0001193125-23-216091 | S-4 | XBRL Viewer | Neoleukin Therapeutics INC

Net loss per common stock (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Schedule of Securities Excluded From Computation of Earnings Per Share

The Company excluded the following potentially dilutive shares from diluted net loss per share as the effect would have been anti-dilutive for all periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Outstanding stock options		4,636,560		7,638,393		4,636,560		7,638,393
Restricted stock units		46,250		603,000		46,250		603,000
Shares issuable under 2020 ESPP		7,459		76,872		7,459		76,872

		4,690,269		8,318,265		4,690,269		8,318,265

The Company excluded the following potentially dilutive shares from diluted net loss per share as the effect would have been anti-dilutive for all periods presented:


	December 31,
	2022		2021

Outstanding stock options		8,514,381		8,963,945
Restricted stock units		378,500		132,000
Shares issuable under 2020 ESPP		49,251		53,446

		8,942,132		9,149,391

Leases

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Leases [Abstract]

Leases

5. Leases

The Company enters into lease arrangements for its facilities as well as certain equipment, classified either as operating or finance leases.

The Company has an operating lease agreement for approximately 6,272 square feet of office space in Seattle, Washington, for additional office and laboratory space for research and development and related uses. In March

2021, the Company executed an amendment to this lease pursuant to which the contractual lease term was extended through September 30, 2026, unless terminated earlier, with the option to extend the lease for an additional

28-month

term. In December 2022, the Company entered into an agreement to sublease this office and laboratory space in Seattle, Washington to an unrelated third party. Pursuant to the terms of the sublease, the Company is entitled to receive up to $0.5 million in base lease payments. The term of the sublease is through August 31, 2023, with an option by the sublessee to extend such term through November 30, 2023.

As of June 30, 2023, and December 31, 2022, the Company’s operating lease

right-of-use

assets were $9.1 million and $9.7 million, respectively. As of June 30, 2023, the Company’s finance lease

right-of-use

assets, included within property and equipment on the condensed balance sheets, were immaterial. As of December 31, 2022, the Company’s finance lease

right-of-use

assets were $0.5 million.

7. Leases

The Company enters into lease arrangements for its facilities as well as certain equipment, classified either as operating or finance leases.

The Company has an operating lease agreement, as amended by the execution of two subsequent amendments, for approximately 33,300 square feet of office space in Seattle, Washington for the Company’s principal executive offices, a laboratory for research and development, and related uses. In January 2020, the Company issued an irrevocable letter of credit in the amount of $0.5 million for the security deposit in accordance with the terms of the lease. The lease term commenced on January 15, 2020 and payments of rent obligations began on February 1, 2021. The lease is scheduled to expire on February 1, 2029, with the option to extend the lease for two five-year terms. The lease provides for a tenant improvement allowance of up to $9.5 million, which is included in the base rent, and has been fully utilized. The Company will also be responsible for the payment of additional rent to cover the Company’s share of the annual operating, tax expenses, and utilities costs for the building.

The Company has an operating lease agreement for approximately 6,272 square feet of laboratory and office space in Seattle, Washington, for research and development and related uses. In March 2021, the Company executed an amendment to this lease pursuant to which the contractual lease term was extended through September 30, 2026, unless terminated earlier, with the option to extend the lease for an additional

28-month

term. The execution of this amendment was accounted for as a modification to the lease due to the extension of the lease term and an increase in lease payments, and the Company recorded an increase in the lease liability and related

right-of-use

asset of $1.6 million. In December 2022, the Company entered into an agreement to sublease this space to an unrelated third party. Pursuant to the terms of the sublease, the Company is entitled to receive up to $0.5 million in base lease payments. The term of the sublease is through August 2023, with an option by the sublessee to extend such term through November 2023.

As of December 31, 2022, and December 31, 2021, the Company’s operating lease

right-of-use

assets were $9.7 million and $10.8 million, respectively. As of December 31, 2022, and December 31, 2021, the Company’s

finance lease

right-of

use-assets,

included within property and equipment on the balance sheet, were $0.5 million and $0.2 million, respectively.

The components of the lease expense were as follows (in thousands):


	December 31,
	2022		2021
Finance lease cost
Amortization of right-of-use asset	$	58	$	49
Interest on lease liabilities		8		12
Operating lease cost		2,542		2,535
Short term lease cost		—		40
Variable lease cost		1,124		2,161

Total net lease cost	$	3,732	$	4,797

Supplemental balance sheet information related to leases is as follows:


	December 31,
	2022			2021

Weighted average remaining lease term—finance leases		3.00 years			2.70 years
Weighted average remaining lease term—operating leases		5.87 years			6.86 years
Weighted average discount rate—finance leases		6.99	%		6.98	%
Weighted average discount rate—operating leases		12.46	%		12.42	%

Supplemental cash flow information related to leases was as follows (in thousands):


	December 31,
	2022		2021

Cash paid for amounts included in the measurement of operating lease liabilities	$	2,657	$	2,249
Cash paid for amounts included in the measurement of finance lease liabilities	$	64	$	63

The calculation of the present value of the lease payments for operating leases did not include any options to extend the leases as the Company is not reasonably certain to exercise such options.

At December 31, 2022, the future payments under the Company’s operating and finance lease liabilities were as follows (in thousands):


	Finance Lease			Operating Lease

2023	$	173		$	2,718
2024		109			2,781
2025		109			2,845
2026		26			2,806
2027		—			2,557
Thereafter		—			2,835

Total undiscounted lease payments		417			16,542
Less: imputed interest		(44	)		(4,845	)

Total lease liabilities		373			11,697
Less: current portion		(140	)		(1,375	)

Non-current lease liabilities—December 31, 2022	$	233		$	10,322

Nature of operations	6 Months Ended	12 Months Ended
Nature of operations	Jun. 30, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of operations	1. Nature of operations Neoleukin Therapeutics, Inc. (“Neoleukin” or “the Company”) has historically been a biopharmaceutical company creating next generation immunotherapies for cancer, inflammation, and autoimmunity using de novo protein design technology. Based on decisions made by the Company’s Board of Directors in November 2022 and March 2023, the Company has restructured operations to significantly reduce its workforce, discontinue development of NL-201, a de novo protein that was in Phase 1 clinical trial for the treatment of cancer, and suspended all research and development activities in order to conserve capital and focus on other strategic alternatives for the Company. On July 17, 2023, Neoleukin, Project North Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Neoleukin (“Merger Sub”), and Neurogene Inc., a privately held Delaware corporation (“Neurogene”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Neurogene, with Neurogene continuing as a wholly owned subsidiary of Neoleukin and the surviving corporation of the merger (the “Merger”). The Merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “IRC”). The Merger Agreement is subject to customary closing conditions, including approval of certain matters by stockholders of each of Neoleukin and Neurogene, and is anticipated to close in the fourth quarter of 2023, assuming satisfaction or waiver of all of the conditions of the Merger. If the Merger is completed, Neoleukin will continue as the surviving corporation after the Merger, but will change its name to Neurogene Inc., and the management of Neurogene is expected to become the management of the surviving corporation. The surviving company is expected to pursue the business activities of Neurogene following the closing of the Merger.	1. Nature of operations Neoleukin Therapeutics, Inc. (“Neoleukin” or the “Company”) is a biopharmaceutical company creating next generation immunotherapies for cancer, inflammation, and autoimmunity using de novo protein design technology. Neoleukin uses sophisticated computational methods to design proteins that demonstrate specific pharmaceutical properties that provide potentially superior therapeutic benefit over native proteins.

Income taxes - Schedule of Income Tax Recovery (Details)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Statutory federal income tax rate	(21.00%)	(21.00%)
Stock-based compensation	2.20%	2.00%
Change in valuation allowance	21.40%	21.20%
Tax credits	(2.60%)	(2.20%)
Income tax recovery	0.00%	0.00%

Intangible asset, net - Summary of Intangible Asset (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Cost	$ 659	$ 659
Accumulated amortization	(659)	(531)
Net intangible asset	$ 0	128
Intangible asset useful life	3 years
Amortization expense	$ 100	$ 200

License and patent agreements - Additional Information (Details) - USD ($) $ in Millions	1 Months Ended		12 Months Ended
	Nov. 30, 2019	Aug. 31, 2019	Dec. 31, 2022
License and patent agreements [Line Items]
Convertible preferred stock, Shares issued upon conversion (in shares)	419,700
University Of Washington
License and patent agreements [Line Items]
License arrangements, amounts of development milestones payment			$ 0.9
License arrangements, amounts payable based on net sales			10.0
License and maintenance \| University Of Washington
License and patent agreements [Line Items]
Shares issued for service (in shares)		536,813
License and maintenance \| Common stock \| University Of Washington
License and patent agreements [Line Items]
Stock issued for acquisition (in shares)		188,974
License and maintenance \| Minimum \| University Of Washington
License and patent agreements [Line Items]
Revenue from contract with customer, excluding assessed tax			100.0
License and maintenance \| Maximum \| University Of Washington
License and patent agreements [Line Items]
Revenue from contract with customer, excluding assessed tax			$ 1,000.0
Non-voting convertible preferred stock \| License and maintenance \| University Of Washington
License and patent agreements [Line Items]
Stock issued for acquisition (in shares)		4,197

Income taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Schedule of Income Tax Recovery

Income tax recovery varies from the amounts that would be computed by applying the expected U.S. federal income tax rate (21%) as shown in the following table:


	December 31,
	2022			2021

Statutory federal income tax rate		(21.0	)%		(21.0	)%
Stock-based compensation		2.2			2.0
Change in valuation allowance		21.4			21.2
Tax credits		(2.6	)		(2.2	)

Income tax recovery		—	%		—	%

Schedule of Net (Loss) Income Before Taxes


Net loss before taxes (in thousands):	Years Ended December 31,
	2022			2021

U.S.		(57,578	)		(60,692	)

Total	$	(57,578	)	$	(60,692	)

Components of Deferred Income Tax Assets

Deferred income tax assets and liabilities result from the temporary differences between the amount of assets and liabilities recognized for financial statement and income tax purposes. The significant components of the deferred income tax assets are as follows (in thousands):


	December 31,
	2022			2021

Deferred tax assets:
U.S. net operating losses	$	26,362		$	22,863
Research and development deductions and credits		3,931			2,414
Intangibles		446			457
Lease liability		2,456			2,701
Stock-based compensation		2,274			1,695
Capitalized research and development		6,920			—
Other		168			186

Total deferred tax assets:		42,557			30,316
Deferred income tax liabilities
Right-of-use assets		2,040			2,261
Other		410			287

Total deferred tax liabilities		2,450			2,548

Net deferred income tax assets		40,107			27,768
Less: valuation allowance		(40,107	)		(27,768	)

Deferred tax assets, net of valuation allowance	$	—		$	—

Cash, cash equivalents, and restricted cash - Schedule of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021	Dec. 31, 2020
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents [Abstract]
Cash and cash equivalents	$ 31,110	$ 37,887		$ 142,467
Restricted cash	508	878		878
Total cash, cash equivalents, and restricted cash	$ 31,618	$ 38,765	$ 78,404	$ 143,345	$ 193,434

Net loss per share

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Earnings Per Share [Abstract]

Net loss per share

7. Net loss per share

The Company excluded the following potentially dilutive shares from diluted net loss per share as the effect would have been anti-dilutive for all periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Outstanding stock options		4,636,560		7,638,393		4,636,560		7,638,393
Restricted stock units		46,250		603,000		46,250		603,000
Shares issuable under 2020 ESPP		7,459		76,872		7,459		76,872

		4,690,269		8,318,265		4,690,269		8,318,265

9. Net loss per common stock

The Company excluded the following potentially dilutive shares from diluted net loss per share as the effect would have been anti-dilutive for all periods presented:


	December 31,
	2022		2021

Outstanding stock options		8,514,381		8,963,945
Restricted stock units		378,500		132,000
Shares issuable under 2020 ESPP		49,251		53,446

		8,942,132		9,149,391

Income taxes - Components of Deferred Income Tax Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Deferred tax assets:
U.S. net operating losses	$ 26,362	$ 22,863
Research and development deductions and credits	3,931	2,414
Intangibles	446	457
Lease liability	2,456	2,701
Stock-based compensation	2,274	1,695
Capitalized research and development	6,920	0
Other	168	186
Total deferred tax assets:	42,557	30,316
Deferred income tax liabilities
Right-of-use assets	2,040	2,261
Other	410	287
Total deferred tax liabilities	2,450	2,548
Net deferred income tax assets	40,107	27,768
Less: valuation allowance	(40,107)	(27,768)
Deferred tax assets, net of valuation allowance	$ 0	$ 0

Summary of significant accounting policies (Policies)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Accounting Policies [Abstract]

Basis of presentation

(a) Basis of presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, these financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form

10-K

for the year ended December 31, 2022, filed with the Securities and Exchange Commission on March 20, 2023.

In management’s opinion, the unaudited condensed financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position of the Company as of June 30, 2023, and results of operations and cash flows for all periods presented. The interim results presented are not necessarily indicative of results that can be expected for the full year ending December 31, 2023. The Company reclassified prior year interest income in the condensed statements of operations and comprehensive income (loss) to conform to current year presentation. This reclassification had no effect on net loss or

comprehensive

loss.

(a) Basis of presentation

The accompanying financial statements are presented in United States (“U.S.”) dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Use of estimates and assumptions

(b) Use of estimates and assumptions

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant areas requiring estimates include valuation and recognition of stock-based compensation, the incremental borrowing rate utilized in the measurement of operating and finance lease liabilities, amortization/depreciation and impairment of property and equipment, and

pre-clinical,

clinical, and other accruals. Actual results could differ from those estimates.

(b) Use of estimates and assumptions

The preparation of financial statements in conformity with U.S. GAAP requires management 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 and the reported amounts of expenses during the reporting period. Significant areas requiring estimates include valuation and recognition of stock-based compensation, the incremental borrowing rate utilized in the measurement of operating and finance lease liabilities, estimated useful lives utilized in the amortization and depreciation of property and equipment, and

pre-clinical,

clinical, and other accruals. Actual results could differ from those estimates.

