UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________

FORM 10-Q

______________________

~~FORM~~

~~10-Q~~

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

For the quarterly period ended ~~June 30, 2021~~March 31, 2022

☐
o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number: 001-40045

______________________

NEXIMMUNE, INC.

(Exact Name of Registrant as Specified in its Charter)

______________________


Delaware		42-2518457
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

9119 Gaither Road ~~Gaithersburg,~~ MD		~~20877~~
Gaithersburg,	MD	20877
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (301)

825-9810

______________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading

Symbol(s)

~~Trading~~

~~Symbol(s)~~

Name of each exchange

on which registered

Common Stock, $0.0001 par value per share

NEXI

The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

~~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

☒x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐o

Non-accelerated filer

☒

Smaller reporting company

☒x

Emerging growth company

☒x

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 7(a)(2)(B) of the Securities Act. ☐

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

oNo

☒

As of ~~June 30, 2021,~~March 31, 2022, the registrant had ~~22,628,007~~22,841,794 shares of common stock, $0.0001 par value per share, outstanding.

~~outstanding.~~

Table of Contents


			~~Page~~
		Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS							1
PART I -	FINANCIAL INFORMATION							3
	Item 1.					Financial Statements			3
					Balance sheets (unaudited)				3
					Statements of Operations (unaudited)				4
					Statements of Comprehensive Loss (unaudited)				4	5
					Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) (unaudited)				5	6
					Statements of Cash Flows (unaudited)				7
					Notes to Unaudited Financial Statements (unaudited)				8
	Item 2.					Management’s Discussion and Analysis of Financial Condition and Results of Operations			16	19
	Item 3.					Quantitative and qualitative disclosures about market risk			24	28
	Item 4.					Controls and Procedures			24	28
PART II -	OTHER INFORMATION							25	31
	Item 1.					Legal Proceedings			25	31
	Item 1A.					Risk Factors			25	31
	Item 2.					Unregistered Sales of Equity Securities and Use of Proceeds			25	31
	Item 3.					Defaults Upon Senior Securities			25	32
	Item 4.					Mine Safety Disclosures			25	32
	Item 5.					Other Information			25	32
	Item 6.			Exhibits		~~Exhibits~~32			26
SIGNATURES							28	33

Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form

10-Q

contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form

10-Q

are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these words or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

•our ability to obtain and maintain regulatory approval of

NEXI-001

and

NEXI-002

and/or our other product candidates;

•our ability to successfully commercialize and market

NEXI-001

and

NEXI-002

and/or our other product candidates, if approved;

•our ability to contract with third-party suppliers, manufacturers and other service providers and their ability to perform adequately;

•the potential market size, opportunity and growth potential for

NEXI-001

and

NEXI-002

and/or our other product candidates, if approved;

•our ability to build our own sales and marketing capabilities, or seek collaborative partners, to commercialize

NEXI-001

and

NEXI-002

and/or our other product candidates, if approved;

•our ability to obtain funding for our operations;

•the initiation, timing, progress and results of our preclinical studies and clinical trials, and our research and development programs;

•the timing of anticipated regulatory filings;

•the timing of availability of data from our clinical trials;

•the impact of the ongoing

COVID-19

pandemic and our response to it;

•the accuracy of our estimates regarding expenses, capital requirements and needs for additional financing;

•our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;

•our ability to advance product candidates into, and successfully complete, clinical trials;

•our ability to recruit and enroll suitable patients in our clinical trials;

•the timing or likelihood of the accomplishment of various scientific, clinical, regulatory and other product development objectives;

•the pricing and reimbursement of our product candidates, if approved;

•the rate and degree of market acceptance of our product candidates, if approved;

•the implementation of our business model and strategic plans for our business, product candidates and technology;

•the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;

•developments relating to our competitors and our industry;

•the accuracy of our estimates regarding expenses, capital requirements and needs for additional financing;

•the development of major public health concerns, including the novel coronavirus outbreak or other pandemics arising globally, and the future impact of it and

COVID-19

on our clinical trials, business operations and funding requirements; and

•our financial performance.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the “Risk Factors” section and elsewhere in this Form

10-Q.

Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors,

Table of Contents

may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Form

10-Q

may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

~~Table of Contents~~

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable as of the date of this Form

10-Q,

we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Form

10-Q

to conform these statements to new information, actual results or to changes in our expectations, except as required by law.

You should read this Form

10-Q

and the documents that we reference in this Form

10-Q

and have filed with the Securities and Exchange Commission, or SEC, as exhibits to this Form

10-Q

with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

NEXIMMUNE, INC.

BALANCE SHEETS


	March 31, 2022		December 31, 2021
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	24,503,334	$	30,326,352
Marketable securities	40,506,415		51,491,942
Restricted cash	67,500		67,500
Prepaid expenses and other current assets	6,822,410		4,394,916
Total current assets	71,899,659		86,280,710
Property and equipment, net	4,475,089		4,427,307
Operating lease right-of-use assets	1,345,681		—
Other non-current assets	593,525		324,099
Total assets	$	78,313,954	$	91,032,116
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,007,994	$	1,045,159
Accrued expenses	4,497,425		6,170,709
Operating lease liabilities, current	585,916		—
Total current liabilities	7,091,335		7,215,868
Operating lease liabilities, net of current portion	829,440		—
Deferred rent, net of current portion	—		55,581
Total liabilities	7,920,775		7,271,449
Commitments and contingencies	0		0
Stockholders’ equity
Common Stock, $0.0001 par value, 250,000,000 shares authorized, 22,841,794 issued and outstanding as of March 31, 2022 and 22,828,904 shares issued and outstanding as of December 31, 2021.	2,284		2,283
Additional paid-in-capital	213,177,933		211,498,827
Accumulated other comprehensive (loss) income	(20,578)		3,012
Accumulated deficit	(142,766,460)		(127,743,455)
Total stockholders’ equity	70,393,179		83,760,667
Total liabilities and stockholders’ equity	$	78,313,954	$	91,032,116

June 30,

2021

December 31,

2020


(unaudited)

ASSETS

Current assets:

Cash and cash equivalents
   $ 63,816,106 $ 5,031,079
Marketable securities
   38,979,670 —
Restricted cash
   67,500 67,500
Prepaid expenses and other current assets
   8,327,117 3,293,858
Total current assets
   111,190,393 8,392,437
Property and equipment, net
   4,148,875 2,885,260
Other
non-current
assets
   53,373 23,373
Total assets
   $ 115,392,641 $ 11,301,070

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
(DEFICIT)

Current liabilities:

Accounts payable
   $ 2,169,660 $ 2,760,129
Accrued expenses
   2,469,942 2,603,027
Derivative liability
   —   1,702,359
Other current liabilities
   843,619 843,619
Convertible notes issued to related parties
   —   7,324,267
Convertible notes
   —   11,793,397
Total current liabilities
   5,483,221 27,026,798
Deferred rent, net of current portion
   23,529
Other
non-current
liabilities
   —   4,935
Total liabilities
   5,483,221 27,055,262
Commitments and contingencies
   0 0
Redeemable convertible preferred stock
Series A Redeemable Convertible Preferred Stock, $0.0001 par value, 0 shares outstanding as of June 30,

2021
and 121,735,303 shares authorized, issued and outstanding as of December 31, 2020. Liquidation value of
$42,314,789 as of December 31, 2020.
   —   35,047,435
Series
A-2
Redeemable Convertible Preferred Stock, $0.0001 par value, 0 shares outstanding as of June 30,

2021
and 28,384,899 shares authorized, 22,047,361 shares issued and outstanding as of December 31,
2020.
Liquidation
value of $8,683,746 as of December 31, 2020.
   —   7,685,865
Series
A-3
Redeemable Convertible Preferred Stock, $0.0001 par value, 0 shares outstanding as of June 30,

2021
and 34,061,879 shares authorized, 31,209,734 shares issued and outstanding as of December 31,
2020.
Liquidation
value of $11,699,176 as of December 31, 2020.
   —   10,887,449
Total redeemable convertible preferred stock    —   53,620,749
Stockholders’ equity (deficit)

Common Stock, $0.0001 par value, 250,000,000 shares authorized, 22,628,007 issued and outstanding as of June 30, 2021 and 1,256,609 shares issued and outstanding as of December 31, 2020.
   2,263 126
Additional
paid-in-capital
   207,480,819 8,206,938
Accumulated other comprehensive loss

(2,917
)
—

Accumulated deficit
   (97,570,745 ) (77,582,005 )
Total stockholders’
equity (deficit)
   109,909,420 (69,374,941 )
Total liabilities, redeemable convertible preferred stock and stockholders’
equity (deficit)
$ 115,392,641 $ 11,301,070

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

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NEXIMMUNE, INC.

STATEMENTS OF OPERATIONS

(unaudited)


	Three Months Ended March 31,
	2022		2021
Revenue	$	—	$	—
Operating expenses:
Research and development	10,448,843		6,012,608
General and administrative	4,604,679		4,057,592
Total operating expenses	15,053,522		10,070,200
Loss from operations	(15,053,522)		(10,070,200)
Other income (expense):
Interest income	33,093		3,613
Change in fair value of derivative liability	—		2,424,877
Interest expense	—		(904,119)
Other expense	(2,576)		(722)
Other income	30,517		1,523,649
Net loss	$	(15,023,005)	$	(8,546,551)
Accumulated dividends on Redeemable Convertible Preferred Stock	—		(377,562)
Net loss attributable to common stockholders	$	(15,023,005)	$	(8,924,113)
Basic and diluted net loss attributable to common stockholders per common share	$	(0.66)	$	(0.71)
Basic and diluted weighted-average number of common shares outstanding	22,836,781		12,633,123

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Revenue
$ 0   $ 0   $ 0   $ 0
Operating expenses:

Research and development
8,124,973 4,209,261 14,137,581 8,481,428
General and administrative
4,038,050 2,565,402 8,095,642 4,653,803

Total operating expenses
12,163,023 6,774,663 22,233,223 13,135,231
Loss from operations
(12,163,023 ) (6,774,663 ) (22,233,223 ) (13,135,231 )
Other (expense) income:

Interest income
6,851 1,184 10,464 19,868
Interest expense
(101 ) (183,682 ) (904,220 ) (184,671 )
Change in fair value of derivative liability
— —   2,424,877 —
Other (expense) income (25,974 ) 26,636 (26,696 ) 54,001

Other (expense) income (19,224 ) (155,862 ) 1,504,425 (110,802 )

Net loss
$ (12,182,247 ) $ (6,930,525 ) $ (20,728,798 ) $ (13,246,033 )
Accumulated dividends on Redeemable Convertible Preferred Stock
—   (815,816 ) (377,562 ) $ (1,631,632 )

Net loss
attributable
to common

stockholders
$ (12,182,247 ) $ (7,746,341 ) $ (21,106,360 ) $ (14,877,665 )

Basic and diluted net loss
attributable
to common stockholders per common share
$ (0.54 ) $ (6.17 ) $ (1.20 ) $ (11.86 )

Basic and diluted weighted-average number of common shares outstanding
22,608,866 1,254,681 17,648,551 1,254,681

~~STATEMENTS OF COMPREHENSIVE LOSS~~

~~(unaudited)~~

Three Months Ended June 30,

Six Months Ended June 30,


2021

2020

2021

2020

Net loss
   $ (12,182,247 ) $ (6,930,525 ) $ (20,728,798 ) $ (13,246,033 )


Other comprehensive loss:

Unrealized (loss) gain on
available-for-sale
marketable securities, net of tax
   (2,917 ) —   (2,917 ) (506 )


Comprehensive loss
   $ (12,185,164 ) $ (6,930,525 ) $ (20,731,715 ) $ (13,246,539 )

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

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NEXIMMUNE, INC.

