0000950170-23-021353 | 10-Q | XBRL Viewer

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Stock-Based Compensation - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]
Number of Units Outstanding, Beginning Balance	8,402,626
Number of Units, Granted	3,550,000
Number of Units, Forfeited	(363,272)
Number of Units, Expired	(14,351)
Number of Units Outstanding, Ending Balance	11,575,003	8,402,626
Number of Units Outstanding, Options vested and expected to vest	11,575,003
Number of Units Outstanding, Options vested and exercisable	3,373,505
Number of Units Outstanding, Weighted Average Strike Price per Unit, Beginning Balance	$ 3.52
Number of Units, Granted, Weighted Average Strike Price per Unit	0.57
Number of Units, Forfeited, Weighted Average Exercise Price per Unit	1.69
Number of Units, Expired, Weighted Average Exercise Price per Unit	7.27
Number of Units Outstanding, Weighted Average Strike Price per Unit, Ending Balance	2.65	$ 3.52
Number of Units, Options vested and expected to vest, Weighted Average Exercise Price per Unit	2.65
Number of Units, Options vested and exercisable, Weighted Average Exercise Price per Unit	$ 4.69
Number of Units Outstanding, Weighted Average Remaining Contractual Term (in years)	8 years 10 months 24 days	8 years 7 months 6 days
Number of Units, Options vested and expected to vest, Weighted Average Remaining Contractual Term (in years)	8 years 10 months 24 days
Number of Units, Options vested and exercisable, Weighted Average Remaining Contractual Term (in years)	7 years 9 months 18 days
Number of Units Outstanding, Aggregate Intrinsic Value	$ 0	$ 0

Condensed Statements of Stockholders Equity (Deficit) (Unaudited) - USD ($) $ in Thousands	Total	Series 1 Convertible Preferred Stock	Preferred Stock Series 1 Convertible Preferred Stock	Common Stock	Additional Paid-in Capital	Accumulated Deficit
Balance at Dec. 31, 2021	$ 233,977		$ 3	$ 3	$ 598,913	$ (364,942)
Balance, Shares at Dec. 31, 2021			29,863,674
Balance, Shares at Dec. 31, 2021				26,408,031
Issuance of Common Stock upon exercise of stock options	98				98
Issuance of Common Stock upon exercise of stock options, Shares				65,862
Issuance of Common Stock pursuant to employee stock purchase plan	216				216
Issuance of Common Stock pursuant to employee stock purchase plan, Shares				145,027
Stock-based compensation expense	1,545				1,545
Net loss	(33,051)					(33,051)
Balance at Mar. 31, 2022	202,785		$ 3	$ 3	600,772	(397,993)
Balance, Shares at Mar. 31, 2022				26,618,920
Balance, Shares at Mar. 31, 2022			29,863,674
Balance at Dec. 31, 2022	$ 126,739		$ 3	$ 3	604,687	(477,954)
Balance, Shares at Dec. 31, 2022		29,863,674	29,863,674
Balance, Shares at Dec. 31, 2022	26,795,800			26,795,800
Issuance of Common Stock for restricted stock units (in shares)				3,450
Issuance of Common Stock pursuant to employee stock purchase plan	$ 33				33
Issuance of Common Stock pursuant to employee stock purchase plan, Shares				68,315
Stock-based compensation expense	1,183				1,183
Net loss	(17,831)					(17,831)
Balance at Mar. 31, 2023	$ 110,124		$ 3	$ 3	$ 605,903	$ (495,785)
Balance, Shares at Mar. 31, 2023	26,867,565			26,867,565
Balance, Shares at Mar. 31, 2023		29,863,674	29,863,674

Organization and Nature of Business - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Organization And Nature Of Business [Line Items]
Net losses	$ 17,831	$ 33,051
Cash and cash equivalents	112,959	187,586	$ 130,191
Restricted cash	$ 2,600
Reduction in Force
Organization And Nature Of Business [Line Items]
Expense related to reduction in force		$ 1,000

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

Fair Value Measurement - Summary of Financial Assets Carried at Fair Value and Measured on Recurring Basis (Details) - Fair Value Measurements, Recurring - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Assets:
Total assets measured at fair value	$ 108,685	$ 127,404
Level 1
Assets:
Total assets measured at fair value	108,685	127,404
Money Market Funds
Assets:
Cash equivalents	108,685	127,404
Money Market Funds \| Level 1
Assets:
Cash equivalents	$ 108,685	$ 127,404

Stock-Based Compensation - Components of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 1,183	$ 1,545
Research and Development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	231	575
Selling, General and Administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 952	$ 970

Commitments and Contingencies - Schedule of Undiscounted Future Lease Payments (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
2023(reminder)	$ 2,587
2024	1,677
2025	1,718
2026	1,759
2027	1,802
2028 and thereafter	8,831
Total future minimum lease payments	18,374
Less: imputed interest	(3,663)
Present value of operating lease liabilities	14,711
Less: current portion of lease liabilities	(2,962)	$ (3,703)
Noncurrent portion of lease liabilities	$ 11,749	$ 29,879

