What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-01 compared with 2021-03-25 · 227 added, 194 removed, 442 unchanged (49% of the section changed)

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm ( KPMG LLP , San Francisco, CA , Auditor Firm ID:

Consolidated Balance Sheets as of December 31, 2021 and 2020

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Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2021 and 2020

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Years ended December 31, 2020 and 2019

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ E quity ( Deficit) for the Years ended December 31, 2021 and 2020

Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020

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Annexon, Inc.:

Opinion on the Consolidated Financial Statements

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Annexon, Inc.

and subsidiary (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, redeemable convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with U.S.

We also have audited the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2021 due to the adoption of Accounting Standards Update (ASU) No.

2016-02, Leases (Topic 842) .

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

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

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

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

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accrued preclinical study and clinical trial expenses

As discussed in Note 2 to the consolidated financial statements, the Company estimates preclinical study and clinical trial expenses based on the services performed pursuant to contracts with research institutions, clinical research organizations and clinical manufacturing organizations.

In accruing service fees, the Company estimates the period over which services will be performed and the level of effort to be expended in each period.

These estimates are based on the Company’s communications with the third-party service providers and on information available at each balance sheet date.

If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust research and development expenses accordingly to reflect the best information available at the time of the financial statement issuance.

As of December 31, 2021, amounts recorded as accrued liabilities were $9.3 million, which included accrued preclinical study and clinical trial expenses.

We identified the evaluation of accrued preclinical study and clinical trial expenses incurred as a result of contracts with clinical research organizations and clinical manufacturing organizations as a critical audit matter.

Subjective auditor judgment was required to evaluate the Company’s assessment of the status of research and development activities, specifically, the period over which services were performed and the level of effort expended in the period.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the research and development contract process.

This included controls related to the assessment of the period over which services were performed and the level of effort expended in the period.

For a selection of research and development contracts, we evaluated the period over which services were performed by obtaining and inspecting executed contracts and change orders, including the timeline and budget, and agreeing them to the information used in the Company’s estimate of preclinical study and clinical trial expenses incurred to date.

In addition, for each selected research and development contract, we evaluated the level of effort expended in the period by comparing the Company’s expected status of each clinical trial to confirmations received from clinical research organizations and clinical manufacturing organizations.

We have served as the Company’s auditor since 2016.

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Total current assets

Property and equipment

Other long-term assets

Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity

Restricted cash

Property and equipment, net

Operating lease right-of-use assets

Liabilities and Stockholders' Equity

Current liabilities:

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Deferred rent, current

Operating lease liabilities, current

Other current liabilities

Total current liabilities

Deferred rent

Operating lease liabilities, non-current

Total liabilities

Commitments and contingencies (Note 5)

Redeemable convertible preferred stock, $0.001 par value;

zero and 119,155,472

shares authorized as of December 31, 2020 and 2019, respectively;

and 111,748,065 shares issued and outstanding as of December 31, 2020 and

2019, respectively;

aggregate liquidation preference of zero and $137,814 as

of December 31, 2020 and 2019, respectively

Stockholders’ Equity (Deficit):

Stockholders’ equity:

Preferred stock, $ 0.001 par value;

5,000,000 and zero shares authorized as of

5,000,000 shares authorized as of

December 31, 2021 and 2020, respectively;

zero issued and

no shares issued and

outstanding as of December 31, 2021 and 2020, respectively

Common stock, $ 0.001 par value;

300,000,000 and 150,000,000 shares authorized

300,000,000 shares authorized

as of December 31, 2021 and 2020, respectively;

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Accumulated deficit

Total stockholders’ equity (deficit)

Total liabilities, redeemable convertible preferred stock and stockholders’

equity (deficit)

Total stockholders' equity

Total liabilities and stockholders’ equity

See accompanying notes to consolidated financial statements.

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Loss from operations

Loss on remeasurement of redeemable convertible preferred

stock liability

Other income, net

Net loss before taxes

Provision for income taxes

Interest and other income, net

Accretion on redeemable convertible preferred stock

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Balances as of December 31, 2019

Issuance of Series C redeemable

convertible preferred stock, net

of issuance costs of $3 and the

value of the redeemable convertible

preferred stock liability of $10,810

Accretion on redeemable convertible

preferred stock

Stock option exercises

Stock-based compensation

Foreign currency translation adjustment

Balances as of December 31, 2019

Accretion on redeemable convertible

preferred stock

Issuance of Series D redeemable

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initial public offering

( 183,467,924

Deemed dividend of beneficial conversion

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Balances as of December 31, 2020

Stock-based compensation

Stock option exercises

Issuance of common stock per ESPP

Foreign currency translation adjustment

Unrealized loss on available-for-sale

Balances as of December 31, 2021

See accompanying notes to consolidated financial statements.