STATEMENTS OF COMPREHENSIVE LOSS

(unaudited)


	Three Months Ended March 31,
	2022		2021
Net loss	$	(15,023,005)	$	(8,546,551)
Other comprehensive loss:
Unrealized loss on available-for-sale marketable securities, net of tax	(23,590)		—
Comprehensive loss	$	(15,046,595)	$	(8,546,551)

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

Table of Contents

STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

For the Three Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ (unaudited)

~~Table of Contents~~

~~STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)~~

~~For the Six Months Ended June 30, 2021 and 2020 (unaudited)~~

Redeemable Convertible Preferred Stock

Stockholders’ Deficit

Series A

Series
A-2

Series
A-3

Common Stock

Accumulated

Other

Comprehensive

Income/ (Loss)

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

Additional

Paid-In

Capital

Accumulated

Deficit

Total

Stockholders

Deficit

Balance at January 1, 2021
121,735,303
$
35,047,435 22,047,361
$
7,685,865 31,209,734
$
10,887,449 1,256,609
$
126
$
8,206,938
$
(77,582,005 ) —
$
(69,374,941 )
Cumulative effect of adoption of accounting standard
—   —   —   —   —   —   —   —   (2,277,332 ) 740,058 —   (1,537,274 )
Issuance of Series A redeemable preferred stock upon exercise of warrants
145,000 1,450 —   —   —   —   —   —   —   —   —   —
Conversion of preferred stock into common stock
(121,880,303 ) (35,048,885 ) (22,047,361 ) (7,685,865 ) (31,209,734 ) (10,887,449 ) 10,144,041 1,014 53,621,185 —   —   53,622,199
Conversion of convertible debt into common stock
—   —   —   —   —   —   3,669,010 367 30,251,689 —   —   30,252,056
Issuance of common stock in connection with the initial public offering. net of transaction costs
—   —   —   —   —   —   7,441,650 744 114,550,571 —   —   114,551,315
Exercise of stock options
—   —   —   —   —   —   113,801 12 446,843 —   —   446,855
Exercise of warrants
—   —   —   —   —   —   2,896 —   —   —   —   —
Stock-based compensation
—   —   —   —   —   —   —   —   2,680,925 —   —   2,680,925
Change in unrealized loss on marketable
available-for-sale
securities

—

—

—

—

—

—

—

—

—

—

(2,917 ) (2,917 )
Net loss
—   —   —   —   —   —   —   —   —   (20,728,798 ) —   (20,728,798 )

Balance at June 3
0
, 2021
—   $ —   —   $ —   —   $ —   22,628,007 $ 2,263 $ 207,480,819 $ (97,570,745 ) $ (2,917 ) $ 109,909,420

Balance at January 1, 2020
121,735,303 $ 35,047,435 22,047,361 $ 7,685,865 31,209,734 $ 10,887,449 1,254,681 $ 126 $ 4,705,808 $ (47,716,008 ) $ 506 $ (43,009,568 )
Stock-based compensation
—   —   —   —   —   —   —   —   658,752 —   —   658,752
Change in unrealized gains on marketable
available-for-sale
securities
—   —   —   —   —   —   —   —   —   —   (506 ) (506 )
Beneficial conversion feature on convertible notes
—
—

—

—

—

—

—

—

1,035,263
—

—

1,035,263
Net loss
—   —   —   —   —   —   —   —   —   (13,246,033 ) —   (13,246,033 )

Balance at June 30, 2020
121,735,303 $

35,047,435
22,047,361 $

7,685,865
31,209,734 $

10,887,449
1,254,681 $ 126 $ 6,399,823 $ (60,962,041 ) —   $ (54,562,092 )


	Redeemable Convertible Preferred Stock									Stockholders’ Deficit
	Series A			Series A-2			Series A-3			Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income/ (Loss)		Total Stockholders Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
Balance at January 1, 2021	121,735,303	$	35,047,435	22,047,361	$	7,685,865	31,209,734	$	10,887,449	1,256,609	$	126	$	8,206,938	$	(77,582,005)	—		$	(69,374,941)
Cumulative effect of adoption of accounting standard	—	—		—	—		—	—		—	—		(2,277,332)		740,058		—		(1,537,274)
Issuance of Series A redeemable preferred stock upon exercise of warrants	145,000	1,450		—	—		—	—		—	—		—		—		—		—
Conversion of preferred stock into common stock	(121,880,303)	(35,048,885)		(22,047,361)	(7,685,865)		(31,209,734)	(10,887,449)		10,144,041	1,014		53,621,185		—		—		53,622,199
Conversion of convertible debt into common stock	—	—		—	—		—	—		3,669,010	367		30,251,689		—		—		30,252,056
Issuance of common stock in connection with the initial public offering. net of transaction costs	—	—		—	—		—	—		7,441,650	744		114,550,571		—		—		114,551,315
Exercise of stock options	—	—		—	—		—	—		65,013	7		297,076		—		—		297,083
Exercise of warrants	—	—		—	—		—	—		2,896	—		—		—		—		—
Stock-based compensation	—	—		—	—		—	—		—	—		1,197,444		—		—		1,197,444
Net loss	—	—		—	—		—	—		—	—		—		(8,546,551)		—		(8,546,551)
Balance at March 31, 2021	—	$	—	—	$	—	—	$	—	22,579,219	$	2,258	$	205,847,571	$	(85,388,498)	$	—	$	120,461,331

Balance at January 1, 2022	—	$	—	—	$	—	—	$	—	22,828,904	$	2,283	$	211,498,827	$	(127,743,455)	$	3,012	$	83,760,667
Exercise of stock options	—	—		—	—		—	—		12,890	1		33,254		—		—		33,255
Stock-based compensation	—	—		—	—		—	—		—	—		1,645,852		—		—		1,645,852
Change in unrealized loss on marketable available-for-sale securities	—	—		—	—		—	—		—	—		—		—		(23,590)		(23,590)
Net loss	—	—		—	—		—	—		—	—		—		(15,023,005)		—		(15,023,005)
Balance at March 31, 2022	—	$	—	—	$	—	—	$	—	22,841,794	$	2,284	$	213,177,933	$	(142,766,460)	(20,578)		$	70,393,179

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NEXIMMUNE, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities
Net loss	$	(15,023,005)	$	(8,546,551)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	226,956		174,331
Accretion income on available-for-sale marketable securities, net	(1,618)		—
Loss on asset disposal	—		(464)
Stock-based compensation	1,645,852		1,197,444
Non-cash lease expense	121,904		—
Non-cash interest expense	—		903,919
Change in fair value of derivative liability	—		(2,424,877)
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(2,696,917)		(2,446,793)
Accounts payable	955,433		(645,847)
Accrued expenses, deferred rent and other	(1,596,261)		633,307
Operating lease liabilities	(107,810)		—
Net cash used in operating activities	(16,475,466)		(11,155,532)
Cash flows from investing activities
Purchase of property and equipment	(344,362)		(581,228)
Proceeds from disposal of equipment	—		464
Purchase of marketable securities	(16,036,445)		—
Proceeds from maturities and sales of available-for-sale marketable securities	27,000,000		—
Net cash provided by (used in) investing activities	10,619,193		(580,764)
Cash flows from financing activities
Proceeds from initial public offering, net of transaction costs	—		115,503,948
Proceeds from the exercise of stock options	33,255		297,083
Proceeds from the exercise of warrants	—		1,450
Principal payments on capital leases	—		(5,212)
Proceeds from the issuance of convertible notes from related parties	—		56,500
Proceeds from the issuance of convertible notes	—		8,974,980
Issuance costs associated with convertible notes	—		(20,587)
Proceeds from the issuance of short-term debt	—		—
Net cash provided by financing activities	33,255		124,808,162
Net increase (decrease) in cash, cash equivalents and restricted cash	(5,823,018)		113,071,866
Net cash, cash equivalents and restricted cash at beginning of period	30,393,852		5,098,579
Net cash, cash equivalents and restricted cash at end of period	$	24,570,834	$	118,170,445
Supplemental disclosure of cash flow information:
Cash paid during the year for interest	$	—	$	200
Supplemental disclosure of noncash investing and financing activities:
Property and equipment purchases included in accounts payable and accrued expenses	$	62,241	$	292,255

Six Months Ended June 30,


2021

2020

Cash flows from operating activities


Net loss
   $ (20,728,798
)
$ (13,246,033
)
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization
   393,875

290,750

(Gain) loss on asset disposal
   (464
)
398

Stock-based compensation
   2,680,925

658,752

Non-cash
interest expense
   903,919

140,829

Change in fair value of derivative liability
   (2,424,877
)
1,334

Changes in operating assets and liabilities:

Prepaid expenses and other assets
   (5,985,891
)
(1,191,324
)
Accounts payable
   172,566

698,078

Accrued expenses, deferred rent and other
   219,163

129,502



Net cash used in operating activities
   (24,769,582
)
(12,517,714
)
Cash flows from investing activities

Purchase of property and equipment
   (1,634,586
)
(390,220 )
Proceeds from disposal of equipment
   464

550

Collections on employee advances
   0—

80,224

Purchase of marketable securities
   (38,981,461
)
0—

Proceeds from maturities and sales of
available-for-sale
marketable securities
   0—

1,006,372



Net cash

(used in)
provided by investing activities
   (40,615,583
)
696,926

Cash flows from financing activities

Proceeds from initial public offering, net of transaction costs
   114,721,518

0—

Proceeds from the exercise of stock options
   446,855

0—

Proceeds from the exercise of warrants
   1,450

0—

Principal payments on capital leases
   (10,524
)
(9,756
)
Proceeds from the issuance of convertible notes from related parties
   56,500

4,900,460

Proceeds from the issuance of convertible notes
   8,974,980

1,637,826

Issuance costs associated with convertible notes
   (20,587
)
(89,895
)
Proceeds from the issuance of short-term debt

0—

843,619



Net cash provided by financing activities
   124,170,192

7,282,254

Net increase (decrease) in cash, cash equivalents and restricted cash
   58,785,027

(4,538,534 )
Net cash, cash equivalents and restricted cash at beginning of period
   5,098,579

9,196,487



Net cash, cash equivalents and restricted cash at end of period
   $ 63,883,606

$ 4,657,953



Supplemental disclosure of cash flow information:

Cash paid during the year for interest
   $ 300

$ 1,608



Supplemental disclosure of noncash investing and financing activities:

Property and equipment purchases included in accounts payable and accrued expenses
   $ 80,905

$ 1,487

Deferred financing costs included in accounts payable

$
0—

$
181,377

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

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NEXIMMUNE, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

1.Nature of the ~~business and basis of presentation~~

Business

NexImmune, Inc. (“Company”, “we”, “us” or “NexImmune”), a Delaware corporation headquartered in Gaithersburg, Maryland, was incorporated on June 7, 2011. The Company is an emerging biopharmaceutical company advancing a new generation of immunotherapies based on its proprietary Artificial Immune Modulation, ~~(AIM)~~or AIMTM, technology. The AIM nanotechnology platform, originally developed at Johns Hopkins University, is the foundation for an innovative approach to immunotherapy in which the body’s own immune system is stimulated to orchestrate a targeted T cell response against a disease. Central to the AIM technology are AIM nanoparticles, which act as synthetic dendritic cells. These AIM nanoparticles can be programmed to present specific antigens and

co-stimulatory

signals to specific T cells, generating an immune response that can be directed toward any foreign substance or cell type in a patient’s body. The C

~~mpany’s~~Company’s first t

otwo products, both for the treatment of different types of cancer, entered clinical trials in 2020. Data is expected to be generated throughout 2022 from these trials and the Company will share this data in the appropriate scientific forums.

Going Concern

Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 205-40, Presentation of Financial Statements - Going Concern ("ASC 205-40"), requires management to assess the Company’s ability to continue as a going concern for one year after the date the financial statements are issued. Under ASC 205-40, management has the responsibility to evaluate whether conditions and/or events raise substantial doubt about the Company’s ability to meet future financial obligations as they become due within one year after the date that the financial statements are issued. As required by this standard, management’s evaluation shall initially not take into consideration the potential mitigating effects of management’s plans that have not been fully implemented as of the date the financial statements are issued.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred recurring operating losses and negative cash flows from operations. The financial statements do not include any adjustments relating to the realization of the carrying value of assets or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

As of March 31, 2022, the Company had an accumulated deficit of $142.8 million, negative cash flows from operating activities for the period ended March 31, 2022, and significant ongoing research and development expenses. While we have no outstanding debt and $65.0 million in cash, cash equivalents, and marketable securities as of March 31, 2022, the Company expects its negative cash flows from operating activities to continue and thus has determined that its losses and negative cash flows from operations and uncertainty in generating sufficient cash to meet our obligations and sustain our operations raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the issuance date of these Financial Statements.

As our research and development activities mature and develop over the next year, the Company will likely require substantial funds to continue such activities, depending upon events that are difficult to predict at this time. In this regard, management plans to raise additional capital through financing activities that may include public offerings and private placements of our common stock, preferred stock offerings, collaborations and licensing arrangements and issuances of debt and convertible debt instruments.In the absence of additional capital, the Company plans to strategically manage its uncommitted spend, execute its priorities and implement cost saving measures to reduce research and development and general and administrative expenditures which could include minimizing staff costs and delaying or terminating manufacturing and clinical trial costs. There are inherent uncertainties associated with fundraising activities and activities to manage our uncommitted spending and the successful execution of these activities may not be within the Company’s control.There are no assurances that such additional funding will be obtained and that the Company will succeed in its future operations. If the Company cannot successfully raise additional capital and implement its strategic development plan, its liquidity, financial condition and business prospects will be materially and adversely affected.The Company is continually looking into further capital planning and the evaluation of strategic alternatives.There is substantial doubt about the Company’s ability to continue as a going concern.

