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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from           to           
Commission File Number: 001-39303
PLIANT THERAPEUTICS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware47-4272481
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
260 Littlefield Avenue 
South San Francisco, CA
94080
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (650) 481-6770
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading
Symbol
Name of Each Exchange on which Registered
Common Stock, par value $0.0001 per sharePLRXThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 5, 2023, the registrant had 59,156,444 shares of common stock, $0.0001 par value per share, outstanding.



Table of Contents
  
  
  

2


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, or this Report, contains forward-looking statements that involve risks, uncertainties, and assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The statements contained in this Report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms, and similar expressions that convey uncertainty of future events or outcomes. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Forward-looking statements in this Report include, but are not limited to, statements about:
Our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
The success, cost and timing of our product development activities and clinical trials of our lead product candidate, bexotegrast (PLN-74809), as well as PLN-1474 and our other product candidates;
Our estimates regarding the impact of the COVID-19 pandemic on our business and operations, and our ability to manage such impacts;
Our or our current or future collaborators' plans to initiate, recruit and enroll patients in, and conduct our clinical trials at the pace that we project;
Our plans and strategy to obtain and maintain regulatory approvals of our product candidates;
Our plans and strategy to obtain funding for our operations, including funding necessary to complete further development and, upon successful development, if approved, commercialize any of our product candidates;
The potential benefit of orphan drug and fast track designations for bexotegrast;
Our ability to compete with companies currently marketing or engaged in the development of treatments for fibrosis;
Our plans and strategy regarding obtaining and maintaining intellectual property protection for our product candidates and the duration of such protection;
Our plans and strategy regarding the manufacture of our product candidates for clinical trials and for commercial use, if approved;
Our dependence on current and future collaborators for developing, obtaining regulatory approval for and commercializing product candidates in the collaboration;
Our receipt and timing of any milestone payments or royalties under any current or future research collaboration or license agreements or arrangements;
Our plans and strategy regarding the commercialization of any products that are approved for marketing and our ability to establish adequate pricing in the U.S. and international markets;
The size and growth potential of the markets for our product candidates, and our ability to serve those markets, either alone or in combination with others;
Our ability to attract and retain qualified employees and key personnel; and
Our expectations regarding government and third-party payor coverage and reimbursement.
These statements are based on the beliefs and assumptions of our management, which are in turn based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results and timing expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Risk Factors” included under Part II, Item 1A in this Report. Furthermore, such forward-looking statements speak only as of the date of this Report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
3


SUMMARY OF RISKS ASSOCIATED WITH OUR BUSINESS
Our business involves significant risks, some of which are summarized below. The summary risk factors listed below should be read together with the text of the full risk factors discussed in "Part II, Item 1A. Risk Factors" in this Report. You should carefully consider the risks described below, as well as the other information in this Report, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in other documents that we file with the Securities and Exchange Commission, or the SEC. The occurrence of any of the events or developments described in this Report could have a material adverse effect on our business, financial condition, results of operations, growth prospects and stock price. In such an event, the market price of our common stock could decline. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations and the market price of our common stock.

Risks Related to Our Financial Position and Need for Additional Capital
We have incurred significant net losses since inception, and we expect to continue to incur significant net losses for the foreseeable future.
We will require substantial additional capital to finance our operations. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and drug development programs, future commercialization efforts or other operations.

Risks Related to Research and Development and the Biopharmaceutical Industry
We have a limited operating history, which may make it difficult to evaluate our prospects and likelihood of success.
Our business is highly dependent on the success of our lead product candidate, bexotegrast, as well as PLN-1474 and any other product candidates that we advance into the clinic. All of our product candidates will require significant additional preclinical and clinical development before we may be able to seek regulatory approval for and launch a product commercially.
Our approach to drug discovery and development in the area of fibrotic diseases is unproven and may not result in marketable products.
Clinical development involves a lengthy, complex, and expensive process, with an uncertain outcome to support either a marketing authorization or positive pricing and reimbursement decisions.
We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of bexotegrast or any other product candidates.
We may fail to obtain and maintain certain regulatory exclusivities and orphan designations in some jurisdictions and therefore fail to secure orphan exclusivity or other exclusivity extensions in those jurisdictions.
Our ongoing and future clinical trials may reveal significant adverse events or unexpected drug-drug interactions not seen in our preclinical studies and may result in a safety profile that could delay or prevent regulatory approval or market acceptance of any of our product candidates.
If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.
We face substantial competition, which may result in others discovering, developing, or commercializing products before or more successfully than us.

Risks Related to Our Intellectual Property
Our success depends in part on our ability to obtain patent term extensions and to protect our intellectual property. It is difficult and costly to protect our proprietary rights and technology, and we may not be able to ensure their protection.
4


Our collaborators may assert ownership or commercial rights to inventions they develop from research we support, or that we develop from our use of the tissue samples or other biological materials which they provide to us, or otherwise arising from the collaboration.

Risks Related to Our Reliance on Third Parties
We previously entered into a collaboration agreement, as amended, with Novartis Institutes for Biomedical Research, Inc., or Novartis, for the development of PLN-1474, which was terminated in April 2023, and may in the future seek to enter into collaborations with third parties for the development and commercialization of other product candidates. If we fail to enter into such collaborations, or if our collaborations are not successful, we may be unable to continue development of such product candidates, we would not receive any contemplated milestone payments or royalties, and we could fail to capitalize on the market potential of such product candidates.
We rely on third parties to conduct certain aspects of our preclinical studies and clinical trials and for tissue samples and other materials required for our research and development activities.
We rely on single-source third party suppliers located in foreign jurisdictions, including China, to manufacture our drug candidates. An interruption in this supply, caused by a business interruption or geopolitical events, could materially disrupt our research and development activities.

Risks Related to Managing Our Business and Operations
The ongoing COVID-19 pandemic could adversely impact our business, including our preclinical studies and clinical trials.
Our loss of key management personnel, or our failure to recruit additional highly skilled personnel, will impair our ability to develop current product candidates or identify and develop new product candidates, could result in loss of markets or market share and could make us less competitive.


5


PART I—FINANCIAL INFORMATION
Item 1. Condensed Financial Statements.
Pliant Therapeutics, Inc.
Condensed Balance Sheets
(Unaudited)
(In thousands, except number of shares and per share amounts)
 March 31,
2023
*December 31,
2022
Assets
Current assets
Cash and cash equivalents$102,527 $33,685 
Short-term investments474,787 297,502 
Accounts receivable3,297 1,983 
Tax credit receivable83 83 
Prepaid expenses and other current assets (Note 5)7,533 7,058 
Total current assets588,227 340,311 
     Property and equipment, net4,197 4,486 
     Operating lease right-of-use assets4,813 5,422 
     Other non-current assets644 394 
Total assets$597,881 $350,613 
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable$1,419 $1,580 
Accrued research and development14,621 11,218 
Accrued liabilities (Note 6)4,733 8,658 
Lease liabilities, current2,380 2,457 
Total current liabilities23,153 23,913 
Lease liabilities, non-current2,850 3,429 
Long-term debt (Note 7)9,958 9,929 
Total liabilities35,961 37,271 
Stockholders’ equity
Common stock, $0.0001 par value; 300,000,000 shares authorized at March 31, 2023 and December 31, 2022; and 58,978,902 and 48,941,254 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively;
6 5 
Additional paid-in capital939,205 653,707 
Accumulated deficit(375,960)(338,412)
Accumulated other comprehensive loss(1,331)(1,958)
Total stockholders’ equity561,920 313,342 
Total liabilities and stockholders’ equity$597,881 $350,613 
*The condensed balance sheet as of December 31, 2022 has been derived from the audited financial statements as of that date.
The accompanying notes are an integral part of these condensed financial statements
6


Pliant Therapeutics, Inc.
Condensed Statements of Operations and Comprehensive Loss
(Unaudited)
(In thousands, except number of shares and per share amounts)
Three Months Ended
March 31,
20232022
Revenue$1,332 $1,249 
Operating expenses:
Research and development(29,273)(20,881)
General and administrative(14,154)(8,579)
Total operating expenses(43,427)(29,460)
Loss from operations(42,095)(28,211)
Interest and other income (expense), net4,858 111 
Interest expense(311) 
Net loss$(37,548)$(28,100)
Net loss attributable to common stockholders$(37,548)$(28,100)
Net loss per share, attributable to common stockholders:
Basic$(0.67)$(0.78)
Diluted$(0.67)$(0.78)
Shares used in computing net loss per share attributable to common stockholders:
Basic56,057,603 36,116,440 
Diluted56,057,603 36,116,440 
Comprehensive loss:
Net loss$(37,548)$(28,100)
Net unrealized gain (loss) on short-term investments and cash equivalents627 (749)
Total comprehensive gain (loss)627 (749)
Comprehensive loss$(36,921)$(28,849)
The accompanying notes are an integral part of these condensed financial statements.
7


Pliant Therapeutics, Inc.
Condensed Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except number of shares and per share amounts)
    Additional
Paid-In
Capital
Accumulated
Other
Comprehensive Loss
Accumulated
Deficit
Total
Stockholders’
Equity
 Common Stock
 SharesAmount
Balance at December 31, 202248,941,254 $5 $653,707 $(1,958)$(338,412)$313,342 
Common stock issued in a public offering, net of offering expenses9,583,334 1 269,914 — — 269,915 
Option exercises454,314 — 3,661 — — 3,661 
Stock-based compensation expense— — 11,923 — — 11,923 
Net unrealized gain on short-term investments— — — 627 — 627 
Net loss— — — — (37,548)(37,548)
Balance at March 31, 202358,978,902 $6 $939,205 $(1,331)$(375,960)$561,920 

