COGNITION THERAPEUTICS INC 10-Q

Item 1. Financial Statements COGNITION THERAPEUTICS, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ ​ ​ September 30, 2021 ​ December 31, 2020 ​ ​ (unaudited) ​ ​ ​ Assets ​ ​ ​ ​ Current assets ​ ​ ​ ​ Cash and cash equivalents ​ $ 8,310 ​ $ 5,189 ​ Grant receivables ​ 847 ​ 564 ​ Prepaid expenses ​ 571 ​ 544 ​ Other receivables ​ 300 ​ 588 ​ Other current assets ​ 10 ​ 23 ​ Total current assets ​ 10,038 ​ 6,908 ​ Deferred offering costs ​ ​ 3,210 ​ ​ — ​ Property and equipment, net ​ 141 ​ 211 ​ Total assets ​ $ 13,389 ​ $ 7,119 ​ Liabilities, Convertible Preferred Stock, and Stockholders’ Deficit ​ ​ ​ Current liabilities ​ ​ ​ Accounts payable ​ 2,775 ​ 2,003 ​ Accrued expenses ​ 740 ​ 994 ​ Other current liabilities ​ 913 ​ 253 ​ Total current liabilities ​ 4,428 ​ 3,250 ​ Simple Agreements for Future Equity ​ ​ 10,918 ​ ​ — ​ Paycheck protection program loan ​ — ​ 443 ​ Derivative liability ​ — ​ 2,209 ​ Convertible notes, net ​ — ​ 12,409 ​ Accrued interest ​ — ​ 1,622 ​ Total liabilities ​ 15,346 ​ 19,933 ​ Commitments and contingencies ​ ​ ​ Convertible preferred stock: ​ ​ ​ Series A convertible preferred stock, par value $ 0.001 per share, 3,067,519 shares authorized at September 30, 2021 and December 31, 2020, 2,819,027 shares issued and outstanding as of September 30, 2021 and December 31, 2020; liquidation preference of $ 5,051 as of September 30, 2021 ​ 4,616 ​ 4,616 ​ Series A-1 convertible preferred stock, par value $ 0.001 per share, 3,970,776 shares authorized at September 30, 2021 and December 31, 2020, 3,730,366 shares issued and outstanding as of September 30, 2021 and December 31, 2020; liquidation preference of $ 5,906 as of September 30, 2021 ​ 5,398 ​ 5,398 ​ Series A-2 convertible preferred stock, par value $ 0.001 per share, 3,565,063 shares authorized at September 30, 2021 and December 31, 2020, 3,565,063 shares issued and outstanding as of September 30, 2021 and December 31, 2020; liquidation preference of $ 6,355 as of September 30, 2021 ​ 5,809 ​ 5,809 ​ Series B convertible preferred stock, par value $ 0.001 per share, 30,450,000 shares authorized at September 30, 2021 and December 31, 2020, 30,409,890 shares issued and outstanding as of September 30, 2021 and December 31, 2020; liquidation preference of $ 43,269 as of September 30, 2021 ​ 39,547 ​ 39,547 ​ Series B-1 convertible preferred stock, par value $ 0.001 per share, 10,928,155 and 0 shares authorized at September 30, 2021 and December 31, 2020, respectively, 10,926,089 and 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020; liquidation preference of $ 16,038 as of September 30, 2021 ​ ​ 29,391 ​ ​ — ​ Total convertible preferred stock ​ 84,761 ​ 55,370 ​ Stockholders’ deficit: ​ ​ ​ Common stock, $ 0.001 par value, 70,000,000 and 58,000,000 shares authorized at September 30, 2021 and December 31, 2020, respectively; 615,907 and 538,793 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively ​ 1 ​ 1 ​ Additional paid-in capital ​ 142 ​ 222 ​ Accumulated deficit ​ ( 86,665 ) ​ ( 68,220 ) ​ Accumulated other comprehensive loss ​ ( 196 ) ​ ( 187 ) ​ Total stockholders’ deficit ​ ( 86,718 ) ​ ( 68,184 ) ​ Total liabilities, convertible preferred stock, and stockholders’ deficit ​ $ 13,389 ​ $ 7,119 ​ The accompanying notes are an integral part of these consolidated financial statements. 7 Table of Contents COGNITION THERAPEUTICS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited) (in thousands, except share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ ​ 2021 2020 2021 2020 ​ Operating Expenses: ​ ​ ​ ​ ​ ​ Research and development ​ $ 3,675 ​ $ 3,399 ​ $ 12,999 ​ $ 9,600 ​ General and administrative ​ 1,548 ​ 1,062 ​ 3,791 ​ 3,687 ​ Total operating expenses ​ 5,223 ​ 4,461 ​ 16,790 ​ 13,287 ​ Loss from operations ​ ( 5,223 ) ​ ( 4,461 ) ​ ( 16,790 ) ​ ( 13,287 ) ​ Other income (expense): ​ ​ ​ ​ ​ Grant income ​ 3,037 ​ 3,192 ​ 12,375 ​ 8,146 ​ Change in the fair value of the derivative liability ​ — ​ ( 112 ) ​ 2,209 ​ ​ 135 ​ Change in the fair value of the warrant liability ​ — ​ 1 ​ — ​ ​ 33 ​ Change in the fair value of the Simple Agreements for Future Equity ​ ​ ( 932 ) ​ ​ — ​ ​ ( 1,976 ) ​ ​ — ​ Other income, net ​ 8 ​ 95 ​ 256 ​ ​ 353 ​ Gain (loss) on debt extinguishment ​ — ​ — ​ 443 ​ ​ ( 129 ) ​ Interest expense, net ​ — ​ ( 506 ) ​ ( 894 ) ​ ​ ( 1,222 ) ​ Total other income, net ​ 2,113 ​ 2,670 ​ 12,413 ​ 7,316 ​ Net loss ​ ( 3,110 ) ​ ( 1,791 ) ​ ( 4,377 ) ​ ( 5,971 ) ​ Cumulative preferred stock dividends ​ ( 1,859 ) ​ ( 1,064 ) ​ ( 4,326 ) ​ ( 3,170 ) ​ Net loss attributable to common stockholders ​ $ ( 4,969 ) ​ $ ( 2,855 ) ​ $ ( 8,703 ) ​ $ ( 9,141 ) ​ Unrealized (loss) gain on foreign currency translation ​ ( 3 ) ​ 18 ​ ( 9 ) ​ ( 40 ) ​ Total comprehensive loss ​ $ ( 3,113 ) ​ $ ( 1,773 ) ​ $ ( 4,386 ) ​ $ ( 6,011 ) ​ Net loss per share attributable to common stockholders, basic and diluted ​ $ ( 8.12 ) ​ $ ( 5.31 ) ​ $ ( 14.87 ) ​ $ ( 18.34 ) ​ Weighted-average common shares outstanding, basic and diluted ​ 611,680 ​ 537,315 ​ 585,320 ​ 498,415 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 8 Table of Contents COGNITION THERAPEUTICS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT (unaudited) (in thousands, except share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Series A ​ Series A ‑ 1 ​ Series A ‑ 2 ​ Series B ​ Series B-1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ Convertible ​ Convertible ​ Convertible ​ Convertible ​ Convertible ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ Total ​ ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ ​ Common Stock ​ Paid-in ​ Accumulated ​ Comprehensive ​ Stockholders’ ​ Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Loss Deficit Balances as of December 31, 2020 2,819,027 ​ $ 4,616 3,730,366 ​ $ 5,398 3,565,063 ​ $ 5,809 30,409,890 ​ $ 39,547 — ​ $ — ​ 538,793 ​ $ 1 ​ $ 222 ​ $ ( 68,220 ) ​ $ ( 187 ) ​ $ ( 68,184 ) Exercise of stock options ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 20,787 ​ ​ — ​ ​ 14 ​ ​ — ​ ​ — ​ ​ 14 Equity-based compensation ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 98 ​ ​ — ​ ​ — ​ ​ 98 Other comprehensive loss ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 5 ) ​ ​ ( 5 ) Net loss ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 223 ​ ​ — ​ ​ 223 Balances as of March 31, 2021 ​ 2,819,027 ​ ​ 4,616 ​ 3,730,366 ​ ​ 5,398 ​ 3,565,063 ​ ​ 5,809 ​ 30,409,890 ​ ​ 39,547 ​ — ​ ​ — ​ ​ 559,580 ​ ​ 1 ​ ​ 334 ​ ​ ( 67,997 ) ​ ​ ( 192 ) ​ ​ ( 67,854 ) Exercise of common stock warrants ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 50,497 ​ ​ — ​ ​ 34 ​ ​ — ​ ​ — ​ ​ 34 Equity-based compensation ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 94 ​ ​ — ​ ​ — ​ ​ 94 Issuance of Series B-1 Convertible Preferred Stock upon conversion of debt ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ 10,926,089 ​ ​ 29,391 ​ ​ — ​ ​ — ​ ​ ( 397 ) ​ ​ ( 14,068 ) ​ ​ — ​ ​ ( 14,465 ) Other comprehensive loss ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1 ) ​ ​ ( 1 ) Net loss ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1,490 ) ​ ​ — ​ ​ ( 1,490 ) Balances as of June 30, 2021 ​ 2,819,027 ​ ​ 4,616 ​ 3,730,366 ​ ​ 5,398 ​ 3,565,063 ​ ​ 5,809 ​ 30,409,890 ​ ​ 39,547 ​ 10,926,089 ​ ​ 29,391 ​ ​ 610,077 ​ ​ 1 ​ ​ 65 ​ ​ ( 83,555 ) ​ ​ ( 193 ) ​ ​ ( 83,682 ) Exercise of stock options — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 4,996 ​ ​ — ​ ​ 5 ​ ​ — ​ ​ — ​ 5 Exercise of common stock warrants ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 834 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Equity-based compensation — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 72 ​ ​ — ​ ​ — ​ 72 Other comprehensive loss — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 3 ) ​ ( 3 ) Net loss — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 3,110 ) ​ ​ - ​ ( 3,110 ) Balances as of September 30, 2021 2,819,027 ​ $ 4,616 3,730,366 ​ $ 5,398 3,565,063 ​ $ 5,809 30,409,890 ​ $ 39,547 10,926,089 ​ $ 29,391 ​ 615,907 ​ $ 1 ​ $ 142 ​ $ ( 86,665 ) ​ $ ( 196 ) ​ $ ( 86,718 ) 9 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Series A ​ Series A ‑ 1 ​ Series A ‑ 2 ​ Series B ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ Convertible ​ Convertible ​ Convertible ​ Convertible ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ Total ​ ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ ​ Common Stock ​ Paid-in ​ Accumulated ​ Comprehensive ​ Stockholders’ ​ Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit (Loss) Gain Deficit Balances as of December 31, 2019 2,819,027 ​ $ 4,413 3,730,366 ​ $ 5,160 3,565,063 ​ $ 5,552 30,409,890 ​ $ 37,802 ​ 469,751 ​ $ 1 ​ $ 1 ​ $ ( 58,239 ) ​ $ ( 185 ) ​ $ ( 58,422 ) Equity-based compensation — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 125 ​ ​ — ​ ​ — ​ 125 Accretion of convertible preferred stock to redemption value ​ — ​ ​ 88 ​ — ​ ​ 102 ​ — ​ ​ 111 ​ — ​ ​ 752 ​ ​ — ​ ​ — ​ ​ ( 125 ) ​ ​ ( 928 ) ​ ​ — ​ ​ ( 1,053 ) Other comprehensive loss — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 114 ) ​ ( 114 ) Net loss ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2,506 ) ​ ​ — ​ ​ ( 2,506 ) Balances as of March 31, 2020 ​ 2,819,027 ​ ​ 4,501 ​ 3,730,366 ​ ​ 5,262 ​ 3,565,063 ​ ​ 5,663 ​ 30,409,890 ​ ​ 38,554 ​ ​ 469,751 ​ ​ 1 ​ ​ 1 ​ ​ ( 61,673 ) ​ ​ ( 299 ) ​ ​ ( 61,970 ) Exercise of stock options ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 16,694 ​ ​ — ​ ​ 11 ​ ​ — ​ ​ — ​ ​ 11 Exercise of common stock warrants ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 50,497 ​ ​ — ​ ​ 34 ​ ​ — ​ ​ — ​ ​ 34 Equity-based compensation ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 88 ​ ​ — ​ ​ — ​ ​ 88 Accretion of convertible preferred