2.Basis of Presentation

~~Basis of Presentation~~

The accompanying unaudited financial statements were prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the

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information required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the ~~Accounting Standards Codification (“ASC”)~~ASC and Accounting Standards Updates (“ASU”) of the ~~Financial Accounting Standards Board (“FASB”).~~FASB. These financial statements should be read in conjunction with our audited financial statements and the accompanying notes to our financial statements contained in our Annual Report on Form

10-K

for the year ended December 31, ~~2020,~~2021, as filed with the SEC on March ~~31, 2021.~~9, 2022.

In management’s opinion, the accompanying financial statements contain all adjustments, including normal, recurring adjustments, necessary to fairly present our financial position as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, and our statements of operations and comprehensive ~~income,~~loss, statements of changes in redeemable convertible preferred stock and stockholders’ equity (deficit), and ~~statement~~statements of cash flows for the three ~~and six~~ month periods ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021. Interim results are not necessarily indicative of results for an entire year.

Recent ~~accounting standards~~Accounting Standards and ~~pronouncements~~Pronouncements

Recently Adopted

~~In August 2020, the FASB issued ASU~~

~~2020-06,~~

~~an update to ASC Topic 470, Subtopic - 20,~~

~~Debt - Debt with Conversion and Other Options, and ASC Topic 815, Subtopic - 4, Derivatives and Hedging - Contracts in Entity’s Own Equity~~

~~. ASU~~

~~2020-06~~

simplifies the guidance for certain financial instruments with characteristics of liability and equity, including convertible instruments and contracts on an entity’s own equity by reducing the number of accounting models for convertible instruments and amends guidance in ASC Topic 260, Earnings Per Share, relating to the computation of earnings per share for convertible instruments and contracts on an entity’s own equity. ASU

~~2020-06~~

~~is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2021, with early adoption permitted for fiscal years that begin after December 15, 2020.~~

The Company early adopted this standard effective January 1, 2021 using the modified retrospective method. Under this standard, only conversion features embedded in the debt instrument that are accounted for as derivatives in accordance with ASC 815 or under the substantial premium model in ASC 470, require separate accounting. Prior to the adoption of this standard, the Company had recorded a beneficial conversion feature as a discount to convertible notes issued. Upon adoption of this standard, the beneficial conversion feature is no longer separately accounted. As a result of applying the modified retrospective method, the Company recognized a transition adjustment of

~~$0.7 million recorded in accumulated deficit, a reduction of additional~~

~~paid-in~~

~~capital of $2.2 million and an increase to the carrying value of the convertible notes of $1.5 million on January 1, 2021.~~

~~Not Yet Adopted~~

In February 2016, the FASB issued ASU

No. 2016-02,

Leases ~~(Topic 842)~~

(Topic 842), as subsequently amended (collectively “ASC 842”). The guidance ~~requires~~amends the existing accounting standards for lease accounting, including requirements for lessees to recognize assets and liabilities related to long-term leases on the balance sheet and ~~expands~~expanding disclosure requirements regarding leasing arrangements. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. In July 2018, the FASB issued additional guidance, which offers a transition option to entities adopting ~~the new lease standards, and a package of practical expedients an entity can elect to utilize to reduce the level of effort required for adoption. Under the transition option,~~ASC 842 in which entities can elect to apply the new guidance using a modified retrospective approach at the beginning of the year in which the new lease standard is ~~adopted, rather than to the earliest comparative period presented in their financial statements.~~adopted. In November 2019, the FASB issued ASU

2019-10

deferring the effective date for private entities for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021. In June 2020, the FASB issued ASU

2020-05

which further defers the effective date for private entities for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. ~~The~~

As an emerging growth company ("EGC"), the Company ~~is currently reviewing its leases and other contracts to determine~~adopted the ~~impact the adoption of this~~new leasing guidance ~~will have on the financial statements. The Company currently expects that the adoption of this guidance will change the way it accounts for its operating leases and will result in recording~~

~~right-of-use~~

assets and lease liabilities in the balance sheets, and result in additional lease-related disclosures in the footnotes to the financial statements. The Company expects that it will adopt this guidanceeffective January 1, 2022 utilizing the modified retrospective approach ~~and elect~~that uses the ~~package~~effective date as the initial date of application whereby financial information for prior periods presented before the ASC 842 effective date will not be updated. ASC 842 provides a number of optional practical expedients in transition. By applying the ‘package of practical ~~expedients.~~

expedients’ permitted under the transition guidance, the Company is not required to reassess i) whether existing or expired arrangements contain a lease, ii) the lease classification of existing or expired leases, or iii) whether previous initial direct costs would qualify for capitalization under the new lease standard. The Company completed its evaluation and recognized $1.5 million in operating right-of-use assets and $0.6 million and $1.0 million in operating lease liabilities, current and non-current, respectively, on January 1, 2022. The Adoption of ASC 842 did not have a material impact on the Company’s Statements of Operations and Statements of Cash Flows.

Not Yet Adopted

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In June 2016, the FASB issued ASU

2016-13,

Financial Instruments – Credit Losses (Topic 326)

, which modifies the measurement of expected credit losses on certain financial ~~instruments.~~instruments ("ASU 2016-13"). In addition, for

available-for-sale

debt securities, the standard eliminates the concept of other-than-temporary impairment and requires the recognition of an allowance for credit losses rather than reductions in the amortized cost of the securities. The standard is effective for fiscal year beginning after December 15, 2022, and interim periods beginning after December 15, 2022 and requires a modified-retrospective approach with a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period. Early adoption is permitted. Based on the composition of the Company’s investment portfolio, current market conditions and historical credit loss activity, the adoption of ASU

2016-13

is not expected to have a material impact on its financial position, results of operations or the related disclosures.

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3.Cash and Cash Equivalents, Restricted cash, and Marketable Securities

The following table presents the Company’s cash and cash equivalents and restricted cash as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~

2021:


	March 31, 2022		December 31, 2021		Recurring Fair Value Measurement
Cash and cash equivalents:
Cash	$	7,903,843	$	2,702,393
Money market funds	13,603,049		22,124,003		Level 1
Fixed income debt securities	2,996,442		5,499,956		Level 2
Total Cash and cash equivalents	24,503,334		30,326,352
Restricted cash	67,500		67,500
Total cash, cash equivalents, and restricted cash	$	24,570,834	$	30,393,852

June 30, 2021

December 31, 2020

Recurring Fair

Value Measurement

Cash and cash equivalents:

Cash
   $ 251,862    $

105,888
Money market funds
   44,665,609    4,925,191    Level
1

Fixed income debt securities
   18,898,635    0    Level 2
Total Cash and cash equivalent
s

63,816,106

5,031,079

Restricted cash

67,500

67,500






Total cash
,

cash equivalents
, and restricted cash
   $ 63,883,606    $ 5,098,579

The Company considers all investments in highly liquid financial instruments with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash equivalents are stated at amortized cost, plus accrued interest, which approximates fair value.

Amounts included in restricted cash represent those required as collateral on corporate credit cards.

Marketable Securities

Marketable securities consist of fixed-income debt securities with an original maturity in excess of ninety days. These investments are classified as

available-for-sale

and are carried at fair value. Unrealized gains and losses, net of taxes, are reported as a component of other comprehensive income or loss.

Realized gains and losses are reported as other income (expense) within the statement of operations.

The specific identification method is used to determine the cost basis of the marketable securities sold. There were 0no realized gains or losses on the sale of marketable securities for the three ~~and six~~ month ended periods ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021. The Company regularly monitors and evaluates the fair value of its investments to identify other-than-temporary declines in value. The Company determined that any decline in fair value of these investments is temporary as the Company does not intend to sell these securities and it is not likely that the Company will be required to sell the securities before the recovery of their amortized cost basis.

As of ~~June 30,~~March 31, 2022 and December 31, 2021, the Company’s marketable securities consisted of only fixed-income securities that mature within one year. The amortized cost of these securities amounted to ~~$39.0~~$40.5 million and $51.5 million, and the estimated fair value amounted to ~~$39.0~~$40.5 million and $51.5 million as of ~~June 30, 2021.~~March 31, 2022 and December 31, 2021, respectively. The gross unrealized gains and gross unrealized losses on these marketable securities were not material as of ~~June 30,~~March 31, 2022 and December 31, 2021. All marketable securities are measured as Level 2 investments. ~~As of December 31, 2020, the Company did 0t hold any~~

~~marketable se~~

~~urities.~~

4.Fair Value Measurements

The Company’s financial instruments include cash and cash equivalents, marketable securities, accounts payable, accrued expenses, convertible notes and derivative liabilities. The fair values of the cash and cash equivalents, accounts payable and accrued expenses approximated their carrying values as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 due to their short-term maturities. The Convertible Notes as discussed in Note 10 contain embedded derivative features that

were

required to be bifurcated and remeasured to fair value at each reporting period

while those instruments were ~~outstanding~~

outstanding.

~~Table of Contents~~

The Company accounts for recurring and nonrecurring fair value measurements in accordance with ASC 820, Fair Value Measurements (“ASC 820”). ASC 820 defines fair value, establishes a fair value hierarchy for assets and liabilities measured at fair value, and requires expanded disclosures about fair value measurements. The ASC hierarchy ranks the quality of reliability

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of inputs, or assumptions, used in the determination of fair value, and requires assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories:

Level 1 -Fair value is determined by using unadjusted quoted prices that are available in active markets for identical assets and liabilities.

Level 2 -Fair value is determined by using inputs, other than Level 1 quoted prices that are directly and indirectly observable. Inputs can include quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets and liabilities in inactive markets. Related inputs can also include those used in valuation or other pricing models that can be corroborated by observable market data.

Level 3 -Fair value is determined by inputs that are unobservable and not corroborated by market data. Use of these inputs involves significant judgments to be made by a reporting entity.


~~Level 1 -~~		~~Fair value is determined by using unadjusted quoted prices that are available in active markets for identical assets and liabilities.~~

~~Level 2 -~~		Fair value is determined by using inputs, other than Level 1 quoted prices that are directly and indirectly observable. Inputs can include quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets and liabilities in inactive markets. Related inputs can also include those u s ~~ed in valuation or other pricing models that can be corroborated by observable market data.~~

~~Level 3 -~~		~~Fair value is determined by inputs that are unobservable and not corroborated by market data. Use of these inputs involves significant judgments to be made by a reporting entity.~~

In instances where the determination of the fair value measurement is based on inputs from different levels of fair value hierarchy, the fair value measurement will fall within the lowest level input that is significant to the fair value measurement in its entirety. The Company periodically evaluates financial assets and liabilities subject to fair value measurements to determine the appropriate level at which to classify them each reporting period. This determination requires the Company to make judgments as to the significance of inputs used in determining fair value and where such inputs lie within the ASC 820 hierarchy.

The Company’s derivative liability related to certain features embedded within the Company’s Convertible Notes as discussed in Note 10. The derivative is accounted for as a liability and remeasured to fair value as of each balance sheet date until the Convertible Note is settled or cancelled. The Convertible Notes were converted into shares of common stock upon the Company’s completion of the Initial Public Offering (“IPO”) on February 11, 2021. The related remeasurement adjustments are recognized in the accompanying statements of operations.

~~During the period ended June 30, 2021 and December 31, 2020 the Company did not have any transfers between levels.~~ There were no Level 3 recurring fair value measurements as of ~~June 30,~~March 31, 2022 and December 31, 2021. ~~The following table presents activity related to the Company’s fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis:~~

Balance as of December 31, 2020
   $ 1,702,359
Fair value of derivative liabilities issued
   722,518
Incremental expense related to fair value changes in derivative liabilities
   (2,424,877 )


Balance as of June 30, 2021
   $ 0

The following table represents the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis:

June 30, 2021

December 31, 2020


Level 1

Level 2

Level 3

Level 1

Level 2

Level 3

Assets

Money market funds
   $ 44,665,609    $ —    $ —    $ —

$
—    $ —
Fixed income debt securities
      18,898,635    —    —    —    —
   $ 44,665,609    $ 18,898,635
Liability

Derivative liability
   —    —    —    —    —    $ 1,702,359
   $ —    $ —    $ —    $ —

$
—    $ 1,702,359

~~The fair value of the derivative liability was determined using a binomial lattice model by calculating and comparing the fair value of the Convertible Notes with and without the embedded features.~~

Key inputs into this valuation model are ( l) the probability of various events which result in conversion prior to the maturity of the Convertible Notes; (2) the estimated timing of conversion; (3) time period to maturity; (4) the fair value of the Company’s stock underlying the Convertible Notes within each scenario; (5) the expected volatility of the Company’s stock through the various events resulting in conversion; (6) the risk-adjusted discount rate; and (7) the Company’s stock dividend yield.