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

8


Pliant Therapeutics, Inc.
Condensed Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except number of shares and per share amounts)
    Additional
Paid-In
Capital
Accumulated
Other
Comprehensive Loss
Accumulated
Deficit
Total
Stockholders’
Equity
 Common Stock
 SharesAmount
Balance at December 31, 202136,083,301 $3 $414,348 $(201)$(215,091)$199,059 
Vesting of restricted stock awards15,606 — 1 — — $1 
Option exercises63,552 — 51 — — 51 
Stock-based compensation expense— — 3,531 — — 3,531 
Net unrealized loss on short-term investments— — — (749)— (749)
Net loss— — — — (28,100)(28,100)
Balance at March 31, 202236,162,459 $3 $417,931 $(950)$(243,191)$173,793 

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


9


Pliant Therapeutics, Inc.
Condensed Statements of Cash Flows
(Unaudited)
  Three Months Ended
March 31,
(In thousands)20232022
Cash flows from operating activities  
Net loss$(37,548)$(28,100)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense452 455 
Stock-based compensation expense11,923 3,531 
Non-cash operating lease expense609 244 
(Accretion) amortization on short-term investments (2,584)272 
Changes in operating assets and liabilities:
Accounts receivable(1,314)749 
Prepaid expenses and other current assets(476)1,013 
Other non-current assets 207 
Accounts payable(144)1,770 
Accrued liabilities(538)(364)
Operating lease liabilities(656)(275)
Net cash used in operating activities(30,276)(20,498)
Cash flows from investing activities
Purchase of short-term investments(276,620)(39,228)
Maturity of short-term investments102,575 41,403 
Purchase of property and equipment(163)(644)
Net cash (used in) provided by investing activities(174,208)1,531 
Cash flows from financing activities
Proceeds from issuances of common stock under benefit plans3,661 51 
Payment of offering costs(586)(204)
Proceeds from sale of common stock in a public offering270,251  
Net cash provided by (used in) financing activities273,326 (153)
Net increase (decrease) in cash and cash equivalents68,842 (19,120)
Cash and cash equivalents at beginning of period33,685 51,665 
Cash and cash equivalents at end of period$102,527 $32,545 
Supplemental disclosures of cash flow information:
Cash paid for interest$282 $ 
Supplemental disclosures of noncash investing activities:
Net unrealized gain (loss) on short-term investments$636 $(749)
The accompanying notes are an integral part of these condensed financial statements.
10


Pliant Therapeutics, Inc.
Notes to Condensed Financial Statements
(Unaudited)
1. Organization and Description of Business
Pliant Therapeutics, Inc. (the “Company” or "Pliant" or “we” or “our” or “us”) is a clinical stage biopharmaceutical company focused on discovering and developing novel therapies for the treatment of fibrosis with an initial focus on treating fibrosis by inhibiting integrin-mediated activation of TGF-ß. Fibrosis refers to the abnormal thickening and scarring of connective tissue due to the production and deposition of excess collagen in the extra-cellular matrix. Fibrosis can occur in many different tissues including lung, liver, kidney, muscle, skin and the GI tract, and often causes severe and debilitating disease leading to organ failure. The Company is located in South San Francisco, California, and was incorporated in the state of Delaware in June 2015.
Public Offering
In January 2023, the Company completed a public offering of 9,583,334 shares of common stock, including the exercise in full of the underwriters' option to purchase 1,250,000 additional shares of common stock. The shares were offered at a price of $30.00 per share, resulting in aggregate proceeds of approximately $269.9 million, net of underwriting discounts, commissions and offering expenses payable by us.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain prior year reported amounts have been reclassified to conform with the current period presentation.
The accompanying condensed balance sheet as of March 31, 2023, condensed statements of operations and comprehensive loss for the three months ended March 31, 2023 and 2022, condensed statements of cash flows for the three months ended March 31, 2023 and 2022, and the condensed statements of stockholders’ equity for the three months ended March 31, 2023 and 2022, are unaudited. The balance sheet as of December 31, 2022 was derived from audited financial statements as of and for the year ended December 31, 2022. The unaudited interim condensed financial statements have been prepared on the same basis as the audited annual financial statements as of and for the year ended December 31, 2022, and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2023, and the results of its operations and its cash flows for the three months ended March 31, 2023 and 2022. The financial data and other information disclosed in these notes related to the three months ended March 31, 2023 and 2022, are also unaudited.
Use of Estimates
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, liabilities, and expenses as well as the disclosure of contingent assets and liabilities as of and during the reporting period. The Company bases its estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, stock-based compensation expense and accruals for research and development costs. The Company assesses estimates on an ongoing basis, however, actual results could materially differ from those estimates.
Significant Accounting Policies
There have been no significant changes to the accounting policies during the three months ended March 31, 2023, as compared to the significant accounting policies described in Note 2 of the "Notes to the Financial Statements" in the Company's audited financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
3. Financial Instruments
11


The Company’s short-term investments consist of U.S. Treasury securities, U.S. Government agency securities and highly rated, investment-grade corporate debt securities with original maturities beyond three months at the date of purchase. The Company has classified and accounted for its short-term investments as available-for-sale securities as the Company may sell these securities at any time even prior to maturity and such investments represent cash available for current operations. As a result, short-term investments may include securities with maturities beyond twelve months that are classified within current assets in the Balance Sheets. The Company’s short-term investments classified as available-for-sale are carried at fair market value with unrealized gains or losses recognized in the statements of operations and comprehensive loss.
The Company’s cash equivalent Money Market Funds are classified as Level 1 because they are valued using quoted active market prices. The fair value of the Company’s U.S. Treasury securities, U.S. government agency securities and corporate debt securities are classified as Level 2 because they are valued using observable inputs to quoted market prices other than Level 1 prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency and include U.S. government agency securities, U.S. Treasury securities and corporate debt securities.
There were no assets or liabilities recorded at fair value to the condensed balance sheets using Level 3 inputs as of March 31, 2023 and as of December 31, 2022.
The following tables show the Company’s Money Market Funds, U.S. Treasury securities, U.S. government agency securities and corporate debt securities by significant investment category as of March 31, 2023 and December 31, 2022 (in thousands):
 As of March 31, 2023
 Adjusted
Cost
Unrealized
Gains
Unrealized
Losses
Market
Value
Level 1:    
Money Market Funds$51,187 $ $ $51,187 
Level 2:
U.S. Treasury securities included in cash and cash equivalents and short-term investments14,446 9 (1)14,454 
U.S. government agency securities included in cash and cash equivalents and short-term investments52,388 17 (101)52,304 
Corporate debt securities included in cash and cash equivalents and short-term investments
441,141 32 (1,288)439,885 
Total financial assets$559,162 $58 $(1,391)$557,831 
 As of December 31, 2022
 Adjusted
Cost
Unrealized
Gains
Unrealized
Losses
Market
Value
Level 1:    
Money Market Funds$28,312 $ $ $28,312 
Level 2:
U.S. Treasury securities included in cash and cash equivalents and short-term investments4,446  (5)4,441 
U.S. government agency securities included in short-term investments28,746  (111)28,635 
Corporate debt securities included in cash and cash equivalents and short-term investments266,267 45 (1,887)264,425 
Total financial assets$327,771 $45 $(2,003)$325,813 
The Company may sell certain of its short-term securities prior to their stated maturities for reasons including, but not limited to, managing liquidity, credit risk, duration and asset allocation.
There were no liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022. The Company evaluates transfers between levels at the end of each reporting period and there have been no transfers between fair value measurement levels during the three months ended March 31, 2023. In addition, there were no assets or liabilities measured at fair value on a non-recurring basis as of March 31, 2023 and December 31, 2022.
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As of March 31, 2023, the Company had not recorded any impairment related to other-than-temporary declines in the fair value of short-term investments. Short-term investments are considered impaired when a decline in fair value is judged to be other-than-temporary. The Company consults with its investment managers and considers available quantitative and qualitative evidence in evaluating potential impairment of its short-term investments on a quarterly basis. If the cost of an individual investment exceeds its fair value, the Company evaluates, among other factors, general market conditions, the duration and extent to which the fair value is less than cost and its intent and ability to hold the investment.
The Company records interest income, accretion income and amortization expense on Money Market Funds and U.S. Treasury, U.S. government agency and corporate debt securities to interest and other income (expense), net in its condensed statement of operations and comprehensive loss.
4. Property and Equipment, net
Property and equipment, net consisted of the following (in thousands):
  As of March 31, 2023As of December 31, 2022
Laboratory equipment9,707 9,581 
Leasehold improvements1,650 1,650 
Construction-in-progress103 66 
Computer equipment and software$30 $30 
Total property and equipment, gross11,490 11,327 
Less: Accumulated depreciation(7,293)(6,841)
Total property and equipment, net$4,197 $4,486 
Depreciation expense for the three months ended March 31, 2023 and 2022 was $0.5 million and $0.5 million, respectively.
5. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
As of March 31,
2023
As of December 31,
2022
Prepaid research and development3,305 3,421 
Prepaid insurance935 1,427 
Prepaid licenses1,498 959 
Interest receivable1,377 1,078 
Other418 173 
Total prepaid expenses and other current assets7,533 7,058 
6. Accrued Liabilities
Accrued liabilities consisted of the following (in thousands):
As of March 31,
2023
As of December 31,
2022
Accrued compensation and benefits$3,447 $7,200 
Other accrued liabilities1,286 1,458 
Total accrued liabilities$4,733 $8,658 
Accrued compensation and benefits consist primarily of accrued bonuses and accrued vacation.