stock to redemption value ​ — ​ ​ 88 ​ — ​ ​ 102 ​ — ​ ​ 111 ​ — ​ ​ 752 ​ ​ — ​ ​ — ​ ​ ( 133 ) ​ ​ ( 920 ) ​ ​ — ​ ​ ( 1,053 ) Other comprehensive gain ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 56 ​ ​ 56 Net loss ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1,674 ) ​ ​ — ​ ​ ( 1,674 ) Balances as of June 30, 2020 ​ 2,819,027 ​ ​ 4,589 ​ 3,730,366 ​ ​ 5,364 ​ 3,565,063 ​ ​ 5,774 ​ 30,409,890 ​ ​ 39,306 ​ ​ 536,942 ​ ​ 1 ​ ​ 1 ​ ​ ( 64,267 ) ​ ​ ( 243 ) ​ ​ ( 64,508 ) Exercise of stock options ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 429 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Equity-based compensation ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 129 ​ ​ — ​ ​ — ​ ​ 129 Accretion of convertible preferred stock to redemption value ​ — ​ ​ 27 ​ — ​ ​ 34 ​ — ​ ​ 35 ​ — ​ ​ 241 ​ ​ — ​ ​ — ​ ​ ( 44 ) ​ ​ ( 293 ) ​ ​ — ​ ​ ( 337 ) Other comprehensive gain — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 18 ​ 18 Net loss — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1,791 ) ​ ​ — ​ ( 1,791 ) Balances as of September 30, 2020 2,819,027 ​ $ 4,616 3,730,366 ​ $ 5,398 3,565,063 ​ $ 5,809 30,409,890 ​ $ 39,547 ​ ​ 537,371 ​ $ 1 ​ $ 86 ​ $ ( 66,351 ) ​ $ ( 225 ) ​ $ ( 66,489 ) ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 10 Table of Contents COGNITION THERAPEUTICS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ 2021 2020 ​ Cash flows from operating activities: ​ ​ ​ Net loss ​ $ ( 4,377 ) ​ $ ( 5,971 ) ​ Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ Depreciation and amortization ​ 70 ​ 74 ​ Amortization of debt issuance costs ​ 31 ​ 34 ​ Amortization of debt discount ​ 352 ​ 536 ​ Change in the fair value of the derivative liability ​ ( 2,209 ) ​ ( 135 ) ​ Change in the fair value of the warrant liability ​ — ​ ( 33 ) ​ Change in the fair value of the Simple Agreements for Future Equity ​ ​ 1,976 ​ ​ — ​ (Gain) loss on debt extinguishment ​ ( 443 ) ​ 129 ​ Equity-based compensation ​ 264 ​ 342 ​ Changes in operating assets and liabilities: ​ ​ ​ ​ Grant receivables ​ ( 283 ) ​ 11 ​ Prepaid expenses and other current assets ​ ( 18 ) ​ ( 214 ) ​ Other receivables ​ 264 ​ 966 ​ Accounts payable ​ ( 278 ) ​ 286 ​ Accrued expenses and interest ​ 258 ​ 275 ​ Other current liabilities ​ 661 ​ 747 ​ Net cash used in operating activities ​ ( 3,732 ) ​ ( 2,953 ) ​ Cash flows from investing activities: ​ ​ ​ ​ Payments for property and equipment ​ — ​ ( 10 ) ​ Net cash used in investing activities ​ — ​ ( 10 ) ​ Cash flows from financing activities: ​ ​ ​ Payments on capital lease obligation ​ — ​ ( 4 ) ​ Proceeds from issuance of Simple Agreements for Future Equity ​ 8,942 ​ — ​ Proceeds from the exercise of stock warrants ​ 34 ​ 34 ​ Proceeds from the exercise of stock options ​ 19 ​ 11 ​ Proceeds from the issuance of convertible notes ​ — ​ 5,372 ​ Deferred offering costs ​ ​ ( 2,155 ) ​ ​ — ​ Debt issuance costs related to convertible notes ​ — ​ ( 93 ) ​ Net cash provided by financing activities ​ 6,840 ​ 5,320 ​ Effect of exchange rate changes on cash and cash equivalents ​ 13 ​ ( 4 ) ​ Net increase in cash and cash equivalents ​ 3,121 ​ 2,353 ​ Cash and cash equivalents ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents – beginning of period ​ 5,189 ​ 2,890 ​ Cash and cash equivalents – end of period ​ $ 8,310 ​ $ 5,243 ​ Supplemental disclosures of non-cash financing activities: ​ ​ ​ Non-cash accretion of convertible preferred stock to redemption value ​ $ — ​ $ 2,443 ​ Deferred offering costs included in accounts payable ​ $ 1,055 ​ $ — ​ Issuance of Series B-1 Convertible Preferred Stock upon conversion of debt ​ $ 29,391 ​ $ — ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 11 Table of Contents Cognition Therapeutics, Inc. and Subsidiary Notes to Consolidated Financial Statements (unaudited) (in thousands, except share and per share amounts) 1. Description of Business and Financial Condition Cognition Therapeutics, Inc. (the “Company”) was incorporated as a Delaware corporation on August 21, 2007. The Company is a biopharmaceutical company developing disease modifying therapies for central nervous system (CNS) disorders. The Company’s pipeline candidates were discovered using proprietary biology and chemistry platforms designed to identify novel drug targets and disease-modifying therapies that address dysregulated pathways specifically associated with neurodegenerative diseases. The Company was founded on the unique combination of biological expertise around these targets, including proprietary assays that emphasize functional responses, and proprietary medicinal chemistry intended to produce novel, high-quality small-molecule drug candidates. On July 14, 2015, the Company formed Cognition Therapeutics PTY LTD, as its wholly owned subsidiary (the “Subsidiary”), primarily for the purpose of conducting research and development efforts at facilities located in Australia. Assets and liabilities of the Company’s Australian subsidiary, which uses the Australian dollar as its local functional currency, are translated to United States (U.S.) dollars at year-end exchange rates. Income statement accounts are translated using the average exchange rates prevailing during the month in which income and expenses are generated. Translation adjustments are recorded to accumulated other comprehensive income (loss) (“AOCI”) within stockholders’ deficit. Gains and losses from foreign currency transactions are included in net loss as a part of other income, net. On October 13, 2021, the Company closed its initial public offering (“IPO”) of 3,768,116 shares of the Company’s common stock at a public offering price of $ 12.00 per share. The gross proceeds from the IPO, including the overallotment exercise, were $ 45.2 million and the net proceeds were approximately $ 38.1 million, after deducting underwriting discounts and commissions and other offering related expenses payable by the Company. Upon completion of the IPO, all of the Company’s then outstanding preferred stock as of September 30, 2021 was automatically converted into an aggregate of 15,906,537 shares of common stock and an aggregate amount of $ 8.9 million of simple agreements for future equity (“SAFEs”), as of September 30, 2021, was automatically converted into an aggregate of 931,485 shares of common stock (see Note 13). On November 10, 2021, the representative of the underwriters for the IPO provided notice to the Company that it had elected to exercise its over-allotment option in full to purchase 565,217 shares of the Company’s common stock. The representative’s exercise of the over-allotment option closed on November 12, 2021, resulting in gross proceeds of $ 6.8 million and net proceeds to the Company of approximately $ 6.3 million, after deducting underwriting discounts and commissions and other offering related expenses. The Company held cash and cash equivalents of $ 8.3 million at September 30, 2021. The Company expects that its cash and cash equivalents, including the net proceeds from its IPO, will enable it to fund its operating expenses and capital expenditure requirements for at least twelve months from November 17, 2021, the filing date of this Quarterly Report on Form 10-Q. However, additional funding will be necessary beyond this point to fund future preclinical and clinical activities. The Company expects to finance its future cash needs through a combination of equity or debt financings, collaboration agreements, strategic alliances and licensing arrangements. 2. Summary of Significant Accounting Policies The Company’s significant accounting policies are disclosed in the audited financial statements for the year ended December 31, 2020, which are contained in the Company’s final prospectus for its IPO, dated October 7, 2021, and filed with the Securities and Exchange Commission (“SEC”) pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the “Prospectus”). Since the date of those financial statements, there have been no changes to its significant accounting policies. 12 Table of Contents Basis of Presentation The accompanying consolidated financial statements as of September 30, 2021, and for the three and nine months ended September 30, 2021 and 2020, have been prepared in accordance with the rules and regulations of the SEC and generally accepted accounting principles in the United States of America (“U.S. GAAP”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying unaudited interim consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of September 30, 2021, the statements of operations and comprehensive loss and convertible preferred stock and stockholders’ deficit for the three and nine months ended September 30, 2021 and 2020, and the statement of cash flows for the nine months ended September 30, 2021 and 2020. Such adjustments are of a normal and recurring nature. The results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results for the year ending December 31, 2021, or for any future period. These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2020, and the notes thereto, which are included in the Prospectus. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of other income and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents consist primarily of interest-bearing deposits at various financial institutions. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Receivables Grant Receivables Grant receivables relate to outstanding amounts due for reimbursable expenditures of awarded grants issued by the National Institute of Health and are carried at their estimated collectible amounts. The Company expects all receivables to be collectible, and accordingly, there is no allowance for doubtful accounts required on these grant receivables. Other Receivables Other receivables consist of research and development tax credits from the Commonwealth of Pennsylvania and the Australian research and development tax credit from the Australian Tax Authority. Historically, the Company has sold the Pennsylvania tax credits to third parties, while the Australian tax refund is paid directly to the Company by the Australian Tax Authority. Research and development tax refunds and credits are carried at their estimated collectible amounts. The Company expects all receivables to be collectible and accordingly, there is no allowance for doubtful accounts required on these other receivables. Deferred Offering Costs The Company capitalizes certain legal, accounting and other third-party fees that are directly associated with in-process equity financings, including the IPO, as deferred costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in stockholders’ deficit as a reduction of proceeds generated as a result of the offering. Should an in-process equity financing be abandoned, the deferred offering costs will be expensed immediately in the consolidated statement of operations and comprehensive loss. During the three and nine months ended September 30, 2021, the Company incurred $ 769 and $ 3,210 of deferred offering costs in connection with 13 Table of Contents its IPO registration process, respectively. During the three and nine months ended September 30, 2020, the Company incurred $ 0 of deferred offering costs. Property and Equipment Property and equipment is recorded at cost, less accumulated depreciation. Depreciation is computed on the straight-line basis over the estimated useful life of the asset. The Company estimates the useful life to be 5 and 6 years for equipment and furniture and fixtures, respectively. The cost of repairs and maintenance is charged to expense as incurred. Property and equipment is evaluated for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. If expected cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the assets. There were no indicators of impairment of long-lived assets during the three and nine months ended September 30, 2021 or 2020. Convertible Instruments ASC 815, Derivatives and Hedging Activities (“ASC 815”) requires companies to bifurcate certain conversion options and redemption features from their host instruments and account for them as freestanding derivative financial instruments should certain criteria be met. The Company also follows ASC 480-10, Distinguishing Liabilities from Equity (“ASC 480-10”) when evaluating the accounting for its hybrid instruments. A financial instrument that embodies an unconditional obligation, or a financial instrument other than an outstanding share that embodies a conditional obligation, that the issuer must or may settle by issuing a variable number of its equity shares shall be classified as a liability (or an asset in some circumstances) if, at inception, the monetary value of the obligation is based solely or predominantly on any one of the following: (a) a fixed monetary amount known at inception; (b) variations in something other than the fair value of the issuer’s equity shares; or (c) variations inversely related to changes in the fair value of the issuer’s equity shares. Hybrid instruments meeting these criteria are not further evaluated for any embedded derivatives and are carried as a liability at fair value at each balance sheet date. Debt Issuance Costs and Discounts The Company incurred third-party costs in connection with the convertible notes as described in Note 6. These costs are classified on the balance sheet as a direct deduction from the convertible notes and amortized over the term of the agreement as interest expense using the effective interest rate method. Discounts related to bifurcated derivatives resulting from the convertible note issuances are recorded as a reduction to the carrying value of the debt and amortized over the life of the debt using the effective interest method. Warrants Issued in Connection with Financings The Company generally accounts for warrants issued in connection with debt and equity financings as a component of equity, unless the warrants include specific features, such as if the warrants are exercisable for securities that are considered contingently redeemable. For warrants that are exercisable for securities that are considered contingently redeemable, the Company records the fair value of the warrants as a liability at each balance sheet date and records changes in fair value in other income (expense) in the consolidated statement of operations and comprehensive loss. Convertible Preferred Stock The Company has classified convertible preferred stock outside of stockholders’ deficit in the accompanying balance sheets due to the convertible preferred stock’s redemption features. Originally, the convertible preferred stock was eligible to become redeemable at the holders’ option at any time after March 20, 2021. This right was removed in 14 Table of Contents connection with an amendment to the Company’s articles of incorporation on July 29, 2020. Pre-amendment, the convertible preferred stock was redeemable due to the passage of time, and therefore, the Company recorded changes in the redemption value and accreted the convertible preferred stock immediately to the redemption value during each period presented. These increases were affected through charges against retained earnings, if any, and then to additional paid-in capital. In the absence of additional paid-in capital, the accretion is charged to accumulated deficit. Post-amendment, the convertible preferred stock is considered to be contingently redeemable only upon the occurrence of a deemed liquidation event (Note 7). As a result, the Company ceased accreting the convertible preferred stock on July 29, 2020. To evaluate whether the changes to the terms of the preferred stock should be accounted for as a modification or extinguishment, the Company follows the qualitative approach, in which amendments to preferred shares are analyzed based on the expected economics as well as the business purpose of the amendment. The Company concluded that the amendment did not result in a significant change to the fundamental nature of the preferred stock, and accordingly, the amendment was accounted for as a modification, and there was no accounting impact for the modification. Grant income For the three and nine months ended September 30, 2021, the Company generated grant income of $ 3,037 and $ 12,375 , respectively, from reimbursements from the National Institute of Health (“NIH”) for aging research. For the three and nine months ended September 30, 2020, the Company generated grant income of $ 3,192 and $ 8,146 , respectively. The Company records grant income in other income (expense) in the period in which the reimbursable research and development services are incurred and the right to payment is realized. The grants awarded relate to agreed upon direct and indirect costs for specific studies or clinical trials, which may include personnel and consulting costs, costs paid to contract research organizations (“CROs”), research institutions and/or consortiums involved in the grant, as well as facilities and administrative costs. These grants are cost plus fixed fee arrangements in which the Company is reimbursed for its eligible direct and indirect costs over time, up to the maximum amount of each specific grant award. Only costs that are allowable under the grant award, certain government regulations and the NIH’s supplemental policy and procedure manual may be claimed for reimbursement, and the reimbursements are subject to routine audits from governmental agencies from time to time. Research and Development Costs The Company is involved in research and development aimed at the development of treatments for a variety of diseases related to the central nervous system, with a primary focus on Alzheimer’s Disease. Research and development costs are expensed as incurred. Research and development expenses consist principally of personnel costs, including salaries, stock-based compensation, and benefits for employees, third-party license fees and other operational costs related to our research and development activities, including allocated facility-related expenses and external costs of outside vendors, and other direct and indirect costs. Non-refundable research and development costs are deferred and expensed as the related goods are delivered or services are performed. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks. Costs for certain research and development activities are recognized based on the pattern of performance of the individual arrangements, which may differ from the pattern of billings incurred, and are reflected in the consolidated financial statements as prepaid expenses or as accrued research and development expenses. Equity-based Compensation Following the provisions of ASC 718, Compensation — Stock Compensation , the Company recognizes compensation expense for equity-based grants using the straight-line attribution method, in which the expense is recognized ratably over the requisite service period within operating expenses based on the grant date fair value. The Company also has granted awards subject to performance-based vesting. The Company would recognize compensation expense for these awards commencing in the period in which the vesting condition becomes probable of achievement. Grant date fair value is estimated on the date of grant using the Black-Scholes option pricing model. Forfeitures are recognized in the period in which they occur. Black-Scholes requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. Due to the lack 15 Table of Contents of a public market for the Company’s common stock and lack of company specific historical and implied volatility data, the Company has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to the Company, including stage of product development and life science industry focus. The historical volatility is calculated based on a period of time commensurate with expected term assumption. The Company uses the simplified method to calculate the expected term for stock options granted to employees whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the stock options due to its lack of sufficient historical data. The risk-free interest rate is based on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. Due to the absence of an active market for the Company’s common stock, the Company utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation , to estimate the fair value of its common stock. In determining the exercise prices for stock options granted, the Company has considered the estimated fair value of the common stock as of the measurement date. The estimated fair value of the common stock has been determined at each grant date based upon a variety of factors, including the illiquid nature of the common stock, arm’s-length sales of the Company’s capital stock (including convertible preferred stock), the effect of the rights and preferences of the preferred stockholders and the prospects of a liquidity event. Among other factors are the Company’s financial position and historical financial performance, the status of technological developments within the Company’s research, the composition and ability of the current research and management team, an evaluation or benchmark of the Company’s competition and the current business climate in the marketplace. Significant changes to the key assumptions underlying the factors used could result in different fair values of common stock at each valuation date. Concentration of Credit Risk The Company’s financial instruments that are exposed to credit risks consist of cash and cash equivalents. The Company maintains its cash and cash equivalents in bank deposit accounts which, at times, may exceed the federally insured limit. The Company has not experienced any losses in these accounts and does not believe it is exposed to any significant credit risk related to these funds. Fair Value of Financial Instruments The Company applies ASC 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances. The carrying value of the Company’s cash and cash equivalents, grants receivable, prepaid expense, other receivables, other current assets, accounts payable, accrued expenses and other current liabilities approximate fair value because of the short-term maturity of these financial instruments. In addition, the Company records its warrant liability, derivative liability, and SAFEs at fair value. 16 Table of Contents The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: ● Level 1  — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. ● Level 2  — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. ● Level 3  — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. Comprehensive Loss The Company recorded $ 3 and $ 9 in other comprehensive loss related to foreign currency translation for the three and nine months ended September 30, 2021, respectively. The Company recorded $ 18 in other comprehensive gain and $ 40 in other comprehensive loss for the three and nine months ended September 30, 2020, respectively. The Company presents comprehensive loss in a single statement within its consolidated financial statements. Net Loss Per Share Attributable to Common Stockholders Basic net loss attributable to common shares is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during each period. Diluted net loss attributable to common shares includes the effect, if any, from the potential exercise or conversion of securities, such as convertible preferred stock and stock options, which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. The Company’s convertible preferred stock entitles the holder to participate in dividends and earnings of the Company, and, if the Company were to recognize net income attributable to common stockholders, it would have to use the two-class method to calculate earnings per share. The two-class method is not applicable during periods with a net loss attributable to common stockholders, as the holders of the convertible preferred stock have no obligation to fund losses. Segments The Company has determined that it operates and manages one operating segment, which is the business of developing and commercializing therapeutics. The Company’s chief operating decision maker, its chief executive officer, reviews financial information on an aggregate basis for the purpose of allocating resources. Emerging Growth Company Status The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (a) no longer an emerging growth company or (b) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. 17 Table of Contents Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). ASU No. 2016-02 requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. ASU No. 2016-02 is effective for the Company for annual periods beginning after December 15, 2021. Early adoption is permitted. The Company expects to adopt this guidance when effective and is assessing what effect the adoption of ASU 2016-02 will have on its consolidated financial statements and accompanying notes. The Company expects to record right-of-use assets and liabilities upon adoption. In June 2018, the FASB issued ASU 2018-07, Compensation — Stock Compensation (Topic 718) Improvements to Nonemployee Share-Based Payment Accounting. The new ASU simplifies the accounting for share-based payments to non-employees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The Company adopted the standard on January 1, 2020 and it did not have a material impact on the Company’s financial condition, results of operations and cash flows. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820). This standard modifies disclosure requirements related to fair value measurement and is effective for all entities for fiscal years beginning after December 15, 2019. Among other things, ASU 2018-13 requires public entities to disclose the range and weighted average used to develop significant unobservable inputs for level 3 fair value measurements, while eliminating the requirement for public entities to disclose the amount of and reasons for transfers between level 1 and level 2 of the fair value hierarchy. Implementation on a prospective or retrospective basis varies by specific disclosure requirement. The standard also allows for early adoption of any removed or modified disclosures upon issuance while delaying adoption of the additional disclosures until their effective date. The Company adopted this guidance on January 1, 2020 and the adoption did not have a material impact on its financial statements. In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU simplifies the accounting for certain convertible instruments. ASU 2020-06 will be effective for fiscal years beginning after December 15, 2021, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2020. The Company adopted ASU 2020-06 on January 1, 2021, and the adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures. In October 2020, the FASB issued ASU 2020-10, Codification Improvements , which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC’s regulations. The Company adopted ASU 2020-10 on January 1, 2021. The adoption of ASU 2020-10 did not have a material impact on the Company’s consolidated financial statements and related disclosures. All other new accounting pronouncements issued, but not yet effective or adopted have been deemed to be not relevant to the Company and, accordingly, are not expected to have a material impact once adopted. Reverse Stock Split In July 2021, the Company's Board of Directors approved an amendment to the Company's second amended and restated certificate of incorporation to effect a 1 -for-3.2345 reverse stock split of the Company's common stock, which was effected on October 1, 2021 with a filing made with the Secretary of State of the State of Delaware. Stockholders entitled to fractional shares as a result of the reverse stock split will receive a cash payment in lieu of receiving fractional shares. The par value of the common stock was not adjusted as a result of the reverse stock split. Shares of common stock underlying outstanding stock options and other equity instruments were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with the terms of the appropriate securities agreements. Shares of common stock reserved for issuance upon the conversion of our convertible preferred stock were 18 Table of Contents proportionately reduced and the respective conversion prices were proportionately increased. All common share and per share data have been retrospectively revised to reflect the reverse stock split. ​ 3. Financial Instruments and Fair Value Measurements Financial assets and liabilities measured at fair value are summarized below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of September 30, 2021 ​ ​ ​ ​ ​ ​ ​ ​ Significant ​ ​ ​ ​ ​ Quoted Priced in ​ Significant Other ​ Unobservable ​ ​ ​ ​ ​ Active Markets ​ Observable Inputs ​ Inputs ​ ​ ​ ​ (Level 1) (Level 2) (Level 3) Total Assets: ​ ​ ​ ​ Money market funds ​ $ 7,252 ​ $ — ​ $ — ​ $ 7,252 Total assets ​ $ 7,252 ​ $ — ​ $ — ​ $ 7,252 Liabilities: ​ ​ ​ ​ ​ ​ ​ Simple Agreements for Future Equity ​ $ — ​ $ — ​ $ 10,918 ​ $ 10,918 Total liabilities ​ $ — ​ $ — ​ $ 10,918 ​ $ 10,918 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ Significant ​ ​ ​ ​ ​ Quoted Priced in ​ Significant Other ​ Unobservable ​ ​ ​ ​ ​ Active Markets ​ Observable Inputs ​ Inputs ​ ​ ​ ​ (Level 1) (Level 2) (Level 3) Total Assets: ​ ​ ​ ​ Money market funds ​ $ 2,853 ​ $ — ​ $ — ​ $ 2,853 Total assets ​ $ 2,853 ​ $ — ​ $ — ​ $ 2,853 Liabilities: ​ ​ ​ ​ Derivative liability ​ $ — ​ $ — ​ $ 2,209 ​ $ 2,209 Total liabilities ​ $ — ​ $ — ​ $ 2,209 ​ $ 2,209 ​ The following table sets forth a summary of the changes in fair value of the Level 3 liabilities for the nine months ended September 30, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, 2021 ​ ​ ​ ​ Derivative ​ ​ SAFE Liability Total Balance at December 31, 2020 ​ $ — ​ $ 2,209 ​ $ 2,209 Change in the fair value of the warrant liability ​ — ​ — ​ — Fair value recognized upon the issuance of SAFE ​ 8,942 ​ — ​ 8,942 Change in the fair value of the liability ​ 1,976 ​ ( 2,209 ) ​ ( 233 ) Balance at September 30, 2021 ​ $ 10,918 ​ $ — ​ $ 10,918 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, 2020 ​ ​ Warrant ​ Derivative ​ ​ Liability Liability Total Balance at December 31, 2019 ​ $ 181 ​ $ 1,493 ​ $ 1,674 Change in the fair value of the warrant liability ​ — ​ — ​ — Fair value recognized upon the issuance of Convertible Notes ​ — ​ 718 ​ 718 Change in the fair value of the liability ​ ( 33 ) ​ ( 135 ) ​ ( 168 ) Balance at September 30, 2020 ​ $ 148 ​ $ 2,076 ​ $ 2,224 ​ 19 Table of Contents Derivative Liability — The Company recognizes derivative liabilities as a result of the issuance of the convertible notes that contain conversion and redemption features that are required to be bifurcated. The fair value measurement of the derivative liability is classified as Level 3 under the fair value hierarchy as it has been valued using certain unobservable inputs. These inputs include: (1) probability of occurrence of future events (such as a qualified financing or a sale), and (2) discount rate for implied return required by investor. Significant increases or decreases in any of those inputs in isolation could result in a significantly lower or higher fair value measurement. The fair value of the derivative liability was determined by calculating the fair value of the notes with the conversion and redemption features as compared to the fair value of the notes without such features, with the difference representing the value of the conversion and redemption features, or the derivative liability. The conversion and redemption features are measured at fair value as of each reporting date and the change in the fair value for the period is recorded in the consolidated statements of operations as a change in the fair value of the derivative liability. The fair value of the derivative liability is based on Level 3 unobservable inputs. Changes in fair value are recognized as a gain or loss within other income (expense) on the consolidated statements of operations and comprehensive loss. The derivative liability expired unexercised upon the conversion of the convertible notes into Series B-1 Convertible Preferred Stock in May of 2021 (Note 7). Warrant Liability — The Company issued 180,724 Series A-1 preferred stock warrants in December 2010. The Company recorded a change in fair value adjustment of $ 1 and $ 33 in the consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2020, respectively. The warrants expired unexercised in October 2020. Simple Agreements for Future Equity — On March 25, 2021, the Company entered into SAFEs with existing investors, pursuant to which the Company received gross proceeds in an aggregate amount equal to $ 8,942 . The fair value of the SAFE liability is estimated using a fair value model that includes inputs such as: (1) probability of occurrence of future events (such as a change of control or public offering), and (2) discount rate for implied return required by investor. The Company recorded a change in fair value adjustment of $ 932 and $ 1,976 in the consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2021, respectively. The fair value of the SAFEs was determined using a probability weighted expected return method (PWERM), in which the probability and timing of potential future events is considered in order to estimate the fair value of the SAFEs as of each valuation date. Management determined the fair value of the SAFEs using the following significant unobservable inputs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 25, ​ ​ September 30, ​ 2021 ​ 2021 ​ (Issuance) Expected term (in years) 0.02 ​ 0.35 Discount upon conversion 20.0 % ​ 20.0 % Discount upon implied return 18.9 % ​ 18.9 % Probability of initial public offering occurrence 90.0 % ​ 45.0 % Probability of dissolution event occurrence ​ 2.0 % ​ 15.0 % Probability of equity financing occurrence ​ 7.0 % ​ 37.0 % Probability of change of control occurrence ​ 1.0 % ​ 3.0 % ​ In addition, the Company recorded the Series B-1 convertible preferred stock within mezzanine equity at fair value on the date of issuance, May 1, 2021 (Note 7). This non-recurring fair value measure was based on level 3 unobservable inputs. 20 Table of Contents 4. Accrued Expenses Accrued expense consists of the following as of: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Costs as of ​ ​ ​ September 30, ​ December 31, ​ ​ 2021 2020 ​ Employee compensation, benefits, and related accruals ​ $ 679 ​ $ 732 ​ Research and development costs ​ 44 ​ 143 ​ Professional fees ​ — ​ 119 ​ Other accrued ​ 17 ​ — ​ Total ​ $ 740 ​ $ 994 ​ ​ ​ ​ 5. Commitments and Contingencies The Company has operating leases for its office and laboratory facilities under agreements that run through February 28, 2029. Minimum lease commitments consisted of the following as of September 30, 2021: ​ ​ ​ ​ ​ For the Years Ended December 31, Operating Leases 2021 ​ $ 49 2022 ​ 197 2023 ​ 140 2024 ​ ​ 82 Thereafter ​ ​ 357 Total lease commitments ​ $ 825 ​ Rent expense was $ 34 and $ 116 for the three and nine months ended September 30, 2021, respectively, and $ 40 and $ 145 for the three and nine months ended September 30, 2020, respectively. From time to time, the Company may be involved in disputes or regulatory inquiries that arise in the ordinary course of business. When the Company determines that a loss is both probable and reasonably estimable, a liability is recorded and disclosed if the amount is material to the financial statements taken as a whole. When a material loss contingency is only reasonably possible, the Company does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can reasonably be made. As of September 30, 2021 and December 31, 2020, there was no litigation or contingency with at least a reasonable possibility of a material loss. 6. Debt On March 8, 2018, the Company entered into a Convertible Note Purchase Agreement (the “Original Agreement”) with existing investors of the Company. Under the terms of the Original Agreement, the Company agreed to issue up to $ 5,000 in principle Convertible Notes (the “Original Notes”). The Original Notes accrued interest at 4.0 % per annum from the date of issuance with a maturity date of February 27, 2020 (subsequently extended — see below). The Company issued $ 2,965 in Original Notes in March and April 2018. Under the terms of the Original Agreement, the following features were included: ● Automatic conversion into equity securities upon the closing of an equity financing with aggregate gross proceeds of at least $ 10,000 , at the conversion price equal to 90.0 % of the lowest price per share of the equity financing securities sold (a “Automatic Conversion Upon a Qualified Financing”); 21 Table of Contents ● Optional conversion into equity securities upon the closing of an equity financing that does not constitute a Qualified Financing at a conversion price equal to 90.0 % of the price per share of the equity financing securities sold (a “Optional Conversion Upon a Non-Qualified Financing”); ● Optional conversion of the unpaid principal balance plus accrued and unpaid interest to into B-1 Convertible Preferred Stock at a conversion price of $ 1.385 per share or redemption of the unpaid principal balance plus accrued and unpaid interest if (i) a transaction results in any person or group with over 50.0 % voting power, (ii) any consolidation or merger transaction, or (iii) a sale or transfer of substantially all of the Company’s assets (“Option Conversion or Redemption”) Optional conversion of the unpaid principal balance plus accrued and unpaid interest to into Series B-1 convertible preferred stock at a conversion price of $ 1.385 per share or redemption of the unpaid principal balance plus accrued and unpaid interest if (i) a transaction results in any person or group with over 50.0 % voting power, (ii) any consolidation or merger transaction, or (iii) a sale or transfer of substantially all of the Company’s assets (“Option Conversion or Redemption”); and ● Automatic redemption of unpaid principal and all accrued and unpaid interest upon maturity, liquidation, dissolution, winding up, or event of default (“Automatic Redemption”). On November 15, 2018, the Company entered into a Convertible Note Purchase Agreement (the “Additional Agreement”) with existing investors of the Company. Under the terms of the Additional Agreement, the Company agreed to issue up to an aggregate of $ 8,000 in principle Convertible Notes (the “Additional Notes”). In connection with the Additional Agreement, the Company amended the Original Notes (the “Amendment”). The Amendment resulted in the following changes to the Original Notes: ● the interest rate of the Original Notes accrue interest at 4.0 % from issuance to November 15, 2018, and accrue interest at 8.0 % from November 15, 2018 to maturity or conversion; ● the conversion price was amended to 80.0 % of the price per share in connection with conversion of the notes upon a Qualified or Non-Qualified Financing; ● the holder’s