What changed in this filing

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Item 1. Financial Statements

2021-11-10 compared with 2021-08-16 · 112 added, 80 removed, 330 unchanged (37% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

Current assets:

23 unchanged sentences

103,289 and 132,244 shares issued and outstanding at

June 30, 2021 and December 31, 2020, respectively

September 30, 2021 and December 31, 2020, respectively

Common stock, $ 0.001 par value;

150,000,000 shares authorized;

shares and 32,347,905 shares issued and outstanding at June 30, 2021 and

shares and 32,347,905 shares issued and outstanding at September 30, 2021 and

December 31, 2020, respectively

7 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Collaboration revenue

2 unchanged sentences

General and administrative

Acquired in-process research and development

Total operating expenses

2 unchanged sentences

Interest income

Gain on disposal of long-lived assets

Change in fair value of CVR liability

21 unchanged sentences

Balances at June 30, 2021

Issuance of common stock upon exercise of

stock options

Issuance of common stock under Employee

Stock Purchase Plan

Stock-based compensation expense

Balances at September 30, 2021

Series A Non-Voting

2 unchanged sentences

Balances at December 31, 2019

Issuance of common stock upon exercise of

stock options

Issuance of common stock upon

exercise of stock options

Issuance of common stock under

Employee Stock Purchase Plan

Issuance of common stock to LPC as a

commitment fee

Acquisition and retirement of treasury stock

Issuance of common stock to LPC as

a commitment fee

Acquisition and retirement of

treasury stock

Stock-based compensation expense

Balances at March 31, 2020

Issuance of common stock upon exercise of

stock options

Issuance of common stock upon

exercise of stock options

Stock-based compensation expense

Balances at June 30, 2020

Issuance of common stock upon

exercise of stock options

Issuance of common stock under

Employee Stock Purchase Plan

Issuance of common stock upon

Issuance of common stock to LPC

Issuance of Series A non-voting

preferred stock and common stock

in connection with the Kiq

Issuance of Series A non-voting

preferred stock, net of issuance

costs of $ 5,493

Dividend payable to common

Stock-based compensation expense

Balances at September 30, 2020

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

2 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

3 unchanged sentences

Noncash consideration received from a customer

Noncash portion of acquired in-process research and development

Gain on disposal of long-lived assets

Change in fair value of CVR liability

10 unchanged sentences

Purchases of property and equipment

Net cash used in investing activities

Proceeds from sale of property and equipment

Proceeds from sale of BOXR Platform assets

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Proceeds from issuance of Series A non-voting convertible preferred stock, net of issuance costs of $ 5,493

Proceeds from issuance of common stock

Proceeds from issuance of common stock upon stock option exercises

1 unchanged sentence

Payment to CVR Holders

Net cash provided by (used in) financing activities

Net decrease in cash, cash equivalents and restricted cash

Net cash (used in) provided by financing activities

Net (decrease) increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

26 unchanged sentences

Patent and Trademark Office and the European Patent Office.

No amounts related to the potential future milestone payments to be received from Sotio have been recognized as of June 30, 2021.

No amounts related to the potential future milestone payments to be received from Sotio have been recognized as of September 30, 2021.

On December 4, 2020, the Company completed an underwritten public offering of 11,794,872 shares of its common stock at a public offering price of $ 9.75 per share.

6 unchanged sentences

The accompanying condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business.

The Company has incurred recurring losses since inception, including a net loss of $ 28.3 million for the six months ended June 30, 2021.

As of June 30, 2021, the Company had an accumulated deficit of $ 227.0 million.

The Company has incurred recurring losses since inception, including a net loss of $ 47.4 million for the nine months ended September 30, 2021.

As of September 30, 2021, the Company had an accumulated deficit of $ 246.1 million.

The Company expects to continue to generate operating losses in the foreseeable future.

11 unchanged sentences

The consolidated balance sheet at December 31, 2020 was derived from audited financial statements but does not include all disclosures required by GAAP.

The accompanying unaudited condensed consolidated financial statements as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements.

The accompanying unaudited condensed consolidated financial statements as of September 30, 2021 and for the three and nine months ended September 30, 2021 and 2020 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements.

Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K on file with the SEC.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of June 30, 2021 and results of operations for the three and six months ended June 30, 2021 and 2020 and cash flows for the six months ended June 30, 2021 and 2020 have been made.

The Company’s results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2021.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of September 30, 2021 and results of operations for the three and nine months ended September 30, 2021 and 2020 and cash flows for the nine months ended September 30, 2021 and 2020 have been made.

The Company’s results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2021.

Principles of Consolidation

14 unchanged sentences

Potential impacts to the Company’s business include temporary closures of its facilities or those of its vendors, disruptions or restrictions on its employees’ ability to travel, disruptions to or delays in ongoing laboratory experiments and operations, the potential diversion of healthcare resources away from the conduct of clinical trials to focus on pandemic concerns, and its ability to raise capital.

As of June 30, 2021, there have been no material impacts to the Company.

As of September 30, 2021, there have been no material impacts to the Company.

As the impact of COVID-19 continues to unfold, the Company will make continual assessments of the situation, as the extent to which the COVID-19 pandemic may materially impact the Company’s financial condition, liquidity or results of operations in the future is uncertain.

13 unchanged sentences

The following tables present information about the Company’s assets that are measured at fair value on a recurring basis (in thousands) :

Fair Value Measurements at June 30, 2021 Using:

Fair Value Measurements at September 30, 2021 Using:

CVR Liability

15 unchanged sentences

Changes in fair value of the liability

are recognized as a compon ent of Other income (expense) in the condensed consolidated statement of operations and comprehensive loss for the three and six months ended June 30, 2021 .

are recognized as a compon ent of Other income (expense) in the condensed consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2021 .

The liability was valued based on significant inputs not observable in the market, which represents a Level 3 measurement wi thin the fair value hierarchy.

2 unchanged sentences

Any settlement of the remaining CVR liability will be a cash settlement.

At June 30, 2020, the Company had no financial liabilities outstanding measured at fair value.

The following table sets forth a summary of the changes in the fair value of the Company’s CVR liability:

For the Six Months

Ended June 30, 2021

The following table sets forth a summary of the changes in the fair value of the Company’s CVR liability (in thousands) :

For the Nine Months

Ended September 30, 2021

Beginning balance

3 unchanged sentences

Ending balance

During the three and six months ended June 30, 2021 and 2020, there were no transfers between Level 1, Level 2 and Level 3 .

During the three and nine months ended September 30, 2021 and 2020, there were no transfers between Level 1, Level 2 and Level 3 .

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands) :

September 30,

Accrued employee compensation and benefits

1 unchanged sentence

Accrued external manufacturing costs

Accrued professional and consulting services

Preferred Stock, Series A Non-Voting Convertible Preferred Stock and Common Stock

5 unchanged sentences

Except as otherwise required by law, the Series A Preferred Stock does not have voting rights.

However, as long as any shares of Series A Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series A Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock, (b) alter or amend the Certificate of Designation, (c) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of Series A Preferred Stock, (d) increase the number of authorized shares of Series A Preferred Stock, (e) prior to the stockholder approval of the Conversion Proposal or at any time while at least 40 % of the originally issued Series A Preferred Stock remains issued and outstanding, consummate a Fundamental Transaction (as defined in the Certificate of Designation) or (f) enter into any agreement with respect to any of the foregoing.

or (f) enter into any agreement with respect to any of the foregoing.

The Series A Preferred Stock does not have a preference upon any liquidation, dissolution or winding-up of the Company.

Each share of Series A Preferred Stock is convertible at any time at the option of the holder thereof, into 250 shares of common stock, subject to certain limitations, including that a holder of Series A Preferred Stock is prohibited from converting shares of Series A Preferred Stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than a specified percentage (to be established by the holder between 4.9 % and 19.9 %) of the total number of shares of common stock issued and outstanding immediately after giving effect to such conversion.

Cumulatively, through June 30, 2021, 60,036 shares of Series A Preferred Stock, or 36.8 % of the issued Series A Preferred Stock, have been converted into 15,009,000 shares of common stock.

No other classes of preferred stock have been designated and no other preferred shares have been issued or are outstanding as of June 30, 2021.

Cumulatively, through September 30, 2021, 60,036 shares of Series A Preferred Stock, or 36.8 % of the issued Series A Preferred Stock, have been converted into 15,009,000 shares of common stock.

No other classes of preferred stock have been designated and no other preferred shares have been issued or are outstanding as of September 30, 2021.

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders.

10 unchanged sentences

Additionally, on February 8, 2021, pursuant to the Form S-3, the Company entered into a Sales Agreement (the “Sales Agreement”) with SVB Leerink LLC (“SVB Leerink”), pursuant to which the Company may issue and sell, from time to time, shares of its common stock having an aggregate offering price of up to $ 75.0 million through SVB Leerink as the sales agent.

As of June 30, 2021, no shares have been sold under the Sales Agreement.

As of September 30, 2021, no shares have been sold under the Sales Agreement.

Stock-Based Compensation

7 unchanged sentences

On June 16, 2021, at the Company’s 2021 annual stockholder meeting, the Company’s stockholders approved the amendment and restatement of the 2018 Stock Plan to increase the number of shares of common stock issuable under the 2018 Plan by 6,000,000 shares.

Upon stockholder approval, in accordance with ASC 718- Compensation- Stock Compensation , a grant date was established for accounting purposes with respect to 3,402,768 options previously granted to employees and non-employee directors during the six months ended June 30, 2021, which were subject to stockholder approval of the amendment and restatement of the 2018 Plan.

As of June 30, 2021, 4,137,224 shares of common stock remain available for issuance under the 2018 Plan.

Upon stockholder approval, in accordance with ASC 718- Compensation- Stock Compensation , a grant date was established for accounting purposes with respect to 3,402,768 options previously granted to employees and non-employee directors during the nine months ended September 30, 2021, which were subject to stockholder approval of the amendment and restatement of the 2018 Plan.

As of September 30, 2021, 3,716,296 shares of common stock remain available for issuance under the 2018 Plan.

Inducement Plan

4 unchanged sentences

On November 5, 2020, the Company filed a Registration on Form S-8 related to the 3,750,000 shares of its common stock reserved for issuance under the Inducement Plan.

The Company has granted 3,021,005 options under the Inducement Plan, of which 1,160,400 were granted during the six months ended June 30, 2021.

As of June 30, 2021, 728,995 shares of common stock remain available for issuance under the Inducement Plan.

The Company has granted 3,021,005 options under the Inducement Plan, of which 1,160,400 were granted during the nine months ended September 30, 2021.

As of September 30, 2021, 728,995 shares of common stock remain available for issuance under the Inducement Plan.

2018 Employee Stock Purchase Plan

2 unchanged sentences

The number of authorized shares reserved for issuance under the ESPP was increased by 125,000 shares effective as of January 1, 2021.

The first six month offering period was initiated on July 1, 2019.

As of June 30, 2021, 341,416 shares remain available for issuance under the ESPP.

In July 2021, 4,497 shares were issued to employees under the ESPP.

As of September 30, 2021, 336,919 shares remain available for issuance under the ESPP.

Stock-Based Compensation

The Company recorded stock-based compensation expense in the following expense categories of its condensed consolidated statements of operations and comprehensive loss (in thousands) :

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development expenses

General and administrative expenses

On April 8, 2020, the Company launched a tender offer to certain employee option holders, subject to specified conditions, to exchange some or all of their outstanding options to purchase shares of common stock, par value $ 0.001 per share, for equivalent number of new options to purchase shares of the Company’s common stock.

Pursuant to the exchange offer, all eligible employees elected to exchange outstanding options, and the Company accepted for cancellation options to purchase an aggregate of 542,418 shares of the Company’s common stock.

On May 7, 2020, immediately following the expiration of the exchange offer, the Company granted new options to purchase 542,418 shares of common stock, pursuant to the terms of the exchange offer and the Company’s 2018 Plan.

As a result, the exercise price was determined to be $ 1.68 , the fair value of the Company’s closing stock price on the grant date.

No other terms of the exchanged stock options were modified, and the stock options continued to vest according to their original vesting schedules and retained their original expiration dates.

The Company accounted for the exchange offer as an option modification and as a result, recorded $ 0.2 million in incremental stock-based compensation expense during the year ended December 31, 2020.

On July 6, 2020, all then outstanding stock options became fully vested in connection with the Kiq Acquisition, resulting in acceleration of stock compensation expense of $ 2.9 million, which was recognized in the year ended December 31, 2020.

As of June 30, 2021, total unrecognized compensation cost related to the unvested stock-based options was $ 43.7 million, which is expected to be recognized over a weighted average period of 3.50 years.

As of September 30, 2021, total unrecognized compensation cost related to the unvested stock-based options was $ 42.6 million, which is expected to be recognized over a weighted average period of 3.27 years.

Commitments and Contingencies

Operating Leases

The Company leases office and laboratory space in Cambridge, MA under a non-cancelable operating lease that expires in April 2023 with the Company’s option to extend for an additional five-year term.

Corporate Headquarters- Cambridge, MA

The Company leases office and laboratory space in Cambridge, MA for its corporate headquarters under a non-cancelable operating lease (the “Cambridge Lease”) that expires in April 2023 , with the Company’s option to extend for an additional five-year term.

The lessee has the right to terminate the lease in the event of the inability to use the space due to substantial damage while the lessor has the right to terminate the lease for tenant’s default of lease financial obligations.

Per the terms of the lease agreement, the Company does not have any residual value guarantees.

This extension has not been considered in the determination of the lease liability as the Company is not obligated to exercise its option and it is not

reasonably certain that the option will be exercised.

Per the terms of the Cambridge Lease, the Company does not have any residual value guarantees.

This extension has not been considered in the determination of the lease liability as the Company is not obligated to exercise its option and it is not reasonably certain that the option will be exercised.

The lease payments include fixed lease payments that escalate over the term of the lease on an annual basis.

The Company’s real estate lease is a net lease, as the non-lease components ( i.e.

The Cambridge Lease is a net lease, as the non-lease components (i.e.

common area maintenance) are paid separately from rent based on actual costs incurred.

1 unchanged sentence

The discount rate used in determining the lease liability represents the Company’s incremental borrowing rate as the rate implicit in the lease could not be readily determined.

On August 28, 2020, the Company amended this operating lease resulting in increased annual rent payments.

No other terms of the lease were changed.

On August 28, 2020, the Company amended the lease (the “Cambridge Lease Amendment”) resulting in increased annual rent payments.

No other terms of the Cambridge Lease were changed.

The Company determined that the lease modification did not grant an additional right of use and concluded that the modification was not a separate new lease, but rather that it should reassess and remeasure the right-of-use asset and lease liability on the effective date of the modification.

The Company increased the right-of-use asset and operating lease liabilities by $ 0.9 million, respectively.

Concurrent with the lease amendment and the BOXR sale, the Company entered into a sublease for a significant portion of the leased premises for the remaining term of the lease.

Under the terms of the sublease agreement, the sublessee leased approximately 70 % of the facility and is responsible for the corresponding percentage of operating lease costs and variable lease costs.

Concurrent with the Cambridge Lease Amendment and the BOXR sale, the Company entered into a sublease (the “Cambridge Sublease Agreement”) for a significant portion of the leased premises for the remaining term of the lease.

Under the terms of the Cambridge Sublease Agreement, the sublessee leased approximately 70 % of the facility and is responsible for the corresponding percentage of operating lease costs and variable lease costs.

Variable lease costs include common area maintenance and other operating charges.

The elements of the lease expense, net of sublease income, were as follows (in thousands):

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Operating lease cost

7 unchanged sentences

Discount rate

The variable lease costs for the six months ended June 30, 2021 include common area maintenance and other operating charges.

Future minimum lease payments under the operating lease as of June 30, 2021 are as follows (in thousands):

The variable lease costs for the nine months ended September 30, 2021 include common area maintenance and other operating charges.

Future minimum lease payments under the operating lease as of September 30, 2021 are as follows (in thousands):

Year Ending December 31,

6 unchanged sentences

Total operating lease liability

Under the terms of the lease, the Company issued a $ 1.3 million letter of credit to the landlord as collateral for the leased facility.

Under the terms of the Cambridge Lease, the Company issued a $ 1.3 million letter of credit to the landlord as collateral for the leased facility.

The underlying cash collateralizing this letter of credit has been classified as non-current restricted cash in the accompanying condensed consolidated balance sheets.

This is a refundable deposit and not a lease payment.

Under the terms of the sublease agreement, the sublessee obtained a letter of credit for $ 1.3 million for the benefit of the Company.

Under the terms of the Cambridge Sublease Agreement, the sublessee obtained a letter of credit for $ 1.3 million for the benefit of the Company.

This has been excluded from the undiscounted cash flows above.

Boulder Lease

On July 6, 2021, the Company entered into a lease agreement (the “Boulder Lease”) pursuant to which the Company leases approximately 38,075 square feet at 4840 Pearl East Circle, Boulder, Colorado, which will include office and laboratory space.

The landlord will contribute an aggregate of approximately $ 6.9 million toward the cost of landlord assets (the “Improvements”), as well as an additional amount of up to approximately $ 2.3 million in the form of a tenant improvement loan at an annual interest rate of 6 %.

Any monies borrowed under the tenant improvement loan are required to be repaid over the Boulder Lease term.

Boulder Lease payments will begin upon the earlier of (i) substantial completion of the Improvements or (ii) May 1, 2022.

The Company will be entitled to 14 months of free rent, followed by an initial Boulder Lease term of 12 years.

The Company also has the option to extend the Boulder Lease for three successive five-year terms.

Upon the commencement of its obligation to pay rent, the Company will pay the landlord base rent at an initial rate of $ 40.00 per square foot per year.

Rent will be payable in equal monthly installments and subject to 2.5 % annual increases over the term.

Additionally, the Company is responsible for reimbursing the landlord for its share of the building’s property taxes and operating expenses.

In connection with the Boulder Lease, the Company provided a cash security deposit to the landlord in an amount of $ 0.7 million which is recorded in Other Assets in the condensed consolidated balance sheet as of September 30, 2021.

The Company has determined this is a lease under ASC 842.

The Company gained access to the leased space on August 14, 2021, to commence construction of the Improvements.

As of September 30, 2021, the Company has determined that it does not have control of the space, as defined in ASC 842, during the construction period and as such, the accounting lease commencement date has not occurred for the Boulder Lease as of September 30, 2021.

Therefore, the Company will not record a right-of-use asset or lease liability for the Boulder Lease until the accounting lease commencement date which is expected to be in 2022.

The Company has determined the cost of Improvements during the construction period are lessor assets and considered a prepayment of lease under ASC 842.

The Company has paid $ 0.9 million towards the construction of lessor assets, which is included in Other Assets in the condensed consolidated balance sheet as of September 30, 2021.

License Agreements

15 unchanged sentences

To date, the Company has not incurred any material costs as a result of such indemnifications.

The Company is not aware of any claims under indemnification arrangements that will have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of June 30, 2021 or its consolidated financial statements as of December 31, 2020.

The Company is not aware of any claims under indemnification arrangements that will have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of September 30, 2021 or its consolidated financial statements as of December 31, 2020.

Legal Proceedings

4 unchanged sentences

Basic and diluted net loss per common share was calculated as follows (in thousands, except share and per share amounts) :

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Net loss attributable to common stockholders

3 unchanged sentences

The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated above because including them would have had an anti-dilutive effect:

September 30,

Stock options to purchase common stock

Series A Preferred Stock

Unvested restricted common stock units

Retirement Plan

2 unchanged sentences

The 401(k) Plan allows for discretionary matching contributions of 100 % of the first 4 % of elective contributions, which vest immediately.

Contributions under the plan were approximately $ 0.1 million for the three months ended June 30, 2021 and $ 0.2 million for the six months ended June 30, 2021.

The Company did no t make any matching contributions during the three and six months ended June 30, 2020.

Subsequent Events

On July 6, 2021, the Company and BCSP Pearl East Property LLC (the “Landlord”) entered into a lease agreement (the “Lease”) pursuant to which the Company will lease approximately 38,075 square feet of office and laboratory space at 4840 Pearl East Circle, Boulder, Colorado (the “Leased Space”).

Pursuant to the terms of the Lease, the Company will take possession of the Leased Space on or around August 15, 2021 to commence construction and tenant improvements (collectively, “Improvements”).

The Landlord will contribute an aggregate of approximately $ 6.9 million toward the cost of the Improvements, as well as an additional amount of up to approximately $ 2.3 million in the form of a tenant improvement loan at an annual interest rate of 6 %.

Any monies borrowed under the tenant improvement loan are required to be repaid over the Lease term.

The Lease will commence upon the earlier of (i) substantial completion of the Improvements or (ii) May 1, 2022.

The Company will be entitled to 14 months of free rent, followed by an initial Lease term of 12 years.

The Company also has the option to extend the Lease for three successive five-year terms.

Upon the commencement of its obligation to pay rent, the Company will pay the Landlord base rent at an initial rate of $ 40.00 per square foot per year.

Rent will be payable in equal monthly installments and subject to 2.5 % annual increases over the term.

Additionally, the Company is responsible for reimbursing the Landlord for its share of the building’s property taxes and operating expenses.

In connection with the Lease, the Company provided a cash security deposit to the Landlord in an amount of $ 0.7 million.

Contributions under the plan were approximately $ 0.1 million for the three months ended September 30, 2021 and $ 0.3 million for the nine months ended September 30, 2021.

The Company did no t make any matching contributions during the three and nine months ended September 30, 2020.

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