What changed in this filing

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Item 1. Financial Statements

2022-08-09 compared with 2022-05-11 · 98 added, 77 removed, 418 unchanged (30% of the section changed)

4 unchanged sentences

(in thousands, except share and per share amounts)

March 31, 2022

June 30, 2022

December 31, 2021

21 unchanged sentences

Preferred stock, $ 0.001 par value, 10,000,000 shares authorized;

no shares issued and outstanding at March 31, 2022 and December 31, 2021

no shares issued and outstanding at June 30, 2022 and December 31, 2021

Common stock, $ 0.001 par value, 250,000,000 shares authorized;

22,578,584 and 22,230,032 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

22,597,907 and 22,230,032 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

8 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating Expenses:

5 unchanged sentences

Change in the fair value of the derivative liability

Change in the fair value of the Simple Agreements for Future Equity

Other (expense) income, net

3 unchanged sentences

Loss before income tax

Income tax expense

Income tax benefit

Net (loss) income

17 unchanged sentences

Balances as of March 31, 2022

Exercise of stock options

Equity-based compensation

Other comprehensive loss

Balances as of June 30, 2022

Preferred Stock

2 unchanged sentences

Preferred Stock

Comprehensive

5 unchanged sentences

Balances as of March 31, 2021

Exercise of common stock warrants

Equity-based compensation

Issuance of Series B-1 Convertible Preferred Stock upon conversion of debt

Other comprehensive loss

Balances as of June 30, 2021

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash used in operating activities:

5 unchanged sentences

Change in the fair value of the derivative liability

Change in the fair value of the Simple Agreements for Future Equity

Gain on debt extinguishment

1 unchanged sentence

Grant receivables

Prepaid expenses and other current assets

Prepaid expenses and other assets

Other receivables

1 unchanged sentence

Accrued expenses

Other current liabilities

Deferred grant income, current

Other noncurrent liabilities

Deferred grant income, current and other liabilities

Operating lease liabilities

7 unchanged sentences

Proceeds from issuance of Simple Agreements for Future Equity

Proceeds from exercise of stock warrants

Deferred offering costs

Net cash (used in) provided by financing activities

5 unchanged sentences

Supplemental disclosures of non-cash financing activities:

Accrued issuance costs related to Simple Agreements for Future Equity

Deferred offering costs included in accounts payable and accrued expenses

Issuance of Series B-1 Convertible Preferred Stock upon conversion of debt

Deferred offering costs included in accounts payable

The accompanying notes are an integral part of these consolidated financial statements.

19 unchanged sentences

The representative’s exercise of the over-allotment option closed on November 12, 2021, resulting in gross proceeds of $ 6,783 and net proceeds to the Company of approximately $ 6,308 , after deducting underwriting discounts and commissions and other offering related expenses.

The Company held cash and cash equivalents of $ 51,509 at March 31, 2022.

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 through at least the one year period subsequent to the filing date of this Form 10-Q.

However, additional funding will be necessary beyond this point to fund future preclinical and clinical activities.

The Company held cash and cash equivalents of $ 45,771 at June 30, 2022.

However, additional funding will be necessary beyond this point to fund the Company’s future preclinical and clinical activities.

The Company expects to finance its future cash needs through a combination of grant awards, equity or debt financings, collaboration agreements, strategic alliances and licensing arrangements.

1 unchanged sentence

Basis of Presentation

The accompanying consolidated financial statements as of March 31, 2022, and for the three months ended March 31, 2022 and 2021, have been prepared in accordance with the rules and regulations of the Securities Exchange and Commission (“SEC”) and generally accepted accounting principles in the United States of America (“U.S.

The accompanying consolidated financial statements as of June 30, 2022, and for the three and six months ended June 30, 2022 and 2021, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and generally accepted accounting principles in the United States of America (“U.S.

GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X.

2 unchanged sentences

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 March 31, 2022, the statements of operations and comprehensive loss and convertible preferred stock and stockholders’ equity (deficit), and cash flows for the three months ended March 31, 2022 and 2021.

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 June 30, 2022, the statements of operations and comprehensive loss and convertible preferred stock and stockholders’ equity (deficit) for the three and six months ended June 30, 2022 and 2021, and cash flows for the six months ended June 30, 2022 and 2021.

Such adjustments are of a normal and recurring nature.

The results for the three months ended March 31, 2022 are not necessarily indicative of the results for the year ending December 31, 2022, 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, 2021, and the notes thereto, which are included on Form 10-K filed with the SEC on March 30, 2022.

The results for the three and six months ended June 30, 2022 are not necessarily indicative of the results for the year ending December 31, 2022, or for any future period.

Use of Estimates

6 unchanged sentences

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.

