What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-27 compared with 2022-03-28 · 345 added, 459 removed, 347 unchanged (70% of the section changed)

12 unchanged sentences

We have audited the accompanying balance sheets of Acumen Pharmaceuticals, Inc.

(the Company) as of December 31, 2021 and 2020, the related statements of operations, changes in convertible preferred stock and stockholders’ deficit and cash flows for the years then ended, and the related notes

(collectively referred to as the “financial statements”).

(the Company) as of December 31, 2022 and 2021, the related statements of operations and comprehensive loss, changes in convertible preferred stock and stockholders’ equity (deficit) and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in conformity with U.S.

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We believe that our audits provide a reasonable basis for our opinion.

Ernst & Young LLP

/s/ Ernst & Young LLP

We have served as the Company’s auditors since 2021.

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Marketable securities, short-term 47,504 72,075

Grant receivable

Prepaid expenses and other current assets 2,724 4,424

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Property and equipment, net 165 36

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

Right-of-use asset 105 —

Other assets 151 14

Total assets $ 196,587 $ 230,330

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Accounts payable $ 1,640 $ 1,088

Accrued clinical trial expenses 2,717 147

Accrued expenses and other current liabilities 3,350 3,912

Preferred stock tranche rights liability

Preferred stock warrant liability

Operating lease liability, current portion 105 —

Total current liabilities 7,812 5,147

Total liabilities 7,812 5,147

Series A convertible preferred stock, $ 0.0001 par value;

no shares authorized, issued and outstanding as of

December 31, 2021;

711,203 shares authorized and 477,297 shares issued and outstanding as of December 31,

liquidation preference of $ 1,067 as of December 31, 2020

convertible preferred stock, $ 0.0001 par value;

no shares authorized, issued and outstanding as of December 31, 2021;

11,898,177 shares authorized and 7,537,879 shares issued and outstanding as of December 31, 2020;

liquidation preference of $ 16,847 as of December 31, 2020

Series B convertible preferred stock, $ 0.0001 par value;

no shares authorized, issued and outstanding as of

December 31, 2021;

29,457,450 shares authorized and 11,862,043 shares issued and outstanding as of

liquidation preference of $ 45,070 as of December 31, 2020

Stockholders’ equity (deficit)

Commitments and contingencies (Note 11)

Stockholders’ equity

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized and no shares issued and outstanding as of

December 31, 2021;

no shares authorized, issued and outstanding as of December 31, 2020

10,000,000 shares authorized and no shares issued and outstanding as of December 31, 2022 and 2021

Common stock, $ 0.0001 par value;

300,000,000 shares authorized and 40,473,270 shares issued and outstanding as of December 31, 2021;

50,500,000 shares authorized and 419,124 shares issued and outstanding as of December 31, 2020

Additional paid-in

300,000,000 shares authorized and 41,025,062 and 40,473,270 shares issued and outstanding as of December 31, 2022 and 2021, respectively

Additional paid-in capital 359,949 352,981

Accumulated deficit ( 170,427 ) ( 127,571 )

Accumulated other comprehensive loss ( 751 ) ( 231 )

Total stockholders’ equity (deficit)

Total liabilities, convertible preferred stock and stockholders’ equity (deficit)

Total stockholders’ equity 188,775 225,183

Total liabilities and stockholders’ equity $ 196,587 $ 230,330

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

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Year Ended December 31,

Grant and other revenue

Operating expenses

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Other income (expense)

Change in fair value of preferred stock tranche rights liability and preferred stock warrant liability

Interest income, net 2,392 84

Other income, net

Other income (expense), net ( 11 ) 51

Change in fair value of preferred stock tranche rights liability and preferred stock warrant liability — ( 81,157 )

Total other income (expense) 2,381 ( 81,022 )

Net loss ( 42,856 ) ( 100,606 )

Other comprehensive loss

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(in thousands, except share data)

Preferred Stock

Series B Convertible

Preferred Stock

Preferred Stock Series A-1

Preferred Stock Series B Convertible

Preferred Stock Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Stockholders’

Balance as of December 31, 2019

Issuance of Series B convertible preferred stock for cash, net of issuance costs of $ 395

Share-based compensation

Balance as of December 31, 2020

Shares Amount Shares Amount Shares Amount Shares Amount

Balance as of January 1, 2021 477,297 $ 1,067 7,537,879 $ 16,333 11,862,043 $ 39,253 419,124 $ — $ 8,374 $ ( 26,965 ) $ — $ ( 18,591 )

Issuance of milestone shares for cash, net of issuance costs of $ 16

— — — — 7,908,027 30,031 — — — — — —

Exercise of preferred stock warrant — — 447,426 1,250 — — — — — — — —

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Issuance of common stock for cash, net of issuance costs of $ 15,445

— — — — — — 11,499,998 1 168,555 — — 168,556

Cashless exercise of common stock warrants — — — — — — 178,847 — — — — —

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Unrealized loss on marketable securities — — — — — — — — — — ( 231 ) ( 231 )

Share-based compensation

Stock-based compensation — — — — — — — — 922 — — 922

Net loss — — — — — — — — — ( 100,606 ) — ( 100,606 )

Balance as of December 31, 2021 — — — — — — 40,473,270 4 352,981 ( 127,571 ) ( 231 ) 225,183

Issuance of common stock for cash, net of issuance costs of $ 412

— — — — — — 422,160 — 3,792 — — 3,792

Unrealized loss on marketable securities — — — — — — — — — — ( 520 ) ( 520 )

Stock options exercised — — — — — — 124,886 — 115 — — 115

Cashless exercise of stock options — — — — — — 4,746 — — — — —

Stock-based compensation — — — — — — — — 3,061 — — 3,061

Net loss — — — — — — — — — ( 42,856 ) — ( 42,856 )

Balance as of December 31, 2022 — $ — — $ — — $ — 41,025,062 $ 4 $ 359,949 $ ( 170,427 ) $ ( 751 ) $ 188,775

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

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(in thousands)

Year Ended December 31,

Cash flows from operating activities

Net loss $ ( 42,856 ) $ ( 100,606 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation 32 4

Change in fair value of preferred stock tranche rights liability and preferred stock warrant liability — 81,157

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Amortization of premiums and accretion of discounts on marketable securities, net 487 155

Amortization of right-of-use asset 137 —

Other non-cash expense — 109

Changes in operating assets and liabilities:

Grant receivable

Prepaid expenses and other current assets 1,700 ( 3,881 )

Other assets ( 137 ) ( 14 )

Accounts payable 552 557

Accrued clinical trial expenses 2,570 147

Operating lease liability ( 137 ) —

Accrued expenses and other current liabilities ( 562 ) 3,489

1 unchanged sentence

Cash flows from investing activities

Purchases of available-for-sale

marketable securities

Purchases of marketable securities ( 41,514 ) ( 104,080 )

Proceeds from maturities and sales of marketable securities 80,860 —

Purchases of property and equipment ( 161 ) ( 40 )

Net cash used in investing activities

Net cash provided by (used in) investing activities 39,185 ( 104,120 )

Cash flows from financing activities

Proceeds from issuance of common stock, net of issuance costs 3,792 168,556

Proceeds from exercise of stock options 115 15

Proceeds from issuance of Series B milestone shares, net of issuance costs — 30,031

Proceeds from issuance of convertible preferred stock, net of issuance costs

Proceeds from exercise of Series A-1

Proceeds from exercise of Series A-1 warrant — 1,250

Proceeds from exercise of common stock warrants — 614

Proceeds from issuance of common stock upon initial public offering, net of issuance costs

Proceeds from stock option exercises

Net cash provided by financing activities 3,907 200,466

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Supplemental disclosure of noncash financing activities

Right-of-use assets obtained in exchange for operating lease liabilities $ 242 $ —

Conversion of convertible preferred stock into common stock upon IPO $ — $ 174,504

Reclassification of preferred stock tranche rights liability upon share issuance $ — $ 81,190

Reclassification of warrant liability upon exercise of preferred stock warrant $ — $ 5,380

Conversion of convertible preferred stock into common stock upon IPO

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

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(“Acumen” or the “Company”) was incorporated in 1996 in the state of Delaware.

Acumen discovers and develops targeted therapies for the treatment of Alzheimer’s disease (“AD”).

Acumen’s sole drug candidate, ACU193, is a humanized monoclonal antibody which selectively targets amyloid-beta oligomers (“AßOs”).

Acumen and Merck & Co., Inc.

discovered and developed ACU193 through an eight-year research collaboration.

Acumen currently holds exclusive rights to the program.

The Company submitted an Investigational New Drug Application for ACU193 to the Food and Drug Administration in the fourth quarter of 2020.

The Company initiated a Phase 1 clinical trial of ACU193 in the second quarter of 2021, which the Company named “INTERCEPT-AD.”

Approximately 62 individuals with early AD (mild cognitive impairment or mild dementia due to AD) are expected to be randomized into this double-blind, placebo-controlled, first-in-human

study of ACU193.

consists of single-ascending-dose and multiple-ascending-dose cohorts and the overall objective of the trial is to evaluate the safety and tolerability and

establish clinical proof of mechanism of ACU193 administered intravenously.

In October 2021, the Company announced the initial dosing of the first patient in the INTERCEPT-AD

trial and the subsequent successful sentinel safety review of the first two patients.

Clinical trial site activation and patient recruitment and enrollment is ongoing.

At present, INTERCEPT-AD is in the single-ascending-dose portion of the trial.

Based on current site activations and enrollment rates, the Company anticipates reporting its topline data from this trial in the first half of 2023.

