BioXcel Therapeutics, Inc. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2021, our disclosure controls and procedures were effective at the reasonable assurance level. Management’s Annual Report on Internal Controls Over Financial Reporting Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in “Internal Control-Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that, as of December 31, 2021, our internal control over financial reporting was effective. Attestation Report of the Registered Public Accounting Firm This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm on internal control over financial reporting due to an exemption established by the JOBS Act for “emerging growth companies.” 104 Table of Contents Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information None. ​ Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections Not applicable. ​ 105 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance. ​ The information required by this Item is incorporated herein by reference to the information that will be contained in our proxy statement related to our annual meeting of stockholders to be held in 2022 (the “2022 Annual Meeting of Stockholders”), which we intend to file with the SEC within 120 days of the year ended December 31, 2021. ​ Item 11. Executive Compensation The information required by this Item is incorporated herein by reference to the information that will be contained in our proxy statement related to the 2022 Annual Meeting of Stockholders, which we intend to file with the SEC within 120 days of the year ended December 31, 2021. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this Item is incorporated herein by reference to the information that will be contained in our proxy statement related to the 2022 Annual Meeting of Stockholders, which we intend to file with the SEC within 120 days of the year ended December 31, 2021. ​ ​ Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this Item is incorporated herein by reference to the information that will be contained in our proxy statement related to the 2022 Annual Meeting of Stockholders, which we intend to file with the SEC within 120 days of the year ended December 31, 2021. ​ ​ Item 14. Principal Accounting Fees and Services The information required by this Item is incorporated herein by reference to the information that will be contained in our proxy statement related to the 2022 Annual Meeting of Stockholders, which we intend to file with the SEC within 120 days of the year ended December 31, 2021. ​ ​ 106 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules (a) The following documents are filed as part of this report: (1) Financial Statements: Reports of Independent Registered Public Accounting Firm F-2 Balance Sheets as of December 31, 2021 and 20 20 F-3 Statements of Operations for the Years Ended December 31, 2021 and 20 20 F-4 Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2021 and 20 20 F-5 Statements of Cash Flows for the Years Ended December 31, 2021 and 20 20 F-6 Notes to Financial Statements F-7 ​ (2) Financial Statement Schedules : All financial statement schedules have been omitted because they are not applicable, not required or the information required is shown in the financial statements or the notes thereto. (3) Exhibits. Exhibit Number Description Form File No. Exhibit Filing Date Filed/ Furnished Herewith 3.1 ​ Amended and Restated Certificate of Incorporation. ​ 10-Q ​ 001-38410 ​ 3.1 ​ 8/10/2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3.2 ​ Amended and Restated Bylaws ​ 8-K ​ 001-38410 ​ 3.2 ​ 3/13/2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 4.1 ​ Description of the Registrant’s Securities Registered Under Section 12 of the Exchange Act ​ 10-K ​ 001-38410 ​ 4.1 ​ 3/09/2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 4.2 ​ Specimen Stock Certificate evidencing the shares of common stock ​ S-1/A ​ 333-222990 ​ 4.2 ​ 2/26/2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.1 ˄ ​ Second Amended and Restated Separation and Shared Services Agreement, dated March 6, 2020 , by and between BioXcel Corporation and BioXcel Therapeutics, Inc. ​ 10-K ​ 001-38410 ​ 10.2 ​ 3/09/2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.2# ​ F irst Amendment to Second Amended and Restated Separation and Shared Services Agreement, dated March 3, 2021, by and between BioXcel LLC and BioXcel Therapeutics Inc. ​ 10-K ​ 001-38410 ​ 10.3 ​ 3/12/2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.3# ​ Amended and Restated Asset Contribution Agreement, effective November 7, 2017, by and between BioXcel Corporation and BioXcel Therapeutics, Inc. ​ S-1/A ​ 333-222990 ​ 10.2 ​ 2/12/2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 107 Table of Contents Exhibit Number Description Form File No. Exhibit Filing Date Filed/ Furnished Herewith 10.4 ​ Lease Agreement, dated as of August 20, 2018, by and between Fusco Harbour Associates, LLC, as Landlord, and BioXcel Therapeutics, Inc., as Tenant ​ 8-K ​ 001-38410 ​ 10.1 ​ 8/23/2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.5 ​ First Amendment, dated August 19, 2020, to Lease Agreement, dated as of August 20, 2018, by and between Fusco Harbour Associates, LLC, as Landlord, and BioXcel Therapeutics, Inc., as Tenant. ​ 10-Q ​ 001-38410 ​ 10.1 ​ 11/12/2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.6† ​ 2017 Equity Incentive Plan ​ S-1/A ​ 333-222990 ​ 10.3 ​ 2/12/2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.7† ​ Form of Incentive Stock Option Agreement under the 2017 Equity Incentive Plan ​ S-1/A ​ 333-222990 ​ 10.4 ​ 2/12/2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.8† ​ Form of Non-Statutory Stock option Agreement under the 2017 Equity Incentive Plan ​ S-1/A ​ 333-222990 ​ 10.5 ​ 2/12/2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.9† ​ BioXcel Therapeutics, Inc. 2020 Incentive Award Plan and forms of award agreements thereunder ​ 10-Q ​ 001-38410 ​ 10.1 ​ 8/14/2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.10† ​ BioXcel Therapeutics, Inc. 2020 Employee Stock Purchase Plan ​ 10-Q ​ 001-38410 ​ 10.2 ​ 8/14/2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.11† ​ Form of Indemnification Agreement with directors and executive officers ​ S-1/A ​ 333-222990 ​ 10.6 ​ 2/12/2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.12† ​ Employment Agreement, dated March 7, 2018 by and between BioXcel Therapeutics, Inc. and Vimal Mehta ​ 8-K ​ 001-38410 ​ 10.1 ​ 3/13/2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.13† ​ Employment Agreement, dated February 12, 2018, by and between BioXcel Therapeutics, Inc. and Frank Yocca ​ S-1/A ​ 333-222990 ​ 10.11 ​ 2/12/2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.14† ​ Employment Agreement, effective October 2, 2017, by and between BioXcel Therapeutics, Inc. and Richard Steinhart ​ S-1/A ​ 333-222990 ​ 10.12 ​ 2/12/2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.15† ​ Employment