monetizing our Integrated Drug Creation platform by generating internally developed programs that are later partnered or out-licensed following certain value inflection points (anywhere from preclinical through clinical development) or by partnering with third parties who wish to leverage our Integrated Drug Creation platform for early discovery efforts in a variety of deal structures. Our Integrated Drug Creation platform enables our core competencies in three broad areas: target selection and discovery; AI-guided antibody drug creation, such as de novo antibody design; and AI-guided lead optimization. Recently, in collaboration with the California Institute of Technology, we demonstrated the successful de novo design of an antibody that targets a previously difficult-to-drug epitope in the HIV "caldera" region.
Internally developed programs: We believe that by developing our own pipeline, we will create optionality for enhanced monetization and validation of our Integrated Drug Creation platform. Moreover, our pipeline reflects internally developed programs which highlight our differentiated capabilities, including in de novoantibody design, multi-parametric lead optimization, and reverse immunology, with an initial focus on cytokine biology. With the ability to selectively choose both novel and fast-follower targets, in addition to develop potentially best-in-class attributes, we aim to take our internally developed programs to certain value inflection points before considering partnering or out-licensing opportunities.
As of November 12, 2025, we have identified five wholly owned, internally developed programs focusing on cytokine biology, as well as several undisclosed internal pipeline programs currently in early discovery phases.
ABS-101
Our first development candidate, ABS-101 is in development as a potential treatment for Inflammatory Bowel Disease (IBD). In May 2025, we initiated the Phase 1 clinical trial in healthy volunteers. In November 2025, we reported interim results of the ongoing Phase 1 clinical trial in healthy volunteers that demonstrated extended half-life as compared to first-generation anti-TL1A competitor programs, but not versus next-generation programs. There was no apparent impact of ADA on PK and the overall safety profile was favorable with no serious adverse events reported to date. The phase 1 trial is on track to complete in the first quarter of 2026. However, we will not pursue further internal clinical development of ABS-101 following the completion of the ongoing phase 1 trial, and will seek a partner for this asset, including exploring the possibility of first-in-class indications outside of IBD with such potential partners.
ABS-201
Our second development candidate, ABS-201 is in development as a potential treatment for androgenic alopecia (AGA). Preclinical development of ABS-201 is ongoing and we submitted a regulatory filing for a Phase 1 clinical trial for ABS-201 to Human Research Ethics Committee (HREC) in Australia, which was approved in October 2025. We anticipate dosing the first participant in the Phase 1 clinical trial in December 2025, with an interim data read-out in the second half of 2026. In addition, we anticipate initiating a Phase 2 clinical trial for ABS-201 in patients with endometriosis in late 2026, with a potential interim data readout in the second half of 2027.
Partnered programs:
•Drug creation programs:We enter into collaborations with third parties who are seeking to leverage our platform to solve challenging problems. We work closely with our partners on single and multi-target programs to develop product candidates against targets they have selected. We aim to expand and diversify our portfolio of partnered programs through these collaborations, each of which may include up-front fees and research fees, as well as potential clinical and/or commercial milestones and royalties.
•Co-development programs:We enter into co-development partnerships with third parties who may offer perceived synergies with our Integrated Drug Creation platform. Our co-development programs are based on a clear alignment to take these programs through to certain value inflection points before considering partnering or out-licensing opportunities. Our co-development partnerships may be directed to either single and multi-target programs and may include mutual cost-sharing and/or technology contributions. We aim to further expand and diversify our portfolio of partnered programs through these co-development partnerships. By sharing both the risks and rewards of these programs, we ensure both parties are motivated for success.
To date, we have had over 25 partnered programs and anticipate entering into additional partnerships.
Our evolving business model is underpinned by our Integrated Drug Creation platform which supports a strategic diversification of our program portfolio through internally developed programs, partnered drug creation programs and co-development programs. This strategic diversification allows us the potential to balance our program portfolio between internally developed programs for which we have more control and may provide more significant economic returns, and partnered programs which broaden our reach into therapeutic areas where our partner has established capabilities and expertise. Thus, the cornerstone of this business model evolution lies in the diversification of risk and potential return on investment. Our business model not only secures a focused set of therapeutic areas, but also gives us greater optionality, enhancing our ability to pivot and adapt as the programs progress. We believe we will grow and diversify our portfolio of programs through our model, ultimately driving innovation and delivering value for all stakeholders.
