Acumen Pharmaceuticals, Inc. 10-Q

Item 1. Financial Statements. Acumen Pharmaceuticals, Inc. Condensed Balance Sheets (in thousands, except share and per share data) September 30, 2023 December 31, 2022 (unaudited) ASSETS Current assets Cash and cash equivalents $ 94,917 $ 130,101 Marketable securities, short-term 120,517 47,504 Prepaid expenses and other current assets 3,164 2,724 Total current assets 218,598 180,329 Marketable securities, long-term 67,270 15,837 Restricted cash 189 — Property and equipment, net 123 165 Right-of-use asset 2 105 Other assets 189 151 Total assets $ 286,371 $ 196,587 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 1,362 $ 1,640 Accrued clinical trial expenses 1,566 2,717 Accrued expenses and other current liabilities 3,168 3,350 Operating lease liability 2 105 Total current liabilities 6,098 7,812 Total liabilities 6,098 7,812 Commitments and contingencies (Note 6) Stockholders’ equity Preferred stock, $ 0.0001 par value; 10,000,000 shares authorized and no shares issued and outstanding as of September 30, 2023 and December 31, 2022 — — Common stock, $ 0.0001 par value; 300,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 57,910,461 and 41,025,062 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively 6 4 Additional paid-in capital 487,077 359,949 Accumulated deficit ( 206,301 ) ( 170,427 ) Accumulated other comprehensive loss ( 509 ) ( 751 ) Total stockholders’ equity 280,273 188,775 Total liabilities and stockholders’ equity $ 286,371 $ 196,587 The accompanying notes are an integral part of these unaudited condensed financial statements. 4 Table of Contents Acumen Pharmaceuticals, Inc. Condensed Statements of Operations and Comprehensive Loss (in thousands, except share and per share data) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Operating expenses Research and development $ 11,179 $ 8,309 $ 29,025 $ 21,615 General and administrative 4,860 3,062 13,627 9,374 Total operating expenses 16,039 11,371 42,652 30,989 Loss from operations ( 16,039 ) ( 11,371 ) ( 42,652 ) ( 30,989 ) Other income (expense) Interest income, net 3,124 663 6,840 1,000 Other expense, net ( 42 ) ( 2 ) ( 62 ) ( 1 ) Total other income 3,082 661 6,778 999 Net loss ( 12,957 ) ( 10,710 ) ( 35,874 ) ( 29,990 ) Other comprehensive gain (loss) Unrealized gain (loss) on marketable securities 137 — 242 ( 734 ) Comprehensive loss $ ( 12,820 ) $ ( 10,710 ) $ ( 35,632 ) $ ( 30,724 ) Net loss per common share, basic and diluted $ ( 0.24 ) $ ( 0.26 ) $ ( 0.79 ) $ ( 0.74 ) Weighted-average shares outstanding, basic and diluted 54,229,630 40,502,860 45,474,953 40,491,181 The accompanying notes are an integral part of these unaudited condensed financial statements. 5 Table of Contents Acumen Pharmaceuticals, Inc. Condensed Statements of Changes in Stockholders’ Equity (in thousands, except share data) (unaudited) For the Three Months Ended September 30, 2023 Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders’ Equity Shares Amount Balance as of June 30, 2023 41,025,062 $ 4 $ 362,860 $ ( 193,344 ) $ ( 646 ) $ 168,874 Issuance of common stock for cash, net of issuance costs of $ 7,706 16,774,193 2 122,292 — — 122,294 Stock options exercised for cash 111,206 — 325 — — 325 Unrealized gain on marketable securities — — — — 137 137 Stock-based compensation — — 1,600 — — 1,600 Net loss — — — ( 12,957 ) — ( 12,957 ) Balance as of September 30, 2023 57,910,461 $ 6 $ 487,077 $ ( 206,301 ) $ ( 509 ) $ 280,273 For the Three Months Ended September 30, 2022 Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders’ Equity Shares Amount Balance as of June 30, 2022 40,501,258 $ 4 $ 354,331 $ ( 146,851 ) $ ( 965 ) $ 206,519 Stock options exercised for cash 1,866 — 2 — — 2 Stock-based compensation — — 840 — — 840 Net loss — — — ( 10,710 ) — ( 10,710 ) Balance as of September 30, 2022 40,503,124 $ 4 $ 355,173 $ ( 157,561 ) $ ( 965 ) $ 196,651 The accompanying notes are an integral part of these unaudited condensed financial statements. 6 Table of Contents Acumen Pharmaceuticals, Inc. Condensed Statements of Changes in Stockholders’ Equity (in thousands, except share data) (unaudited) For the Nine Months Ended September 30, 2023 Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders’ Equity Shares Amount Balance as of December 31, 2022 41,025,062 $ 4 $ 359,949 $ ( 170,427 ) $ ( 751 ) $ 188,775 Issuance of common stock for cash, net of issuance costs of $ 7,706 16,774,193 2 122,292 — — 122,294 Stock options exercised for cash 111,206 — 325 — — 325 Unrealized gain on marketable securities — — — — 242 242 Stock-based compensation — — 4,511 — — 4,511 Net loss — — — ( 35,874 ) — ( 35,874 ) Balance as of September 30, 2023 57,910,461 $ 6 $ 487,077 $ ( 206,301 ) $ ( 509 ) $ 280,273 For the Nine Months Ended September 30, 2022 Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders’ Equity Shares Amount Balance as of December 31, 2021 40,473,270 $ 4 $ 352,981 $ ( 127,571 ) $ ( 231 ) $ 225,183 Unrealized loss on marketable securities — — — — ( 734 ) ( 734 ) Stock options exercised for cash 25,108 — 19 — — 19 Cashless stock options exercise 4,746 — — — — — Stock-based compensation — — 2,173 — — 2,173 Net loss — — — ( 29,990 ) — ( 29,990 ) Balance as of September 30, 2022 40,503,124 $ 4 $ 355,173 $ ( 157,561 ) $ ( 965 ) $ 196,651 The accompanying notes are an integral part of these unaudited condensed financial statements. 