Stock-Based Compensation - Summary of Restricted Stock Unit Activity (Details) - Restricted Stock Units	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding at December 31, 2022 \| shares	326,364
Granted \| shares	12,100
Vested \| shares	(9,750)
Forfeited \| shares	(27,500)
Outstanding at March 31, 2023 \| shares	301,214
Outstanding at December 31, 2022 \| $ / shares	$ 2.75
Granted \| $ / shares	0.56
Vested \| $ / shares	1.61
Forfeited \| $ / shares	2.01
Outstanding at March 31, 2023 \| $ / shares	$ 2.76

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Schedule of Undiscounted Future Lease Payments

The undiscounted future lease payments for operating leases as of March 31, 2023 were as follows (in thousands):


	Operating Leases
2023(remainder)		2,587
2024		1,677
2025		1,718
2026		1,759
2027		1,802
2028 and thereafter		8,831
Total future minimum lease payments		18,374
Less: imputed interest		(3,663	)
Present value of operating lease liabilities		14,711
Less: current portion of lease liabilities		(2,962	)
Noncurrent portion of lease liabilities	$	11,749

Condensed Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 112,959	$ 130,191
Restricted cash	1,010	0
Accounts receivable, net	127	308
Prepaid expenses and other current assets	1,492	2,783
Total current assets	115,588	133,282
Property and equipment, net	3,634	3,312
Operating lease right-of-use-assets	12,289	30,920
Other long-term assets	1,542	1,776
Total assets	133,053	169,290
Current liabilities:
Accounts payable	3,871	3,768
Accrued compensation	2,733	4,212
Accrued liabilities	1,614	989
Operating lease liabilities, current portion	2,962	3,703
Total current liabilities	11,180	12,672
Operating lease liabilities, long-term portion	11,749	29,879
Total liabilities	22,929	42,551
Commitments and contingencies (Note 5)
Stockholders equity:
Common stock, $0.0001 par value; 200,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 26,867,565 and 26,795,800 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	3	3
Additional paid-in capital	605,903	604,687
Accumulated deficit	(495,785)	(477,954)
Total stockholders' equity	110,124	126,739
Total liabilities and stockholders equity	133,053	169,290
Series 1 Convertible Preferred Stock
Stockholders equity:
Series 1 convertible preferred stock, $0.0001 par value - 60,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 29,863,674 shares issued and outstanding as of March 31, 2023 and December 31, 2022; aggregate liquidation preference of $3 as of March 31, 2023 and December 31, 2022	$ 3	$ 3

Stock-Based Compensation - Additional Information (Details) $ in Millions	3 Months Ended
	Mar. 31, 2023 USD ($) shares
Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized stock based compensation related to stock options	$ 9.4
Expected weighted-average period for recognition of compensation expense related	3 years
Total options vested \| shares	573,844
Fair value of options vested	$ 1.3
Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized stock based compensation related to restricted stock units	$ 0.7
RSUs that were vested, but not yet delivered \| shares	11,375
Expected weighted-average period for recognition of compensation expense related	3 years

Condensed Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
Condensed Statements of Cash Flows - USD ($) $ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Operating activities
Net loss	$ (17,831)	$ (33,051)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	1,183	1,545
Depreciation and amortization	174	363
Non-cash lease expense	785	409
Changes in operating assets and liabilities:
Accounts receivable	182	(2,417)
Inventory	0	(3,499)
Prepaid expenses and other current assets	1,291	(3,748)
Other long-term assets	0	981
Accounts payable	(148)	141
Accrued expenses and other liabilities	(1,075)	(4,463)
Lease liabilities	(1,026)	(19)
Net cash used in operating activities	(16,465)	(43,758)
Investing activities
Purchase of property and equipment	(24)	(507)
Net cash used in investing activities	(24)	(507)
Financing activities
Proceeds from issuance of common stock under employee stock plans	33	314
Net cash provided by financing activities	33	314
Net (decrease) in cash, cash equivalents and restricted cash	(16,456)	(43,951)
Cash, cash equivalents and restricted cash at beginning of period	131,967	233,312
Cash, cash equivalents and restricted cash at end of period	115,511	189,361
Supplemental disclosure of noncash investing and financing activities
Remeasurement of operating lease right-of-use asset for lease modification	$ 18,696	$ 285

Fair Value Measurement

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurement

3. Fair value measurement

The following table summarizes the Company's financial assets carried at fair value and measured on a recurring basis by level within the fair value hierarchy (in thousands):


	March 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents (money market funds)	$	108,685	$	—	$	—	$	108,685
Total assets measured at fair value	$	108,685	$	—	$	—	$	108,685


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents (money market funds)	$	127,404	$	—	$	—	$	127,404
Total assets measured at fair value	$	127,404	$	—	$	—	$	127,404

