Biomea Fusion, Inc. 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) 108 Balance Sheets 109 Statements of Operations and Comprehensive Loss 110 Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) 111 Statements of Cash Flows 112 Notes to Financial Statements 113 107 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Biomea Fusion, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of Biomea Fusion, Inc. (the "Company") as of December 31, 2021 and 2020, the related statements of operations and comprehensive loss, convertible preferred stock and stockholders' equity (deficit), and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements 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. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 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 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 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ DELOITTE & TOUCHE LLP San Francisco, California February 28, 2022 We have served as the Company's auditor since 2020. 108 Biomea Fusion, Inc. Balance Sheets (in thousands, except share and per share data) December 31, 2021 2020 Assets Current assets: Cash and cash equivalents $ 145,736 $ 61,695 Short-term investments 27,780 — Prepaid expenses and other current assets 3,045 528 Total current assets 176,561 62,223 Property and equipment, net 2,965 81 Restricted cash 351 — Other assets 1,230 12 Long-term investments 1,876 — Operating lease right-of-use assets 2,722 210 Total assets $ 185,705 $ 62,526 Liabilities, Convertible Preferred Stock and Stockholders' Equity Current liabilities: Accounts payable $ 1,329 $ 727 Accrued expenses and other current liabilities 2,743 633 Loan payable — 36 Short-term operating lease liabilities 565 223 Total current liabilities 4,637 1,619 Long-term operating lease liabilities 2,285 — Total liabilities 6,922 1,619 Commitments and contingencies (Note 8) Series A convertible preferred stock, $ 0.0001 par value; 0 and 7,064,925 shares authorized as of December 31, 2021 and December 31, 2020, respectively; 0 and 7,064,925 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively; aggregate liquidation preference of $ 0 and $ 56,000 as of December 31, 2021 and December 31, 2020, respectively — 55,738 Stockholders' equity: Preferred stock, $ 0.0001 par value; 10,000,000 and 0 shares authorized as of December 31, 2021 and December 31, 2020; 0 shares issued and outstanding as of December 31, 2021 and December 31, 2020 — — Common stock, $ 0.0001 par value; 300,000,000 and 25,300,080 shares authorized as of December 31, 2021 and December 31, 2020, respectively; 29,115,421 and 11,953,107 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively 3 1 Additional paid-in capital 228,532 13,343 Accumulated other comprehensive loss ( 10 ) — Accumulated deficit ( 49,742 ) ( 8,175 ) Total stockholders' equity 178,783 5,169 Total liabilities, convertible preferred stock, and stockholders' equity $ 185,705 $ 62,526 The accompanying notes are an integral part of these financial statements. 109 Biomea Fusion, Inc. Statements of Operations and Comprehensive Loss (in thousands, except share and per share data) Year Ended December 31, 2021 2020 2019 Operating expenses: Research and development $ 27,996 $ 3,671 $ 1,092 General and administrative 13,671 1,656 103 Total operating expenses 41,667 5,327 1,195 Loss from operations ( 41,667 ) ( 5,327 ) ( 1,195 ) Interest and other income (loss), net 100 3 ( 3 ) Net loss $ ( 41,567 ) $ ( 5,324 ) $ ( 1,198 ) Other comprehensive loss: Unrealized gain (loss) on investments, net ( 10 ) — — Comprehensive loss $ ( 41,577 ) $ ( 5,324 ) $ ( 1,198 ) Net loss per share, basic and diluted $ ( 1.74 ) $ ( 0.51 ) $ ( 0.20 ) Weighted-average number of shares outstanding, basic and diluted 23,858,552 10,532,942 6,051,712 The accompanying notes are an integral part of these financial statements. 110 Biomea Fusion, Inc. Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (in thousands, except share data) Series A Convertible Preferred Stock Common Stock Additional Paid-In Accumulated Other Comprehensive Accumulated Total Stockholders' Shares Amount Shares Amount Capital Gain (Loss) Deficit Equity (Deficit) Balance at December 31, 2018 — $ — 4,274,734 $ — $ 1,390 $ — $ ( 1,653 ) $ ( 263 ) Issuance of common stock — — 4,428,500 1 1,439 — — 1,440 Net loss — — — — — — ( 1,198 ) ( 1,198 ) Balance at December 31, 2019 — — 8,703,234 1 2,829 — ( 2,851 ) ( 21 ) Issuance of Series A convertible preferred stock, net of issuance costs of $ 261 7,064,925 55,738 — — — — — — Issuance of common stock, net of issuance costs of $ 68 — — 3,175,279 — 10,192 — — 10,192 Issuance of restricted stock — — 74,594 — — — — — Stock-based compensation — — — — 322 — — 322 Net loss — — — — — — ( 5,324 ) ( 5,324 ) Balance at December 31, 2020 7,064,925 55,738 11,953,107 1 13,343 — ( 8,175 ) 5,169 Series A convertible preferred stock issuance costs — ( 3 ) — — — — — — Issuance of common stock from initial public offering, net of issuance costs of $ 2,557 — — 9,823,532 1 152,753 — — 152,754 Conversion of Series A convertible preferred stock into common stock ( 7,064,925 ) ( 55,735 ) 7,064,925 1 55,734 — — 55,735 Issuance of restricted stock — — 204,187 — — — — — Exercise of stock options — — 48,663 — 254 — — 254 Purchases under employee stock purchase plan — — 21,007 — 214 — — 214 Stock-based compensation — — — — 6,234 — — 6,234 Unrealized gain (loss) on investments — — — — — ( 10 ) — ( 10 ) Net loss — — — — — — ( 41,567 ) ( 41,567 ) Balance at December 31, 2021 — $ — 29,115,421 $ 3 $ 228,532 $ ( 10 ) $ ( 49,742 ) $ 178,783 The accompanying notes are an integral part of these financial statements. 111 Biomea Fusion, Inc. Statements of Cash Flows (in thousands) Year Ended December 31, 2021 2020 2019 Cash flows from operating activities Net loss $ ( 41,567 ) $ ( 5,324 ) $ ( 1,198 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation expense 249 8 — Non-cash operating lease expense 704 124 — Stock-based compensation expense 6,234 322 — Net amortization of premiums and accretion of discounts on investments 516 — — Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 2,517 ) ( 472 ) 7 Other assets ( 1,218 ) ( 12 ) — Accounts payable 640 418 ( 98 ) Accrued expenses and other current liabilities 2,110 588 10 Operating lease liabilities ( 589 ) ( 111 ) — Net cash used in operating activities ( 35,438 ) ( 4,459 ) ( 1,279 ) Cash flows from investing activities Purchase of property and equipment ( 3,171 ) ( 51 ) — Purchase of investments ( 38,492 ) — — Maturities of investments 8,308 — — Net cash used in investing activities ( 33,355 ) ( 51 ) — Cash flows from financing activities Proceeds from issuance of common stock, net of issuance costs — 10,192 1,440 Proceeds from issuance of Series A convertible preferred