7. Long-term Debt
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In May 2022, we entered into a term loan facility (the “Oxford Loan Agreement”) with Oxford Finance LLC (the "Lender") for up to $100.0 million. At closing, we entered into a term loan for $10.0 million, and in the first quarter of 2023 we declined our option to draw an additional $40.0 million from the first and second tranche. The Oxford Loan Agreement provides for an additional $50.0 million over two tranches, $25.0 million of which is at our option upon the satisfaction of certain conditions related to the development of bexotegrast and one of our preclinical product candidates, and $25.0 million at the Lender's discretion. In connection with the Oxford Loan Agreement, we granted a security interest in substantially all of our current and future assets. There are no warrants or financial covenants associated with the Oxford Loan Agreement.
Borrowings under the Oxford Loan Agreement bear interest at a rate per annum equal to 1-month term Secured Overnight Financing Rate (SOFR) plus 8.5%, subject to an agreed upon floor and cap. The Oxford Loan Agreement requires the Company to make monthly interest-only payments until July 1, 2026 (extendable to July 1, 2027) with monthly interest and principal payments thereafter until the maturity date of May 1, 2027 (extendable to May 1, 2028).
The estimated fair value of the term loan as of March 31, 2023 was measured using Level 2 and Level 3 inputs and approximates the carrying value recorded to the condensed balance sheet. The effective interest rate for the term loan is 12.69% and interest expense for the three months ended March 31, 2023 was $0.3 million.

Future maturities of debt as of March 31, 2023 are as follows (in thousands):
As of March 31, 2023
2023 (remainder of the year)$ 
2024 
2025 
20265,455 
20274,545 
Thereafter 
Total payments$10,000 
Less: unamortized debt issuance costs(127)
Accretion of final payment$85 
Total$9,958 


8. Novartis Collaboration and License Agreement (the "Novartis Agreement")
In 2019, we entered into the Novartis Agreement with Novartis Institutes for BioMedical Research, Inc. (“Novartis”) for the development and commercialization of our preclinical product candidate, PLN-1474 and up to three additional integrin research targets. On February 17, 2023, Novartis exercised their right to terminate the Novartis Agreement as part of their new strategy focusing on a limited number of therapeutic areas. The termination took effect on April 18, 2023, and effective upon the termination, all rights and licenses granted to Novartis under the Novartis Agreement, including PLN-1474, the related IND, and the validated research target, reverted back to us. The payment obligations of Novartis with respect to future milestones, royalties and research and development funding were also terminated.
The Novartis agreement provided for funding of up to $20.0 million associated with research and development services for PLN-1474 and up to $18.4 million for research and development services on the integrin research targets. We continued to provide research and development services on both programs through the termination date. As of March 31, 2023, the aggregate unrecognized transaction price of $0.3 million is associated with performance obligations we satisfied in the second quarter of 2023. Revenues associated with the Novartis Agreement for the three months ended March 31, 2023 and 2022 were $1.3 million and $1.2 million, respectively.
9. Preferred Stock
Under the Company’s Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”), the Company is authorized to issue two classes of shares: preferred and common stock. The preferred stock may be issued in series, and the Company’s board of directors is authorized to determine the rights, preferences, and terms of each series. These rights preferences and terms could include dividend rights, conversion rights, voting rights, terms of redemptions, liquidation preferences and sinking fund terms. As of March 31, 2023 and December 31, 2022, the Company was authorized to issue 10,000,000 shares of preferred stock and there was no outstanding preferred stock as of March 31, 2023 and December 31, 2022.
14


10. Common Stock
As of March 31, 2023 and December 31, 2022, the Company was authorized to issue 300,000,000 shares of common stock at a par value of $0.0001 per share. The common stock has the following rights and privileges:
Voting
The holders of shares of common stock are entitled to one vote for each share of common stock held at any meeting of stockholders and at the time of any written action in lieu of a meeting.
Dividends
The holders of shares of common stock are entitled to receive dividends, when declared by the Company’s board of directors. Cash dividends may not be declared or paid to holders of shares of common stock until all unpaid dividends on preferred stock have been paid in accordance with their terms. No dividends have been declared or paid by the Company since its inception. The terms of the Oxford Loan Agreement restrict our ability to declare and pay dividends.
Liquidation
Subject to the preferential rights of holders of preferred stock then outstanding, the holders of shares of common stock are entitled to share ratably in the Company’s remaining assets available for distribution to its stockholders in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company.
Shares reserved for future issuance
As of
March 31,
2023
As of
December 31,
2022
Outstanding stock option awards6,380,591 5,569,567 
Vesting of RSUs1,168,536 507,925 
Vesting of PSUs472,711 531,796 
Shares of common stock available for future grants under the 2020 Stock Option and Incentive Plan3,443,098 2,937,769 
Shares of common stock available for future issuance under the 2020 Employee Stock Purchase Plan844,888 888,184 
Shares of common stock available for future issuance under the 2022 Inducement Plan1,000,000 1,000,000 
Total shares reserved for future issuance13,309,824 11,435,241 
11. Equity Incentive Plans and Stock-Based Compensation
In 2015, the Company's board of directors adopted the 2015 Equity Incentive Plan (as amended in 2018, 2019 and 2020, the “2015 Plan”), which provided for the grant of incentive stock options, nonqualified stock options or other awards including stock appreciation rights and restricted stock awards to the Company’s employees, officers, directors, advisors, and consultants. In May 2020, the board of directors adopted the 2020 Stock Options and Incentive Plan (the “2020 Plan”) and suspended the 2015 Plan. Awards outstanding under either the 2015 Plan or 2020 Plan that are cancelled, expire or otherwise terminated subsequent to May 2020 will become available for issuance as common stock under the 2020 Plan. Additionally, the 2020 Plan is subject to automatic increases on January 1 of each year beginning January 1, 2021. The number of shares added each January 1 will be equal to the lesser of (i) 5% of the outstanding shares on the immediately preceding December 31 or (ii) such amount as determined by the administrator of the 2020 Plan, which is the compensation committee of the board of directors of the Company.
The 2020 Plan provides for the grant of incentive stock options, nonqualified stock options or other awards including stock appreciation rights, restricted stock awards and restricted stock units to the Company’s employees, officers, directors, advisors, and consultants. As of March 31, 2023, 3,443,098 shares of common stock were available for future issuance under the 2020 Plan.
In 2022, the Board of Directors adopted the 2022 Inducement Plan ("Inducement Plan"), under which the Company may grant restricted stock units, stock options, stock appreciation rights, and restricted stock awards to new hires. As of March 31, 2023, 1,000,000 shares of common stock were available for issuance under the Inducement Plan.
15


Options under the 2020 Plan may be granted for periods of up to 10 years and at prices no less than the market price of the Company’s common stock on the date of grant, provided, however, that the exercise price of an incentive stock option granted to a 10.0% shareholder shall not be less than 110.0% of the estimated fair value of the shares on the date of grant and the option is not exercisable after the expiration of five years from the date of grant.
Incentive Stock Options and Nonqualified Stock Options
Stock options issued under either the 2015 Plan or the 2020 Plan generally vest over four years and expire ten years from the date of grant. Certain options provide for accelerated vesting if there is a change in control, as defined in the respective plans.
The Company used the Black-Scholes option pricing model to estimate stock-based compensation expense for stock option awards with the following assumptions:
  
Three months ended March 31,
 20232022
Expected volatility
80.97% - 81.41%
74.48% - 75.01%
Risk-free interest rate
3.42% - 4.18%
1.64% - 2.13%
Expected dividend
Expected term (in years)
5.77 - 6.08
6.02 - 6.08
Underlying common stock fair value
21.94 - 34.65
7.56 - 12.68
The Company granted 1,278,984 stock options under the 2020 Plan during the three months ended March 31, 2023.
A summary of option activity under the 2015 Plan and the 2020 Plan is as follows:
  Number
of
Options
Weighted-
Average Exercise
Price per Share
Weighted-
Average
Remaining
Contractual
Term (in Years)
Aggregate
Intrinsic
Value
Outstanding as of December 31, 20225,569,567 $13.34 7.96$43,696 
Granted1,278,984 $32.71 
Exercised(411,018)$7.09 
Forfeited(56,942)$12.87 
Outstanding as of March 31, 20236,380,591 $17.63 8.33$66,628 
Exercisable as of March 31, 20232,441,738 $13.49 7.32$32,909 
Vested and expected to vest as of March 31, 20236,380,591 $17.63 8.33$66,628 

As of March 31, 2023, there were $52.7 million of unrecognized compensation costs that are expected to be recognized over the weighted-average period of 3.14 years related to stock options. Aggregate intrinsic value represents the difference between the fair value of the underlying common stock and the exercise price as of March 31, 2023. The weighted-average grant date fair value of options granted during the three months ended March 31, 2023 was $23.36 per share.
Restricted Stock Units
The service-based condition for restricted stock units ("RSUs") is generally satisfied over two years or three years. The following table sets forth the outstanding RSUs and related activity for the three months ended March 31, 2023:

16


Restricted Stock UnitsWeighted Average Grant Date Fair Value
Unvested and outstanding at December 31, 2022507,925 17.43 
Granted671,708 34.65 
Forfeited(11,097)20.19 
Unvested and outstanding at March 31, 20231,168,536 27.30 
As of March 31, 2023, the Company had $27.4 million of unrecognized stock-based compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of 2.52 years.
Performance-Based Restricted Stock Units
Performance-based restricted stock units ("PSUs") vest upon the achievement of market and performance conditions. Market conditions include the Company's total shareholder return ("TSR") relative to the NASDAQ Biotechnology Index over the term of the award ending on June 30, 2024, and performance conditions consist of multiple clinical development milestones associated with bexotegrast. The performance vesting conditions generally must be satisfied within a two-year period and are forfeited if the vesting conditions are not met. Additionally, the number of shares of common stock issued upon vesting will range from 0% to 200% of the PSUs based on achievement of certain targets. The PSUs granted were allocated evenly between the market based, TSR, awards and those with performance conditions associated with clinical development milestones.
The fair value of PSUs associated with clinical development vesting conditions were determined to be equal to the fair market value of the Company's share price on the date of grant. The fair value of the TSR PSUs were derived from a Monte Carlo simulation model that used the following key assumptions:
Valuation date share price$17.57 
Award term (years)1.92
Volatility70.62 %
Correlation coefficient0.3508
Average peer group volatility79.69 %
Average peer group correlation coefficient0.4397
Risk free interest rate2.84 %
As of March 31, 2023, there were 354,532 PSUs associated with the TSR goal at target level achievement of 100% and related activity outstanding with a weighted average grant date fair value of $29.15 per share. There were no additional grants, forfeitures or vesting of the PSUs associated with market-based vesting conditions during the three months ended March 31, 2023.
The following table sets forth the outstanding PSUs associated with clinical development milestones and related activity during the three months ended March 31, 2023:
Performance Stock UnitsWeighted Average Grant Date Fair Value
Unvested balance at December 31, 2022177,266 17.57 
Granted* 17.57 
Adjustment for expected performance achievement354,532 17.57 
Vested(177,266)17.57 
Unvested balance at March 31, 2023354,532 17.57 
In March 2023, the second of three milestones applicable to PSUs with clinical development vesting conditions was achieved. As of March 31, 2023, the Company considered the remaining clinical development performance conditions probable of achievement.
As of March 31, 2023, the Company had $10.9 million of unrecognized stock-based compensation expense related to unvested PSUs expected to be recognized over a remaining weighted-average period of 1.33 years.
2020 Employee Stock Purchase Plan
17


In June 2020, the Company adopted the Company's 2020 Employee Stock Purchase Plan (the "2020 ESPP"). The Company reserved 700,000 shares of common stock for future issuance under the plan. The 2020 ESPP provides that the number of shares reserved and available for issuance will automatically increase on January 1 of each calendar year, beginning January 1, 2021, by the least of (1) 1.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, (2) 700,000 shares or (3) such lesser amount as determined by the administrator of the 2020 ESPP, which is the compensation committee of the board of directors of the Company.
Under the 2020 ESPP, eligible employees may purchase shares of our common stock through payroll deductions that cannot exceed 15% of each employee’s salary. The 2020 ESPP provides for a six-month offering period. At the end of the purchase period, eligible employees are permitted to purchase shares of common stock at the lower of 85% of the fair market value at the beginning of the offering period or 85% of the fair market value at the end of the purchase period, subject to tax limitations on the total value of the purchase. The 2020 ESPP is considered a compensatory plan, and the Company recorded $0.2 million in stock-based compensation expense for the three months ended March 31, 2023. There was $0.1 million in stock-based compensation expense attributed to the 2020 ESPP for the three months ended March 31, 2022. During the three months ended March 31, 2023, 43,296 shares of common stock were issued under the 2020 ESPP with 844,888 shares remaining available for issuance under the 2020 ESPP. The Company used Black-Scholes option pricing model to estimate stock-based compensation expense for the 2020 ESPP with the following assumptions:
 Three Months Ended
March 31,
 20232022
Risk-free interest rate
5.20%
0.60%
Expected term of options (in years)
0.50
0.50
Expected stock price volatility
69.15%
63.17%
Expected dividends
Stock-Based Compensation Expense
The following table presents the components and classification of stock-based compensation expense for the Company’s stock-based awards for the three months ended March 31, 2023 and 2022 (in thousands):
Three Months Ended
March 31,
20232022
Restricted stock awards$ $29 
Stock options and ESPP4,803 3,502 
Restricted stock units2,606  
Performance-based restricted stock units4,514  
Total stock-based compensation expense$11,923 $3,531 
Research and development expenses$4,848 $1,914 
General and administrative expenses$7,075 $1,617 
12. Income Taxes
For the three months ended March 31, 2023 and 2022, the Company did not record an income tax provision. The Company will continue to maintain a 100% valuation allowance on total deferred tax assets. The Company believes it is more likely than not that the related deferred tax asset will not be realized. As a result, the Company’s effective tax rate will remain at 0% because there are no estimated or discrete items that would impact the tax provision.
13. Commitments and Contingencies
Purchase Commitments
The Company has contractual arrangements with research and development organizations and suppliers; however, these contracts are generally cancellable on 30 days’ notice and the obligations under these contracts are largely based on services performed.
18


14. Leases
In February 2018, the Company entered into a non-cancelable lease agreement (the “Lease”) for premises consisting of approximately 32,974 square feet located in South San Francisco, California (the “Premises”). The Company moved into the Premises in July 2018. The Premises is being used for the Company’s corporate headquarters and principal operating facility. The term of the Lease is eighty-four months, which commenced on July 1, 2018. Base rent was abated for the first two months of the lease term and thereafter is $0.2 million per month during the first year of the lease term, with specified annual increases thereafter. The Company paid a refundable security deposit of approximately $0.4 million, which is included in other non-current assets in the condensed balance sheets at March 31, 2023 and December 31, 2022. The Company has the right to extend the lease term by seven years upon written notice not more than twelve months nor less than nine months prior to the expiration of the original lease term, with monthly payments equal to the “fair rental value” as defined in the Lease. The exercise of lease renewal options is at the sole discretion of the Company and is not included in the right-of-use (ROU) asset and lease liability as it is not reasonably certain of exercise. This lease does not contain material variable rent payments, residual value guarantees, covenants, or other restrictions.
In August 2022, the Company entered into a non-cancelable lease agreement for premises consisting of approximately 12,456 square feet located in South San Francisco, California. The premises is being used as additional office space for the Company. The term of the lease is 18 months, which commenced on August 1, 2022. Base rent is $0.1 million per month during the first year of the lease term, with specified annual increases of 3% thereafter. The Company has the right to extend the lease term by three years with monthly payments equal to the market rate of rent. The exercise of lease renewal options is at the sole discretion of the Company and is not included in the right-of-use (ROU) asset and lease liability as it is not reasonably certain of exercise. This lease does not contain material variable rent payments, residual value guarantees, covenants, or other restrictions.
For each of the three months ended March 31, 2023 and 2022, the Company recognized expenses associated with the operating leases of $0.7 million. Additionally, the Company incurred variable lease costs of $0.2 million and $0.1 million for the three months ended March 31, 2023 and 2022, respectively, which is comprised primarily of the Company's proportionate share of operating expenses, property taxes, and insurance. Short-term lease expense and variable lease payments recorded in operating expenses were immaterial for the three months ended March 31, 2023 and 2022. Cash paid for amounts included in the measurement of operating lease liabilities was $0.8 million and $0.6 million for the three months ended March 31, 2023 and 2022, respectively.
The undiscounted future non-cancellable lease payments of the Company's operating lease liabilities as of March 31, 2023 were as follows (in thousands):
Operating Lease
2023 (remainder of the year)$2,064 
20242,422 
20251,202 
2026 
2027 
Total undiscounted lease payments$5,688 
Less: Present value discount458 
Total current operating lease liabilities$2,380 
Total non-current operating lease liabilities$2,850 
The weighted-average remaining lease terms and discount rates related to the Company's operating leases were as follows:
As of March 31, 2023As of March 31, 2022
Weighted-average remaining lease term (in years)2.13.2
Weighted-average discount rate
8.2%7.9%

15. Defined Contribution Plan
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The Company sponsors a defined contribution plan under Section 401(k) of the Internal Revenue Code covering substantially all full-time U.S. employees. Employee contributions are voluntary and are determined on an individual basis subject to the maximum allowable under federal tax regulations. The Company made contributions to the plan of $0.3 million and $0.2 million for the three months ended March 31, 2023 and 2022, respectively.
16. Net Loss Per Share Attributable to Common Stockholders
The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented, because including them would have been antidilutive:
Three Months Ended March 31,
20232022
Options to purchase common stock6,380,591 5,196,869 
Restricted stock units1,168,536  
Performance-based restricted stock units*  
Unvested restricted shares 6,235 
Total7,549,127 5,203,104 
*No unvested performance-based restricted stock units are included above as none of the contingently issuable shares would be issued assuming the end of our reporting period was the end of the relevant PSU award contingency period
A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net loss per share attributable to common stockholders is as follows (in thousands, except share and per share amounts):
Three Months Ended March 31,
20232022
Net loss per share:  
Net loss$(37,548)$(28,100)
Net loss attributable to common stockholders$(37,548)$(28,100)
Weighted-average common shares outstanding used to calculate net loss per share attributable to common stockholders:
Basic56,057,603 36,116,440 
Diluted56,057,603 36,116,440 
Net loss per share attributable to common stockholders:
Basic$(0.67)$(0.78)
Diluted$(0.67)$(0.78)