Revenue was $0.4 million and $2.2 million for the three and nine months ended September 30, 2025, respectively, compared to $1.7 million and $3.9 million for the three and nine months ended September 30, 2024 due to the number of ongoing partnered programs and respective timing of project-based milestones achieved. We incurred a net loss of $28.7 million and $85.6 million for the three and nine months ended September 30, 2025, compared to a net loss of $27.4 million and $74.1 million for the three and nine months ended September 30, 2024. Research and development expenses increased by $10.6 million, or 23%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.
As of September 30, 2025, we had an accumulated deficit of $595.2 million and cash and cash equivalents and marketable securities totaling $152.5 million.
We expect to continue to incur significant expenses in connection with our ongoing activities, including as we:
•develop our internally developed programs across diverse indications, including the advancement of these product candidates through preclinical and clinical development;
•continue to engage in discovery, research and development efforts and scale our activities to meet potential demand from both new and existing partners;
•execute an effective business development strategy to drive adoption of our Integrated Drug Creation platform by new and existing partners and, as relevant, to identify partners for internally developed programs;
•develop, acquire, in-license or otherwise obtain technologies that enable us to expand our Integrated Drug Creation platform capabilities; and
•attract, retain and motivate highly qualified personnel.
Our corporate headquarters and primary research and development facilities are located in Vancouver, Washington in a 77,974 square foot facility that includes general administrative office space and laboratory space. Our AI Research Lab is located in New York, New York and our Innovation Center is located in Zug, Switzerland. Additionally, we have a research and development presence in Belgrade, Serbia.
Key factors affecting our results of operations and future performance
We believe that our future financial performance will be primarily driven by multiple factors as described below, each of which presents growth opportunities for our business. These factors also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations. Our ability to successfully address these challenges is subject to various risks and uncertainties, including those described in the "Risk Factors" sections of this Quarterly Report on Form 10-Q and those described in the "Risk Factors" sections of our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on March 18, 2025.
•Build out our internally developed programs:We will continue to selectively develop our own programs and intend to advance them to certain value inflection points anywhere from preclinical validation through clinical development, prior to out-licensing for further clinical advancement by a partner or other third party, or potentially through commercialization. We may also utilize significant resources in the design and execution of clinical trials to support our internally developed programs.
•Establish and maintain partnerships:Our potential to grow revenue and long-term earnings will require us to successfully identify, establish and maintain programs with new and existing partners.
•Successfully complete our drug creation activities with partners and enter into licensing agreements: Our business model relies upon entering into licensing agreements with our partners to advance the product candidates we generate through preclinical validation and clinical development to commercialization. Both our ability to successfully complete drug creation activities to meet the needs of a partner, and the partner's prioritization of the relevant program, impact the likelihood and timing of any election by a partner to enter into a follow-on licensing agreement. There is no assurance that a partner will elect to license our intellectual property for the development of any product candidates.
•Developing and commercializing product candidates generated with our Integrated Drug Creation platform:Our business model is dependent on the eventual progression of product candidates discovered or initially developed utilizing our Integrated Drug Creation platform into clinical trials by us or our partners and through commercialization by us, our partners, or other third parties. Given the nature of our relationships with our partners, we often do not fully control the progression, clinical development, regulatory strategy, public disclosure or eventual commercialization, if approved, of our partnered programs. As a result, our future success and our potential eligibility to receive milestone payments and royalties are significantly dependent on our partners' efforts over which we have no control. The timing and scope of any approval that may be
required by the U.S. Food and Drug Administration (FDA), or any other regulatory body, for drugs that are developed based on molecules discovered and/or manufactured using our Integrated Drug Creation platform can significantly impact our results of operations and future performance.
•Continued significant investments in our research and development of new technologies and expansion of our Integrated Drug Creation platform:We are seeking to further refine and expand the scope of our capabilities, which may or may not be successful. This includes, but is not limited to, novel target identification, de novodiscovery, and application of artificial intelligence across our Integrated Drug Creation platform. We expect to incur significant expenses to advance our discovery, research and development efforts or to invest in and/or acquire complementary technologies, but these efforts may not be successful.
•Drive commercial adoption of our Integrated Drug Creation platform capabilities: Driving the adoption of our Integrated Drug Creation platform across existing and new markets will require significant investment. We plan to further invest in research and development to support the expansion of our capabilities, including to discover and validate new product candidates for existing partners or help expand our capabilities to support new markets.