stock, net of issuance costs — 55,738 — Proceeds from issuance of common stock from initial public offering, net of issuance costs 152,753 — — Proceeds from exercise of stock options and purchases under the employee stock purchase plan 468 — — Proceeds (payment) from Paycheck Protection Program loan ( 36 ) 36 — Net cash provided by financing activities 153,185 65,966 1,440 Net increase in cash, cash equivalents, and restricted cash 84,392 61,456 161 Cash, cash equivalents, and restricted cash at the beginning of the period 61,695 239 78 Cash, cash equivalents, and restricted cash at the end of the period $ 146,087 $ 61,695 $ 239 Non-cash financing and investing activities: Conversion of Series A convertible preferred stock into common stock $ 55,735 $ — $ — Acquisition of operating lease right-of-use assets $ 3,216 $ 334 $ — Acquisition of property and equipment included in accounts payable and accrued liabilities $ — $ 38 $ — Unpaid deferred offering costs $ — $ 29 $ — Reconciliation of cash, cash equivalents, and restricted cash: Cash and cash equivalents 145,736 61,695 239 Restricted cash 351 — — Total cash, cash equivalents, and restricted cash $ 146,087 $ 61,695 $ 239 The accompanying notes are an integral part of these financial statements. 112 Biomea Fusion, Inc. Notes to Financial Statements Note 1. Organization Organization Biomea Fusion, Inc., (the Company), was established in the state of Delaware in August 2017 as Biomea Fusion, LLC. In December 2020, all outstanding membership interests in Biomea Fusion, LLC were converted into equity interests in the Company. The capitalization information included in these financial statements is consistently presented as if it is that of Biomea Fusion, Inc., even during the prior period when investors held their equity interests in Biomea Fusion, LLC. The Company is a biopharmaceutical company focused on the discovery and development of irreversible covalent small molecule therapeutics to treat patients with genetically defined cancers and metabolic diseases. Since its inception in 2017, the Company has built its proprietary FUSION System to design and develop a pipeline of novel irreversible therapies. Basis of Presentation These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Forward Stock Split In April 2021, the Company’s board of directors approved an amended and restated certificate of incorporation to effect a split of shares of the Company’s outstanding capital at a ratio of 8.84 -for-1 (the Forward Stock Split) effective as of April 12, 2021. The number of authorized shares and the par values of the common stock and convertible preferred stock were not adjusted as a result of the Forward Stock Split. All references to common stock, options to purchase common stock, convertible preferred stock, share data, per share data and related information contained in the financial statements have been retrospectively adjusted to reflect the effect of the Forward Stock Split for all periods presented. Initial Public Offering On April 16, 2021, the Company’s registration statement on Form S-1 (File No. 333-254793) relating to its initial public offering (IPO) of common stock became effective. The IPO closed on April 20, 2021 at which time the Company issued an aggregate of 9,000,000 shares of its common stock at a price of $ 17.00 per share. Subsequent to the close, an additional 823,532 shares were issued in connection with the partial exercise by the underwriters of their option to purchase additional shares of common stock. In addition, immediately prior to the closing of the IPO, all outstanding shares of the Company’s convertible preferred stock automatically converted into 7,064,925 shares of common stock. In connection with the completion of its IPO, on April 20, 2021, the Company’s certificate of incorporation was amended and restated to provide for 300,000,000 authorized shares of common stock with a par value of $ 0.0001 per share and 10,000,000 authorized shares of preferred stock with a par value of $ 0.0001 per share. Proceeds from the IPO, net of underwriting discounts and commissions and offering costs, were $ 152.8 million. Liquidity and Capital Resources The Company has incurred net operating losses and negative cash flows from operations since its inception and had an accumulated deficit of $ 49.7 million at December 31, 2021. As of December 31, 2021, the Company had cash, cash equivalents, restricted cash, and investments of $ 175.7 million. To date, none of the Company’s product candidates have been approved for sale, and the Company has not generated any revenue since inception. Management expects operating losses to continue and increase for the foreseeable future, as the Company progresses into clinical development activities for its lead product candidate. The Company’s prospects are subject to risks, expenses and uncertainties frequently encountered by companies in the biotechnology industry. While the Company has been able to raise multiple rounds of financing, there can be no assurance that in the event the Company requires additional financing, such financing will be available on terms which are favorable or at all. Failure to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending would have a material adverse effect on the Company’s ability to achieve its intended business objectives. 113 Note 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to clinical and preclinical accruals, accrued research and development expenses, fair value of common stock, stock-based compensation and operating lease right-of-use (ROU) assets and liabilities. The Company bases its estimates on its historical experience and also on assumptions that it believes are reasonable; however, actual results could significantly differ from those estimates. Segments The Company operates and manages its business as one reportable and operating segment, which is the business of developing clinical product candidates for the treatment of cancer patients. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for allocating and evaluating financial performance. All long-lived assets are maintained in, and all losses are attributable to, the United States of America. Concentration of Credit Risk and Other Risks and Uncertainties Financial instruments that potentially subject the Company to a concentration of credit risk, consist primarily of cash, cash equivalents and investments. The Company invests in money market funds, U.S. Treasury securities, U.S. government agency securities, corporate notes, commercial paper, and asset backed securities. The Company maintains bank deposits in federally insured financial institutions and these deposits may exceed federally insured limits. The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash and cash equivalents and issuers of investments to the extent recorded on the balance sheets. The Company’s investment policy limits investments to money market funds, certain types of debt securities issued by the U.S. Government and its agencies, corporate debt, commercial paper, and places restrictions on the credit ratings, maturities and concentration by type and issuer. The Company has not experienced any losses on its deposits of cash, cash equivalents and investments . The Company’s future results of operations involve a number of other risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s potential product candidates, uncertainty of market acceptance of the Company’s product candidates, competition from substitute products and larger companies, securing and protecting proprietary technology, strategic relationships and dependence on key individuals or sole source suppliers. The Company’s product candidates require approvals from the U.S. Food and Drug Administration and comparable foreign regulatory agencies prior to commercial sales in their respective jurisdictions. There can be no assurance that any product candidates will receive the necessary approvals. If the Company is denied approval, approval is delayed or the Company is unable to maintain approval for any product candidate, it could have a materially adverse impact on the Company. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be cash and cash equivalents. Cash equivalents consist primarily of amounts invested in money market accounts and are stated at fair value. Restricted cash consisted of two stand-by letters of credit issued to the Company’s landlord in connection with one of the Company’s leases. Investments The Company’s investments have been classified and accounted for as available-for-sale securities. Fixed income securities consist of U.S. Treasury securities, U.S. government agency securities, corporate debt, commercial paper, and asset backed securities. The specific identification method is used to determine the cost basis of fixed income securities sold. These securities are recorded on the balance sheets at fair value. Unrealized gains and losses on these securities are included as a separate component of accumulated other comprehensive income. The cost of investment securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion are included in interest and other income (loss), net. 114 Realized gains and losses and declines in fair value judged to be other-than-temporary, if any, are also included in interest and other income (loss) , net. The Company evaluates securities for other-than-temporary impairment at the balance sheet date. Declines in fair value determined to be other-than-temporary are also included in interest and other income (loss) , net . The Company classifies its investments as short or long term primarily based on the remaining contractual maturity of the securities. Property and Equipment, Net Property and equipment are recorded at cost net of accumulated depreciation and amortization. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets. The useful lives of property and equipment are as follows: Laboratory equipment 5 years Computers 3 years Furniture and fixtures 5 years Leasehold improvements Shorter of remaining lease term or estimated useful life Upon retirement or sale of the assets, the cost and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is recorded to the statements of operations. Repairs and maintenance are expensed as incurred. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. There was no impairment of long-lived assets during the years ended December 31, 2021 and 2020. Convertible Preferred Stock The Company records shares of convertible preferred stock at their respective fair values on the dates of issuance, net of issuance costs. The convertible preferred stock is recorded outside of stockholders’ deficit on the balance sheets because the shares contain liquidation features that are not solely within the Company’s control. The Company has elected not to adjust the carrying values of the convertible preferred stock to the liquidation preferences of such shares because of the uncertainty of whether or when such an event would occur. Subsequent adjustments to increase the carrying values to the liquidation preferences will be made only when it becomes probable that such a liquidation event will occur. Research and Development Expenses The Company expenses research and developments costs as they are incurred. Research and development expenses consist primarily of: (i) personnel-related expenses, including salaries, benefits and stock-based compensation expense, for personnel in the Company’s research and development functions; (ii) fees paid to third parties such as contractors, consultants and contract research organizations (CROs), for animal studies and other costs related to preclinical and clinical testing; (iii) costs related to acquiring and manufacturing research and clinical trial materials, including under agreements with third parties such as contract manufacturing organizations (CMOs), and other vendors; (iv) costs related to the preparation of regulatory submissions; (v) expenses related to laboratory supplies and services; and (vi) depreciation of equipment and facilities expenses. Accrued Research and Development Expenses The Company records accruals for estimated costs of research, preclinical, and manufacturing development, which are significant components of research and development expenses. A substantial portion of the Company’s ongoing research and development activities is conducted by third-party service providers, CROs and CMOs. The Company’s contracts with the CROs and CMOs generally include fees such as initiation fees, reservation fees, costs related to animal studies and safety tests, verification run costs, materials and reagents expenses, taxes, etc. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to the 115 Company under such contracts. The Company accrues the costs incurred under agreements with these third parties based on estimates of actual work completed in accordance with the respective agreements. The Company determines the estimated costs through discussions with internal personnel and external service providers as to the progress, or stage of completion and actual timeline (start- date and end-date) of the services and the agreed-upon fees to be paid for such services. Through December 31, 2021, there have been no material differences from the Company’s estimated accrued research and development expenses to actual expenses. Stock-Based Compensation The Company accounts for stock-based compensation by measuring and recognizing compensation expense for all share-based awards made to employees, non-employees and directors based on estimated grant-date fair values. The Company uses the straight-line method to allocate compensation cost to reporting periods over the requisite service period, which is generally the vesting period, and estimates the fair value of share-based awards to employees, non-employees and directors using the Black-Scholes option-pricing model. The Company accounts for forfeitures as they occur. The fair value of restricted stock awards is based on grant-date fair value. The fair value of each purchase under the employee stock purchase plan (ESPP) is estimated at the beginning of the offering period using the Black-Scholes option pricing model and recorded as expense over the service period using the straight-line method . Net Loss Per Share Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is the same as basic net loss per share, since the effects of potentially dilutive securities are antidilutive given the net loss for each period presented. Leases On January 1, 2020, the Company elected to early adopt Accounting Standard Update (ASU) No. 2016-02, Leases (ASC 842) and its associated amendments using the modified retrospective transition approach. There was no cumulative-effect adjustment recorded to accumulated deficit upon adoption. The Company recorded right-of-use assets and lease liabilities of $ 0.3 million upon adoption. Under ASC 842, the Company determines if an arrangement is a lease at inception. In addition, the Company determines whether leases meet the classification criteria of a finance or operating lease at the lease commencement date considering: (1) whether the lease transfers ownership of the underlying asset to the lessee at the end of the lease term, (2) whether the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (3) whether the lease term is for a major part of the remaining economic life of the underlying asset, (4) whether the present value of the sum of the lease payments and residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset, and (5) whether the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. As of December 31, 2021, the Company's lease population consisted of real estate. As of the date of adoption of ASC 842, the Company did not have finance leases. Operating leases are included in operating lease right-of-use (ROU) assets, lease liabilities, current, and lease liabilities, non-current in the Company’s balance sheet. 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 ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date if the rate implicit in the lease is not readily determinable. The Company determines the incremental borrowing rate base on an analysis of corporate bond yields with a credit rating similar to the Company. The determination of the Company’s incremental borrowing rate requires management judgment including the development of a synthetic credit rating and cost of debt as the Company currently does not carry any debt. The Company believes that the estimates used in determining the incremental borrowing rate are reasonable based upon current facts and circumstances. Applying different judgments to the same facts and circumstances could result in the estimated amounts to vary. The operating lease ROU assets also include adjustments for prepayments and accrued lease payments and exclude lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Operating lease cost is recognized on a straight-line basis over the 116 expected lease term. Lease agreements entered into after the adoption of ASC 842 that include lease and non-lease components are accounted for as a single lease component. Lease agreements with a noncancelable term of less than 12 months are not recorded on the Company’s balance sheet. For more information about the impact of adoption and disclosures on the Company’s leases, refer to “Note 8 – Commitments and Contingencies.” Income Taxes The Company began providing for income taxes under the asset and liability method in December 2020 upon conversion from a limited liability company into a corporation. Current income tax expense or benefit represents the amount of income taxes expected to be payable or refundable for the current year. Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax basis of assets and liabilities and net operating loss and credit carryforwards and are measured using the enacted tax rates and laws that will be in effect when such items are expected to reverse. Deferred income tax assets are reduced, as necessary, by a valuation allowance when management determines it is more likely than not that some or all the tax benefits will not be realized. The Company accounts for uncertain tax positions in accordance with ASC No. 740 Income Taxes . The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available. The Company includes any penalties and interest expense related to income taxes as a component of income tax expense, as necessary. Deferred Offering Costs The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in stockholders’ equity as a reduction of additional paid-in capital generated as a result of the equity financing. There were zero and $ 29,000 of deferred offering costs recorded on the balance sheet as of December 31, 2021 and December 31, 2020, respectively. Recent Accounting Pronouncements The Company is an emerging growth company (EGC), as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act), and may take advantage of reduced reporting requirements that are otherwise applicable to public companies. Section 107 of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with those standards. The Company has elected to use the extended transition period for complying with new or revised accounting standards; and as a result of this election, its financial statements may not be comparable to companies that comply with public company effective dates. The JOBS Act also exempts the Company from having to provide an auditor attestation of internal controls over financial reporting under Sarbanes-Oxley Act Section 404(b). The Company will remain an EGC until the earliest of (i) the last day of the fiscal year in which it has total annual gross revenues of $1.07 billion or more, (ii) the last day of the fiscal year following the fifth anniversary of the completion of its IPO, (iii) the date on which it has issued more than $1.0 billion in nonconvertible debt during the previous three years or (iv) the date on which it is deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission (SEC), which generally is when it has more than $700 million in market value of its stock held by non-affiliates, has been a public company for at least 12 months and has filed one annual report on Form 10-K. From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB), or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption. 