Leases

(d) Leases

At contract inception, the Company determines if the contract is or contains a lease. Lease liabilities are recognized on the lease commencement date based on the estimated present value of lease payments over the lease term. To determine the present value of the lease payments, the Company utilizes its estimated incremental borrowing rate based on information available at the lease commencement date as the interest rate implicit in the lease is typically not readily determinable. The related

right-of-use

assets are recorded net of any lease incentives received. Variable lease cost primarily includes building operating expenses as charged to the Company by its landlords.

The Company includes options to extend the lease in its lease liability and

right-of-use

asset when it is reasonably certain that it will exercise that option. None of the Company’s options to extend the rental term of any of its existing leases were considered reasonably certain as of June 30, 2023.

For leases of office space and equipment, the Company has elected to not separate the lease components from the

non-lease

components.

For leases with a lease term of 12 months or less and which do not include an option to purchase the underlying asset, the Company has elected to recognize the lease payments in the statement of operations on a straight-line basis over the lease term.

right-of-use

assets are recorded net of any lease incentives received. Variable lease cost primarily includes building operating expenses as charged to the Company by its landlords and payments for lessor-owned assets that are not covered by a tenant improvement allowance.

The Company includes options to extend the lease in its lease liability and

right-of-use

For leases of office space, the Company has elected to not separate the lease components from the

non-lease

components.

For leases of office space with a lease term of 12 months or less and which do not include an option to purchase the underlying asset, the Company has elected to recognize the lease payments in the statement of

operations

on a straight-line basis over the lease term.

Cash, cash equivalents, and restricted cash

(d) Cash, cash equivalents, and restricted cash

The Company considers all highly liquid investments with an original contractual maturity or a remaining maturity of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist of money market funds and U.S. treasury securities as of December 31,

2022 and of money market funds as of December 31,

2021.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash in the balance sheets that sum to the total of the same such amounts shown in the statements of cash flows (in thousands):


	December 31,
	2022		2021

Cash and cash equivalents	$	37,887	$	142,467
Restricted cash		878		878

Total cash, cash equivalents, and restricted cash	$	38,765	$	143,345

Restricted cash, included in other

non-current

assets in the balance sheets, includes $0.9 million in cash deposits the Company maintains with its bank as collateral for the irrevocable letters of credits related to its lease obligations.

Property and equipment, net

Property and equipment are recorded at cost and are amortized using the straight-line basis over a range of three to seven years.

The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. Based on management’s assessment, as a result of the corporate restructuring announced in March 2023, including the decision to suspend all research and development activities, there were indicators of impairment of certain property and equipment. In March 2023, the Company recorded $3.4 million in impairment charges. There were no additional indicators of impairment of property and equipment as of June 30, 2023 and none as of December 31, 2022.

(e) Property and equipment

Property and equipment are recorded at cost and are amortized using the straight-line basis over a range of three to seven years. Expenditures for maintenance and repairs are expensed as incurred.

The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. Based on management’s assessment there were no indicators of impairment of property and equipment as of December 31, 2022 and 2021.

Net loss per share

(g) Net loss per share

equivalents are included in the calculation of diluted earnings per share only in periods of net income and are excluded in the calculation

diluted net loss per share in periods of net loss as their inclusion would be

anti-dilutive.

Outstanding

pre-funded

warrants as of June 30, 2023 and June 30, 2022 was 11,483,010 and 12,663,010, respectively. They are considered outstanding as of their issuance date and are included in basic and diluted net loss per share because they are fully vested and exercisable for nominal cash consideration.

(f) Net loss per share

Basic net loss per share is calculated by dividing the net loss by the weighted average number of shares of common stock outstanding for the period, without consideration for common stock equivalents. Common stock equivalents are included in the calculation of diluted earnings per share only in periods of net income. Such common stock equivalents are excluded in the calculation of diluted net loss per share in periods of net loss as inclusion of such amounts would be anti-dilutive. Outstanding

pre-funded

warrants as of December 31, 2022 and 2021 of 12,663,010 are considered outstanding as of their issuance date and are included in the basic and diluted net loss per share calculation because they are fully vested and exercisable at any time for a nominal cash consideration.

Intangible assets subject to amortization

(g) Intangible assets subject to amortization

Long-lived intangible assets are

recorded

at the acquired cost and amortized using the straight-line method over their estimated useful life.

The intangible asset is tested for impairment when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. The Company recognizes an impairment loss when carrying amount is not recoverable and the estimated fair value of the intangible asset is less than its carrying value. Based on management’s assessment there were no indicators of impairment of intangible assets as of December 31, 2022 and 2021.

Income taxes

(h) Income taxes

The Company accounts for income taxes using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the differences between events that have been recognized in the Company’s

financial statements and the tax bases of assets and liabilities and tax carryforwards recognized at enacted

tax

rates. The measurement of deferred tax assets is reduced, if necessary, to the amount more likely than not to be realized by a valuation allowance.

Research and development costs

(i) Research and development costs

Research and development costs are charged to expense as incurred and include items such as: employee related expenses, including salaries, stock-based compensation, and benefits, expenses incurred under agreements with contract research organizations that conduct clinical trials and preclinical studies, the cost of acquiring, developing, and manufacturing clinical trial materials, facilities, and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, and other supplies and costs associated with clinical trials, preclinical activities, and regulatory operations.

Development costs are expensed in the period incurred unless management believes a development project meets generally accepted accounting criteria for deferral and amortization. No product development expenditures have been deferred to date. The Company records costs for certain development activities based on management’s evaluation of the progress to completion of specific tasks or information provided to the Company by vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued expense.

Accounting for stock-based compensation

(h) Accounting for stock-based compensation

The Company has issued stock options and restricted stock units (“RSUs”). The Company measures the cost of services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost of such award is recognized on a straight-line basis over the requisite service period, which is generally the vesting period. The Company accounts for forfeitures as they occur. The Company utilizes newly issued shares to satisfy option exercises, the vesting of RSUs, and 2020 Employee Stock Purchase Plan (“2020 ESPP”) purchases.

The Company estimates the fair value of options using the Black-Scholes option pricing model on the grant date. This approximation uses assumptions regarding a number of inputs that requires management to make significant estimates and judgments. The expected term represents the period that the Company’s stock-based awards are expected to be outstanding. As the Company does not have sufficient historical experience for determining the expected term of the stock option awards granted, the Company has based its expected term for awards issued to employees on the simplified method, which represents the average period from vesting to the expiration of the stock option. In addition, the Company does not have sufficient trading history of the Company’s common stock, and therefore, the expected stock price volatility for the Company’s common stock was estimated by taking the average historical price volatility for industry peers. The Company has never declared or paid any cash dividends to common stockholders and does not presently plan to pay cash dividends in the foreseeable future. Consequently, the Company used an expected dividend yield of zero. The risk-free interest rate was based on the yields of treasury securities with maturities similar to the expected term of the options for each option group.

The fair value of each RSU is measured using the closing price of the Company’s common stock on the date of grant.

(j) Accounting for stock-based compensation

The Company has issued stock options and restricted stock units (“RSUs”). The Company measures the cost of services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost of such award is recognized on a straight-line basis over the requisite service period, which is generally the vesting period. Awards subject to performance-based vesting requirements are expensed utilizing a graded vesting model if achievement of the performance criteria is determined to be probable. The Company accounts for forfeitures as they occur. The Company utilizes newly issued shares to satisfy option exercises, the vesting of RSUs, and Employee Stock Purchase Plan purchases.

The Company estimates the fair value of options using the Black-Scholes option pricing model on the grant date. This approximation uses assumptions regarding a number of inputs that requires management to make significant estimates and judgments. The expected term represents the period that the Company’s stock-based awards are expected to be outstanding. As the Company does not have sufficient historical experience for determining the expected term of the stock option awards granted, the Company has based its expected term for awards issued to employees on the simplified method, which represents the average period from vesting to the expiration of the stock option. In addition, the Company does not have sufficient trading history for the Company’s common stock, and therefore, the expected stock price volatility for the Company’s common stock was estimated by taking the average historical price volatility for industry peers. The Company has never declared or paid any cash dividends to common stockholders and does not presently plan to pay cash dividends in the foreseeable future. Consequently, the Company used an expected dividend yield of zero. The risk-free interest rate was based on the yields of treasury securities with maturities similar to the expected term of the options for each option group.

The fair value of each RSU is measured using the closing price of the Company’s common stock on the date of grant.

Segment reporting

(k) Segment reporting

The Company operates in one segment, the research and

development

de novo

protein therapeutics using sophisticated computational algorithms and methods to address unmet medical needs. The Company’s primary areas of focus are in oncology, inflammation, and autoimmunity. The Company’s operations and its assets are held in the United States.

Fair value of financial instruments

(e) Fair value of financial instruments

The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, restricted cash, receivables, accounts payable and other liabilities, approximate their fair values because of

their

nature and/or short maturities.

Certain of the Company’s financial instruments are measured at fair value on a recurring basis. The Company determines the fair value of those financial instruments based upon the fair value hierarchy, which prioritizes valuation inputs based on the observable nature of those inputs. The three levels of the fair value hierarchy are as follows:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed on the measurement date

Level 2 - quoted prices (in

non-active

markets or in active markets for similar assets or liabilities), observable inputs other than quoted prices and inputs that are not directly observable but are corroborated by observable market data

Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities

The following table presents information about the Company’s financial instruments that are measured at fair value on a recurring basis:


	June 30, 2023
(in thousands)	Total		Level 1		Level 2		Level 3

Financial assets
Money market funds	$	30,593	$	30,593	$	—	$	—
U.S. treasury securities		50,965		50,965		—		—

Total financial assets	$	81,558	$	81,558	$	—	$	—


	December 31, 2022
(in thousands)	Total		Level 1		Level 2		Level 3

Financial assets
Money market funds	$	33,767	$	33,767	$	—	$	—
U.S. treasury securities		61,970		61,970		—		—

Total financial assets	$	95,737	$	95,737	$	—	$	—

(l) Fair value of financial instruments

The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, restricted cash, receivables, accounts payable, and other liabilities, approximate their fair values because of their nature and/or short maturities.

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed on the measurement date

Level 2 - quoted prices (in

non-active

markets or in active markets for similar assets or liabilities), observable inputs other than quoted prices and inputs that are not directly observable but are corroborated by observable market data

Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities

The following table presents information about the Company’s financial instruments that are measured at fair value on a recurring basis:


	December 31, 2022
(in thousands)	Total		Level 1		Level 2		Level 3

Financial assets
Money market funds	$	33,767	$	33,767	$	—	$	—
U.S. treasury securities		61,970		61,970		—		—

Total financial assets	$	95,737	$	95,737	$	—	$	—


	December 31, 2021
(in thousands)	Total		Level 1		Level 2		Level 3

Financial assets
Money market funds	$	140,856	$	140,856	$	—	$	—
U.S. treasury securities		—		—		—		—

Total financial assets	$	140,856	$	140,856	$	—	$	—

Concentration of credit risk

(n) Concentration of credit risk

Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash, cash equivalents, and short-term investments. Cash, cash equivalents, and short-term investments are invested in accordance with the Company’s investment policy. The primary objective for the Company’s investment portfolio is the preservation of capital and maintenance of liquidity and includes guidelines on the quality of financial instruments and defines allowable investments that the Company believes minimizes the exposure to concentration of credit risk.

Restructuring Charges

(i) Restructuring charges

The Company records costs and liabilities associated with exit and disposal activities in accordance with ASC 420,

Exit or Disposal Cost Obligations

. Restructuring charges are recorded in the period in which they are incurred. The Company evaluates and adjusts these costs as appropriate for changes in circumstances as additional information becomes available.

(o) Restructuring charges

The Company records costs and liabilities associated with exit and disposal activities in accordance with ASC 420,

Exit or Disposal Cost Obligations

Recently issued and recently adopted accounting standards

(j) Recently issued and recently adopted accounting standards

The Company monitors and evaluates the issuance of Accounting Standards Updates (“ASUs”). No ASUs have been issued recently which impact the Company’s financial statements and disclosures.

(p) Recently issued and recently adopted accounting standards

In June 2016, the FASB issued Accounting Standard Update (“ASU”)

No. 2016-13,

Measurement of Credit Losses on Financial Instruments

(ASU

2016-13),

which replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In November 2019, the FASB issued ASU

2019-10,

Financial Instruments – Credit Losses

(Topic 326),

Derivatives

(Topic 815), and

Leases

(Topic 842). This ASU delayed the required adoption for SEC filers that are smaller reporting companies as of their determination on November 15, 2019, until annual and interim periods beginning after December 15, 2022, with early adoption permitted. The Company adopted this standard in conjunction with the investment in debt securities during the quarter ended June 30, 2022.

Investments

(f) Investments

The Company’s short-term investments consist entirely of investments in U.S. treasury securities. These investments are classified as

available-for-sale

debt securities and are therefore reported at fair value in the condensed balance sheets. Unrealized gains and losses are included in accumulated other comprehensive income (loss). There were no realized gains or losses on investments for the three and six months ended June 30, 2023 and 2022.

The Company assesses investments for impairment at each reporting period. An investment is considered impaired when the amortized cost basis exceeds the fair value. When this is the case, the Company assesses whether the impairment is credit-related or noncredit-related based on various factors. When an impairment, or a portion of an impairment, is considered credit-related, an allowance for credit losses is recorded. For the six months ended June 30, 2023, the Company recognized no

year-to-date

credit losses and no allowance for credit losses is recorded as of June 30, 2023. The aggregate fair value of investments with unrealized losses as of June 30, 2023 is $31.1 million.

(m) Investments

The Company’s short-term investments consist entirely of investments in U.S. treasury securities. These investments are classified as

available-for-sale

debt securities and are therefore reported at fair value in the balance sheets. Unrealized gains and losses are included in accumulated other comprehensive income (loss). There were no realized gains or losses on investments for the years ended December 31, 2022 and 2021.