Grant receivables relate to outstanding amounts due for reimbursable expenditures of awarded grants issued by the National Institute of Health (“NIH”) 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.

6 unchanged sentences

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 months ended March 31, 2022 or 2021.

There were no indicators of impairment of long-lived assets during the three or six months ended June 30, 2022 or 2021.

Convertible Instruments

1 unchanged sentence

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

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;

2 unchanged sentences

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.

For the three months ended March 31, 2022 and 2021, the Company generated grant income of $ 5,904 and $ 4,692 , respectively, primarily from reimbursements from the National Institute of Aging (“NIA”), a division of the National Institutes of Health, or NIH, for aging research.

For the three and six months ended June 30, 2022, the Company generated grant income of $ 6,385 and $ 12,289 , respectively, primarily from reimbursements from the National Institute of Aging (“NIA”), a division of the NIH, for aging research.

For the three and six months ended June 30, 2021, the Company generated grant income of $ 4,646 and $ 9,338 , respectively, from reimbursements from the NIA.

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.

3 unchanged sentences

Deferred grant income represents grant proceeds received by the Company prior to the period in which the reimbursable research and development services are incurred.

As of March 31, 2022, the Company has been awarded grants with project periods that extend through May 31, 2025, subject to extension.

As of June 30, 2022, the Company has been awarded grants with project periods that extend through May 31, 2025, subject to extension.

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.

13 unchanged sentences

At the commencement date, operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of future lease payments over the expected lease term.

The Company’s lease agreements do not

provide an implicit rate.

The Company’s lease agreements do not provide an implicit rate.

As a result, the Company utilizes an estimated incremental borrowing rate, or IBR, to discount lease payments, which is based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term.

9 unchanged sentences

Prior to adoption

Adjustment for adoption

of new leasing

Adjustment for

of new leasing

adoption of new

leasing standards

Right-of-use assets (1)

18 unchanged sentences

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.

Prior to the IPO, 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.

2 unchanged sentences

Significant changes to the key assumptions underlying the factors used could result in different fair values of common stock at each valuation date.

Subsequent to the IPO, the board of directors will determine the fair value of the shares of common stock underlying the stock-based awards based off of the closing price as reported on the Nasdaq Stock Market LLC on the grant date.

Subsequent to the IPO, the board of directors determines the fair value of the shares of common stock underlying the stock-based awards based upon the closing price as reported on the Nasdaq Global Market on the grant date.

Concentration of Credit Risk

29 unchanged sentences

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.

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

Recent Accounting Pronouncements

25 unchanged sentences

All shares of common stock and per share data have been retrospectively revised to reflect the reverse stock split.

In accordance with ASC 270, Interim Reporting , and ASC 740, Income Taxes , the Company is required at the end of each interim period to determine the best estimate of its annual effective tax rate, apply that rate in providing for income taxes on a current year-to-date (interim period) basis, and including the tax impact for discrete items within the interim period.

For the three months ended March 31, 2022, the Company recorded income tax expense of $ 125 related to a certain state, and there was no income tax expense or benefit recorded during the three months ended March 31, 2021.

The Company maintains a full valuation allowance against all deferred tax assets as of March 31, 2022 and December 31, 2021, as management has determined that it is not more likely than not that the Company will realize these future tax benefits.

As of March 31, 2022 and December 31, 2021, the Company had no uncertain tax positions.

In accordance with ASC 270, Interim Reporting , and ASC 740, Income Taxes , the Company is required at the end of each interim period to determine the best estimate of its annual effective tax rate, apply that rate in providing for income taxes on a current year-to-date (interim period) basis, and include the tax impact for discrete items within the interim period.

The Company maintains a full valuation allowance against all deferred tax assets as of June 30, 2022 and December 31, 2021, as management has determined that it is not more likely than not that the Company will realize these future tax benefits.

As of June 30, 2022 and December 31, 2021, the Company had no uncertain tax positions.

Financial Instruments and Fair Value Measurements

Financial assets and liabilities measured at fair value are summarized below:

As of March 31, 2022

As of June 30, 2022

Quoted Priced in

9 unchanged sentences

Money market funds

The following table sets forth a summary of the changes in fair value of the Level 3 liabilities for the three months ended March 31, 2021:

Three Months Ended March 31, 2021

The following table sets forth a summary of the changes in fair value of the Level 3 liabilities for the six months ended June 30, 2021:

Six Months Ended June 30, 2021

Balance at December 31, 2020

1 unchanged sentence

Change in the fair value of the derivative liability

Balance at March 31, 2021

Change in the fair value of SAFE

Balance at June 30, 2021

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.

7 unchanged sentences

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.