7 Table of Contents Acumen Pharmaceuticals, Inc. Condensed Statements of Cash Flows (in thousands) (unaudited) Nine Months Ended September 30, 2023 2022 Cash flows from operating activities Net loss $ ( 35,874 ) $ ( 29,990 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 42 20 Stock-based compensation expense 4,511 2,173 Amortization of premiums and accretion of discounts on marketable securities, net ( 1,344 ) 575 Amortization of right-of-use asset 103 100 Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 436 ) 2,058 Other assets ( 38 ) ( 78 ) Accounts payable ( 278 ) 996 Accrued clinical trial expenses ( 1,151 ) 1,358 Operating lease liability ( 103 ) ( 100 ) Accrued expenses and other current liabilities ( 182 ) ( 1,062 ) Net cash used in operating activities ( 34,750 ) ( 23,950 ) Cash flows from investing activities Purchases of marketable securities ( 178,857 ) ( 12,129 ) Proceeds from maturities and sales of marketable securities 55,997 71,860 Proceeds from sale of property and equipment 3 — Purchases of property and equipment ( 7 ) ( 126 ) Net cash provided by (used in) investing activities ( 122,864 ) 59,605 Cash flows from financing activities Proceeds from issuance of common stock, net of issuance costs 122,294 — Proceeds from exercise of stock options 325 19 Payments for deferred offering costs — ( 296 ) Net cash provided by (used in) financing activities 122,619 ( 277 ) Net change in cash and cash equivalents and restricted cash ( 34,995 ) 35,378 Cash and cash equivalents and restricted cash at the beginning of the period 130,101 122,162 Cash and cash equivalents and restricted cash at the end of the period $ 95,106 $ 157,540 Supplemental disclosure of noncash investing and financing activities Proceeds from sale of property and equipment in other current assets $ 4 $ — Right-of-use assets obtained in exchange for operating lease liabilities $ — $ 233 Deferred offering costs in accrued expenses and other current liabilities $ — $ 41 Reconciliation of cash, cash equivalents and restricted cash to the condensed balance sheets Cash and cash equivalents $ 94,917 $ 157,540 Restricted cash 189 — Total cash, cash equivalents and restricted cash $ 95,106 $ 157,540 The accompanying notes are an integral part of these unaudited condensed financial statements. 8 Table of Contents Acumen Pharmaceuticals, Inc. Notes to Condensed Financial Statements (unaudited) NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Acumen Pharmaceuticals, Inc. (“Acumen” or the “Company”) was incorporated in 1996 in the state of Delaware. 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 primary toxins involved in the initiation and propagation of AD pathology. The Company is currently focused on advancing a targeted immunotherapy drug candidate, ACU193, through clinical development following Phase 1 results in “early AD” patients (patients with mild cognitive impairment or mild dementia due to Alzheimer’s pathology) that were announced in July 2023. ACU193 is a recombinant humanized immunoglobulin 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 mouse models for AD. The Company is subject to the uncertainty of whether the Company’s intellectual property will develop into successful commercial products. Public Offering On July 21, 2023, the Company issued 16,774,193 shares of its common stock, $ 0.0001 par value per share (“Common Stock”), in a public offering (the “Offering”) at a price to the public of $ 7.75 per share. The aggregate net proceeds from the Offering, after underwriting discounts and commissions and other offering expenses, were $ 122.3 million. Liquidity and Capital Resources The Company has incurred operating losses since inception and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of September 30, 2023 and December 31, 2022, the Company had an accumulated deficit of $ 206.3 million and $ 170.4 million, respectively, and working capital of $ 212.5 million and $ 172.5 million, respectively. Management believes that the Company has sufficient cash to continue operating activities for beyond 12 months from issuance of these condensed financial statements. 