AMD strategic collaboration
In January 2025, we entered into a strategic collaboration with Advanced Micro Devices, Inc. (AMD) with a goal to optimize the performance of AMD InstinctTMaccelerators and ROCmTM software to support our AI drug creation, including our de novo antibody design models. Additionally, AMD invested $20.0 million through the purchase of 5,714,285 shares of our common stock a private investment in public equity (PIPE) at a premium over the market price.
Components of Results of Operations
Revenue
Our revenue currently consists primarily of fees earned from our partners in conjunction with drug creation agreements utilizing our Integrated Drug Creation platform, which are presented as partner program revenue in our results of operations. These fees are earned and paid at various points throughout the terms of these agreements including upfront, upon the achievement of specified project-based milestones, and throughout the program.
We expect that our revenue will fluctuate from period to period due to, for example, the timing of executing additional partnerships, the contractual structure of future partnerships, the measurement of progress towards completion of each program, the uncertainty of the timing of milestone achievements and dependence on our partners' program-related decisions. We expect revenue to increase over time as we grant licenses to our partners for the clinical and commercial use of product candidates, and as the partnered product candidates advance into and through clinical development and commercialization.
Operating Expenses
Research and development
Research and development expenses include personnel-related costs (comprised of salaries, benefits and share-based compensation), contract research services, contract manufacturing, consulting fees, laboratory supplies and facilities, and certain technology costs. These expenses are exclusive of depreciation and amortization. Research and development activities consist of continued development of our Integrated Drug Creation platform, internally developed programs, and partnered programs. We derive improvements to our Integrated Drug Creation platform from each type of activity. Research and development efforts apply to our Integrated Drug Creation platform broadly, as well as across programs.
We expect research and development expenses to increase in absolute dollars over the long term as we develop and advance our internally developed programs, enter into additional partnerships, and continue to invest in technology enhancements.
Selling, general, and administrative
Selling, general, and administrative expenses include personnel-related costs (comprised of salaries, benefits and share-based compensation) for executive, business development, legal, finance, human resources,
information technology and other administrative functions. Business development expenses include costs associated with attending conferences and other promotion efforts for our Integrated Drug Creation platform. General and administrative expenses include certain professional service expenses, such as external legal, accounting, and other consultants, as well as certain technology costs and allocated facility costs. These expenses are exclusive of depreciation and amortization.
As we grow our operations, we expect personnel-related costs to increase in absolute dollars and we expect to continue to actively manage other general and administrative expenses.
We have a comprehensive intellectual property portfolio directed towards the many aspects of our Integrated Drug Creation platform, including those related to our internally developed programs, product candidates proprietary cell lines and protein expression technologies, proprietary screening assays, antibody discovery methods, and generative AI models. We regularly file patent applications to protect innovations arising from our research and development. We also hold trademarks and trademark applications in the United States and foreign jurisdictions. Costs to secure and defend our intellectual property are expensed as incurred and are classified as selling, general and administrative expenses.
Depreciation and amortization
Depreciation and amortization expense consists of the depreciation expense of our property and equipment and amortization of our intangibles. Our equipment is used most actively as part of our lab operations.
We expect depreciation expense to fluctuate in future periods in line with continued growth in absolute dollars as we purchase additional equipment.
Other income (expense)
Interest expense
Interest expense, net, consists primarily of interest related to borrowings under our term debt and financed laboratory equipment.
Other income, net
Other income, net consists primarily of interest income from our cash, cash equivalents and marketable securities and realized and unrealized gains and losses on foreign currency transactions.