The derivative liability expired unexercised upon the conversion of the convertible notes into shares of the Series B-1 convertible preferred stock in May of 2021.

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 .

6 unchanged sentences

Discount upon implied return

Probability of initial public offering occurrence

Probability of IPO occurrence

Probability of dissolution event occurrence

1 unchanged sentence

Probability of change of control occurrence

There was no change in fair value of the SAFEs from the March 25, 2021 issuance date until March 31, 2021.

The change in fair value of the SAFEs for the three and six months ended June 30, 2021 was $ 1,044 and $ 1,044 , respectively.

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.

4 unchanged sentences

Research and development costs

Income taxes payable

Professional fees

4 unchanged sentences

Payments of approximately $ 134 are due monthly from October 2021 through September 2022.

As of March 31, 2022 and December 31, 2021, respectively, the outstanding principal of the loan was $ 799 and $ 1,191 and is included in other current liabilities on the consolidated balance sheet.

As of June 30, 2022 and December 31, 2021, the outstanding principal of the loan was $ 401 and $ 1,191 , respectively, and is included in other current liabilities on the consolidated balance sheet.

Commitments and Contingencies

2 unchanged sentences

The Company also leases approximately 6,068 square feet of laboratory and office space located in Pittsburgh, Pennsylvania under leases that expire in June, 2023.

Amounts reported in the consolidated balance sheets for leases where the Company is the lessee as of March 31, 2022 were as follows, in thousands:

As of March 31,

Amounts reported in the consolidated balance sheets for leases where the Company is the lessee as of June 30, 2022 were as follows, in thousands:

As of June 30,

Operating lease assets

3 unchanged sentences

Total operating lease liabilities

The following table summarizes operating lease costs for the three months ended March 31, 2022:

The following table summarizes operating lease costs for the three and six months ended June 30, 2022:

Three Months Ended

March 31, 2022

Six Months Ended

June 30, 2022

Operating lease costs

1 unchanged sentence

Total lease costs

Rent expense for the three months ended March 31, 2021 was $ 34 .

The maturities of the operating lease liabilities and minimum lease payments as of March 31, 2022 were as follows:

Rent expense for the three and six months ended June 30, 2021 was $ 48 and $ 82 , respectively.

The maturities of the operating lease liabilities and minimum lease payments as of June 30, 2022 were as follows:

For the Years Ended December 31,

4 unchanged sentences

Present value of operating lease liabilities

The following table summarizes the lease term and discount rate as of March 31, 2022:

As of March 31,

The following table summarizes the lease term and discount rate as of June 30, 2022:

As of June 30,

Weighted-average remaining lease term (years)

2 unchanged sentences

Operating leases

The following table summarizes cash paid for amounts included in the measurement of the Company’s operating lease liabilities for the three months ended March 31, 2022:

Three Months Ended March 31, 2022

The following table summarizes cash paid for amounts included in the measurement of the Company’s operating lease liabilities for the three and six months ended June 30, 2022:

Six Months Ended June 30, 2022

(in thousands)

4 unchanged sentences

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 March 31, 2022 and December 31, 2021, there was no litigation or contingency with at least a reasonable possibility of a material loss.

As of June 30, 2022 and December 31, 2021, there was no litigation or contingency with at least a reasonable possibility of a material loss.

Equity-based Compensation

2021 Equity Incentive Plan

On October 7, 2021, the date upon which the Registration Statement on Form S-1 in connection with the IPO was declared effective, the 2021 Equity Incentive Plan (the “2021 Plan”) became effective.

On October 7, 2021, the date upon which the Registration Statement on Form S-1 in connection with the IPO was declared effective, the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) became effective.

On the same date, the Company ceased granting awards under its 2017 Equity Incentive Plan (the “2017 Plan”).

The 2021 Plan authorizes the award of

both equity-based and cash-based incentive awards, including:

(i) stock options (both incentive stock options and nonqualified stock options), (ii) stock appreciation rights, (iii) restricted stock awards, (iv) restricted stock units, or RSUs, and (v) cash or other stock-based awards.

The 2021 Plan authorizes the award of both equity-based and cash-based incentive awards, including:

(i) stock options (both incentive stock options and nonqualified stock options), (ii) stock appreciation rights, (iii) restricted stock awards, (iv) restricted stock units, or

RSUs, and (v) cash or other stock-based awards.

Incentive stock options may be granted only to employees.

All other types of awards may be issued to employees, directors, consultants, and other service providers.

As of March 31, 2022, the aggregate number of shares of common stock of the Company that may be issued under the Plan is 3,625,897 .

As of June 30, 2022, the aggregate number of shares of common stock of the Company that may be issued under the Plan is 3,480,014 .