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. The Company expects that it will need to obtain additional financing to complete clinical trials and launch and commercialize any product candidates for which it receives regulatory approval. Until such time, if ever, the Company can generate revenue sufficient to achieve profitability, the Company expects to finance its operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. There can be no assurance that such financing will be available on terms acceptable to the Company, or at all. To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the ownership interest of its stockholders will be diluted, and the terms of these securities may include liquidation of other preferences that adversely affect the rights of common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting the Company’s ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If the Company is unable to maintain sufficient financial resources, its business, financial condition and results of operations will be materially and adversely affected. The Company may be required to delay, limit, reduce or terminate its product discovery and development activities or future commercialization efforts. 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 65 patients with “early AD.” INTERCEPT-AD was a U.S.-based, multi-center, randomized, double-blind, placebo-controlled clinical trial with overlapping single ascending dose and multiple ascending dose cohorts evaluating patients with early AD. Topline results were announced in July 2023. The Company plans to initiate a Phase 2 portion of a Phase 2/3 clinical trial of ACU193 in the first half of 2024. 9 Table of Contents Acumen Pharmaceuticals, Inc. Notes to Condensed Financial Statements (unaudited) NOTE 2. BASIS OF PRESENTATION, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These unaudited condensed financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period. A description of the Company’s significant accounting policies is included in the Company’s Annual Report. Other than as described below, there have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Company’s Annual Report. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements, as well as the reported amounts of expenses during the reporting periods. 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. 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 statements of cash flows, whereas these accrued expenses were previously included in accrued expenses and other current liabilities. This reclassification had no effect on the reported results of operations. Cash and Cash Equivalents and Restricted Cash 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. All of the Company’s cash equivalents have liquid markets and high credit ratings. The Company had $ 94.6 million and $ 129.1 million in cash equivalents as of September 30, 2023 and December 31, 2022, respectively. Restricted cash consists of deposited cash collateral for the Company’s corporate credit card program. 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 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. The fair value of restricted stock units is the closing market price of the Common Stock on the date of the grant. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. Stock- 10 Table of Contents Acumen Pharmaceuticals, Inc. Notes to Condensed Financial Statements (unaudited) based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period for the last 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 role within the Company. Forfeitures are recorded as they occur. See also Note 8. Stock-based Compensation below. Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which was codified with its subsequent amendments as Accounting Standards Codification (“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 was 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, but it did require the Company to provide additional disclosures related to its available-for-sale debt securities in a continuous unrealized loss position. NOTE 3. MARKETABLE SECURITIES The Company’s marketable securities consisted of the following (in thousands): September 30, 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available-for-sale securities, short-term Corporate debt securities $ 88,459 $ 14 $ ( 239 ) $ 88,234 Government and agency - U.S. 32,302 2 ( 21 ) 32,283 Total available-for-sale securities, short-term 120,761 16 ( 260 ) 120,517 Available-for-sale securities, long-term Corporate debt securities 52,605 7 ( 258 ) 52,354 Government and agency - U.S. 14,934 — ( 18 ) 14,916 Total available-for-sale securities, long-term 67,539 7 ( 276 ) 67,270 Total available-for-sale securities $ 188,300 $ 23 $ ( 536 ) $ 187,787 December 31, 2022 Amortized Cost Gross Unrealized Gains Gross Unrealized 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 Government and agency - U.S. 