Agreement, dated June 1, 2018, by and between BioXcel Therapeutics, Inc. and Dr. Vincent O’Neill, M.D. ​ 8-K ​ 001-38410 ​ 10.1 ​ 6/07/2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.16† ​ Employment Agreement between William Kane and BioXcel Therapeutics, Inc., dated May 15, 2020. ​ 10-Q ​ 001-38410 ​ 10.3 ​ 8/14/2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 108 Table of Contents Exhibit Number Description Form File No. Exhibit Filing Date Filed/ Furnished Herewith 10.17† ​ Employment Agreement between Reina Benabou and BioXcel Therapeutics, Inc., dated June 21, 2020. ​ 10-Q ​ 001-38410 ​ 10.4 ​ 8/14/2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.18† ​ Separation Agreement and General Release between Reina Benabou and BioXcel Therapeutics, Inc., dated July 28, 2021. ​ 10-Q ​ 001-38410 ​ 10.1 ​ 8/10/2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.19† ​ Employment Agreement between Javier Rodriguez and BioXcel Therapeutics, Inc., dated February 15, 2021. ​ 10-K ​ 001-38410 ​ 10.19 ​ 3/12/2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.20† ​ Employment Agreement between Matthew Wiley and BioXcel Therapeutics, Inc., dated January 12, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ * ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 10.21† ​ Non-Employee Director Compensation Program ​ 10-Q ​ 001-38410 ​ 10.1 ​ 5/12/2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 21.1 ​ Subsidiaries of BioXcel Therapeutics, Inc. ​ ​ ​ ​ ​ ​ ​ ​ ​ * ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 23.1 ​ Consent of Ernst & Young LLP ​ ​ ​ ​ ​ ​ ​ ​ ​ * ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 23.2 ​ C onsent of BDO USA, LLP; Stamford, CT; (PCAOB ID #243) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ * 31.1 ​ Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. ​ ​ ​ ​ ​ ​ ​ ​ ​ * ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 31.2 ​ Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. ​ ​ ​ ​ ​ ​ ​ ​ ​ * ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 32.1 ​ Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ​ ​ ​ ​ ​ ​ ​ ​ ​ ** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 32.2 ​ Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ​ ​ ​ ​ ​ ​ ​ ​ ​ ** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.INS ​ Inline eXtensible Business Reporting Language (XBRL) Instance Document – the instance document does not appear in the Interactive Data File because its XBRL ​ ​ ​ ​ ​ ​ ​ ​ ​ * 109 Table of Contents Exhibit Number Description Form File No. Exhibit Filing Date Filed/ Furnished Herewith tags are embedded within the Inline XBRL document ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.SCH ​ Inline XBRL Taxonomy Extension Schema Document ​ ​ ​ ​ ​ ​ ​ ​ ​ * ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.CAL ​ Inline XBRL Taxonomy Extension Calculation Linkbase Document ​ ​ ​ ​ ​ ​ ​ ​ ​ * ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.DEF ​ Inline XBRL Taxonomy Extension Definition Linkbase Document ​ ​ ​ ​ ​ ​ ​ ​ ​ * ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.LAB ​ Inline XBRL Taxonomy Extension Label Linkbase Document ​ ​ ​ ​ ​ ​ ​ ​ ​ * ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101.PRE ​ Inline XBRL Taxonomy Extension Presentation Linkbase Document ​ ​ ​ ​ ​ ​ ​ ​ ​ * ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 104 ​ Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) ​ ​ ​ ​ ​ ​ ​ ​ ​ * ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ † Indicates a management contract or any compensatory plan, contract or arrangement. ˄ Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K. # Confidential treatment has been granted for portions omitted from this exhibit and those portions have been separately filed with the Securities and Exchange Commission. * Filed herewith. ** Furnished herewith. ​ Item 16. Form 10-K Summary Not applicable ​ ​ 110 Table of Contents ​ SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ​ ​ BioXcel Therapeutics, Inc. ​ ​ Dated: March 10, 2022 By: ​ /s/ Vimal Mehta ​ Vimal Mehta ​ Chief Executive Officer ​ (Principal Executive Officer) ​ ​ Dated: March 10, 2022 By: ​ /s/ Richard Steinhart ​ Richard Steinhart, Chief Financial Officer ​ (Principal Financial Officer) ​ 11 Signature Title Date ​ ​ ​ ​ ​ /s/ VIMAL MEHTA Vimal Mehta, Ph.D. Chief Executive Officer, President, and Director (Principal Executive Officer) March 10, 2022 ​ /s/ RICHARD STEINHART Richard Steinhart ​ ​ Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) ​ ​ March 10, 2022 ​ /s/ PETER MUELLER Peter Mueller, Ph.D. ​ ​ Chairman of the Board of Directors ​ ​ March 10, 2022 ​ /s/ JUNE BRAY June Bray Director March 10, 2022 ​ /s/ SANDEEP LAUMAS Sandeep Laumas, M.D. ​ ​ Director ​ ​ March 10, 2022 ​ ​ ​ ​ ​ ​ /s/ KRISHNAN NANDABALAN Krishnan Nandabalan, Ph.D. Director March 10, 2022 ​ ​ ​ ​ ​ ​ /s/ MICHAL VOTRUBA Michal Votruba ​ Director ​ March 10, 2022 ​ ​ ​ 111 Table of Contents Report of Independent Registered Public Accounting Firm ​ To the Stockholders and the Board of Directors of BioXcel Therapeutics, Inc. ​ Opinion on the Financial Statements ​ We have audited the accompanying balance sheet of BioXcel Therapeutics, Inc. (the Company) as of December 31, 2021, the related statements of operations and stockholders' equity and cash flows for the year then ended, 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 at December 31, 2021, and the results of its operations and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles. ​ 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 audit. 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 audit 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 audit 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 audit 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 audit 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 audit provides a reasonable basis for our opinion. ​ ​ ​ ​ /s/ Ernst & Young LLP ​ We have served as the Company’s auditor since 2021. ​ Stamford, Connecticut March 10, 2022 ​ ​ ​ ​ ​ ​ F-1 Table of Contents Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors BioXcel Therapeutics, Inc. New Haven, CT Opinion on the Financial Statements We have audited the accompanying balance sheet of BioXcel Therapeutics, Inc. (the “Company”) as of December 31, 2020, the related statements of operations, changes in stockholders’ equity, and cash flows for the year ended December 31, 2020, 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 at December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020 , 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 audit 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 audit, 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 audit 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 audit 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 audit provides a reasonable basis for our opinion. ​ /s/ BDO USA, LLP