Results of Operations
The results of operations presented below should be reviewed in conjunction with our condensed consolidated financial statements and notes included elsewhere in this Quarterly Report. The following tables set forth our results of operations for the periods presented (In thousands):
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2025 2024 2025 2024
Partner program revenue $ 378 $ 1,701 $ 2,150 $ 3,869
Operating expenses
Research and development 19,249 17,985 56,071 45,482
Selling, general and administrative 8,441 9,256 26,441 27,346
Depreciation and amortization 2,842 3,355 8,914 10,155
Total operating expenses 30,532 30,596 91,426 82,983
Operating loss (30,154) (28,895) (89,276) (79,114)
Other income (expense)
Interest expense (45) (130) (180) (456)
Other income, net 1,597 1,664 4,066 5,496
Total other income, net 1,552 1,534 3,886 5,040
Loss before income taxes (28,602) (27,361) (85,390) (74,074)
Income tax expense (104) (37) (231) (49)
Net loss $ (28,706) $ (27,398) $ (85,621) $ (74,123)
Comparison of the Three and Nine Months Ended September 30, 2025 and 2024
Revenue
Partner program revenue decreased by $1.3 million, or 78%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 and decreased by $1.7 million, or 44%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, driven by a combination of the timing of achieving project-based milestones and the mix of ongoing program activity under our drug creation agreements. For the three and nine months ended September 30, 2025 two partners represented approximately 93% and three partners represented 98% of total partner program revenue, respectively. For the three and nine months ended September 30, 2024, two partners represented approximately 100% of partner program revenue.
Operating expenses
The following tables summarize our operating expenses for the three and nine months ended September 30, 2025 and 2024 (In thousands, except for percentages):
For the Three Months Ended September 30,
2025 2024 $ Change % Change
Operating expenses
Research and development $ 19,249 $ 17,985 $ 1,264 7 %
Selling, general and administrative 8,441 9,256 (815) (9) %
Depreciation and amortization 2,842 3,355 (513) (15) %
Total operating expenses $ 30,532 $ 30,596 $ (64) - %
For the Nine Months Ended September 30,
2025 2024 $ Change % Change
Operating expenses
Research and development $ 56,071 $ 45,482 $ 10,589 23 %
Selling, general and administrative 26,441 27,346 (905) (3) %
Depreciation and amortization 8,914 10,155 (1,241) (12) %
Total operating expenses $ 91,426 $ 82,983 $ 8,443 10 %
Research and development
Research and development expenses increased by $1.3 million, or 7%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase was primarily attributable to the advancement of our drug creation programs representing $2.2 million of this increase, including direct costs associated with external preclinical and clinical development, an increase of $0.3 million of personnel costs and stock-based compensation, offset by a decrease of $1.3 million in other lab costs.
Research and development expenses increased by $10.6 million, or 23%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was primarily attributable to the advancement of our drug creation programs representing $9.9 million of this increase, including direct costs associated with external preclinical and clinical development, and an increase of $2.2 million of personnel costs and stock-based compensation, offset by a decrease of $1.6 million in other lab costs.
Selling, general and administrative expenses
Selling, general, and administrative expenses decreased by $0.8 million, or 9%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The decrease was primarily attributable to a decrease in stock-based compensation of $1.1 million offset by an increase in personnel costs of $0.4 million.
Selling, general, and administrative expenses decreased by $0.9 million, or 3%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The decrease was primarily attributable to a decrease of $1.1 million in personnel and stock-based compensation costs.
Depreciation and amortization
Depreciation and amortization expense decreased by $0.5 million, or 15% for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 and decreased by $1.2 million, or 12%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily due to disposals of lab equipment.
Other income (expense)
Interest expense
Interest expense was less than $0.1 million for the three months ended September 30, 2025 compared to $0.1 million for the three months ended September 30, 2024, representing a decrease of $0.1 million, or 65%. Interest expense was $0.2 million for the nine months ended September 30, 2025, compared to $0.5 million for the nine months ended September 30, 2024, representing a decrease of $0.3 million, or 61%. These decreases were primarily attributable to decreased finance lease and long-term debt obligations.
Other income, net
Other income, net, was $1.6 million for the three months ended September 30, 2025 compared to $1.7 million for the three months ended September 30, 2024, representing a decrease of $0.1 million, or 4%, primarily attributable to realized and unrealized gains and losses on foreign currency transactions and a decrease in investment income from cash, cash equivalents, and investments.
Other income, net, was $4.1 million for the nine months ended September 30, 2025, compared to $5.5 million for the nine months ended September 30, 2024, representing a decrease of $1.4 million, or 26%, primarily attributable to realized and unrealized gains and losses on foreign currency transactions and a decrease in investment income from cash, cash equivalents and investments.
Liquidity and Capital Resources
Overview
As of September 30, 2025, we had $152.5 million of cash, cash equivalents and marketable securities.