~~The recurring Level 3 fair value measurements of the embedded features of the Convertible Notes issued in January 2021 include the following significant unobservable inputs:~~


	March 31, 2022						December 31, 2021
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Money market funds	$	13,603,049	$	—	$	—	$	22,124,003	$	—	$	—
Fixed income debt securities	—		43,502,857		—		—		56,991,897		—
	$	13,603,049	$	43,502,857	$	—	$	22,124,003	$	56,991,897	$	—


~~Unobservable Input~~		~~Assumptions~~
~~Probabilities of conversion provisions~~		~~5%-50~~ %
~~Estimated timing of conversion (yrs)~~		~~0.13-0.31~~
~~Time period to maturity (yrs)~~		~~0.31~~
~~Fair value of the Company’s stock~~		~~$0.45-$0.56~~
~~Stock price volatility~~		~~76-90~~ %
~~Risk-adjusted discount rate~~		~~25.56~~ %
~~Dividend yield~~		0 %

Significant changes to these assumptions would result in increases or decreases to the fair value of the derivative liability. There were no Convertible Notes issued after January 2021. Immediately before the conversion of the Convertible Notes on February 11, 2021, the derivative liability was remeasured to fair value which the Company concluded was immaterial. The derivative liability was remeasured to 0. There were 0 derivative instruments after February 11, 2021.

~~Table of Contents~~

5.Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


	March 31, 2022		December 31, 2021
Prepaid research and development expenses	$	3,663,880	$	3,375,388
Prepaid maintenance agreements	153,476		132,104
Prepaid insurance	2,571,256		479,393
Prepaid other	306,767		308,842
Other current assets	127,031		99,189
Total prepaid expenses and other current assets	$	6,822,410	$	4,394,916

June 30,

2021

December 31,
2020

Prepaid research and development expenses
   $ 5,946,498    $ 1,894,785
Prepaid maintenance agreements
   230,394    144,575
Prepaid insurance
   1,945,516    98,421
Prepaid other
   144,580    124,929
Deferred financing costs
   —      952,633
Other current assets
   60,129    78,515




Total prepaid expenses and other current assets
   $ 8,327,117    $ 3,293,858




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6.Property and Equipment

Property and equipment consist of the following at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~

2021:


	March 31, 2022		December 31, 2021
Laboratory equipment	$	6,199,779	$	5,943,501
Computer equipment and software	500,972		486,822
Furniture and fixtures	47,877		47,877
Leasehold improvements	234,457		230,148
	6,983,085		6,708,348
Less accumulated depreciation and amortization	(2,507,996)		(2,281,041)
Total Property and equipment, net	$	4,475,089	$	4,427,307

June 30,

2021

December 31,
2020

Laboratory equipment
   $ 5,047,152    $ 3,801,545
Computer equipment and software
   389,495    305,214
Furniture and fixtures
   47,877    47,877
Leasehold improvements
   209,338    153,965
Assets under construction    271,103    0

5,964,965

4,308,601

Less accumulated depreciation and amortization
   (1,816,090 )    (1,423,341 )




Total
Property and equipment, net
   $ 4,148,875    $ 2,885,260

Depreciation and amortization expense was ~~$216,168~~$226,956 and ~~$149,572~~$174,331 for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, and $395,001 and $290,750 for the six months ended June 30, 2021 and 2020,~~ respectively.

Laboratory equipment includes $0.6 million in equipment received but not yet placed into service as of March 31, 2022.

7.Accrued Expenses

A summary of the components of accrued expenses is as follows as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~

2021:

June 30,

2021

December 31,
2020

Accrued professional fees
   $ 207,033    $ 135,033
Accrued salaries, benefits and related expenses
   1,896,677    1,924,405
Accrued severance
   0      26,724
Accrued interest
   3,491    408,315
Other accrued expenses
   362,741    108,550




Total accrued expenses    $ 2,469,942    $ 2,603,027


	March 31, 2022		December 31, 2021
Accrued research and development costs	$	2,084,028	$	2,611,380
Accrued professional fees	659,784		384,254
Accrued salaries, benefits and related expenses	1,628,703		3,143,602
Other accrued expenses	124,910		31,473
Total accrued expenses	$	4,497,425	$	6,170,709

~~The accrued severance relates to a former executive of the Company. The terms of the agreement provided severance pay including Cobra insurance continuation from a period ranging from 12 months.~~

8.Commitments and Contingencies

Maryland Biotechnology Center Grant

The Company entered into a Translational Research Award Agreement effective May 23, 2012 with the Department of Business & Economic Development with the State of Maryland, Maryland Biotechnology Center (“MBC”). The mission of MBC is to integrate entrepreneurial strategies to stimulate the transformation of scientific discovery and intellectual assets into capital formation and business development. Under the agreement and as amended in 2013, MBC provided ~~$200,000~~$325,000 to NexImmune for research on its artificial aAPC for cancer immunotherapy. In 2013, an amendment increased the amount by $125,000 for a total grant of $325,000. This grant was recorded as income in 2012 and 2013, as the Company incurred the expenses which qualified it for the grant.

The Company must repay the funds through annual payments calculated at 3% of annual revenues for the preceding year. Payments shall continue for 10 years after the first payment date and may total up to 200% of the total grant amount. The end date of the agreement is defined as January 31, 2024, or when any and all repayments due to MBC have been made. If the Company does not earn any revenue, the grant does not need to be repaid. Through ~~June 30, 2021, 0~~March 31, 2022, no revenue has been recorded, therefore, 0no payments to MBC are due.

Johns Hopkins University Exclusive License Agreement

The Company entered into an Exclusive License Agreement with Johns Hopkins University (“JHU”) effective June 2011, which was amended and restated in January 2017, referred to as the A&R JHU License Agreement, under which there are license fees, royalties, and milestone payments. As part of the agreement, the Company acquired a perpetual, exclusive license from JHU covering its invention related to Antigen Specific T cells. ~~In consideration for the Exclusive License Agreement, the Company made an upfront payment of $155,000 and issued 26,918 shares of Common Stock.~~

JHU was also entitled to milestone fees of $75,000 in connection with clinical trial milestones. For the first licensed product or licensed service in the therapeutic field, the Company may be required to pay JHU additional aggregate milestone fees of $1.6 million for clinical and regulatory milestone fees. The Company may be required to pay JHU reduced milestone

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fees for the second and third

~~Table of Contents~~

licensed products or licensed services in the therapeutic field in connection with clinical and regulatory milestones. In the diagnostic field, the Company may be required to pay JHU aggregate milestone fees of $400,000 for the first licensed product, or licensed service and reduced milestone fees for the second and third licensed products, or licensed services in connection with regulatory and commercial milestones. The Company may be required to pay JHU aggregate milestone fees of $100,000 for commercial milestones for the first licensed product or licensed service in the

non-clinical

field. In the aggregate, the Company may be required to pay JHU additional milestone fees of up to $4.2 million for all clinical, regulatory and commercial milestones for all licensed products or licensed services in the therapeutic field, the diagnostic field and the

non-clinical

field. The Company may also be required to pay royalties in the low to upper

mid-single

digits on net sales of therapeutic products, diagnostic products and

non-clinical

products. The Company may also be required to pay royalties in the low to upper single digits on net sales of licensed services in therapeutic products, diagnostic products and non-clinical products.

The Company is required to make minimum annual royalty payments of $100,000 to JHU under the A&R JHU License Agreement, which started in the low five figures in the first year of the agreement and increased to ~~the low six figures~~$100,000 in the third year of the agreement and for each subsequent year of the agreement. The Company may also be required to pay JHU a low double digit percentage not to exceed 15%, of any

non-royalty

sublicense consideration ~~we receive.~~the Company receives.

The Company will record a liability when su

hsuch events become probable of occurring. The Company has not reached any of the milestones or transacted its first commercial sale as of ~~June 30, 2021.~~March 31, 2022.

The Company must make minimum royalty payments, which began upon the ~~fourth~~4th anniversary of the agreement and upon every anniversary thereafter during the term of the agreement, which offset future royalties per above owed to JHU.

The Company has incurred ~~$375,000~~$450,000 in cumulative minimum royalties from inception. Future annual minimum royalties consist of $100,000 due each year during the remaining term of the ~~agreement.~~A&R JHU License Agreement. The Company records milestones, royalties and minimum royalties at the time when payments become probable. During the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company incurred $25,000 ~~and $50,000, respectively,~~in both periods related to minimum royalties owed, included in research and development expenses on the accompanying statement of operations. The Company has accrued royalties of ~~$100,000~~$75,000 as of ~~June 30,~~March 31, 2022 and $50,000 as of December 31, 2021.

Paycheck Protection Program Loan

On April 23, 2020, the Company applied for an unsecured $843,619 loan under the Paycheck Protection Program (“PPP Loan”). The Paycheck Protection Program (or “PPP”) was established under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and is administered by the U.S. Small Business Administration (“SBA”). On May 1, 2020, the PPP Loan was approved and funded. The Company entered into a promissory note of $843,619, which iswas recorded within other current liabilities in the accompanying balance sheet. The Company ~~treats~~treated the PPP Loan as debt under ASC 470. The use of loan proceeds ~~must~~was required to be used for payroll costs, payment of interest on covered mortgage obligations, rent and utility costs over either an eight-week or

24-week

period, at the Company’s option.

The PPP Loan has a maturity date of April 23, 2022 and accrues interest at an annual rate of 0.98%. Interest and principal payments are deferred for the first six months of the loan. Thereafter, monthly interest and principal payments are due until the loan is fully satisfied. The promissory note evidencing the PPP Loan contains customary events of default resulting from, among other things, default in the payments.

The PPP Loan indebtedness may be forgiven in whole or in part upon request and the Company must provide documentation in accordance with the SBA requirements and the Company must certify that the amounts requested to be forgiven qualify under those requirements. The SBA may approve or deny the Company’s loan forgiveness application, in whole or part. The amount of potential loan forgiveness may be reduced if NexImmune fails to maintain employee and salary levels during the applicable eight-week or

~~24-week~~

~~period following receipt of the loan proceeds.~~ The Company submitted the PPP Loan forgiveness application to the SBA in March 2021 and received full forgiveness of the $843,619 PPP Loan in July 2021. The Company did not carry a PPP loan balance as of March 31, 2022 and December 31, 2021.

Contingencies

From time to time, the Company may be subject to various litigation and related matters arising in the ordinary course of business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred and the amount can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company was 0tnot involved in any material legal proceedings.

9.Convertible Notes

In April 2020, the Company entered into Convertible Note Purchase Agreement (“Agreement”) for the sale of up to $15,000,000 of convertible promissory notes with 6% interest rate (“Convertible Notes”). The Agreement specified an initial closing date of April 23, 2020 and allowed additional closings within 90 days of the initial closing. The Convertible Notes were scheduled to mature on April 23, 2021.

~~During the three months ended June 30, 2020, the Company issued convertible notes with a principal amount~~

Table of ~~$6,538,286.~~Contents

The terms of the Convertible Notes require a mandatory conversion upon certain qualified financing events (“Mandatory Conversion”) and

allowed

for conversion at the option of the holder upon certain non-qualified financing events (“Optional Conversion 1”). Upon Mandatory Conversion and Optional Conversion 1, the outstanding principal amount and all accrued and unpaid interest would automatically convert into the Company’s preferred stock of the same series issued in such equity financing and will be equal to the number of preferred stock obtained by dividing (a) all principal and accrued but unpaid interest under such Convertible Note by (b) the price per share paid by the other purchasers of the preferred stock sold in such equity financing multiplied

% 80%.

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If the Mandatory Conversion and Optional Conversion 1 did not occur by the maturity date, the outstanding principal amount plus all accrued and unpaid interest would be converted at the option of the holder into Company’s

common stock at the price per share obtained by dividing $

$85.0 million by the Company’s fully-diluted

capitalization (“Optional Conversion 2”).

If the Company (i) consummates a change in control or (ii) the Company’s common stock becomes publicly listed on a stock exchange, the outstanding principal amount plus all accrued and unpaid interest

would automatically

convert into shares of the Company’s most senior series of capital stock outstanding at the time of such change in control or public listing, at a price equal to the lower of (a) 90% of the price per share paid by the purchasers of such stock in such a transaction and (b) the price per share obtained by dividing ~~$125~~$125.0 million by the Company’s fully-diluted capitalization (“Change in Control”).

The Agreement was amended in July 2020 to increase the aggregate principal amount to $50,000,000 convertible notes and to allow for additional closings within 150 days of the initial closing date. The Agreement was amended in September 2020 to allow for additional closings within 190

days of the initial closing date. In addition, the provisions of Mandatory Conversion and Optional Conversion 1 were amended to allow for conversion upon an equity financing at a price equal to the lower of (a) 80% of the price per share paid by the purchasers of such stock in such a transaction and (b) the price per share obtained by dividing

$125,000,000 by the Company’s fully-diluted capitalization. The Company evaluated the amendments and concluded that the amendments represented a debt modification.

In October 2020, the Agreement was further amended to allow additional closings through December 31, 2020, and in January 2021 it was amended again to allow closings through January 31, 2021. In January 2021, the Company issued convertible notes with a principal amount of ~~$9,031,480.~~$9.0 million.