The Company is subject to the uncertainty of whether the Company’s intellectual property will develop into successful commercial products.

November 2020 Reverse Stock Split

On November 20, 2020, the Company effected a 1-for-30

reverse stock split of its authorized, issued and outstanding shares of common stock and convertible preferred stock.

Accordingly, all share and per share amounts for the periods presented in the accompanying financial statements and these notes have been adjusted retroactively, where applicable, to reflect this reverse stock split.

On November 20, 2020, the Company also increased the number of shares of preferred stock and common stock authorized for issuance (see Note 6).

Acumen is a clinical-stage biopharmaceutical company developing a novel disease-modifying approach to target what the Company believes to be a key underlying cause of Alzheimer’s disease (“AD”).

Alzheimer’s disease is a progressive neurodegenerative disease of the brain that leads to loss of memory and cognitive functions and ultimately results in death.

The Company’s scientific founders pioneered research on soluble amyloid-beta oligomers (“AßOs”), which are globular assemblies of the amyloid-beta (“Aß”) peptide that are distinct from Aß monomers and amyloid plaques.

Based on decades of research and supporting evidence, AßOs have gained increasing scientific acceptance as a primary toxin involved in the initiation and propagation of AD pathology.

The Company is currently focused on advancing a targeted immunotherapy drug candidate, ACU193, through clinical proof of mechanism trials in early AD patients.

ACU193 is a recombinant humanized immunoglobin gamma 2 (“IgG2”) monoclonal antibody (“mAb”) that was designed to selectively target AßOs , has demonstrated functional and protective effects in in vitro assays, and has demonstrated in vivo safety and pharmacologic activity in multiple animal species, including transgenic models for AD.

The Company is subject to the uncertainty of whether its intellectual property will develop into successful commercial products.

June 2021 Reverse Stock Split

The Company’s Board of Directors (“Board”) approved a reverse split of shares of the Company’s common stock and convertible preferred stock on a 1-for-1.49

basis (the “June 2021 Reverse Stock Split”), which was effected on June 23, 2021.

The Company’s Board of Directors (“Board”) approved a reverse split of shares of the Company’s common stock and convertible preferred stock on a 1-for-1.49 basis (the “June 2021 Reverse Stock Split”), which was effected on June 23, 2021.

The par value and the number of authorized shares of the convertible preferred stock and common stock were not adjusted in connection with the June 2021 Reverse Stock Split.

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Initial Public Offering

On July 6, 2021, the Company issued 9,999,999 shares of common stock in an initial public offering (“IPO”), and on July 8, 2021, the Company issued an additional 1,499,999 shares of common stock that were purchased by the underwriters pursuant to the underwriters’ option to purchase additional shares at the public offering price

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

less underwriting discounts and commissions.

The price to the public for each share was $ 16.00 .

The aggregate net proceeds from the Company’s IPO, after underwriting discounts and commissions and other offering expenses of $ 15.4 million, were $ 168.6 million.

On July 6, 2021, in connection with the closing of the IPO, 477,297 shares of Series A, 7,985,305 shares of Series A-1,

and 19,770,070 shares of Series B convertible preferred stock, respectively, automatically converted into an equal number of shares of common stock.

On July 6, 2021, in connection with the closing of the IPO, 477,297 shares of Series A, 7,985,305 shares of Series A-1, and 19,770,070 shares of Series B convertible preferred stock, respectively, automatically converted into an equal number of shares of common stock.

Warrants to purchase shares of common stock were automatically net exercised for the purchase of an aggregate of 178,847 shares of common stock.

As a result of the IPO, the underwriters’ exercise of their option, the conversions of the Series A, A-1

and B convertible preferred stock, and the exercise of the warrants, the Company’s total number of outstanding common shares increased by 39,911,517 immediately following the closing of the IPO.

As a result of the IPO, the underwriters’ exercise of their option, the conversions of the Series A, A-1 and B convertible preferred stock, and the exercise of the warrants, the Company’s total number of outstanding common shares increased by 39,911,517 immediately following the closing of the IPO.

Liquidity and Capital Resources

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As of December 31, 2022 and 2021, the Company had an accumulated deficit of $ 170.4 million and $ 127.6 million, respectively, and working capital of $ 172.5 million and $ 193.5 million, respectively.

Prior to the IPO, the Company historically relied on raising capital from venture capital firms and private investors and funding from a government grant to finance its operations.

On June 9, 2021, the Board and the holders of more than 67 % of the then outstanding shares of Series B convertible preferred stock held by the Series B purchasers (the “Requisite Investors”) elected to waive the achievement of the milestone subject to the terms and conditions of the Series B Preferred Stock Purchase Agreement (the “Series B Agreement”) and consummate the subsequent closing (the “Milestone Closing”) (see Note 5).

On June 17, 2021, the Milestone Closing for the Series B convertible preferred stock occurred, resulting in the sale of 7,908,027 shares of Series B convertible preferred stock at $ 3.80 per share for gross proceeds of $ 30.0 million.

As a result of the Milestone Closing and the closing of the Company’s IPO on July 6, 2021, management believes that its existing cash and cash equivalents and marketable securities will be sufficient to enable the Company to fund its operating expenses and capital expenditure requirements at least through 202 5

Management believes that the Company has sufficient cash to continue operating activities for beyond 12 months from issuance of these financial statements.

In October 2022, the Company issued 422,160 shares of common stock for net proceeds of $ 3.8 million, at a weighted average price of $ 10.06 per share.

See additional discussion in Note 8.

Future capital requirements will depend upon many factors, including the timing and extent of spending on research and development and market acceptance of the Company’s products.

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The Company may be required to delay, limit, reduce or terminate its product discovery and development activities or future commercialization efforts.

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

In October 2021, the Company announced the initial dosing of the first patient in the

trial and the subsequent successful sentinel safety review of the first two patients.

Due to delays in clinical trial site activation and patient enrollment that the Company believes are principally related to effects of the coronavirus (“COVID-19”) pandemic, the Company is expanding the anticipated number of trial sites to support its enrollment objectives and anticipated timelines.

Clinical trial site activation and patient recruitment and enrollment is ongoing.

At present, INTERCEPT-AD is in the single-ascending-dose portion of the trial.

Based on current site activations and enrollment rates, the Company anticipates reporting its topline data from this trial in the first half of 2023.

The ultimate impact of the

pandemic on the Company’s business, results of operations, financial position and cash flows will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions.

These developments and the impact of the

pandemic on the financial markets and the overall economy are highly uncertain and cannot be predicted.

If the financial markets and/or the overall economy are impacted for an extended period, the Company’s business, results of operations, financial position and cash flows may be materially adversely affected.

BASIS OF PRESENTATIO N, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS

The Company initiated a Phase 1 clinical trial of ACU193 in the second quarter of 2021, which the Company named “INTERCEPT-AD.” This trial enrolled patients with mild dementia or mild cognitive impairment (“MCI”), due to AD, conditions referred to as “early AD.” INTERCEPT-AD is a U.S.-based, multi-center, randomized, double-blind, placebo-controlled clinical trial with overlapping single ascending dose and multiple ascending dose cohorts involving a total of approximately 65 patients with early AD.

BASIS OF PRESENTATION, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS

Basis of Presentation

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GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of expenses during the reporting periods.

These estimates and assumptions are based on our historical experience, and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources.

These estimates and assumptions are based on the Company’s historical experience, and on various other factors that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

Reclassifications

Certain prior year amounts have been reclassified for consistency with the current period presentation.

Accrued clinical trial expenses are presented as a separate line on the balance sheets and statements of cash flows, whereas these accrued expenses were previously included in accrued expenses and other current liabilities.

These reclassifications had no effect on the reported results of operations.

Cash and Cash Equivalents

considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents.

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents.

The Company’s cash equivalents consist of funds held in several money market accounts.

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The Company considers its marketable securities to be available-for-sale.

Available-for-sale

securities are classified as cash equivalents, or as short-term or long-term marketable securities based on the maturity date at time of purchase and their availability to meet current operating requirements.

Available-for-sale securities are classified as cash equivalents, or as short-term or long-term marketable securities based on the maturity date at time of purchase and their availability to meet current operating requirements.

Available-for-sale securities that mature in three months or less from the date of purchase are classified as cash equivalents.

Available-for-sale securities, excluding cash equivalents, that mature in one year or less are classified as short-term marketable securities and those that mature in more than one year are classified as long-term.

Securities that are classified as available-for-sale

are measured at fair value;

Fair Value of Financial Instruments

Securities that are classified as available-for-sale are measured at fair value;

see “ Fair Value of Financial Instruments ” below.

Any premium arising at purchase is amortized to the earliest call date and any discount arising at purchase is accreted to maturity.

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The cost of investments sold will be calculated using the specific-identification method.

The Company did

record any other-than-temporary impairments related to available-for-sale securities for the year ended December 31, 2021.

The Company did no t own any marketable securities during the year ended December 31, 2020.

The Company did not record any other-than-temporary impairments related to available-for-sale securities for the years ended December 31, 2022 or 2021.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash, cash equivalents and marketable securities.

The Company may maintain deposits in financial institutions in excess of government insured limits.

The Company maintains deposits in financial institutions in excess of government insured limits.

Management believes that the Company is not exposed to significant credit risk as the Company’s cash and cash equivalents are held at financial institutions that management believes to be of high credit quality.

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Fair Value of Financial Instruments

The Company’s financial assets and liabilities are accounted for in accordance with Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures

, which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The Company’s financial assets and liabilities are accounted for in accordance with Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures , which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset

or liability in an orderly transaction between market participants on the measurement date.