The Company assesses investments for

impairment

at each reporting period. An investment is considered impaired when the amortized cost basis exceeds the fair value. When this is the case, the Company assesses whether the impairment is credit-related or noncredit-related based on various factors. When an impairment, or a portion of an impairment, is considered credit-related, an allowance for credit losses is recorded. For the years ended December 31, 2022 and 2021, the Company recognized no

year-to-date

credit losses and no allowance for credit losses is recorded as of December 31, 2022 or 2021. The aggregate fair value of investments with unrealized losses as of December 31, 2022 is $40.7 million.

Property and equipment, net

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Property and equipment, net

4. Property and equipment, net

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


	December 31, 2022
	Cost		Accumulated Amortization		Net Book Value

Laboratory equipment	$	6,773	$	1,926	$	4,847
Furniture, fixtures, and IT equipment		2,342		1,026		1,316

	$	9,115	$	2,952	$	6,163


	December 31, 2021
	Cost		Accumulated Amortization		Net Book Value

Laboratory equipment	$	6,237	$	1,006	$	5,231
Furniture, fixtures, and IT equipment		1,850		629		1,221

	$	8,087	$	1,635	$	6,452

Depreciation expense on property and equipment totaled $1.4 million and $1.1 million for the years ended December 31, 2022 and 2021, respectively.

Equity - Additional Information (Details) $ / shares in Units, $ in Thousands			3 Months Ended			6 Months Ended		12 Months Ended
	Jul. 18, 2023 Day	Jan. 01, 2022 shares	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2022 USD ($) shares	Mar. 31, 2022 shares	Jun. 30, 2023 USD ($) Day offering $ / shares shares	Jun. 30, 2022 $ / shares	Dec. 31, 2022 USD ($) Day offering $ / shares shares	Dec. 31, 2021 USD ($) $ / shares shares	Nov. 04, 2021 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, shares authorized (in shares)			100,000,000			100,000,000		100,000,000	100,000,000
Common stock, par value (in dollars per share) \| $ / shares			$ 0.000001			$ 0.000001		$ 0.000001	$ 0.000001
Common stock, shares issued (in shares)			44,021,429			44,021,429		42,648,346	42,457,471
Common stock, shares outstanding (in shares)			44,021,429			44,021,429		42,648,346	42,457,471
Outstanding pre-funded warrants (in shares)								12,663,010	12,663,010
Exercise price (in dollars per share) \| $ / shares								$ 0.000001
Percentage of outstanding stock per stockholder, maximum						9.99%
Percentage of outstanding stock per stockholder, upon notice, maximum						19.99%		19.99%
Notice period \| Day						61		61
Preferred stock, shares authorized (in shares)			5,000,000			5,000,000		5,000,000	5,000,000
Preferred stock, par value (in dollars per share) \| $ / shares			$ 0.000001			$ 0.000001		$ 0.000001	$ 0.000001
Preferred stock, shares issued (in shares)			0			0		0	0
Preferred stock, shares outstanding (in shares)			0			0		0	0
Options outstanding (in shares)			4,636,560			4,636,560		8,514,381	8,963,945
Options exercised (in shares)						0		36,500
Common stock issued upon exercise of options aggregate intrinsic value \| $						$ 100		$ 100	$ 1,300
Weighted-average grant date fair value of options granted (in dollars per share) \| $ / shares						$ 0.51	$ 1.47	$ 0.95	$ 6.37
Unrecognized stock-based compensation cost (in dollars per share) \| $			$ 1,600			$ 1,600		$ 13,400
Unrecognized stock-based compensation cost, weighted-average period recognized (in years)						1 year 10 months 17 days		2 years 1 month 24 days
Proceeds from ESPP \| $			$ 4	$ 63				$ 82	$ 372
Previously Reported [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, shares outstanding (in shares)			42,648,346			42,648,346
Subsequent Event [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of outstanding stock per stockholder, upon notice, maximum	19.99%
Notice period \| Day	61
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period								1 year
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period								4 years
2014 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares of common stock that may be issued (in shares)								13,408,356
Shares of common stock reserved for issuance percentage								4.00%
Number of additional shares authorized (in shares)		2,212,454
Award expiration period (in years)								10 years
Shares available to be granted (in shares)								6,705,058	5,040,300
Equity Incentive Plan 2006
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding (in shares)								0
Common stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options exercised (in shares)					36,500	36,500		36,500	124,928
Issuance of shares under Employee Stock Purchase Plan (in shares)			13,083	75,881				129,625	51,747
Common stock \| Pre Funded Warrants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued upon the exercise of pre-funded warrants (in shares)			1,180,000
Pre Funded Warrants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding pre-funded warrants (in shares)			11,483,010			11,483,010		12,663,010
Exercise price (in dollars per share) \| $ / shares			$ 0.000001			$ 0.000001
Percentage of outstanding stock per stockholder, maximum								9.99%
Shares issuable under 2020 ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Sale of shares under public offering (in dollars per share) \| $ / shares								$ 0.83	$ 9.53
Issuance of shares under Employee Stock Purchase Plan (in shares)								75,881	22,972
Shares issuable under 2020 ESPP \| 2020 Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Sale of shares under public offering (in dollars per share) \| $ / shares								$ 0.36	$ 5.33
ESPP common stock reserved for issuance (in shares)			759,936			759,936		759,936
ESPP max contribution rate			15.00%			15.00%		15.00%
ESPP purchase price of common stock, percent of market price						85.00%		85.00%
ESPP number of offerings per year \| offering						2		2
ESPP offering period						6 months		6 months
Issuance of shares under Employee Stock Purchase Plan (in shares)								53,744	28,775
Proceeds from ESPP \| $								$ 100	$ 400
Equity Offering Sales Agreement
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum value \| $										$ 40,000

Leases - Supplemental Balance Sheet Information Related to Leases (Details)	Dec. 31, 2022	Dec. 31, 2021
Leases [Abstract]
Weighted average remaining lease term—finance leases	3 years	2 years 8 months 12 days
Weighted average remaining lease term—operating leases	5 years 10 months 13 days	6 years 10 months 9 days
Weighted average discount rate—finance leases	6.99%	6.98%
Weighted average discount rate—operating leases	12.46%	12.42%

Investments

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Investments, Debt and Equity Securities [Abstract]

Investments

4. Investments

The Company’s investments consist of the following:


	June 30, 2023
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

Cash equivalents:
Money market funds	$	30,593	$	—	$	—		$	30,593
Short-term investments:
U.S. treasury securities - due within 1 year		50,965		2		(15	)		50,952

Total	$	81,558	$	2	$	(15	)	$	81,545


	December 31, 2022
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash equivalents:
Money market funds	$	33,767	$	—	$	—		$	33,767
U.S. treasury securities - due within 3 months		3,473		—		—			3,473
Short-term investments:
U.S. treasury securities - due within 1 year		58,518		6		(27	)		58,497

Total	$	95,758	$	6	$	(27	)	$	95,737

3. Investments

The Company’s investments consist of the following (in thousands):


	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash equivalents:

Money market funds	$	33,767	$	—	$	—		$	33,767
U.S. treasury securities - due within 3 months		3,473		—		—			3,473
Short-term investments:
U.S. treasury securities - due within 1 year		58,518		6		(27	)		58,497

Total	$	95,758	$	6	$	(27	)	$	95,737


	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash equivalents:

Money market funds		140,856		—		—		140,856

Total	$	140,856	$	—	$	—	$	140,856

Equity - Schedule of RSU Activity (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Number of Shares
Non-vested beginning balance (in shares)	378,500
Non-vested ending balance (in shares)	46,250	378,500
Restricted stock units
Number of Shares
Non-vested beginning balance (in shares)	378,500	132,000
Restricted stock units granted (in shares)	0	700,000
Restricted stock units vested (in shares)	(180,000)	(24,750)
Restricted stock units forfeited (in shares)	(152,250)	(428,750)
Non-vested ending balance (in shares)		378,500
Weighted Average Grant Date Fair Value
Non-vested beginning balance (in dollars per share)	$ 4.22	$ 9.97
Restricted stock units granted (in dollars per share)	0	3.69
Restricted stock units vested (in dollars per share)	4.18	12.2
Restricted stock units forfeited (in dollars per share)	4.15	4.66
Non-vested ending balance (in dollars per share)	$ 4.59	$ 4.22

Leases (Tables)

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Schedule of Components of Lease Expense

The components of the lease expense were as follows (in thousands):


	December 31,
	2022		2021
Finance lease cost
Amortization of right-of-use asset	$	58	$	49
Interest on lease liabilities		8		12
Operating lease cost		2,542		2,535
Short term lease cost		—		40
Variable lease cost		1,124		2,161

Total net lease cost	$	3,732	$	4,797

Supplemental Balance Sheet Information Related to Leases

Supplemental balance sheet information related to leases is as follows:


	December 31,
	2022			2021

Weighted average remaining lease term—finance leases		3.00 years			2.70 years
Weighted average remaining lease term—operating leases		5.87 years			6.86 years
Weighted average discount rate—finance leases		6.99	%		6.98	%
Weighted average discount rate—operating leases		12.46	%		12.42	%

Supplemental Cash flow Information Related to Leases

Supplemental cash flow information related to leases was as follows (in thousands):


	December 31,
	2022		2021

Cash paid for amounts included in the measurement of operating lease liabilities	$	2,657	$	2,249
Cash paid for amounts included in the measurement of finance lease liabilities	$	64	$	63

Schedule of Company's Operating Lease Liability

At December 31, 2022, the future payments under the Company’s operating and finance lease liabilities were as follows (in thousands):


	Finance Lease			Operating Lease

2023	$	173		$	2,718
2024		109			2,781
2025		109			2,845
2026		26			2,806
2027		—			2,557
Thereafter		—			2,835

Total undiscounted lease payments		417			16,542
Less: imputed interest		(44	)		(4,845	)

Total lease liabilities		373			11,697
Less: current portion		(140	)		(1,375	)

Non-current lease liabilities—December 31, 2022	$	233		$	10,322

Schedule of Company's Finance Lease Liability

At December 31, 2022, the future payments under the Company’s operating and finance lease liabilities were as follows (in thousands):


	Finance Lease			Operating Lease

2023	$	173		$	2,718
2024		109			2,781
2025		109			2,845
2026		26			2,806
2027		—			2,557
Thereafter		—			2,835

Total undiscounted lease payments		417			16,542
Less: imputed interest		(44	)		(4,845	)

Total lease liabilities		373			11,697
Less: current portion		(140	)		(1,375	)

Non-current lease liabilities—December 31, 2022	$	233		$	10,322

Restructurings and impairment charges (Details) - USD ($) $ in Thousands		3 Months Ended			6 Months Ended		12 Months Ended		13 Months Ended
	Nov. 14, 2022	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Mar. 31, 2024	Mar. 06, 2023
Restructuring Cost and Reserve [Line Items]
Number of positions eliminated, period percent	40.00%
Expected cost	$ 1,800
Charges					$ 2,109		$ 1,407
Amounts Paid					2,276		366
Accrued at period end		$ 874			874		1,041
Impairment of property and equipment		0		$ 0	3,418	$ 0
Gain (Loss) on disposition of property plant equipment					47	$ 0	(118)	$ 0
Property and equipment disposals		1,800
Property, Plant and Equipment [Member]
Restructuring Cost and Reserve [Line Items]
Gain (Loss) on disposition of property plant equipment		200
Forecast [Member]
Restructuring Cost and Reserve [Line Items]
Charges			$ 400
General and administrative expenses [Member]
Restructuring Cost and Reserve [Line Items]
Charges							200
Gain (Loss) on disposition of property plant equipment		100
Research and development expenses [Member]
Restructuring Cost and Reserve [Line Items]
Charges							1,200
Gain (Loss) on disposition of property plant equipment		300
November 2022 Reductions [Member]
Restructuring Cost and Reserve [Line Items]
Number of positions eliminated, period percent	40.00%
Expected cost	$ 1,700
Charges					327		1,407
Amounts Paid					1,058		366
Accrued at period end		310			310		1,041
March2023 Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Expected cost										$ 1,800
Charges					1,782
Amounts Paid					1,218
Accrued at period end		$ 564			564		$ 0
March2023 Restructuring Plan [Member] \| Forecast [Member]
Restructuring Cost and Reserve [Line Items]
Number of positions eliminated, period percent									70.00%
March2023 Restructuring Plan [Member] \| General and administrative expenses [Member]
Restructuring Cost and Reserve [Line Items]
Charges					600
March2023 Restructuring Plan [Member] \| Research and development expenses [Member]
Restructuring Cost and Reserve [Line Items]
Charges					$ 1,200

Summary of significant accounting policies

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Accounting Policies [Abstract]

Summary of significant accounting policies

2. Summary of significant accounting policies

(a) Basis of presentation

10-K

for the year ended December 31, 2022, filed with the Securities and Exchange Commission on March 20, 2023.

comprehensive

loss.

(b) Use of estimates and assumptions

pre-clinical,

clinical, and other accruals. Actual results could differ from those estimates.

Property and equipment are recorded at cost and are amortized using the straight-line basis over a range of three to seven years.

(d) Leases

right-of-use

assets are recorded net of any lease incentives received. Variable lease cost primarily includes building operating expenses as charged to the Company by its landlords.

The Company includes options to extend the lease in its lease liability and

right-of-use

For leases of office space and equipment, the Company has elected to not separate the lease components from the

non-lease

components.

(e) Fair value of financial instruments

their

nature and/or short maturities.