We served as the Company's auditor from 2017 to 2021. Stamford, Connecticut March 12, 2021 ​ ​ ​ F-2 Table of Contents BIOXCEL THERAPEUTICS, INC. ​ BALANCE SHEETS (amounts in thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2021 2020 ASSETS ​ ​ Current assets ​ ​ Cash and cash equivalents ​ $ 232,968 ​ $ 213,119 Prepaid expenses ​ 2,888 ​ 2,962 Other current assets ​ 956 ​ 984 Total current assets ​ 236,812 ​ 217,065 Property and equipment, net ​ 1,294 ​ 1,273 Operating lease right-of-use assets ​ ​ 1,247 ​ ​ 1,511 Other assets ​ ​ 86 ​ ​ 87 Total assets ​ $ 239,439 ​ $ 219,936 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS' EQUITY ​ ​ Current liabilities ​ ​ Accounts payable ​ $ 4,678 ​ $ 3,979 Accrued expenses ​ 11,492 ​ 7,469 Due to related party ​ 204 ​ 157 Other current liabilities ​ ​ 293 ​ ​ 237 Total current liabilities ​ 16,667 ​ 11,842 Long-term portion of operating lease liabilities ​ ​ 1,105 ​ 1,398 Total liabilities ​ 17,772 ​ 13,240 ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies (Note 11) ​ ​ ​ ​ ​ ​ Stockholders' equity ​ ​ Common stock, $ 0.001 par value, 100,000 and 50,000 shares authorized as of December 31, 2021 and December 31, 2020, respectively; 27,980 and 24,417 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively ​ 28 ​ 24 Preferred stock, $ 0.001 par value, 10,000 shares authorized; no shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively ​ ​ — ​ ​ — Additional paid-in-capital ​ 467,427 ​ 345,529 Accumulated deficit ​ ( 245,788 ) ​ ( 138,857 ) Total stockholders' equity ​ 221,667 ​ 206,696 Total liabilities and stockholders' equity ​ $ 239,439 ​ $ 219,936 ​ The accompanying notes are an integral part of these financial statements. ​ F-3 Table of Contents BIOXCEL THERAPEUTICS, INC. STATEMENTS OF OPERATIONS (amounts in thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2020 Operating expenses ​ ​ Research and development ​ 52,708 ​ 57,995 General and administrative ​ 54,227 ​ 24,302 Total operating expenses ​ 106,935 ​ 82,297 Loss from operations ​ ( 106,935 ) ​ ( 82,297 ) Other income (expense) ​ ​ Interest income ​ 44 ​ 155 Interest expense ​ ​ ( 40 ) ​ ​ ( 27 ) Net loss and comprehensive loss ​ $ ( 106,931 ) ​ $ ( 82,169 ) Basic and diluted net loss per share attributable to common stockholders ​ $ ( 4.05 ) ​ $ ( 3.79 ) Weighted average shares outstanding - basic and diluted ​ 26,373 ​ 21,683 ​ The accompanying notes are an integral part of these financial statements. ​ F-4 Table of Contents BIOXCEL THERAPEUTICS, INC. STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Paid in ​ Accumulated ​ ​ ​ ​ Shares Amount Capital Deficit Total Balance as of January 1, 2020 18,087 ​ $ 18 ​ $ 83,565 ​ $ ( 56,688 ) ​ $ 26,895 Issuance of common shares, net of issuance costs of $ 17,815 ​ 6,300 ​ ​ 6 ​ ​ 255,779 ​ ​ — ​ ​ 255,785 Purchase and cancellation of shares from BioXcel LLC ​ ( 300 ) ​ ​ — ​ ​ ( 9,024 ) ​ ​ — ​ ​ ( 9,024 ) Stock-based compensation ​ — ​ ​ — ​ ​ 14,611 ​ ​ — ​ ​ 14,611 Exercise of stock options ​ 330 ​ ​ — ​ ​ 598 ​ ​ — ​ ​ 598 Net loss ​ — ​ ​ — ​ ​ — ​ ​ ( 82,169 ) ​ ​ ( 82,169 ) Balance as of December 31, 2020 ​ 24,417 ​ $ 24 ​ $ 345,529 ​ $ ( 138,857 ) ​ $ 206,696 Issuance of common shares, net of issuance costs of $ 3,542 ​ 3,279 ​ ​ 3 ​ ​ 100,990 ​ ​ — ​ ​ 100,993 Stock-based compensation ​ — ​ ​ — ​ ​ 19,455 ​ ​ — ​ ​ 19,455 Exercise of stock options ​ 284 ​ ​ 1 ​ ​ 1,453 ​ ​ — ​ ​ 1,454 Net loss ​ — ​ ​ — ​ ​ — ​ ​ ( 106,931 ) ​ ​ ( 106,931 ) Balance as of December 31, 2021 ​ 27,980 ​ $ 28 ​ $ 467,427 ​ $ ( 245,788 ) ​ $ 221,667 ​ The accompanying notes are an integral part of these financial statements. ​ F-5 Table of Contents BIOXCEL THERAPEUTICS, INC. STATEMENTS OF CASH FLOWS (amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: ​ ​ Net loss ​ $ ( 106,931 ) ​ $ ( 82,169 ) Reconciliation of net loss to net cash used in operating activities ​ ​ ​ Depreciation and amortization ​ 297 ​ 188 Loss on disposal of equipment ​ ​ 46 ​ ​ — Stock-based compensation expense ​ 19,455 ​ 14,611 Changes in operating assets and liabilities: ​ ​ ​ ​ Prepaid expenses and other assets ​ 103 ​ ( 2,301 ) Operating lease right of use assets ​ ​ 264 ​ ​ 288 Accounts payable, accrued expenses, and other liabilities ​ 4,850 ​ 3,197 Operating lease liabilities ​ ​ ( 237 ) ​ ​ ( 164 ) Net cash used in operating activities ​ ( 82,153 ) ​ ( 66,350 ) ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM INVESTING ACTIVITIES: ​ ​ Purchases of equipment and leasehold improvements ​ ( 445 ) ​ ( 316 ) Net cash used in investing activities ​ ( 445 ) ​ ( 316 ) ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM FINANCING ACTIVITIES: ​ ​ Proceeds from issuance of common stock, net of issuance costs ​ 100,993 ​ ​ 255,785 Purchase and cancellation of shares from BioXcel LLC ​ — ​ ​ ( 9,024 ) Exercise of stock options ​ 1,454 ​ ​ 598 Net cash provided by financing activities ​ 102,447 ​ 247,359 ​ ​ ​ ​ ​ ​ ​ Net increase in cash and cash equivalents ​ 19,849 ​ 180,693 Cash and cash equivalents, beginning of the period ​ 213,119 ​ 32,426 Cash and cash equivalents, end of the period ​ $ 232,968 ​ $ 213,119 ​ ​ ​ ​ ​ ​ ​ Supplemental cash flow information: ​ ​ Interest paid ​ ​ 40 ​ ​ 27 Purchases of property and equipment in accounts payable and accrued expenses ​ ​ 22 ​ ​ 104 Operating lease ROU assets obtained in exchange for operating lease liabilities ​ ​ — ​ ​ 606 ​ The accompanying notes are an integral part of these financial statements. ​ F-6 Table of Contents BIOXCEL THERAPEUTICS, INC. NOTES TO FINANCIAL STATEMENTS (in thousands, except per share amounts) Note 1. Nature of the Business BioXcel Therapeutics, Inc. (“BTI”) is a clinical stage biopharmaceutical company focused on drug development that utilizes artificial intelligence to identify improved therapies in neuroscience and immuno-oncology. BTI's drug re-innovation approach leverages existing approved drugs and/or clinically validated product candidates together with big data and proprietary machine learning algorithms to identify new therapeutic indices. BTI's two most advanced clinical development programs are BXCL501, a proprietary, orally dissolving, sublingual thin film formulation of the adrenergic receptor agonist dexmedetomidine (“Dex”), for the treatment of agitation and opioid withdrawal symptoms, and BXCL701, an orally administered, systemic innate immune activator for the treatment of aggressive forms of prostate cancer and advanced solid tumors that are refractory or treatment naïve to checkpoint inhibitors. As used in these financial statements, unless otherwise specified or the context otherwise requires, the terms the “Company” or “BTI” refer to BioXcel Therapeutics, Inc., and “BioXcel, LLC ” refer to BioXcel LLC and, its predecessor, BioXcel Corporation. The Company was incorporated under the laws of the State of Delaware on March 29, 2017. The Company’s principal office is in New Haven, Connecticut. Certain reclassifications have