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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with our condensed financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q, or this Report, as well as our audited financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission, or SEC. This discussion and analysis contains forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intention, beliefs and projections. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth in the section titled “Risk Factors” under Part II, Item 1A of this Report and under Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “should,” “will” or the negative of these terms or other similar expressions.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate we have conducted exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
Overview
We are a clinical stage biopharmaceutical company focused on discovering and developing novel therapies for the treatment of fibrosis and related diseases. Our initial focus is on treating fibrosis by inhibiting integrin-mediated activation of TGF-β. We have applied our deep understanding of fibrosis biology, along with our medicinal chemistry and translational medicine expertise to develop a set of proprietary tools designed to discover and de-risk product candidates quickly and efficiently. Our wholly-owned lead product candidate, bexotegrast (PLN-74809), is an oral, small molecule, dual selective inhibitor of αvß6 and αvß1 integrins that we are developing for the treatment of idiopathic pulmonary fibrosis, or IPF, and primary sclerosing cholangitis, or PSC. We announced positive data from our Phase 2a INTEGRIS-IPF trial in January 2023 and May 2023 and expect to initiate BEACON-IPF, a Phase 2b trial of bexotegrast in patients with IPF, in mid-2023. BEACON-IPF is a 52-week, randomized, placebo-controlled trial evaluating bexotegrast at doses of 160 mg or 320 mg in approximately 270 patients with IPF. We are currently conducting a Phase 2a trial in primary sclerosing cholangitis, or PSC.
We have also developed a second product candidate, PLN-1474, a Phase 2-ready oral, small molecule selective inhibitor of αvß1 for the treatment of advanced liver fibrosis associated with nonalcoholic steatohepatitis, or NASH. PLN-1474 was licensed to Novartis in 2019, and as part of a broad strategic realignment, Novartis in early 2023 determined to discontinue clinical development in NASH and, as a result, discontinue development of PLN-1474. In February 2023, Novartis exercised its right to terminate the Novartis Agreement, and in April 2023 global rights to PLN-1474 were returned to Pliant.
In December 2022, we filed an investigational new drug (IND) application for our third clinical program, PLN-101095, a dual inhibitor of integrins αvß8 and αvß1 for the treatment of solid tumors resistant to immune checkpoint inhibitors. In January 2023, we received FDA clearance for our IND and expect to initiate a Phase 1 trial of PLN-101095 in the second quarter of 2023.
In addition to our clinical programs, we are currently advancing a preclinical integrin-based program targeting muscular dystrophies.
First Quarter and Recent Highlights
Bexotegrast (PLN-74809) Highlights
INTEGRIS-IPF Phase 2a 24-week 320 mg clinical data showed bexotegrast was well tolerated and demonstrated durable improvements in exploratory endpoints. This 24-week Phase 2a data from the 320 dose group showed bexotegrast was well tolerated up to 40 weeks, displayed a favorable pharmacokinetic profile and in exploratory efficacy endpoints showed improvements in forced vital capacity (FVC), Quantitative Lung Fibrosis (QLF) imaging, patient reported cough severity and biomarkers in patients with idiopathic pulmonary fibrosis (IPF) to Week 24. In January, 12-week data from the 320 mg dose group showed bexotegrast demonstrated statistically significant FVC increases at all time points, was well tolerated with no drug-related severe or serious adverse events and showed dose-proportional increases in plasma concentrations, consistent with prior dose groups.
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Initiation of BEACON-IPF, a Phase 2b trial of bexotegrast in patients with IPF, expected in mid-2023. BEACON-IPF is a 52-week, multinational, randomized, placebo-controlled trial evaluating bexotegrast at doses of 160 mg or 320 mg in approximately 270 patients with IPF.
INTEGRIS-PSC Phase 2a 12-week clinical data expected in the third quarter of 2023. INTEGRIS-PSC is a 12-week randomized, dose-ranging, double-blind, placebo-controlled trial evaluating safety, tolerability and pharmacokinetics of bexotegrast at doses of 40, 80 or 160 mg in approximately 84 patients with primary sclerosing cholangitis (PSC). Exploratory efficacy endpoints include fibrosis biomarkers such as PRO-C3 and enhanced liver fibrosis (ELF) score, changes in alkaline phosphatase (ALP), and liver imaging. INTEGRIS-PSC is fully enrolled.
First patient dosed in the INTEGRIS-PSC Phase 2a 320 mg dose cohort, evaluating bexotegrast for at least 24 weeks. This cohort is evaluating the safety, tolerability and pharmacokinetics of bexotegrast at a dose of 320 mg versus placebo over at least 24 weeks of treatment in approximately 28 patients with PSC. The trial is also evaluating exploratory efficacy endpoints including fibrosis biomarkers such as PRO-C3 and ELF score, changes in ALP and liver imaging.
Early-Stage Development Programs
Initiation of a Phase 1 first-in-human trial of PLN-101095 in oncology expected in the second quarter of 2023. PLN-101095 is an oral, small molecule, dual selective inhibitor of αvβ8 and αvβ1 integrins designed to block TGF-β activation in the tumor microenvironment. Initiation of a Phase 1 trial in patients with solid tumors that are resistant to immune checkpoint inhibitors is expected in the second quarter of 2023.
Muscular dystrophy program progressing through IND enabling activities. PLN-101325 is a monoclonal antibody designed to act as an allosteric agonist of the integrin α7β1. An IND submission for Duchenne muscular dystrophy (DMD) is expected in 2023.
Corporate Highlights
Closing of underwritten public offering of $287.5 million in common stock. The Company closed a public offering in January 2023, yielding $269.9 million in net proceeds to the Company, which included the underwriter’s exercise in full of their option to purchase additional shares.
Since inception, we have had significant operating losses. Our net loss was $37.5 million for the three months ended March 31, 2023. As of March 31, 2023, we had an accumulated deficit of $376.0 million and cash, cash equivalents and short-term investments of $577.3 million. We expect to continue to incur net losses for the foreseeable future, and we expect our research and development expenses, general and administrative expenses, and capital expenditures will increase in connection with our ongoing activities, as we:
perform research and development activities to identify and develop product candidates;
advance product candidates into and through clinical development;
require the manufacture of supplies to support research and development, preclinical studies and clinical trials;
seek regulatory approvals for any product candidates that successfully complete clinical trials;
expand our operational, financial and management systems and increase personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a public company;
maintain, expand and protect our intellectual property portfolio; and
invest in or in-license other technologies or product candidates.
Components of Operations
Revenue
We have not generated any revenue from product sales and do not expect to do so in the near future. Our revenue to date is derived from a Collaboration and License Agreement with Novartis, or the "Novartis Agreement," that was executed in 2019.
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Under the terms of the Novartis Agreement, we received an upfront license fee payment of $50.0 million for the worldwide, exclusive license to PLN-1474 and an additional $29.0 million upon the achievement of specified research and development milestones. As part of a broad strategic realignment, Novartis has discontinued clinical development in NASH and, as a result, discontinued development of PLN-1474. In February 2023, Novartis issued a termination notice for the collaboration and license agreement, and returned global rights to Pliant for PLN-1474.
Following termination of the Novartis Agreement, we are no longer eligible to receive additional milestone or royalty payments under the arrangement; however, we continued to earn research and development services revenues through the effective termination date of April 18, 2023. We recognized $1.3 million in revenues for performing research and development activities associated with PLN-1474 and integrin research targets in the three months ended March 31, 2023.
We estimate an additional $0.3 million of aggregate research and development funding remained available for use as of March 31, 2023 under the Novartis Agreement, which terminated effective April 18, 2023.
Operating Expenses
Research and Development
Our research and development expenses consist of expenses incurred in connection with the development of our product candidates. Research and development expenses include:
employee-related expenses, which include salaries, benefits and stock-based compensation for our research and development personnel;
expenses incurred under agreements with third-party contract organizations for pre-clinical studies, clinical trials and consultants that conduct research and development activities on our behalf;
costs associated with the manufacture of supplies to support research and development, preclinical studies and clinical trials;
depreciation of laboratory equipment and costs of equipment and supplies;
costs associated with technology and intellectual property licenses; and
facilities and other allocated expenses, which include expenses for rent and other facility related costs and other supplies.
General and Administrative
Our general and administrative expenses consist primarily of salaries, benefits and stock-based compensation for our general and administrative personnel, allocated facilities costs, insurance and other expenses for outside professional services, including legal, marketing, investor relations, human resource and accounting services.
Interest and Other Income (Expense), net
Our interest and other income (expense), net consists of interest, accretion income and amortization expense on cash and cash equivalents, and short-term investments, and realized gains and losses on investments.
Interest Expense
Our interest expense is derived from a term loan under the Oxford Loan Agreement that we entered into in May 2022. Borrowings under the Oxford Loan Agreement bear interest at a rate per annum equal to 1-month term Secured Overnight Financing Rate (SOFR) plus 8.5%, subject to an agreed upon floor and cap.
Financial Operations Overview
Comparison of the three months ended March 31, 2023 and 2022 (in thousands)
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Three Months Ended March 31,
 