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed on the measurement date

Level 2 - quoted prices (in

non-active

markets or in active markets for similar assets or liabilities), observable inputs other than quoted prices and inputs that are not directly observable but are corroborated by observable market data

Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities

The following table presents information about the Company’s financial instruments that are measured at fair value on a recurring basis:


	June 30, 2023
(in thousands)	Total		Level 1		Level 2		Level 3

Financial assets
Money market funds	$	30,593	$	30,593	$	—	$	—
U.S. treasury securities		50,965		50,965		—		—

Total financial assets	$	81,558	$	81,558	$	—	$	—


	December 31, 2022
(in thousands)	Total		Level 1		Level 2		Level 3

Financial assets
Money market funds	$	33,767	$	33,767	$	—	$	—
U.S. treasury securities		61,970		61,970		—		—

Total financial assets	$	95,737	$	95,737	$	—	$	—

(f) Investments

The Company’s short-term investments consist entirely of investments in U.S. treasury securities. These investments are classified as

available-for-sale

year-to-date

credit losses and no allowance for credit losses is recorded as of June 30, 2023. The aggregate fair value of investments with unrealized losses as of June 30, 2023 is $31.1 million.

(g) Net loss per share

equivalents are included in the calculation of diluted earnings per share only in periods of net income and are excluded in the calculation

diluted net loss per share in periods of net loss as their inclusion would be

anti-dilutive.

Outstanding

pre-funded

(h) Accounting for stock-based compensation

The fair value of each RSU is measured using the closing price of the Company’s common stock on the date of grant.

(i) Restructuring charges

The Company records costs and liabilities associated with exit and disposal activities in accordance with ASC 420,

Exit or Disposal Cost Obligations

(j) Recently issued and recently adopted accounting standards

The Company monitors and evaluates the issuance of Accounting Standards Updates (“ASUs”). No ASUs have been issued recently which impact the Company’s financial statements and disclosures.

2. Basis of presentation and summary of significant accounting policies

(a) Basis of presentation

(b) Use of estimates and assumptions

The preparation of financial statements in conformity with U.S. GAAP requires management 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 and the reported amounts of expenses during the reporting period. Significant areas requiring estimates include valuation and recognition of stock-based compensation, the incremental borrowing rate utilized in the measurement of operating and finance lease liabilities, estimated useful lives utilized in the amortization and depreciation of property and equipment, and

pre-clinical,

clinical, and other accruals. Actual results could differ from those estimates.

right-of-use

The Company includes options to extend the lease in its lease liability and

right-of-use

For leases of office space, the Company has elected to not separate the lease components from the

non-lease

components.

operations

on a straight-line basis over the lease term.

(d) Cash, cash equivalents, and restricted cash

2022 and of money market funds as of December 31,

2021.


	December 31,
	2022		2021

Cash and cash equivalents	$	37,887	$	142,467
Restricted cash		878		878

Total cash, cash equivalents, and restricted cash	$	38,765	$	143,345

Restricted cash, included in other

non-current

assets in the balance sheets, includes $0.9 million in cash deposits the Company maintains with its bank as collateral for the irrevocable letters of credits related to its lease obligations.

(e) Property and equipment

Property and equipment are recorded at cost and are amortized using the straight-line basis over a range of three to seven years. Expenditures for maintenance and repairs are expensed as incurred.

The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. Based on management’s assessment there were no indicators of impairment of property and equipment as of December 31, 2022 and 2021.

(f) Net loss per share

pre-funded

(g) Intangible assets subject to amortization

Long-lived intangible assets are

recorded

at the acquired cost and amortized using the straight-line method over their estimated useful life.

(h) Income taxes

financial statements and the tax bases of assets and liabilities and tax carryforwards recognized at enacted

tax

rates. The measurement of deferred tax assets is reduced, if necessary, to the amount more likely than not to be realized by a valuation allowance.

(i) Research and development costs

(j) Accounting for stock-based compensation

The Company has issued stock options and restricted stock units (“RSUs”). The Company measures the cost of services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost of such award is recognized on a straight-line basis over the requisite service period, which is generally the vesting period. Awards subject to performance-based vesting requirements are expensed utilizing a graded vesting model if achievement of the performance criteria is determined to be probable. The Company accounts for forfeitures as they occur. The Company utilizes newly issued shares to satisfy option exercises, the vesting of RSUs, and Employee Stock Purchase Plan purchases.

The Company estimates the fair value of options using the Black-Scholes option pricing model on the grant date. This approximation uses assumptions regarding a number of inputs that requires management to make significant estimates and judgments. The expected term represents the period that the Company’s stock-based awards are expected to be outstanding. As the Company does not have sufficient historical experience for determining the expected term of the stock option awards granted, the Company has based its expected term for awards issued to employees on the simplified method, which represents the average period from vesting to the expiration of the stock option. In addition, the Company does not have sufficient trading history for the Company’s common stock, and therefore, the expected stock price volatility for the Company’s common stock was estimated by taking the average historical price volatility for industry peers. The Company has never declared or paid any cash dividends to common stockholders and does not presently plan to pay cash dividends in the foreseeable future. Consequently, the Company used an expected dividend yield of zero. The risk-free interest rate was based on the yields of treasury securities with maturities similar to the expected term of the options for each option group.

The fair value of each RSU is measured using the closing price of the Company’s common stock on the date of grant.

(k) Segment reporting

The Company operates in one segment, the research and

development

de novo

(l) Fair value of financial instruments

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed on the measurement date

Level 2 - quoted prices (in

non-active

markets or in active markets for similar assets or liabilities), observable inputs other than quoted prices and inputs that are not directly observable but are corroborated by observable market data

Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities

The following table presents information about the Company’s financial instruments that are measured at fair value on a recurring basis:


	December 31, 2022
(in thousands)	Total		Level 1		Level 2		Level 3

Financial assets
Money market funds	$	33,767	$	33,767	$	—	$	—
U.S. treasury securities		61,970		61,970		—		—

Total financial assets	$	95,737	$	95,737	$	—	$	—


	December 31, 2021
(in thousands)	Total		Level 1		Level 2		Level 3

Financial assets
Money market funds	$	140,856	$	140,856	$	—	$	—
U.S. treasury securities		—		—		—		—

Total financial assets	$	140,856	$	140,856	$	—	$	—

(m) Investments

The Company’s short-term investments consist entirely of investments in U.S. treasury securities. These investments are classified as

available-for-sale

The Company assesses investments for

impairment

year-to-date

credit losses and no allowance for credit losses is recorded as of December 31, 2022 or 2021. The aggregate fair value of investments with unrealized losses as of December 31, 2022 is $40.7 million.

(n) Concentration of credit risk

(o) Restructuring charges

The Company records costs and liabilities associated with exit and disposal activities in accordance with ASC 420,

Exit or Disposal Cost Obligations

(p) Recently issued and recently adopted accounting standards

In June 2016, the FASB issued Accounting Standard Update (“ASU”)

No. 2016-13,

Measurement of Credit Losses on Financial Instruments

(ASU

2016-13),

2019-10,

Financial Instruments – Credit Losses

(Topic 326),

Derivatives

(Topic 815), and

Leases

Condensed Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Common Stock Pre-Funded Warrants	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)
Balance, beginning (in shares) at Dec. 31, 2020		42,196,296
Balance, beginning at Dec. 31, 2020	$ 191,216			$ 524,022	$ (332,806)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued upon exercises of stock options (in shares)		124,928
Shares issued upon exercises of stock options	411			411
Shares issued upon vesting of restricted stock units (in shares)		84,500
Issuance of shares under Employee Stock Purchase Plan (in shares)		51,747
Issuance of shares under Employee Stock Purchase Plan	372			372
Stock-based compensation	11,557			11,557
Net loss	(60,692)				(60,692)
Balance, ending (in shares) at Dec. 31, 2021		42,457,471
Balance, ending at Dec. 31, 2021	142,864			536,362	(393,498)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued upon exercises of stock options (in shares)		36,500
Shares issued upon exercises of stock options	134			134
Stock-based compensation	2,446			2,446
Net loss	(15,351)				(15,351)
Balance, ending (in shares) at Mar. 31, 2022		42,493,971
Balance, ending at Mar. 31, 2022	130,093			538,942	(408,849)	$ 0
Balance, beginning (in shares) at Dec. 31, 2021		42,457,471
Balance, beginning at Dec. 31, 2021	142,864			536,362	(393,498)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Unrealized gain (loss) on available-for-sale securities	(72)
Net loss	(31,039)
Balance, ending (in shares) at Jun. 30, 2022		42,579,852
Balance, ending at Jun. 30, 2022	116,708			541,317	(424,537)	(72)
Balance, beginning (in shares) at Dec. 31, 2021		42,457,471
Balance, beginning at Dec. 31, 2021	$ 142,864			536,362	(393,498)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued upon exercises of stock options (in shares)	36,500	36,500
Shares issued upon exercises of stock options	$ 134			134
Shares issued upon vesting of restricted stock units (in shares)		24,750
Issuance of shares under Employee Stock Purchase Plan (in shares)		129,625
Issuance of shares under Employee Stock Purchase Plan	82			82
Unrealized gain (loss) on available-for-sale securities	(21)					(21)
Stock-based compensation	8,829			8,829
Net loss	(57,557)				(57,557)
Balance, ending (in shares) at Dec. 31, 2022		42,648,346
Balance, ending at Dec. 31, 2022	94,331			545,407	(451,055)	(21)
Balance, beginning (in shares) at Mar. 31, 2022		42,493,971
Balance, beginning at Mar. 31, 2022	130,093			538,942	(408,849)	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued upon vesting of restricted stock units (in shares)		10,000
Issuance of shares under Employee Stock Purchase Plan (in shares)		75,881
Issuance of shares under Employee Stock Purchase Plan	63			63
Unrealized gain (loss) on available-for-sale securities	(72)					(72)
Stock-based compensation	2,312			2,312
Net loss	(15,688)				(15,688)
Balance, ending (in shares) at Jun. 30, 2022		42,579,852
Balance, ending at Jun. 30, 2022	116,708			541,317	(424,537)	(72)
Balance, beginning (in shares) at Dec. 31, 2022		42,648,346
Balance, beginning at Dec. 31, 2022	94,331			545,407	(451,055)	(21)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued upon vesting of restricted stock units (in shares)		170,000
Unrealized gain (loss) on available-for-sale securities	39					39
Stock-based compensation	1,191			1,191
Net loss	(14,204)				(14,204)
Balance, ending (in shares) at Mar. 31, 2023		42,818,346
Balance, ending at Mar. 31, 2023	81,357			546,598	(465,259)	18
Balance, beginning (in shares) at Dec. 31, 2022		42,648,346
Balance, beginning at Dec. 31, 2022	$ 94,331			545,407	(451,055)	(21)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued upon exercises of stock options (in shares)	0	36,500
Unrealized gain (loss) on available-for-sale securities	$ 8
Net loss	(16,289)
Balance, ending (in shares) at Jun. 30, 2023		44,021,429
Balance, ending at Jun. 30, 2023	79,576			546,933	(467,344)	(13)
Balance, beginning (in shares) at Mar. 31, 2023		42,818,346
Balance, beginning at Mar. 31, 2023	81,357			546,598	(465,259)	18
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued upon vesting of restricted stock units (in shares)		10,000
Shares issued upon the exercise of pre-funded warrants (in shares)			1,180,000
Issuance of shares under Employee Stock Purchase Plan (in shares)		13,083
Issuance of shares under Employee Stock Purchase Plan	4			4
Unrealized gain (loss) on available-for-sale securities	(31)					(31)
Stock-based compensation	331			331
Net loss	(2,085)				(2,085)
Balance, ending (in shares) at Jun. 30, 2023		44,021,429
Balance, ending at Jun. 30, 2023	$ 79,576			$ 546,933	$ (467,344)	$ (13)

Equity - Schedule of Weighted Average Assumptions (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Equity [Abstract]
Expected volatility	87.37%	82.68%	86.77%	83.01%	84.00%	89.00%
Expected dividends	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Expected terms (years)	5 years 3 months 7 days	5 years 8 months 23 days	5 years 7 months 6 days	5 years 11 months 15 days	6 years 14 days	6 years 10 days
Risk free rate	3.82%	2.77%	3.67%	2.22%	2.66%	0.93%

License and patent agreements	12 Months Ended
License and patent agreements	Dec. 31, 2022
License Agreement [Abstract]
License and patent agreements	11. License and patent agreements On July 8, 2019, Neoleukin Therapeutics, Inc., or Former Neoleukin, entered into an exclusive license agreement with the University of Washington (“UW”), under which UW (on behalf of itself and Stanford University) granted the Company an exclusive worldwide license under certain patent rights, to make, have made, use, offer to sell, sell, offer to lease or lease, import, export or otherwise offer to dispose of licensed products in all fields of use, and a nonexclusive worldwide license to use certain know-how. The foregoing licenses are sublicensable by the Company without UW’s consent, subject to certain limited conditions. The Exclusive License Agreement was amended effective as of July 24, 2020 to, among other things, (i) add a jointly owned de novo cytokine antagonist to the agreement, (ii) specify royalties, milestone payments and sublicense consideration payments payable by Neoleukin for certain jointly licensed products, (iii) specify the term for achievement of performance milestones for certainly jointly licensed products, and (iv) terminate UW’s right to participate in equity financings. The Exclusive License Agreement was amended a second time, effective as of December 15, 2021 to, among other things, add a second jointly owned patent application family directed to de novo cytokine antagonists to the agreement subject to the same terms of the first jointly owned patent application family. As consideration for the licensed rights, Former Neoleukin issued 536,813 shares of common stock to UW. These shares were exchanged for 188,974 shares of common stock of the Company and 4,197 shares of non-voting convertible preferred stock on the completion of the merger of Former Neoleukin into the Company in August 2019. Such convertible preferred shares were subsequently converted into 419,700 shares of common stock in November 2019. Furthermore, the Company is required to pay; (i) an annual maintenance fee beginning in January 2022 (but excluding any year in which minimum annual royalties are paid); (ii) up to $0.9 million in combined development and regulatory milestone payments with respect to each distinct class of licensed product; (iii) up to $10.0 million in combined commercial milestone payments based on cumulative net sales of licensed products within each distinct class of licensed products, beginning when cumulative net sales of the class of licensed products equals or exceeds $100.0 million, with the majority payable when cumulative net sales of the class of licensed products equals or exceeds $1.0 billion; (iv) a low single-digit royalty on net sales of licensed products sold by the Company and its sublicensees, which may be subject to reductions, and subject to minimum annual royalty payments following the first commercial sale of a licensed product; (v) a certain percentage of any sublicense consideration (other than royalties) the Company receives from sublicensees, based on the stage of development at the time the sublicense is executed; and (vi) a certain percentage of consideration the Company receives from an acquisition of the Company or its assets based on the stage of development at the relevant time. The Company is obligated to pay royalties on a country-by-country basis until the expiration of the last valid claim within the licensed patent rights in such country. The agreement will expire upon the expiration of the last valid claim within the licensed patent rights. The Company may terminate the agreement upon prior written notice to UW. UW may terminate the agreement by a specified number of days’ notice if the Company permanently ceases operations, becomes insolvent or similar, or if the Company challenges the validity of the licensed patent rights. In addition, UW may terminate the agreement for material breach that is not cured within a specified number of days, which cure period is to be at least doubled if the Company is proceeding diligently to cure the default.