The number of shares reserved for issuance under the 2021 Plan increased automatically on January 1, 2022 pursuant to an evergreen provision therein by 1,111,502 shares, representing 5 % of total common shares outstanding at December 31, 2021.

12 unchanged sentences

Under the ESPP, the Company may provide employees and employees of the Subsidiary with an opportunity to purchase shares of the Company’s common stock at a discounted purchase price.

As of March 31, 2022, subject to adjustment as provided in the ESPP, a total of 209,532 shares of common stock are authorized and reserved for issuance under the ESPP.

As of June 30, 2022, subject to adjustment as provided in the ESPP, a total of 209,532 shares of common stock are authorized and reserved for issuance under the ESPP.

Subject to prior approval by the board of directors in each instance, on or about January 1, 2022 and each anniversary of such date thereafter prior to the termination of the ESPP, the number of shares of common stock authorized and reserved for issuance under the ESPP will be increased by a number of shares of common stock equal to the least of (i) 1,000,000 shares of the Company’s common stock, (ii) 1 % of the shares of common stock outstanding on the final day of the immediately preceding calendar year, and (iii) such smaller number of shares of common stock as determined by the Company’s board of directors.

Such shares of common stock may be newly issued shares, treasury shares or shares acquired on the open market.

In the event that any dividend or other distribution (whether in the form of cash, our common stock, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, or exchange of common stock or other securities, or other change in the structure affecting common stock occurs, then in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the ESPP, the compensation committee will, in such manner as it deems equitable, adjust the number of shares and class of common stock that may be delivered under the ESPP, the purchase price per

share and the number of shares covered by each outstanding option under the ESPP, and the numerical limits described above.

Equity-based Compensation

The fair value of options granted was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

Three Months Ended March 31,

Six Months Ended June 30,

Fair value of common stock

$ 1.92 – $ 3.05

$ 1.75 – $ 6.15

Expected volatility

91.09 % – 92.72 %

100.82 % – 101.83 %

Risk-free interest rate

1.87 % – 3.25 %

0.67 % – 1.06 %

Dividend yield

20 unchanged sentences

Options expired

Balance, March 31, 2022

Exercisable as of March 31, 2022

Vested and expected to vest as of March 31, 2022

The weighted-average grant date fair value of stock options granted was $ 2.31 and $ 1.39 during the three months ended March 31, 2022 and 2021, respectively.

There were 212,450 stock options granted at an aggregate fair value of $ 491 for the three months ended March 31, 2022 and 55,639 stock options granted at an aggregate fair value of $ 77 for the three months ended March 31, 2021.

During the three months ended March 31, 2022 and 2021, there were 348,552 and 20,787 stock options exercised, respectively, with an aggregate grant date fair value of $ 209 and $ 11 , respectively.

The intrinsic value of stock options exercised during the three months ended March 31, 2022 was $ 1,084 and was $ 22 for the three months ended March 31, 2021.

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 March 31,

Balance, June 30, 2022

Exercisable as of June 30, 2022

Vested and expected to vest as of June 30, 2022

The weighted-average grant date fair value of stock options granted was $ 2.00 and $ 2.52 during the three and six months ended June 30, 2022, respectively.

The weighted-average grant date fair value of stock options granted was $ 1.19 and $ 1.39 during the three and six months ended June 30, 2021, respectively.

There were 214,125 and 426,575 stock options granted at an aggregate fair value of $ 429 and $ 1,077 for the three and six months ended June 30, 2022, respectively.

There were 11,593 and 67,232 stock options granted at an aggregate fair value of $ 14 and $ 91 for the three and six months ended June 30, 2021, respectively.

During the three and six months ended June 30, 2022 there were 19,321 and 367,875 stock options exercised, respectively, with an aggregate grant date fair value of $ 22 and $ 327 , respectively.

During the three and six months ended June 30, 2021 there were 0 and 20,787 stock options exercised, respectively, with an aggregate grant date fair value of $ 0 and $ 11 , respectively.

The intrinsic value of stock options exercised during the three and six months ended June 30, 2022 was $ 36 and $ 1,121 , respectively, and was $ 0 and $ 114 for the three and six months ended June 30, 2021, respectively.

The Company recorded total equity-based compensation expense in the statement of operations and comprehensive loss related to stock options as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

1 unchanged sentence

Total equity-based compensation

As of March 31, 2022, total future compensation expense related to unvested awards yet to be recognized by the Company was $ 9,621 , which is expected to be recognized over a weighted-average remaining vesting period of approximately 3.1 years.

As of June 30, 2022, total future compensation expense related to unvested awards yet to be recognized by the Company was $ 9,025 , which is expected to be recognized over a weighted-average remaining vesting period of approximately 2.5 years.

Net Loss per Share

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements