What changed in this filing

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Item 1. Financial Statements

2020-11-10 compared with 2020-08-12 · 107 added, 68 removed, 321 unchanged (35% of the section changed)

3 unchanged sentences

(In thousands, except share and par value data)

September 30,

Current assets:

8 unchanged sentences

Accrued expenses

Current portion of long-term notes payable

Total current liabilities

7 unchanged sentences

24,724,544 and 17,425,654 shares issued and outstanding as of

June 30, 2020 and December 31, 2019, respectively

September 30, 2020 and December 31, 2019, respectively

Additional paid-in capital

Accumulated other comprehensive income

Accumulated other comprehensive (loss) income

Accumulated deficit

6 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Operating expenses:

3 unchanged sentences

Loss from operations

Other income (expense), net:

Other (expense) income, net:

Interest expense

1 unchanged sentence

Other income (expense), net

Total other income (expense), net

Total other (expense) income, net

Other comprehensive (loss) income, net:

21 unchanged sentences

Balance at June 30, 2019

Vesting of restricted stock liability

Stock-based compensation expense

Issuance of common stock warrants

Other comprehensive loss

Balance at September 30, 2019

Comprehensive

Stockholders'

Income (Loss)

Balance at December 31, 2019

12 unchanged sentences

Balance at June 30, 2020

Issuance of common stock, net of issuance costs

Issuance of common stock under ATM, net of issuance costs

Vesting of restricted stock liability

Stock-based compensation expense

Other comprehensive loss

Balance at September 30, 2020

See accompanying notes.

2 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

Operating activities:

2 unchanged sentences

Stock-based compensation

Net unrealized loss on foreign currency transactions

Net unrealized (gain) loss on foreign currency transactions

Non-cash consulting expense

1 unchanged sentence

Realized gain on investments

Accretion of discount on investments, net

Amortization/accretion of investments, net

Changes in operating assets and liabilities:

7 unchanged sentences

Maturities of short-term investments

Net cash provided by investing activities

Net cash (used in) provided by investing activities

Financing activities:

Proceeds from issuance of common stock, net of issuance costs

Proceeds from issuance of common stock under ATM facility, net of issuance costs

Proceeds from issuance of notes payable, net of issuance costs

Proceeds from ESPP purchase

6 unchanged sentences

Issuance of commitment shares to Lincoln Park pursuant to agreement

Equity issuance costs in accounts payable

Fair value of common stock warrants in connection with issuance of notes payable

Notes payable issuance costs in accounts payable

See accompanying notes.

4 unchanged sentences

(the Company) was incorporated in the state of Delaware on March 16, 2017.

The Company is engaged in the research and development of products for severe autoimmune and inflammatory disorders with high unmet medical need.

From inception through June 30, 2020, the Company has devoted substantially all of its efforts to organizing and staffing the Company, business planning, raising capital, in-licensing rights to itolizumab (EQ001), conducting preclinical research, filing two initial Investigational New Drug applications (INDs), commencing clinical development of the Company’s initial product candidate, itolizumab (EQ001), conducting business development activities, and the general and administrative activities associated with operating as a public company.

The Company is a clinical-stage biotechnology company leveraging deep understanding of immunology to develop novel products to treat severe autoimmune and inflammatory disorders with high unmet medical need.

From inception through September 30, 2020, the Company has devoted substantially all of its efforts to organizing and staffing the Company, business planning, raising capital, in-licensing rights to itolizumab (EQ001), conducting preclinical research, filing three initial Investigational New Drug applications (INDs), commencing clinical development of the Company’s initial product candidate, itolizumab (EQ001), conducting business development activities, and the general and administrative activities associated with operating as a public company.

In addition, the Company has a limited operating history, has not generated revenues from its principal operations, and the sales and income potential of its business is unproven.

Liquidity and Business Risks

As of June 30, 2020, the Company had $42.6 million in cash, cash equivalents and short-term investments.

As of September 30, 2020, the Company had $90.5 million in cash, cash equivalents and short-term investments.

The Company has incurred significant operating losses and negative cash flows from operations.

The Company expects to use its cash, cash equivalents and short-term investments to fund research and development of itolizumab (EQ001) and for working capital and other general corporate purposes.

The Company does not expect to generate any revenues from product sales unless and until the Company successfully completes development and obtains regulatory approval of itolizumab (EQ001) or any future product candidate, which will not be for at least the next several years, if ever.

The Company does not expect to generate any revenues from product sales unless and until the Company successfully completes development and obtains regulatory approval of itolizumab (EQ001) or any future product candidate, which is unlikely to happen within the next 12 months, if ever.

Accordingly, until such time as the Company can generate significant revenue from sales of its product candidates, if ever, the Company expects to finance its cash needs through a combination of equity offerings, debt financings, and collaboration and license agreements.

4 unchanged sentences

The Company’s failure to raise capital or enter into such other arrangements when needed would have a negative impact on the Company’s financial condition and could force the Company to delay, reduce or terminate its research and development programs or other operations, or grant rights to develop and market product candidates that the Company would otherwise prefer to develop and market itself.