The fair value hierarchy requires an entity to maximize the use of observable inputs when measuring fair value and classifies those inputs into three levels:

Observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities;

Level 1 — Observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities;

quoted prices in markets that are not active;

or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the instrument’s anticipated life.

Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Level 3 — Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair values requires more judgement.

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The carrying values reported in the Company’s balance sheets for cash (excluding cash equivalents which are recorded at fair value on a recurring basis), accounts payable and accrued expenses are reasonable estimates of their fair values due to the short-term nature of these items.

The following tables present the Company’s fair value hierarchy for its money market securities, available-for-sale

marketable securities, preferred stock tranche rights liability and preferred stock warrant liability measured at fair value on a recurring basis (in thousands):

Fair value measurements at reporting date using

Quoted Prices in

Active Markets

for Identical

Assets (Level 1)

Significant Other

Inputs (Level 2)

Fair Value at

Assets included in:

Cash and cash equivalents

Money market securities

Marketable securities

Commercial paper

Corporate debt securities

Asset-backed securities

treasury securities

Total fair value

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NOTES TO FINANCIAL STATEMENTS

Fair value measurements at reporting date using

Quoted Prices in

Active Markets

for Identical

Assets (Level 1)

Significant Other

Inputs (Level 2)

Fair Value at

Assets included in:

Cash and cash equivalents

Money market securities

Total fair value

Liabilities included in:

Preferred stock tranche rights liability

Preferred stock warrant liability

Total fair value

The fair value of the Company’s money market funds is determined using quoted market prices in active markets for identical assets.

The fair value for the available-for-sale

marketable securities is determined based on valuation models using inputs that are observable either directly or indirectly (Level 2 inputs), such as quoted prices for similar assets or liabilities, yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures.

Refer to Note 5 for further information about the Level 3 rollforward of activity and Level 3 inputs.

Grant Receivable

Grant receivable consists of research expenses reimbursable under a grant from the National Institute of Health (“NIH”).

The Company carried its grant receivable at the unreimbursed amount.

Management determined that the remainder of the unreimbursed amount under the grant receivable could no longer be collected from the NIH and the Company recorded a loss of $ 0.1 million in

general and administrative

expense on the statement of operations and comprehensive loss during the year ended December 31, 2021.

Management determined that no allowance was necessary for this receivable as of December 31, 2020.

Property and Equipment

Property and equipment consists primarily of computer equipment and is stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, which is generally three years for computer-related assets.

Property and equipment consists primarily of computer equipment and furniture and fixtures and is stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, which is generally three years for computer-related assets and five years for furniture.

Effective as of January 1, 2022, the Company accounts for its leases under ASC 842, Leases .

Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the balance sheet as both a right-of-use asset and a lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate.

Lease liabilities are increased by interest and reduced by payments each period, and right-of-use assets are amortized over the lease term.

For operating leases, interest on the lease liability and the amortization of the right-of-use asset results in straight-line rent expense over the lease term.

Variable lease expenses are recorded when incurred and not included in the measurement of right-of-use assets and lease liabilities.

ASC 842 provides practical expedients for an entity’s ongoing accounting.

In calculating right-of-use assets and lease liabilities, the Company has elected to combine lease and non-lease components.

Additionally, the Company has elected to apply the practical expedient related to short-term leases (i.e., leases having initial terms of 12 months or less at commencement date) as an accounting policy election.

For short-term leases, the Company will not recognize a right-of-use asset or lease liability, but instead will recognize lease payments as an expense on a straight-line basis over the lease term.

Prior to the adoption of ASC 842 on January 1, 2022, the Company accounted for its leases under ASC 840, Leases.

Convertible Preferred Stock

The Company recorded shares of convertible preferred stock at their respective fair values on the dates of issuance, net of issuance costs.

The Company applied the guidance in ASC 480-10-S99-3A,

SEC Staff Announcement:

Classification and Measurement of Redeemable Securitie

s, and therefore classified the Series A, Series A-1

and Series B convertible preferred stock as mezzanine equity.

The convertible preferred stock was recorded outside of stockholders’ deficit because, in the event of certain deemed liquidation events considered

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

not solely within the Company’s control, such as a merger, acquisition and sale of all or substantially all of the Company’s assets, the convertible preferred stock would have become redeemable at the option of the holders.

In the event of a change of control of the Company, proceeds received from the sale of such shares would have been distributed in accordance with the corresponding liquidation preferences.

The Company applied the guidance in ASC 480-10-S99-3A, SEC Staff Announcement:

Classification and Measurement of Redeemable Securities , and therefore classified the Series A, Series A-1 and Series B convertible preferred stock as mezzanine equity.

The convertible preferred stock was recorded outside of stockholders’ deficit because, in the event of certain deemed liquidation events considered not solely within the Company’s control, such as a merger, acquisition and sale of all or substantially all of the Company’s assets, the convertible preferred stock would have become redeemable at the option of the holders.

In the event of a change of control of the Company, proceeds received from the

sale of such shares would have been distributed in accordance with the corresponding liquidation preferences.

The Company did not adjust the carrying values of the convertible preferred stock to the deemed liquidation values of such shares since a liquidation event was not probable at any of the reporting dates.

As mentioned above in Note 1, in connection with the closing of the IPO, all of the outstanding shares of Series A, Series A-1

and Series B convertible preferred stock automatically converted into an equal number of shares of common stock on July 6, 2021.

As mentioned above in Note 1, in connection with the closing of the IPO, all of the outstanding shares of Series A, Series A-1 and Series B convertible preferred stock automatically converted into an equal number of shares of common stock on July 6, 2021.

Preferred Stock Tranche Rights Liability

The Company determined that its obligation to issue, and the Company’s investors’ right to purchase, additional shares of Series B convertible preferred stock pursuant to the Milestone Closing (see Note 1 and Note 5) represented a freestanding financial instrument (the “tranche liability”).

The Company determined that its obligation to issue, and the Company’s investors’ right to purchase, additional shares of Series B convertible preferred stock pursuant to a subsequent closing, (deemed the “Milestone Closing” in Note 7) represented a freestanding financial instrument (the “tranche liability”), as it was legally detachable and separately exercisable from the initial closing of the Series B convertible preferred stock.

The tranche liability was initially recorded at fair value.

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The tranche liability was remeasured at each reporting period and upon the exercise of the obligation, with gains and losses arising from subsequent changes in its fair value recognized in other income and expense in the statements of operations and comprehensive loss.

As discussed above in Note 1, the Milestone Closing occurred on June 17, 2021, and as a result, the remaining value of the tranche liability was reclassified to convertible preferred stock on the balance sheet.

The Milestone Closing occurred on June 17, 2021, and as a result, the remaining value of the tranche liability was reclassified to convertible preferred stock on the balance sheet.

Preferred Stock Warrant Liability

The Company accounted for the warrant to purchase Series A-1

convertible preferred stock as a liability as this warrant was a freestanding financial instrument that required the Company to transfer assets upon exercise.

The Company accounted for the warrant to purchase Series A-1 convertible preferred stock as a liability as this warrant was a freestanding financial instrument that required the Company to transfer assets upon exercise.

The warrant liability was initially recorded at fair value.

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In June 2021, several holders of warrants to purchase the Company’s common stock exercised their warrants and purchased a total of 137,446 shares of common stock at an exercise price of $ 4.47 .

On July 6, 2021, in connection with the closing of the Company’s IPO, the Company issued 178,847 shares of common stock in exchange for the 248,247 outstanding common stock warrants at an exercise price of $ 4.47 .

There were no common stock warrants outstanding as of December 31, 2021.

Grant and Other Revenue Recognition

The Company’s NIH grant is not within the scope of ASC 606, Revenue from Contracts with Customers

(“ASC 606”) ,

as the grant does not meet the definition of a contract with a customer.

The Company has concluded that

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

the grant meets the definition of a contribution and is a non-reciprocal

transaction, and management has also concluded that Subtopic 958-605,

Not-for-Profit-Entities-Revenue

does not apply, as Acumen is a business entity and the grant is with a governmental agency.

In the absence of applicable guidance under U.S.

GAAP, the Company’s policy is to recognize grant revenue when the related costs are incurred and the right to payment is realized.

Costs incurred are recorded in research and development and general and administrative expenses on the statements of operations and comprehensive loss.

The Company believes the recognition of revenue as costs are incurred and amounts become realizable is analogous to the concept of transfer of control of a service over time under ASC 606.

Research and Development Expenses

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When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies, including the phase or completion of events, invoices received and contracted costs.

Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors.

The Company accrues and expenses costs for clinical trial activities performed by third parties based upon the work completed to date for each clinical trial in accordance with established agreements.

The Company determines its costs through discussions with internal clinical stakeholders and outside service providers as to the progress

or stage of completion of clinical trials or services and the contracted fee to be paid for such services.

In the event advance payments are made to an outside service provider, the payments are recorded within prepaid expenses and other current assets on the Balance Sheet and subsequently recognized as research and development expense in the Statement of Operations when the associated services have been performed.

As actual costs become known, the Company adjusts its estimates, liabilities and assets.

Inputs used in the determination of estimates discussed above may vary from actual, which will result in adjustments to research and development expense in future periods.

Stock-based Compensation

The Company expenses stock-based compensation to employees, non-employees

and board members over the requisite service period based on the estimated grant date fair value of the awards and actual forfeitures.