Net loss per share - Schedule of Securities Excluded From Computation of Earnings Per Share (Details) - shares	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from computation of earnings per share (in shares)	4,690,269	8,318,265	4,690,269	8,318,265	8,942,132	9,149,391
Outstanding stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from computation of earnings per share (in shares)	4,636,560	7,638,393	4,636,560	7,638,393	8,514,381	8,963,945
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from computation of earnings per share (in shares)	46,250	603,000	46,250	603,000	378,500	132,000
Shares issuable under 2020 ESPP
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from computation of earnings per share (in shares)	7,459	76,872	7,459	76,872	49,251	53,446

Income taxes - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Income Taxes Disclosure [Line Items]
Capitalized research and development	$ 6,920	$ 0
Net operating losses carried forward for tax purposes	124,900	108,200
Operating loss carryforwards subject to expiration	1,700
Operating loss carryforwards not subject to expiration	123,200
Increase (decrease) in valuation allowance	12,300	12,900
Research Tax Credit Carryforward [Member]
Income Taxes Disclosure [Line Items]
Tax credits for research and development	$ 3,900	$ 2,400

Property and equipment, net - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Cost	$ 9,115	$ 8,087
Accumulated Amortization	2,952	1,635
Net Book Value	6,163	6,452
Laboratory equipment
Property, Plant and Equipment [Line Items]
Cost	6,773	6,237
Accumulated Amortization	1,926	1,006
Net Book Value	4,847	5,231
Furniture, fixtures, and IT equipment
Property, Plant and Equipment [Line Items]
Cost	2,342	1,850
Accumulated Amortization	1,026	629
Net Book Value	$ 1,316	$ 1,221

Summary of significant accounting policies (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Accounting Policies [Abstract]

Schedule of Cash and Cash Equivalents

The following table provides a reconciliation of cash, cash equivalents, and restricted cash in the condensed balance sheets that sum to the total of the same such amounts shown in the condensed statements of cash flows:


(in thousands)	June 30, 2023		December 31, 2022

Cash and cash equivalents	$	31,110	$	37,887
Restricted cash		508		878

Total cash, cash equivalents, and restricted cash	$	31,618	$	38,765


	December 31,
	2022		2021

Cash and cash equivalents	$	37,887	$	142,467
Restricted cash		878		878

Total cash, cash equivalents, and restricted cash	$	38,765	$	143,345

Restrictions on Cash and Cash Equivalents


(in thousands)	June 30, 2023		December 31, 2022

Cash and cash equivalents	$	31,110	$	37,887
Restricted cash		508		878

Total cash, cash equivalents, and restricted cash	$	31,618	$	38,765


	December 31,
	2022		2021

Cash and cash equivalents	$	37,887	$	142,467
Restricted cash		878		878

Total cash, cash equivalents, and restricted cash	$	38,765	$	143,345

Schedule of Fair Value, Assets

The following table presents information about the Company’s financial instruments that are measured at fair value on a recurring basis:


	June 30, 2023
(in thousands)	Total		Level 1		Level 2		Level 3

Financial assets
Money market funds	$	30,593	$	30,593	$	—	$	—
U.S. treasury securities		50,965		50,965		—		—

Total financial assets	$	81,558	$	81,558	$	—	$	—


	December 31, 2022
(in thousands)	Total		Level 1		Level 2		Level 3

Financial assets
Money market funds	$	33,767	$	33,767	$	—	$	—
U.S. treasury securities		61,970		61,970		—		—

Total financial assets	$	95,737	$	95,737	$	—	$	—

The following table presents information about the Company’s financial instruments that are measured at fair value on a recurring basis:


	December 31, 2022
(in thousands)	Total		Level 1		Level 2		Level 3

Financial assets
Money market funds	$	33,767	$	33,767	$	—	$	—
U.S. treasury securities		61,970		61,970		—		—

Total financial assets	$	95,737	$	95,737	$	—	$	—


	December 31, 2021
(in thousands)	Total		Level 1		Level 2		Level 3

Financial assets
Money market funds	$	140,856	$	140,856	$	—	$	—
U.S. treasury securities		—		—		—		—

Total financial assets	$	140,856	$	140,856	$	—	$	—

Intangible asset, net

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible asset, net

5. Intangible asset, net

The following table summarizes intangible asset (in thousands):


	December 31,
	2022			2021

Cost	$	659		$	659
Accumulated amortization		(659	)		(531	)

Net intangible asset	$	—		$	128

Intangible asset, net, which is fully amortized as of December 31, 2022, included an assembled workforce that was acquired in 2019 and was being amortized over its expected life of 3 years based on management’s judgment. Amortization expense was $0.1 million for the year ended December 31, 2022 and $0.2 million for the year ended December 31, 2021.

Condensed Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Operating expenses
Research and development	$ (426)	$ 10,956	$ 7,263	$ 21,656	$ 41,129	$ 39,162
General and administrative	3,492	4,915	7,519	9,580	17,968	21,536
Impairment of property and equipment	0	0	3,418	0
Total operating expenses	3,066	15,871	18,200	31,236	59,097	60,698
Loss from operations	(3,066)	(15,871)	(18,200)	(31,236)	(59,097)	(60,698)
Interest income	981	194	1,926	207	1,582	19
Other income (loss), net	0	(11)	(15)	(10)	(42)	(13)
Net loss	(2,085)	(15,688)	(16,289)	(31,039)	(57,557)	(60,692)
Comprehensive income (loss)
Unrealized gain (loss) on available-for-sale securities	(31)	(72)	8	(72)	(21)
Comprehensive loss	$ (2,116)	$ (15,760)	$ (16,281)	$ (31,111)	$ (57,578)	$ (60,692)
Net loss per share - basic (in dollars per share)	$ (0.04)	$ (0.28)	$ (0.29)	$ (0.56)	$ (1.04)	$ (1.1)
Net loss per share - diluted (in dollars per share)	$ (0.04)	$ (0.28)	$ (0.29)	$ (0.56)	$ (1.04)	$ (1.1)
Basic weighted average number of shares outstanding (in shares)	56,158,629	55,203,709	55,791,808	55,173,789	55,221,161	55,041,662
Diluted weighted average common shares outstanding (in shares)	56,158,629	55,203,709	55,791,808	55,173,789	55,221,161	55,041,662

Property and equipment, net - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 1.4	$ 1.1

Cash, cash equivalents, and restricted cash (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents [Abstract]

Schedule of Cash and Cash Equivalents


(in thousands)	June 30, 2023		December 31, 2022

Cash and cash equivalents	$	31,110	$	37,887
Restricted cash		508		878

Total cash, cash equivalents, and restricted cash	$	31,618	$	38,765


	December 31,
	2022		2021

Cash and cash equivalents	$	37,887	$	142,467
Restricted cash		878		878

Total cash, cash equivalents, and restricted cash	$	38,765	$	143,345

Restrictions on Cash and Cash Equivalents


(in thousands)	June 30, 2023		December 31, 2022

Cash and cash equivalents	$	31,110	$	37,887
Restricted cash		508		878

Total cash, cash equivalents, and restricted cash	$	31,618	$	38,765


	December 31,
	2022		2021

Cash and cash equivalents	$	37,887	$	142,467
Restricted cash		878		878

Total cash, cash equivalents, and restricted cash	$	38,765	$	143,345

Leases - Supplemental Cash flow Information Related to Leases (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Leases [Abstract]
Cash paid for amounts included in the measurement of operating lease liabilities	$ 2,657	$ 2,249
Cash paid for amounts included in the measurement of finance lease liabilities	$ 64	$ 63

Cash, cash equivalents, and restricted cash - Additional Information (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents [Abstract]
Cash deposit	$ 0.5	$ 0.9

Investments (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Cash equivalents:
Amortized Cost	$ 31,110	$ 37,887	$ 142,467
Short-term investments:
Amortized Cost	81,558	95,758
Gross Unrealized Gains	2	6
Gross Unrealized Losses	(15)	(27)
Fair Value	81,545	95,737
U.S. treasury securities
Cash equivalents:
Amortized Cost		3,473
Fair Value		3,473
Short-term investments:
Amortized Cost	50,965	58,518
Gross Unrealized Gains	2	6
Gross Unrealized Losses	(15)	(27)
Fair Value	50,952	58,497
Money market funds
Cash equivalents:
Amortized Cost	30,593	33,767	140,856
Fair Value	$ 30,593	$ 33,767	$ 140,856

Stockholders' equity (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Equity [Abstract]

Schedule of Stock Option Activity

A summary of the Company’s stock option activity and related information for the six months ended June 30, 2023 is as follows:


	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)		Aggregate Intrinsic Value (in Thousands)

Outstanding at December 31, 2022		8,514,381		$	4.89		8.32	$	—
Options granted		260,500		$	0.70
Options exercised		—		$	—
Options cancelled/forfeited		(4,138,321	)	$	5.07

Outstanding at June 30, 2023		4,636,560		$	3.96		4.41	$	11

Exercisable as of June 30, 2023		3,534,712		$	4.51		3.01	$	—

Stock options

A summary of the Company’s stock option activity and related information for the year ended December 31, 2022 is as follows:


	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (In Years)		Aggregate Intrinsic Value (In Thousands)

Outstanding at December 31, 2021		8,963,945		$	7.20		8.32	$	6,912
Options granted		3,431,050		$	1.32
Options exercised		(36,500	)	$	3.67
Options cancelled/forfeited		(3,844,114	)	$	7.10

Outstanding at December 31, 2022		8,514,381		$	4.89		8.32	$	—

Exercisable as of December 31, 2022		3,890,924		$	6.01		7.18	$	—

Schedule of Weighted Average Assumptions

The fair values of stock options granted are estimated using the Black-Scholes option pricing model with the following weighted average assumptions:


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022

Expected volatility		87.37	%		82.68	%		86.77	%		83.01	%
Expected dividends		0	%		0	%		0	%		0	%
Expected terms (years)		5.27			5.73			5.60			5.96
Risk free rate		3.82	%		2.77	%		3.67	%		2.22	%

The fair value of stock options granted is estimated using the Black-Scholes option pricing model with the following weighted average assumptions:


	December 31,
	2022			2021

Expected volatility		84	%		89	%
Expected dividends		0	%		0	%
Expected terms (years)		6.04			6.03
Risk free rate		2.66	%		0.93	%

Schedule of RSU Activity

Restricted stock units

A summary of the Company’s restricted stock unit activity and related information for the year ended December 31, 2022 is as follows:


	Number of Shares			Weighted Average Grant Date Fair Value

Non-vested at December 31, 2021		132,000		$	9.97
Restricted stock units granted		700,000		$	3.69
Restricted stock units vested		(24,750	)	$	12.20
Restricted stock units forfeited		(428,750	)	$	4.66

Non-vested at December 31, 2022		378,500		$	4.22

Summary of Stock-based Compensation Expense

Stock-based compensation expense is classified in the condensed statements of operations and comprehensive income (loss) as follows:


(in thousands)	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

Research and development expenses	$	—	$	1,051	$	255	$	2,315
General and administrative expenses		331		1,261		1,267		2,443

Total stock-based compensation expense	$	331	$	2,312	$	1,522	$	4,758

Stock-based compensation expense is classified in the statements of operations as follows (in thousands):


	December 31,
	2022		2021
Research and development expenses	$	4,342	$	5,095
General and administrative expenses		4,487		6,462

Total stock-based compensation expense	$	8,829	$	11,557

Schedule of Unvested Restricted Stock Units Roll Forward

(d) Restricted stock units

A summary of the Company’s RSU activity and related information for the six months ended June 30, 2023 is as follows:


	Number of Shares			Weighted Average Grant Date Fair Value

Non-vested at December 31, 2022		378,500		$	4.22
Restricted stock units granted		—		$	—
Restricted stock units vested		(180,000	)	$	4.18
Restricted stock units forfeited		(152,250	)	$	4.15

Non-vested at June 30, 2023		46,250		$	4.59

Intangible asset, net (Tables)

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Asset

The following table summarizes intangible asset (in thousands):


	December 31,
	2022			2021

Cost	$	659		$	659
Accumulated amortization		(659	)		(531	)

Net intangible asset	$	—		$	128

Summary of significant accounting policies - Additional Information (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 USD ($) shares	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 USD ($) shares	Dec. 31, 2022 USD ($) segment shares	Dec. 31, 2021 shares
Lessee, Lease, Description [Line Items]
Security deposit	$ 500,000		$ 500,000		$ 900,000
Outstanding pre-funded warrants (in shares) \| shares					12,663,010	12,663,010
Number of operating segments \| segment					1
Fair value, investments, unrealized loss	31,100,000		31,100,000		$ 40,700,000
Impairment of property and equipment	0	$ 0	3,418,000	$ 0
Allowance for credit loss	$ 0		$ 0
Expected dividends	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Prefunded Warrants
Lessee, Lease, Description [Line Items]
Outstanding pre-funded warrants (in shares) \| shares	11,483,010	12,663,010	11,483,010	12,663,010
Minimum
Lessee, Lease, Description [Line Items]
Property and equipment, useful life	3 years		3 years		3 years
Maximum
Lessee, Lease, Description [Line Items]
Property and equipment, useful life	7 years		7 years		7 years
Office space \| Maximum
Lessee, Lease, Description [Line Items]
Lease term	12 months		12 months		12 months