The Company evaluated the Convertible Notes and determined that the Mandatory Conversion feature, Optional Conversion 1 feature and Change in Control meet the definition of an embedded derivative liability that is required to be bifurcated from the host instrument and measured at fair value. The fair value of the derivative liability for the

convertible notes issued in January

2021

was ~~$722,518~~

$0.7 million.

~~and $75,584~~

~~for the convertible notes issued during the three and six months ended June 30, 2020.~~

The Company ~~recognized~~amortized the debt issuance costs of

~~$256,212~~ $0.3 million and

debt discount of ~~$1,982,594~~

~~from~~$4.2 million, comprising of the initial value of the derivative liability ~~on Convertible Notes outstanding during the six months ended June 30, 2021.~~

~~NaN~~

~~amounts were recognized during the three months ended June 30, 2021 as no Convertible Notes were outstanding during the period. The Company recognized debt issuance costs of~~

~~$89,895 and a debt discount~~ of ~~$1,331,535,~~

~~comprising the initial value of the derivative liability of~~

~~$296,272~~

$2.0 million and the ~~beneficial conversion feature~~BCF of

~~$1,035,263~~

~~on Convertible Notes outstanding during~~ $2.2 million, prior to the ~~three and six months ended June 30, 2020. The debt issuance costs and debt discount are amortized~~adoption of ASU 2020-06, over the term of the Convertible Notes using the effective interest method. ~~Amortization expense for~~Upon adoption of this standard, the ~~three~~beneficial conversion feature was no longer separately accounted. As a result of applying the modified retrospective method, the Company recognized a transition adjustment of $0.7 million recorded in accumulated deficit, a reduction of additional paid-in capital of $2.3 million and ~~six months ended June 30, 2021 was~~

~~$0 and~~

~~$613,770,~~

~~respectively. Amortization expense for~~an increase to the ~~three and six months ended June 30, 2020 was~~carrying value of the convertible notes of $1.5 million on January 1, 2021.

~~$140,821.~~

The debt issuance costs and debt discount amortization expense for three months ended March 31, 2021 was $0.6 million and is included in interest expense in the accompanying statements of operations.

The interest expense at 6% of the Convertible Notes’ principal amount for ~~the~~ three ~~and six~~ months ended ~~June 30,~~March 31, 2021

was $0

~~and $217,593, respectively~~

~~The interest expense at 6% of the Convertible Notes’ principal amount for the three and six months ended June 30, 2020 was $42,364.~~

$0.2 million. The effective interest rate during the three ~~and six~~ months ended ~~June 30,~~March 31, 2021

~~and 2020~~

was 25%

~~and 27~~

%,.

~~respectively. The unamortized debt~~

~~issuance costs and debt discount on the~~

~~Convertible Notes as of June 30, 2020 were $78,141 and $1,202,467~~

~~, respectively and as of December 31, 2020, were~~

~~$116,636 and $2,383,986, respectively.~~

The Company completed an IPO on February 11, 2021, which triggered the mandatory conversion of all the outstanding Convertible Notes plus accrued interest into 3,669,010 shares of common stock (Note 10). Upon conversion of the Convertible Notes, the outstanding Convertible notes principal plus accrued interest thereon, net of unamortized debt discounts totaling ~~$30,252,056~~$30.3 million was reclassified to stockholders’ equity (deficit).

10.Series A Redeemable Convertible Preferred Stock and Stockholders’

Equity (Deficit)

Issuances of Common Stock

On February 11, 2021, the Company completed its IPO, pursuant to which it issued and sold 7,441,650 shares of its common stock at a public offering price of $17.00 per share, resulting in net proceeds of $114,551,315, after deducting underwriting discounts and commissions and other offering expenses. Upon the closing of the IPO, all of the 175,137,398

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outstanding shares of the Company’s Redeemable Convertible Preferred Stock automatically converted into 10,144,052 shares of common stock after giving effect to the reverse stock split, and all of the outstanding convertible debt and accrued but unpaid interest thereon of $31,272,224 converted to 3,669,010 shares of common stock. Upon completion of the offering on February 11, 2021, the Company’s authorized capital stock consists of 250,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share, all of which shares of preferred stock are undesignated.

In January 2021, 145,000 warrants were exercised at an exercise price of $0.01 and 145,000 shares of Series A redeemable convertible stock were issued and then converted into common stock upon the closing of the IPO. The remaining outstanding warrants outstanding as of December 31, 2020 were exercised and settled in January 2021 with 2,896 shares of common stock issued in a cashless exercise.

11.Stock-Based Compensation

During January 2017, the Company adopted the 2017 Equity Incentive Plan (“2017 Plan”), which provides for granting of restricted stock, options to purchase shares of common stock and other awards to employees, directors and consultants. In March 2017, the Company amended the 2017 Plan to increase the number of available shares to 660,838. In ~~June~~September 2018, the Company adopted the 2018 Equity Incentive Plan (“2018 Plan”) which provides for granting of restricted stock, options to purchase shares of common stock, and other awards to employees, directors and consultants, and reserved 1,741,770 shares for this purpose. The 2018 Plan was amended in July 2018 to increase the number of available shares to 1,809,143. In February 2021, the Company adopted the 2021 Equity Incentive Plan (“2021 Plan”) and reserved 2,757,556 shares under the plan. No further shares will be issued under the 2017 and 2018 plans. There are ~~1,387,543~~2,664,700 shares available for issuance under the 2021 ~~plan.~~

plan as of March 31, 2022 which includes the evergreeen provision effective January 1, 2022 contained in the 2021 Plan.

~~Table of Contents~~

The number of options to be granted under the 2021 Plan, the option exercise prices, and other terms of the options are determined by the Board of Directors in accordance with the terms of the

2021 Plan

Generally, stock options are granted at fair value, become exercisable over a period of one to four years, expire in ten years or less and are subject to the employee’s ~~conti~~

ncontinued employment.

~~ued employment.~~

Stock-based compensation expense was recorded in the following financial statement line items within the statement of operations for the period ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~

2021:


	Three Months Ended March 31,
	2022		2021
Research and development expenses	$	1,132,762	$	204,330
General and administrative expenses	513,090		993,114
Total stock-based compensation expense	$	1,645,852	$	1,197,444

Three Months Ended June 30,

Six Months Ended June 30,


2021

2020

2021

2020

Research and development expenses
   $ 648,783    $ 83,707    $ 853,114    $ 166,450
General and administrative expenses
   834,698    256,083    1,827,811    492,302








Total stock-based compensation expense
   $ 1,483,481    $ 339,790    $ 2,680,925    $ 658,752



��

The following is a summary of option activity under the Company’s Stock Option Plans:


	Stock Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (millions)
Outstanding as of January 1, 2022	3,305,291	$	9.62
Granted	27,500	2.91
Exercised	(12,890)	2.58
Cancelled	(73,903)	3.05
Forfeited	(303,130)	15.76
Outstanding as of March 31, 2022	2,942,868	$	9.12	6.5	1.7
Vested or expected to vest as of March 31, 2022	2,942,868	$	9.12	6.5	1.7
Exercisable as of March 31, 2022	1,981,477	$	6.46	5.2	1.7
Shares unvested as of March 31, 2022	961,391	$	14.62	9.0	0.1

Stock

Options

Weighted

Average

Exercise

Price

Weighted

Average

Remaining

Contractual

Term (years)

Aggregate

Intrinsic Value

(millions)

Outstanding as of January 1, 2021
   2,233,185    $ 3.52
Granted
   1,369,713    17.20
Exercised
   (113,801 )    3.95
Cancelled
   (1,699 )    4.78
Forfeited
   (195,031 )    4.82








Outstanding as of June 30, 2021
   3,292,367    $ 9.12    7.9    24.9








Vested or expected to vest as of June 30, 2021
   3,292,367    $ 9.12    7.9    24.9
Exercisable as of June 30, 2021
   1,718,339    $ 3.25    6.5    22.5
Shares unvested as of June 30, 2021
   1,574,028    $ 15.53    9.5    2.5

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The weighted average fair value of the options granted during the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 was $1.99 and ~~2020 was $11.68 and $4.01,~~$11.64, respectively. The options were valued using the Black-Scholes option-pricing model for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ with the following assumptions:


	2022		2021
Expected volatility	78.8% to 79.0%		79.8% to 81.0%
Risk-free interest rate	1.5% to 1.7%		0.6% to 0.7%
Expected dividend yield	0	%	0	%
Expected term	6.1 years		5.5 to 6.0 years

2021

2020

Expected volatility
   79.5% to 81.1 % 100
%

Risk-free interest rate
   0.6% to 1.1 % 0.7% to 0.74
%
Expected dividend yield
   0 % 0
%
Expected term
   5.5 to 6.0 years    5.3 to 6.0 years

The total fair value of stock options vested during the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was approximately ~~$1.0~~$5.2 million, and ~~$0.5~~$0.8 million, respectively. The intrinsic value of stock options exercised for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 was immaterial and ~~2020 was approximately $1.0~~$0.2 million, ~~and $0,~~ respectively.

As of ~~June 30, 2021,~~March 31, 2022, there was ~~$14.7~~$8.6 million of total unrecognized compensation expense related to unvested options that will be recognized over a weighted average period of ~~2.8~~2.5 years.

12.Net Loss Per Share Attributable to Common Stockholders

Basic net loss per common share is determined by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common stock and common stock equivalents outstanding for the period. The Company adjusts net loss to arrive at the net loss attributable to common stockholders to reflect the amount of dividends accumulated during the period on the Company’s redeemable convertible preferred stock. Such dividends are only payable if and when declared by the Board of Directors. The treasury stock method is used to determine the dilutive effect of the Company’s stock option grants and warrants and the

if-converted

method is used to determine the dilutive effect of the Company’s redeemable convertible preferred stock and Convertible Notes. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company had a net loss attributable to common stockholders, and as such, all outstanding stock options, ~~and~~ shares of redeemable convertible preferred stock, and warrants were excluded from the calculation of diluted loss per share. Under the

if-converted

method, convertible instruments that are in the money, are assumed to have been converted as of the beginning of the period or when issued, if later.

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Additionally, the effects of any interest expense and changes in fair value of bifurcated derivatives is added back to the numerator of the diluted net loss per share calculation if the conversion of the Convertible Notes is dilutive. The following table sets forth the computation of basic and diluted earnings per share for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


	Three Months Ended March 31,
	2022		2021
Net loss	$	(15,023,005)	$	(8,546,551)
Accumulated dividends on Redeemable Convertible Preferred Stock	—		(377,562)
Net loss attributable to common stockholders	$	(15,023,005)	$	(8,924,113)
Basic and diluted net loss per common share	$	(0.66)	$	(0.71)
Basic and diluted weighted average common shares outstanding	22,836,781		12,633,123

Three Months Ended June 30,

Six Months Ended June 30,


2021

2020

2021

2020

Net loss
   $ (12,182,247 )    $ (6,930,525 )    $ (20,728,798 )    $ (13,246,033 )
Accumulated dividends on Redeemable Convertible Preferred Stock
   0      (815,816 )    (377,562 )    (1,631,632 )








Net loss attributable to common stockholders
   $ (12,182,247 )    $ (7,746,341 )    $ (21,106,360 )    $ (14,877,665 )








Basic and diluted net loss per common share
   $ (0.54 )    $ (6.17 )    $ (1.20 )    $ (11.86 )
Basic and diluted weighted average common shares outstanding
   22,608,866    1,254,681    17,648,551    1,254,681

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The following potentially dilutive securities ~~outstanding at June 30, 2021 and 2020~~ have been excluded from the computation of diluted weighted average common shares outstanding at March 31, 2022 and 2021 as the effect would be anti-dilutive:


	Three Months Ended March 31,
	2022	2021
Stock options	2,942,868	3,146,048
Redeemable convertible preferred stock	—	4,733,929
Convertible debt	—	2,059,100
Warrants	—	611
Total	2,942,868	9,939,688

     Three Months Ended June 30,

     Six Months Ended June 30,


2021

2020

2021

2020

Stock options
   3,292,367    2,240,118    3,292,367    2,240,118
Redeemable convertible preferred stock
   0      10,135,735    2,353,887    10,135,735
Convertible debt
   0      477,467    1,024,736    237,414
Warrants
   0      14,480    304    14,480








Total
   3,292,367    12,867,800    6,671,294    12,627,747

Shares of redeemable convertible preferred stock also participate in dividends with shares of common stock (if and when declared) and therefore are deemed participating securities. The holders of redeemable convertible preferred stock do not contractually share in losses and therefore no additional net loss per share has been disclosed under the two-class method.

