aTYR PHARMA INC 10-Q

Item 1. Financial Statements aTyr Pharma, Inc. Condensed Consolidated Balance Sheets (in thousands, except share and per share data) March 31, December 31, 2022 2021 (unaudited) Assets Current assets: Cash and cash equivalents $ 8,324 $ 2,336 Available-for-sale investments 90,342 105,575 Other receivables 426 435 Prepaid expenses 4,025 5,223 Total current assets 103,117 113,569 Property and equipment, net 433 543 Right-of-use assets 1,050 1,267 Other assets 176 158 Total assets $ 104,776 $ 115,537 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 1,563 $ 1,031 Accrued expenses 3,694 4,002 Current portion of operating lease liability 1,012 980 Total current liabilities 6,269 6,013 Long-term operating lease liability, net of current portion 133 398 Commitments and contingencies (Note 4) Stockholders’ equity: Preferred stock, $ 0.001 par value per share; 5,000,000 undesignated authorized shares; Class X Convertible Preferred Stock issued and outstanding shares – 0 as of March 31, 2022 (unaudited) and December 31, 2021, respectively — — Common stock, $ 0.001 par value per share; 42,500,000 authorized shares as of March 31, 2022 and December 31, 2021, respectively; issued and outstanding shares – 28,056,249 (unaudited) and 27,793,035 as of March 31, 2022 and December 31, 2021, respectively 28 28 Additional paid-in capital 483,730 481,832 Accumulated other comprehensive loss ( 759 ) ( 263 ) Accumulated deficit ( 384,449 ) ( 372,296 ) Total aTyr Pharma, Inc. stockholders’ equity 98,550 109,301 Noncontrolling interest in Pangu BioPharma Limited ( 176 ) ( 175 ) Total stockholders’ equity 98,374 109,126 Total liabilities and stockholders’ equity $ 104,776 $ 115,537 See accompanying notes. 3 aTyr Pharma, Inc. Condensed Consolidated Statements of Operations (in thousands, except share and per share data) Three Months Ended March 31, 2022 2021 (unaudited) Operating expenses: Research and development $ 8,896 $ 4,516 General and administrative 3,482 2,686 Total operating expenses 12,378 7,202 Loss from operations ( 12,378 ) ( 7,202 ) Total other income (expense), net 224 47 Consolidated net loss ( 12,154 ) ( 7,155 ) Net loss attributable to noncontrolling interest in Pangu BioPharma Limited 1 4 Net loss attributable to aTyr Pharma, Inc. $ ( 12,153 ) $ ( 7,151 ) Net loss per share, basic and diluted $ ( 0.44 ) $ ( 0.51 ) Shares used in computing net loss per share, basic and diluted 27,818,379 14,103,783 See accompanying notes. 4 aTyr Pharma, Inc. Condensed Consolidated Statements of Comprehensive Loss (in thousands) Three Months Ended March 31, 2022 2021 (unaudited) Consolidated net loss $ ( 12,154 ) $ ( 7,155 ) Other comprehensive loss: Change in unrealized loss on available-for-sale investments, net of tax ( 496 ) ( 14 ) Comprehensive loss ( 12,650 ) ( 7,169 ) Comprehensive loss attributable to noncontrolling interest in Pangu BioPharma Limited 1 4 Comprehensive loss attributable to aTyr Pharma, Inc. common stockholders $ ( 12,649 ) $ ( 7,165 ) See accompanying notes. 5 aTyr Pharma, Inc. Condensed Consolidated Statements of Stockholders’ Equity (in thousands, except share data) Three months ended March 31, 2022 (unaudited) Common Stock Additional Paid-In Other Comprehensive Accumulated Noncontrolling Total Stockholders’ Shares Amount Capital Gain/(Loss) Deficit Interest Equity Balance as of December 31, 2021 27,793,035 $ 28 $ 481,832 $ ( 263 ) $ ( 372,296 ) $ ( 175 ) $ 109,126 Issuance of common stock upon release of restricted stock units 2,500 — — — — — — Issuance of common stock upon exercise of stock options 259 — 1 — — — 1 Issuance of common stock from at-the-market offerings, net of offering costs 260,455 — 1,480 — — — 1,480 Stock-based compensation — — 417 — — — 417 Net unrealized loss on investments, net of tax — — — ( 496 ) — — ( 496 ) Net loss — — — — ( 12,153 ) ( 1 ) ( 12,154 ) Balance as of March 31, 2022 28,056,249 $ 28 $ 483,730 $ ( 759 ) $ ( 384,449 ) $ ( 176 ) $ 98,374 Three Months Ended March 31, 2021 (unaudited) Common Stock Additional Paid-In Other Comprehensive Accumulated Noncontrolling Total Stockholders’ Shares Amount Capital Gain/(Loss) Deficit Interest Equity Balance as of December 31, 2020 11,018,954 $ 11 $ 370,210 $ ( 43 ) $ ( 338,528 ) $ ( 166 ) $ 31,484 Issuance of common stock upon release of restricted stock units 4,177 — — — — — — Issuance of common stock from at-the-market offerings, net of offering costs 1,988,254 2 9,619 — — — 9,621 Issuance of common stock from committed purchase agreement, net of offering costs 3,000,000 3 15,233 — — — 15,236 Stock-based compensation — — 360 — — — 360 Net unrealized loss on investments, net of tax — — — ( 14 ) — — ( 14 ) Net loss — — — — ( 7,151 ) ( 4 ) ( 7,155 ) Balance as of March 31, 2021 16,011,385 $ 16 $ 395,422 $ ( 57 ) $ ( 345,679 ) $ ( 170 ) $ 49,532 See accompanying notes. 