Condensed Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 31,110	$ 37,887	$ 142,467
Short-term investments	50,952	58,497
Other current assets	1,718	2,750	1,522
Total current assets	83,780	99,134	143,989
Property and equipment, net	561	6,163	6,452
Operating lease right-of-use asset	9,135	9,715	10,766
Intangible asset, net		0	128
Other non-current assets	529	936	1,928
Total assets	94,005	115,948	163,263
Current liabilities
Accounts payable and other liabilities	3,387	9,547	7,415
Operating lease liability	1,490	1,375	1,166
Finance lease liability	3	140	55
Total current liabilities	4,880	11,062	8,636
Non-current operating lease liability	9,543	10,322	11,696
Non-current finance lease liability	6	233	67
Total liabilities	14,429	21,617	20,399
Stockholders' equity
Common stock - $0.000001 par value - authorized, 100,000,000 as of June 30, 2023 and December 31, 2022; issued and outstanding, 44,021,429 as of June 30, 2023 and 42,648,346 as of December 31, 2022	0	0	0
Preferred stock - $0.000001 par value - authorized, 5,000,000 as of June 30, 2023 and December 31, 2022; issued and outstanding, 0 as of June 30, 2023 and December 31, 2022	0	0	0
Additional paid-in capital	546,933	545,407	536,362
Accumulated other comprehensive income (loss)	(13)	(21)
Accumulated deficit	(467,344)	(451,055)	(393,498)
Total stockholders' equity	79,576	94,331	142,864
Total liabilities and stockholders' equity	$ 94,005	$ 115,948	$ 163,263

Accounts payable and other liabilities

12 Months Ended

Dec. 31, 2022

Payables and Accruals [Abstract]

Accounts payable and other liabilities

6. Accounts payable and other liabilities

Accounts payable and other liabilities consist of the

following

(in thousands):


	December 31,
	2022		2021

Trade accounts payable	$	478	$	526
Accrued clinical and preclinical expenses		4,360		2,399
Accrued compensation and vacation		3,539		3,263
Other accrued liabilities		1,170		1,227

	$	9,547	$	7,415

Equity - Schedule of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Number of Shares
Options outstanding at beginning of period (in shares)	8,514,381	8,963,945
Options granted (in shares)	260,500	3,431,050
Options exercised (in shares)	0	(36,500)
Options cancelled/forfeited (in shares)	(4,138,321)	(3,844,114)
Options outstanding at end of period (in shares)	4,636,560	8,514,381	8,963,945
Options exercisable, Number of options (in shares)	3,534,712	3,890,924
Weighted Average Exercise Price
Options outstanding at beginning of period (in dollars per share)	$ 4.89	$ 7.2
Options granted (in dollars per share)	0.7	1.32
Options exercised (in dollars per share)	0	3.67
Options cancelled/forfeited (in dollars per share)	5.07	7.1
Options outstanding at end of period (in dollars per share)	3.96	4.89	$ 7.2
Options exercisable, Weighted average exercise price (in dollars per share)	$ 4.51	$ 6.01
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Options outstanding, Weighted average remaining contractual life (in years)	8 years 3 months 25 days	8 years 3 months 25 days	8 years 3 months 25 days
Options exercisable, Weighted average remaining contractual life (in years)	3 years 3 days	7 years 2 months 4 days
Options outstanding at beginning of period, Aggregate intrinsic value (in dollars)	$ 0	$ 6,912
Options outstanding at end of period, Aggregate intrinsic value (in dollars)	11	0	$ 6,912
Options exercisable, Aggregate intrinsic value (in dollars)	$ 0	$ 0
Previously Reported [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Options outstanding, Weighted average remaining contractual life (in years)	4 years 4 months 28 days

Income taxes - Schedule of Net (Loss) Income Before Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
U.S.	$ (57,578)	$ (60,692)
Total	$ (57,578)	$ (60,692)

- Definition

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 944
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(11))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483586/944-220-S99-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 30
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-30

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (f)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 5: http://www.xbrl.org/2003/role/exampleRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 31
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-31

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 942
-SubTopic 235
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-05(b)(2))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479557/942-235-S99-1

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Name Accounting Standards Codification
-Section 25
-Paragraph 1
-SubTopic 20
-Topic 940
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481913/940-20-25-1

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(10))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483621/220-10-S99-2

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 942
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(15))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483589/942-220-S99-1

+ Details

Restructurings and impairment charges

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Restructuring and Related Activities [Abstract]

Restructuring Plan

8. Restructurings and impairment charges

November workforce reduction

On November 14, 2022, the Company announced a corporate restructuring as a result of the strategic decision to discontinue further development of

NL-201.

In conjunction with this decision, the Company’s Board of Directors approved a restructuring plan that included a reduction of approximately 40% of the Company’s workforce (the “November 2022 Reduction”).

In connection with the November 2022 Reduction, the Company expects to incur aggregate restructuring charges consisting of severance payments, benefits, and other employee related costs of $1.7 million, of which $1.4 million was recognized during the fourth quarter of 2022. The remaining $0.3 million was incurred during the six months ended June 30, 2023, all of which is included in research and development expenses in the statement of operations and comprehensive income (loss). The Company expects to pay all remaining restructuring charges associated with the November 2022 Reduction by the end of the third quarter of 2023.

March workforce reduction

On March 6, 2023, the Company’s Board of Directors approved a reduction in force of the Company’s workforce by approximately 70% in connection with a

re-prioritization

of the Company’s focus on seeking strategic alternatives to maximize stockholder value (the “March 2023 Restructuring Plan”).

In connection with the March 2023 Restructuring Plan, the Company expects to incur additional aggregate restructuring charges consisting of severance payments, benefits, and other employee related costs of $1.8 million, all of which was incurred during the six months ended June 30, 2023. Of the $1.8 million of restructuring charges incurred during the six months ended June 30, 2023, $0.6 million is included in general and administrative expenses and $1.2 million is included in research and development expenses in the condensed statement of operations and comprehensive income (loss). The Company expects to pay all remaining restructuring charges associated with the March 2023 Restructuring Plan by the end of the first quarter of 2024.

A summary of the accrued liabilities activity recorded in connection with the November 2022 Reduction and March 2023 Restructuring Plan for the six months ended June 30, 2023 is as follows (in thousands):


	Accrued at December 31, 2022		Charges		Amounts Paid			Accrued at June 30, 2023

Employee severance, benefits, and related costs
November 2022 Reduction	$	1,041	$	327	$	(1,058	)	$	310
March 2023 Restructuring Plan	$	—	$	1,782	$	(1,218	)	$	564

Total	$	1,041	$	2,109	$	(2,276	)	$	874

Impairment charges

As a result of the March 2023 Restructuring Plan, the Company determined that sufficient indicators existed to trigger the performance of an interim long-lived asset impairment analysis as of March 31, 2023. In the first quarter of 2023, the Company tested the recoverability of its asset groups for property and equipment using entity-specific undiscounted cash flows. Based on these undiscounted cash flows, the Company concluded the undiscounted future cash flows expected to result from the eventual disposition of its long-lived assets were less than the carrying value of the asset groups. Therefore, the Company measured the long-lived asset impairment as the amount by which the carrying value of the asset group exceeds its fair value and recorded an impairment charge of $3.4 million. The fair value of the asset group reflect the Company’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset group which represents a Level 3 fair value measurement. During the three months ended June 30, 2023, the Company sold property and equipment previously assessed for impairment with a carrying value of $1.8 million, for a $0.2 million gain on sale, net. Of this total gain, $0.3 million of gain on sale is included in research and development expenses and a $0.1 million loss on sale included in general and administrative expenses in the condensed statement of operations and comprehensive income (loss).

13. Workforce reduction

On November 14, 2022, the Company announced the decision to discontinue further development of

NL-201.

In conjunction with this decision, the Company’s Board of Directors approved a restructuring plan that includes a reduction of approximately 40% of the Company’s workforce (the “November 2022 Reduction”).

The Company expects to incur aggregate restructuring charges consisting of severance payments, benefits, and other employee related costs of $1.8 million, of which $1.4 million was incurred during the year ended December 31, 2022 and the remaining $0.4 million will be incurred during the quarter ended March 31, 2023 due to future service requirements by certain employees to receive severance benefits. Of the $1.4 million of restructuring charges incurred during the year ended December 31, 2022, $0.2 million is included in general and administrative expenses and $1.2 million is included in research and development expenses in the statement of operations and comprehensive income. The Company expects to pay all remaining restructuring charges by the end of 2023.

A summary of the accrued liabilities activity recorded in connection with the November 2022 Reduction for the year ended December 31, 2022 is as follows (in thousands):


	Charges		Amounts Paid		Accrued at December 31, 2022

Employee severance, benefits, and related costs
November 2022 Reduction	$	1,407	$	366	$	1,041

Total	$	1,407	$	366	$	1,041

Subsequent Events (Details) - USD ($) $ in Millions			4 Months Ended
Subsequent Events (Details) - USD ($) $ in Millions	Jul. 17, 2023	Nov. 14, 2022	Jun. 30, 2023	Mar. 06, 2023
Subsequent Event [Line Items]
Number of positions eliminated, period percent		40.00%
Expected cost		$ 1.8
Subsequent Event
Subsequent Event [Line Items]
Expected non-cash expense				$ 0.3
Subsequent Event \| Neoleukin [Member] \| Merger Agreement [Member]
Subsequent Event [Line Items]
Business combination termination fee	$ 12.0
Business combination reimbursement of expenses	1.0
Subsequent Event \| Neurogene [Member] \| Neoleukin [Member] \| Merger Agreement [Member]
Subsequent Event [Line Items]
Business combination termination fee	3.0
Business combination reimbursement of expenses	$ 1.0
Subsequent Event \| Forecast [Member]
Subsequent Event [Line Items]
Number of positions eliminated, period percent			70.00%
Subsequent Event \| Minimum
Subsequent Event [Line Items]
Expected cost				2.5
Subsequent Event \| Maximum
Subsequent Event [Line Items]
Expected cost				$ 3.0

Leases - Schedule of Components of Lease Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Finance lease cost
Amortization of right-of-use asset	$ 58	$ 49
Interest on lease liabilities	8	12
Operating lease cost	2,542	2,535
Short term lease cost	0	40
Variable lease cost	1,124	2,161
Total net lease cost	$ 3,732	$ 4,797

Accounts payable and other liabilities (Tables)

12 Months Ended

Dec. 31, 2022

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Other Liabilities

Accounts payable and other liabilities consist of the

following

(in thousands):


	December 31,
	2022		2021

Trade accounts payable	$	478	$	526
Accrued clinical and preclinical expenses		4,360		2,399
Accrued compensation and vacation		3,539		3,263
Other accrued liabilities		1,170		1,227

	$	9,547	$	7,415

Accounts payable and other liabilities - Schedule of Accounts Payable and Other Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Trade accounts payable	$ 478	$ 526
Accrued clinical and preclinical expenses	4,360	2,399
Accrued compensation and vacation	3,539	3,263
Other accrued liabilities	1,170	1,227
Accounts payable and other liabilities	$ 9,547	$ 7,415

Equity

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Equity [Abstract]

Equity

6. Equity

(a) Common stock and

pre-funded

warrants

The Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.000001 as of June 30, 2023 and December 31, 2022. As of June 30, 2023 and December 31, 2022, the total number of shares of common stock issued and outstanding was 44,021,429 and 42,648,346, respectively.

As of June 30, 2023, the Company had

pre-funded

warrants outstanding to purchase an aggregate of 11,483,010 shares of common stock.

The

pre-funded

warrants are exercisable at any time for an exercise price of $0.000001, except that the terms of the

pre-funded

warrants provide that such warrants cannot be exercised by the holders if, after giving effect thereto, the holders would beneficially own more than 9.99% of the outstanding common stock (the “Exercise Cap”), subject to certain exceptions. However, any holder may increase or decrease the Exercise Cap to any other percentage (not in excess of 19.99%) upon at least 61 days’ prior notice from the holder to the Company. On July 18, 2023, the Company received notice from the holders of all of our outstanding

pre-funded

warrants to increase the Exercise Cap up to 19.99%, effective 61 days from the date of such notice. The holders of the

pre-funded

warrants will not have the right to vote on any matter except to the extent required by Delaware law.

During the three months ended June 30, 2023, 1,180,000 shares of common stock were issued upon the exercise of

pre-funded

warrants. Proceeds of the exercise to the Company were immaterial.

On November 4, 2021, the Company entered into an ATM or “at-the-market” Equity Offering Sales Agreement (the “Sales Agreement”) with BofA Securities, Inc., as agent (“BofA”), pursuant to which the Company may offer and sell, from time to time through BofA, shares of the Company’s common stock, having an aggregate offering price of up to $40.0 million. The offer and sale of the shares will be made pursuant to a shelf registration statement on Form

S-3

and the related prospectus filed on December 11, 2020, and declared effective by the SEC on December 21, 2020, as supplemented by a prospectus supplement dated November 4, 2021. The Company has no obligation to sell any such shares under the Sales Agreement. Through June 30, 2023, no sales of common stock have been made pursuant to the Sales Agreement. As of March 20, 2023, the Company is subject to limitations on the amount of funds the Company can raise by selling shares of our common stock using our Form

S-3,

including sales under this ATM facility, to

one-third

of the aggregate market value of the shares of our common stock held by

non-affiliates,

or public float, due to the

so-called

“baby shelf” requirements set forth in the SEC general instructions of Form

S-3.

These restrictions will

remain

in place until such time as our public float exceeds $75 million.