option upon a sale event to receive repayment, at two times the principal plus accrued and unpaid interest, (“Optional Redemption Upon a Sales Transaction”); and ● a condition that each holder of $ 1,000 in aggregate principal must be included in the 66 2/3% of the holders of the principal amount of the Notes to provide consent to make any further amendments or waivers. On February 27, 2020, the Company entered into a Convertible Note Purchase Agreement (the “Second Amendment”) with existing investors of the Company. Under the terms of the Second Amendment, the Company agreed to issue up to an aggregate of $ 10,035 in principle Convertible Notes (the “Second Amendment Notes”). In connection with the Second Amendment, the Company amended the Original Notes and Additional Notes. The Second Amendment resulted in the following changes: ● extend the maturity date to June 30, 2021; ● add a cap for a conversion in connection with a Qualified Financing; and ● provide for mandatory conversion of the Combined Notes into Series B-1 Preferred Convertible Stock of the Company if the Company has not completed a Qualified Financing on or before June 30, 2021. The Company applied extinguishment accounting to the Original Notes upon execution of the Amendment in 2018 on the basis that the present value of the cash flows under the terms of the Amendment of the Original notes were determined to be substantially different. The Company applied extinguishment accounting upon execution of the Second Amendment as the addition of the conversion features are substantive and recorded a loss on debt extinguishment of $ 0 22 Table of Contents and $ 129 in the consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2020, respectively. Each Additional Note and Second Amendment Note (collectively with the Original Notes, the “Convertible Notes” or the “Notes) included the features set forth above. The Company issued $ 2,965 Original Notes in 2018, $ 4,661 Additional Notes in 2018 and 2019, and $ 5,372 Second Amendment Notes in 2020. The total issuance costs incurred in connection with all closings of the Convertible Notes was $ 205 . The Convertible Notes were considered to be a hybrid financial instrument consisting of a fixed interest rate host with certain embedded features requiring evaluation for bifurcation and separate accounting. The Company determined that the Automatic Conversion Upon a Qualified Financing, Optional Conversion Upon a Non-Qualified Financing and the Optional Redemption Upon a Sales Transaction were considered freestanding financial instruments which required bifurcation from the host debt instruments. The resulting debt discount from the derivative liabilities was presented as a direct deduction from the carrying amount of the Convertible Notes and amortized to interest expense using the effective interest rate method. Interest expense on the convertible notes, including amortization of debt issuance costs, consisted of the following for the three and nine months ended September 30, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2021 2020 2021 2020 Coupon interest ​ $ — ​ $ 262 ​ $ 512 ​ $ 660 Issuance costs amortization ​ — ​ 18 ​ 31 ​ 34 Discount amortization ​ — ​ 228 ​ 352 ​ 536 ​ ​ $ — ​ $ 508 ​ $ 895 ​ $ 1,230 ​ In May of 2021, the convertible notes and accrued interest thereon were converted into shares of the Company’s Series B-1 convertible preferred stock (Note 7). In April 2020, the Company received a $ 443 unsecured loan, bearing interest at 1.0 %, pursuant to the Paycheck Protection Program (the “PPP”), a program implemented by the U.S. Small Business Administration (the “SBA”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) (the “PPP Loan”). The PPP provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loan and accrued interest are forgivable after eight weeks if the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities. The amount of loan forgiveness may be reduced if the borrower terminates employees or reduces salaries during the eight-week period. The unforgiven portion of the PPP loan is payable over two years at an interest rate of 1.0 %, with a deferral of payments for the first six months . The Company used the proceeds for purposes consistent with the PPP. On January 21, 2021, the Company received confirmation from the SBA that the PPP Loan had been forgiven in full, including all interest incurred. Accordingly, the Company recognized $ 0 and $ 443 of income for the debt extinguishment pursuant to ASC 470-50-15-4 for the three and nine months ended September 30, 2021, respectively. 23 Table of Contents 7. Preferred Stock Convertible preferred stock consisted of the following: As of September 30, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Preferred Stock ​ ​ ​ ​ ​ ​ ​ Common Stock ​ ​ Preferred Stock ​ Issued and ​ Carrying ​ Liquidation ​ Issuable Upon Class of Preferred Authorized Outstanding Value Preference Conversion Series A Convertible Preferred Stock 3,067,519 2,819,027 ​ $ 4,616 ​ $ 5,051 871,541 Series A‑1 Convertible Preferred Stock 3,970,776 3,730,366 ​ 5,398 ​ 5,906 1,153,290 Series A‑2 Convertible Preferred Stock 3,565,063 3,565,063 ​ 5,809 ​ 6,355 1,102,182 Series B Convertible Preferred Stock 30,450,000 30,409,890 ​ 39,547 ​ 43,269 9,401,599 Series B‑1 Convertible Preferred Stock 10,928,155 10,926,089 ​ 29,391 ​ 16,038 3,377,925 Total 51,981,513 51,450,435 ​ $ 84,761 ​ $ 76,619 15,906,537 ​ As of December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Preferred Stock ​ ​ ​ ​ ​ ​ ​ Common Stock ​ ​ Preferred Stock ​ Issued and ​ Carrying ​ Liquidation ​ Issuable Upon Class of Preferred Authorized Outstanding Value Preference Conversion Series A Convertible Preferred Stock 3,067,519 2,819,027 ​ $ 4,616 ​ $ 4,766 871,541 Series A‑1 Convertible Preferred Stock 3,970,776 3,730,366 ​ 5,398 ​ 5,572 1,153,290 Series A‑2 Convertible Preferred Stock 3,565,063 3,565,063 ​ 5,809 ​ 5,997 1,102,182 Series B Convertible Preferred Stock 30,450,000 30,409,890 ​ 39,547 ​ 40,826 9,401,599 Total 41,053,358 40,524,346 ​ $ 55,370 ​ $ 57,161 12,528,612 ​ On May 1, 2021, the holders of all of our outstanding convertible promissory notes agreed to an acceleration of the date of the automatic conversion from June 30, 2021 to May 1, 2021 for all convertible promissory notes. Accordingly, on May 1, 2021, all of our outstanding convertible promissory notes were converted into 10,926,089 shares of our Series B-1 convertible preferred stock, at a conversion price equal to $ 1.385 per share. The Series B-1 convertible preferred stock was recorded within mezzanine equity at fair value on the date of issuance. On October 13, 2021, upon the closing of the IPO, all shares of preferred stock were converted into 15,906,537 shares of common stock (see Note 13). ​ Rights, preferences, privileges, and restrictions: The holders of shares of Series A, A-1, A-2, B and B-1 convertible preferred stock (collectively, the “Preferred Stock”) have the rights, preferences, privileges, and restrictions as set forth below: Dividends: The holders of the Preferred Stock are entitled to receive cumulative dividends when, as and if declared by the Company’s Board of Directors. Accrued dividends shall accrue only on the unreturned amount of the original issue price taking into account the payment of any mandatory dividend. As used herein, “original issue price” means $ 0.69 per share with respect to the Series A and A-1 convertible preferred stock, $ 0.8415 per share with respect to the Series A-2 convertible preferred Stock, $ 0.923 per share with respect to the Series B convertible preferred stock, and $ 1.385 per share with respect to the Series B-1 convertible preferred stock. After such time the holders receive their full preferred liquidation amount, less any and all mandatory dividends, the holders of preferred stock will not be entitled to any additional accruing dividends; provided that the holders of the preferred stock will share in all dividends and distributions declared by the board of directors and paid by the Company with the holders of common stock on an as if converted to common stock basis. 24 Table of Contents Voting Rights: The holders of Preferred Stock are entitled to voting rights equal to the number of shares of common stock into which the shares of Preferred Stock can be converted. In addition, as long as there are shares of Preferred Stock outstanding, each of the holders of over 7.5 % of the total Preferred Stock outstanding on a converted basis are entitled to designate one director of the Company to be elected by the holders of Preferred Stock. The holders of a majority of the then outstanding shares of common stock, voting together as a single class, are entitled to elect one director of the Company. If the holders of the Preferred Stock or common stock fail to elect a sufficient number of directors to fulfill directorships for which they are entitled to elect directors, then any directorship shall remain vacant until the holders of the Preferred Stock or common stock elect such person. Liquidation Rights: In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of Preferred Stock have liquidation preferences, before any distribution or payment is made to holders of any common stock, in an amount per share equal to the original issue price for such Preferred Stock plus all accruing dividends (the “Preferred Liquidation Amount”). If the assets and funds to be distributed among the holders of Preferred Stock are insufficient to permit the payment to such holders, then the entire assets and funds of the Company legally available for distribution will be distributed ratably among the holders of Preferred Stock in proportion to the Preferred Liquidation Amount each such holder is otherwise entitled to receive on each share, less any mandatory dividends. Upon completion of the payment of the full liquidation preference of Preferred Stock less any and all mandatory dividends previously distributed, the remaining assets of the Company, if any, shall be distributed among the holders of common stock and Preferred Stock, pro rata based on the number of common shares held by each (assuming conversion of all shares of the Preferred Stock into common stock). Conversion: Each share of Preferred Stock is convertible into shares of common stock, at the option of the holder, at any time after date of issuance. Each share of Preferred Stock automatically converts to the number of shares of common stock determined in accordance with the conversion rate upon the closing of a public offering, at a price per share of not less than three times the highest, then applicable conversion price, resulting in offering proceeds of at least $ 30,000 net of underwriting discounts and commissions. The conversion ratio will be adjusted in the case of specified changes to the Company’s capitalization as a result of stock splits, combinations, common stock dividends and distributions, reclassifications, exchanges, substitutions, reorganizations, mergers or consolidations. Redemption: Prior to the July 29, 2020 amendment to the Company’s second amended and restated certificate of incorporation, holders of Preferred Stock had the right to redeem shares of preferred stock on or after March 20, 2021 after receipt of written notice requesting redemption from 60 % of the then outstanding shares of the preferred stock voting together as a single class on an as-converted to common stock basis at a price equal to the original issue price plus all accruing dividends. As the Preferred Stock was redeemable due to the passage of time prior to the amendment, the Company recorded changes in the redemption value and accreted the Preferred Stock immediately to its redemption value during each reporting period. On July 29, 2020, the Company’s second amended and restated certificate of incorporation was amended resulting in the removal of the redemption right. As the redemption option was removed in connection with the amendment, the only option for redemption is based on the occurrence of a deemed liquidation event. As the events that would trigger a deemed liquidation event are corporate transactions that are not certain to occur, the Company determined that post July 29, 2020, the Preferred Stock is no longer considered probable to become redeemable, and is instead contingently redeemable. As a result, the Company ceased the accretion of the Preferred Stock to redemption value upon execution of the amendment to the articles of incorporation. 25 Table of Contents Protective Provisions: At any time when shares of Preferred Stock are outstanding, the Company shall not, either directly, indirectly by amendment, merger, consolidation or otherwise, do any of the following without the written consent or affirmative vote of at least 60 % of the then outstanding shares of Preferred Stock, voting together as a single class on an as-converted to Common Stock basis: (i) effect the consummation of a liquidation event or any other merger or consolidation, (ii) amend, alter or repeal any provision of the Company’s certificate of incorporation of bylaws in a manner that adversely affects the powers, preferences or rights of the Preferred Stock, (iii) amend, alter, or repeal any provision of the by-laws of the Company, in a manner that affects the powers, preferences, or rights of Preferred Stock, (iv) increase or decrease the authorized number of shares of Preferred Stock or Common Stock, (v) reclassify, alter, or amend any existing security of the Company in respect to the distribution of assets on the liquidation, dissolution, or winding up of the Company or payment of dividends, if such reclassification, alteration, or amendment would render such other security senior to Preferred Stock in respect to any such right, preference, or privilege, (vi) purchase or redeem, or declare any dividend, on any shares of capital stock of the Company other than repurchase of stock pursuant to stock restriction agreements approved by the board of directors that grant to the Company the right of repurchase upon termination of the service, (vii) borrow or authorize any amount of indebtedness, other than inventory financing in the ordinary course of business and any indebtedness in an amount of up to $ 250 in aggregate that is approved by the board of directors, (viii) increase or decrease the authorized number of directors of the board of directors (ix) effect a change in business from the discovery and development of small molecule therapeutics targeting toxic proteins that cause cognitive decline associated with Alzheimer’s disease and other neurodegenerative diseases, (x) enter into any transaction with any person other than in the ordinary course of business on an arm’s length basis, (xi) increase the number of shares of common stock reserved for issuance, (xii) make any loan except advances in ordinary course of business or advances up to $ 50 in aggregate approved by the board of directors, (xiii) hire, terminate, or change compensation in excess of $ 100 of any officer, director, or employee, unless approved by the board of directors, (xiv) own any stock or securities of any other corporation, unless approved by the board of directors, (xv) guarantee any indebtedness except for trade accounts of the Company or any guarantee approved by the board of directors, (xvi) make any investment other than investments in prime commercial paper, money market funds, certificates of deposits in any United States bank having a net worth in excess of $ 100,000 or obligations issued or guaranteed by the United States of America, unless approved by the board of directors. 8. Warrants In conjunction with both debt and equity investments, the Company issued warrants on each of the following classes of stock: common stock and Series A-1 convertible preferred stock. The following is a summary of the Company’s outstanding common stock warrants: ​ As of September 30, 2021: ​ ​ ​ ​ ​ ​ ​ ​ Exercise Expiration Number of Warrants ​ Price ​ Date 115,310 ​ $ 0.03 March 2023 24,171 ​ $ 0.03 May 2023 10,319 ​ $ 0.03 August 2023 ​ As of December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercise ​ Expiration Number of Warrants Price Date 50,497 ​ $ 0.68 May 2021 116,144 ​ $ 0.03 March 2023 24,171 ​ $ 0.03 May 2023 10,319 ​ $ 0.03 August 2023 ​ 26 Table of Contents Series A-1 Convertible Preferred Stock Warrants The Company reviewed the classification of the warrants as liabilities or equity under the guidance of ASC 480-10, Distinguishing Liabilities from Equity, and concluded that the Series A-1 convertible preferred stock warrants should be classified as a liability. The Company re-measures the warrant liability to fair market value at the end of each reporting period. The Series A-1 convertible preferred stock warrants expired in October 2020 and were not exercised. Common Stock Warrants The Company’s common stock warrants are equity classified as there are no features within the warrant agreements that require liability treatment. Accordingly, the warrants are recorded as a component of equity when they are issued. Upon the closing of the IPO on October 13, 2021, 147,702 warrants were exercised into shares of common stock (see Note 13). The remaining warrants were not exercised and expired pursuant to their terms. 9. Common Stock Common stockholders are entitled to dividends if and when declared by the Company’s board of directors subject to the rights of the preferred stockholders. As of September 30, 2021 and December 31, 2020, no dividends on common stock had been declared by the Company. The Company has reserved the following shares of common stock for conversion of preferred stock, exercise of warrants and exercise of stock options as of: ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 December 31, 2020 ​ Convertible preferred stock (as converted) 15,906,537 12,528,612 ​ Options issued and outstanding 4,318,992 4,587,865 ​ Warrants for common stock 149,800 201,131 ​ Total 20,375,329 17,317,608 ​ ​ ​ ​ 10. Equity-based Compensation On September 15, 2017, the Company’s board of directors approved the 2017 Amended and Restated Equity Incentive Plan (the “Plan”), which provides for the granting of incentive stock options, non-qualified stock options and stock awards to employees, certain consultants and directors. The Board, or its designated committee, has the sole authority to select the individuals to whom awards are granted and determine the terms of each award, including the number of shares and the schedule upon which the award becomes exercisable. The aggregate number of shares of common stock of the Company that may be issued under the Plan is 4,726,847 (taking into account shares of common stock that may become issuable pursuant to Section 3(b) of the Plan in respect of shares of common stock reserved under the Company’s Amended and Restated 2007 Equity Incentive Plan). The Plan also allows for a provision for shares granted which are cancelled, forfeited, exchanged or surrendered without having been exercised to subsequently be available for reissuance under the Plan. The Company recorded total equity-based compensation expense in the statement of operations and comprehensive loss related to incentive stock options and nonstatutory stock options as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2021 2020 2021 2020 Research and development ​ $ ( 4 ) ​ $ 56 ​ $ 30 ​ $ 161 General and administrative ​ 76 ​ 73 ​ 234 ​ 181 Total equity-based compensation ​ $ 72 ​ $ 129 ​ $ 264 ​ $ 342 ​ 27 Table of Contents As of September 