117 In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The measurement of expected credit losses is based on historical experience, current conditions, and reasonable and supportable forecasts that affect collectability. This ASU also eliminates the concept of “other-than-temporary” impairment when evaluating available-for-sale debt securities and instead focuses on determining whether any impairment is a result of a credit loss or other factors. An entity will recognize an allowance for credit losses on available-for-sale debt securities rather than an other-than-temporary impairment that reduces the cost basis of the investment. This ASU is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of this standard on its financial statements and related disclosures. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes (ASU 2019-12), which is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for annual periods beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its financial statements and does not expect the adoption to have a material impact on its financial statements. Note 3. Fair Value Measurement The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is 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, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows: Level 1—Observable inputs, such as quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—Unobservable inputs which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. Financial instruments classified within Level 2 of the fair value hierarchy are valued based on other observable inputs, including broker or dealer quotations or alternative pricing sources. When quoted prices in active markets for identical assets or liabilities are not available, the Company relies on non-binding quotes from its investment managers, which are based on proprietary valuation models of independent pricing services. These models generally use inputs such as observable market data, quoted market prices for similar instruments, or historical pricing trends of a security relative to its peers. To validate the fair value determination provided by its investment managers, the Company reviews the pricing movement in the context of overall market trends and trading information from its investment managers. In addition, the Company assesses the inputs and methods used in determining the fair value in order to determine the classification of securities in the fair value hierarchy. As of December 31, 2021, there were no financial instruments classified as Level 3. 118 As of December 31, 2021, investments measured and recognized at fair value are as follows (in thousands): December 31, 2021 Fair Value Hierarchy Level Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Financial assets included within cash and cash equivalents: Money market funds Level 1 $ 112,193 $ — $ — $ 112,193 Financial assets included within short-term investments: Corporate notes Level 2 19,258 1 ( 6 ) 19,253 Commercial paper Level 2 4,499 — — 4,499 Asset backed securities Level 2 4,029 — ( 1 ) 4,028 Financial assets included within long-term investments: Corporate notes Level 2 1,185 — ( 4 ) 1,181 Asset backed securities Level 2 695 — 695 Total $ 141,859 $ 1 $ ( 11 ) $ 141,849 The Company did no t have any investments as of December 31, 2020 . Note 4. Balance Sheet Components Property and Equipment, Net Property and equipment, net consists of the following (in thousands): December 31, 2021 2020 Computer equipment $ 124 $ — Furniture and fixtures 315 7 Laboratory equipment 1,874 — Leasehold improvements 828 24 Construction in progress 81 58 Total property and equipment, gross 3,222 89 Less: accumulated depreciation ( 257 ) ( 8 ) Total property and equipment, net $ 2,965 $ 81 Depreciation expense was approximately $ 0.2 million, $ 8,000 and zero for the years ended December 31, 2021, 2020 and 2019, respectively . Accrued Expenses and Other Current Labilities Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, 2021 2020 Accrued research and development materials and services $ 1,674 $ 519 Accrued professional services 170 67 Accrued personnel expenses 419 47 Other 480 — Total accrued expenses and other current liabilities $ 2,743 $ 633 119 Note 5. Capital Structure Common Stock In December 2020, all of the outstanding membership interests in Biomea Fusion LLC were exchanged for equity interests in Biomea Fusion, Inc. in a statutory conversion under Delaware law. All of the share information referenced throughout the financial statements and notes to the financial statements have been retroactively adjusted to reflect the change in capital structure. In connection with the completion of its IPO, on April 20, 2021, the Company’s certificate of incorporation was amended and restated to authorize 300,000,000 shares of common stock with a par value of $ 0.0001 per share and 10,000,000 shares of preferred stock with a par value of $ 0.0001 per share. Common stockholders are entitled to dividends when and if declared by the Company’s Board of Directors and after any preferred share dividends are fully paid. The holder of each share of common stock is entitled to one vote. As of December 31, 2021 and December 31, 2020, no dividends have been declared. The Company had reserved common stock, on an as-converted basis, for future issuance as follows: December 31, 2021 2020 Stock options, issued and outstanding 4,254,504 — Stock options, authorized for future issuance 1,134,944 4,327,799 Employee stock purchase plan, available for future issuance 284,993 — Restricted stock, issued and outstanding 493,914 749,835 Total 6,168,355 5,077,634 Series A Convertible Preferred Stock In December 2020, the Company issued 7,064,925 shares of its convertible preferred stock, par value $ 0.0001 , raising $ 55.7 million in net proceeds. Prior to the December 2020 convertible preferred stock financing, there were no shares of convertible preferred stock outstanding. Preferred stock consisted of the following as of December 31, 2020 (in thousands, except share numbers): Shares authorized Shares issued and outstanding Original issue price Carrying value Liquidation preference Series A convertible preferred stock 7,064,925 7,064,925 $ 7.93 $ 55,738 $ 56,000 As of December 31, 2020, the holders of the convertible preferred stock had the following rights and preferences: Conversion Rights Each share of Series A convertible preferred stock is convertible at an option of the holder into one share of common stock (subject to adjustment for certain events, including dilutive issuances, stock splits, and reclassifications). The Series A convertible preferred stock will also be converted automatically into shares of common stock (1) immediately prior to an initial public offering with aggregate proceeds of at least $ 75.0 million at a per share price equal to or greater