(b) Stock-based compensation expense

Stock-based compensation expense is classified in the condensed statements of operations and comprehensive income (loss) as follows:


(in thousands)	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

Research and development expenses	$	—	$	1,051	$	255	$	2,315
General and administrative expenses		331		1,261		1,267		2,443

Total stock-based compensation expense	$	331	$	2,312	$	1,522	$	4,758

Total unrecognized compensation expense for all stock-based compensation plans was $1.6 million as of June 30, 2023. This expense is expected to be recognized over a weighted average remaining vesting period of 1.88 years.

The fair values of stock options granted are estimated using the Black-Scholes option pricing model with the following weighted average assumptions:


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022

Expected volatility		87.37	%		82.68	%		86.77	%		83.01	%
Expected dividends		0	%		0	%		0	%		0	%
Expected terms (years)		5.27			5.73			5.60			5.96
Risk free rate		3.82	%		2.77	%		3.67	%		2.22	%

A summary of the Company’s stock option activity and related information for the six months ended June 30, 2023 is as follows:


	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)		Aggregate Intrinsic Value (in Thousands)

Outstanding at December 31, 2022		8,514,381		$	4.89		8.32	$	—
Options granted		260,500		$	0.70
Options exercised		—		$	—
Options cancelled/forfeited		(4,138,321	)	$	5.07

Outstanding at June 30, 2023		4,636,560		$	3.96		4.41	$	11

Exercisable as of June 30, 2023		3,534,712		$	4.51		3.01	$	—

There were no exercises of options during the six months ended June 30, 2023. During the six months ended June 30, 2022, 36,500 shares of common stock were issued upon exercise of options with an aggregate intrinsic value of $0.1 million. The weighted-average grant date fair value of options granted during the six months ended June 30, 2023 and June 30, 2022 was $0.51 and $1.47 per share, respectively.

(d) Restricted stock units

A summary of the Company’s RSU activity and related information for the six months ended June 30, 2023 is as follows:


	Number of Shares			Weighted Average Grant Date Fair Value

Non-vested at December 31, 2022		378,500		$	4.22
Restricted stock units granted		—		$	—
Restricted stock units vested		(180,000	)	$	4.18
Restricted stock units forfeited		(152,250	)	$	4.15

Non-vested at June 30, 2023		46,250		$	4.59

(e) Employee stock purchase plan

The Company’s 2020 ESPP was adopted by the Company’s Board of Directors in March 2020 and approved by the Company’s stockholders in May 2020. A total of 759,936 shares of common stock have been reserved for issuance under the 2020 ESPP.

Subject to share and dollar limits as described in the plan, the 2020 ESPP allows eligible employees to contribute, through payroll deductions, up to 15% of their earnings for the purchase of shares of the Company’s common stock at the lower of 85% of the closing price of the Company’s common stock on the first trading day of the offering period or 85% of the closing price of the Company’s common stock on the last trading day of the offering period. There are two

six-month

offering periods during each fiscal year, ending on May 15 and November 15.

As of June 30, 2023 and December 31, 2022, employee contributions included in accounts payable and accrued liabilities in the accompanying condensed balance sheet were immaterial.

8. Stockholders’ equity

(a) Common stock and

pre-funded

warrants

The Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.000001 per share as of December 31, 2022. As of December 31, 2022, and 2021, the total number of shares of common stock issued and outstanding was 42,648,346, and 42,457,471, respectively.

The Company has

pre-funded

warrants outstanding to purchase an aggregate of 12,663,010 shares of common stock as of December 31, 2022. The

pre-funded

warrants are exercisable at any time for an exercise price of $0.000001, except that the

pre-funded

warrants cannot be exercised by the holders if, after giving effect thereto, the holders would beneficially own more than 9.99% of the outstanding common stock, subject to certain exceptions. However, any holder may increase or decrease such percentage to any other percentage (not in excess of 19.99%) upon at least 61 days’ prior notice from the holder to the Company. The holders of the

pre-funded

warrants will not have the right to vote on any matter except to the extent required by Delaware law.

On November 4, 2021, the Company entered into an ATM

“at-the-market”

Equity

Offering Sales Agreement (the “Sales Agreement”) with BofA Securities, Inc., as agent (“BofA”), pursuant to which the Company may offer and sell, from time to time through BofA, shares of the Company’s common stock, having an aggregate offering price of up to $40.0 million. The offer and sale of the shares will be made pursuant to a shelf registration statement on Form

S-3

(b) Preferred stock

The Company is authorized to issue 5,000,000 shares of preferred stock with a par value of $0.000001 per share. As of December 31, 2022 and 2021, 0 shares of preferred stock were issued or outstanding.

The 2014 Equity Incentive Plan (“2014 Plan”), as amended and restated on May 13, 2021, became effective in March 2014 and is the successor to and continuation of the Joint Canadian Stock Option Plan (the “2006 Plan”). No further grants will be made under the 2006 Plan. The 2014 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards, and other forms of equity awards to employees, directors, and consultants.

As of December 31, 2022, the maximum number of shares of common stock that may be issued under the 2014 Plan was 13,408,356. The number of shares of common stock reserved for issuance under the 2014 Plan will be increased by the number of shares subject to stock options granted under the 2006 Plan that would have otherwise returned to the 2006 Plan, such as upon the expiration or termination of a stock award prior to vesting. As of December 31, 2022, there were no shares subject to stock options granted under the 2006 Plan. Additionally, the number of shares of common stock reserved for issuance under the 2014 Plan will automatically increase on January 1 of each year, beginning on January 1, 2022 and ending on and including January 1, 2030, by 4.00% of the sum of (A) the total number of shares of capital stock and (B) the total number of shares of common stock subject to

pre-funded

warrants, in each case outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the board of directors. On January 1, 2023, the number of shares of common stock reserved under the 2014 Plan was increased by 2,212,454 shares. All stock options granted pursuant to the 2014 Plan have a contractual term of ten years. All awards granted to date are equity classified and subject to either service or performance based vesting, typically over a period of one to four years.

The number of shares available to be granted under the 2014 Plan was 6,705,058 and 5,040,300 as of December 31, 2022 and 2021, respectively.

Stock options

A summary of the Company’s stock option activity and related information for the year ended December 31, 2022 is as follows:


	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (In Years)		Aggregate Intrinsic Value (In Thousands)

Outstanding at December 31, 2021		8,963,945		$	7.20		8.32	$	6,912
Options granted		3,431,050		$	1.32
Options exercised		(36,500	)	$	3.67
Options cancelled/forfeited		(3,844,114	)	$	7.10

Outstanding at December 31, 2022		8,514,381		$	4.89		8.32	$	—

Exercisable as of December 31, 2022		3,890,924		$	6.01		7.18	$	—

During the year ended December 31, 2022, 36,500 shares of common stock were issued upon exercise of options with an aggregate intrinsic value of $0.1 million. During the year ended December 31, 2021, 124,928 shares of common stock were issued upon exercise of options with an aggregate intrinsic value of $1.3 million. The weighted-average grant date fair value of

options

granted during the years ended December 31, 2022 and 2021 was $0.95 and $6.37 per share, respectively.

The fair value of stock options granted is estimated using the Black-Scholes option pricing model with the following weighted average assumptions:


	December 31,
	2022			2021

Expected volatility		84	%		89	%
Expected dividends		0	%		0	%
Expected terms (years)		6.04			6.03
Risk free rate		2.66	%		0.93	%

Restricted stock units

A summary of the Company’s restricted stock unit activity and related information for the year ended December 31, 2022 is as follows:


	Number of Shares			Weighted Average Grant Date Fair Value

Non-vested at December 31, 2021		132,000		$	9.97
Restricted stock units granted		700,000		$	3.69
Restricted stock units vested		(24,750	)	$	12.20
Restricted stock units forfeited		(428,750	)	$	4.66

Non-vested at December 31, 2022		378,500		$	4.22

(d) Stock-based compensation

Stock-based compensation expense is classified in the statements of operations as follows (in thousands):


	December 31,
	2022		2021
Research and development expenses	$	4,342	$	5,095
General and administrative expenses		4,487		6,462

Total stock-based compensation expense	$	8,829	$	11,557

Total unrecognized compensation for all stock-based compensation was $13.4 million as of December 31, 2022, which is expected to be recognized over a weighted-average period of 2.15 years.

(e) Employee stock purchase plan

The Company’s 2020 Employee Stock Purchase Plan (“2020 ESPP”) was adopted by the Company’s board of directors in March 2020 and approved by the Company’s stockholders in May 2020. A total of 759,936 shares of common stock have been reserved for issuance under the 2020 ESPP.

Subject to share and dollar limits as described in the plan, the 2020 ESPP allows eligible employees to contribute, through payroll deductions, up to 15% of their earnings for the purchase of the Company’s shares of common stock at the lower of 85% of the closing price of the Company’s common stock on the first trading day of the offering period or 85% of the closing price of the Company’s common stock on the last trading day of the offering period. There are two

six-month

offering periods during each

fiscal

year, ending on May 15 and November 15.

During the year ended December 31, 2022, the Company issued 75,881 shares of common stock at a price per share of $0.83 and 53,744 of shares of common stock at a price per share of $0.36, respectively, under the 2020 ESPP. During the year ended December 31, 2021, the Company issued 22,972 shares of common stock at a price per share of $9.53 and 28,775 of shares of common stock at a price per share of $5.33, respectively, under the 2020 ESPP. Cash received from the purchases under the 2020 ESPP for the years ended December 31, 2022 and 2021 was $0.1 million and $0.4 million, respectively. As of December 31, 2022 and 2021, employee contributions included in accounts payable and accrued liabilities in the accompanying balance sheet were immaterial.

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 505
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481004/946-505-50-6

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 815
-SubTopic 40
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480237/815-40-50-6

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480008/505-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 505
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//505/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 16
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-16

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

+ Details

Leases - Additional Information (Details) $ in Thousands	1 Months Ended	6 Months Ended		12 Months Ended
Leases - Additional Information (Details) $ in Thousands	Dec. 31, 2022 USD ($) ft²	Jun. 30, 2023 USD ($) ft² OPTION	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) ft² OPTION	Dec. 31, 2021 USD ($)	Jan. 31, 2020 USD ($)
Lessee, Lease, Description [Line Items]
Security deposit	$ 900	$ 500		$ 900
Tenant improvements (up to)				9,500
Sublease, base lease payments	500
Increase in lease liability		(664)	$ (563)	(1,165)	$ (687)
Operating lease right-of-use assets	9,715	9,135		9,715	10,766
Finance lease right-of-use assets	$ 500	0		$ 500	$ 200
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Property and equipment, net			Property and equipment, net
Standby Letters of Credit
Lessee, Lease, Description [Line Items]
Security deposit						$ 500
Office space, principal executive offices and laboratory
Lessee, Lease, Description [Line Items]
Tenant improvements (up to)		$ 9,500
Washington \| Office space, principal executive offices and laboratory
Lessee, Lease, Description [Line Items]
Square feet of office space leased \| ft²	33,300	33,300		33,300
Number of option to extend leases \| OPTION		2		2
Lease agreement extended period	5 years	5 years		5 years
Washington \| Office space, additional offices and laboratory
Lessee, Lease, Description [Line Items]
Square feet of office space leased \| ft²	6,272	6,272		6,272
Lease agreement extended period	28 months	28 months		28 months
Increase in right-of-use-asset				$ 1,600
Increase in lease liability				$ 1,600

Summary of significant accounting policies - Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Money market funds	$ 30,593	$ 33,767	$ 140,856
U.S. treasury securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Money market funds		3,473
Fair Value, Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total financial assets	81,558	95,737	140,856
Fair Value, Recurring \| Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Money market funds	30,593	33,767	140,856
Fair Value, Recurring \| Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total financial assets	81,558	95,737	140,856
Fair Value, Recurring \| Level 1 \| Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Money market funds	30,593	33,767	140,856
Fair Value, Recurring \| Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total financial assets	0	0	0
Fair Value, Recurring \| Level 2 \| Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Money market funds	0	0	0
Fair Value, Recurring \| Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total financial assets	0	0	0
Fair Value, Recurring \| Level 3 \| Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Money market funds	0	0	0
Fair Value, Recurring \| U.S. treasury securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
U.S. treasury securities	50,965	61,970
Fair Value, Recurring \| U.S. treasury securities \| Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
U.S. treasury securities	50,965	61,970
Fair Value, Recurring \| U.S. treasury securities \| Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
U.S. treasury securities	0	0	0
Fair Value, Recurring \| U.S. treasury securities \| Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
U.S. treasury securities	$ 0	$ 0	$ 0

Cash, cash equivalents, and restricted cash

6 Months Ended

Jun. 30, 2023

Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents [Abstract]

Cash, cash equivalents, and restricted cash

3. Cash, cash equivalents, and restricted cash


(in thousands)	June 30, 2023		December 31, 2022

Cash and cash equivalents	$	31,110	$	37,887
Restricted cash		508		878

Total cash, cash equivalents, and restricted cash	$	31,618	$	38,765

Restricted cash, included in other

non-current

assets in the condensed balance sheets, includes $0.5 million in cash deposits the Company maintains with its bank as collateral for the irrevocable letter of credit related to its lease obligations.