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 11 Table of Contents Acumen Pharmaceuticals, Inc. Notes to Condensed Financial Statements (unaudited) The following tables summarize the amount of unrealized losses, defined as the amount by which the amortized cost exceeds fair value, and the related fair value of available-for-sale marketable securities with unrealized losses, which have been segregated into two categories: those that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months. September 30, 2023 Less than 12 Months Greater than 12 Months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Corporate debt securities $ 119,250 $ ( 497 ) $ — $ — $ 119,250 $ ( 497 ) Government and agency - U.S. 27,393 ( 39 ) — — 27,393 ( 39 ) Total $ 146,643 $ ( 536 ) $ — $ — $ 146,643 $ ( 536 ) December 31, 2022 Less than 12 Months Greater than 12 Months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Corporate debt securities $ 29,515 $ ( 58 ) $ 16,247 $ ( 234 ) $ 45,762 $ ( 292 ) Asset-backed securities — — 2,904 ( 102 ) 2,904 ( 102 ) Government and agency - U.S. 3,026 ( 7 ) 11,649 ( 350 ) 14,675 ( 357 ) Total $ 32,541 $ ( 65 ) $ 30,800 $ ( 686 ) $ 63,341 $ ( 751 ) As of September 30, 2023, 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 less than two years . As noted in the table above, none of the Company’s available-for-sale marketable securities as of September 30, 2023 have been in an unrealized loss position for more than 12 months. No credit losses were recognized on the Company’s available-for-sale securities during the three and nine months ended September 30, 2023. There were no realized gains or losses for the three and nine months ended September 30, 2023 and 2022 . 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. NOTE 4. 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 Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at September 30, 2023 Assets included in: Cash and cash equivalents Money market securities $ 64,760 $ — $ — $ 64,760 Government and agency - U.S. — 29,877 — 29,877 Marketable securities Corporate debt securities — 140,588 — 140,588 Government and agency - U.S. — 47,199 — 47,199 Total fair value $ 64,760 $ 217,664 $ — $ 282,424 12 Table of Contents Acumen Pharmaceuticals, Inc. Notes to Condensed Financial Statements (unaudited) Fair value measurements at reporting date using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at December 31, 2022 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 Government and agency - U.S. — 14,675 — 14,675 Total fair value $ 129,100 $ 63,341 $ — $ 192,441 The carrying values reported in the Company’s condensed balance sheets for cash (excluding cash equivalents which are recorded at fair value on a recurring basis), accounts payable, accrued clinical trial expenses and accrued expenses and other current liabilities are reasonable estimates of their fair values due to the short-term nature of these items. 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. NOTE 5. SUPPLEMENTAL FINANCIAL INFORMATION Prepaid expenses and other current assets consisted of the following (in thousands): September 30, 2023 December 31, 2022 Research and development service agreements $ 1,534 $ 1,077 Prepaid insurance 1,216 1,106 Dues and subscriptions 166 105 Prepaid raw materials 67 199 Other 181 237 Total prepaid expenses and other current assets $ 3,164 $ 2,724 Accrued expenses and other current liabilities consisted of the following (in thousands): September 30, 2023 December 31, 2022 Compensation and other employee liabilities $ 2,054 $ 2,008 Research and development 1,015 1,211 Legal 18 — Other 81 131 Total accrued expenses and other current liabilities $ 3,168 $ 3,350 13 Table of Contents Acumen Pharmaceuticals, Inc. Notes to Condensed Financial Statements (unaudited) NOTE 6. COMMITMENTS AND CONTINGENCIES The Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims. 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. 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. NOTE 7. STOCKHOLDERS’ EQUITY Authorized Shares As of September 30, 2023, the total number of shares of capital stock authorized to be issued per the Company’s Amended and Restated Certificate of Incorporation is 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. Each share of Common Stock is entitled to one voting right. Shelf Registration and Equity Offerings 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 (the “Sales Agreement”) with BofA Securities, Inc. (“BofA”) and Stifel, Nicolaus & Company, Incorporated (“Stifel”), as sales agents, pursuant to which the Company may issue and sell shares of 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. On April 23, 2023, the Company entered into an amendment to the Sales Agreement (as amended, the “Amended Sales Agreement”) to add BTIG, LLC (“BTIG”) as a sales agent under the Amended Sales Agreement (BTIG, together with BofA and Stifel, the “Sales Agents”). Pursuant to the Amended Sales Agreement, 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 Common Stock under the ATM. The Company did not sell any shares of its Common Stock under the ATM during the nine months ended September 30, 2023. On July 21, 2023, the Company issued 16,774,193 shares of Common Stock in the Offering for net proceeds of $ 122.3 million. See Note 1. Description of Organization and Business Operations . NOTE 8. 