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2023	May 04, 2023
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Document Quarterly Report	true
Document Transition Report	false
Entity Registrant Name	Talis Biomedical Corporation
Entity Central Index Key	0001584751
Entity Current Reporting Status	Yes
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Interactive Data Current	Yes
Entity File Number	001-40047
Entity Tax Identification Number	46-3122255
Entity Address, Address Line One	1100 Island Drive
Entity Address, City or Town	Redwood City
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94065
City Area Code	650
Local Phone Number	433-3000
Entity Incorporation State Country Code	DE
Title of 12(b) Security	Common Stock, $0.0001 par value per share
Security Exchange Name	NASDAQ
Trading Symbol	TLIS
Entity Stock, Shares Outstanding		56,743,493
Common Stock
Document Information [Line Items]
Entity Stock, Shares Outstanding		26,879,819
Series 1 Convertible Preferred Stock
Document Information [Line Items]
Entity Stock, Shares Outstanding		29,863,674

Net Loss Per Share

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Net Loss Per Share

9. Net loss per share

Net loss per share

The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except for share and per share data):


	Three Months Ended
	March 31,
	2023			2022
Numerator:
Net loss - basic and diluted	$	(17,831	)	$	(33,051	)
Denominator:
Weighted-average number of shares of common stock outstanding - basic and diluted		26,815,787			26,468,154
Net loss per share - basic and diluted	$	(0.66	)	$	(1.25	)

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods as the inclusion of all potential common shares outstanding would have been anti-dilutive. The Company’s Series 1 convertible preferred stock are participating securities but, because they do not have the obligation to share in the loss of the

Company, they are excluded from the calculation of basic net loss per share. Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:


	As of March 31,
	2023		2022
Series 1 convertible preferred stock		29,863,674		29,863,674
Options to purchase common stock		11,575,003		7,922,274
Shares estimated to be purchased under 2021 ESPP		—		262,204
Unvested RSUs		301,214		368,115
Total		41,739,891		38,416,267

Summary of Significant Accounting Policies (Policies)	3 Months Ended
Summary of Significant Accounting Policies (Policies)	Mar. 31, 2023
Accounting Policies [Abstract]
Basis of presentation	Basis of presentation The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting. Accordingly, these unaudited condensed financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed financial statements include all adjustments necessary to fairly state the financial position and the results of our operations and cash flows for interim periods in accordance with GAAP. All such adjustments are of a normal, recurring nature. The results for any interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or for any future period. The condensed balance sheet presented as of December 31, 2022 has been derived from the audited financial statements as of that date. The condensed financial statements and notes as presented do not contain all information that is included in the annual financial statements and notes thereto of the Company. The condensed financial statements and notes included in this Quarterly Report should be read in conjunction with the financial statements and notes included in the Company’s 2022 Annual Report on Form 10-K (Annual Report) filed with the SEC. The significant accounting policies used in preparation of these condensed financial statements as of and for the three months ended March 31, 2023 are consistent with those described in our Annual Report.
Use of estimates	Use of estimates The preparation of financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company bases its estimates and judgments on historical experience and on various other assumptions, including knowledge about current events and expectations about actions the Company may take in the future, that the Company believes are reasonable under the circumstances. Actual results could vary from the amounts derived from management’s estimates and assumptions.
Concentration of credit risk and other risks and uncertainties	Concentration of credit risk and other risks and uncertainties Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, and accounts receivables. The Company’s cash is deposited in accounts at large financial institutions and its cash equivalents are primarily held in prime and U.S. government money market funds. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and cash equivalents are held. The Company is subject to risks common to companies in the diagnostics industry including, but not limited to, uncertainties related to commercialization of products, regulatory approvals, and protection of intellectual property rights. Global economic conditions remain volatile resulting from the continuing and evolving effects of the COVID-19 pandemic, inflationary pressures, rising interest rates, the ongoing military conflict between Russia and Ukraine and related sanctions imposed against Russia and otherwise. The Company continues to evaluate the potential impact of these global issues on our current and future business operations, including our expenses, clinical trials and addressable markets as well as on our industry and healthcare system. The Company is dependent on key suppliers for certain manufacturing and research and development activities. An interruption in the supply of these materials could temporarily impact the Company’s ability to commercialize, manufacture inventory and perform research and development, testing and clinical trials related to its products. The Company is also dependent on its manufacturing partners that are critical to the Company's ability to supply product to its end customers.
Grant revenue and receivables	Grant revenue and receivables Grants awarded to the Company for research and development by government entities are outside the scope of ASC 606. This is because the granting entities are not considered to be customers and are not receiving reciprocal value for their grant support provided to the Company. These grants provide the Company with payments for certain types of expenditures in return for research and development activities or for meeting certain development milestones over a contractually defined period. For efforts performed under these grant agreements, the Company’s policy is to recognize revenue when it is reasonably assured that the grant funding will be received as evidenced through the existence of a grant arrangement, amounts eligible for reimbursement are determinable and have been incurred and paid, the applicable conditions under the grant arrangements have been met, and collectability of amounts due is reasonably assured. Costs of grant revenue are recorded as a component of research and development expenses in the Company’s statements of operations and comprehensive loss. Grant funds received from third parties are recorded as revenue if the Company is deemed to be the principal participant in the arrangement. If the Company is not the principal participant, the funds from grants are recorded as a reduction to research and development expense. Reimbursable costs paid prior to being billed are recorded as unbilled grant receivables. Funds received in advance are recorded as deferred grant revenue. Management has determined that the Company is the principal participant under the Company’s grant agreements, and accordingly, the Company records amounts earned under these arrangements as grant revenue.
New accounting pronouncements	New accounting pronouncements Recently issued accounting pronouncements There are no accounting pronouncements currently pending that we expect to have a material impact on our financial statements or disclosures. Recently adopted accounting standards We did not adopt any new accounting standards during the three months ended March 31, 2023.