been made to the prior year financial information to conform to the current period presentation. These reclassifications had no effect on the reported results of operations. Impact of COVID-19 Pandemic During the first quarter ended March 31, 2020, and continuing through December 31, 2021, the novel coronavirus disease, or COVID-19, was declared a pandemic and spread to multiple regions across the globe, including the United States and Europe. The outbreak and government measures taken in response have had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred; supply chains have been disrupted; facilities and production have been suspended; and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen. To date we have taken steps in line with guidance from the U.S. Centers for Disease Control and Prevention (“CDC”) and the State of Connecticut to protect the health and safety of our employees and the community. In particular, we implemented a work-from-home policy for all employees and have restricted on-site activities to certain chemical, manufacturing and control (“CMC”) and clinical trial activities. We continue to assess the impact of the COVID-19 pandemic to best mitigate risk and continue the operations of our business. Beginning late in the second quarter of 2020, we began to slowly bring our staff, in very limited numbers, back to our office. This modified return-to-work approach is continuing into 2022. We have taken steps to protect our workforce and have instituted strict work rules to protect our employees. We continue to work closely with our clinical sites to monitor the potential impact of the evolving COVID-19 pandemic. We remain committed to our clinical programs and development plans. Other than Phase 2 clinical trial evaluating BXCL501 in patients with delirium through December 31, 2021, we have not experienced any significant delays to our ongoing or planned clinical trials, except for challenges in accessing elderly care facilities and ICU settings; however, this could rapidly change. ​ F-7 Table of Contents Note 2. Basis of Presentation The Company’s financial statements are prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”). The Company believes that its existing cash and cash equivalents will be sufficient to cover its cash flow requirements for at least the next twelve months from the issuance of these financial statements. However, the Company’s future requirements may change and will depend on numerous factors. Note 3. Summary of Significant Accounting Policies Use of Estimates The Company’s financial statements are prepared in accordance with GAAP. The preparation of the Company’s financial statements requires it to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses in its financial statements and the accompanying notes. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. As of December 31, 2021, and 2020, cash equivalents were comprised primarily of money market funds. Cash and cash equivalents held at financial institutions may at times exceed federally insured amounts. We believe we mitigate such risk by investing in or through major financial institutions. Property and Equipment Property and equipment are recorded at cost and depreciated and amortized over the shorter of their remaining lease term or their estimated useful life on a straight-line basis as follows: Equipment 3 - 5 years Furniture 7 years Leasehold improvements Lesser of life of improvement or lease term Expenditures for maintenance and repairs which do not improve or extend the useful lives of respective assets are expensed as incurred. When assets are sold or retired, the related cost and accumulated depreciation are removed from their respective accounts and any resulting gain or loss is included within general and administrative expenses in net loss from operations in the statement of operations. The Company follows the guidance provided by FASB ASC Topic 360-10, Property, Plant, and Equipment . 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 undiscounted future net cash flows expected to be generated. Impairment charges are recognized at the amount by which the carrying amount of an asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell. Leases We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and the long-term portion of operating lease liabilities in our balance sheet. F-8 Table of Contents ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As our lease did not provide an implicit rate, we used an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any prepaid lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Renewal options were not included in our calculation of the related asset and liability. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, “ Compensation—Stock Compensation, ” which requires the measurement and recognition of compensation expense based on estimated fair market values for all share-based awards made to employees and directors, including stock options. The Company’s 2017 Equity Incentive Plan became effective in August 2017. The Company’s 2020 Incentive Award Plan (“2020 Plan”) became effective in May 2020. Following the effective date of the Company's 2020 Stock Plan, the Company ceased granting awards under the 2017 Plan, however the terms and conditions of the 2017 Plan continue to govern any outstanding awards granted thereunder. The Company’s stock option awards are valued at fair value on the date of grant and that fair value is recognized over the requisite service period using the accelerated attribution method. The estimated fair value of stock option awards was determined using the Black-Scholes option pricing model on the date of grant. Prior to the IPO, significant judgment and estimates were used to estimate the fair value of these awards prior to the IPO. Stock awards granted by the Company subsequent to the IPO are valued using market prices at the date of grant. ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Black-Scholes option-pricing model was used as its method of determining fair value. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the award is recognized as an expense in the statement of operations over the requisite service period using the accelerated attribution method. The Company has elected to account for forfeitures as they occur, by reversing compensation cost when the award is forfeited. Research and Development Costs Research and development expenses include wages, benefits, facilities, supplies, external services, clinical study and manufacturing costs and other expenses that are directly related to the Company’s research and development activities. At the end of the reporting period, the Company compares payments made to third party service providers to the estimated progress toward completion of the research or development objectives. Depending on the timing of payments to the service providers and the progress that the Company estimates has been made as a result of the service provided, the Company may record net prepaid or accrued expense relating to these costs. Such estimates are subject to change as additional information becomes available. The Company expenses research and development costs as incurred. Expenses Accrued Under Contractual Arrangements As part of the process of preparing our financial statements, we are required to estimate our accrued expenses. This process involves reviewing open contracts and purchase orders, communicating with our applicable personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual cost. The majority of our service providers invoice us monthly in arrears for services performed. We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary. F-9 Table of Contents We base our expenses related to clinical trials on our estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and contract research organizations that conduct and manage clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing expenses, we estimate the time period over which services will be performed and the level of effort to be expended in each period, which is based on an established protocol specific to each clinical trial. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too low in any particular period. Patent Costs Costs related to filing and pursuing patent applications are expensed as incurred as general and administrative costs as recoverability of such expenditures is uncertain. Fair Value of Financial Instruments The Company applies the provisions of ASC 820, “ Fair Value Measurements and Disclosures ” for financial assets and liabilities measured on a recurring basis which requires disclosure that establishes a framework for measuring fair value. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources, or observable inputs, and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances, or unobservable inputs. The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). ASC 820 requires that fair value measurements be classified and disclosed in one of three categories: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Directly or indirectly observable inputs as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. Level 3: Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. 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 considering counterparty credit risk in its assessment of fair value. The carrying amounts of cash and accounts payable approximate fair value due to the short-term nature of these instruments. As of December 31, 2021, and December 31, 2020, the Company had $ 232,968 and $ 213,119 , respectively, in cash and U.S. government money market accounts (included in cash and cash equivalents) which was valued based on Level F-10 Table of Contents 1 inputs. There were no transfers between levels within the hierarchy during the year ended December 31, 2021 and December 31, 2020. Earnings (Loss) per Share Basic earnings (loss) per share (“EPS”) is calculated in accordance with ASC 260, “ Earnings Per Share ,” by dividing net income or loss attributable to common stockholders by the weighted average common stock outstanding. Diluted EPS is calculated by adjusting weighted average common shares outstanding for the dilutive effect of common stock options and warrants. In periods in which a net loss is recorded, no effect is given to potentially dilutive securities, since the effect would be antidilutive. Securities that could potentially dilute basic EPS in the future were not included in the computation of diluted EPS because to do so would have been antidilutive. Segment Information The Company operates in a single segment. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker in making decisions regarding resource allocation and assessing performance. To date, our chief operating decision maker has made such decisions and assessed performance at the company level as one segment. Recent Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12 , Income Taxes (Topic 740) which amends the existing guidance relating to the accounting for income taxes. ASU No. 2019-12 is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve the consistent application of GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance. ASU No. 2019-12 is effective for fiscal years beginning after December 15, 2020. The Company adopted ASU No. 2019-12 effective January 1, 2021. The adoption of ASU No. 2019-12 did not have a material impact on the Company’s financial statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . We adopted this standard effective January 1, 2020 on a prospective basis. ASU No. 2018-15 requires that certain implementation costs for cloud computing arrangements are capitalized and amortized over the term of associated hosted cloud computing arrangement service. ASU No. 2018-15 also provides classification guidance on these implementation costs as well as additional quantitative and qualitative disclosures. The adoption of ASU No. 2018-15 did not have an effect on the Company’s financial statements. Accounting Pronouncements effective in future periods In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance: ASU No. 2018-19, ASU No. 2019-04 and No. ASU 2019-05 (collectively, “Topic 326”) . Topic 326 requires measurement and recognition of expected credit losses for financial assets held. Topic 326 was to be effective for reporting periods beginning after December 15, 2019, with early adoption permitted. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) , and Leases (Topic 842) Effective Dates, which deferred the effective dates for the Company, until fiscal year 2023. The Company does not expect that the adoption of ASU No. 2016-13 will have a material impact on its financial statements. ​ Note 4. Financing Activities In June 2021, the Company sold in a registered offering 3,155 shares of its common stock at a public offering price of $ 31.70 per share. The Company received proceeds of $ 96,937 , net of issuance costs of $ 3,042 . ​ F-11 Table of Contents In May 2021, the Company entered into an Open Market Sale Agreement (the “Sale Agreement”) with Jefferies LLC (“Jefferies”) pursuant to which the Company could offer and sell shares of its common stock, par value $ 0.001 per share (the “Common Stock”), having an aggregate offering price of up to $ 100,000 (the “Shares”), from time to time, through an “at the marketing offering” program under which Jefferies will act as sale agent. The Company sold 124 shares under the Sale Agreement in June 2021. As of December 31, 2021, the Company had received proceeds of $ 4,056 , net of issuance costs of $ 500 . ​ In July 2020, the Company sold in a registered offering 4,000 shares of its common stock at a public offering price of $ 50.00 . The Company received proceeds of approximately $ 186,974 , net of issuance costs of $ 13,026 . Under the terms of the Underwriting Agreement entered into by the Company in connection with the July 2020 