30, 2021, total future compensation expense related to unvested awards yet to be recognized by the Company was $ 887 . Total future compensation expense related to unvested awards yet to be recognized by the Company is expected to be recognized over a weighted-average remaining vesting period of approximately 2.6 years. The fair value of options granted was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ 2021 2020 Fair value of common stock ​ $ 1.75 - $ 6.15 $ 1.20 Expected volatility ​ 100.82 % - 101.83 % 104.60 % - 109.34 % Risk-free interest rate ​ 0.67 % - 1.06 % 0.38 % - 1.60 % Dividend yield ​ 0.00 % 0.00 % Expected term (years) ​ 5.00 - 6.22 5.00 - 6.25 ​ Expected Term  — The expected term represents the period that the stock-based awards are expected to be outstanding. As the Company does not have sufficient historical experience for determining the expected term of the stock option awards granted, expected term has been calculated using the simplified method. Risk-Free Interest Rate  — The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant for zero-coupon U.S. Treasury constant maturity notes with terms approximately equal to the stock-based awards’ expected term. Expected Volatility  — Since the Company is privately held and does not have a trading history of common stock, the expected volatility was derived from the average historical stock volatilities of the common stock of several public companies within the industry that the Company considers to be comparable to our business over a period equivalent to the expected term of the stock-based awards. Dividend Yield  — The expected dividend yield is zero as the Company has not paid and does not anticipate paying any dividends in the foreseeable future. Fair Value of Common Stock  — The fair value of the shares of common stock underlying the stock-based awards has historically been determined by the board of directors with input from management. Because there has been no public market for the common stock, the board of directors has determined the fair value of the common stock at the time of grant of the stock-based award by considering a number of objective and subjective factors, including having contemporaneous valuations of the common stock performed by a third-party valuation specialist. Activity for options was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options Outstanding ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted- ​ Aggregate ​ Average ​ ​ ​ ​ Average ​ Intrinsic ​ Remaining ​ ​ Number of ​ Exercise ​ Value ​ Contractual Life ​ Options Price (in 000’s) (In Years) Balance, December 31, 2020 4,587,865 ​ $ 0.98 ​ Options granted 67,232 ​ $ 2.25 ​ Options exercised ( 25,783 ) ​ $ 0.73 ​ Options forfeited ( 161,479 ) ​ $ 1.12 ​ Options expired ( 148,843 ) ​ $ 0.94 ​ Balance, September 30, 2021 4,318,992 ​ $ 1.00 ​ $ 22,213 6.4 Exercisable as of September 30, 2021 3,023,934 ​ $ 0.92 ​ $ 15,800 5.6 Vested and expected to vest as of September 30, 2021 3,982,080 ​ $ 1.00 ​ $ 20,494 6.3 ​ 28 Table of Contents The weighted-average grant date fair value of stock options granted was $ 1.79 during the nine months ended September 30, 2021. There were no stock options granted for the three months ended September 30, 2021 and 67,232 stock options granted at an aggregate fair value of $ 121 for the nine months ended September 30, 2021. The total grant-date fair value of stock options vested during the three and nine months ended September 30, 2021 was $ 83 and $ 383 , respectively. During the three and nine months ended September 30, 2021, there were 4,996 and 25,783 stock options exercised, respectively, with an aggregate grant date fair value of $ 3 and $ 14 , respectively. The intrinsic value of stock options exercised during the three and nine months ended September 30, 2021 was $ 26 and $ 140 , respectively. The Company granted 349,150 option awards containing performance conditions to an executive during 2019. As of September 30, 2021, the Company determined that the achievement of the performance targets was not probable and therefore, there was no expense recognized for these awards during the three and nine months ended September 30, 2021. As of September 30, 2021, total unrecognized compensation expense related to un-vested performance-based awards was $ 254 , which would be recognized commencing with the period in which the performance condition is deemed probable of achievement. 11. Net Loss per Share The following outstanding potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods presented due to their antidilutive effect: ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2021 2020 Convertible preferred stock (as converted) 15,906,537 12,528,612 Options issued and outstanding 4,318,992 4,587,865 Warrants for common stock 149,800 201,131 Total 20,375,329 17,317,608 ​ The basic and diluted net loss per share attributable to common stockholders has been prepared as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ ​ 2021 2020 2021 2020 ​ Net loss ​ $ ( 3,110 ) ​ $ ( 1,791 ) ​ $ ( 4,377 ) ​ $ ( 5,971 ) ​ Cumulative preferred stock dividends ​ ( 1,859 ) ​ ( 1,064 ) ​ ( 4,326 ) ​ ( 3,170 ) ​ Net loss attributable to common stockholders ​ $ ( 4,969 ) ​ $ ( 2,855 ) ​ $ ( 8,703 ) ​ $ ( 9,141 ) ​ Weighted-average common shares outstanding - basic and diluted ​ 611,680 ​ 537,315 ​ 585,320 ​ 498,415 ​ Total ​ $ ( 8.12 ) ​ $ ( 5.31 ) ​ $ ( 14.87 ) ​ $ ( 18.34 ) ​ ​ ​ ​ 12. Simple Agreements for Future Equity (SAFEs) On March 25, 2021, the Company entered into SAFEs with existing investors, pursuant to which the Company received gross proceeds in an aggregate amount equal to $ 8,942 . Pursuant to the arrangement, all of the SAFEs were initially issued with a conversion price equal to 80.0 % of either the common stock price upon the occurrence of an IPO, or the price paid for shares of preferred stock by other investors upon a subsequent private financing. Upon a change of control, investors are entitled to receive a portion of proceeds equal to the greater of the purchase amount or the amount payable on the number of shares of common stock equal to the purchase amount divided by the liquidity price. In a liquidity or dissolution event, the investors’ right to receive cash is junior to payment of outstanding indebtedness and creditor claims, on par for other SAFEs and preferred stock, and senior to common stock. The SAFE agreements have no interest rate or maturity date, and the SAFE investors have no voting right prior to conversion. 29 Table of Contents The SAFEs included a provision allowing for cash redemption upon either the occurrence of a change of control or dissolution event, the occurrence of which is outside the control of the Company. Therefore, the SAFEs are classified as marked-to-market liabilities pursuant to ASC 480, Distinguishing Liabilities from Equity . The Company recorded a change in fair value adjustment of $ 932 and $ 1,976 in the consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2021. In connection with the close of the Company’s IPO, the SAFEs were automatically converted into 931,485 shares of common stock (see Note 13). 13. Subsequent Events Initial Public Offering: On October 13, 2021, the Company closed its initial public offering of 3,768,116 shares of the Company’s common stock at a public offering price of $ 12.00 per share. The gross proceeds from the IPO were $ 45.2 million and the net proceeds were approximately $ 38.1 million, after deducting underwriting discounts and commissions and other offering expenses payable by the Company. Upon the completion of the Company’s IPO, all of the Company’s then outstanding preferred stock was automatically converted into an aggregate of 15,906,537 shares of common stock. In addition, 931,485 shares of common stock were issued in connection with the automatic conversion of the SAFEs in the aggregate amount of $ 8.9 million and 147,702 shares of common stock were issued in connection with the exercise of common stock warrants. On November 10, 2021, the representative of the underwriters for the IPO provided notice to the Company that it had elected to exercise its over-allotment option in full to purchase 565,217 shares of the Company’s common stock. The representative’s exercise of the over-allotment option closed on November 12, 2021, resulting in gross proceeds of $ 6.8 million and net proceeds to the Company of approximately $ 6.3 million, after deducting underwriting discounts and commissions and other offering related expenses. Changes to the Certificate of Incorporation: In connection with the reverse stock split effected on October 1, 2021, the number of shares of common stock the Company is authorized to issue increased from 70,000,000 to 80,000,000 . Subsequently, in connection with the completion of the IPO, a third amended and restated certificate of incorporation was filed with the Secretary of State of the State of Delaware on October 13, 2021 to, among other things, provide for 250,000,000 authorized shares of common stock, par value $ 0.001 per share, and 10,000,000 authorized shares of “blank check” preferred stock, par value $ 0.001 per share. Stock Plans: The Company’s board of directors adopted the Company’s 2021 Equity Incentive Plan (“2021 Plan”) and an Employee Stock Purchase Plan (the “ESPP”) in July 2021, each of which became effective upon the effectiveness of the registration statement filed in connection with the IPO on October 7, 2021. Since October 7, 2021, the Company has granted 1,942,804 options to purchase shares of the Company’s common stock to certain executives and directors under the 2021 Plan. As of September 30, 2021, 209,532 shares of common stock have been reserved for future issuance under the ESPP. ​ ​ 30 Table of Contents