What changed in this filing

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Item 1. Financial Statements

2021-11-02 compared with 2021-08-05 · 110 added, 81 removed, 450 unchanged (30% of the section changed)

3 unchanged sentences

(In thousands, except share and per share data)

September 30,

Current assets:

22 unchanged sentences

Preferred stock, $ 0.00001 par value;

10,000,000 shares authorized and no shares issued or outstanding at June 30, 2021 and December 31, 2020

10,000,000 shares authorized and no shares issued or outstanding at September 30, 2021 and December 31, 2020

Common stock, $ 0.00001 par value;

100,000,000 shares authorized at June 30, 2021 and December 31, 2020;

61,204,987 and 45,109,314 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

100,000,000 shares authorized at September 30, 2021 and December 31, 2020;

61,226,750 and 45,109,314 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

Additional paid‑in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Contract research

38 unchanged sentences

Balance at June 30, 2021

Issuance of common stock in connection with vesting of restricted stock units

Unrealized gain on marketable securities

Foreign currency translation adjustment

Stock-based compensation expense

Balance at September 30, 2021

Comprehensive

2 unchanged sentences

Balance at December 31, 2019

Vesting of restricted stock units

Issuance of common stock in connection with vesting of restricted stock units

Fair value of warrants issued

3 unchanged sentences

Balance at March 31, 2020

Vesting of restricted stock units

Issuance of common stock in connection with vesting of restricted stock units

Unrealized loss on marketable securities

2 unchanged sentences

Balance at June 30, 2020

Issuance of common stock in connection with vesting of restricted stock units

Issuance of common stock in connection with equity purchase agreement

Unrealized loss on marketable securities

Foreign currency translation adjustment

Stock-based compensation expense

Balance at September 30, 2020

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

2 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities :

3 unchanged sentences

Revaluation of contingent consideration

Loss on extinguishment of debt

Changes in operating assets and liabilities:

12 unchanged sentences

Proceeds from debt financing (including warrants), net of issuance costs

Repayment of debt

Restricted stock unit employee tax withholdings

Finance lease payments

Deferred issuance costs

Proceeds from exercise of employee stock options and the issuance of stock

4 unchanged sentences

Supplemental disclosure of non-cash investing and financing activities:

Additions to property and equipment included in accounts payable

Fair value of warrants issued in connection with debt financing

Offering costs included in accounts payable

Fair value of common stock issued in connection with an equity purchase agreement

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

11 unchanged sentences

The Company’s condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business.

As of June 30, 2021, the Company had cash, cash equivalents and marketable securities of $ 266.2 million and an accumulated deficit of $ 551.5 million.

As of September 30, 2021, the Company had cash, cash equivalents and marketable securities of $ 243.6 million and an accumulated deficit of $ 572.6 million.

Since inception, the Company has incurred net losses and negative cash flows from its operations.

3 unchanged sentences

The future viability of the Company is dependent on its ability to successfully develop its drug candidates and to generate revenue from identifying and consummating transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize its development assets or to raise additional capital to finance its operations.

The Company will require additional capital to complete the clinical development of ATI-450 and ATI-1777, to develop its preclinical compounds, and to support its discovery efforts.

The Company will require additional capital to complete the clinical development of zunsemetinib (ATI-450) and ATI-1777, to develop its preclinical compounds, and to support its discovery efforts.

Additional funds may not be available on a timely basis, on commercially acceptable terms, or at all, and such funds, if raised, may not be sufficient to enable the Company to continue to implement its long-term business strategy.

7 unchanged sentences

Unaudited Interim Financial Information

The accompanying condensed consolidated balance sheet as of June 30, 2021, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2021 and 2020, the condensed consolidated statement of stockholders’ equity for the three and six months ended June 30, 2021 and 2020, and the condensed consolidated statements of cash flows for the six months ended June 30, 2021 and 2020 are unaudited.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements contained in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 25, 2021 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of June 30, 2021, the results of its operations and comprehensive loss for the three and six months ended June 30, 2021 and 2020, its changes in stockholders’ equity for the three and six months ended June 30, 2021 and 2020 and its cash flows for the six months ended June 30, 2021 and 2020.

The accompanying condensed consolidated balance sheet as of September 30, 2021, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2021 and 2020, the condensed consolidated statement of stockholders’ equity for the three and nine months ended September 30, 2021 and 2020, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2021 and 2020 are unaudited.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements contained in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 25, 2021 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of September 30, 2021, the results of its operations and comprehensive loss for the three and nine months ended September 30, 2021 and 2020, its changes in stockholders’ equity for the three and nine months ended September 30, 2021 and 2020 and its cash flows for the nine months ended September 30, 2021 and 2020.

The condensed consolidated balance sheet data as of December 31, 2020 was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles in the United States (“GAAP”).

The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2021 and 2020 are unaudited.

The results for the three and six months ended June 30, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods, or any future year or period.

The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2021 and 2020 are unaudited.

The results for the three and nine months ended September 30, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods, or any future year or period.

The unaudited interim financial statements of the Company included herein have been prepared, pursuant to the rules and regulations of the SEC.

31 unchanged sentences

The following tables present information about the fair value measurements of the Company’s financial assets and liabilities which are measured at fair value on a recurring and non-recurring basis, and indicate the level of the fair value hierarchy utilized to determine such fair values:

June 30, 2021

September 30, 2021

(In thousands)

9 unchanged sentences

Total liabilities

As of June 30, 2021 and December 31, 2020, the Company’s cash equivalents consisted of a money market fund, which was valued based upon Level 1 inputs.

As of September 30, 2021 and December 31, 2020, the Company’s cash equivalents consisted of a money market fund, which was valued based upon Level 1 inputs.

The Company’s cash equivalents as of December 31, 2020 also included commercial paper, which was valued based upon Level 2 inputs.

The Company’s marketable securities as of June 30, 2021 and December 31, 2020 consisted of commercial paper and asset-backed and U.S.

The Company’s marketable securities as of September 30, 2021 and December 31, 2020 consisted of commercial paper and asset-backed and U.S.

government agency debt securities, which were valued based upon Level 2 inputs.

The Company’s marketable securities as of June 30, 2021 also included corporate debt securities, which were valued based upon Level 2 inputs.

The Company’s marketable securities as of September 30, 2021 also included corporate debt securities and foreign government agency debt securities, which were valued based upon Level 2 inputs.

In determining the fair value of its Level 2 investments, the Company relied on quoted prices for identical securities in markets that are not active.

2 unchanged sentences

The Company evaluates whether adjustments to third-party pricing are necessary and, historically, the Company has not made adjustments to quoted prices obtained from the third-party pricing service.

During the six months ended June 30, 2021 and 2020, there were no transfers between Level 1, Level 2 and Level 3.

The increase in contingent consideration of $ 21.2 million during the six months ended June 30, 2021 resulted from updates to the Company’s probability of achieving regulatory milestones and commencing commercialization and estimated future sales level assumptions as a result of the completion of a Phase 2a clinical trial of ATI-450 in subjects with moderate to severe rheumatoid arthritis and the inclusion of estimated future sales of ATI-450 for the potential treatment of hidradenitis suppurativa and psoriatic arthritis, which are additional planned indications for ATI-450, as well as a result of the completion of a Phase 2a clinical trial of ATI-1777 in subjects with moderate to severe atopic dermatitis.

As of June 30, 2021 and December 31, 2020, the fair value of the Company’s available for sale marketable securities by type of security was as follows:

June 30, 2021

During the nine months ended September 30, 2021 and 2020, there were no transfers between Level 1, Level 2 and Level 3.

The increase in contingent consideration of $ 22.1 million during the nine months ended September 30, 2021 resulted from updates to the Company’s probability of achieving regulatory milestones and commencing commercialization and estimated future sales level assumptions as a result of the completion of a Phase 2a clinical trial of zunsemetinib in subjects with moderate to severe rheumatoid arthritis and the inclusion of estimated future sales of zunsemetinib for the potential treatment of psoriatic arthritis and moderate to severe hidradenitis suppurativa, which are additional planned indications for zunsemetinib, as well as a result of the completion of a Phase 2a clinical trial of ATI-1777 in subjects with moderate to severe atopic dermatitis.

As of September 30, 2021 and December 31, 2020, the fair value of the Company’s available for sale marketable securities by type of security was as follows:

September 30, 2021

(In thousands)

3 unchanged sentences

Asset-backed debt securities

Foreign government agency debt securities

government agency debt securities

9 unchanged sentences

Property and equipment, net consisted of the following:

September 30,

(In thousands)

6 unchanged sentences

Property and equipment, net

Depreciation expense was $ 0.2 million and $ 0.3 million for the three months ended June 30, 2021 and 2020, respectively, and $ 0.4 million and $ 0.6 million for the six months ended June 30, 2021 and 2020, respectively.

Depreciation expense was $ 0.2 million and $ 0.3 million for the three months ended September 30, 2021 and 2020, respectively, and $ 0.6 million and $ 0.9 million for the nine months ended September 30, 2021 and 2020, respectively.

Intangible Assets

1 unchanged sentence

Accumulated Amortization

September 30,

(In thousands, except years)

2 unchanged sentences

Total intangible assets

As of June 30, 2021, estimated future amortization expense was as follows:

As of September 30, 2021, estimated future amortization expense was as follows:

(In thousands)

1 unchanged sentence

Accrued expenses consisted of the following:

September 30,

(In thousands)

8 unchanged sentences

The proceeds of the Loan and Security Agreement were allocated to the term loan and Warrant using a relative fair value approach.

As of June 30, 2021 and December 31, 2020 the outstanding principal balance on the Loan and Security Agreement was $ 11.0 million.

In July 2021, the Company repaid in full the $ 11.0 million that was outstanding under the Loan and Security Agreement, together with all accrued and unpaid interest and fees as of the payoff date, for a total payment of $ 11.7 million (see Note 18).

The term loan repayment schedule provided for interest only payments beginning April 1, 2020 and continuing through March 1, 2022, followed by 24 consecutive equal monthly installments of principal, plus monthly payments of accrued interest, starting on April 1, 2022 and continuing through the maturity date of March 1, 2024.

The Loan and Security Agreement provided for an annual interest rate equal to the greater of (i) the prime rate then in effect as reported in The Wall Street Journal plus 2 % and (ii) 6.75 %.

The Loan and Security Agreement included a final payment fee equal to 5 % of the original principal amount borrowed.

The Company had the option to prepay the outstanding balance of the term loans in full, subject to a prepayment premium of (i) 3 % of the original principal amount borrowed for any prepayment on or prior to the first anniversary of March 30, 2020, (ii) 2 % of the original principal amount borrowed for any prepayment after the first anniversary and on or before the second anniversary of March 30, 2020 or (iii) 1 % of the original principal amount borrowed for any prepayment after the second anniversary of March 30, 2020 but before March 1, 2024.

Following this repayment, all of the Company’s obligations under the Loan and Security Agreement are deemed to be terminated, except as set forth in the agreement.

Stockholders’ Equity

Preferred Stock

As of June 30, 2021 and December 31, 2020, the Company’s amended and restated certificate of incorporation authorized the Company to issue 10,000,000 shares of undesignated preferred stock.

There were no shares of preferred stock outstanding as of June 30, 2021 or December 31, 2020.

As of June 30, 2021 and December 31, 2020, the Company’s amended and restated certificate of incorporation authorized the Company to issue 100,000,000 shares of $ 0.00001 par value common stock.

As of September 30, 2021 and December 31, 2020, the Company’s amended and restated certificate of incorporation authorized the Company to issue 10,000,000 shares of undesignated preferred stock.

There were no shares of preferred stock outstanding as of September 30, 2021 or December 31, 2020.

As of September 30, 2021 and December 31, 2020, the Company’s amended and restated certificate of incorporation authorized the Company to issue 100,000,000 shares of $ 0.00001 par value common stock.

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders.

Common stockholders are entitled to receive dividends, as may be declared by the board of directors, if any, subject to any preferential dividend rights of any series of preferred stock that may be outstanding.

No dividends have been declared through June 30, 2021.

No dividends have been declared through September 30, 2021.

The Warrant issued to SVB in March 2020 had an initial exercise price of $ 0.956 per share, subject to adjustment as provided in the Warrant.

22 unchanged sentences

Beginning at the time the 2015 Plan became effective, no further grants may be made under the Company’s 2012 Equity Compensation Plan, as amended and restated (the “2012 Plan”).

The 2015 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit (“RSU”) awards, performance stock awards, cash-based awards and other

stock-based awards.

The number of shares initially reserved for issuance under the 2015 Plan was 1,643,872 shares of common stock.

2 unchanged sentences

As of January 1, 2021, the number of shares of common stock that may be issued under the 2015 Plan was increased by 1,804,372 shares.

As of June 30, 2021, 2,799,230 shares remained available for grant under the 2015 Plan.

The Company had 2,833,405 stock options and 1,476,308 RSUs outstanding as of June 30, 2021 under the 2015 Plan.

As of September 30, 2021, 2,795,696 shares remained available for grant under the 2015 Plan.

The Company had 2,843,205 stock options and 1,458,483 RSUs outstanding as of September 30, 2021 under the 2015 Plan.

2017 Inducement Plan

1 unchanged sentence

The 2017 Inducement Plan is a non-stockholder approved stock plan adopted pursuant to the “inducement exception” provided under Nasdaq listing rules.

The Company had 421,075 stock options and 22,408 RSUs outstanding as of June 30, 2021 under the 2017 Inducement Plan.

The Company had 416,375 stock options and 7,480 RSUs outstanding as of September 30, 2021 under the 2017 Inducement Plan.

All shares of common stock that were eligible for issuance under the 2017 Inducement Plan after October 1, 2018, including any shares underlying any awards that expire or are otherwise terminated, reacquired to satisfy tax withholding obligations, settled in cash or repurchased by the Company in the future that would have been eligible for re-issuance under the 2017 Inducement Plan, were retired.

1 unchanged sentence

Upon the 2015 Plan becoming effective, no further grants can be made under the 2012 Plan.

The Company granted stock options to purchase a total of 1,140,524 shares under the 2012 Plan, of which 484,145 were outstanding as of June 30, 2021.

The Company granted stock options to purchase a total of 1,140,524 shares under the 2012 Plan, of which 484,145 were outstanding as of September 30, 2021.

Stock options granted under the 2012 Plan expire after ten years .

Stock Option Valuation

The weighted average assumptions the Company used to estimate the fair value of stock options granted during the six months ended June 30, 2021 and 2020 were as follows:

Six Months Ended

The weighted average assumptions the Company used to estimate the fair value of stock options granted during the nine months ended September 30, 2021 and 2020 were as follows:

Nine Months Ended

September 30,

Risk-free interest rate

5 unchanged sentences

Stock Options

The following table summarizes stock option activity for the six months ended June 30, 2021:

The following table summarizes stock option activity for the nine months ended September 30, 2021:

(In thousands, except share and per share data and years)

1 unchanged sentence

Forfeited and cancelled

Outstanding as of June 30, 2021

Options vested and expected to vest as of June 30, 2021

Options exercisable as of June 30, 2021

The weighted average grant date fair value of stock options granted during the six months ended June 30, 2021 was $ 15.96 per share.

Outstanding as of September 30, 2021

Options vested and expected to vest as of September 30, 2021

Options exercisable as of September 30, 2021

The weighted average grant date fair value of stock options granted during the nine months ended September 30, 2021 was $ 15.86 per share.

Restricted Stock Units

The following table summarizes RSU activity for the six months ended June 30, 2021:

The following table summarizes RSU activity for the nine months ended September 30, 2021:

(In thousands, except share and per share data)

2 unchanged sentences

Forfeited and cancelled

Outstanding as of June 30, 2021

Outstanding as of September 30, 2021

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

3 unchanged sentences

Total stock-based compensation expense

As of June 30, 2021, the Company had unrecognized stock-based compensation expense for stock options and RSUs of $ 16.7 million and $ 16.7 million, respectively, which is expected to be recognized over a weighted average period of 3.1 years and 3.2 years, respectively.

As of September 30, 2021, the Company had unrecognized stock-based compensation expense for stock options and RSUs of $ 14.7 million and $ 15.0 million, respectively, each of which is expected to be recognized over a weighted average period of 3.0 years.

Net Loss per Share

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except for share and per share data)

3 unchanged sentences

Therefore, the weighted average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share is the same.

The following table presents potential shares of common stock excluded from the calculation of diluted net loss per share for the three and six months ended June 30, 2021 and 2020.

All share amounts presented in the table below represent the total number outstanding as of June 30, 2021 and 2020.

The following table presents potential shares of common stock excluded from the calculation

of diluted net loss per share for the three and nine months ended September 30, 2021 and 2020.

All share amounts presented in the table below represent the total number outstanding as of September 30, 2021 and 2020.

September 30,

Options to purchase common stock

12 unchanged sentences

Supplemental balance sheet information related to operating leases is as follows:

September 30,

(In thousands)

4 unchanged sentences

Total operating lease liabilities

Amortization expense related to operating lease right-of-use assets and accretion of operating lease liabilities totaled $ 0.3 million for each of the three months ended June 30, 2021 and 2020 and $ 0.5 million for each of the six months ended June 30, 2021 and 2020.

Amortization expense related to operating lease right-of-use assets and accretion of operating lease liabilities totaled $ 0.3 million for each of the three months ended September 30, 2021 and 2020 and $ 0.8 million for each of the nine months ended September 30, 2021 and 2020.

Finance Leases

1 unchanged sentence

The Company leased laboratory equipment which it used in its laboratory space in St.

Louis, Missouri under two finance lease financing arrangements which the Company entered into in August 2017 and October 2017, with terms ended in October 2020 and December 2020, respectively.

Louis, Missouri under two finance lease financing arrangements which the Company entered into in August 2017 and October 2017, for which terms ended in October 2020 and December 2020, respectively.

Related Party Transactions

5 unchanged sentences

Reasons was not involved in the negotiation or execution of the agreement, but may be deemed to have an interest in the ongoing transactions based on his employment as an executive officer of Mallinckrodt plc.

During the six months ended June 30, 2021 and 2020, the Company invoiced Mallinckrodt for $ 24 thousand and $ 0.3 million, respectively, under the master services agreement.

As of June 30, 2021 and December 31, 2020, the Company had $ 0 and $ 24 thousand, respectively, of outstanding accounts receivable balances from Mallinckrodt.

During the nine months ended September 30, 2021 and 2020, the Company invoiced Mallinckrodt for $ 24 thousand and $ 0.3 million, respectively, under the master services agreement.

As of September 30, 2021 and December 31, 2020, the Company had $ 0 and $ 24 thousand, respectively, of outstanding accounts receivable balances from Mallinckrodt.

Reasons had no financial interest in these transactions.

3 unchanged sentences

EPI Health agreed to pay the Company a high single-digit royalty calculated as a percentage of net sales on a country-by-country basis until the date that the patent rights related to RHOFADE have expired or, if later, ten years from the date of the first commercial sale of RHOFADE in such country.

The Company recorded royalty income under the asset purchase agreement of $ 0.4 million during each of the six months ended June 30, 2021 and 2020.

The Company recorded royalty income under the asset purchase agreement of $ 0.6 million and $ 0.5 million during the nine months ended September 30, 2021 and 2020, respectively.

Royalty income is included in other revenue on the condensed consolidated statements of operations and comprehensive loss.

EPI Health in connection with any license or sublicense of the assets transferred in the disposition in any territory outside of the United States, subject to specified exceptions.

EPI Health has also agreed to pay the Company potential sales milestone payments of up to $ 20.0 million in the aggregate upon the achievement of specified levels of net sales of products covered by the asset purchase agreement, and 25 % of any upfront, license, milestone, maintenance or fixed payment received by EPI Health in connection with any license or sublicense of the assets transferred in the disposition in any territory outside of the United States, subject to specified exceptions.

Agreement and Plan of Merger – Confluence

4 unchanged sentences

In addition to the payments described above, if the Company sells, licenses or transfers any of the intellectual property acquired from Confluence pursuant to the Confluence Agreement to a third party, the Company will be obligated to pay the former Confluence equity holders a portion of any consideration received from such sale, license or transfer in specified circumstances.

As of June 30, 2021 and December 31, 2020, the balance of the Company’s contingent consideration liability was $ 25.3 million and $ 4.1 million, respectively (see Note 3).

The Company did not record a federal or state income tax benefit for losses incurred during each of the three and six months ended June 30, 2021 and 2020.

As of September 30, 2021 and December 31, 2020, the balance of the Company’s contingent consideration liability was $ 26.2 million and $ 4.1 million, respectively (see Note 3).

The Company did not record a federal or state income tax benefit for losses incurred during each of the three and nine months ended September 30, 2021 and 2020.

The Company concluded that it is more likely than not that its deferred tax assets will not be realized which resulted in recording a full valuation allowance during those periods.

1 unchanged sentence

The following table presents information related to liabilities reported as discontinued operations in the Company’s condensed consolidated balance sheet:

September 30,

(In thousands)

9 unchanged sentences

The Company does not report balance sheet information by segment since it is not reviewed by the chief operating decision maker, and all of the Company’s tangible assets are held in the United States.

The Company’s results of operations by segment for the three and six months ended June 30, 2021 and 2020 are summarized in the tables below:

The Company’s results of operations by segment for the three and nine months ended September 30, 2021 and 2020 are summarized in the tables below:

(In thousands)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Total revenue

5 unchanged sentences

(In thousands)

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Total revenue

2 unchanged sentences

General and administrative

Revaluation of contingent consideration

Loss from operations

Loss from discontinued operations

(In thousands)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Total revenue

5 unchanged sentences

(In thousands)

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Total revenue

6 unchanged sentences

Intersegment Revenue

Revenue for the contract research segment included $ 1.9 million and $ 1.8 million for services performed on behalf of the therapeutics segment for the three months ended June 30, 2021 and 2020, respectively and $ 3.5 million and $ 4.0 million for the six months ended June 30, 2021 and 2020, respectively.

Revenue for the contract research segment included $ 1.9 million and $ 1.7 million for services performed on behalf of the therapeutics segment for the three months ended September 30, 2021 and 2020, respectively and $ 5.5 million and $ 5.7 million for the nine months ended September 30, 2021 and 2020, respectively.

All intersegment revenue has been eliminated in the Company’s condensed consolidated statement of operations.

16 unchanged sentences

The parties signed and filed a settlement agreement in July 2021.

The settlement agreement is subject to preliminary approval by the U.S.

District Court for the Southern District of New York, notice to the putative class, and subsequent final approval by the court.

The Company accrued a liability of $ 2.65 million as of June 30, 2021 for its estimated financial obligation.

On August 18, 2021, the court preliminarily approved the proposed settlement, directed that notice be given to the putative class and scheduled the final approval settlement hearing for November 30, 2021.

Notice was subsequently given to the putative class.

The proposed settlement is subject to final approval by the court.

The Company had $ 2.65 million accrued as of September 30, 2021 for its estimated financial obligation.

The Company expects its financial obligation to be within the limits of its insurance coverage and accordingly recorded a receivable for an insurance recovery equal to the settlement amount.

16 unchanged sentences

The parties signed and filed a settlement agreement in July 2021.

The settlement agreement is subject to preliminary approval by the U.S.

District Court for the Southern District of New York, notice to the Company’s stockholders, and subsequent final approval by the court.

The Company accrued a liability of $ 425 thousand as of June 30, 2021 for its estimated financial obligation.

On August 18, 2021, the court preliminarily approved the proposed settlement, directed that notice be given to the Company’s stockholders and scheduled the final approval settlement hearing for November 30, 2021.

Notice was subsequently given to the Company’s stockholders .

The proposed settlement is subject to final approval by the court.

The Company had $ 425 thousand accrued as of September 30, 2021 for its estimated financial obligation.

The Company expects its financial obligation to be within the limits of its insurance coverage and accordingly recorded a receivable for an insurance recovery equal to the settlement amount.

10 unchanged sentences

Subsequent Event

Repayment of the Term Loan Facility with SVB

In July 2021, the Company repaid in full the $ 11.0 million borrowed under the Loan and Security Agreement with SVB (see Note 7).

In addition, the Company paid (i) accrued and unpaid interest as of the payoff date of $ 45 thousand, (ii) a final payment fee of $ 550 thousand and (iii) a prepayment fee of $ 120 thousand.

Following this repayment, all of the Company’s obligations under the Loan and Security Agreement are deemed to be terminated, except as set forth in the agreement.

On November 1, 2021, Kamil Ali-Jackson, Co-Founder, Chief Legal Officer, Chief Compliance Officer and Corporate Secretary notified the Company that she will retire from her position effective January 3, 2022.

In connection with her retirement, the Company entered into a Severance Agreement containing a release of claims against the Company.

Under the Severance Agreement, Ms.

Ali-Jackson will receive a lump sum cash payment of $ 615 thousand, equal to her annual base salary, her 2021 target bonus, and accrued but unused paid-time off.

She will also receive continuation of health insurance benefits for 12 months, acceleration of vesting of options and restricted stock units, to the extent the award would have vested had she remained employed through March 31, 2022, and acceleration of additional currently outstanding restricted stock units held by her, with respect to a number of shares equal to (i) $ 157 thousand divided by (ii)

the fair market value of the Company’s common stock on January 3, 2022.

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-Q

Item 1. Financial Statements