We have incurred net operating losses since inception. As of September 30, 2025, our accumulated deficit was $595.2 million. To date, we have funded operations through issuances and sales of equity securities and debt, in addition to revenue generated from our drug creation agreements. We believe that our cash, cash equivalents and marketable securities will be sufficient to meet our operating expenses, working capital and capital expenditure needs over at least the next 12 months following the date of this filing.
Our future capital requirements will depend on many factors, including, but not limited to our ability to raise additional capital through equity or debt financing, the development of our internally developed programs including the progress and strategy of our preclinical and clinical activities, our ability to successfully enter into additional partnerships with new and existing partners, the advancement of technology development activities with existing and future partners, the successful preclinical and clinical development by us and our partners of product candidates generated using our Integrated Drug Creation platform, and the successful commercialization by us and our partners of any such product candidates that are approved. If we are unable to execute on our business plan and adequately fund operations, or if our business plan requires a level of spending in excess of cash resources, we may be required to change our strategies related to preclinical and clinical development and our approach to negotiating partnerships. Alternatively, we may need to seek additional equity or debt financing, which may not be available on terms acceptable to us or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our programs, making product acquisitions, making capital expenditures, or declaring dividends. If we are unable to generate
sufficient revenue or raise additional capital when desired, our business, financial condition, results of operations and prospects would be adversely affected.
Sources of liquidity
Since our inception, we have financed our operations primarily from the issuance and sale of our redeemable convertible preferred stock, issuances of equity securities, borrowings under long-term debt agreements, and to a lesser extent, cash flow from operations.
Equipment financing
In 2022, we received a total of $12.0 million of proceeds from equipment financing arrangements. Terms of the agreements require monthly payments over 42-48 month periods with imputed interest rates ranging from 8%-10%. As of September 30, 2025, the combined outstanding balance on these agreements is $1.4 million.
At-the-market offering
In June 2023, the Company entered into a Sales Agreement with Cowen and Company, LLC, as Sales Agent (the "Prior Sales Agreement"), with respect to an "at the market offering" program under which the Company had the ability to offer and sell, from time to time, shares of its common stock, par value $0.0001 per share, having an aggregate offering price of up to $100.0 million through the Sales Agent. The Company agreed to pay the Sales Agent a commission up to 3.0% of the gross sales proceeds of any shares sold under the Prior Sales Agreement. During the nine months ended September 30, 2025, the Company has issued 10,377,752 shares and received $35.7 million in net proceeds from the sale of securities pursuant to the Prior Sales Agreement.
In August 2025, the Company entered into a Sales Agreement with TD Securities (USA) LLC, as Sales Agent (the "Sales Agreement"), with respect to an "at the market offering" program under which the Company may offer and sell, from time to time, shares of its common stock having an aggregate offering price of up to $100.0 million through the Sales Agent. The Company has agreed to pay the Sales Agent a commission of up to 3.0% of the gross proceeds of any shares sold under the Sales Agreement. Upon execution, the Sales Agreement terminated and superseded the Prior Sales Agreement in its entirety. During the nine months ended September 30, 2025, the Company did not issue any shares of common stock under the Sales Agreement.
Public offerings of common stock
On March 1, 2024, we sold an aggregate of 19,205,000 shares of our common stock, pursuant to an underwriting agreement with Morgan Stanley & Co. LLC and Cowen and Company, LLC at a public offering price of $4.50 per share, before underwriting discounts and commissions. We received total net proceeds from the offering of $80.8 million after deducting underwriting discounts and commissions and offering expenses payable by us.
On July 28, 2025, we sold an aggregate of 16,670,000 shares of our common stock pursuant to an underwriting agreement with Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Jefferies LLC and TD Securities (US) LLC at a public offering price of $3.00 per share, before underwriting discounts and commissions. We received total net proceeds from the offering of $46.7 million after deducting underwriting discounts and commissions and offering expenses payable by us.
Private investment in public equity
In January 2025, we entered into a strategic collaboration with AMD and sold an aggregate of 5,714,285 shares of our common stock to AMD for net proceeds of $20.0 million through a private investment in public equity (PIPE). The issuance of stock to AMD was at a premium of approximately $2.5 million over the market price on the issuance date.
Cash Flows
The following summarizes our cash flows (In thousands):
For the Nine Months Ended September 30,
2025 2024
Net cash provided by (used in)
Operating activities (63,743) (55,438)
Investing activities (69,707) (60,620)
Financing activities 102,107 81,540
Net decrease in cash, cash equivalents, and restricted cash $ (31,343) $ (34,518)
Cash flows from operating activities
In the nine months ended September 30, 2025, net cash used in operating activities was $63.7 million and consisted primarily of a net loss of $85.6 million adjusted for non-cash items, including depreciation and amortization expense of $8.9 million, stock-based compensation expense of $14.1 million, and a net decrease in operating assets and liabilities in the amount of $1.2 million.
In the nine months ended September 30, 2024, net cash used in operating activities was $55.4 million and consisted primarily of a net loss of $74.1 million adjusted for non-cash items, including depreciation and amortization expense of $10.2 million, stock-based compensation expense of $14.4 million, impairment of $1.1 million for asset that met the held for sale criteria during the period and a net increase in operating assets and liabilities in the amount of $4.2 million.
Net cash used in operations increased by $8.3 million year-over-year primarily due to increased research and development costs, including external preclinical and clinical development costs related to our internally developed programs.
Cash flows from investing activities
In the nine months ended September 30, 2025, net cash used in investing activities was $69.7 million primarily from purchases of marketable securities of $134.9 million, partially offset by cash provided by maturities of marketable securities of $65.2 million.
In the nine months ended September 30, 2024, net cash used in investing activities was $60.6 million primarily from purchases of marketable securities of $159.5 million, partially offset by maturities of marketable securities of $99.0 million.
Cash flows from financing activities
In the nine months ended September 30, 2025, net cash provided by financing activities was $102.1 million. The net cash provided resulted primarily from aggregate proceeds of $102.3 million from the issuance of common stock pursuant to the PIPE with AMD, the issuance of common stock pursuant to our July 2025 underwritten offering and pursuant to the ATM, and proceeds of $2.5 million from the issuance of common stock from stock option exercises and our 2021 ESPP, partially offset by principal payments of $2.7 million made for financed equipment.
In the nine months ended September 30, 2024, net cash provided by financing activities was $81.5 million primarily from proceeds of $80.8 million from the issuance of common stock from a public offering and proceeds of $3.8 million from the issuance of common stock from option exercises and our 2021 ESPP, partially offset by principal payments of $3.1 million made for financed equipment.
Critical Accounting Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (US GAAP). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
This report should be read in conjunction with the consolidated financial statements in our 2024 Annual Report on Form 10-K where we include additional information on our business, risk factors, critical accounting estimates, policies, and the methods and assumptions used in our estimates, among other important information.
There were no material changes in our critical accounting policies and estimates during the nine months ended September 30, 2025.
Emerging Growth Company Status
We are an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. Section 107 of the JOBS Act provides that an emerging growth company may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 for complying with new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. Section 107 of the JOBS Act provides that we can elect to opt out of the extended transition period at any time, which election is irrevocable. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Subject to certain conditions, as an emerging growth company, we may rely on certain other exemptions and reduced reporting requirements, including without limitation (i) 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 and (ii) complying with any requirement by the Public Company Accounting Oversight Board (PCAOB) regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the consolidated financial statements, known as the auditor discussion and analysis.
In addition, we are also a "smaller reporting company" as defined in Rule 12b-2 of the Exchange Act and have elected to take advantage of certain of the scaled back disclosure requirements available to smaller reporting companies such as avoiding the extensive narrative disclosure required of other reporting companies, particularly in the description of executive compensation. We will remain a smaller reporting company until (a) the last day of the fiscal year in which we have total annual gross revenue of less than $100 million and the market value of our common stock held by non-affiliates exceeds $700.0 million as of the prior June 30th, or (b) the last day of the fiscal year in which we have total annual gross revenue exceeding $100 million and the market value of our common stock held by non-affiliates exceeds $250.0 million. In August 2025, the SEC released a Compliance and Disclosure Interpretation clarifying the filer status transition for registrants that lose their smaller reporting company status based on the revenue tests. Due to this interpretation, we will remain a non-accelerated filer for filings due in the fiscal year immediately following the loss of smaller reporting company status, allowing us to retain the exception from the auditor attestation requirement on internal control over financial reporting. However, the interpretation specifies that we will lose eligibility for all other smaller reporting company accommodations beginning with the Form 10-Q for the first fiscal quarter of the year after losing smaller reporting company status.
In addition, the loss of emerging growth status will not impact our "non-accelerated filer" status, which also provides an exemption from the auditor attestation requirement with respect to internal control over financial reporting.
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