Management believes that the Company’s cash, cash equivalents and short-term investments as of June 30, 2020, together with capital raised subsequent to June 30, 2020, will be sufficient to fund operations for at least the next 12 months from the date this Quarterly Report on Form 10-Q is filed with the Securities and Exchange Commission (SEC).

Management believes that the Company’s cash, cash equivalents and short-term investments as of September 30, 2020 will be sufficient to fund operations for at least the next 12 months from the date this Quarterly Report on Form 10-Q is filed with the Securities and Exchange Commission (SEC).

In March 2020, as a result of impacts and risks associated with the COVID-19 pandemic, the Company decided to pause enrollment in its Phase 1b clinical trials of itolizumab (EQ001) in uncontrolled asthma and lupus nephritis.

1 unchanged sentence

In July 2020, the Company announced that patient enrollment in both of those trials had resumed.

The Company is continuing efforts to enroll patients in the Phase 1b/2 clinical trial of itolizumab (EQ001) for the treatment of acute graft-versus-host disease (aGVHD) given the acute life-threatening severity of the disease, as the Company believes itolizumab (EQ001) represents a potentially life-saving treatment for these severely ill patients.

However, there remains a risk that enrollment of that trial as well as enrollment in the Company’s Phase 1b trials in uncontrolled asthma and lupus nephritis and the timing of topline data may also be adversely impacted by the COVID-19 pandemic.

The Company did not pause enrollment of patients in the Phase 1b/2 clinical trial of itolizumab (EQ001) for the treatment of acute graft-versus-host disease (aGVHD) given the acute life-threatening severity of the disease, as the Company believes itolizumab (EQ001) represents a potentially life-saving treatment for these severely ill patients.

However, there remains a risk that enrollment of that trial, as well as enrollment in the Company’s recently announced trial to evaluate itolizumab in hospitalized COVID-19 patients suffering from acute respiratory distress syndrome and the recently resumed Phase 1b trials in uncontrolled asthma and lupus nephritis, in addition to the timing of topline data from all four of those trials may also be adversely impacted by the COVID-19 pandemic.

The COVID-19 outbreak in the United States and the rest of the world has caused disruptions to the Company’s business, which may delay results of the Company’s clinical trials and adversely impact the Company’s business.

The Company cannot predict how legal and regulatory responses to concerns about COVID-19 or other major public health issues will impact the Company’s business, nor can it predict potential adverse impacts related to the availability of capital to fund the Company’s operations.

Additionally, the Company’s workforce and outside consultants may also be affected, which could result in an adverse impact on the Company’s ability to conduct business.

Additionally, the Company’s workforce and outside consultants may also be affected, which could result in an

adverse impact on the Company’s ability to conduct business.

Any of these factors, alone or in combination with others, could harm the Company’s business, results of operations, financial condition or liquidity.

19 unchanged sentences

Realized and unrealized gains and losses denominated in foreign currencies are recorded in operating expenses in the Company’s condensed consolidated statements of operations.

For the three months ended June 30, 2020, net realized and unrealized gains totaled $0.3 million.

For the six months ended June 30, 2020, net realized and unrealized losses totaled $44,000.

There were no material realized and unrealized gains and losses for the three and six months ended June 30, 2019.

For both the three and nine months ended September 30, 2020, net realized and unrealized gains totaled $0.1 million.

For the three and nine months ended September 30, 2019, net realized and unrealized losses totaled $12,000 and $17,000, respectively.

Recently Issued Accounting Pronouncements

8 unchanged sentences

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement , which is designed to improve the effectiveness of disclosures by removing, modifying and adding disclosures related to fair value measurements.

ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

Early adoption is permitted.

ASU 2018-13 was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

Early adoption was permitted.

The Company adopted this ASU on January 1, 2020.

14 unchanged sentences

The Company classifies its estimates for accrued research and development expenses as accrued expenses on the accompanying condensed consolidated balance sheet.

Australian Research and Development Tax Incentive

The Company is eligible under the Australian Research and Development Tax Incentive Program, or the Tax Incentive, to obtain a cash refund from the Australian Taxation Office for eligible research and development expenditures.

However, the Company must have revenue of less than AUD $20.0 million during the reimbursable period and cannot be controlled by income tax exempt entities.

The Tax Incentive is recognized as a reduction to research and development expense when there is a reasonable assurance that the Tax Incentive will be received, the relevant expenditure has been incurred, and the amount can be reliably measured.

Stock-Based Compensation

9 unchanged sentences

For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

Potentially dilutive securities not included in the calculation of diluted net loss per share attributable to common stockholders because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Common stock options

5 unchanged sentences

Active Markets

September 30,

for Identical

20 unchanged sentences

The carrying amounts of the Company’s financial instruments, including cash, prepaid and other current assets, accounts payable, and accrued liabilities, approximate fair value due to their short maturities.