 20232022$ Change
Revenue$1,332 $1,249 $83 
Operating expenses:
Research and development(29,273)(20,881)(8,392)
General and administrative(14,154)(8,579)(5,575)
Total operating expenses(43,427)(29,460)(13,967)
Loss from operations(42,095)(28,211)(13,884)
Interest and other income (expense), net4,858 111 4,747 
Interest expense(311)— (311)
Net loss$(37,548)$(28,100)$(9,448)

Revenue
Revenue was $1.3 million for the three months ended March 31, 2023 compared to $1.2 million for the three months ended March 31, 2022. The increase of $0.1 million is attributable to increased research and development services associated with the Novartis Agreement.
Research and development expenses
The following table summarizes our research and development expenses for the three months ended March 31, 2023 and 2022 (in thousands):
  Three Months Ended March 31,
 
2023
2022
$ Change
Employee-related expenses$10,984 $6,155 $4,829 
Outside and consulting services for preclinical studies and research and development activities by third-party contract organizations5,399 6,376 (977)
Clinical trials expenses9,073 5,515 3,558 
Depreciation of lab equipment and costs of equipment and supplies
1,285 1,390 (105)
Facilities and other allocated expenses2,513 1,436 1,077 
Technology and intellectual property licenses18 
Total research and development expenses$29,273 $20,880 $8,391 
Research and development expenses for the three months ended March 31, 2023 was $29.3 million compared to $20.9 million for the three months ended March 31, 2022. The increase of $8.4 million is primarily attributable to employee-related expenses, driven by headcount, salaries and stock-based compensation expense, manufacturing expense for clinical drug supply, and facilities and other allocated charges. These costs were partially offset by a decrease in preclinical manufacturing costs associated with activities that were substantially complete in 2022.
We do not allocate our costs by product candidates or by preclinical programs as these are in early stages of clinical trials or development, and our internal expenses are not allocated between product candidates and programs. Although external third-party costs are allocable between product candidates and programs, we do not perform this allocation. We expect our research and development expenses to increase for the foreseeable future as we continue to invest in research and development activities related to developing our product candidates and our preclinical programs and as they advance into later stages of development.
General and Administrative Expenses
General and administrative expenses for the three months ended March 31, 2023 was $14.2 million compared to $8.6 million for the three months ended March 31, 2022. The increase of $5.5 million is primarily attributable to employee-related costs, driven by salaries and stock-based compensation expense, consulting and other professional services expense.
We expect our general and administrative expenses to increase for the foreseeable future as we continue to build our administrative function to support our growth in operations.
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Interest and Other Income (Expense), net
Interest and other income (expense), net for the three months ended March 31, 2023 was $4.9 million compared to $0.1 million for the three months ended March 31, 2022. The increase of $4.7 million resulted from higher interest income due to increased yields and an increase in short-term investments due to recent financing activities.
Interest Expense
Interest expense was $0.3 million and zero for the three months ended March 31, 2023 and 2022, respectively. The increase of $0.3 million was due to the interest incurred from our term loan under the Oxford Loan Agreement, issued in the second quarter of 2022.
Liquidity and Capital Resources
Overview
As of March 31, 2023, we had $577.3 million of cash, cash equivalents and short-term investments. Our short-term investments consist of U.S. Treasury securities, U.S. Government agency securities and highly rated, investment-grade corporate debt securities.
In May 2022 we entered into a Loan and Security Agreement (the “Oxford Loan Agreement”) with Oxford Finance LLC (or "Oxford"). In October 2022, we amended the Oxford Loan Agreement, extending the time period available to draw on the first two tranches, to mid-February 2023. Upon closing of the Oxford Loan Agreement, we drew $10.0 million and a further $50.0 million may become available to us, $25.0 million upon the achievement of pre-determined development milestones and $25.0 million at Oxford's discretion.
In July 2022, we completed an underwritten public offering of 12,432,432 shares of common stock, including the exercise in full of the underwriters' option to purchase 1,621,621 additional shares of common stock. The shares were offered at a price to the public of $18.50 per share, resulting in aggregate proceeds of approximately $215.4 million, net of underwriting discounts, commissions and offering expenses, payable by us.
In January 2023, we completed an underwritten public offering of 9,583,334 shares of common stock, including the exercise in full of the underwriters' option to purchase 1,250,000 additional shares of common stock. The shares were offered at a price of $30.00 per share, resulting in aggregate proceeds of approximately $269.9 million, net of underwriting discounts, commissions and offering expenses, payable by us.
We believe that our existing capital resources will be sufficient to meet our projected operating requirements to the second half of 2026. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. Further, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for product development and commercialization sooner than planned.
Our operations have been financed primarily through the issuance and sale of convertible preferred stock, issuance of common stock, debt and our collaboration with Novartis. During the third quarter of 2021, we entered into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent, pursuant to which we may issue and sell shares of common stock from time to time. In March 2023, we filed a prospectus registering the offer and sale of up to $150.0 million of shares of common stock from time to time pursuant to the Sales Agreement. The issuance and sale of these shares pursuant to the Sales Agreement are deemed an “at-the-market” offering and are registered under the Securities Act of 1933, as amended. As of March 31, 2023, we had not issued any shares pursuant to any at-the-market offerings.
Funding Requirements
Our primary use of cash is to fund operating expenses, primarily research and development expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid expenses.
Our future funding requirements will depend on many factors, including the following:
the initiation, progress, timing, costs and results of preclinical studies and clinical trials for our product candidates;
the clinical development plans we establish for these product candidates;
the timelines of our clinical trials and the overall costs to conduct and complete the clinical trials, which may be impacted by the COVID-19 pandemic;
the number and characteristics of product candidates that we develop;
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the outcome, timing and cost of meeting regulatory requirements established by the U.S. Food and Drug Administration, or FDA, and other comparable foreign regulatory authorities including but not limited to the European Medicines Agency (EMA), the UK Medicines and Healthcare products Regulatory Agency (MHRA);
whether we enter into any collaboration agreements and the terms of any such agreements;
the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;
the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against us or our product candidates;
the effect of competing technological and market developments;
the cost and timing of completion of commercial-scale outsourced manufacturing activities;
the cost and timing of achieving favorable pricing and reimbursement agreements with the pricing authorities in each market of interest, including of securing a positive recommendation after undergoing a health technology assessment by health technology authorities;
the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own; and
the cost of operating as a public company.
Further, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development expenditures. If we need to raise additional capital to fund our operations, funding may not be available to us on acceptable terms, or at all. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of our preclinical studies, clinical trials, research and development programs or commercialization efforts. We may seek to raise any necessary additional capital through a combination of public or private equity offerings, debt financings, collaborations and other licensing arrangements. If we raise capital through additional debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us.
Cash Flows
Comparison of the three months ended March 31, 2023 and 2022
The following summarizes our cash flows for the periods indicated (in thousands):
Three Months Ended March 31,
20232022
Net cash used in operating activities$(30,276)$(20,498)
Net cash (used in) provided by investing activities(174,208)1,531 
Net cash (used in) provided by financing activities273,326 (153)
Net decrease in cash and cash equivalents$68,842 $(19,120)
Cash Used in Operating Activities
Net cash used in operating activities was $30.3 million for the three months ended March 31, 2023 compared to $20.5 million for the three months ended March 31, 2022. The increase in cash used in operating activities of $9.8 million over the prior year is attributable to an increase in the net loss of $9.4 million, the timing of revenue related cash receipts and cash outlay to settle accrued liabilities.
Cash (Used in) Provided by Investing Activities
Net cash used in investing activities was $174.2 million for the three months ended March 31, 2023 compared to net cash provided by investing activities of $1.5 million for the same period in 2022. The increase in cash used by investing activities of $175.7 million is attributable to a significant purchase of short-term investments following the Company's public offering of shares of common stock in January 2023.
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Cash (Used in) Provided by Financing Activities
Net cash provided by financing activities was $273.3 million for the three months ended March 31, 2023 compared to cash used in financing activities of $0.2 million for the same period in 2022. The increase of $273.5 million is mainly attributable to net proceeds from the Company's January 2023 underwritten public offering.
Contractual Obligations and Other Commitments
There have been no material changes to our contractual obligations and other commitments as of March 31, 2023, as compared to those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Off-Balance Sheet Arrangements
During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements or holdings in any variable interest entities.
Critical Accounting Polices and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
There have been no material changes to our critical accounting policies and estimates from those described in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC.
Recent Accounting Pronouncements
See Note 2 to our condensed financial statements appearing elsewhere in this Report for more information.
Emerging Growth Company Status and JOBS Act Accounting Election
Based on the market value of our common stock held by our non-affiliates as of June 30, 2021, we were considered a “large accelerated filer” on December 31, 2021 and thus lost, and will not regain, our status as an emerging growth company. Additionally, based on the market value of our common stock held by our non-affiliates as of June 30, 2022 we were considered a "non-accelerated filer" and “smaller reporting company” on December 31, 2022, and thus will not be subject to accelerated filing deadlines nor the requirements of section 404(b) of the Sarbanes-Oxley Act of 2002.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The primary objectives of our investment activities are to ensure liquidity and to preserve capital. We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities. We had cash, cash equivalents and short-term investments of $577.3 million as of March 31, 2023 which consisted of bank deposits, highly liquid money market funds and short-term investments in U.S. treasury securities, U.S. government agency securities and corporate debt securities. Under the Oxford Loan Agreement, we had a $10.0 million term loan outstanding as of March 31, 2023 which is subject to the movement in interest rates, however the exposure is capped at 2.0%. Due to the short-term maturities of our cash equivalents and short-term investments, an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our cash equivalents or short-term investments.
To minimize the risk, we maintain our portfolio of cash equivalents and short-term investments in institutional market funds that are composed of U.S. Treasury and U.S. Treasury-backed repurchase agreements or short-term U.S. Treasury securities, U.S. government agency securities and corporate debt securities. We do not believe that inflation, interest rate changes, or exchange rate fluctuations had a significant impact on our results of operations for any periods presented herein. A hypothetical 10% change in interest rates during the periods presented would not have had a material impact on our condensed financial statements.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of March 31, 2023, management, with the participation of our Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Our disclosure controls and procedures are designed to