6 aTyr Pharma, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) March 31, 2022 2021 (unaudited) Cash flows from operating activities: Consolidated net loss $ ( 12,154 ) $ ( 7,155 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 81 121 Stock-based compensation 417 360 Amortization of premium of available-for-sale investment securities 237 51 Amortization of right-of-use assets 217 176 Gain on disposal of property and equipment ( 89 ) — Changes in operating assets and liabilities: Other receivables 9 1,950 Prepaid expenses and other assets 1,180 395 Accounts payable and accrued expenses 216 ( 1,521 ) Operating lease liability ( 233 ) ( 204 ) Net cash used in operating activities ( 10,119 ) ( 5,827 ) Cash flows from investing activities: Purchases of property and equipment ( 43 ) ( 17 ) Purchases of available-for-sale investment securities — ( 25,678 ) Maturities of available-for-sale investment securities 14,500 2,300 Proceeds from sale of property and equipment 169 — Net cash provided by (used in) investing activities 14,626 ( 23,395 ) Cash flows from financing activities: Proceeds from issuance of common stock through option exercises 1 — Proceeds from issuance of common stock from at-the-market offerings, net of offering costs 1,480 9,621 Proceeds from issuance of common stock from committed purchase agreement, net of offering costs — 15,236 Net cash provided by financing activities 1,481 24,857 Net change in cash and cash equivalents 5,988 ( 4,365 ) Cash and cash equivalents at beginning of period 2,336 16,952 Cash and cash equivalents at the end of period $ 8,324 $ 12,587 See accompanying notes. 7 aTyr Pharma, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Organization, Business, Basis of Presentation and Summary of Significant Accounting Policies Organization and Business aTyr Pharma, Inc. (we, us, and our) was incorporated in the State of Delaware on September 8, 2005. We are a biotherapeutics company engaged in the discovery and development of innovative medicines based on our proprietary tRNA synthetase biology platform. Principles of Consolidation Our condensed consolidated financial statements include our accounts and our 98 % majority-owned subsidiary in Hong Kong, Pangu BioPharma Limited (Pangu BioPharma). All intercompany transactions and balances are eliminated in consolidation. Unaudited Interim Financial Information The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (U.S. GAAP) and follow the requirements of the U.S. Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. In our opinion, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of our financial position and our results of operations and cash flows for periods presented. These statements do not include all disclosures required by GAAP and should be read in conjunction with our financial statements and accompanying notes for the fiscal year ended December 31, 2021, contained in our Annual Report on Form 10-K filed with the SEC on March 15, 2022. The results of the interim periods are not necessarily indicative of the results expected for the full fiscal year or any other interim period or any future year or period. Risks and Uncertainties The impact of the ongoing COVID-19 pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world. Impacts to our business have included delayed enrollment of our now completed Phase 1b/2a clinical trial in patients with pulmonary sarcoidosis and the discontinuation of some patients in that trial, temporary closures of portions of our facilities and those of our licensees and collaborators, disruptions or restrictions on our employee’s ability to travel and delays in certain research and development activities. Other potential impacts to our business include, but are not limited to disruptions to or delays in planned clinical trials, third-party manufacturing supply and other operations, inflation, the potential diversion of healthcare resources away from the conduct of clinical trials to focus on pandemic concerns, interruptions or delays in the operations of the U.S. Food and Drug Administration or other regulatory authorities, and our ability to raise capital and conduct business development activities. Liquidity and Financial Condition We have incurred net losses in each year since our inception in 2005, including a consolidated net loss of $ 12.2 million for the three months ended March 31, 2022. As of March 31, 2022, we had an accumulated deficit of $ 384.4 million. We believe that our existing cash, cash equivalents and available-for-sale investments of $ 98.7 million as of March 31, 2022 will be sufficient to meet our material cash requirements from known contractual and other obligations for a period of at least one year from the filing date of this Quarterly Report on Form 10-Q. We do not expect to generate any revenues from product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which we expect will take a number of years at a minimum. If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Accordingly, we will need to raise substantial additional capital to fund our operations. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our preclinical and clinical development efforts and the timing and nature of the regulatory approval process for our product candidates. We anticipate that we will seek to fund our operations through equity offerings, grant funding, collaborations, strategic partnerships and/or licensing arrangements, and when we are closer to commercialization of our product candidates potentially through debt financings. However, we may be unable to raise additional capital or enter into such arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such arrangements when needed would have a negative impact on our financial condition and ability to develop our product candidates. 8 Use of Estimates Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure for these items in our condensed consolidated financial statements and accompanying notes. The most significant estimates in our condensed consolidated financial statements relate to clinical trial and research and development expenses. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ materially from these estimates and assumptions. Leases We determine if an arrangement is a lease at inception. Short-term leases with an initial term of 12 months or less are not recorded on our balance sheet. For long-term operating leases with an initial term of greater than 12 months, we recognize an operating right-of-use asset (ROU) and a lease liability based on the present value of future lease payments using an estimated rate of interest that we would pay to borrow equivalent funds on a collateralized basis at the lease commencement date. We determine the lease term at the commencement date by considering whether renewal options and termination options are reasonably assured of exercise. Rent expense for the operating lease is recognized on a straight-line basis over the lease term and is included in operating expenses in our condensed consolidated statements of operations. If a lease is modified, the modified contract is evaluated to determine whether it is or contains a lease. If a lease continues to exist, the lease modification is determined to be a separate contract when the modification grants the lessee an additional ROU that is not included in the original lease and the lease payments increase commensurate with the standalone price for the additional ROU. A lease modification that results in a separate contract will be accounted for in the same manner as a new lease. For a modification that is not a separate contract, we reassess the lease classification using the modified terms and conditions and the facts and circumstances as of the effective date of the modification and recognize the amount of the remeasurement of the lease liability for the modified lease as an adjustment to the corresponding operating lease ROU asset. Our ROU asset consists of an operating lease for our facility headquarters. We have a noncancelable operating lease that includes certain tenant improvement allowances and is subject to base lease payments, which escalate over the term of the lease, additional charges for common area maintenance and other costs. We currently do not have any finance leases. We do not separate lease and non-lease components of our long-term leases. Rent expense for the operating lease is recognized on a straight-line basis over the lease term and is included in our condensed consolidated statement of operations. Variable lease payments, including lease operating expenses, are recorded as incurred. Revenue Recognition We evaluate our agreements under Accounting Standard Codification ( ASC) Topic 606, Revenue from Contracts with Customers and ASC Topic 808, Collaborative Arrangements . We recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services . In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under our agreement, we perform the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance obligation. As part of the accounting for these arrangements, we must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. We use key assumptions to determine the stand-alone selling price, which may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success. We recognize revenue in one of two ways, over time or at a point in time. We recognize revenue over time when we are executing on our performance obligation over time and our partner receives benefit over time. For example, we recognize revenue over time when we provide research and development services. We recognize revenue at a point in time when we transfer control of a distinct performance obligation to our partner. For example, if a license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenues from non-refundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. Net Loss Per Share Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share is calculated by dividing the net loss by the weighted average number of common stock equivalents outstanding for the period determined using the treasury-stock method. Dilutive common stock equivalents are comprised 9 of warrants for common stock, options and restricted stock units outstanding under our stock option plan and estimated shares to be purchased under our employee stock purchase plan. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding , as the assumed exercise or settlement of stock options, restricted stock units, and warrants, or the conversion of preferred stock are anti-dilutive . Potentially dilutive securities not considered for the calculation of diluted net loss per share are as follows (in common stock equivalents): Three Months Ended March 31, 2022 2021 Common stock warrants 13,760 13,760 Common stock options and restricted stock units 1,824,164 898,306 Employee stock purchase plan 2,045 1,602 Total 1,839,969 913,668 Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (Topic 326), to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in Topic 326 replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Topic 326 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller reporting companies. We expect the adoption of the amendments in Topic 326 to not have a material effect in our condensed consolidated financial position or results of operations when such amendment is adopted. 2. Fair Value Measurements The carrying amounts of cash equivalents, prepaid and other assets, accounts payable and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments. Investment securities are recorded at fair value. The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1: Observable inputs such as quoted prices in active markets. Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly. Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Financial assets measured at fair value on a recurring basis consist of investment securities. Investment securities are recorded at fair value, defined as the exit price in the principal market in which we would transact, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Level 2 securities are valued using quoted market prices for similar instruments, non-binding market prices that are corroborated by observable market data, or discounted cash flow techniques and include our investments in commercial paper, corporate debt securities and asset-bask securities. We have no financial liabilities measured at fair value on a recurring basis. None of our non-financial assets and liabilities are recorded at fair value on a non-recurring basis. No transfers between levels have occurred during the periods presented. Assets measured at fair value on a recurring basis are as follows (in thousands): 10 Fair Value Measurements Using Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) As of March 31, 2022 Assets: Current: Cash equivalents $ 8,088 $ 8,088 $ — $ — Available-for-sale investments: Commercial paper 26,828 — 26,828 — Corporate debt securities 50,671 — 50,671 — Municipal bonds 12,843 — 12,843 — Total available-for-sale investments 90,342 — 90,342 — Total assets measured at fair value $ 98,430 $ 8,088 $ 90,342 $ — Fair Value Measurements Using Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) As of December 31, 2021 Assets: Current: Cash equivalents $ 2,052 $ 2,052 $ — $ — Available-for-sale investments: Commercial paper 36,921 — 36,921 — Corporate debt securities 55,713 — 55,713 — Municipal bonds 12,941 — 12,941 — Total available-for-sale investments 105,575 — 105,575 — Total assets measured at fair value $ 107,627 $ 2,052 $ 105,575 $ — As of March 31, 2022 and December 31, 2021, available-for-sale investments are detailed as follows (in thousands): March 31, 2022 Contractual Maturity Gross Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Market Value Available-for-sale investments: Commercial paper Within 1 year $ 26,972 $ — $ ( 144 ) $ 26,828 Corporate debt securities 1 to 2 years 51,152 — ( 481 ) 50,671 Municipal bonds 1 to 2 years 12,927 — ( 84 ) 12,843 $ 91,051 $ — $ ( 709 ) $ 90,342 December 31, 2021 Contractual Maturity Gross Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Market Value Available-for-sale investments: Commercial paper Within 1 year $ 36,956 $ — $ ( 35 ) $ 36,921 Corporate debt securities 1 to 2 years 55,859 — ( 146 ) 55,713 Municipal bonds 1 to 2 years 12,973 — ( 32 ) 12,941 $ 105,788 $ — $ ( 213 ) $ 105,575 11 At each reporting date, we perform an evaluation of impairment to determine if any unrealized losses are other-than-temporary. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition of the issuer, and our intent and ability to hold the investment until recovery of its amortized cost basis. We intend, and have the ability, to hold our investments in unrealized loss positions, if any, until their amortized cost basis has been recovered. As of March 31, 2022, all available-for-sale investments had a variety of effective maturity dates of less than two years . As of March 31, 2022, all available-for-sale investments were in gross unrealized loss positions and have been in such loss positions less than twelve months . 3. License and Other Agreements Kyorin Pharmaceutical Co., Ltd. In January 2020, we entered into a collaboration and license agreement (Kyorin Agreement) with Kyorin Pharmaceutical Co., Ltd. (Kyorin) for the development and commercialization of efzofitimod for interstitial lung disease (ILD) in Japan. Under the Kyorin Agreement, Kyorin received an exclusive right to develop and commercialize efzofitimod in Japan for all forms of ILD. Kyorin is obligated to fund all research, development, regulatory, marketing and commercialization activities in Japan. In 2020, Kyorin completed a Phase 1 clinical trial of efzofitimod (known as KRP-R120 in Japan). The Phase 1 clinical trial, which was conducted and funded by Kyorin, was a placebo-controlled study to evaluate the safety, pharmacokinetics and immunogenicity of efzofitimod in 32 healthy Japanese male volunteers. Efzofitimod was observed to be generally well-tolerated with no drug-related serious adverse events and pharmacokinetics findings were consistent with previous studies of efzofitimod. We received an $ 8.0 million upfront payment in January 2020 and a $ 2.0 milestone payment in January 2021 upon completion of enrollment in the Phase 1 clinical trial, and we are eligible to receive up to an additional $ 165.0 million in the aggregate upon achievement of certain development, regulatory and sales milestones, as well as tiered royalties ranging from the mid-single digits to mid-teens on net sales in Japan. Either party may terminate the Kyorin Agreement in the event that the other party breaches the agreement and fails to cure the breach, becomes insolvent or challenges certain of the intellectual property rights licensed under the agreement . We assessed our license and collaboration with Kyorin in accordance with Topic 606 and concluded that Kyorin is a customer. We identified the following performance obligations under the Kyorin Agreement: 1) the license of efzofitimod for ILD in Japan; and 2) free clinical trial material for Kyorin’s Phase 1 clinical trial. The $8.0 million upfront payment received from Kyorin is non-refundable and non-creditable and is considered fixed consideration. We determined that the relative stand-alone selling price was $ 7.9 million when the license was delivered to Kyorin in January 2020. We determined that the relative standalone selling price was $ 0.1 million for the free clinical trial material delivered to Kyorin in June 2020, using the “expected cost plus a margin” approach. In December 2020, Kyorin completed the last subject visit in its Phase 1 clinical trial of efzofitimod. This achievement triggered a $2.0 million milestone payment which we recognized as license and collaboration revenue in December 2020. We received the $2.0 million from Kyorin in January 2021. For each of the three months ended March 31, 2022 and 2021, there were no activities that triggered additional license and collaboration agreement revenue under the Kyorin Agreement. The remaining milestones and royalty payments under the Kyorin Agreement are variable consideration. Since milestone payments are binary in nature, we will use the “most-likely” method to evaluate whether the milestones should be included as revenue. We will constrain these amounts until the milestone is probable of being achieved. The royalties are dependent on future sales by Kyorin which are at the full discretion of Kyorin. Accordingly, we constrain these amounts until the future sales have occurred. Hong Kong University of Science and Technology In March 2020, our subsidiary, Pangu BioPharma, together with the Hong Kong University of Science and Technology (HKUST) was awarded a grant of approximately $ 750,000 to build a high-throughput platform for the development of bi-specific antibodies. The project is being funded by the Hong Kong Government’s Innovation and Technology Commission (ITC) under the Partnership Research Program (PRP). The PRP aims to support research and development projects undertaken by companies in collaboration with local universities and public research institutions. The ITC funded approximately 50% of the total estimated project cost and we contributed the remaining 50%. The research grant agreement between Pangu BioPharma, HKUST and the Government of the Hong Kong Special Administration Region became effective April 1, 2020 . The term of the project was initially for two years and in December 2021, due to the ongoing COVID-19 pandemic, was extended for an additional six months with no additional costs. All the contributions provided by the ITC are paid to HKUST and we record expenses under this grant award when incurred. Expenses for the three months ended March 31, 2022 and 2021 were $ 41,000 and $ 0.2 million, respectively. 12 4. Commitments and Contingencies Facility Leases Future minimum payments under the non-cancelable facility lease and reconciliation to the operating lease liability as of March 31, 2022 were as follows (in thousands): Operating Lease 2022 $ 799 2023 404 Less: Amount representing interest ( 58 ) Present value of lease payments 1,145 Less: Current portion of operating lease liability ( 1,012 ) Long-term operating lease liability, net of current portion $ 133 For each of the three months ended March 31, 2022 and 2021, we recorded an operating lease cost of $ 0.2 million. 5. Stockholders’ Equity Underwritten Follow-On Public Offerings In September 2021, we completed an underwritten follow-on public offering of 10,781,250 shares of our common stock, including the full exercise of the underwriters’ option to purchase additional shares, at a price to the public of $ 8.00 per share. The total net proceeds from the offering were approximately $ 80.6 million after deducting underwriting discounts, commissions and offering expenses payable by us. At the Market Offering Programs In March 2021, we entered into a Capital on Demand TM Sales Agreement with JonesTrading Institutional Services LLC (JonesTrading) for an at-the-market offering program (Prior ATM Offering Program), pursuant to which we were entitled to sell from time to time, at our option, up to an aggregate of $ 25.0 million of shares of our common stock through JonesTrading, as sales agent or principal. JonesTrading was entitled to a commission at a fixed rate equal of up to 3.0 % of the gross proceeds. During 2021, we sold an aggregate of 986,267 shares of common stock at an average price of $ 4.75 per share for net proceeds of $ 4.4 million under the Prior ATM Offering Program. For the three months ended March 31, 2022, we sold an aggregate of 260,455 shares of common stock at an average price of $ 6.07 per share for net proceeds of approximately $ 1.5 million under the Prior ATM Offering Program. On April 22, 2022, we terminated the Prior ATM Offering Program. Purchase Agreement In September 2020 , we entered into a common stock purchase agreement (Purchase Agreement) with Aspire Capital Fund, LLC (Aspire Capital), which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $ 20.0 million of shares of our common stock at our request from time to time during the 30 month term of the Purchase Agreement. Concurrently with entering into the Purchase Agreement, we also entered into a registration rights agreement with Aspire Capital, in which we agreed to file one or more registration statements, as permissible and necessary to register under the Securities Act of 1933, as amended, for the resale of the shares of our common stock that have been and may be issued to Aspire Capital under the Purchase Agreement. For the three months ended March 31, 2021, we sold an aggregate of 3,000,000 shares of common stock at an average price of $ 5.09 per share for net proceeds of $ 15.2 million under this Purchase Agreement. Inducement Grants In March 2022, we adopted and our Board of Directors approved our 2022 Inducement Plan (Inducement Plan). Awards granted under our Inducement Plan are in accordance with the Nasdaq Listing Rules5635(c)(4). A total of 300,000 shares of our common stock were initially reserved for the issuance under our Inducement Plan. The maximum term of options granted under the Inducement Plan is ten years . Each option vests over a period of four years , with 25 % of the shares vesting on the one-year anniversary of the applicable vesting commencement date and the remaining 75 % vesting in equal monthly installments over three years , subject to continuous employment. In March 2022, we granted nonstatutory stock options under our Inducement Plan to purchase an aggregate of 58,400 shares of our common stock, each with an exercise price of $ 5.24 per share as inducement awards to ten employees. 13 Common Stock Reserved for Future Issuance Common stock reserved for future issuance was as follows: March 31, 2022 Common stock warrants 13,760 Common stock options and restricted stock units 1,824,164 Shares available under the 2015 equity incentive plan 72,423 Shares available under the 2022 inducement plan 241,600 Shares available under the employee stock purchase plan 71,933 2,223,880 The following table summarizes our stock option activity under all equity incentive plans for the three months ended March 31, 2022: Number of Outstanding Stock Options Weighted Average Exercise Price Outstanding as of December 31, 2021 1,412,550 $ 12.01 Granted 331,912 $ 5.47 Exercises ( 259 ) $ 3.77 Canceled/forfeited/expired ( 5,477 ) $ 4.89 Outstanding as of March 31, 2022 1,738,726 $ 10.79 The assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants were as follows: March 31, 2022 2021 Expected term (in years) 6.02 – 6.08 5.99 – 6.02 Risk-free interest rate 1.7% – 2.4 % 0.6% – 0.9 % Expected volatility 85.8% – 86.5 % 104.0% – 104.8 % Expected dividend yield 0.0 % 0.0 % The following table summarizes our restricted stock unit activity under all equity incentive plans for the three months ended March 31, 2022: Number of Outstanding Restricted Stock Units Weighted Average Grant Date Fair Value Balance as of December 31, 2021 7,500 $ 4.08 Granted 80,438 $ 5.52 Released ( 2,500 ) $ 4.13 Balance as of March 31, 2022 85,438 $ 5.43 Stock-based Compensation The allocation of stock-based compensation for all options and restricted stock units and stock issued pursuant to our employee stock purchase plan is as follows (in thousands): March 31, 2022 2021 Research and development $ 107 $ 63 General and administrative 310 297 Total stock-based compensation expense $ 417 $ 360 6. Subsequent Events In April 2022, we entered into an Open Market Sale Agreement SM with Jefferies LLC (Jefferies) implementing an “at-the-market” offering program (ATM Offering Program), pursuant to which we may offer and sell, from time to time and at our option, up 14 to an aggregate of $ 65.0 million of shares of our common stock through Jefferies, acting as sales agent. Jefferies is entitled to a fixed commission rate of up to 3.0 % of the gross sales proceeds of shares sold under the ATM Offering Program.