than the original issuance price or (2) upon the date specified by written consent of holders of a majority of the outstanding preferred shares on an as-converted basis. Dividends Each holder is entitled to dividends per share, if and when declared by the board of directors. Dividends are to be paid in advance of any distributions to common stockholders. No dividends have been declared as of December 31, 2020. Liquidation Preference In the event of any liquidation, dissolution, or winding-up of the Company, including a merger, acquisition, or sale of assets, as defined, each Series A convertible preferred stock holder is entitled to receive the greater of i) an 120 amount of $ 7.93 per share for each share of Series A convertible preferred stock held (as adjusted for recapitalizations, stock combinations, stock dividends, stock splits, and reclassifications), plus any declared but unpaid dividends prior to and in preference to any distribution to the holders of common stock or ii) an amount of cash, securities or other property per share on an as-converted to common stock basis. If the assets of the Company are insufficient to make payment in full to all Series A convertible preferred stockholders then the assets or consideration will be distributed ratably among such holders. Any remaining assets would then be distributed among the holders of the common stock on a pro rata basis based on the number of shares of common stock held by them. Voting Each holder of shares of Series A convertible preferred stock is entitled to the number of votes equal to the number of shares of common stock into which such shares could be converted and has voting rights and powers equal to the voting rights and powers of the common stock, and except as provided by law or by other provisions of the Company’s Certificate of Incorporation shall vote together with the common stock as a single class on an as-converted basis on all matters as to which holders of common stock have the right to vote. The holders of Series A convertible preferred stock, voting separately as a single class, are entitled to elect two members of the Company’s board of directors. The holders of shares of common stock, voting separately as a single class, are entitled to elect three members of the Company’s board of directors. All remaining members of the Company’s board of directors are elected by the holders of the common stock and preferred stock voting together as a single class. Redemption The convertible preferred stock is not redeemable. Immediately prior to the closing of the IPO, all outstanding shares of the Company’s convertible preferred stock converted into 7,064,925 shares of common stock and the related carrying value was reclassified to common stock and additional paid-in capital. There were no shares of convertible preferred stock outstanding as of December 31, 2021. Note 6. Stock-Based Compensation 2020 Equity Incentive Plan The Company adopted the 2020 Equity Incentive Plan (the “2020 Plan”) on December 18, 2020. The 2020 Plan reserved 4,327,799 shares of common stock to grant stock-based compensation awards, including stock options and restricted stock awards, to employees and non-employees. As of April 9, 2021, the Company ceased granting awards under the 2020 Plan. However, 2020 Plan awards will remain subject to the terms of the 2020 Plan. 2021 Equity Incentive Plan In April 2021, the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”). Options granted under the 2021 Plan expire no later than 10 years from the date of grant. The exercise price of options granted under the 2021 Plan must at least be equal to the fair market value of the Company’s common stock on the date of grant. With respect to any participant who owns more than 10 % of the voting power of all classes of the Company’s outstanding stock, the term of an incentive stock option granted to such participant must not exceed five years and the exercise price must equal at least 110 % of the fair market value on the grant date. Employee stock options generally vest 1/16 th quarterly over four years subject to continued service to the Company. Subject to adjustment in the case of certain capitalization events as provided in the 2021 Plan, the Company initially reserved 3,370,000 shares of the Company’s common stock for issuance pursuant to awards under the 2021 Plan. The 2021 Plan is administered by the Compensation Committee of the Company’s Board of Directors. The number of shares of the Company’s common stock available for issuance under the 2021 Plan will also include an annual increase on the first day of each fiscal year beginning in 2022 and ending in 2031, equal to the lesser of (i) 5 % of the Company’s common stock outstanding at December 31 of the immediately preceding year, or (ii) such number of shares as determined by the Company’s Board of Directors. As of December 31, 2021, 1,134,944 shares of common stock remained available for issuance under the 2021 Plan. Effective January 1, 2022, the number of shares of common stock available under the 2021 Plan increased by 1,480,466 shares pursuant to the evergreen provision of the 2021 Plan. 121 2021 Employee Stock Purchase Plan The Company adopted a 2021 Employee Stock Purchase Plan (ESPP) in April 2021. The ESPP enables eligible employees of the Company and designated affiliates to purchase shares of common stock at a discount of 15 %. Subject to adjustment in the case of certain capitalization events, a total of 306,000 common shares of the Company were available for purchase at adoption of the ESPP. Pursuant to the ESPP, the annual share increase pursuant to the evergreen provision is determined based on the lesser of (i) 1 % of the Company’s common stock outstanding at December 31 of the immediately preceding year, or (ii) such number of shares as determined by the Company’s Board of Directors. As of December 31, 2021, 284,993 shares of common stock remained available for issuance under the ESPP. Effective January 1, 2022, the number of shares of common stock available under the ESPP increased by 296,093 shares pursuant to the evergreen provision of the ESPP. Stock-Based Compensation Expense Total stock-based compensation expense related to the 2020 Plan, 2021 Plan, and ESPP was recorded in the statements of operations and allocated as follows (in thousands): Year Ended December 31, 2021 2020 2019 Research and development $ 2,637 $ 89 $ — General and administrative 3,597 233 — Total stock-based compensation expense $ 6,234 $ 322 $ — Stock Options The following table summarizes stock option activity : Number of Options Outstanding Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Balance as of December 31, 2020 — $ — — $ — Granted 4,457,606 9.80 Exercised ( 48,663 ) 5.22 Cancelled ( 154,439 ) 8.76 Balance as of December 