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ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.
Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2023, the design and operation of our disclosure controls and procedures were effective at a reasonable assurance level.
Changes in Internal Control over Financial Reporting
There was no change in our internal controls over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) under the Exchange Act that occurred during the quarter ended March 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
As of the date of this filing, we are not party to any material legal matters or claims. We may become party to legal matters and claims arising in the ordinary course of business. We cannot predict the outcome of any such legal matters or claims, and despite the potential outcomes, the existence thereof may have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Item 1A. Risk Factors.
Our business faces significant risks. If any of the events or circumstances described in the following risks actually occurs, our business may suffer, the trading price of our common stock could decline and our financial condition or results of operations could be harmed. These risks should be read in conjunction with the other information set forth in this quarterly report on Form 10-Q. The risks and uncertainties described below are not the only ones facing us. There may be additional risks faced by our business. Other events that we do not currently anticipate or that we currently deem immaterial also may adversely affect our financial condition or results of operations.
RISK FACTORS
Risks Related to Our Financial Position and Need for Additional Capital
We have incurred significant net losses since inception and we expect to continue to incur significant net losses for the foreseeable future.
We have incurred significant net losses since our inception and have financed our operations principally through equity and debt financing and our prior collaboration with Novartis. We continue to incur significant research and development and other expenses related to our ongoing operations. Our net loss was $123.3 million and $97.3 million for the years ended December 31, 2022 and 2021, respectively. As of March 31, 2023, we had an accumulated deficit of $376.0 million. We have devoted substantially all of our resources and efforts to research and development, and we expect that it will be at least several years, if ever, before we generate revenue from product sales. Even if we receive marketing approval for and commercialize one or more of our product candidates, we expect that we will continue to incur substantial research and development and other expenses in order to further develop and, if approved, market additional potential product candidates.
We expect to continue to incur significant losses for the foreseeable future, and we anticipate that our expenses will increase substantially if, and as, we:
advance our lead product candidate, bexotegrast, and our other product candidates through clinical development, and, if successful, later-stage clinical trials;
discover and develop new product candidates;
advance our preclinical development programs into clinical development;
further develop manufacturing processes and manufacture our product candidates;
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experience delays or interruptions to preclinical studies, clinical trials, our receipt of services from our third-party service providers on whom we rely, or our supply chain due to the COVID-19 pandemic;
seek regulatory approvals for any product candidates that successfully complete clinical trials;
commercialize bexotegrast, our other product candidates and any future product candidates, if approved;
increase the amount of research and development activities to identify and develop product candidates;
hire additional clinical development, quality control, scientific and management personnel;
expand our operational, financial and management systems and increase personnel, including personnel to support our clinical development and manufacturing efforts;
establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any products for which we may obtain marketing approval and intend to commercialize on our own or jointly with third parties;
maintain, expand and protect our intellectual property portfolio;
invest in or in-license other technologies or product candidates; and
continue to build out our organization to engage in such activities.
To become and remain profitable, we must develop and eventually commercialize products with significant market potential. This will require us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials, obtaining marketing approval for product candidates, manufacturing, marketing, and selling products for which we may obtain marketing approval and satisfying any post-marketing requirements. We may never succeed in any or all of these activities and, even if we do, we may never generate revenue that is significant enough to achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business, or continue our operations.
We will require substantial additional capital to fund our operations. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and drug development programs, future commercialization efforts or other operations.
Developing biopharmaceutical products, including conducting preclinical studies and clinical trials, is a very time-consuming, expensive, and uncertain process that takes years to complete. Our operations have consumed substantial amounts of cash since inception. We expect our expenses to increase in connection with our ongoing activities, particularly as we conduct our planned clinical trials of bexotegrast and any future product candidates that we may develop, seek regulatory approvals for our product candidates and to launch and commercialize any products for which we receive regulatory approval. Accordingly, we will need to obtain substantial additional funding in order to maintain our continuing operations. If we are unable to raise capital when needed or on acceptable terms, we may be forced to delay, reduce, or eliminate one or more of our research and drug development programs or future commercialization efforts.
As of March 31, 2023, we had approximately $577.3 million in cash, cash equivalents and short-term investments. Based on our current operating plan, we believe that our existing cash, cash equivalents and short-term investments will be sufficient to fund our anticipated operating expenses and capital expenditure requirements into the second half of 2026. However, our future capital requirements and the period for which our existing resources will support our operations may vary significantly from what we expect, and we will in any event require additional capital in order to complete clinical development of any of our current programs. Our monthly spending levels will vary based on new and ongoing development and corporate activities. Because the length of time and activities associated with development of our product candidates is highly uncertain, we are unable to estimate the actual funds we will require for development, marketing, and commercialization activities. Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:
the initiation, progress, timing, costs and results of preclinical studies and clinical trials for our product candidates;
the clinical development plans we establish for these product candidates;
the timelines of our clinical trials and the overall costs to conduct and complete the clinical trials, including any increased costs due to disruptions caused by the ongoing COVID-19 pandemic or other geopolitical conditions;
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the cost and capital commitments required for developing manufacturing processes for our product candidates and manufacturing our product candidates at clinical and commercial scales;
the number and characteristics of product candidates that we develop;
the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities;
whether we are able to enter into future collaboration agreements and the terms of any such agreements;
the ability to and timing of achieving a favorable pricing and reimbursement decision by the pricing authorities in the markets of interest;
the ability to secure a position recommendation following the health technology assessment by the health technology bodies in the relevant market;
the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;
the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against us or our product candidates;
the effect of competing technological and market developments;
the cost and timing of completion of commercial-scale outsourced manufacturing activities; and
the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own.
We have borrowed and in the future may borrow additional capital from institutional and commercial banking sources to fund future growth, including pursuant to our Oxford Loan Agreement, or potentially pursuant to new arrangements with different lenders. In addition, we expect to continue to opportunistically seek access to the equity capital markets to support our development efforts and operations. However, we cannot be certain that additional funding will be available on acceptable terms, or at all. Until we can generate sufficient revenue to finance our cash requirements, which we may never do, we expect to finance our future cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing or distribution arrangements. If we raise additional funds through public or private equity offerings, the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Further, to the extent that we raise additional capital through the sale of common stock or securities convertible or exchangeable into common stock, your ownership interest will be diluted. In addition, any debt financing may subject us to fixed payment obligations and covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish certain valuable intellectual property or other rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us. We also may be required to seek collaborators for any of our product candidates at an earlier stage than otherwise would be desirable or relinquish our rights to product candidates or technologies that we otherwise would seek to develop or commercialize ourselves. Market volatility resulting from the COVID-19 pandemic or other financial markets factors could also adversely impact our ability to access capital as and when needed. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates or one or more of our other research and development initiatives. Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our common stock to decline.
Covenants and other provisions in the Oxford Loan Agreement restrict our business and operations in many ways, and if we do not effectively manage our covenants, our financial conditions and results of operations could be adversely affected. In addition, our operations may not provide sufficient cash to meet the repayment obligations of our debt incurred under the Oxford Loan Agreement.
Pursuant to the Oxford Loan Agreement, Oxford has been granted a security interest in substantially all of our assets, excluding intellectual property (but including the right to payments and proceeds of intellectual property), and a negative pledge on substantially all of our intellectual property, subject to customary exceptions. If an event of default occurs under the Oxford Loan Agreement, Oxford may foreclose on its security interest and liquidate some or all of these assets, which would harm our business, financial condition and results of operations.
In the event of a default in connection with our bankruptcy, insolvency, liquidation, or reorganization, Oxford would have a prior right to substantially all of our assets to the exclusion of our general unsecured creditors. Only after satisfying the claims of Oxford and any unsecured creditors would any amount be available for our equity holders.
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The pledge of these assets and other restrictions imposed in the Oxford Loan Agreement may limit our flexibility in raising capital for other purposes. Because substantially all of our assets are pledged to secure the Oxford Loan Agreement obligations, our ability to incur additional indebtedness or to sell or dispose of assets to raise capital may be impaired, which could have an adverse effect on our financial flexibility.
In addition, if we are unable to comply with certain financial and operating restrictions in the Oxford Loan Agreement, we may be limited in our business activities and access to credit or may default under the Oxford Loan Agreement. Provisions in the Oxford Loan Agreement impose restrictions or require prior approval on our ability, and the ability of certain of our subsidiaries to, among other things:
Incur additional debt;
Make certain investments and acquisitions;
Guarantee the indebtedness of others or our subsidiaries;
Create liens or encumbrances;
Engage in new lines of business;
Enter into transactions with affiliates;
Pay cash dividends and make distributions;
Redeem or repurchase capital shares;
Sell, lease or transfer certain parts of our business or property, including equity interests of our subsidiaries;
Prepay other indebtedness; and
Acquire new companies and merge or consolidate.