Subsequent Events	6 Months Ended	12 Months Ended
Subsequent Events	Jun. 30, 2023	Dec. 31, 2022
Subsequent Events [Abstract]
Subsequent Events	9. Subsequent Events Merger Agreement On July 17, 2023, the Company, Merger Sub, and Neurogene entered into the Merger Agreement, pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Neurogene, with Neurogene continuing as a wholly owned subsidiary of Neoleukin and the surviving corporation of the merger (the “Merger”). The Merger is expected to close in the fourth quarter of 2023, subject to approval by the Company’s and Neurogene’s stockholders, the effectiveness of a registration statement to be filed with the SEC to register the securities to be issued in connection with the Merger, and the satisfaction of customary closing conditions. Holders of common stock of Neoleukin and pre-funded warrants exercisable for common stock of Neoleukin immediately prior to the Merger will be issued a contingent value right (“CVR”), at the closing of the Merger that will entitle them to receive payments in cash or shares of the surviving company (at the surviving company’s election) through June 30, 2029 in the event that (a) certain legacy assets of Neoleukin are sold prior to or in the first year following the closing of the Merger, (b) there is a reduction of any lease obligations of Neoleukin, net of certain costs, and (c) the Company receives any amounts from the State of Washington in connection with a sales tax refund being submitted to the State of Washington. Holders of options to purchase stock of Neoleukin at the time of the closing who later exercise those options shall also be entitled to receive one CVR per share issued on exercise of such option, provided, however, that no payments of prior amounts paid to the holders of the CVRs shall be owing to such option holder upon exercise. The Merger Agreement contains certain termination rights of each of Neoleukin and Neurogene. Upon termination of the Merger Agreement under specified circumstances, Neoleukin may be required to pay Neurogene a termination fee of $3.0 million and/or reimburse Neurogene’s expenses up to a maximum of $1.0 million, and Neurogene may be required to pay Neoleukin a termination fee of $12.0 million and/or reimburse Neoleukin’s expenses up to a maximum of $1.0 million.	14. Subsequent Events On March 6, 2023, the Company’s Board of Directors approved a reduction in force of the Company’s workforce by approximately 70% and a re-prioritization of the Company’s focus to seek strategic alternatives to maximize shareholder value (the “Restructuring Plan”). The Company’s current best estimate of costs it will incur total between $2.5 million and $3.0 million, consisting of employee related costs, including severance and benefits and equity compensation, contract termination costs, and other costs. Approximately $0.3 million of these costs are expected to be non-cash expenses. The majority of these costs are expected to be incurred during the first half of 2023, and the Company expects the execution of the Restructuring Plan will be substantially complete by the end of the second quarter of 2023. These costs are incremental to the exit and disposal costs previously disclosed in Item 5 of the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 14, 2022.

Summary of significant accounting policies - Cash and cash equivalents and restricted cash (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021	Dec. 31, 2020
Accounting Policies [Abstract]
Cash and cash equivalents	$ 31,110	$ 37,887		$ 142,467
Restricted cash	508	878		878
Total cash, cash equivalents, and restricted cash	$ 31,618	$ 38,765	$ 78,404	$ 143,345	$ 193,434

401(k) plan	12 Months Ended
401(k) plan	Dec. 31, 2022
Retirement Benefits [Abstract]
401(k) plan	12. 401(k) plan In May 2020, the Company established a 401(k) plan that allows full-time employees to contribute a portion of their salary, subject to statutory limits. The Company makes matching cash contributions up to a pre-defined annual maximum contribution per employee per year. During the years ended December 31, 2022 and December 31, 2021, the Company’s total expense for the matching contributions was immaterial.

Property and equipment, net (Tables)

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

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


	December 31, 2022
	Cost		Accumulated Amortization		Net Book Value

Laboratory equipment	$	6,773	$	1,926	$	4,847
Furniture, fixtures, and IT equipment		2,342		1,026		1,316

	$	9,115	$	2,952	$	6,163


	December 31, 2021
	Cost		Accumulated Amortization		Net Book Value

Laboratory equipment	$	6,237	$	1,006	$	5,231
Furniture, fixtures, and IT equipment		1,850		629		1,221

	$	8,087	$	1,635	$	6,452

Condensed Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
Condensed Statements of Cash Flows - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Operating activities
Net loss	$ (16,289)	$ (31,039)	$ (57,557)	$ (60,692)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	1,522	4,758	8,829	11,557
Depreciation and amortization	406	870	1,561	1,306
Impairment of property and equipment	3,418	0
Amortization of operating lease right-of-use assets	580	509	1,051	971
Amortization and accretion of premiums/discounts on available-for-sale securities	(1,178)	3	(494)	0
Gain (Loss) on sale/disposal of property and equipment	(47)	0	118	0
Changes in operating assets and liabilities:
Other current assets and other non-current assets	1,046	(537)	(206)	129
Accounts payable and accrued liabilities	(5,876)	614	2,256	(142)
Operating lease liabilities	(664)	(563)	(1,165)	(687)
Net cash used in operating activities	(17,082)	(25,385)	(45,607)	(47,558)
Investing activities
Purchases of property and equipment	(551)	(684)	(1,110)	(3,263)
Proceeds from sale of property and equipment	2,115	0
Purchases of available-for-sale securities	(55,269)	(39,067)	(107,524)	0
Proceeds from maturities of available-for-sale securities	64,000	0	49,500	0
Net cash provided by (used in) investing activities	10,295	(39,751)	(59,134)	(3,263)
Financing activities
Proceeds from exercise of stock options	0	134	134	411
Payment on finance lease obligations	(364)	(2)	(55)	(51)
Proceeds from the issuance of common stock under Employee Stock Purchase Plan	4	63	82	372
Net cash provided by (used in) financing activities	(360)	195	161	732
Net change in cash, cash equivalents, and restricted cash during the period	(7,147)	(64,941)	(104,580)	(50,089)
Cash, cash equivalents, and restricted cash, beginning of period	38,765	143,345	143,345	193,434
Cash, cash equivalents, and restricted cash, end of period	31,618	78,404	38,765	143,345
Supplemental disclosure of non-cash investing and financing activities:
Operating lease liabilities arising from obtaining right-of-use asset			0	1,584
Finance lease liabilities arising from obtaining right-of-use asset			307	0
Purchases of property and equipment unpaid at period-end	$ 0	$ 265	$ 283	$ 412

Investments (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Investments, Debt and Equity Securities [Abstract]

Schedule of Investments

The Company’s investments consist of the following:


	June 30, 2023
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

Cash equivalents:
Money market funds	$	30,593	$	—	$	—		$	30,593
Short-term investments:
U.S. treasury securities - due within 1 year		50,965		2		(15	)		50,952

Total	$	81,558	$	2	$	(15	)	$	81,545


	December 31, 2022
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash equivalents:
Money market funds	$	33,767	$	—	$	—		$	33,767
U.S. treasury securities - due within 3 months		3,473		—		—			3,473
Short-term investments:
U.S. treasury securities - due within 1 year		58,518		6		(27	)		58,497

Total	$	95,758	$	6	$	(27	)	$	95,737

The Company’s investments consist of the following (in thousands):


	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash equivalents:

Money market funds	$	33,767	$	—	$	—		$	33,767
U.S. treasury securities - due within 3 months		3,473		—		—			3,473
Short-term investments:
U.S. treasury securities - due within 1 year		58,518		6		(27	)		58,497

Total	$	95,758	$	6	$	(27	)	$	95,737


	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash equivalents:

Money market funds		140,856		—		—		140,856

Total	$	140,856	$	—	$	—	$	140,856

- Definition

Tabular disclosure of investment in debt security measured at fair value with change in fair value recognized in other comprehensive income (available-for-sale).

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-9

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-3

Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
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+ Details

Cover Page	6 Months Ended
Cover Page	Jun. 30, 2023
Document Information [Line Items]
Document Type	S-4
Entity Registrant Name	NEOLEUKIN THERAPEUTICS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	98-0542593
Entity Address, Address Line One	188 East Blaine Street
Entity Address, Address Line Two	Suite 450
Entity Address, City or Town	Seattle
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	98102
City Area Code	866
Local Phone Number	245-0312
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Amendment Flag	false
Entity Central Index Key	0001404644
Entity Primary SIC Number	2834
Business Contact [Member]
Document Information [Line Items]
Entity Address, Address Line One	188 East Blaine Street
Entity Address, Address Line Two	Suite 450
Entity Address, City or Town	Seattle
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	98102
City Area Code	866
Local Phone Number	245-0312
Contact Personnel Name	Donna M. Cochener

Condensed Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.000001	$ 0.000001	$ 0.000001
Common stock, shares authorized (in shares)	100,000,000	100,000,000	100,000,000
Common stock, shares issued (in shares)	44,021,429	42,648,346	42,457,471
Common stock, shares outstanding (in shares)	44,021,429	42,648,346	42,457,471
Preferred stock, par value (in dollars per share)	$ 0.000001	$ 0.000001	$ 0.000001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0	0
Preferred stock, shares outstanding (in shares)	0	0	0

Workforce reduction (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Restructuring and Related Activities [Abstract]

Summary of Restructuring Charges


	Accrued at December 31, 2022		Charges		Amounts Paid			Accrued at June 30, 2023

Employee severance, benefits, and related costs
November 2022 Reduction	$	1,041	$	327	$	(1,058	)	$	310
March 2023 Restructuring Plan	$	—	$	1,782	$	(1,218	)	$	564

Total	$	1,041	$	2,109	$	(2,276	)	$	874

A summary of the accrued liabilities activity recorded in connection with the November 2022 Reduction for the year ended December 31, 2022 is as follows (in thousands):


	Charges		Amounts Paid		Accrued at December 31, 2022

Employee severance, benefits, and related costs
November 2022 Reduction	$	1,407	$	366	$	1,041

Total	$	1,407	$	366	$	1,041

Leases - Schedule of Company's Operating and Finance Lease Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Finance Lease
2023		$ 173
2024		109
2025		109
2026		26
2027		0
Thereafter		0
Total undiscounted lease payments		417
Less: imputed interest		(44)
Total lease liabilities		373
Less: current portion	$ (3)	(140)	$ (55)
Non-current lease liabilities—December 31, 2022	6	233	67
Operating Lease
2023		2,718
2024		2,781
2025		2,845
2026		2,806
2027		2,557
Thereafter		2,835
Total undiscounted lease payments		16,542
Less: imputed interest		(4,845)
Total lease liabilities		11,697
Less: current portion	(1,490)	(1,375)	(1,166)
Non-current lease liabilities—December 31, 2022	$ 9,543	$ 10,322	$ 11,696

Equity - Summary of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 331	$ 2,312	$ 1,522	$ 4,758	$ 8,829	$ 11,557
Research and development expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	0	1,051	255	2,315	4,342	5,095
General and administrative expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 331	$ 1,261	$ 1,267	$ 2,443	$ 4,487	$ 6,462

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Income taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income taxes

10. Income taxes

Income tax recovery varies from the amounts that would be computed by applying the expected U.S. federal income tax rate (21%) as shown in the following table:


	December 31,
	2022			2021

Statutory federal income tax rate		(21.0	)%		(21.0	)%
Stock-based compensation		2.2			2.0
Change in valuation allowance		21.4			21.2
Tax credits		(2.6	)		(2.2	)

Income tax recovery		—	%		—	%


Net loss before taxes (in thousands):	Years Ended December 31,
	2022			2021

U.S.		(57,578	)		(60,692	)

Total	$	(57,578	)	$	(60,692	)


	December 31,
	2022			2021

Deferred tax assets:
U.S. net operating losses	$	26,362		$	22,863
Research and development deductions and credits		3,931			2,414
Intangibles		446			457
Lease liability		2,456			2,701
Stock-based compensation		2,274			1,695
Capitalized research and development		6,920			—
Other		168			186

Total deferred tax assets:		42,557			30,316
Deferred income tax liabilities
Right-of-use assets		2,040			2,261
Other		410			287

Total deferred tax liabilities		2,450			2,548

Net deferred income tax assets		40,107			27,768
Less: valuation allowance		(40,107	)		(27,768	)

Deferred tax assets, net of valuation allowance	$	—		$	—

The Tax Cuts and Jobs Act contained a provision which requires the capitalization of Section 174 costs incurred in years beginning on or after January 1, 2022. Section 174 costs are expenditures which represent research and development costs that are incident to the development or improvement of a product, process, formula, invention, computer software, or technique. This provision changes the treatment of Section 174 costs such that the expenditures are no longer allowed as an immediate deduction but rather must be capitalized and amortized.

The Company has included the impact of this provision, which results in a deferred tax asset of approximately $6.9 million as of December 31, 2022.

At December 31, 2022 and December 31, 2021, the Company had U.S. federal net operating losses (“NOL”) carryforwards for tax purposes of approximately $124.9 million and $108.2 million, respectively, which were available to reduce taxable income. Of the $124.9 million of federal NOL carryforwards, $1.7 million will expire between the years 2028 and 2037 and the remaining $123.2 million are indefinite. The Company also has U.S. federal research & development tax credits of $3.9 million and $2.4 million as of December 31, 2022 and December 31, 2021, respectively, that begin to expire in 2039. The Company completed a formal study under IRC Section 382 through 2019 to determine the U.S. tax attributes available for use. The U.S. attributes disclosed reflect the conclusion of that study. However, subsequent ownership changes may further affect the limitation in future years.

The Company maintains a full valuation allowance on its net U.S. deferred tax assets. The assessment regarding whether a valuation allowance is required considers both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. In making this assessment, significant weight is given to evidence that can be objectively verified. In its evaluation, the Company considered its cumulative losses and its forecasted losses in the near-term as significant negative evidence. Therefore, the Company determined that the negative evidence outweighed the positive evidence and a full valuation allowance on its assets will be maintained. The Company will continue to assess the realizability of its assets going forward and will adjust the valuation allowance as needed. The

valuation

allowance increased by $12.3 million for the

year ended December 31, 2022. The increase is primarily due to an increase in U.S. net operating losses, capitalized research expense, and research and development tax credits. The valuation allowance increased by $12.9 million for the year ended December 31, 2021. The increase is primarily due to an increase in U.S. net operating losses and research and development tax credits.

The Company applies judgment in the determination of the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. As of December 31, 2022, the Company had no uncertain tax positions.

The Company currently files income tax returns in the United States, the jurisdictions in which the Company believes that it is subject to tax. Further, while the statute of limitations in each jurisdiction where an income tax return has been filed generally limits the examination period, as a result of loss carryforwards, the limitation period for examination generally does not expire until several years after the loss carryforwards are utilized. Other than routine audits by tax authorities for tax credits and tax refunds that the Company has claimed, the Company is not aware of any other material income tax examination currently in progress by any taxing jurisdiction.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details