~~two-class~~

~~method.~~

13.Related Party Transaction

On March 16, 2022, the Company and Zephyr AI, Inc. (“Zephyr”) entered into a Joint Research Agreement (the “JRA”) focused on the joint collaboration, identification and validation of certain targets in order to facilitate further research, development and potential commercialization of immunotherapies. Zephyr is owned by a holding company with multiple Board members from the Company. The JRA term is two years unless mutually extended.

Pursuant to the JRA, Zephyr will identify suitable antigens or combinations thereof for validation and testing by NexImmune. The Joint Steering Committee provided for by the JRA (the “JSC”) will then determine which identified candidates shall be subject to further analysis. NexImmune will validate which, if any, of the identified antigens are suitable for T-cell engagement and killing function (the “Final Candidates”). The JSC will make a good-faith determination as to whether the data supports the further IND-targeted development by NexImmune of any of the Final Candidates. The Company and Zephyr will jointly own any Final Candidates, including the intellectual property related thereto. Each of the Company and Zephyr shall be responsible for payment of their own respective costs and expenses in connection with the performance of their respective obligations under the JRA. If a Final Candidate is to be further developed, then the Company and Zephyr shall engage in good-faith negotiations to agree on the terms and conditions of an agreement with respect to the further development and commercialization of such Final Candidate. If such an agreement is not executed within the prescribed negotiation period, then neither the Company nor Zephyr may further develop such Final Candidate. The expenses related to the JRA for the three months ended March 31, 2022 were immaterial.

14. Leases

The Company leases certain office space and laboratory space. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. The Company does not recognize right-of-use assets or lease liabilities for leases determined to have a term of 12 months or less. Options to extend a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will either renew or not cancel, respectively.

At the lease commencement date, the operating lease liability is recorded at the present value of future lease payments over the expected remaining lease term using the discount rate implicit in the lease, if it is readily determinable, or the Company’s incremental borrowing rate. The right-of-use asset is measured as the lease liability and adjusted for prepaid rent, initial direct costs, and incentives. The Company's leases contain variable non-lease components such as maintenance, taxes, insurance, and similar costs for the spaces it occupies. For new and amended leases beginning in 2022 and after, the Company has elected the practical expedient not to separate these non-lease components of leases for classes of all underlying assets and instead account for them as a single lease component for all leases. The Company recognizes the net fixed payments of operating leases on a straight-line basis over the lease term. Variable executory costs, as it relates to net leases, are to be excluded from the calculation of the lease liability and the Company expenses the variable lease payments in the period in

~~13.~~18

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which it incurs the obligation to pay such variable amounts and will be included in variable lease costs in the leases footnote disclosure.

Variable lease payments are not included in the Company's calculation of its right-of-use assets or lease liabilities. Variable lease costs were immaterial for the three month period ending March 31, 2022. The components of lease cost under ASC 842 for the three months ending March 31, 2022 are as follows:


Lease costs	Statement of Operations Classification	March 31, 2022
Operating lease cost	Operating expenses: research and development	$	82,506

Operating lease cost	Operating expenses: general and administrative	64,151
		$	146,657

Supplemental disclosure of cash flow information and weighted average remaining lease term and discount rate related to leases were as follows:


Other information	March 31, 2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(132,563)
Weighted-average remaining lease term — operating leases	2.6 years
Weighted-average discount rate — operating leases	6.8		%

Future fixed lease payments for operating leases in effect as of March 31, 2022, are payable as follows:


Maturity of lease liabilities for the years ending December 31,	Operating Leases
2022 (for the remaining nine months of the year ending December 31, 2022)	$	451,866
2023	617,999
2024	469,939
2025	—
2026	—
Thereafter	—
Total lease payment	$	1,539,804
Less: imputed interest	(124,448)
Present value of lease liabilities	$	1,415,356

15. Income Taxes

The Company has not recorded any tax provision or benefit for the three ~~and six~~ months ended ~~June 30, 2021~~

March 31, 2022 and ~~2020~~

.2021. The Company has provided a valuation allowance for the full amount of its net deferred tax assets since realization of any future benefit from deductible temporary differences, net operating loss carryforwards, and research and development credits is not

more-likely-than-not

to be realized at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2021.~~2022. The effective tax rate for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ is 0%.

The Company has 0tnot recorded any accruals related to uncertain tax positions as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~

2021. Income tax returns are filed in federal and state jurisdictions and generally subject to a three-year statute of limitations. The years that are subject to examination by tax authorities are tax years ~~2017~~2018 through ~~2020,~~2021, although tax years dating back to 2015 remain open to the tax attribute amounts carried forward for future use.

~~14. Employee Benefit Plan~~

The Company has a defined contribution plan under the Internal Revenue Code Section 401(k). The plan covers all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. The Company may contribute a matching contribution at its discretion. During the three and six months ended June 30, 2021, the Company made contributions of $89,737 and $129,970, respectively, to the plan. During the three and six months ended June 30, 2020, the Company made contributions of

~~$55,733~~

~~, and~~

~~$88,482~~

~~respectively, to the plan.~~

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

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this Quarterly Report on Form

10-Q

and our ~~final prospectus~~Annual Report

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on Form 10-K for ~~our initial public offering~~the year ended December 31, 2021, as filed ~~pursuant to Rule 424(b)(4) under~~with the ~~Securities Act of 1933, as amended, or the Securities Act,~~SEC on ~~February 11, 2021 (“Prospectus”).~~March 9, 2022. Some of the information contained in this discussion and analysis or set forth elsewhere in this Form

10-Q,

including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Form

10-Q,

our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Investors and others should note that we routinely use the Investor Relations section of our website to announce material information to investors and the marketplace. While not all of the information that we post on the Investor Relations section of our website is of a material nature, some information could be deemed to be material. Accordingly, we encourage investors, the media, and others interested in us to review the information that it shares on the Investor Relations section of our website, www.neximmune.com.

Overview

We are a clinical-stage biotechnology company developing a novel approach to immunotherapy designed to employ the body’s own T cells to generate a specific, potent and durable immune response that mimics natural biology. Our mission is to create therapies with curative potential for patients with cancer and other life-threatening immune-mediated diseases.

The backbone of our approach is our proprietary Artificial Immune Modulation, or AIMTM. One of the critical advantages of the AIM technology platform is the ability to rapidly customize it for new therapeutics, in a modular, Lego-like manner. NexImmune has developed protein conjugation techniques so that nanoparticles can be customized quickly for different antigens, HLA alleles and Signal 2 messages. It is even possible to add additional signals or homing proteins. This gives the platform tremendous flexibility and application in oncology and infectious disease (where up-regulatory messages are delivered to targeted T cells) but also autoimmune disorders (where down-regulatory or apoptopic messages are delivered to targeted T cells). These conjugation techniques also apply to both the ex vivo adoptive cell therapy modality, called AIM ACT, and the in vivo directly-injectable modality, called AIM INJ.

Currently, we have two product candidates in human trials:

NEXI-001

in acute myeloid leukemia, or AML, and

NEXI-002

in multiple myeloma, or ~~MM.~~MM, both of which are AIM ACT therapies. Both programs have active Phase 1/2 trials ongoing. As result of changes in the approved product landscape, we are exploring the potential for collaborations or partnerships to further advance the NEXI-002 development program in multiple myeloma. Our next adoptive cell therapy product candidate, NEXI-003, is our first product candidate targeted at solid tumors. The company anticipates filing an IND by the end of first half 2022 for NEXI-003 against HPV-associated solid tumor malignancies.

In addition to our programs using the AIM ACT modality, we are also developing “off-the-shelf” AIM INJ. The AIM INJ modality is designed to enable AIM nanoparticles to engage CD8+ T cells directly inside the body without the need for ex vivo expansion and manufacturing, which we believe will result in a greater ease of administration and a less complex and less expensive manufacturing process. We have completed substantial non-clinical work to advance the AIM INJ modality towards a potential investigational new drug application, or IND, filing, including preparing appropriate IND-enabling experiments in support of a planned clinical program focusing on solid tumors. Subject to regulatory feedback and an IND filing, we anticipate a second clinical program that would target autoimmune disease and which would be the first AIM product candidate to suppress, rather than activate, T cell function.

We were incorporated under the laws of the State of Delaware on June 7, 2011. In June 2011, we exclusively licensed the core AIM technology from The Johns Hopkins University, or Johns Hopkins. See “Business—Johns Hopkins License Agreement” for information about this license.

To date, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, identifying and developing product candidates, enhancing our intellectual property portfolio, undertaking research, conducting preclinical studies and clinical trials, and securing manufacturing for our development programs. We do not have any products approved for sale and have not generated any revenue from product sales.

To date, we have funded our operations primarily with proceeds from private placement of convertible preferred stock, our convertible promissory notes and the IPO. In February 2021, we completed the IPO and issued and sold an aggregate 7,441,650 shares of common stock, which included 970,650 shares of our common stock issued pursuant to the underwriters’ option to purchase additional shares, at a public offering price of $17.00 per share, for net proceeds of $114.6 million after deducting underwriting discounts and commissions and other offering costs.

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We have incurred significant operating losses since our inception, which are mainly attributed to research and development costs and employee payroll expense included in general and administrative expenses. As of ~~June 30, 2021,~~March 31, 2022, we had an accumulated deficit of ~~$97.6~~$142.8 million. Our operating losses may fluctuate significantly from

quarter-to-quarter

and

year-to-year

as a result of several factors, including the timing of our preclinical studies and clinical trials and our expenditures related to other research and development activities. We expect to continue to incur operating losses for the foreseeable future. We anticipate these losses will increase substantially as we advance our product candidates through preclinical and clinical development, develop additional product candidates and seek regulatory approvals for our product candidates. We do not expect to generate any revenues from product sales unless and until we successfully complete development and obtain regulatory approval for one or more product candidates. In addition, if we obtain marketing approval for any product candidate, we expect to incur

pre-commercialization

expenses and significant commercialization expenses related to marketing, sales, manufacturing and distribution We may also incur expenses in connection with the

in-licensing

of additional product candidates. Furthermore, we expect to ~~incur additional~~continue incurring costs associated with operating as a public company, including ~~significant~~ legal, accounting, investor relations, compliance and other ~~expenses that we did not incur as a private company.~~expenses.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through public or private equity offerings, debt financings, collaborations and licensing arrangements or other capital sources. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates that we would otherwise prefer to develop and market ourselves.

Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

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As of ~~June 30, 2021,~~March 31, 2022, we had cash, cash equivalents, and marketable securities of ~~$102.8~~$65.0 million.

Components of our Results of Operations

Revenue

We have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products in the near future, if at all.

Research and Development Expenses

To date, our research and development expenses, have related primarily to development of

NEXI-001

and

NEXI-002,

preclinical studies and other preclinical activities related to our portfolio. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. Research and development expenses also include the accrual of minimum royalties under our Johns Hopkins license.

Research and development expenses include:

•salaries, payroll taxes, employee benefits and stock-based compensation charges for those individuals involved in research and development efforts;

•external research and development expenses incurred under agreements with contract research organizations, or CROs, and consultants to conduct our preclinical, toxicology and other preclinical studies;

•laboratory supplies;

•costs related to manufacturing product candidates, including fees paid to third-party manufacturers and raw material suppliers;

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•license fees and research funding; and

•facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent, maintenance of facilities, insurance, equipment and other supplies.

Clinical trial and preclinical study costs are a significant component of research and development expenses and include costs associated with third-party contractors. We outsource a substantial portion of our clinical trial activities, utilizing external entities such as CROs, independent clinical investigators and other third-party service providers to assist us with the execution of our clinical trials. We also expect to incur additional expenses related to milestone and royalty payments payable to Johns Hopkins.

We plan to substantially increase our research and development expenses for the foreseeable future as we continue the development of our product candidates and seek to discover and develop new product candidates. Due to the inherently unpredictable nature of preclinical and clinical development, we cannot determine with certainty the timing of the initiation, duration or costs of future clinical trials and preclinical studies of product candidates. Clinical and preclinical development timelines, the probability of success and the amount of development costs can differ materially from expectations. We anticipate that we will make determinations as to which product candidates and development programs to pursue and how much funding to direct to each product candidate or program on an ongoing basis in response to the results of ongoing and future preclinical studies and clinical trials, regulatory developments and our ongoing assessments as to each product candidate’s commercial potential. In addition, we cannot forecast which product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.

Our future clinical development costs may vary significantly based on factors such as:

•per-patient

trial costs;

•the number of trials required for regulatory approval;

•the number of sites included in the trials;

•the countries in which the trials are conducted;

•the length of time required to enroll eligible patients;

•the number of patients that participate in the trials;

•the number of doses that patients receive;

•the

drop-out

or discontinuation rates of patients;

•potential additional safety monitoring requested by regulatory agencies;

•the duration of patient participation in the trials and

follow-up;

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•the phase of development of the product candidate; and

•the efficacy and safety profile of the product candidate.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and employee-related costs, including stock-based compensation, for personnel in our executive, finance and other administrative functions. Other significant costs include facility related costs, legal fees relating to intellectual property and corporate matters, professional fees for accounting and consulting services and insurance costs. We anticipate that our general and administrative expenses will increase in the future to support our continued research and development activities,

pre-commercialization

and, if any product candidates receive marketing approval, commercialization activities. We also anticipate increased expenses related to audit, legal, regulatory and

tax-related

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services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs associated with operating as a public company.