offering, certain stockholders of the Company granted the underwriters an option exercisable for thirty days to purchase up to an additional 600 shares of common stock at the public offering price less underwriting discounts and commissions, which was not exercised. The Company intends to use the net proceeds of the offering to fund ongoing clinical trials, commercialization preparation and for general corporate purposes. ​ In February 2020, the Company sold in a registered offering 2,300 shares of its common stock at a public offering price of $ 32.00 per share. The Company received proceeds of $ 68,811 , net of issuance costs of $ 4,789 . The Company used $ 9,024 of the proceeds to purchase and cancel 300 shares of common stock from BioXcel LLC. ​ ​ Note 5. Transactions with BioXcel LLC The Company entered into a Separation and Shared Services Agreement with BioXcel LLC that took effect on June 30, 2017, as amended and restated, or the Services Agreement, pursuit to which services provided by BioXcel LLC through its subsidiaries in India and the United States will continue indefinitely, as agreed upon by the parties. These services are primarily for drug discovery, chemical, manufacturing and controls cost, and administrative support. Service charges recorded under this agreement for the year ended December 31, 2021 and 2020 were comprised as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 ​ 2020 ​ ​ ​ ​ ​ ​ ​ Research and development $ 1,184 ​ $ 1,180 General and administrative ​ 218 ​ ​ 82 Total ​ $ 1,402 ​ $ 1,262 ​ As of December 31, 2021 and 2020, $ 204 and $ 157 related to these service charges is included in due to related parties in the Company’s balance sheet, respectively. Under the Services Agreement, the Company has an option, exercisable until March 12, 2023, to enter into a collaborative services agreement with BioXcel LLC pursuant to which BioXcel LLC shall perform product identification and related services for us utilizing EvolverAI. The parties are obligated to negotiate the collaborative services agreement in good faith and to incorporate reasonable market-based terms, including consideration for BioXcel LLC reflecting a low, single-digit royalty on net sales and reasonable development and commercialization milestone payments, provided that (i) development milestones shall not exceed $ 10 million in the aggregate and not be payable prior to proof of concept in humans and (ii) commercialization milestones shall be based on reaching annual net sales levels, be limited to 3 % of the applicable net sales level, and not exceed $ 30 million in the aggregate. BioXcel LLC shall continue to make such product identification and related services available to us through at least September 30, 2024. As of December 31, 2021, this option has not been exercised. The Company paid $ 9,024 in February 2020 for the purchase and subsequent cancellation of 300 shares owned by BioXcel LLC. F-12 Table of Contents Note 6. Earnings (Loss) Per Share Basic earnings (loss) per share (“EPS”) is calculated in accordance with ASC 260, “Earnings Per Share,” by dividing net income or loss attributable to common stockholders by the weighted average common stock outstanding. Diluted EPS is calculated by adjusting weighted average common shares outstanding for the dilutive effect of common stock options. In periods in which a net loss is recorded, no effect is given to potentially dilutive securities, since the effect would be antidilutive. Securities that could potentially dilute basic EPS in the future were not included in the computation of diluted EPS because to do so would have been antidilutive. The calculations of basic and diluted net loss per share are as follows (in thousands, except per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ ​ 2021 2020 Net loss (numerator) ​ $ ( 106,931 ) ​ $ ( 82,169 ) Weighted average share, in thousands (denominator) ​ ​ 26,373 ​ ​ 21,683 Basic and diluted net loss per share ​ $ ( 4.05 ) ​ $ ( 3.79 ) ​ Potentially dilutive securities outstanding consists solely of stock options. The Company had options outstanding to purchase 4,000 and 3,798 shares of common stock as of December 31, 2021 and 2020, respectively. ​ Note 7. Property and Equipment, net A summary of property and equipment is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ 2021 2020 Computers and related equipment ​ $ 167 ​ $ 260 Furniture ​ ​ 572 ​ ​ 369 Leasehold improvements ​ ​ 1,133 ​ ​ 650 Work in process ​ ​ 24 ​ ​ 356 ​ ​ ​ 1,896 ​ ​ 1,635 Accumulated depreciation ​ ​ ( 602 ) ​ ​ ( 362 ) ​ ​ $ 1,294 ​ $ 1,273 ​ ​ Depreciation expense was $ 297 and $ 188 for the years ended December 31, 2021 and 2020, respectively. ​ Note 8. Accrued Expenses Accrued expenses consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 December 31, 2020 ​ ​ ​ ​ ​ Research and development expenses ​ $ 5,762 ​ $ 3,264 Accrued compensation and benefits ​ ​ 3,968 ​ ​ 2,066 Accrued professional expenses ​ 1,324 ​ 1,288 Accrued taxes ​ ​ 302 ​ ​ 697 Other accrued expenses ​ 136 ​ 154 ​ ​ $ 11,492 ​ $ 7,469 ​ ​ ​ F-13 Table of Contents Note 9. Stock-Based Compensation 2017 Equity Incentive Plan The Company’s 2017 Equity Incentive Plan (the “2017 Plan”) became effective in August 2017. Following the effective date of the Company's 2020 Plan (as defined below), the Company ceased granting awards under the 2017 Plan, however, the terms and conditions of the 2017 Plan continue to govern any outstanding awards granted thereunder. 2020 Incentive Award Plan The Company’s 2020 Plan was approved and became effective at the Company’s 2020 annual meeting of Shareholders on May 20, 2020 and unless, earlier terminated by the Board of Directors, will remain in effect until March 26, 2030. The 2020 Plan originally authorized for issuance the sum of (i) 911 shares of the Company’s common stock authorized for issuance and (ii) 233 shares of the Company’s common stock, which represents the number of shares that remained available for issuance under the 2017 Plan as of immediately prior to the approval of the 2020 Plan by the Company’s shareholders. Any shares of Common Stock which, as of immediately prior to the approval of the 2020 Plan by the Company’s stockholders, were subject to awards granted under the 2017 Plan that are forfeited or lapse unexercised and are not issued under the 2017 Plan will increase the number of shares of common stock available for grant under the 2020 Plan. In addition, the number of shares available for issuance under the 2020 Plan will increase on the first day of each calendar year beginning January 1, 2021 and ending on and including January 1, 2030 by a number of shares equal to the lesser of (A) 4 % of the aggregate number of shares of the Company’s common stock outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of shares of common stock as determined by the Board of Directors. On January 1, 2021, the shares available for issuance under the 2020 Plan increased by 977 shares and on January 1, 2022, the shares available for issuance under the 2020 Plan increased by 1,119 additional shares pursuant to this provision. Options granted under the 2020 Plan have a term of ten years with the vesting schedule determined by the Board of Directors, which is generally four years . As of December 31, 2021, there were 648 shares available to be granted under the 2020 Plan. A summary of the status of the Company’s stock option activity for the year ended December 31, 2021 is presented below (in thousands, except per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number ​ Weighted Average ​ ​ of ​ Exercise ​ Shares Price per Share Outstanding as of January 1, 2021 3,798 ​ $ 16.15 Granted ​ 869 ​ $ 37.26 Forfeited ​ ( 364 ) ​ $ 43.04 Cancelled ​ ( 19 ) ​ $ 55.38 Exercised ​ ( 284 ) ​ $ 5.12 Outstanding as of December 31, 2021 ​ 4,000 ​ $ 18.89 ​ ​ ​ ​ ​ ​ Options vested and exercisable as of December 31, 2021 2,684 ​ $ 9.58 ​ F-14 Table of Contents As of December 31, 2021, the intrinsic value of options outstanding was $ 41,120 . The intrinsic value for stock options is calculated based on the difference between the exercise prices of the underlying awards and the quoted stock price of the Company’s common stock as of the reporting date. The total intrinsic value of stock options exercised for the years ended December 31, 2021 and 2020 was $ 11,942 and $ 11,629 , respectively. The total intrinsic value of stock options exercisable for the years ended December 31, 2021 and 2020 was $ 39,794 and $ 99,054 , respectively. The weighted average grant date fair value of options granted in 2021 and 2020 was $ 28.81 and $ 32.71 , respectively. The weighted average grant date fair value of options vested at December 31, 2021 was $ 7.05 . The weighted average remaining contractual life is 6.3 years for options exercisable. The weighted average remaining contractual life is 8.8 years for options outstanding. Stock-Based Compensation The fair value of options granted during the years ended December 31, 2021 and 2020 was estimated using the Black-Scholes option-pricing model with the following assumptions. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ For the ​ ​ Year Ended ​ Year Ended ​ December 31, 2021 ​ December 31, 2020 Expected Term ​ ​ 5.50 years - 6.25 years ​ 5.50 years - 6.25 years Expected stock price volatility ​ ​ 95.00 % - 98.00 % ​ 79.02 % - 86.71 % Risk-free rate of interest ​ ​ 0.96 % - 1.37 % ​ 0.33 % - 2.34 % Expected dividend ​ ​ 0.0 % - 0.0 % ​ 0.0 % - 0.0 % ​ Prior to the Company’s IPO, it did not have a history of market prices of its common stock and, as such, volatility is estimated using historical volatilities of similar public companies. In 2021, the Company began using a combination of the historical volatility of similar public companies and the limited historical information related to the Company’s common stock. The expected term of the employee awards is estimated based on the simplified method, which calculates the expected term based upon the midpoint of the term of the award and the vesting period. The Company uses the simplified method because it does not have sufficient option exercise data to provide a reasonable basis upon which to estimate the expected term. The expected dividend yield is 0 % as the Company has no history of paying dividends nor does management expect to pay dividends over the contractual terms of these options. The risk-free interest rates are based on the United States Treasury yield curve in effect at the time of grant, with maturities approximating the expected term of the stock options. The fair value of the underlying common stock is generally determined as the closing price of the Company’s common stock on the Nasdaq Capital Market on the grant date, with consideration of whether there is material nonpublic information that could impact that estimated fair value when it is released. The Company recognized stock-based compensation expense under the 2017 Plan and the 2020 Plan of $ 19,455 and $ 14,611 for the years ended December 31, 2021 and 2020, respectively. Unrecognized compensation expense related to unvested awards as of December 31, 2021 was $ 18,738 and will be recognized over the remaining vesting periods of the underlying awards. The weighted-average period over which such compensation is expected to be recognized is 1.7 years. Total stock-based compensation charges were approximately $ 19,455 and $ 14,611 for the years ended December 31, 2021 and 2020, respectively. The Company charged $ 6,657 and $ 12,798 to research and development and general and administrative expense for the year ended December 31, 2021, respectively. The Company charged $ 6,020 and $ 8,591 to research and development and general and administrative expense for the year ended December 31, 2020, respectively. F-15 Table of Contents 2020 Employee Stock Purchase Plan The Company’s 2020 Employee Stock Purchase Plan (the “ESPP”) was also approved and became effective at the Company’s 2020 annual meeting of Shareholders on May 20, 2020. The ESPP is designed to assist eligible employees of the Company with the opportunity to purchase the Company’s common stock at a discount through accumulated payroll deductions during successive offering periods. The aggregate number of Shares that may be issued pursuant to rights granted under the ESPP is 100 shares of common stock. In addition, the number of shares available for issuance under the ESPP will increase on the first day of each calendar year beginning on January 1, 2021 and ending on and including January 1, 2030 by a number of shares of common stock equal to the lesser of (a) 1 % of the shares outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares as determined by the Board. The number of shares that may be issued or transferred pursuant to rights granted under the component of the ESPP that is intended to qualify for favorable U.S. federal tax treatment under Section 423 of the Internal Revenue Code (the “Section 423 Component”) shall not exceed 500 shares. The purchase price will be determined by the administrator of the ESPP and, for purposes of the Section 423 Component, shall not be less than 85 % of the fair market value of a share on the first trading day or on the last trading day of the applicable offering period, whichever is lower. On January 1, 2021, the shares available for issuance under the 2020 ESPP increased by 244 shares and 344 shares were available at December 31, 2021 and on January 1, 2022, the shares available for issuance under the ESPP increased by 156 additional shares pursuant to this provision. To date, no shares have been sold under the ESPP. Note 10. Leases In August 2018, the Company entered into an agreement to lease approximately 11,040 square feet of space on the 12 th floor of the building located at 555 Long Wharf Drive, New Haven, Connecticut (the “12 th Floor Lease) which was effective February 22, 2019. The 12 th Floor Lease expires in February 2026. Payments under the Company’s lease agreement are fixed. In August 2020, the Company entered into an amendment to the 12 th Floor Lease wherein the Company leased an additional 7,245 square feet of space on the 12 th floor of the building located at 555 Long Wharf Drive, New Haven, Connecticut (the “12 th Floor Lease Amendment”). The 12 th Floor Lease Amendment expires in February 2026. Payments under the Company’s lease amendment agreement are fixed. The future minimum annual lease payments under these operating leases as of December 31, 2021 are as follows: ​ ​ ​ ​ ​ Year ending December 31, Amount 2022 ​ ​ 363 2023 ​ ​ 372 2024 ​ ​ 381 2025 ​ ​ 391 2026 ​ ​ 65 Thereafter ​ ​ - Total lease payments ​ ​ 1,572 Less imputed interest ​ ​ ( 174 ) Total lease liability ​ ​ 1,398 Less current portion of lease liability ​ ​ ( 293 ) Long-term portion operating lease liability ​ $ 1,105 ​ The current portion of the Company’s operating lease liability of $ 293 as of December 31, 2021 is included in other current liabilities on the balance sheet. The Company recorded lease expense related to its operating lease right-of-use asset of $ 365 and $ 345 for the years ended December 31, 2021 and 2020, respectively. F-16 Table of Contents The Company has an option to renew the lease for one additional five -year term at 95 % of the then-prevailing market rates but not less than the rental rate at the end of the initial lease term. The renewal option is not included in the right-of-use asset. Note 11. Commitments and Contingencies From time to time, in the ordinary course of business, the Company may be subject to litigation and regulatory examinations as well as information gathering requests, inquiries and/or investigations. The Company is not currently subject to any matters where it believes there is a reasonable possibility that a material loss may be incurred. As of December 31, 2021, there were no matters which would have a material impact on the Company’s financial results. The Company received a demand letter pursuant to Section 220 of the Delaware General Corporation Law (“DGCL”) from a stockholder seeking disclosure of certain of the Company’s records. The Company responded to those demands, stating its belief that the demand letter failed to fully comply with the requirements of Section 220 of the DGCL. On June 15, 2021, the stockholder filed a complaint in Delaware Chancery Court seeking to compel inspection of books and records pursuant to Section 220 of the DGCL. Pursuant to a negotiated settlement agreement, the matter was dismissed with prejudice on August 10, 2021. Note 12. Income Taxes There is no provision for income taxes because the Company has historically incurred operating losses and maintains a full valuation allowance against its net deferred tax assets. The reported amount of income tax expense for the years differs from the amount that would result from applying domestic federal statutory tax rates to pretax losses primarily because of changes in valuation allowance. The significant components of the Company’s net deferred tax assets at December 31, 2021 and 2020 are shown below. In determining the realizability of the Company’s net deferred tax asset, the Company considered numerous factors, including historical profitability, estimated future taxable income, and the industry in which it operates. Based on this information the Company has provided a valuation allowance for the full amount of its net deferred tax asset because the Company has determined that it is more likely than not that it will not be realized. ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ 2020 Deferred tax assets: ​ ​ ​ ​ ​ ​ Federal net operating losses ​ $ 29,157 ​ $ 8,547 State net operating losses ​ 8,213 ​ 2,411 Stock options ​ 7,461 ​ 3,998 Tax credits ​ ​ 7,102 ​ ​ 4,895 Capitalized R&D ​ 18,880 ​ 21,249 Accrued expense ​ ​ 1,026 ​ ​ 599 Depreciation ​ 17 ​ ( 11 ) Lease Accounting - liability ​ ​ 376 ​ ​ 440 Unrealized gain ​ ​ 3 ​ ​ — Valuation allowance ​ ​ ( 71,899 ) ​ ​ ( 41,721 ) Total deferred tax assets ​ ​ 336 ​ ​ 407 Deferred tax liabilities: ​ ​ ​ ​ Right-of-use assets ​ ​ ( 336 ) ​ ​ ( 407 ) Total deferred tax liabilities ​ ​ ( 336 ) ​ ​ ( 407 ) Net deferred tax asset (liability) ​ $ — ​ $ — ​ F-17 Table of Contents The income tax benefit for the year ended December 31, 2021 differed from the amounts computed by applying the U.S. federal income tax rate of 21 % to loss before tax benefit as a result of nondeductible expenses, tax credits generated and increases in the Company’s valuation allowance. ​ A reconciliation between the Company’s effective tax rate and the federal statutory rate for the years ended December 31, 2021 and 2020 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ 2020 Federal statutory rate ​ 21.0 % ​ 21.0 % Stock based compensation ​ 0.1 % ​ 0.9 % Federal and state credits ​ 2.1 % ​ 3.7 % State taxes ​ 5.8 % ​ 6.8 % Other ​ ( 0.7 ) % ​ ( 0.2 ) % Valuation allowance ​ ( 28.3 ) % ​ ( 32.2 ) % ​ ​ — % ​ — % ​ At December 31, 2021, the Company had approximately $ 138,843 of gross federal and $ 138,614 of gross state net operating loss carry-forwards. If not utilized, the federal and state net operating loss carry-forwards will begin to expire in 2037. The federal net operating loss of $ 136,197 incurred after December 31, 2017 will be carried forward indefinitely. The utilization of such net operating loss carry-forwards and realization of tax benefits in future years depends predominantly upon having taxable income. The Company also has approximately $ 6,445 of federal research and development credits which will begin to expire in 2037 if not utilized. ​ Utilization of the net operating loss, or NOL, and research tax credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that has occurred or that could occur in the future, as required by Section 382 of the Code, as well as similar state and foreign provisions. These ownership changes may limit the amount of NOL and research tax credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an "ownership change" as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders or public groups. To date, the company's NOL's have not been subject to the Section 382 limitation. ​ Entities are also required to evaluate, measure, recognize and disclose any uncertain income tax provisions taken on their income tax returns. The Company has analyzed its tax positions and has concluded that as of December 31, 2021, there were no uncertain positions. The Company's U.S. federal and state net operating losses have occurred since its inception in 2017 and as such, tax years subject to potential tax examination could apply from that date because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities. The Company did no t have any unrecognized tax benefits and has no t accrued any interest or penalties for the 12 months ended December 31, 2021 and 2020. ​ ​ ​ ​ F-18