The Company expenses stock-based compensation to employees, non-employees and board members over the requisite service period based on the estimated grant date fair value of the awards and actual forfeitures.

The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, which requires the use of a number of complex assumptions including the fair value of the common stock, expected volatility, risk-free interest rate, expected dividends, and the expected term of the option.

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Stock-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award.

All stock-based compensation costs are recorded in research and development expense or general and administrative expense in the statements of operations and comprehensive loss based upon the respective employee’s or non-employee’s

roles within the Company.

Forfeitures are recorded as they occur.

See also Note 9 below.

Income taxes are recorded in accordance with ASC 740, Income Taxes

(“ASC 740”), which provides for deferred taxes using an asset and liability approach.

Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.

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The Company has recorded a full valuation allowance to reduce its net deferred income tax assets to zero .

In the event the Company were to determine that it would be able to realize some or all of its deferred income tax assets in the future, an adjustment

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

to the deferred income tax asset valuation allowance would increase income in the period such determination was made.

In the event the Company were to determine that it would be able to realize some or all of its deferred income tax assets in the future, an adjustment to the deferred income tax asset valuation allowance would increase income in the period such determination was made.

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740.

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The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.

The Company has no t recorded any accruals related to uncertain tax positions as of December 31, 2021 and 2020.

The Company has not recorded any liabilities related to uncertain tax positions as of December 31, 2022 and 2021.

The Company’s policy is to record interest and penalties, if any, as part of income tax benefit.

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Net Loss Per Share of Common Stock

Basic net loss per share of common stock is calculated using the two-class

method under which earnings are allocated to both common shares and participating securities based on their participation rights.

Basic net loss per share of common stock is calculated using the two-class method under which earnings are allocated to both common shares and participating securities based on their participation rights.

Net loss attributable to common stockholders was not allocated to the convertible preferred stock as the holders of the convertible preferred stock did not have a contractual obligation to share in any losses.

1 unchanged sentence

Diluted net loss per share of common stock is computed by dividing the net loss using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period.

Potential common shares consist of stock options and warrants to purchase common stock (using the treasury stock method), and the conversion of convertible preferred stock and the preferred warrant (using the if-converted

For the year ended December 31, 2022, potential common shares consisted of stock options.

For the year ended December 31, 2021, potential common shares consisted of stock options and warrants to purchase common stock (using the treasury stock method), and the conversion of convertible preferred stock and the preferred warrant (using the if-converted method).

See Note 12 below.

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The Company views its operations and manages its business in one segment.

Recently Adopted Accounting Pronouncements

ASC 842 requires lessees to recognize the liabilities related to all leases, including operating leases, with a term greater than 12 months on the balance sheet and also requires lessees and lessors to disclose key information about their leasing transactions.

The Company adopted this guidance on January 1, 2022, using the modified retrospective method and the Company elected the package of practical expedients upon transition, which retained the lease classification for leases that existed prior to the adoption of this guidance.

The Company recorded both a right-of-use asset and a lease liability of approximately $ 0.2 million on its balance sheet upon the adoption of ASC 842.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application.

The Company adopted this guidance on January 1, 2022 with no material impact to the Company’s financial statements upon adoption.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU No.

Leases (Topic 842)

, as amended, with guidance regarding the accounting for and disclosure of leases.

This update requires lessees to recognize the liabilities related to all leases, including operating leases, with a term greater than 12 months on the balance sheet.

This update also requires lessees and lessors to disclose key information about their leasing transactions.

Topic 842 became effective on January 1, 2022.

The Company will adopt this guidance using the modified retrospective method and will elect the package of practical expedients upon transition, which will retain the lease classification for leases that existed prior to the adoption of this guidance.

Additionally, in calculating the right-of-use asset and lease liability, the Company will elect to combine lease and non-lease components as permitted under the guidance and to exclude short-term leases having initial terms of 12 months or less as an accounting policy election and recognize rent expense on a straight-line basis over the lease term for short-term leases.

Upon adoption, the Company will record both a right-of-use

asset and a lease liability of approximately $0.2 million on its balance sheet.

In June 2016, the FASB issued ASU 2016-13,

Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on

Financial Instruments

, which was codified with its subsequent amendments as ASC 326.

ASC 326 changes how entities account for credit losses on financial assets and other instruments that are not measured

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

at fair value through net income, including available-for-sale securities.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which was codified with its subsequent amendments as ASC 326.

ASC 326 seeks to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments, including trade receivables, and other commitments to extend credit held by a reporting entity at each reporting date.

The amendments require an entity to replace the incurred loss impairment methodology in current U.S.

GAAP with a methodology that reflects current expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The updated guidance is effective for the Company on January 1, 2023, with early adoption permitted.

The Company is currently evaluating the impact of this new guidance on its financial statements and related disclosures.

In December 2019, the FASB issued ASU

Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes

which is intended to simplify various aspects related to accounting for income taxes.

removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application.

This guidance is effective for the Company for annual reporting periods beginning January 1, 2022, and interim periods within fiscal years beginning on January 1, 2023, with early adoption permitted.

The Company is currently evaluating the impact of this standard on its financial statements.

The updated guidance is effective for the Company on January 1, 2023.

The Company’s marketable securities portfolio consists entirely of available-for-sale debt securities and, as such, the adoption of this guidance did not have a material impact on its financial statements and disclosures upon adoption.

MARKETABLE SECURITIES

Marketable securities consisted of the following as of December 31, 2021 (in thousands):

Available-for-sale

securities, short-term

The Company’s marketable securities consisted of the following (in thousands):

December 31, 2022

Losses Fair Value

Available-for-sale securities, short-term

Corporate debt securities $ 30,174 $ — $ ( 249 ) $ 29,925

Asset-backed securities 3,006 — ( 102 ) 2,904

treasury securities 15,032 — ( 357 ) 14,675

Total available-for-sale securities, short-term 48,212 — ( 708 ) 47,504

Available-for-sale securities, long-term

Corporate debt securities 15,880 — ( 43 ) 15,837

Total available-for-sale securities, long-term 15,880 — ( 43 ) 15,837

Total available-for-sale securities $ 64,092 $ — $ ( 751 ) $ 63,341

December 31, 2021

Losses Fair Value

Available-for-sale securities, short-term

Commercial paper $ 47,939 $ — $ — $ 47,939

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Asset-backed securities 16,177 — ( 22 ) 16,155

Total available-for-sale

securities, short-term

Available-for-sale

securities, long-term

Total available-for-sale securities, short-term 72,108 — ( 33 ) 72,075

Available-for-sale securities, long-term

Corporate debt securities 16,816 — ( 103 ) 16,713

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treasury securities 11,988 — ( 70 ) 11,918

Total available-for-sale

securities, long-term

Total available-for-sale

As of December 31, 2021, the Company’s available-for-sale

securities classified as short-term mature

in one year or less and the Company’s available-for-sale

securities classified as long-term mature within two years .

of the available-for-sale

marketable securities were

in an unrealized loss position as of December 31, 2021, all of which were in

a loss position for less than twelve months.

Unrealized losses on available-for-sale

securities as of December 31, 2021 were not significant and were primarily due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities.

Accordingly, no other-than-temporary impairment was recorded for the year ended December 31, 2021.

There were no realized gains or losses for the year ended December 31, 2021.

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

SUPPLEMENTAL FINANCIAL INFORMATION

Prepaid expenses and other current assets consisted of the following (in thousands):

Research and development service agreements

Prepaid insurance

Dues and subscriptions

Prepaid raw materials

Total prepaid expenses and other current assets

Accrued expenses and other current liabilities consisted of the following (in thousands):

Research and development

Bonuses and other employee liabilities

Professional fees

Total accrued expenses and other current liabilities

CONVERTIBLE PREFERRED STOCK, TRANCHE LIABILITY AND WARRANT LIABILITY

Convertible Preferred Stock

On November 20, 2020, the Company entered into the Series B Agreement for a private placement of up to 19,770,070 shares of Series B convertible preferred stock, $ 0.0001 par value per share, at an original issuance price of $ 3.80 per share, subject to separate closings, including:

(1) 11,862,043 shares at the Initial Closing on November 20, 2020, and (2) 7,908,027 shares at a subsequent closing that would be triggered by the achievement of a specific clinical milestone.

The Series B Agreement obligated the Company to issue and sell and the Series B purchasers to purchase up to a total of 7,908,027 additional shares of Series B convertible preferred stock (the “Milestone Shares”) at the same price per share upon the achievement of a certain defined clinical milestone.

The determination as to whether the milestone event has been met was subject to certification by the Board and the Requisite Investors.

Each Series B convertible preferred stock investor had the right, but not the obligation, to purchase all or any portion of the Milestone Shares at any time in its sole option and in its sole and absolute discretion, whether or not the Company achieved the applicable clinical milestone.

See “ Series B Convertible Preferred Stock Tranche Rights Liability

As discussed above in Note 1, on June 9, 2021, the Board and the Requisite Investors elected to waive the achievement of the milestone subject to the terms and conditions of the Series B Agreement and consummate the Milestone Closing and, on June 17, 2021, the Milestone Closing occurred, resulting in the sale of 7,908,027 shares of Series B convertible preferred stock at $ 3.80 per share for gross proceeds of $ 30.0 million, bringing the total number of Series B convertible preferred shares outstanding to 19,770,070 .

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

On June 22, 2021, a warrant to purchase 447,426 shares of Series A-1

convertible preferred stock at an exercise price of $ 2.794 per share was exercised (see “Series A-1

Convertible Preferred Stock Warrant Liability”

below), bringing the total number of Series A-1

convertible preferred shares outstanding to 7,985,305 .

Additionally, on July 6, 2021, in connection with the closing of the IPO, 477,297 shares of Series A, 7,985,305 shares of Series A-1,

and 19,770,070 shares of Series B convertible preferred stock, respectively, automatically converted into an equal number of shares of common stock.

There were no shares of convertible preferred stock outstanding as of December 31, 2021.

Convertible preferred stock consisted of the following as of December 31, 2020 (in thousands, except share and per share data):

Weighted Average

Issuance Price per

The holders of Series B, Series A-1

and Series A convertible preferred stock were entitled to receive dividends ahead of, or simultaneously with, common stockholders in an amount equal to the product of (A) the dividend payable on each share of the class or series of convertible preferred stock determined, if applicable, as if all shares of such class or series of convertible preferred stock had been converted into common stock and (B) the number of shares of common stock issuable upon conversion of a share of preferred stock.

No dividends have been declared since inception.

Liquidation preference

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, holders of Series B convertible preferred stock were entitled to receive, prior and in preference to, holders of Series A-1

convertible preferred stock, Series A convertible preferred stock, and holders of common stock, in the amount of the original issue price plus any declared but unpaid dividends thereon.

If upon occurrence of such an event, the assets and funds to be distributed among the holders of Series B convertible preferred stock were insufficient to permit full payment to such holders, the entire assets and funds of the Company legally available for distribution would have been distributed ratably among the holders of the Series B convertible preferred stock.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, holders of Series A-1

convertible preferred stock were entitled to receive, prior and in preference to, holders of Series A convertible preferred stock and holders of common stock, in the amount of the original issue price plus any declared but unpaid dividends thereon.

If upon occurrence of such an event, the assets and funds to be distributed among the holders of Series A-1

convertible preferred stock were insufficient to permit full payment to such holders, the entire assets and funds of the Company legally available for distribution would have been distributed ratably among the holders of the Series A-1

convertible preferred stock.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, holders of Series A convertible preferred stock were entitled to receive, prior and in preference to, holders of common

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

stock, in the amount of the original issue price plus any declared but unpaid dividends thereon.

If upon occurrence of such an event, the assets and funds to be distributed among the holders of Series A convertible preferred stock were insufficient to permit full payment to such holders, the entire assets and funds of the Company legally available for distribution would have been distributed ratably among the holders of the Series A convertible preferred stock.

Conversion rights

Shares of all series of convertible preferred stock were convertible into such number of fully paid and non-assessable

shares of common stock as determined by dividing the original issuance price for such series by the applicable conversion price for such series then in effect.

The initial conversion price per share for each series of convertible preferred stock was the original issue price applicable to such series as shown in the table above, subject to adjustment in the event of certain dilutive issuances.

The convertible preferred stock original issuance price and conversion price were each subject to adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the convertible preferred stock.

Each share of convertible preferred stock was convertible at any time at the option of the holder at the conversion ratio then in effect.

In addition, each share of convertible preferred stock was to be automatically converted into common stock at the conversion ratio then in effect upon either (a) the closing of an underwritten public offering resulting in gross proceeds to the Company of at least $ 75 million and at a price per share equal to at least two times the Series B original issuance price, or $ 7.60 (subject to adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series B convertible preferred stock), or (b) the date and time, or the occurrence of an event, specified in such vote or written consent of at least 67 % of the holders of the then outstanding shares of Series B convertible preferred stock.

If any Series B purchaser failed to purchase its respective portion of the Milestone Shares upon occurrence of the Milestone Closing, each existing share of Series B convertible preferred stock held by such stockholder would have automatically converted into one share of common stock two days after the Milestone Closing.

On July 6, 2021, in connection with the closing of the IPO, each outstanding share of Series A, Series A-1

and Series B convertible preferred stock converted into one share of common stock.

Voting rights

Holders of convertible preferred stock were entitled to vote as a single class together with the holders of common stock and had one vote for each share of common stock into which the convertible preferred stock was convertible.

The holders of Series B convertible preferred stock were entitled to elect two directors to the Board, and the holders of Series A and Series A-1

convertible preferred stock, voting together as a single class, were also entitled to elect two directors to the Board.

The holders of common stock, exclusively and as a separate class, are entitled to elect two directors to the Board.

The final director to the Board was designated by the holders of a majority of the shares of the preferred stock and common stock, voting together as a single class.

A majority of the outstanding shares of convertible preferred stock was necessary for approving certain matters, including the ability to either increase or decrease the authorized number of directors constituting the Board, pursuant to protective provisions in the Company’s amended and restated certificate of incorporation.

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

Total available-for-sale securities, long-term 31,817 — ( 198 ) 31,619

Total available-for-sale securities $ 103,925 $ — $ ( 231 ) $ 103,694

As of December 31, 2022, the Company’s available-for-sale securities classified as short-term mature in one year or less and the Company’s available-for-sale securities classified as long-term mature within two years .

Certain of the Company’s available-for-sale marketable securities that were in an unrealized loss position as of December 31, 2022 have been in a loss position for between 12 to 15 months;

however, unrealized losses on available-for-sale securities as of December 31, 2022 were not significant and were primarily due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities.

Accordingly, no other-than-temporary impairment was recorded for the years ended December 31, 2022 and 2021.

There were no realized gains or losses for the years ended December 31, 2022 and 2021.

The Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

FAIR VALUE MEASUREMENTS

The Company’s financial assets and liabilities subject to fair value measurement on a recurring basis and the level of inputs used for such measurements were as follows (in thousands):

Fair value measurements at reporting date using

Quoted Prices in

Active Markets

for Identical

Assets (Level 1) Significant Other

Inputs (Level 2) Significant

(Level 3) Fair Value at

Assets included in:

Cash and cash equivalents

Money market securities $ 129,100 $ — $ — $ 129,100

Marketable securities

Corporate debt securities — 45,762 — 45,762

Asset-backed securities — 2,904 — 2,904

treasury securities — 14,675 — 14,675

Total fair value $ 129,100 $ 63,341 $ — $ 192,441

Fair value measurements at reporting date using

Quoted Prices in

Active Markets

for Identical

Assets (Level 1) Significant Other

Inputs (Level 2) Significant

(Level 3) Fair Value at

Assets included in:

Cash and cash equivalents

Money market securities $ 121,162 $ — $ — $ 121,162

Marketable securities

Commercial paper — 47,939 — 47,939

Corporate debt securities — 24,694 — 24,694

Asset-backed securities — 19,143 — 19,143

treasury securities — 11,918 — 11,918

Total fair value $ 121,162 $ 103,694 $ — $ 224,856

The fair value of the Company’s money market funds is determined using quoted market prices in active markets for identical assets.

The fair value for the available-for-sale marketable securities is determined based on valuation models using inputs that are observable either directly or indirectly (Level 2 inputs), such as quoted prices for similar assets or liabilities, yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures.

Series B Convertible Preferred Stock Tranche Rights Liability

The Company concluded that the tranche liability met the definition of a freestanding financial instrument, as it was legally detachable and separately exercisable from the initial closing of the Series B convertible preferred stock.

The fair value for the tranche liability was estimated as a forward contract using a valuation model, calibrated at issuance.

2 unchanged sentences

Subsequently, the fair value of the liability was discounted to the valuation date and adjusted for probability of the achievement of the milestone event.

The calibrated valuation model was updated as of December 31, 2020, March 31, 2021 and in the Stay Private scenario utilized in the hybrid methodology as of June 17, 2021 (the date of the Milestone Closing).

Significant estimates and assumptions impacting fair value include the discount rate, expected time to the Milestone Closing, and probability of the Milestone Closing.

The calibrated valuation model was updated as of the end of each reporting period and in the Stay Private scenario utilized in the hybrid methodology as of June 17, 2021 (the date of the Milestone Closing, as further discussed in Note 7).

Significant estimates and assumptions impacting fair value include the discount rate,

expected time to the Milestone Closing, and probability of the Milestone Closing.

The discount rate was equal to the risk-free rate commensurate with the estimated timing of the Milestone Closing.

The following assumptions were used in the estimation of the fair value of the tranche liability as a forward contract as of each of the dates indicated:

2021 December 31,

Risk-free interest rate 0.07 % 0.12 %

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For the other portion of the hybrid method used as of June 17, 2021, the fair value for the tranche liability was estimated based upon an allocation of the underlying equity value, which was determined using an IPO value as estimated through analysis of IPOs for comparable guideline companies, to arrive at a value per share in the IPO scenario.

The estimated fair value of the tranche liability was $ 81,190,000 and $ 5,033,000 as of the Milestone Closing on June 17, 2021 and December 31, 2020, respectively.

The significant increase in the June 17, 2021 valuation stems from both a shift in methodology from an option pricing method (“OPM”) to a Hybrid Model where the concluded value of the forward tranche is derived by the sum of the probability weighted present value of the forward tranche in the Stay Private and IPO scenarios (with the former including all other potential exit scenarios other than an imminent IPO), as well as the increase in the probability of achievement of the Milestone Closing.

The estimated fair value of the tranche liability was $ 81.2 million and $ 5.0 million as of the Milestone Closing on June 17, 2021 and December 31, 2020, respectively.

The significant increase in the June 17, 2021 valuation stemmed from both a shift in methodology from an option pricing method (“OPM”) to a Hybrid Model where the concluded value of the forward tranche was derived by the sum of the probability weighted present value of the forward tranche in the Stay Private and IPO scenarios (with the former including all other potential exit scenarios other than an imminent IPO), as well as the increase in the probability of achievement of the Milestone Closing.

The resulting difference in estimated fair value was recognized as a change in fair value within other income in the accompanying statements of operations.

1 unchanged sentence

Following the Milestone Closing, the remaining tranche liability was reclassified to convertible preferred stock on the balance sheet.

Convertible Preferred Stock Warrant Liability

On October 19, 2018, the Company issued a ten-year

warrant (the “Series A-1

Warrant”) to purchase up to an aggregate of 447,426 shares of Series A-1

convertible preferred stock at an exercise price of $ 2.794 on or before October 18, 2028 .

The warrant liability met the definition of a freestanding financial instrument, as it was legally detachable and separately exercisable from the initial closing of the Series A-1

convertible preferred stock.

As such, it was

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

revalued each reporting period with the change in fair value recorded in the accompanying statements of operations until the warrant was exercised on June 22, 2021.

Series A-1 Convertible Preferred Stock Warrant Liability

On October 19, 2018, the Company issued a ten-year warrant (the “Series A-1 Warrant”) to purchase up to an aggregate of 447,426 shares of Series A-1 convertible preferred stock at an exercise price of $ 2.794 on or before October 18, 2028.

The warrant liability met the definition of a freestanding financial instrument, as it was legally detachable and separately exercisable from the initial closing of the Series A-1 convertible preferred stock.

As such, it was revalued each reporting period with the change in fair value recorded in the accompanying statements of operations until the warrant was exercised on June 22, 2021.

The fair value of the warrant liability was estimated using the OPM backsolve method as of December 31, 2020 and using a hybrid method, which included an OPM backsolve in the Stay Private scenario as of June 22, 2021.

The following assumptions were used in the estimation of the fair value of the warrant liability using the OPM backsolve method as of each of the dates indicated:

2021 December 31,

Risk-free interest rate 0.25 % 0.13 %

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The hybrid method used to value the warrant liability at June 22, 2021 considered both the underlying equity value determined using the OPM backsolve method in a Stay Private scenario, as well as the underlying equity value that was determined using an expected IPO value as estimated through analysis of IPOs for comparable guideline companies, to arrive at a value per share in the IPO scenario.

The underlying equity values from each approach were probability weighted based upon the expected likelihood of each scenario.

The underlying equity values from each approach were probability weighted

based upon the expected likelihood of each scenario.

The fair value of the warrant liability was estimated to be $ 12.02 and $ 0.85 as of June 22, 2021 and December 31, 2020, respectively.

1 unchanged sentence

Series A-1 Preferred

Stock Warrant

Series B Tranche

Balance, December 31, 201 9

Fair value at issuance of Series B convertible preferred stock (November 2020)

Change in fair valu e

Balance, December 31, 2020

Stock Warrant Series B Tranche

Balance, January 1, 2021 $ 380 $ 5,033 $ 5,413

Change in fair value 5,000 76,157 81,157

Settlement of tranche liability due to issuance of Milestone Shares — ( 81,190 ) ( 81,190 )

Settlement of warrant liability upon exercise

Settlement of warrant liability upon exercise of warrant ( 5,380 ) — ( 5,380 )

Balance, December 31, 2021 $ — $ — $ —

STOCKHOLDERS’ EQUITY (DEFICIT)

SUPPLEMENTAL FINANCIAL INFORMATION

Prepaid expenses and other current assets consisted of the following (in thousands):

Prepaid insurance $ 1,106 $ 1,514

Research and development service agreements 1,077 2,591

Prepaid raw materials 199 83

Dues and subscriptions 105 96

Other 237 140

Total prepaid expenses and other current assets $ 2,724 $ 4,424

Accrued expenses and other current liabilities consisted of the following (in thousands):

Research and development $ 1,211 $ 2,476

Compensation and other employee liabilities 2,008 1,102

Other 131 204

Total accrued expenses and other current liabilities $ 3,350 $ 3,912

The Company has been subleasing space in Carmel, Indiana since March 1, 2020.

The Company executed a new sublease for this space that was effective on February 1, 2021 and expires on August 30, 2023.

The sublease does not provide the Company with any renewal options.

The Company allows others to sublease a portion of the space from the Company for less than a one-year period.

The Company recognizes sublease income in other income (expense) on its statements of operations and comprehensive loss.

The Company expects to recognize approximately $ 9,000 in sublease income during 2023.

On September 28, 2022, the Company entered into a lease for office space in Charlottesville, Virginia with a lease term of 15 months beginning October 1, 2022.

On December 1, 2022, the Company entered into a lease for additional office space in the same building in Charlottesville, Virginia with a lease term of 12 months beginning on January 1, 2023.

automatic renewal for either of the Charlottesville, Virginia leases, but any holdover tenancy shall be on a month-to-month basis thereafter.

The following table summarizes quantitative information about the Company’s operating leases for the year ended December 31, 2022 (in thousands):

Operating leases

Operating lease cost $ 154

sublease income ( 43 )

Operating lease expense 111

Short-term lease rent expense 13

Total rent expense $ 124

Supplemental information related to leases for the year ended December 31, 2022 was as follows (dollar amounts in thousands):

Operating cash flows from operating leases $ 154

Right-of-use assets obtained in exchange for operating lease liabilities $ 242

Weighted-average remaining lease term – operating leases (in years) 0.7

Weighted-average discount rate – operating leases 10.0 %

As of December 31, 2022, the present value of maturities of the Company’s operating lease liabilities were as follows (in thousands):

Year ended December 31, 2023 $ 109

present value discount ( 4 )

Operating lease liabilities $ 105

Prior to the adoption of ASC 842, and for the year ended December 31, 2021, the Company recognized rent expense on a straight-line basis over the lease period and recorded deferred rent expense for rent expense incurred but not yet paid.

During the year ended December 31, 2021, the Company recognized total rent expense of approximately $ 147,000 , and recognized sublease income of approximately $ 66,000 .

CONVERTIBLE PREFERRED STOCK

Convertible Preferred Stock

On June 9, 2021, the Board and the holders of more than 67 % of the then-outstanding shares of Series B convertible preferred stock held by the Series B purchasers (the “Requisite Investors”) elected to waive the achievement of the milestone subject to the terms and conditions of the Series B Preferred Stock Purchase Agreement (the “Series B Agreement”) and consummate the subsequent closing (the “Milestone Closing”).

See “ Series B Convertible Preferred Stock Tranche Rights Liability ” above in Note 4.

On June 22, 2021, a warrant to purchase 447,426 shares of Series A-1 convertible preferred stock at an exercise price of $ 2.794 per share was exercised (see “Series A-1 Convertible Preferred Stock Warrant Liability” above in Note 4), bringing the total number of Series A-1 convertible preferred shares outstanding to 7,985,305 .

Conversion rights

Shares of all series of convertible preferred stock were convertible into such number of fully paid and non-assessable shares of common stock as determined by dividing the original issuance price for such series by the applicable conversion price for such series then in effect.

Each share of convertible preferred stock was convertible at any time at the option of the holder at the conversion ratio then in effect.

In addition, each share of convertible preferred stock was to be automatically converted into common stock at the conversion ratio then in effect upon either (a) the closing of an underwritten public offering resulting in gross proceeds to the Company of at least $ 75 million and at a price per share equal to at least two times the Series B original issuance price, or $ 7.60 (subject to adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series B convertible preferred stock), or (b) the date and time, or the occurrence of an event, specified in such vote or written consent of at least 67 % of the holders of the then-outstanding shares of Series B convertible preferred stock.

There were no shares of convertible preferred stock outstanding as of December 31, 2022 or 2021.

STOCKHOLDERS’ EQUITY

Authorized Shares

On July 6, 2021, the Company issued 9,999,999 shares of common stock in an IPO, and on July 8, 2021, the Company issued an additional 1,499,999 shares of common stock that were purchased by the underwriters pursuant to the underwriters’ option to purchase additional shares at the public offering price less underwriting discounts and commissions.

On July 6, 2021, the Company issued 9,999,999 shares of common stock in the IPO, and on July 8, 2021, the Company issued an additional 1,499,999 shares of common stock that were purchased by the underwriters pursuant to the underwriters’ option to purchase additional shares at the public offering price less underwriting discounts and commissions.

The price to the public for each share was $ 16.00 .

The aggregate net proceeds from the Company’s IPO, after underwriting discounts and commissions and other offering expenses of $ 15.4 million, were $ 168.6 million.

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

Effective upon the closing of the IPO on July 6, 2021, the Company amended its certificate of incorporation suc h th

at the total number of shares of all classes of capital stock authorized to be issued was increased to 310,000,000 , with 10,000,000 shares designated as preferred stock with a par value of $ 0.0001 , and 300,000,000 shares designated as common stock with a par value of $ 0.0001 .

The Company amended its certificate of incorporation on November 20, 2020, such that the total number of shares of common stock authorized to be issued was increased to 50,500,000 , and the total number of shares of preferred stock authorized to be issued was increased to 42,066,830 , of which 711,203 were designated Series A convertible preferred stock, 11,898,177 were designated as Series A-1

convertible preferred stock and 29,457,450 were designated as Series B convertible preferred stock.

The certificate of incorporation was also amended for the reverse stock splits that became effective on June 23, 2021 and November 20, 2020, but there were no changes to the authorized shares as a result of the reverse stock split that became effective on June 23, 2021 (see Note 1).

Effective upon the closing of the IPO on July 6, 2021, the Company amended its certificate of incorporation such that the total number of shares of all classes of capital stock authorized to be issued was increased to 310,000,000 , with 10,000,000 shares designated as preferred stock with a par value of $ 0.0001 , and 300,000,000 shares designated as common stock with a par value of $ 0.0001 .

As of December 31, 2022, the Company’s Amended and Restated Certificate of Incorporation authorized the issuance of 300,000,000 shares of common stock, $ 0.0001 par value per share.

Each share of common stock is entitled to one voting right.

Shelf Registration and At-The-Market Equity Offering

On July 1, 2022, the Company filed a shelf registration statement on Form S-3 (the “Registration Statement”).

Pursuant to the Registration Statement, the Company may offer and sell securities having an aggregate public offering price of up to $ 200.0 million.

In connection with the filing of the Registration Statement, the Company also entered into a sales agreement with BofA Securities, Inc.

and Stifel, Nicolaus & Company, Incorporated (the “Sales Agents”), as sales agents, pursuant to which the Company may issue and sell shares of its common stock for an aggregate offering price of up to $ 50.0 million under an at-the-market offering program (the “ATM”), which is included in the $ 200.0 million of securities that may be offered pursuant to the Registration Statement.

Pursuant to the ATM, the Company will pay the Sales Agents a commission rate of up to 3.0 % of the gross proceeds from the sale of any shares of common stock.

The Company is not obligated to make any sales of shares of its common stock under the ATM.

In October 2022, the Company issued 422,160 shares of common stock under the ATM for net proceeds of $ 3.8 million, at a weighted average price of $ 10.06 per share.

Common Stock Warrants

In accordance with ASC 815, the common stock warrants issued in 2014 through 2017 did not meet the definition of a derivative and were classified in stockholders’ deficit in the consolidated balance sheets.

In accordance with ASC 815, the common stock warrants issued in 2014 through 2017 did not meet the definition of a derivative and were classified in stockholders’ equity (deficit) in the consolidated balance sheets.

In June 2021, several holders of warrants to purchase the Company’s common stock exercised their warrants and purchased a total of 137,446 shares of common stock at an exercise price of $ 4.47 .

On July 6, 2021, the Company issued 178,847 shares of common stock in exchange for the remaining 248,247 outstanding common stock warrants at an exercise price of $ 4.47 .

As of December 31, 2021, there were no common stock warrants outstanding.

As of December 31, 2020, the outstanding warrants to purchase the Company’s common stock were comprised of the following:

Expiration Dates

Warrants issued in 2014

3/21/2024 – 6/30/2025

Warrants issued in 2015

Warrants issued in 2016

Warrants issued in 2017

Total Warrants

As of December 31, 2022 and 2021, there were no common stock warrants outstanding.

STOCK-BASED COMPENSATION

2021 Equity Incentive Plan

The 2021 Equity Incentive Plan (the “2021 Plan”), which provides for the grant of incentive stock options to employees, and the grant of nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of stock awards to employees, directors and

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

consultants, became effective on June 30, 2021.

effective, plus (3) any shares subject to outstanding stock options or other stock awards that were granted under the 2013 Plan that, on or after the 2021 Plan became effective, terminate or expire prior to exercise or settlement, are settled in cash, are forfeited or repurchased because of the failure to vest, or are reacquired or withheld to satisfy a tax withholding obligation or the purchase or exercise price in accordance with the terms of the 2013 Plan.

The 2021 Plan is a successor to the Company’s Amended and Restated Stock Performance Plan that was adopted by the Board and stockholders on April 8, 2013 (as amended from time to time, most recently on November 20, 2020, the “2013 Plan”).

Following the effectiveness of the 2021 Plan, no further grants may be made under the 2013 Plan;

however, any outstanding equity awards granted under the 2013 Plan continue to be governed by the 2013 Plan.

As of December 31, 2022, there were 3,326,220 options outstanding under the 2013 Plan.

Initially, the maximum number of shares of the Company’s common stock that may be issued under the 2021 Plan was 7,698,282 shares, which is the sum of (1) 3,550,000 new shares, plus (2) 667,104 shares that remained available for issuance under the Company’s 2013 Plan at the time the 2021 Plan became effective, plus (3) any shares subject to outstanding stock options or other stock awards that were granted under the 2013 Plan that, on or after the 2021 Plan became effective, terminate or expire prior to exercise or settlement, are settled in cash, are forfeited or repurchased because of the failure to vest, or are reacquired or withheld to satisfy a tax withholding obligation or the purchase or exercise price in accordance with the terms of the 2013 Plan.

In addition, the number of shares of the Company’s common stock reserved for issuance under the 2021 Plan will automatically increase on January 1 of each calendar year, starting on January 1, 2022 through January 1, 2031, in an amount equal to 5 % of the total number of shares of the Company’s common stock outstanding on December 31 of the fiscal year before the date of each automatic increase, or a lesser number of shares determined by the Board prior to the applicable January 1.

On January 1, 2022, the Board increased the number of shares of common stock reserved for issuance under the 2021 Plan by 2,023,663 shares.

The maximum number of shares of the Company’s common stock that may be issued upon the exercise of incentive stock options under the 2021 Plan is 12,000,000 .

As of December 31, 2022, 9,721,945 shares were authorized for issuance under the 2021 Plan and 3,976,237 shares remained available for issuance under the 2021 Plan.

The 2013 Plan provided for the grant of incentive stock options, nonstatutory stock options, issuance of shares of restricted stock and other equity awards to the Company’s employees, officers, directors, consultants and advisors.

All outstanding awards issued under the 2013 Plan remain subject to the terms of the 2013 Plan.

As of December 31, 2021, there were 3,475,995 options outstanding under the 2013 Plan.

Stock Options

The Black-Scholes option-pricing model was used to estimate the fair value of stock options granted during the year ended December 31, 2021 with the following weighted average assumptions:

The Black-Scholes option-pricing model was used to estimate the fair value of stock options granted during the years ended December 31, 2022 and 2021 with the following weighted average assumptions:

Year Ended December 31,

Risk-free interest rate 1.7 % – 4.2 %

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Expected dividend yield 0 % 0 %

The weighted average grant date fair value of options granted during the year ended December 31, 2021, was $ 1.93 per share.

The Company did not grant any options during the year ended December 31, 2020.

Prior to its IPO, the fair value of the Company’s common stock underlying the stock options has historically been determined by the Board with assistance from management and, occasionally with input from an independent third-party valuation firm.

For the year ended December 31, 2020, management engaged an independent third-party valuation firm to provide an estimate of the fair value of its common stock.

The fair value of common stock was determined considering a number of objective and subjective factors, including valuations of comparable companies, sales of convertible preferred stock, operating and financial performance, the lack of liquidity of the Company’s common stock and the general and industry-specific economic outlook.

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

As of December 31, 2020, management, with the assistance of an independent third-party valuation firm, estimated the fair value of a share of common stock to be $ 0.83 utilizing the following assumptions:

The weighted average grant date fair value of options granted during the years ended December 31, 2022 and 2021 was $ 3.79 per share and $ 1.93 per share, respectively.

Prior to the Company’s IPO, the fair value of the Company’s common stock underlying the stock options was historically determined by the Board with assistance from management and, occasionally with input from an independent third-party valuation firm.

For the year ended December 31, 2020, management engaged an independent third-party valuation firm to provide an estimate of the fair value of its common stock, which was utilized as an input to the Company’s Black-Scholes options pricing model for stock options awarded during the first quarter of 2021.

The December 31, 2020 fair value of common stock was determined considering a number of objective and subjective factors, including valuations of comparable companies, sales of convertible preferred stock, operating and financial performance, the lack of liquidity of the Company’s common stock and the general and industry-specific economic outlook.

The fair value of the Company’s common stock as of June 30, 2021 was estimated based upon the per share offering price of the Company’s common stock to the public in its IPO which closed on July 6, 2021.

The June 30, 2021 fair value for the Company’s common stock was utilized as an input for options granted by the Company to its Board on June 30, 2021, which was immediately prior to the IPO.

As of June 30, 2021 and December 31, 2020, management estimated the fair value of a share of common stock to be $ 16.00 and $ 0.83 , respectively.

As of December 31, 2020, management, with the assistance of an independent third-party valuation firm, estimated the fair value of a share of common stock utilizing the following assumptions:

Risk-free interest rate 0.13 %

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Expected dividend yield 0 %

he stock options granted after December 31, 2017 vest monthly over 24 or 36 months and have a ten-year

contractual term.

Stock options granted prior to December 31, 2017 were either fully vested upon grant or generally vested monthly over a range of three to 24 months and have a ten-year

The stock options granted after December 31, 2017 vest monthly over a range of 12 to 36 months or vest monthly over a total of 48 months following a one-year cliff and all have a ten-year contractual term.

Stock options granted prior to December 31, 2017 were either fully vested upon grant or generally vested monthly over a range of three to 24 months and have a ten-year term.

The Company became publicly traded in July 2021 and lacks company-specific historical and implied volatility information.

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The following table reflects summarized stock option activity:

Stock Options

Weighted Average

Exercise Price

Weighted Average

Stock Options Weighted Average

Exercise Price Weighted Average

Contractual Life

Aggregate Intrinsic

(in years) Aggregate Intrinsic

Value (in thousands)

Outstanding at December 31, 2020

Outstanding at January 1, 2022 3,835,618 $ 2.51

Granted 1,999,050 $ 5.04

Exercised ( 131,626 ) $ 0.93

Forfeited ( 79,872 ) $ 6.35

Expired ( 12,277 ) $ 16.00

Outstanding at December 31, 2022 5,610,893 $ 3.36 8.1 $ 14,980

Vested and exercisable at December 31, 2022 2,188,874 $ 2.03 7.1 $ 8,714

The intrinsic value of stock options exercised during the year ended December 31, 2021 was approximately $ 54,000 .

No options were exercised during the year ended December 31, 2020.

As of December 31, 2021, total unrecognized compensation costs related to unvested stock option awards granted was approximately $ 4.7 million, which the Company expects to recognize over a weighted-average period of approximately 3.0 years.

The Company recorded stock-based compensation expense related to stock options in the following expense categories of its statements of operations for the periods shown (in thousands):

The intrinsic value of stock options exercised during the years ended December 31, 2022 and 2021was approximately $ 0.6 million and $ 0.1 million.

As of December 31, 2022, total unrecognized compensation costs related to unvested stock option

awards granted was approximately $ 8.9 million, which the Company expects to recognize over a weighted-average period of approximately 2.6 years.

The Company recorded stock-based compensation expense related to stock options in the following expense categories of its statements of operations and comprehensive loss for the periods shown (in thousands):

Year Ended December 31,

General and administrative $ 2,163 $ 690

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Total stock-based compensation $ 3,061 $ 922

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

Employee Stock Purchase Plan

The 2021 Employee Stock Purchase Plan (the “ESPP”), which permits employees to purchase shares of the Company’s common stock, became effective on June 30, 2021.

shares of the Company’s common stock were initially reserved for sale under the ESPP.

1 % of the total number of shares of the Company’s common stock outstanding on the last day of the fiscal year before the date of the automatic increase, and (2)

800,000 shares;

A total of 375,000 shares of the Company’s common stock were initially reserved for sale under the ESPP.

The number of shares of the Company’s common stock reserved for issuance will automatically increase on January 1 of each calendar year, beginning on January 1, 2022 through January 1, 2031, by the lesser of (1) 1 % of the total number of shares of the Company’s common stock outstanding on the last day of the fiscal year before the date of the automatic increase, and (2) 800,000 shares;

provided that before the date of any such increase, the Board may determine that such increase will be less than the amount set forth in clauses (1) and (2).

As of December 31, 2021, there have been

no purchases of shares under the ESPP.

no t recorded any tax provision or benefit for federal income taxes for the years ended December 31, 2021 and 2020.

As of December 31, 2022, there are 779,732 shares authorized for issuance under the ESPP and have been no purchases of shares under the ESPP.

The Company has not recorded any tax provision or benefit for federal income taxes for the years ended December 31, 2022 and 2021.

Current income taxes are based upon the year’s income taxable for federal and state tax reporting purposes.

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statutory federal income tax rate to the total benefit for income taxes for the years ended December 31, 2022 and 2021 is as follows:

For the Year Ended

Year Ended December 31,

Statutory federal income tax rate 21.0 % 21.0 %

State tax, net of federal benefit 2.7 0.7

Change in fair

value of tranche and warrant liabilities

Non-deductible

Non-deductible stock compensation ( 0.5 ) —

Rate change ( 1.1 ) ( 0.2 )

Change in fair value of tranche and warrant liabilities — ( 16.9 )

Non-deductible expense — ( 0.1 )

R&D credit — ( 0.3 )

Change in valuation allowance ( 22.1 ) ( 4.3 )

3 unchanged sentences

Net operating loss $ 13,125 $ 10,819

R&D credit 1,381 1,381

Capitalized R&D 6,788 —

Stock compensation 675 263

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Valuation allowance ( 22,118 ) ( 12,520 )

Deferred tax assets, net of allowance

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

Total deferred tax assets 30 1

Deferred tax liabilities:

Depreciation ( 30 ) ( 1 )

Total deferred tax liabilities ( 30 ) ( 1 )

Net deferred tax assets $ — $ —

In assessing the realizability of deferred tax assets as of December 31, 2022 and 2021, management considered whether it is more likely than not that some portion or all of the deferred tax assets will be realized.

3 unchanged sentences

The change in the valuation allowance as of December 31, 2022 from December 31, 2021 is due to the pretax loss incurred for the year ended December 31, 2022.

of December 31, 2021, the Company had approximately $ 40.9 million of NOL carryforwards available for federal tax purposes which begin to expire on December 31, 2028 .

As of December 31, 2022, the Company had approximately $ 52.7 million of NOL carryforwards available for federal tax purposes which a portion begins to expire on December 31, 2028.

As a result of the Tax Act of 2017, for U.S.

income tax purposes, NOLs generated prior to December 31, 2017 can still be carried forward for up to 20 years, but NOLs generated after December 31, 2017 carryforward indefinitely, but are limited to 80% utilization against taxable income.

Of the total federal NOL of $ 40.

million, $ 6.4 million will begin to expire in 2028 and $ 34.5 million will not expire but will only offset 80% of future taxable income.

Of the total federal NOL of $ 52.7 million, $ 6.4 million will begin to expire in 2028 and $ 46.2 million will not expire.

As of December 31, 2022, the Company also had approximately $ 61.3 million of state NOL carryforwards.

1 unchanged sentence

As of December 31, 2022, the Company had approximately $ 1.4 million of R&D credit carryforwards available for federal tax purposes, which begin to expire on December 31, 2023.

NOL carryforwards and R&D carryforwards may be subject to a substantial annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), as well as similar state and foreign provisions.

Utilization of the NOL and R&D credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), as well as similar state provisions.

These ownership changes may limit the amount of NOL and R&D credit carryforwards that can be used annually to offset future taxable income and tax, respectively.

In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50% of the outstanding stock of a company by certain stockholders.

The Company has not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company’s formation due to the complexity and cost associated with such study, and the fact that there may be additional such ownership changes in the future.

The Company conducts intensive research and experimentation activities, generating R&D tax credits for federal and state purposes under section 41 of the Code.

The Company has not performed a formal study validating these credits claimed in the tax returns.

Once a study is prepared, the amount of R&D tax credits available could vary from what was originally claimed on the tax returns.

The Company has not completed a formal analysis of the potential impact of Section 382 on its deferred tax assets as of December 31, 2022.

Until this analysis has been completed, the Company has not adjusted any of its deferred tax assets, including NOLs or R&D credits.

The Company will reassess the amount of NOLs and credits subject to limitation under Section 382 when a study is complete.

Due to the existence of the valuation allowance, future changes in the deferred tax assets related to these tax attributes will not impact the Company’s effective tax rate.

The Company is subject to U.S.

3 unchanged sentences

However, the Company’s tax years from 2003 and after are subject to examination by the United States and state taxing authorities due to the carry forward of unused NOLs and R&D credits.

ACUMEN PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

From time to time, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities.

The Company has been subleasing space in Indiana since March 1, 2020, under a lease that initially expired on December 31, 2020.

The Company executed a new sublease for this space that was effective February 1, 2021.

The term of the sublease is for 31 months, expiring on August 30, 2023 .

The Company pays monthly rent of $ 12,719 and is allowing others to sublease a portion of the space from the Company for less than a one-year

As of December 31, 2021, the remaining aggregate minimum rent obligation over the remaining term was approximately $ 255,000 .

As of December 31, 2021, future minimum lease payments under this lease agreement associated with the Company’s operations were as follows (in thousands):

Year ended December 31, 2022

Year ended December 31, 2023

In November 2022, the Company entered into a License Agreement (“Agreement”) with Lonza Sales AG (“Lonza”) for a worldwide non-exclusive license to use certain Lonza technology in its research and development and drug manufacturing activities.

Under the terms of the Agreement, in consideration of the licenses and consents granted to the Company, the Company is required to make an annual payment to Lonza (i) in Swiss Francs in the low six-digits where the Company manufactures ACU193 and (ii) in Swiss Francs in the mid six-digits per sublicense upon the anniversary date of the Agreement where a third party manufactures ACU193.

In addition, if the Company generates Net Sales, as defined in the Agreement, of ACU193, the Company will be obligated to pay Lonza a royalty of low single digits based upon what entity manufactures ACU193 at that time.

NET LOSS PER SHARE

The Company computes loss per common share using the two-class

method required for participating securities.

The Company computes net loss per common share using the two-class method required for participating securities.

Basic and diluted loss per share was the same for each period presented as the inclusion of all potential common stock outstanding would have been anti-dilutive.

The table below provides potentially dilutive securities not included in the calculation of the diluted net loss per common share because to do so would be anti-dilutive:

Year Ended December 31,

Shares issuable upon exercise of stock options

Shares issuable upon conversion of Series A Preferred Stock

Shares issuable upon conversion of Series A-1

Preferred Stock

Shares issuable upon conversion of Series B Preferred Stock

Shares issuable upon exercise of common stock warrants

Shares issuable upon exercise of preferred stock warrant

Potentially dilutive securities not included in the calculation of diluted net loss per common share, because to do so would be anti-dilutive, include shares issuable upon the exercise of stock options of 5,610,893 and 3,835,618 for the years ended December 31, 2022 and 2021, respectively.

SUBSEQUENT EVENT

Failure of Silicon Valley Bank

On March 10, 2023, the Company became aware that the Federal Deposit Insurance Corporation (“FDIC”) issued a press release (the “FDIC press release”) stating that Silicon Valley Bank, Santa Clara, California (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver.

On March 12, 2023, the Treasury Department announced that depositors of SVB would have access to all of their money starting March 13, 2023.

The Company had approximately $ 1.8 million cash deposited with SVB as of December 31, 2022.

On March 14, 2023, the Company regained access to the full amount of its cash that was deposited with SVB.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data