Interest Income

Interest income consists of interest earned on our cash equivalents and marketable securities during the period.

Interest Expense

Interest expense consists of interest accrued on the convertible notes and interest recognized upon the amortization of the beneficial conversion feature, debt issuance costs and bifurcated derivative liability. No further interest expense was recognized after the convertible notes were converted into shares of common stock upon the completion of the IPO in February 2021.

Change in Fair Value of Derivative Liability

The change in fair value of derivative liability consists entirely of the

mark-to-market

adjustment of the bifurcated derivative liability related to the convertible notes. As a result of our IPO, the derivative liability was settled.

Results of Operations

Comparison of the Three Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~

The following table summarizes our results of operations for the three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~

2021:


	For the three months ended June 30,										Three Months Ended March 31,				Change
	2021			2020			Change				2022		2021
	(in thousands)										(in thousands)
Operating expenses
Operating expenses:										Operating expenses:
Research and development	$	8,125		$	4,209		$	3,916		Research and development	$	10,449	$	6,013	$	4,436
General and administrative		4,038			2,566			1,472		General and administrative	4,605		4,058		547

Total operating expenses		12,163			6,775			5,388		Total operating expenses	15,054		10,070		4,983

Loss from operations		(12,163	)		(6,775	)		(5,388	)	Loss from operations	(15,054)		(10,070)		(4,983)

Other (expense) income:
Other income (expense):										Other income (expense):
Interest income		7			1			6		Interest income	33		4		29
Change in fair value of derivative liability										Change in fair value of derivative liability	—		2,425		(2,425)
Interest expense		—			(184	)		184		Interest expense	—		(904)		904
Other (expense) income		(26	)		27			(53	)

Other (expense) income		(19	)		(156	)		137

Other expense										Other expense	(3)		(1)		(2)
Other income										Other income	31		1,524		(1,493)
Net loss	$	(12,182	)	$	(6,931	)	$	(5,251	)	Net loss	$	(15,023)	$	(8,547)	$	(6,476)

Research and Development Expenses.

Research and development expenses were ~~$8.1~~$10.4 million and ~~$4.2~~$6.0 million for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The increase of ~~$3.9~~$4.4 million was due primarily to increases of ~~$2.0~~$1.6 million for research and clinical trial expenses, increases to salary and benefits of ~~$0.6~~$1.5 million resulting from increased headcount, ~~$0.6~~$1.0 million in stock compensation expense, and ~~$0.5~~$0.3 million in consulting fees. We have not historically tracked internal research and development expenses by product candidate.

General and Administrative Expenses.

General and administrative expenses were ~~$4.0~~$4.6 million and ~~$2.6~~$4.1 million for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The increase of ~~$1.5~~$0.5 million was due primarily to increases of ~~$0.6~~$0.5 million in salary and benefits resulting from increased headcount, ~~$0.6 million in stock compensation expense, and~~ an increase of ~~$0.5~~$0.3 million in professional fees, and ~~Directors and Officers insurance as a result of operating as public company, offset by a reduction~~an increase of $0.2 million in legal and consulting ~~fees.~~

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~~Comparison of the Six Months Ended June 30, 2021 and 2020~~

~~The following table summarizes our results of operations for the six months ended June 30, 2021 and 2020:~~

For the six months ended
June 30


2021

2020

Change


(in thousands)

Operating expenses

Research and development
   $ 14,138    $ 8,481    $ 5,657
General and administrative
   8,095    4,654    3,441






Total operating expenses
   22,233    13,135    9,098






Loss from operations
   (22,233 )    (13,135 )    (9,098 )






Other income (expense):

Interest income
   10    20    (10 )
Interest expense
   (904 )    (185 )    (719 )
Change in fair value of derivative liability
   2,425    —      2,425
Other (expense) income
   (27 )    54    (81 )






Other income (expense)
   1,504    (111 )    1,615






Net loss
   $ (20,729 )    $ (13,246 )    $ (7,483 )

~~Research and Development Expenses.~~

Research and development expenses were $14.1 million and $8.5 million for the six months ended June 30, 2021 and 2020, respectively. The increase of $5.7 million was due primarily to increases of $3.2 million for research and clinical trial expenses, increases to salary and benefits of $1.1 million resulting from increased headcount, $0.7fees, offset by a reduction $0.5 million in stock compensation ~~expense, and $0.7 million in consulting fees. We have not historically tracked internal research and development expenses by product candidate.~~

expense.

~~General and Administrative Expenses.~~

General and administrative expenses were $8.1 million and $4.7 million for the six months ended June 30, 2021 and 2020, respectively. The increase of $3.4 million was due primarily to increases of $1.3 million in stock compensation expense, an increase in insurance of $1.1 million for Directors and Officers insurance, an increase of $0.5 million in profession fees, and an increase to salary and benefits of $0.3 million from increased headcount.

~~Interest Expense.~~

Interest expense was $0.9 million and $0.2 million for the six months ended June 30, 2021 and 2020, respectively. The increase is due to the issuance of convertible debt during the period from April 2020 into January 2021. The convertible notes were converted into shares of common stock upon the completion of the IPO in February 2021.

Change in Fair Value of Derivative Liability.

The change in fair value of derivative liability was ~~$2.5~~$0 and $2.4 million ~~and $0~~ for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The ~~increase~~decrease reflected the remeasurement of the derivative liability immediately before the conversion of the convertible notes into shares of common stock upon the completion of the IPO in February 2021. Following the IPO there are no derivative instruments.

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Interest Expense. Interest expense decreased by $0.9 million for the three months ended March 31, 2022. The decrease is due to the issuance of convertible debt during the period from April 2020 into January 2021. The convertible notes were converted into shares of common stock upon the completion of the IPO in February 2021.

Liquidity and Capital Resources

We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future. As of ~~June 30, 2021,~~March 31, 2022, we had cash, cash equivalents, and marketable securities of ~~$102.8~~$65.0 million.

We expect our negative cash flows from operating activities to continue and thus have determined that the losses and negative cash flows from operations and uncertainty in generating sufficient cash to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern for at least one year from the issuance date of these Financial Statements.

We believe that our existing cash and cash equivalents, including amounts received subsequent to March 31, 2022, will be sufficient to fund our activities into second quarter of 2023.

As our research and development activities mature and develop over the next year, we will likely require substantial funds to continue such activities, depending upon events that are difficult to predict at this time. In this regard, management plans to raise additional capital through financing activities that may include public offerings and private placements of our common stock, preferred stock offerings, collaborations and licensing arrangements and issuances of debt and convertible debt instruments. In the absence of additional capital, the Company plans to strategically manage its uncommitted spend, execute its priorities and implement cost saving measures to reduce research and development and general and administrative expenditures which could include minimizing staff costs and delaying or terminating manufacturing and clinical trial costs. There are inherent uncertainties associated with fundraising activities and activities to manage our uncommitted spending and the successful execution of these activities may not be within our control. There are no assurances that such additional funding will be obtained and that the Company will succeed in its future operations. If we cannot successfully raise additional capital and implement our strategic development plan, our liquidity, financial condition and business prospects will be materially and adversely affected. We are continually looking into further capital planning and the evaluation of strategic alternatives. There is substantial doubt about our ability to continue as a going concern.

Sources of Liquidity

To date, we have financed our operations principally through private placements of our redeemable convertible preferred stock, our convertible promissory notes and the IPO.

Series A Preferred Stock Financing

InFrom December 2017 through August 2018, we issued an aggregate of 121,735,303 shares of our Series A Redeemable Convertible Preferred Stock at a purchase price of $0.2951 per share for aggregate consideration of $25.0 million plus conversion of convertible notes.

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In January 2019 and February 2019, we issued an aggregate of 22,047,361 shares of our Series

A-2

Preferred Stock at a purchase price of $0.3523 per share for aggregate consideration of $7.8 million.

In November 2019 and December 2019, we issued an aggregate of 31,209,734 shares of our Series

A-3

Preferred Stock at a purchase price of $0.3523 per share for aggregate consideration of $11.0 million.

Convertible Note Financing

From April 2020 through December 31, 2020, we issued $21,618,286 aggregate principal amount of convertible notes, which bear interest at the rate of 6% per annum and mature in April 2021.

In January 2021, we issued an additional $9,031,480 aggregate principal amount of convertible notes, which bore interest at the rate of 6% per annum and had a scheduled maturity date in April 2021.

Paycheck Protection Program Loan

On April 23, 2020, we entered into an unsecured loan agreement with JPMorgan Chase Bank, or Chase, under the terms of which Chase loaned us $843,619, or the PPP Loan, pursuant to the Paycheck Protection Program, or PPP, under the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act. In accordance with the requirements of the CARES Act,

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we ~~have~~ used the proceeds primarily for payroll costs and other eligible expenses. The PPP Loan ~~has~~had a maturity date of April 23, 2022 and ~~accrues~~accrued interest at an annual rate of 0.98%. Interest and principal payments ~~are~~were deferred for the first six months of the loan. Thereafter, monthly interest and principal payments ~~are~~were due until the loan is fully satisfied. The promissory note evidencing the PPP Loan ~~contains~~contained customary events of default resulting from, among other things, default in the payments. The use of loan proceeds must be for payroll costs, payment of interest on covered mortgage obligations, rent and utility costs over either an eight-week or

24-week

period, at our option, following our receipt of the loan proceeds. We elected to use the proceeds over a

24-week

period. We treat the PPP loan as debt under ASC 470, Debt. The CARES Act and the PPP provide a mechanism for forgiveness of up to the full amount borrowed. We submitted the PPP Loan forgiveness application in March 2021. The Company submitted the PPP Loan forgiveness application in March 2021 and received full forgiveness from the $843,619 loan under the PPP in July 2021.

Initial Public Offering

In February 2021, we completed the IPO and issued and sold an aggregate 7,441,650 shares of common stock, which included 970,650 shares of our common stock issued pursuant to the underwriters’ option to purchase additional shares, at a public offering price of $17.00 per share, for net proceeds of $114.6 million after deducting underwriting discounts and commissions and other offering costs.

Cash Flows

The following table sets forth a summary of the net cash flow activity for the ~~six~~

nine months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~

2021:


	2022		2021
	(in thousands)
Net cash provided by (used in):
Operating activities	$	(16,475)	$	(11,156)
Investing activities	$	10,619	$	(581)
Financing activities	$	33	$	124,808
Net (decrease) increase in cash, cash equivalents and restricted cash	$	(5,823)	$	113,072

2021

2020


(in thousands)

Net cash provided by (used in):

Operating activities
   $ (24.8 )    $ (12.5 )
Investing activities
   (40.6 )    0.7
Financing activities
   124.2    7.3




Net increase (decrease) in cash, cash equivalents and restricted cash
   $ 58.8    $ (4.5 )

Operating Activities

Net cash used in operating activities was ~~$24.8~~$16.5 million and ~~$12.1~~$11.2 million for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The net cash used in operating activities for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was primarily due to our net loss of ~~$20.8~~$15.0 million, resulting from ~~R&D~~research and development expenses of ~~$14.1~~$10.4 million as we ~~ramp up~~continue our clinical program ~~plus $6.0 million in prepaid R&D~~ and ~~insurance~~preclinical research programs and ~~$8.1~~$4.6 million of administrative expenses for public company expenses, salary and related expenses and professional fees.

The net cash used in operating activities for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 was primarily due to our net loss of ~~$ 13.2~~$8.5 million, consisting of ~~$8.5~~$6.0 million for ~~R&D~~research and development expenses primarily in

~~pre-clinical~~

preclinical research expenses and manufacturing as we prepared for our clinical program, and ~~$4.7~~$4.1 million in administrative expenses for salary and related expenses and professional fees.

Investing Activities

Net cash provided by investing activities was $10.6 million for the three months ended March 31, 2022 resulting from the maturities of $27.0 million in available-for-sale marketable securities, partially offset by the purchases of $16.0 million in available-for-sale marketable securities and the purchase of property and equipment of $0.3 million. Net cash used in investing activities ~~was $40.6~~of $0.6 million for the ~~six~~three months ended ~~June 30,~~March 31, 2021 ~~resulting from purchases of marketable securities and property and equipment. Net cash provided by investing activities of $0.7 million for the six months ended June 30, 2020~~ was primarily due to ~~maturities of~~

~~available-for-sale~~

~~marketable securities of $1.0 million, partially offset by~~ the ~~purchase~~purchases of property and ~~equipment for $0.4 million.~~equipment.