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Stock-based compensation

Change in fair value of redeemable convertible preferred stock liability

Reduction in the carrying amount of right-of-use assets

Changes in operating assets and liabilities:

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Deferred rent

Operating lease liabilities

Other current liabilities

Net cash used in operating activities

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Purchases of property and equipment

Purchase of available-for-sale securities

Purchases of available-for-sale securities

Proceeds from sale of available-for-sale securities

Proceeds from maturities of available-for-sale securities

Net cash used in investing activities

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Proceeds from the exercise of common stock options

Proceeds from employee stock purchase plan

Proceeds from Paycheck Protection Program loan

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Proceeds from issuance of redeemable convertible preferred stock (including

$13,900 of proceeds from the related parties in 2020)

$ 13,900 of proceeds from the related parties)

Payments of issuance costs related to redeemable convertible preferred stock

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Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Effect of exchange rate changes on cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

(Decrease) increase in cash, cash equivalents, and restricted cash

Effect of exchange rate changes on cash, cash equivalents and restricted cash

Cash, cash equivalents, and restricted cash at beginning of year

Cash, cash equivalents, and restricted cash at end of year

Supplemental disclosures of cash flow information:

Income taxes paid

Cash paid for amounts included in the measurement of lease liability

Non-cash investing and financing activities:

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initial public offering

Reclassification of redeemable convertible preferred stock liability to redeemable

convertible preferred stock

Accretion on redeemable convertible preferred stock

Deferred offering costs included in accounts payable and accrued liabilities

Purchase of property and equipment included in accounts payable

Right-of-use assets obtained in exchange for lease liability

Leasehold improvements obtained in exchange for tenant improvement allowance from lessors

Purchase of property and equipment included in accounts payable and accrued liabilities

Beneficial conversion feature recognized upon issuance of redeemable

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Notes to Consolidated Financial Statements

Annexon, Inc., or the Company, is a clinical-stage biopharmaceutical company targeting C1q and initiating molecules of the classical complement pathway to develop transformative therapies for autoimmune and neurodegenerative disorders of the body, brain and eye.

The Company is located in South San Francisco, California and was incorporated in Delaware in March 2011.

Annexon, Inc., or the Company, is a clinical-stage biopharmaceutical company pioneering a new class of complement medicines designed to stop the classical complement pathway at its start, C1q, in order to bring therapies to patients suffering from serious complement-mediated autoimmune, neurodegenerative and ophthalmic disorders.

The Company is located in Brisbane, California and was incorporated in Delaware in March 2011.

The Company’s wholly-owned subsidiary, Annexon Biosciences Australia Pty Ltd, or the Subsidiary, is a proprietary limited company incorporated in 2016 and domiciled in Australia.

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Initial Public Offering

On July 23 , 2020, the Company’s registration statement on Form S-1 relating to its initial public offering, or the IPO, was declared effective by the Securities and Exchange Commission, or the SEC, and the shares of its common stock began trading on the Nasdaq Global Select Market on July 24, 2020.

On July 23 , 2020, the Company’s registration statement on Form S-1 relating to its initial public offering, or the IPO, was declared effective by the SEC and the shares of its common stock began trading on the Nasdaq Global Select Market on July 24, 2020.

The IPO closed on July 28, 2020, pursuant to which the Company issued and sold 14,750,000 shares of its common stock at a public offering price of $ 17.00 per share.

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The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or 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 and the reported expenses during the reporting period.

On an ongoing basis, management evaluates its estimates, including but not limited to the fair value of common stock, redeemable convertible preferred stock, redeemable convertible preferred stock liability, stock options, income taxes, clinical trial accruals and stock-based compensation.

Management evaluates its estimates, including but not limited to the fair value of investments, stock options, income taxes, clinical trial accruals and stock-based compensation.

The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate.

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Accordingly, the Company has determined that it operates in one segment.

Cash and Cash Equivalents

Cash, Cash Equivalents and Restricted Cash

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

Cash equivalents, which includes amounts invested in money market funds, are stated at fair value.

Restricted cash as of December 31, 2021 relates to the letters of credit established for the Company’s office leases.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows:

Cash equivalents

Cash and cash equivalents

Restricted cash

Cash, cash equivalents and restricted cash

Short-Term Investments

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Available-for-sale securities with original maturities beyond three months at the date of purchase are classified as current based on their availability for use in current operations.

Unrealized gains and losses are excluded from earnings and are reported as a component of other comprehensive loss.

The Company periodically evaluates whether declines in fair values of its marketable securities below their book value are other-than-temporary.

This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss as well as the Company’s ability and intent to hold the marketable security until a forecasted recovery occurs.

Additionally, the Company assesses whether it has plans to sell the security or it is more likely than not it will be required to sell any marketable securities before recovery of its amortized cost basis.

Impairment assessments are made at the individual security level each reporting period.

When the fair value of an available-for-sale security is less than its cost at the balance sheet date, a determination is made as to whether the impairment is other-than-temporary and, if it is other-than-temporary, an impairment loss is recognized in other income, net, equal to the difference between the investment’s amortized cost and fair value at such date.

The Company evaluates, on a quarterly basis, its available-for-sale debt securities for potential impairment.

For available-for-sale debt securities in an unrealized loss position, the Company assesses whether such declines are due to credit loss based on factors such as changes to the rating of the security by a ratings agency, market conditions and supportable forecasts of economic and market conditions, among others.

If credit loss exists, the Company assess es whether it has plans to sell the security or it is more likely than not it will be required to sell any available-for-sale debt security before recovery of its amortized cost basis.

If either condition is met, the security’s amortized cost basis is written down to fair value and is recognized through interest and other income (expense) , net.

If neither condition is met, declines as a result of credit losses, if any, are recognized as an allowance for credit loss, limited to the amount of unrealized loss, through interest and other income (expense) , net.

Any portion of the unrealized loss that is not a result of a credit loss, is recognized in other comprehensive income (loss) .

Realized gains and losses, if any, on available-for-sale debt securities are included in interest and other income (expense) , net.

The cost of investments sold is based on the specific-identification method.

Interest on marketable securities is included in other income, net.

Interest on available-for-sale debt securities is included in interest and other income (expense), net.

Property and Equipment, Net

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There were no impairments of the Company’s long-lived assets for the periods presented.

Deferred Offering Costs

Deferred offering costs, consisting of legal, accounting, audit and filing fees relating to an initial public offering, are capitalized.

As of December 31, 2019, $2.3 million of deferred offering costs were capitalized, which are included in other long-term assets in the accompanying consolidated balance sheets.

In July 2020, upon the closing of the IPO, all deferred offering costs were offset against the Company’s IPO proceeds within additional paid-in capital.

Redeemable Convertible Preferred Stock Liability

The obligation to issue additional shares of the Company’s Series C redeemable convertible preferred stock at a future date was determined to be a freestanding financial instrument that should be accounted for as a liability.

At initial recognition, the Company recorded the redeemable convertible preferred stock liability on the balance sheet at its estimated fair value.

The liability was subject to remeasurement at each balance sheet date, with changes in fair value recognized as gain (loss) on remeasurement of redeemable convertible preferred stock liability on the consolidated statement of operations.

Upon settlement of the redeemable convertible preferred stock liability in August 2019, the Company remeasured the liability and reclassified the final value associated with the redeemable convertible preferred stock liability to the carrying value of the Series C redeemable convertible preferred stock.

The Company determines if an arrangement is a lease at inception.

Upon adoption of Accounting Standards Codification 842, Leases , as of January 1, 2021, the Company includes operating leases in operating lease right of use, or ROU, assets, current and noncurrent operating lease liabilities in the Company’s consolidated balance sheets.

The ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

Operating lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

The Company measures the ROU assets based on the associated lease liabilities adjusted for any lease incentives such as tenant improvement allowances.

As most of the leases do not provide an implicit rate, the Company generally uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at the commencement date.

The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option.

Lease expense for lease payments is recognized on a straight-line basis, net of sublease income, over the lease term.

As a practical expedient, the Company elected, for all facility leases, not to separate non-lease components from lease components and instead to account for each separate lease component and its associated non-lease components as a single lease component.

The Company elected to exclude from its balance sheets recognition of leases having a term of 12 months or less (short-term leases).

Income taxes are accounted for under the asset and liability method.

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Valuation allowances are established when necessary to reduce deferred taxes to the amounts expected to be realized.

The Company recognizes benefits of uncertain tax positions if it is more likely than not that such positions will be sustained upon examination based solely on their technical merit, as the largest amount of benefit that is

more likely than not to be realized upon the ultimate settlement.

The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit.

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The resulting foreign currency translation adjustments are recorded as a separate component of accumulated other comprehensive loss in the accompanying consolidated balance sheets.

Foreign exchange translation gain for the year ended December 31, 2020 was $9,000 and loss for the year ended December 31, 2019 was $14,000.

Foreign exchange translation loss for the year ended December 31, 2021 was $ 5,000 and gain for the year ended December 31, 2020 was $ 9,000 .

Gains and losses resulting from exchange rate changes on transactions denominated in a currency other than the functional currency are included in earnings as incurred.

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The Company estimates preclinical studies and clinical trial expenses based on the services performed pursuant to contracts with research institutions and clinical research organizations that conduct and manage preclinical studies and clinical trials on the Company’s behalf.

The Company also estimates manufacturing costs based on services performed pursuant to contracts with contract manufacturing organizations that develop and manufacture product on the Company’s behalf.

In accruing service fees, the Company estimates the period over which services will be performed and the level of effort to be expended in each period.

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Stock-Based Compensation

related to all stock-based payments, including stock options.

The fair value method requires the Company to estimate the fair value of stock-based payment awards to employees and non-employees on the date of grant using the Black- Scholes option pricing model.

The Company accounts for stock-based compensation arrangements with employees and non-employee directors and consultants using a fair value method which requires the recognition of compensation expense for costs related to all stock-based payments, including stock options and restricted stock units, or RSUs.

The fair value method requires the Company to estimate the fair value of stock options to employees and non-employees on the date of grant using the Black-Scholes option pricing model.

The fair value of RSU awards are based on the fair value of the underlying common stock as of the grant date.

The Company grants certain employees performance-based stock options.

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Stock-based compensation costs are based on the fair value of the underlying option calculated using the Black-Scholes option pricing model and recognized as expense on a straight-line basis (for all but performance-based awards for which the accelerated method is used) over the requisite service period, which is the vesting period.

Determining the appropriate fair value model and related assumptions requires judgment, including estimating the fair value of the underlying common stock, expected term, expected stock price volatility, risk-free interest rate and dividend yield.

Determining the appropriate fair value model and related assumptions requires judgment, including estimating expected term, expected stock price volatility, risk-free interest rate and dividend yield.

The Company accounts for forfeitures as they occur.

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Grants received from government and other agencies in advance of the specific research and development costs to which they relate are deferred and recognized in the consolidated statement of operations in the period they are earned and when the related research and development costs are incurred.

Non-recurring grant income recognized in other income, net was $190,000 for the year ended December 31, 2019.

Non-recurring grant income recognized in interest and other income (expense), net was $ 135,000 for the year ended December 31, 2021.

No non-recurring grant income was recognized during 2020.

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Management believes that the financial institutions are financially sound, and accordingly, minimal credit risk exists with respect to the financial institutions.

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 or the JOBS Act.

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act.

As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Recently Adopted Accounting Pronouncements

In June 2018, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No.

2018-07, Improvements to Nonemployee Share-Based Payment Accounting (Topic 718) .

This standard simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions.

The Company adopted this standard on January 1, 2020 and the adoption of this standard did not have a material impact on its consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820) , which eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some disclosure requirements.

This standard is effective for all entities for fiscal years beginning after December 15, 2019, with early adoption permitted.

The Company adopted this standard on January 1, 2020 and the adoption of this standard did not have a material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU No.

2019-12, Simplifying the Accounting for Income Taxes (Topic 740).

The guidance eliminates certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods.

This guidance also includes guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group.

2019-12 is effective for annual and interim periods in fiscal years beginning after December 15, 2020.

Early adoption is permitted.

The Company early adopted this standard on January 1, 2020.

The adoption of this standard did not have a material impact on the financial statements.

Recently Issued Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No.

2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (Topic 350) .

The standard requires implementation costs incurred by customers in cloud computing arrangements to be deferred over the noncancelable term of the cloud computing arrangements plus any optional renewal periods (1) that are reasonably certain to be exercised by the customer or (2) for which exercise of the renewal option is controlled by the cloud service provider.

The effective date of this pronouncement is for fiscal years beginning after December 15, 2020 and early adoption is permitted.

The standard can be adopted either using the prospective or retrospective transition approach.

The Company adopted ASU No.

2018-15 on January 1, 2021 and the adoption did not have a material impact on its consolidated financial statements.

In February 2016, the FASB issued ASU No.

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A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification.

Leases with a term of 12 months or less may be accounted for similar to existing guidance for operating leases today.

This standard is effective for the Company on January 1, 2022, early adoption is permitted.

Originally, a modified retrospective transition approach was required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements.

In July 2018, the FASB issued guidance to permit an alternative transition method for Topic 842, which allows transition to the new lease standard by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

Entities may elect to apply either approach.

There are also a number of optional practical expedients that entities may elect to apply.

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

Leases with a term of 12 months or less may be accounted for under ASC 842, similar to the operating leases under ASC 840.

In the second quarter of 2021, the Company adopted ASU No.

2016-02 using the modified retrospective approach as of January 1, 2021.

The adoption of Topic 842 as of January 1, 2021 resulted in the recognition of ROU assets of $ 0.5 million, corresponding lease liabilities of $ 0.6 million, the derecognition of the deferred rent liability of $ 1.4 million, and the recognition of a liability of $ 1.3 million related to the reallocation of the consideration of the Company’s lease pending the commencement of the second lease component in May 2021 (see Note 5— Commitments and Contingencies ).

T he adoption resulted in additional $ 0.1 million of rent expense for the first quarter of 2021.

Under the optional transition method, the Company does not need to restate the comparative periods in transition and will continue to present financial information and disclosures for periods before January 1, 2021 in accordance with Topic 840.

As part of the Topic 842 adoption, the Company elected certain practical expedients outlined in the guidance.

The Company has chosen to apply the package of practical expedients for existing leases, which provides relief from reassessing:

(i) whether a contract is or contains a lease, (ii) lease classification, and (iii) whether initial direct costs can be capitalized.

The Company did not elect the hindsight practical expedient to reassess the lease term for existing leases.

The Company elected the short-term lease exemption, under which any lease less than 12 months is excluded from recognition on the balance sheet.

Additionally, the Company elected the non-separation of lease and non-lease components.

In June 2016, the FASB issued ASU No.

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The new guidance also modifies the impairment models for available-for-sale debt securities and for purchased financial assets with credit deterioration since their origination.

Subsequent to the issuance of ASU 2016-13, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses .

Subsequent to the issuance of ASU 2016-13, the FASB issued ASU 2018-19, Codification

Improvements to Topic 326, Financial Instrument s —Credit Losses .

This ASU does not change the core principle of the guidance in ASU 2016-13, instead these amendments are intended to clarify and improve operability of certain topics included within the credit losses guidance.

The FASB also subsequently issued ASU No.

2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Derivatives and Hedging (Topic 815), and Financial Instruments (Topic 825), which did not change the core principle of the guidance in ASU 2016-13 but clarified that expected recoveries of amounts previously written off and expected to be written off should be included

in the valuation account and should not exceed amounts previously written off and expected to be written off.

In March 2020, the FASB issued ASU No.

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The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019 for public business entities, excluding smaller reporting companies.

As a smaller reporting company, the guidance will be effective for the Company during the first quarter of 2023.

The Company is in the process of assessing the impact adoption will have on its consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (Topic 350) .

The effective date of this pronouncement is for fiscal years beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021, and early adoption is permitted.

The standard can be adopted either using the prospective or retrospective transition approach.

The Company is in the process of assessing the impact of this ASU on its future consolidated financial statements but does not expect this update to have a material impact on the Company's consolidated financial statements..

The Company adopted this guidance on a modified-retrospective basis effective January 1, 2021 and noted no material impact to the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

The Company has reviewed the FASB issued ASU accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods.

The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and do not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term.

The applicability of any standard is subject to the formal review of the Company’s financial management.

Fair Value Measurements

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Commercial paper

Corporate bonds

Corporate debt

Government bonds

December 31, 2020

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Money market funds

Short-term investments:

Commercial paper

Corporate bonds

All of the investments held as of December 31, 2021 had maturities of less than two years .

For the years ended December 31, 2021 and 2020, the Company recognized no material realized gains or losses on financial instruments.

In August 2019, the redeemable convertible preferred stock liability was settled upon the completion of the second closing of the Company’s Series C redeemable convertible preferred stock financing.

In light of the Company’s progress towards an IPO, the liability was remeasured at the settlement date using a probability-weighted expected return method, or PWERM, whereby the Company’s total equity value was estimated under various exit scenarios and allocated to the Company’s different classes of equity.

The PWERM included two scenarios, IPO or staying private, that considered an estimate of the timing of each scenario and were weighted based on the Company’s estimate of the probability of each event occurring.

The equity value under the IPO scenario was based on recent IPO values of comparable companies and weighted 50%.

The equity value under the staying private scenario was based on the recent Series C redeemable convertible preferred stock financing and was weighted 50%.

The liability was remeasured to its fair value of $10.8 million upon settlement and the carrying value of the liability was reclassified to the carrying value of the Series C redeemable convertible preferred stock.

The Company recorded a loss of $5.7 million in the consolidated statements of operations for the year ended December 31, 2019, for the change in the fair value of the liability.

The Company had no gain or loss for the change in the fair value of the liability as of December 31, 2020.

The changes in the carrying value of the liability were as follows (in thousands):

Fair value as of December 31, 2018

Change in fair value

Reclassification to redeemable convertible

preferred stock upon settlement

Fair value as of December 31, 2019

Balance Sheet Components

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Other receivables

Other current assets

Total prepaid expenses and other current assets

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Total property and equipment, net

Total depreciation expense recognized for the years ended December 31, 2020 and 2019 was $667,000 and $493,000, respectively.

Total depreciation expense recognized for the years ended December 31, 2021 and 2020 was $ 2.1 million and $ 0.7 million, respectively.

Accrued Liabilities

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Accrued professional services

Accrued construction costs

Other accrued expenses

Total accrued liabilities

Promissory Note

Pursuant to the Coronavirus Aid, Relief, and Economic Security Act, the Company obtained a $0.5 million promissory note from the U.S.

Small Business Administration on April 21, 2020, which was repaid in full on May 1, 2020.

Commitments and Contingencies

The Company leases its offices and laboratory in South San Francisco, California under a 7-year noncancelable lease agreement that ends in June 2024 with a 5-year renewal option.

In December 2020, the Company entered into an agreement to lease office and laboratory space in Brisbane, California, or the Brisbane Lease, with an affiliate of its current landlord.

The term of the Brisbane Lease is expected to begin in November 2021 and end in October 2031, with an option by the Company to extend for an additional ten years.

Concurrent with the execution of the Brisbane Lease, the Company entered into an agreement to terminate its existing lease in South San Francisco, California effective upon the commencement of the Brisbane Lease.

The base rent will be abated for three months and the landlord will provide the Company with a tenant improvement allowance of up to $10.8 million.

In connection with the Brisbane Lease, the Company is required to maintain a letter of credit for the benefit of the landlord in the amount of $1.0 million, which was delivered in January 2021.

Rent expense is recognized on a straight-line basis over the non-cancelable term of the lease and, accordingly, the Company records the difference between cash rent payments and the recognition of rent expense as a deferred rent liability on the accompanying consolidated balance sheet.

Total rent expense was $ 353,000 for each of the year s ended December 31, 20 20 and 2019.

Future minimum lease payments under noncancelable operating leases as of December 31, 2020 were as follows (in thousands):

The Company leased its offices and laboratory in South San Francisco, California, or the South San Francisco Lease, under a 7 -year noncancelable lease agreement that ends in June 2024 with a 5 -year renewal option.

In December 2020, the Company entered into an agreement to lease office and laboratory space in Brisbane, California, or the Brisbane Lease, with an affiliate of the South San Francisco Lease landlord.

The contractual term of the Brisbane Lease began in November 2021 , for a ten-year term, with the Company’s option to extend for an additional ten years .

The Brisbane Lease includes a rent-free period of three months starting in November 2021 and a tenant improvement allowance of $ 10.8 million.

The Company records the tenant improvement allowance as a reduction to the ROU asset, which reduces rent expense over the lease term.

In connection with the Brisbane Lease, the Company maintains a letter of credit in the amount of $ 1.0 million, which is included in restricted cash on the consolidated balance sheet.

In May 2021, the Brisbane Lease commenced when the Company’s tenant improvements started.

Concurrent with the execution of the Brisbane Lease, the Company entered into an agreement to terminate the South San Francisco Lease, immediately effective when the tenant improvements of the Brisbane Lease were completed in December 2021.

The South San Francisco Lease and the Brisbane Lease are accounted for as one lease with two lease components.

Accordingly, upon adoption of Topic 842, the total consideration for the lease was reallocated to each lease component based on standalone selling price.

As the Brisbane Lease commenced in May 2021, $ 1.3 million of the consideration allocated to the Brisbane Lease was recorded as a liability as of January 1, 2021 when the deferred rent balance of the South San Francisco Lease was derecognized.

In November 2021, the Company subleased space that has no immediate needs for the Company’s operations for two years starting from December 2021 for the aggregate sublease payments of $ 3.4 million.

The sublease income, while it reduces the rent expense, is not considered in the value of the right-of-use asset or lease liability.

The Company’s sublease income was $ 0.1 million for the year ended December 31, 2021.

In connection with the Brisbane Lease, the Company recognized operating lease right-of-use assets of $ 21.0 million as of the commencement date in May 2021 , and lease liabilities of $ 22.2 million.

As of December 31, 2021, the operating lease right-of-use assets were $ 20.3 million and lease liabilities were $ 34.6 million in the consolidated balance sheet.

The weighted average remaining lease term is 9.9 years.

The weighted average incremental borrowing rate used to measure the operating lease liability is 8.4 %.

Operating lease cost for the year ended December 31, 2021 was $ 2.9 million.

Variable lease payments for the year ended December 31, 2021 were $ 0.4 million.

Rent expense for the year ended December 31, 2020 was $ 0.4 million.

Future minimum lease payments and related lease liabilities as of December 31, 2021, were as follows:

As of December 31:

(in thousands)

2026 and thereafter

Total undiscounted lease payments

Imputed interest

The Company’s future undiscounted lease payments under non-cancellable operating leases (as defined by prior guidance) as of December 31, 2020 were as follows:

As of December 31:

(in thousands)

2025 and thereafter

License and Other Agreements

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Under the Stanford Agreement, the Company made an upfront payment and is obligated to pay Stanford annual license maintenance fees, potential future milestone payments totaling up to $ 500,000 , and royalty payments at a rate equal to a low single-digit percentage of worldwide net sales of licensed products.

In December 2020, the Company achieved one of the specified development milestones relating to the commencement of the ANX005 Phase 2/3 GBS study, pursuant to the Stanford Agreement.

As such, the milestone payment of $0.1 million was expensed to research and development for the year ended December 31, 2020.

The Company did not achieve any milestones or make any milestone payments for the years ended December 31, 2021 and 2020.

In December 2016, the Company entered into a Sponsored Research Agreement with a not-for-profit entity to perform research on multiple sclerosis.

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If, within 15 years of the end of the Sponsored Research Agreement, the Company files a marketing authorization application for a product treating multiple sclerosis, the Company will be obligated to pay milestone payments up to four times the amounts received under the Sponsored Research Agreement.

The Company has received $455,000 in funding to date, including $190,000 received during the year ended December 31, 2019, which was recorded as other income.

The Company has received $ 590,000 in funding to date, including $ 135,000 received during the year ended December 31, 2021, which was recorded as interest and other income.

No income was recognized for the year ended December 31, 2020.

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The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future.

To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations.

As of December 31, 2020, the Company did not have any material indemnification claims or guarantees that were probable or reasonably possible and consequently has not recorded related liabilities.

Redeemable Convertible Preferred Stock and Stockholder’s Equity ( Deficit )

Redeemable Convertible Preferred Stock

As of December 31, 2019, redeemable convertible preferred stock consisted of the following:

(in thousands)

In June 2020, the Company completed its financing of Series D redeemable convertible preferred stock, which resulted in the Company issuing 71,719,859 shares of Series D redeemable convertible preferred stock, including 9,773,587 shares issued to related parties who were 10% or greater holders of the Company, at a price per share of $1.4222 for aggregate proceeds of $96.8 million, net of issuance costs of $5.2 million.

The shares of Series D redeemable convertible preferred stock were convertible at any time, at the holders’ option, into shares of common stock.

In connection with the issuance and sale of the Series D redeemable convertible preferred stock, the Company recognized a beneficial conversion feature of approximately $6.3 million.

A beneficial conversion feature represents the intrinsic value of the conversion feature, as determined by comparing the effective conversion price at the commitment date with the estimated fair value of the Company’s common stock.

The beneficial conversion feature was recorded in additional paid-in capital on the issuance date resulting in a discount to the carrying value of the Series D redeemable convertible preferred stock.

In July 2020, immediately prior to the completion of the IPO (see Note 1), all outstanding shares of redeemable convertible preferred stock were automatically converted into 20,824,938 shares of common stock.

Upon conversion of the redeemable convertible preferred stock, the unamortized balance of $6.2 million of the discount from the beneficial conversion feature was recorded as a deemed dividend to the preferred stockholders resulting in an increase to the carrying value of redeemable convertible preferred stock.

Upon conversion into common stock, the carrying value of the redeemable convertible preferred stock of $241.4 million was reclassified to equity.

To date, the Company has no t paid any claims or been required to defend any action related to its indemnification obligations.

As of December 31, 2021, the Company did no t have any material indemnification claims or guarantees that were probable or reasonably possible and consequently has not recorded related liabilities.

Stockholder’s Equity

The holders of the Company’s common stock have one vote for each share of common stock.

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The Company reserved the following shares of common stock for issuance as follows:

Redeemable convertible preferred stock outstanding

on an as-converted basis

Options issued and outstanding

Options available for future grant

Reserve for 2020 Incentive Plan

Unvested restricted stock units outstanding

Common stock reserved for 2021 ATM program

Reserved for employee stock purchase plan

Total common stock reserved

At-the-Market Offering

In August 2021, the Company entered into a sales agreement with Cowen and Company LLC, or Cowen, as sales agent, pursuant to which the Company may issue and sell shares of its common stock for an aggregate maximum offering price of $ 100.0 million under an at-the-market offering program, or 2021 ATM program.

The Company will pay Cowen up to 3 % of gross proceeds for the common stock sold through the 2021 ATM program.

As of December 31, 2021, no shares of common stock have been sold under the 2021 ATM program.

Equity Incentive Plan

In July 2020, the Company’s board of directors and stockholders adopted and approved the 2020 Incentive Award Plan, or the 2020 Plan, and the Employee Stock Purchase Plan, or the ESPP, which became effective in connection with the IPO.

The Company reserved 3,600,868 shares of common stock for future issuance under the 2020 Plan and 360,086 shares under the ESPP, respectively.

The Company may not grant any additional awards under the 2011 Equity Incentive Plan, or the 2011 Plan.

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2020 Equity Incentive Plan

The number of shares of common stock reserved for issuance under the 2020 Plan automatically increase on the first day of January, commencing on January 1, 2021 and ending in 2030, in an amount equal to 4% of the total number of shares of the Company’s capital stock outstanding on the last day of the preceding year, or a lesser number of shares determined by the Company’s board of directors.

The number of shares of common stock reserved for issuance under the 2020 Plan automatically increase on the first day of January, in an amount equal to 4 % of the total number of shares of the Company’s capital stock outstanding on the last day of the preceding year, or a lesser number of shares determined by the Company’s board of directors.

Awards granted under the 2020 Plan expire no later than ten years from the date of grant.

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As of December 31, 2021, there were 2,039,951 shares available for issuance under the 2020 Plan.

Stock options

Stock option activity under the 2011 Plan and the 2020 Plan was as follows:

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Exercisable as of December 31, 2021

The total intrinsic value of options exercised during the years ended December 31, 2020 and 2019 was $181,000 and $8,000, respectively.

The total intrinsic value of options exercised during the years ended December 31, 2021 and 2020 was $ 6.4 million and $ 0.2 million, respectively.

The intrinsic value is the difference between the fair value of the Company’s common stock at the time of exercise and the exercise price of the stock option.

The weighted-average grant date fair value of options granted to employees during the years ended December 31, 2021 and 2020 was $ 18.83 and $ 12.33 per share, respectively.

As of December 31, 2021, the total unrecognized stock-based compensation cost related to outstanding unvested stock options that are expected to vest was $ 51.9 million, which the Company expects to recognize over an estimated weighted-average period of 3.03 years.

Restricted Stock Units

RSUs are share awards that entitle the holder to receive freely tradeable shares of the Company’s common stock upon vesting.

The RSUs cannot be transferred and the awards are subject to forfeiture if the holder’s employment terminates prior to the release of the vesting restrictions.

The RSUs generally vest over a three-year period in equal amounts on an annual basis, provided the employee remains continuously employed with the Company.

The fair value of the RSUs is equal to the closing price of the Company’s common stock on the grant date.

A summary of RSU activity under our equity incentive plan and related information is as follows:

Number of Shares

Weighted-Average Grant Date Fair Value Per Share

Unvested as of December 31, 2020

Unvested as of December 31, 2021

As of December 31, 2021, unrecognized stock-based compensation expense related to outstanding unvested RSUs was $ 0.6 million, which is expected to be recognized over a weighted-average period of 2.98 years.

Employee Stock Purchase Plan

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Share purchases are funded through payroll deductions of at least 1 %, and up to 15 % of an employee’s eligible compensation for each payroll period.

The number of shares reserved for issuance under the ESPP increase automatically on the first day of each fiscal year, beginning on January 1, 2021, by a number equal to the least of 360,086 shares, 1% of the shares of common stock outstanding on the last day of the immediately preceding fiscal year, or such number of shares

determined by the Company’s board of directors.

The number of shares reserved for issuance under the ESPP increase automatically on the first day of each fiscal year, by a number equal to, 1 % of the shares of common stock outstanding on the last day of the immediately preceding fiscal year, or such number of shares determined by the Company’s board of directors.

As of December 31, 2021, 729,775 shares were available for future purchase.

The ESPP generally provides for six -month consecutive offering periods beg i n ning on December 15, 2020.

The ESPP generally provides for six-month consecutive offering periods beginning on May 15 th and November 15 th of each year.

The ESPP is a compensatory plan as defined by the authoritative guidance for stock compensation.

As such , stock-based compensation expense has been recorded for the year ended December 31, 2020.

As such, stock-based compensation expense has been recorded for the years ended December 31, 2021 and 2020.

Stock-Based Compensation Expense

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Total stock-based compensation expense

As of December 31, 2020, the total unrecognized stock-based compensation cost related to outstanding unvested stock options that are expected to vest was $25.8 million, which the Company expects to recognize over an estimated weighted-average period of 3.06 years.

The stock-based compensation expense related to the ESPP for the years ended December 31, 2021 and 2020 were $ 0.1 million and $ 0.1 million, respectively.

To determine the value of stock option awards for stock-based compensation purposes, the Company uses the Black-Scholes option pricing model and the assumptions discussed below.

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The board of directors considered, among other things, valuations of the Company’s common stock which were prepared by an independent third-party valuation firm in accordance with the guidance provided by the American Institute of Certified Public Accountants 2013 Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.

After the completion of the IPO in July 2020, the fair value of each share of underlying common stock will be based on the closing price of the Company’s common stock as reported on the date of grant on the Nasdaq Global Select Market.

After the completion of the IPO, the fair value of each share of underlying common stock is based on the closing price of the Company’s common stock as reported on the date of grant on the Nasdaq Global Select Market.

Expected Term —The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding.

The Company’s historical share option exercise information is limited due to a lack of sufficient data points, and did not provide a reasonable basis upon which to estimate an expected term.

The expected term for option grants is therefore determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term).

term for option grants is therefore determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term).

Expected Volatility —Because the Company does not have sufficient trading history for its common stock, the expected volatility was estimated based on the average volatility for comparable publicly traded life science companies over a period equal to the expected term of the stock option grants.

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statutory rate

State income taxes

Stock-based compensation

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Change in valuation allowance

Redeemable convertible preferred stock liability

Section 382 limitations

Provision for income taxes

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Tenant improvement allowances

Lease liabilities

Unrealized gain/loss on investments

Total gross deferred tax assets

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Deferred Tax Liabilities:

Right-of-use assets

Total gross deferred tax liabilities

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As of December 31, 2021, the Company had $ 257.9 million of federal and $ 70.7 million of state net operating loss, or NOL, carryforwards available to offset future taxable income.

Under the Tax Cuts and Jobs Act of 2017, or the Tax Act, NOLs generated after December 31, 2017 will be carried forward indefinitely with the yearly NOL utilization limited to 80 percent of taxable income.

Under the Tax Cuts and Jobs Act of 2017, or the Tax Act, federal NOLs generated after December 31, 2017 will be carried forward indefinitely with the yearly NOL utilization limited to 80 percent of taxable income.

The Company had $ 197.1 million of such federal NOLs that do not expire.

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Utilization of the net operating loss carryforwards and credits may be subject to an annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions.

Any annual limitation may result in the expiration of net operating losses and credits before utilization.

The annual limitations may result in the expiration of net operating losses and credits before utilization.

The Company performed a Section 382 analysis through June 30, 2021.

Federal net operating losses carryforwards of $ 257.8 million and state and local net operating loss carryforwards of $ 30.8 million are not expected to expire unutilized as a result of ownership changes identified through June 30, 2021.

The Company has identified $ 0.1 million and $ 39.9 million of federal and state net operating losses, respectively, that will expire unused due to ownership changes, and federal credits of $ 3.7 million that will not be able to be utilized due to ownership change limitation;

these amounts have been excluded from the deferred tax assets table above.

Uncertain Tax Benefits

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Beginning balance

Decreases based on tax positions related to

Additions based on tax positions related to

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The Company’s policy is to classify interest and penalties associated with unrecognized tax benefits as income tax expense.

The Company had no interest or penalty accruals associated with uncertain tax benefits in its consolidated balance sheet and consolidated statement of operations for the year ended December 31, 2020.

The Company files income tax returns in California, Massachusetts, Pennsylvania and in Australia.

The Company had no interest or penalty accruals associated with uncertain tax benefits in its consolidated balance sheet and consolidated statement of operations for the years ended December 31, 2021 and 2020.

The Company files income tax returns in the US, California, Georgia, Indiana, Maryland, Massachusetts, Nebraska, New Jersey, North Carolina, Pennsylvania, Texas and in Australia.

The Company is not currently under examination by any major tax jurisdictions nor has it been in the past.

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Year Ended December 31,

Redeemable convertible preferred stock on an

as-converted basis

Stock options to purchase common stock

Shares subject to employee stock purchase plan

Unvested restricted stock units

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