31, 2021 4,254,504 $ 9.89 9.4 $ 1,868 Options exercisable as of December 31, 2021 636,356 $ 8.98 8.8 $ 573 The fair value of stock options was estimated using the following weighted-average assumptions: Year Ended December 31, 2021 2020 2019 Expected term in years 6.0 — — Expected volatility 91.0 % — — Risk-free interest rate 1.1 % — — Dividend yield — — — Weighted average fair value of options granted $ 7.28 $ — $ — As of December 31, 2021, there was $ 26.4 million of total unrecognized compensation cost related to stock options under the Plans. The unrecognized stock-based compensation cost is expected to be recognized over a weighted-average period of 3.3 years. The aggregate intrinsic value of options exercised for the years ended December 31, 2021 and December 31, 2020 was $ 0.5 million and zero , respectively. Intrinsic values are 122 calculated as the difference between the exercise price of the underlying options and the fair value of the common stock on the date of exercise. Restricted Stock The Company granted 824,429 restricted stock awards to employees and non-employees during the fourth quarter of 2020 that vest quarterly over four years . Restricted stock awards are share awards that entitle the holder to receive freely tradeable shares of the Company’s common stock. The underlying shares are outstanding as of the issuance date. Any unvested shares are subject to forfeiture in the case that the grantee’s service terminates prior to vesting of the restricted stock. As of December 31, 2020, a total of 749,835 restricted common stock shares remained unvested subject to repurchase. As of December 31, 2021, a total of 493,914 restricted common shares remained unvested subject to repurchase. There were no restricted shares issued during the year ended December 31, 2021. The following table summarizes the restricted stock activity: Number of Restricted Stock Awards Weighted-Average Grant Date Fair Value Balance, December 31, 2020 749,835 $ 4.02 Granted — — Released ( 204,187 ) 4.02 Forfeited ( 51,734 ) 4.02 Balance, December 31, 2021 493,914 $ 4.02 Note 7. Taxes Biomea Fusion is subject to U.S. federal and state income taxes as a corporation. Prior to the tax-free reorganization in December 2020, Biomea Fusion, LLC was treated as a pass-through entity for U.S. federal income tax purposes, and as such, was generally not subject to U.S. federal income tax at the entity level. Rather, the tax liability with respect to its taxable income, was passed through to its unitholders. There was zero income tax expense for the years ended December 31, 2021 and 2020. The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate: Year ended December 31, 2021 2020 Federal statutory income tax rate 21.0 % 21.0 % State income tax rate 0.5 % 1.1 % Tax credits 0.2 % — Stock-based compensation ( 1.5 )% — Amortization 2.6 % — LLC loss prior to C-Corp conversion — ( 17.7 )% Change in valuation allowance ( 22.7 )% ( 4.3 )% Other ( 0.1 )% ( 0.1 )% Effective income tax rate 0.0 % 0.0 % 123 Deferred tax assets and liabilities consist of the following (in thousands): December 31, 2021 2020 Deferred tax assets: Net operating loss carryforwards $ 7,689 $ 286 Accrued liabilities and reserves 65 11 Stock-based compensation 675 — Intangible assets 1,044 1 Operating lease liabilities 599 62 Research and development credits 278 — Property and equipment — 2 Gross deferred tax assets 10,350 362 Valuation allowance ( 9,730 ) ( 303 ) Total deferred tax assets 620 59 Deferred tax liabilities: Property and equipment ( 48 ) — Operating lease right-of-use assets ( 572 ) ( 59 ) Total deferred tax liabilities ( 620 ) ( 59 ) Net deferred tax assets $ — $ — The provisions of ASC Topic 740, Accounting for Income Taxes (ASC 740), require an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. For the years ended December 31, 2021 and 2020, based on all available objective evidence, including the existence of cumulative losses, the Company determined that it was not more likely than not that the net deferred tax assets were fully realizable. Accordingly, the Company established a full valuation allowance against its deferred tax assets. The Company intends to maintain a full valuation allowance on net deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance. T he Company’s valuation allowance increased by $ 9.4 million during the year ended December 31, 2021, primarily because of an increase to the Company's net operating losses, credits and intangible deferred tax assets. T he Company’s valuation allowance increased by $ 0.3 million during the year ended December 31, 2020, primarily because of an increase to the Company's net operating loss deferred tax assets. At December 31, 2021, the Company had net operating loss carryforwards available to reduce future taxable income, if any, for federal and California income tax purposes of approximately $ 36.3 million and $ 1.0 million, respectively. The federal net operating loss carryforwards at December 31, 2021 can be carried forward indefinitely, subject to an annual limitation of 80% of taxable income . The California net operating loss carryforward begins expiring in 2040 . At December 31, 2021, the Company also had federal and California research and development tax credit carryforwards of $ 0.1 million and $ 0.3 million, respectively, available to offset future income tax, if any. The federal credit carryforwards begins expiring in 2040 , and the California credits can be carried forward indefinitely. Under Section 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” the corporation's ability to use its pre-change net operating loss carryforwards and other pre-change attributes, such as research tax credits, to offset its post-change income may be limited. In general, an “ownership change” will occur if there is a cumulative change in the Company's ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. Therefore, certain of the Company's carryforward tax attributes may be subject to an annual limitation regarding their utilization against taxable income in future periods. The Company has performed a Section 382 study and has concluded that ownership changes through December 31, 2021 will not result in federal and California NOL carryforwards and tax credit carryforwards expiring before being applied to reduce future income tax liabilities. Uncertain Tax Positions The Company adopted the provisions of ASC 740, which requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before 124 any tax benefit can be recorded in the financial statements. It also provides guidance on the recognition, measurement, classification and interest and penalties related to uncertain tax positions. The following table summarizes the activity related to the Company’s gross unrecognized tax benefits (in thousands): Year ended December 31, 2021 2020 Beginning balance $ — $ — Increases for tax provisions related to prior year 1 — Increases for tax provisions related to current year 111 — Ending balance $ 112 $ — The unrecognized tax benefits, if recognized, would not affect the effective income tax rate due to the valuation allowance that currently offsets deferred tax assets. Interest and penalties were zero . The Company does not expect the unrecognized tax benefits to change significantly over the next twelve months. The Company files federal and state income tax returns. All periods since inception are subject to examination by federal and state authorities, where applicable. There are currently no pending income tax examinations. Note 8. Commitments and Contingencies Operating Leases The Company leases its headquarters with its main offices and laboratory facilities in Redwood City and San Carlos, California. In November 2021, the Company entered into a four-year lease for additional lab space located in San Carlos, California which is expected to commence in September 2022. Total future rent payments under the agreement amount to approximately $ 2.2 million. The Company has no t recognized a right-of-use asset or aggregate lease liability as of December 31, 2021 for this lease as the Company did not control the underlying assets at any time during the year ended December 31, 2021. In September 2021, the Company entered into a sub-lease agreement for additional office space in Redwood City, California, which commenced in January 2022 and expires in December 2022 . In connection with the sub-lease, the Company made a security deposit of $ 1.1 million which is included in prepaid expenses and other current assets on the balance sheet at December 31, 2021. This lease is treated as a short-term lease in accordance with ASC 842 and therefore, is excluded from the right-of-use asset and liability. In March 2021, the Company entered into a five-year lease for new lab space located in San Carlos, California, which commenced on May 1, 2021 and expires in April 2026 . The lease was accounted for under ASC 842. Upon initiation, the Company recognized a right-of-use asset and liability of $ 3.2 million, discounted at 5.4 %, the Company’s estimated incremental borrowing rate over the five-year expected remaining term. In February 2021, the Company entered into an eight-month sublease agreement for additional office space located in Redwood City, California. In September 2021, the Company renewed the lease agreement on a month-to-month basis and the lease ended in January 2022 . This lease was treated as a short-term lease in accordance with ASC 842 and therefore, is excluded from the right-of -use asset and liability. Cash paid for amounts included in the measurement of lease liabilities for the years ended December 31, 2021 and 2020 was $ 0.3 million and zero , respectively. Lease expense was $ 1.3 million, $ 0.2 million and $ 0.1 million for the years ended December 31, 2021, 2020 and 2019, respectively. 125 Maturities of lease liabilities as of December 31, 2021 were as follows (in thousands): Operating Lease Year Ending December 31, Commitments 2022 $ 705 2023 727 2024 748 2025 771 2026 259 Thereafter — Total undiscounted lease payments 3,210 Less: Present value adjustments ( 360 ) Total operating lease liabilities $ 2,850 Short-term operating lease liabilities 565 Long-term operating lease liabilities 2,285 Total operating lease liabilities $ 2,850 Legal Proceedings The Company, from time to time, may be party to litigation arising in the ordinary course of business. The Company was not subject to any material legal proceedings during the years ended December 31, 2021 and 2020, and, to the best of its knowledge, no material legal proceedings are currently pending or threatened. Indemnification The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to these arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third party with respect to its technology. The term of these indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these arrangements is not determinable. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the fair value of these agreements is not material. The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. The Company currently has directors’ and officers’ insurance. Note 9. Net Loss Per Share The following table sets forth the computation of the basic and diluted net loss per share (in thousands except share and per share data): Year Ended December 31, 2021 2020 2019 Numerator: Net loss $ ( 41,567 ) $ ( 5,324 ) $ ( 1,198 ) Denominator: Weighted-average number of shares outstanding, basic and diluted 23,858,552 10,532,942 6,051,712 Net loss per share, basic and diluted $ ( 1.74 ) $ ( 0.51 ) $ ( 0.20 ) 126 Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods as the inclusion of all common stock equivalents outstanding would have been anti-dilutive. Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows: December 31, 2021 2020 2019 Series A convertible preferred stock — 7,064,925 — Stock options, issued and outstanding 4,254,504 — — Estimated shares issuable under the employee stock purchase plan 6,542 — — Restricted stock, issued and outstanding 493,914 749,835 — Total 4,754,960 7,814,760 — Note 10. Selected Quarterly Financial Data (Unaudited) The following tables provide the selected quarterly financial data for the years ended December 31, 2021 and 2020 (in thousands, except share and per share data): 2021 First Second Third Fourth Quarter Quarter Quarter Quarter Statements of Operations Data: Operating expenses: Research and development $ 3,798 $ 5,224 $ 7,886 $ 11,088 General and administrative 2,059 3,211 4,752 3,649 Total operating expenses 5,857 8,435 12,638 14,737 Loss from operations ( 5,857 ) ( 8,435 ) ( 12,638 ) ( 14,737 ) Interest and other income (loss), net 5 36 32 27 Net loss $ ( 5,852 ) $ ( 8,399 ) $ ( 12,606 ) $ ( 14,710 ) Net loss per share, basic and diluted $ ( 0.49 ) $ ( 0.33 ) $ ( 0.43 ) $ ( 0.51 ) Weighted-average number of shares outstanding, basic and diluted 11,964,205 25,161,038 29,001,213 29,061,076 2020 First Second Third Fourth Quarter Quarter Quarter Quarter Statements of Operations Data: Operating expenses: Research and development $ 334 $ 216 $ 789 $ 2,332 General and administrative 64 79 346 1,167 Total operating expenses 398 295 1,135 3,499 Loss from operations ( 398 ) ( 295 ) ( 1,135 ) ( 3,499 ) Interest and other income (loss), net — 2 — 1 Net loss $ ( 398 ) $ ( 293 ) $ ( 1,135 ) $ ( 3,498 ) Net loss per share, basic and diluted $ ( 0.05 ) $ ( 0.03 ) $ ( 0.10 ) $ ( 0.29 ) Weighted-average number of shares outstanding, basic and diluted 8,758,995 9,746,868 11,724,100 11,871,494 Note 11. Subsequent Events None. 127 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None .