2024

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Financing Activities

Net cash provided by financing activities was ~~$124.2~~immaterial for the three months ended March 31, 2022. Net cash provided by financing activities was $124.8 million for the ~~six~~three months ended ~~June 30,~~March 31, 2021 primarily due to the net proceeds of ~~$114.7~~$115.5 million from the IPO and $9.0 million from the issuance of convertible debt. Net cash provided by financing activities was $7.3 million for the six months ended June 30, 2020 primarily due to the net proceeds of $6.4 million from issuance of convertible debt and $0.8 million in short-term debt.

Funding Requirements

We believe that our existing cash and cash equivalents, together with the net proceeds from our IPO, will be sufficient to meet our anticipated cash requirements ~~through third~~into second quarter of ~~2022.~~2023. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. If we are not able to raise additional funding, we may not be able to enter into successful collaborations under favorable terms. As a result, we may be unable to realize value from our assets and discharge our liabilities in the normal course of business.

Our future capital requirements will depend on many factors, including:

•the initiation, progress, timing, costs and results of drug discovery, preclinical studies and clinical trials of

NEXI-001

and

NEXI-002

and any other future product candidates;

•the potential to expand the eligible patient population for NEXI-001 to include haplo-identical donor/patients;

•the emerging competition and the potential to evaluate NEXI-002 in earlier lines of therapy or combinations for multiple myeloma patients based on the safety profile and clinical signs observed;

•the consideration of collaborations or strategic partnerships to continue the development of NEXI-002;

•the number and characteristics of product candidates that we pursue;

•the outcome, timing and costs of seeking regulatory approvals;

•the cost of manufacturing

NEXI-001

and

NEXI-002

and future product candidates for clinical trials in preparation for marketing approval and in preparation for commercialization;

•the costs associated with hiring additional personnel and consultants as our preclinical and clinical activities increase;

•the emergence of competing therapies and other adverse market developments;

•the ability to establish and maintain strategic licensing or other arrangements and the financial terms of such agreement;

•the costs involved in preparing, filing, prosecuting, maintaining, expanding, defending and enforcing patent claims, including litigation costs and the outcome of such litigation;

•the extent to which we

in-license

or acquire other products and technologies; and

•the costs of operating as a public company.

Until such time, if ever, as we can generate substantial product revenues to support our capital requirements, we expect to finance our cash needs through cash and cash equivalents and marketable securities on hand and a combination of public or private equity offerings, debt financings, collaborations and licensing arrangements or other capital sources. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, or other similar arrangements with third parties, we may need to relinquish valuable rights to our product candidates, future revenue streams or research programs or may have to grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings as and when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.

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Critical Accounting Policies and Significant Judgments 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. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses and stock-based compensation. We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.


Exhibit Number			Description

Exhibit Number		~~Description~~

~~3.1~~10.1		~~Form of Sixth Amended and Restated Certificate of Incorporation. (incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form~~ ~~8-K~~ ~~(File~~ ~~No. 001-40045)~~ ~~filed with the SEC on February 18, 2021)~~

~~3.2~~	~~Restated Bylaws of NexImmune, Inc. (incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form~~ ~~8-K~~ ~~(File~~ ~~No. 001-40045)~~ ~~filed with the SEC on February 18, 2021)~~

~~10.1~~	~~Form of Indemnification Agreement. (incorporated by reference to Exhibit 10.1 of the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(File~~ ~~No. 333-252220)~~ ~~filed with the SEC on February 8, 2021)~~

~~10.2.1~~	~~2017 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.2.1 of the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(File~~ ~~No. 333-252220)~~ ~~filed with the SEC on February 8, 2021)~~

~~10.2.2~~	~~Form of Stock Option Agreement under the 2017 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.2.2 of the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(File~~ ~~No. 333-252220)~~ ~~filed with the SEC on February 8, 2021)~~

~~10.3.1~~	~~2018 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.3.1 of the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(File~~ ~~No. 333-252220)~~ ~~filed with the SEC on February 8, 2021)~~

~~10.3.2~~	~~Form of Stock Option Agreement under the 2018 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.3.2 of the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(File~~ ~~No. 333-252220)~~ ~~filed with the SEC on February 8, 2021)~~

~~10.4.1~~	~~2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.4.1 of the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(File~~ ~~No. 333-252220)~~ ~~filed with the SEC on February 8, 2021)~~

~~10.4.2~~	~~Form of Stock Option Agreement under the 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.4.2 of the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(File~~ ~~No. 333-252220)~~ ~~filed with the SEC on February 8, 2021)~~

~~10.5~~	~~Employment Agreement, by and between the Registrant and Scott Carmer, dated February 3, 2021 (incorporated by reference to Exhibit 10.5 of the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(File~~ ~~No. 333-252220)~~ ~~filed with the SEC on February 8, 2021)~~

~~10.6~~	~~Employment Agreement, by and between the Registrant and John Trainer, dated January 6, 2020 (incorporated by reference to Exhibit 10.6 of the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(File~~ ~~No. 333-252220)~~ ~~filed with the SEC on February 8, 2021)~~

~~10.7~~	Employment Agreement, by and between the Registrant and Jerome Zeldis, M.D., Ph.D., dated January 4, 2021 (incorporated by reference to Exhibit 10.7 of the Registrant’s Registration Statement on Form ~~S-1~~ ~~(File~~ ~~No. 333-252220)~~ ~~filed with the SEC on February 8, 2021)~~

~~10.8~~	Employment Agreement, by and between the Registrant and Kristi Jones, dated ~~February 27, 2017~~March 8, 2022 (incorporated by reference to Exhibit ~~10.8~~10.8.2 of the Registrant’s ~~Registration Statement~~Annual Report on Form ~~S-1~~10-K (File No. ~~333-252220)~~001-40045) filed with the SEC on ~~February 8, 2021)~~March 9, 2022)

~~10.9~~10.2*			Employment Agreement, by and between the Registrant and ~~Robert Knight, M.D., dated January 6, 2021 (incorporated by reference to Exhibit 10.9 of the Registrant’s Registration Statement on Form~~ ~~S-1~~Mathias Oelke, date April 5, 2022 ~~(File~~ ~~No. 333-252220)~~ ~~filed with the SEC on February 8, 2021)~~

~~10.10~~10.3*#			~~Non-Employee~~ ~~Director Compensation Policy (incorporated~~Joint Research Agreement, by ~~reference to Exhibit 10.10 of the Registrant’s Quarterly Report on Form~~ ~~10-Q~~and between Zephyr AI, Inc. and NexImmune, Inc., dated March 16, 2022 ~~(File~~ ~~No. 001-40045)~~ ~~filed with the SEC on May 17, 2021)~~

31.1*			Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*			Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~June~~September 30, 2021, has been formatted in Inline XBRL.


	June 30, 2021			December 31, 2020
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	63,816,106		$	5,031,079
Marketable securities		38,979,670			—
Restricted cash		67,500			67,500
Prepaid expenses and other current assets		8,327,117			3,293,858
Total current assets		111,190,393			8,392,437
Property and equipment, net		4,148,875			2,885,260
Other non-current assets		53,373			23,373
Total assets	$	115,392,641		$	11,301,070

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	2,169,660		$	2,760,129
Accrued expenses		2,469,942			2,603,027
Derivative liability		—			1,702,359
Other current liabilities		843,619			843,619
Convertible notes issued to related parties		—			7,324,267
Convertible notes		—			11,793,397
Total current liabilities		5,483,221			27,026,798
Deferred rent, net of current portion					23,529
Other non-current liabilities		—			4,935
Total liabilities		5,483,221			27,055,262
Commitments and contingencies		0			0
Redeemable convertible preferred stock
Series A Redeemable Convertible Preferred Stock, $0.0001 par value, 0 shares outstanding as of June 30, 2021 and 121,735,303 shares authorized, issued and outstanding as of December 31, 2020. Liquidation value of $42,314,789 as of December 31, 2020.		—			35,047,435
Series A-2 Redeemable Convertible Preferred Stock, $0.0001 par value, 0 shares outstanding as of June 30, 2021 and 28,384,899 shares authorized, 22,047,361 shares issued and outstanding as of December 31, 2020. Liquidation value of $8,683,746 as of December 31, 2020.		—			7,685,865
Series A-3 Redeemable Convertible Preferred Stock, $0.0001 par value, 0 shares outstanding as of June 30, 2021 and 34,061,879 shares authorized, 31,209,734 shares issued and outstanding as of December 31, 2020. Liquidation value of $11,699,176 as of December 31, 2020.		—			10,887,449
Total redeemable convertible preferred stock		—			53,620,749
Stockholders’ equity (deficit)
Common Stock, $0.0001 par value, 250,000,000 shares authorized, 22,628,007 issued and outstanding as of June 30, 2021 and 1,256,609 shares issued and outstanding as of December 31, 2020.		2,263			126
Additional paid-in-capital		207,480,819			8,206,938
Accumulated other comprehensive loss		(2,917	)		—
Accumulated deficit		(97,570,745	)		(77,582,005	)
Total stockholders’ equity (deficit)		109,909,420			(69,374,941	)
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)	$	115,392,641		$	11,301,070


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenue	$	0		$	0		$	0		$	0
Operating expenses:
Research and development		8,124,973			4,209,261			14,137,581			8,481,428
General and administrative		4,038,050			2,565,402			8,095,642			4,653,803

Total operating expenses		12,163,023			6,774,663			22,233,223			13,135,231
Loss from operations		(12,163,023	)		(6,774,663	)		(22,233,223	)		(13,135,231	)
Other (expense) income:
Interest income		6,851			1,184			10,464			19,868
Interest expense		(101	)		(183,682	)		(904,220	)		(184,671	)
Change in fair value of derivative liability		—			—			2,424,877			—
Other (expense) income		(25,974	)		26,636			(26,696	)		54,001

Other (expense) income		(19,224	)		(155,862	)		1,504,425			(110,802	)

Net loss	$	(12,182,247	)	$	(6,930,525	)	$	(20,728,798	)	$	(13,246,033	)
Accumulated dividends on Redeemable Convertible Preferred Stock		—			(815,816	)		(377,562	)	$	(1,631,632	)

Net loss attributable to common stockholders	$	(12,182,247	)	$	(7,746,341	)	$	(21,106,360	)	$	(14,877,665	)

Basic and diluted net loss attributable to common stockholders per common share	$	(0.54	)	$	(6.17	)	$	(1.20	)	$	(11.86	)

Basic and diluted weighted-average number of common shares outstanding		22,608,866			1,254,681			17,648,551			1,254,681

	June 30, 2021		December 31, 2020		Recurring Fair Value Measurement
Cash and cash equivalents:

Cash	$	251,862	$	105,888
Money market funds		44,665,609		4,925,191		Level 1
Fixed income debt securities		18,898,635		0		Level 2
Total Cash and cash equivalent s		63,816,106		5,031,079
Restricted cash		67,500		67,500

Total cash , cash equivalents , and restricted cash	$	63,883,606	$	5,098,579


Balance as of December 31, 2020	$	1,702,359
Fair value of derivative liabilities issued		722,518
Incremental expense related to fair value changes in derivative liabilities		(2,424,877	)

Balance as of June 30, 2021	$	0


	June 30, 2021		December 31, 2020

Prepaid research and development expenses	$	5,946,498	$	1,894,785
Prepaid maintenance agreements		230,394		144,575
Prepaid insurance		1,945,516		98,421
Prepaid other		144,580		124,929
Deferred financing costs		—		952,633
Other current assets		60,129		78,515

Total prepaid expenses and other current assets	$	8,327,117	$	3,293,858


	Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (millions)
Outstanding as of January 1, 2021		2,233,185		$	3.52
Granted		1,369,713			17.20
Exercised		(113,801	)		3.95
Cancelled		(1,699	)		4.78
Forfeited		(195,031	)		4.82

Outstanding as of June 30, 2021		3,292,367		$	9.12		7.9		24.9

Vested or expected to vest as of June 30, 2021		3,292,367		$	9.12		7.9		24.9
Exercisable as of June 30, 2021		1,718,339		$	3.25		6.5		22.5
Shares unvested as of June 30, 2021		1,574,028		$	15.53		9.5		2.5


	For the six months ended June 30
	2021			2020			Change
	(in thousands)
Operating expenses
Research and development	$	14,138		$	8,481		$	5,657
General and administrative		8,095			4,654			3,441

Total operating expenses		22,233			13,135			9,098

Loss from operations		(22,233	)		(13,135	)		(9,098	)

Other income (expense):
Interest income		10			20			(10	)
Interest expense		(904	)		(185	)		(719	)
Change in fair value of derivative liability		2,425			—			2,425
Other (expense) income		(27	)		54			(81	)

Other income (expense)		1,504			(111	)		1,615

Net loss	$	(20,729	)	$	(13,246	)	$	(7,483	)