Condensed Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares, issued	26,867,565	26,795,800
Common stock, shares, outstanding	26,867,565	26,795,800
Series 1 Convertible Preferred Stock
Preferred stock, par value	$ 0.0001	$ 0.0001
Convertible preferred stock, shares authorized	60,000,000	60,000,000
Convertible preferred stock, shares issued	29,863,674	29,863,674
Convertible preferred stock, shares outstanding	29,863,674	29,863,674
Convertible preferred stock, aggregate liquidation preference	$ 3	$ 3

Commitments and Contingencies

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

5. Commitments and contingencies

Operating leases

In March 2023, the Company entered into a lease termination agreement with the landlord of our Redwood City, CA facility. The original term of the lease commenced in June 2022 and was for an initial term of 10.5 years. The termination agreement accelerated the lease termination date to no later than May 12, 2023. As a result of this modification, the Company remeasured the lease liability and the corresponding right-of-use asset resulting in a reduction of each by $18.7 million. The Company incurred immaterial customary termination and broker fees during the first quarter of 2023, which have been included in the remeasurement as of March 31, 2023.

In March 2023, the Company entered into a sublease for a future laboratory and office space in a Redwood City, CA facility. The sublease will continue for a term of 7 years, with no option to extend. The minimum annual commitment under the new sublease is approximately $1.0 million with fixed escalations of 3.5% per annum. The sublease commenced for accounting purposes in the second quarter of 2023, at which time the right-of-use asset and liability will be recorded.

The undiscounted future lease payments for operating leases as of March 31, 2023 were as follows (in thousands):


	Operating Leases
2023(remainder)		2,587
2024		1,677
2025		1,718
2026		1,759
2027		1,802
2028 and thereafter		8,831
Total future minimum lease payments		18,374
Less: imputed interest		(3,663	)
Present value of operating lease liabilities		14,711
Less: current portion of lease liabilities		(2,962	)
Noncurrent portion of lease liabilities	$	11,749

Standby letters of credit

In January 2022, in conjunction with the Company’s Redwood City, CA operating lease, the Company entered into a standby letter of credit (LOC) in the amount of $1.0 million to secure the lease through its expiration. In March 2023, the Company entered into a lease termination agreement with the landlord of our Redwood City, CA facility, which accelerated the lease termination date to no later than May 12, 2023. The Company is required to maintain a cash balance of $1.0 million as collateral for the LOC until all criteria in the termination agreement have been met. The Company expects to meet this criteria upon termination and as a result the $1.0 million LOC has been classified in restricted cash on the balance sheet as of March 31, 2023.

In March 2023, the Company entered into a sublease for a future laboratory and office space in a Redwood City, CA facility. The Company is required to hold a LOC in the amount of $0.7 million to secure this lease through expiration, which has been classified in other long-term assets on the condensed balance sheet as of March 31, 2023, because it is unavailable for a period longer than one year from the balance sheet date.

In conjunction with the Chicago, IL laboratory and office space lease, the Company is required to hold an additional LOC in the amount of $0.8 million to secure this lease through its expiration. The Company is required to maintain a cash balance of $0.8 million as collateral for the LOC, which is classified in other long-term assets on the balance sheet as of March 31, 2023, because it is unavailable for a period longer than one year from the balance sheet date.

The Company has not drawn upon any LOC through March 31, 2023.

Indemnification agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, customers and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. The Company also provides indemnification to directors and officers of the Company to the maximum extent permitted under applicable Delaware law. The maximum potential amount of future payments that the Company could be required to make under these indemnification agreements is, in many cases, unlimited.

As of March 31, 2023, the Company has not incurred any material costs as a result of such indemnifications and is not currently aware of any indemnification claims.

Contingencies

The Company is party to certain legal matters arising in the ordinary course of its business. In addition, third parties may, from time to time, assert claims against us in the form of letters and other communications. The Company records a provision for contingent losses when it is both probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. When management determines that it is not probable, but rather reasonably possible that a liability has been incurred at the date of the financial statements, management discloses such contingencies and the possible loss or range of loss if such estimate can be made. Any estimated range is based on currently available information and involves elements of judgment and significant uncertainties. Any estimated range of possible loss may not represent the maximum possible loss exposure. Circumstances change over time and actual results may vary significantly from estimates.

The Company currently does not believe that the ultimate outcome of any of the matters is probable or reasonably estimable, or that these matters will have a material adverse effect on its business; however, the results of litigation and claims are inherently unpredictable. Regardless of the outcome, litigation and other negotiations can have an adverse impact on the Company because of litigation and settlement costs, diversion of management resources and other factors. Legal costs are expensed as incurred.

Related Party Transactions

3 Months Ended

Mar. 31, 2023

Related Party Transactions

8. Related-party transactions

Registration rights

In March 2021, the Company entered into a registration rights agreement (the Registration Rights Agreement) with Baker Brothers Life Sciences, L.P. and 667, L.P. (the Baker Funds), holders of the Company’s Series 1 convertible preferred stock and related parties. The obligations of the Company regarding such registration rights include, but are not limited to, file a registration statement with the SEC for the registration of registrable securities, reasonable efforts to cause such registration statement to become effective, keep such registration statement effective for up to 30 days, prepare and file amendments and supplements to such registration statement and the prospectus used in connection with such registration statement, and notify each selling holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed. The terms of the Registration Rights Agreement provide for the payment of certain expenses related to the registration of the shares, including a capped reimbursement of legal fees of a single special counsel for the holders of the shares, but do not impose any obligations for the Company to pay additional consideration to the holders in case a registration statement is not declared effective. On May 10, 2022, the Company filed a registration statement on Form S-3 with the SEC to register the registrable securities pursuant to the Registration Rights Agreement, which registration statement was declared effective on May 24, 2022. Under the Registration Rights Agreement, the Baker Funds also have the right to one underwritten offering per calendar year, but no more than two underwritten offerings or block trades in any twelve-month period, to effect the sale or distribution of their registrable securities, subject to specified exceptions, conditions and limitations. The Registration Rights Agreement also includes customary indemnification obligations in connection with registrations conducted pursuant to the Registration Rights Agreement.

Condensed Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Statement of Cash Flows [Abstract]
Cash and cash equivalents	$ 112,959	$ 187,586
Restricted cash	1,010	0
Restricted cash – other long-term assets	1,542	1,775
Total cash, cash equivalents and restricted cash	$ 115,511	$ 189,361

Stock-Based Compensation

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

7. Stock-based compensation

Stock options

A summary of stock option activity during the three months ended March 31, 2023 is as follows:


	Number of Units Outstanding			Weighted Average Strike Price per Unit		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2022		8,402,626		$	3.52		8.6	$	—
Granted		3,550,000		$	0.57
Exercised		—		$	—
Forfeited		(363,272	)	$	1.69
Expired		(14,351	)	$	7.27
Outstanding at March 31, 2023		11,575,003		$	2.65		8.9	$	—
Options vested and expected to vest at March 31, 2023		11,575,003		$	2.65		8.9	$	—
Options vested and exercisable at March 31, 2023		3,373,505		$	4.69		7.8	$	—

As of March 31, 2023, the total unrecognized stock-based compensation related to stock options was $9.4 million, which is expected be recognized over a weighted-average period of approximately 3 years. Total options vested during the three months ended March 31, 2023 were 573,844 with a total fair value of $1.3 million.

Restricted stock units

A summary of RSU activity during the three months ended March 31, 2023 is as follows:


	Number of Units Outstanding			Weighted Average Grant Date Fair Value (per RSU)
Outstanding at December 31, 2022		326,364		$	2.75
Granted		12,100		$	0.56
Vested		(9,750	)	$	1.61
Forfeited		(27,500	)	$	2.01
Outstanding at March 31, 2023		301,214		$	2.76

As of March 31, 2023, the total unrecognized stock-based compensation related to RSUs was $0.7 million, which is expected to be recognized over a weighted average period of approximately 3 years. Outstanding RSUs as of March 31, 2023 includes 11,375 RSUs that were vested, but not yet delivered.

Stock-based compensation expense

The following table summarizes the components of stock-based compensation expense recorded in the Company’s statement of operations and comprehensive loss (in thousands):


	Three Months Ended March 31,
	2023		2022
Research and development	$	231	$	575
Selling, general and administrative		952		970
Total stock-based compensation	$	1,183	$	1,545

Stockholders' Equity - Additional Information (Details)	Jul. 27, 2022 $ / shares
Class Of Stock [Line Items]
Minimum bid price requirement	$ 1.00
Minimum bid price	$ 1.00

Condensed Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Total revenue, net	$ 1,218	$ 3,187
Operating expenses:
Cost of products sold	20	3,521
Research and development	13,796	20,703
Selling, general and administrative	6,399	11,930
Total operating expenses	20,215	36,154
Loss from operations	(18,997)	(32,967)
Other income (expense), net	1,166	(84)
Net loss and comprehensive loss	$ (17,831)	$ (33,051)
Net loss per share - basic	$ (0.66)	$ (1.25)
Net loss per share - diluted	$ (0.66)	$ (1.25)
Weighted average shares basic	26,815,787	26,468,154
Weighted average shares diluted	26,815,787	26,468,154
Grant
Revenue	$ 1,081	$ 874
Product revenue, net
Revenue	$ 137	$ 2,313

Revenue - Additional Information (Details) - USD ($) $ in Millions	1 Months Ended		3 Months Ended
	Oct. 31, 2021	Jul. 31, 2021	Mar. 31, 2023	Mar. 31, 2022	Apr. 30, 2022
RADx Initiative
Disaggregation Of Revenue [Line Items]
Revenue received in completion of second stage				$ 0.7
Potential milestone payment	$ 2.0	$ 4.0
Term of contract	Jan. 30, 2022
NIH
Disaggregation Of Revenue [Line Items]
Additional funding available under extension					$ 1.2
Grant revenue recognized			$ 1.1	$ 0.2

Revenue

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue

4. Revenue

Grant revenue and receivables

NIH grant

In May 2018, the Company was awarded a grant from the NIH for the Diagnostics via Rapid Enrichment, Identification, and Phenotypic Antibiotic Susceptibility Testing of Pathogens from Blood project. In April 2023, the Company exercised a one-year option under the grant, extending the term through April 2024 with $1.2 million in additional funding available under the grant.

During each of the three months ended March 31, 2023 and 2022, the Company recognized $1.1 million and $0.2 million of revenue related to this grant, respectively.

NIH Rapid Acceleration of Diagnostics - RADx Initiative contracts

In July 2020, the Company was awarded a subaward grant from the University of Massachusetts Medical School for Phase 1 of the NIH’s RADx initiative and a contract from the NIH directly for Phase 2 of the RADx initiative. The RADx initiative aims to speed the development, validation, and commercialization of innovative, rapid tests that can directly detect COVID-19. In 2021, the Company and the NIH amended the contract for the completion of the RADx initiative, extending the term of the contract to January 30, 2022 and decreased the potential milestone payment from $4.0 million to $2.0 million. The contract expired on January 30, 2022.

The Company recognized $0.7 million in revenue related to this grant during the three months ended March 31, 2022.

Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Summary of Stock Option Activity

A summary of stock option activity during the three months ended March 31, 2023 is as follows:


	Number of Units Outstanding			Weighted Average Strike Price per Unit		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2022		8,402,626		$	3.52		8.6	$	—
Granted		3,550,000		$	0.57
Exercised		—		$	—
Forfeited		(363,272	)	$	1.69
Expired		(14,351	)	$	7.27
Outstanding at March 31, 2023		11,575,003		$	2.65		8.9	$	—
Options vested and expected to vest at March 31, 2023		11,575,003		$	2.65		8.9	$	—
Options vested and exercisable at March 31, 2023		3,373,505		$	4.69		7.8	$	—

Summary of Restricted Stock Unit Activity

A summary of RSU activity during the three months ended March 31, 2023 is as follows:


	Number of Units Outstanding			Weighted Average Grant Date Fair Value (per RSU)
Outstanding at December 31, 2022		326,364		$	2.75
Granted		12,100		$	0.56
Vested		(9,750	)	$	1.61
Forfeited		(27,500	)	$	2.01
Outstanding at March 31, 2023		301,214		$	2.76

Components of Stock-based Compensation Expense

The following table summarizes the components of stock-based compensation expense recorded in the Company’s statement of operations and comprehensive loss (in thousands):


	Three Months Ended March 31,
	2023		2022
Research and development	$	231	$	575
Selling, general and administrative		952		970
Total stock-based compensation	$	1,183	$	1,545

Stockholders' Equity

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Stockholders' equity

6. Stockholders’ equity

Common stock

On July 27, 2022, the Company received a notice (Notice) from the Nasdaq Stock Market (Nasdaq) that the Company is not in compliance with the $1.00 minimum bid price requirement for continued listing, as set forth in Nasdaq Listing Rule 5450(a)(1) (Minimum Bid Price Requirement), as the minimum bid price of the Company’s common stock had been below $1.00 per share for thirty-one (31) consecutive business days as of the date of the Notice.

On January 24, 2023, the Company transferred the listing of its securities to the Nasdaq Capital Market (Capital Market) and received notice from Nasdaq indicating that, while the Company has not regained compliance with the Minimum Bid Price Requirement, Nasdaq has determined that the Company is eligible for an additional 180-day period, or until July 24, 2023, to regain compliance. We have committed to effectuating a reverse stock split by the end of the second compliance period, if necessary, to regain compliance with the Minimum Bid Price Requirement. The Notice has no other immediate effect on the listing of the Company’s common stock, which will trade on the Capital Market under the symbol “TLIS.”

Net Loss Per Share - Schedule of Potentially Dilutive Securities Not Included in Diluted Per Share Calculations (Details) - shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from the computation of diluted net loss per share	41,739,891	38,416,267
Series 1 Convertible Preferred Stock
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from the computation of diluted net loss per share	29,863,674	29,863,674
Options
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from the computation of diluted net loss per share	11,575,003	7,922,274
Unvested RSUs
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from the computation of diluted net loss per share	301,214	368,115
Shares Estimated to be Purchased Under 2021 ESPP
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from the computation of diluted net loss per share	0	262,204

Organization and Nature of Business

3 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Nature of Business

1. Organization and nature of business

Talis Biomedical Corporation (the Company) is a molecular diagnostic company focused on advancing health equity and outcomes through the delivery of accurate infectious disease testing in the moment of need, at the point of care. The Company plans to develop and commercialize innovative products on its sample-to-answer Talis One system to enable accurate, low cost, and rapid molecular testing. The Company was incorporated in 2013 under the general laws of the State of Delaware and is based in Redwood City, California (CA) and Chicago, Illinois (IL).

Liquidity

The Company has incurred significant losses and negative cash flows since inception, including a net loss of $17.8 million for the three months ended March 31, 2023. As of March 31, 2023, the Company had unrestricted cash and cash equivalents of $113.0 million and $2.6 million of restricted cash.

Management expects to continue to incur additional substantial losses in the foreseeable future primarily as a result of the Company’s research and development activities and future commercialization of the Talis One system. The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to continue to operationalize the Company’s current technology and to advance the development of its products. The Company expects its existing unrestricted cash and cash equivalents as of March 31, 2023 will be sufficient to fund its operations through at least one year from the date these financial statements are issued. The Company expects to finance its future operations with its existing unrestricted cash and cash equivalents and through strategic financing opportunities that could include, but are not limited to, one or a combination of corporate development and licensing opportunities and grant agreements, the incurrence of debt, future offerings of its equity, or collaborations or partnerships with other companies. However, there is no guarantee that any of these strategic or financing opportunities will be executed or realized on favorable terms, if at all, and some could be dilutive to existing stockholders. The Company’s ability to raise additional capital through either the issuance of equity or debt, is dependent on a number of factors including, but not limited to, the demand for the Company, which itself is subject to a number of development and business risks and uncertainties, as well as the uncertainty that the Company would be able to raise such additional capital at a price or on terms that are favorable to the Company or at all.

In March 2022, we implemented a reduction in force designed to reduce our operating expenses, preserve cash and align our remaining resources to focus on, among other things, developing internal manufacturing expertise to support the commercial launch of the Talis One system. We incurred $1.0 million of expenses during the three months ended March 31, 2022 related to the reduction in force, substantially all of which consisted of charges related to the staff reduction, including cash expenditures and other costs. There were no remaining obligations as of March 31, 2023.

Net Loss Per Share - Computation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Numerator:
Net loss	$ (17,831)	$ (33,051)
Denominator:
Weighted-average number of shares of common stock outstanding - basic	26,815,787	26,468,154
Weighted-average number of shares of common stock outstanding - diluted	26,815,787	26,468,154
Net loss per share - basic	$ (0.66)	$ (1.25)
Net loss per share - diluted	$ (0.66)	$ (1.25)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/exampleRef
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-Name Accounting Standards Codification
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The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Loss Per Share

The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except for share and per share data):


	Three Months Ended
	March 31,
	2023			2022
Numerator:
Net loss - basic and diluted	$	(17,831	)	$	(33,051	)
Denominator:
Weighted-average number of shares of common stock outstanding - basic and diluted		26,815,787			26,468,154
Net loss per share - basic and diluted	$	(0.66	)	$	(1.25	)

Schedule of Potentially Dilutive Securities Not Included in Diluted Per Share Calculations


	As of March 31,
	2023		2022
Series 1 convertible preferred stock		29,863,674		29,863,674
Options to purchase common stock		11,575,003		7,922,274
Shares estimated to be purchased under 2021 ESPP		—		262,204
Unvested RSUs		301,214		368,115
Total		41,739,891		38,416,267

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of significant accounting policies

Basis of presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting. Accordingly, these unaudited condensed financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed financial statements include all adjustments necessary to fairly state the financial position and the results of our operations and cash flows for interim periods in accordance with GAAP. All such adjustments are of a normal, recurring nature. The results for any interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or for any future period.

The condensed balance sheet presented as of December 31, 2022 has been derived from the audited financial statements as of that date. The condensed financial statements and notes as presented do not contain all information that is included in the annual financial statements and notes thereto of the Company. The condensed financial statements and notes included in this Quarterly Report should be read in conjunction with the financial statements and notes included in the Company’s 2022 Annual Report on Form 10-K (Annual Report) filed with the SEC.

The significant accounting policies used in preparation of these condensed financial statements as of and for the three months ended March 31, 2023 are consistent with those described in our Annual Report.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company bases its estimates and judgments on historical experience and on various other assumptions, including knowledge about current events and expectations about actions the Company may take in the future, that the Company believes are reasonable under the circumstances. Actual results could vary from the amounts derived from management’s estimates and assumptions.

Concentration of credit risk and other risks and uncertainties

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, and accounts receivables. The Company’s cash is deposited in accounts at large financial institutions and its cash equivalents are primarily held in prime and U.S. government money market funds. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and cash equivalents are held.

The Company is subject to risks common to companies in the diagnostics industry including, but not limited to, uncertainties related to commercialization of products, regulatory approvals, and protection of intellectual property rights.

Global economic conditions remain volatile resulting from the continuing and evolving effects of the COVID-19 pandemic, inflationary pressures, rising interest rates, the ongoing military conflict between Russia and Ukraine and related sanctions imposed against Russia and otherwise. The Company continues to evaluate the potential impact of these global issues on our current and future business operations, including our expenses, clinical trials and addressable markets as well as on our industry and healthcare system.

The Company is dependent on key suppliers for certain manufacturing and research and development activities. An interruption in the supply of these materials could temporarily impact the Company’s ability to commercialize, manufacture inventory and perform research and development, testing and clinical trials related to its products. The Company is also dependent on its manufacturing partners that are critical to the Company's ability to supply product to its end customers.

Grant revenue and receivables

Grants awarded to the Company for research and development by government entities are outside the scope of ASC 606. This is because the granting entities are not considered to be customers and are not receiving reciprocal value for their grant support provided to the Company. These grants provide the Company with payments for certain types of expenditures in return for research and development activities or for meeting certain development milestones over a contractually defined period. For efforts performed under these grant agreements, the Company’s policy is to recognize revenue when it is reasonably assured that the grant funding will be received as evidenced through the existence of a grant arrangement, amounts eligible for reimbursement are determinable and have been incurred and paid, the applicable conditions under the grant arrangements have been met, and collectability of amounts due is reasonably assured. Costs of grant revenue are recorded as a component of research and development expenses in the Company’s statements of operations and comprehensive loss.

Grant funds received from third parties are recorded as revenue if the Company is deemed to be the principal participant in the arrangement. If the Company is not the principal participant, the funds from grants are recorded as a reduction to research and development expense. Reimbursable costs paid prior to being billed are recorded as unbilled grant receivables. Funds received in advance are recorded as deferred grant revenue. Management has determined that the Company is the principal participant under the Company’s grant agreements, and accordingly, the Company records amounts earned under these arrangements as grant revenue.

New accounting pronouncements

Recently issued accounting pronouncements

There are no accounting pronouncements currently pending that we expect to have a material impact on our financial statements or disclosures.

Recently adopted accounting standards

We did not adopt any new accounting standards during the three months ended March 31, 2023.

Fair Value Measurement (Tables)

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Summary of Financial Assets Carried at Fair Value and Measured on Recurring Basis

The following table summarizes the Company's financial assets carried at fair value and measured on a recurring basis by level within the fair value hierarchy (in thousands):


	March 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents (money market funds)	$	108,685	$	—	$	—	$	108,685
Total assets measured at fair value	$	108,685	$	—	$	—	$	108,685


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents (money market funds)	$	127,404	$	—	$	—	$	127,404
Total assets measured at fair value	$	127,404	$	—	$	—	$	127,404

Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2023	Mar. 31, 2022	Jan. 31, 2022	Jan. 31, 2021
Commitments And Contingencies [Line Items]
Remeasurement of operating lease right-of-use asset for lease modification		$ 18,696	$ 285
Standby Letters of Credit
Commitments And Contingencies [Line Items]
Line of Credit				$ 1,000
Letter of Credit
Commitments And Contingencies [Line Items]
letter of credit facility					$ 800
Cash collateral for line of credit facility				1,000
Chicago, IL \| Letter of Credit
Commitments And Contingencies [Line Items]
Cash collateral for line of credit facility					$ 800
Redwood City, CA \| Letter of Credit
Commitments And Contingencies [Line Items]
letter of credit facility	$ 700	$ 700		$ 1,000
Laboratory and Office Space \| Chicago, IL
Commitments And Contingencies [Line Items]
Renewal term	10 years 6 months	10 years 6 months
Laboratory and Office Space \| Redwood City, CA
Commitments And Contingencies [Line Items]
Sublease term	7 years	7 years
Annual minimum commitment	$ 1,000	$ 1,000
Fixed escalations percentage per annum	3.50%	3.50%
Option to extend	no option to extend