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 consultants, became effective on June 30, 2021. The 2021 Plan is a successor to the Company’s Amended and Restated Stock Performance Plan that was adopted by the Company’s Board of Directors (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 terms of the 2013 Plan. As of September 30, 2023, there were 3,231,274 options outstanding under the 2013 Plan. Initially, the maximum number of shares of 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 14 Table of Contents Acumen Pharmaceuticals, Inc. Notes to Condensed Financial Statements (unaudited) 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 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 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, 2023, the Board increased the number of shares of Common Stock reserved for issuance under the 2021 Plan by 2,051,253 shares. The maximum number of shares of Common Stock that may be issued upon the exercise of incentive stock options under the 2021 Plan is 12,000,000 . As of September 30, 2023, 11,773,198 shares were authorized for issuance under the 2021 Plan and 3,798,530 shares remained available for issuance under the 2021 Plan. The Company recorded stock-based compensation expense in the following expense categories of its condensed statements of operations for the periods shown (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 General and administrative $ 1,127 $ 563 $ 3,143 $ 1,525 Research and development 473 277 1,368 648 Total stock-based compensation $ 1,600 $ 840 $ 4,511 $ 2,173 Stock Options The Black-Scholes option-pricing model was used to estimate the fair value of stock options granted during the nine months ended September 30, 2023 and 2022 with the following weighted average assumptions: Nine Months Ended September 30, 2023 2022 Risk-free interest rate 3.47 % - 4.43 % 1.71 % - 4.17 % Expected term (in years) 5.5 - 6.1 5.8 - 6.1 Expected volatility 90 % - 98 % 90 % Expected dividend yield 0 % 0 % The weighted average grant date fair value of options granted during the nine months ended September 30, 2023 and 2022, was $ 4.53 per share and $ 3.77 per share, respectively. Stock options granted after December 31, 2017 generally vest monthly over a range of 12 to 48 months or vest monthly over a total of 48 months following a one-year cliff and all have a 10-year contractual term. During the nine months ended September 30, 2023, the Company also issued option awards to its Board that vest in full on the first anniversary of the grant date. 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 also have a 10-year term. The Company became publicly traded in July 2021 and lacks sufficient company-specific historical and implied volatility information. Therefore, it estimates expected stock volatility using a weighted average blend of historical volatility of a publicly traded set of peer companies, as well as its own historical volatility. Due to the lack of historical exercise history, the expected term of the Company’s stock options has been determined using the “simplified” method for awards. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. 15 Table of Contents Acumen Pharmaceuticals, Inc. Notes to Condensed Financial Statements (unaudited) The following table reflects summarized stock option activity: Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding at January 1, 2023 5,610,893 $ 3.36 Granted 1,921,200 $ 5.96 Exercised ( 111,206 ) $ 2.92 Forfeited ( 14,489 ) $ 2.88 Expired ( 6,251 ) $ 8.33 Outstanding at September 30, 2023 7,400,147 $ 4.04 7.9 $ 9,907 Vested and exercisable at September 30, 2023 3,621,345 $ 3.02 7.2 $ 7,432 As of September 30, 2023, total unrecognized compensation costs related to unvested stock option awards was approximately $ 13.5 million, which the Company expects to recognize over a weighted-average period of approximately 2.4 years. Restricted Stock Units In January 2023, the Company granted a restricted stock unit (“RSU”) award to each of its then current employees. These RSU awards vest in equal annual installments on the first three anniversaries of the grant date. Number of Shares Weighted Average Grant Date Fair Value Unvested as of January 1, 2023 — $ — Granted 328,500 $ 6.11 Unvested at September 30, 2023 328,500 $ 6.11 As of September 30, 2023, total unrecognized compensation costs related to unvested RSUs was approximately $ 1.5 million, which the Company expects to recognize over a weighted-average period of approximately 2.3 years. Employee Stock Purchase Plan The 2021 Employee Stock Purchase Plan (the “ESPP”), which permits employees to purchase shares of Common Stock, became effective on June 30, 2021. A total of 375,000 shares of Common Stock were initially reserved for sale under the ESPP. The number of shares of Common Stock reserved for issuance will automatically increase on January 1 of each calendar year, beginning on January 1, 2023 and through January 1, 2031, by the lesser of (1) 1 % of the total number of shares of 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). On January 1, 2023, the Board increased the number of shares of Common Stock reserved for issuance under the ESPP by 410,251 shares. As of September 30, 2023, there are a total of 1,189,983 shares authorized for issuance under the ESPP and there have been no purchases of shares under the ESPP. NOTE 9. NET LOSS PER SHARE The Company computes net loss per common share using the two-class method required for participating securities. Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential common stock outstanding would have been anti-dilutive. Potentially dilutive securities not included in the calculation of diluted net loss 16 Table of Contents Acumen Pharmaceuticals, Inc. Notes to Condensed Financial Statements (unaudited) per common share, because to do so would be anti-dilutive, include shares issuable upon the exercise of stock options and unvested RSUs as follows: Nine Months Ended September 30, 2023 2022 Shares issuable upon exercise of stock options 7,400,147 5,655,948 Unvested RSUs 328,500 — Total 7,728,647 5,655,948 NOTE 10. SUBSEQUENT EVENTS On November 5, 2023, the Company entered into a Non-exclusive Collaboration and License Agreement (the “Halozyme License Agreement”) with Halozyme, Inc. (“Halozyme”). Under the terms of the Halozyme License Agreement, Halozyme granted the Company a non-exclusive license to Halozyme’s ENHANZE® drug delivery technology for the development of a subcutaneous formulation of ACU193 (such combination, the “Product”). Halozyme will also be the Company’s exclusive supplier of clinical and commercial supplies of the API for Halozyme’s PH20 product. The Company will make a seven figure upfront payment for the license to Halozyme’s technology. Additionally, the Company will make milestone payments tied to achievement of certain development and commercialization milestone events with respect to the Product, as well as milestone payments based on achievement of certain net sales levels of the Product. The Company will also make single-digit royalty payments based on worldwide net sales of the Product. On November 10, 2023 (the “Closing Date”), the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with the lenders referred to therein (the “Lenders”), K2 HealthVentures LLC (“K2HV”), as administrative agent for the Lenders, and Ankura Trust Company, LLC, as collateral agent for the Lenders. The Loan Agreement provides up to $ 50.0 million principal in term loans (the “Term Loan”) consisting of a first tranche of $ 30.0 million funded on the Closing Date and a subsequent second tranche of up to $ 20.0 million upon the Company’s request, subject to review by the Lenders of certain information from the Company and discretionary approval by the Lenders. The Term Loan matures on November 1, 2027, provided, that the maturity date may be extended to November 1, 2028 if the Company achieves certain other financing milestones. The obligations of the Company under the Loan Agreement are secured by substantially all of the assets of the Company, excluding the Company’s intellectual property. The Term Loan bears a variable interest rate equal to the greater of (i) 9.65 % and (ii) the sum of (a) the Prime Rate as reported in the Wall Street Journal plus (b) 1.15 %. The Company may prepay, at its option, all, or a portion of the Term Loan then outstanding plus the accrued and unpaid interest on the portion of principal so repaid, subject to a prepayment premium to which the Lenders are entitled and certain notice requirements. The Lenders may elect at any time following the Closing Date and prior to the full repayment of the Term Loan to convert any portion of the principal amount of the term loans then outstanding, up to an aggregate of $ 2.5 million in principal amount, into shares of the Company’s common stock (the “Conversion Shares”), at a conversion price of $ 2.53 per share, subject to certain beneficial ownership limitations. In addition, under the Loan Agreement, the Company issued to K2HV a warrant to purchase up to 730,769 shares of the Company’s common stock at an exercise price of $ 1.95 per share. 17 Table of Contents