The Oxford Loan Agreement also contains other customary covenants. We may not be able to comply with these covenants in the future. Our failure to comply with these covenants may result in the declaration of an event of default, which, if not cured or waived, may result in the acceleration of the maturity of indebtedness outstanding under the Oxford Loan Agreement and would require us to pay all amounts outstanding. If the maturity of our indebtedness is accelerated, we may not have sufficient funds then available for repayment or we may not have the ability to borrow or obtain sufficient funds to replace the accelerated indebtedness on terms acceptable to us or at all. Our failure to repay our obligations under the Oxford Loan Agreement would result in Oxford foreclosing on all or a portion of our assets, which could force us to curtail or cease our operations.
The amount of our future losses is uncertain and our quarterly operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline.
Our quarterly and annual operating results may fluctuate significantly in the future due to a variety of factors, many of which are outside of our control and may be difficult to predict, including the following:
the timing and success or failure of clinical trials for our product candidates or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or partners;
our ability to successfully recruit and retain subjects for clinical trials, and any delays caused by difficulties in such efforts;
our ability to obtain marketing approval for our product candidates, and the timing and scope of any such approvals we may receive;
the timing and cost of, and level of investment in, research and development activities relating to our product candidates, which may change from time to time;
the cost of manufacturing our product candidates, which may vary depending on the difficulty of manufacture, quantity of production and the terms of our agreements with manufacturers;
our ability to attract, hire and retain qualified personnel;
expenditures that we will or may incur to develop additional product candidates;
the level of demand for our product candidates should they receive approval, which may vary significantly;
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the risk/benefit profile, cost and reimbursement policies with respect to our product candidates, if approved, and existing and potential future therapeutics that compete with our product candidates;
general market conditions or extraordinary external events, such as recessions or the COVID-19 pandemic;
the changing and volatile U.S. and global economic and political environments; and
future accounting pronouncements or changes in our accounting policies.
The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period. If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially. Such a stock price decline could occur even when we have met any previously publicly stated guidance we may provide.
Risks Related to Research and Development and the Biopharmaceutical Industry
We have a limited operating history, which may make it difficult to evaluate our prospects and likelihood of success.
We have no products approved for commercial sale and have not generated any revenue from product sales to date. Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio and performing research and development of our product candidates and our technology related to transforming growth factor beta, or TGF-β, signaling and integrin biology, medicinal chemistry, translational screening technologies, and clinical insights to discover and develop novel therapies for the treatment of fibrosis. Our approach to the discovery and development of product candidates is unproven, and we do not know whether we will be able to develop any products of commercial value. We have not yet demonstrated the ability to progress any product candidate through clinical trials, obtain regulatory approval, manufacture a commercial scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. In addition, as a business with a limited operating history, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors and risks frequently experienced by early-stage biopharmaceutical companies in rapidly evolving fields. Consequently, we expect our operating results to continue to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control, and predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing drug products.
Our business is highly dependent on the success of our lead product candidate, bexotegrast, as well as PLN-1474 and any other product candidates that we advance into the clinic. Our product candidates will require significant additional development before we may be able to seek regulatory approval for and launch a product commercially.
We currently have no products that are approved for commercial sale and may never be able to develop marketable products. We are early in our clinical development for both bexotegrast and PLN-1474. If bexotegrast encounters safety or efficacy problems, development delays, regulatory issues or other problems, our development plans and business would be significantly harmed. We have completed several Phase 1 and Phase 2a trials of bexotegrast in IPF and are currently conducting a Phase 2a trial in PSC. We previously collaborated with Novartis to develop PLN-1474 for advanced liver fibrosis associated with NASH and have completed a Phase 1a SAD/MAD study evaluating PLN-1474 in healthy volunteers. As part of a broad strategic realignment, Novartis discontinued clinical development in NASH and, as a result, discontinued development of PLN-1474. In February 2023, Novartis issued a termination notice for the collaboration and license agreement, and effective upon the termination, returned global rights to Pliant for PLN-1474 and we may pursue other collaborations to further clinical development of PLN-1474. All of the risks and uncertainties that apply to bexotegrast or any candidates that we develop independently or in collaboration with third parties. See “Risks Related to Our Reliance on Third Parties.”
Before we can generate any revenue from sales of our lead product candidate, bexotegrast, or any of our other product candidates, we must undergo additional preclinical and clinical development, regulatory review, and approval in one or more jurisdictions. In addition, if one or more of our product candidates are approved, we must ensure access to sufficient commercial manufacturing capacity and conduct significant marketing efforts in connection with any commercial launch. These efforts will require substantial investment, and we may not have the financial resources to continue development of our product candidates.
We may experience setbacks that could delay or prevent regulatory approval of, or the extent of regulatory protection or our ability to commercialize, our product candidates, including:
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negative or inconclusive results from our preclinical studies or clinical trials or the clinical trials of others for product candidates similar to ours, leading to a decision or requirement to conduct additional preclinical testing or clinical trials or abandon a program;
product-related side effects experienced by subjects in our clinical trials or by individuals using drugs or therapeutics similar to our product candidates;
delays in submitting INDs or comparable foreign applications or delays or failure in obtaining the necessary approvals from regulators to commence a clinical trial, or a suspension or termination of a clinical trial once commenced;
conditions imposed by the FDA or comparable foreign authorities regarding the scope or design of our clinical trials;
delays in enrolling subjects in clinical trials, including due to the COVID-19 pandemic;
high drop-out rates of subjects from clinical trials;
inadequate supply or quality of product candidates or other materials necessary for the conduct of our clinical trials;
challenges manufacturing our product candidates to regulatory requirements in a cost effective manner;
greater than anticipated clinical trial costs;
inability to compete with other therapies;
failure to secure or maintain orphan designation in some jurisdictions;
poor efficacy of our product candidates during clinical trials;
unfavorable FDA or other regulatory agency inspection and review of a clinical trial site;
failure of our third-party contractors or investigators to comply with regulatory requirements or otherwise meet their contractual obligations in a timely manner, or at all;
delays and changes in regulatory requirements, policy and guidelines, including the imposition of additional regulatory oversight around clinical testing generally or with respect to our technology in particular; or
varying interpretations of data by the FDA and similar foreign regulatory agencies.
We do not have complete control over many of these factors, including certain aspects of clinical development and the regulatory submission process, potential threats to our intellectual property rights and our manufacturing, marketing, distribution and sales efforts or that of any future collaborator.
Our approach to drug discovery and development in the area of fibrotic diseases, with an initial focus on tissue-specific integrin modulation and TGF-β signaling inhibition, is unproven and may not result in marketable products.
Our approach is designed to discover and develop targeted treatments for fibrosis with an initial focus on the antagonism of tissue-specific TGF-β signaling through the inhibition of integrins known to mediate the release of activated TGF-β in fibrotic tissue. However, although multiple studies are currently underway, to date, this mechanism has not been definitively proven to successfully treat fibrosis. Targeting integrins to treat fibrosis is a novel approach in a rapidly developing field, and there can be no assurance that we will not experience currently unknown problems or delays in developing our product candidates, that such problems or delays will not result in unanticipated costs, or that any such development problems can be solved. We have primarily tested our lead product candidate, bexotegrast, in healthy volunteers. Therefore, we may ultimately discover that our approach and any product candidates resulting therefrom do not possess properties required for therapeutic effectiveness. As a result, we may never succeed in developing a marketable product.
In addition, while we have developed an extensive panel of cell assays and precision cut tissue assays and have utilized animal models to uncover biological pathways, understood gene expression changes and optimized the potency and selectivity of our potential product candidates, there can be no assurance that our technology will yield their intended benefits. While we believe our assays represent a differentiator in our approach to drug development, our approach has not yet been clinically proven to yield results. Our practice of evaluating our product candidates in live human fibrotic tissue samples before advancing them into the clinic is intended to serve as a bridge between animal models and clinical proof-of-concept. However, there can be no assurance that positive results observed from preclinical animal testing and human fibrotic tissue models will be replicated when a program is advanced into clinical development. In addition, our practice of utilizing live human fibrotic tissue
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as part of our development efforts may become more widespread in the future, and this approach may be adopted and replicated by others, including our competitors.
Studies involving human tissue samples may also be subject to institutional and government human subject privacy policies that may vary by territory. We or our partners who provide us with human tissue samples or conduct tissue and/or animal studies on our behalf, may be found to be in violation of one or more of these regulations or policies and may be subject to closure, censure or other penalties. In some cases, these penalties could materially impact the performance, availability, or validity of studies conducted by us or on our behalf. Even in the absence of violations resulting in penalties, regulatory and other authorities may refuse to authorize the conduct or to accept the results of studies for regulatory or ethical reasons.
Clinical development involves a lengthy, complex, and expensive process, with an uncertain outcome.
To obtain the requisite regulatory approvals to commercialize any product candidates, we must demonstrate through extensive preclinical studies and clinical trials that our product candidates are safe and effective in humans. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. In particular, the general approach for FDA approval of a new drug is dispositive data from two well-controlled, Phase 3 clinical trials of the relevant drug in the relevant patient population. Phase 3 clinical trials typically involve hundreds of patients, have significant costs and take years to complete. A product candidate can fail at any stage of testing, even after observing promising signals of activity in earlier preclinical studies or clinical trials. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials. In addition, initial success in clinical trials may not be indicative of results obtained when such trials are completed. There is typically an extremely high rate of attrition from the failure of product candidates proceeding through clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy profile despite having progressed through preclinical studies and initial clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setba