The carrying amount of the Company’s notes payable of $9.8 million at June 30, 2020 approximated their fair value as the terms of the notes are consistent with the market terms of transactions with similar profiles (Level 2 inputs).

The carrying amount of the Company’s notes payable of $9.9 million at September 30, 2020 approximated their fair value as the terms of the notes are consistent with the market terms of transactions with similar profiles (Level 2 inputs).

None of the Company’s non-financial assets or liabilities are recorded at fair value on a non-recurring basis.

At June 30, 2020 and December 31, 2019, the Company had investments in money market funds of $21.1 million and $10.3 million, respectively, that were measured at fair value using the net asset value per share (or its equivalent) that have not been classified in the fair value hierarchy.

At September 30, 2020 and December 31, 2019, the Company had investments in money market funds of $19.3 million and $10.3 million, respectively, that were measured at fair value using the net asset value per share (or its equivalent) that have not been classified in the fair value hierarchy.

The funds invest primarily in U.S.

government securities.

The Company did not hold any Level 1, 2 or 3 financial liabilities that are recorded at fair value on a recurring basis as of June 30, 2020 and December 31, 2019.

Certain Financial Statement Caption Information

The Company did not hold any Level 1, 2 or 3 financial liabilities that are recorded at fair value on a recurring basis as of September 30, 2020 or December 31, 2019.

Cer tain Financial Statement Caption Information

Short-Term Investments

The following table summarizes the Company’s short-term investments (in thousands):

June 30, 2020

September 30, 2020

treasury securities

10 unchanged sentences

There were no impairments considered other-than-temporary during the periods presented, as it is management’s intention and ability to hold the securities until a recovery of the cost basis or recovery of fair value.

For the three and six months ended June 30, 2020, there were net gross realized gains on short-term investments totaling $0 and $13,000, respectively.

There were no gross realized gains and losses on sales of short-term investments for the three and six months ended June 30, 2019.

Unrealized gains and losses are included in accumulated other comprehensive income.

For the three and nine months ended September 30, 2020, there were net gross realized gains on short-term investments totaling $0 and $13,000, respectively.

There were no gross realized gains and losses on sales of short-term investments for the three and nine months ended September 30, 2019.

Unrealized losses and gains are included in accumulated other comprehensive (loss) income.

Accrued Expenses

Accrued expenses consisted of the following (in thousands):

September 30,

Accrued payroll and other employee benefits

7 unchanged sentences

Upon entering into the Loan Agreement, the Company borrowed $10.0 million from the Lenders (Term A Loan).

Under the terms of the Loan Agreement, the Company may, at its sole discretion, borrow from the Lenders (i) up to an additional $5.0 million (Term B Loan) upon the Company’s achievement of posi tive topline data in either the Company’s (a) Phase 1b aGVHD trial of itolizumab (EQ001) or (b) Phase 1b asthma trial of itolizumab (EQ001), supporting a formal decision to advance into Phase 2 development, and as confirmed by the Company’s Board of Direct ors (the Term B Milestone) and (ii) up to an additional $5.0 million (Term C Loan and together with Term A Loan and Term B Loan, the Term Loans) upon the Company’s achievement of positive topline data in both the Company’s Phase 1b aGVHD trial of itolizuma b (EQ001) and the Company’s Phase 1b asthma trial of itolizumab (EQ001), supporting a formal decision to advance into Phase 2 development, and as confirmed by the Company’s Board of Directors (the Term C Milestone).

The Company may draw the Term B Loan du ring the period commencing on the date of the occurrence of the Term B Milestone and ending on the earliest of (i) December 31, 2020, (ii) 60 days after achieving the Term B Milestone, and (iii) the occurrence of an event of default and may draw the Term C Loan during the period commencing on the date of the occurrence of the Term C Milestone and ending on the earliest of (i) December 31, 2020, (ii) 60 days after achieving the Term C Milestone, and (iii) the occurrence of an event of default.

Under the terms of the Loan Agreement, the Company may, at its sole discretion, borrow from the Lenders (i) up to an additional $5.0 million (Term B Loan) upon the Company’s achievement of positive topline data in either the Company’s (a) Phase 1b aGVHD trial of itolizumab (EQ001) or (b) Phase 1b asthma trial of itolizumab (EQ001), supporting a formal decision to adv ance into Phase 2 development, and as confirmed by the Company’s Board of Directors (the Term B Milestone) and (ii) up to an additional $5.0 million (Term C Loan and together with Term A Loan and Term B Loan, the Term Loans) upon the Company’s achievement of positive topline data in both the Company’s Phase 1b aGVHD trial of itolizumab (EQ001) and the Company’s Phase 1b asthma trial of itolizumab (EQ001), supporting a formal decision to advance into Phase 2 development, and as confirmed by the Company’s Boa rd of Directors (the Term C Milestone).

The Company may draw the Term B Loan during the period commencing on the date of the occurrence of the Term B Milestone and ending on the earliest of (i) December 31, 2020, (ii) 60 days after achieving the Term B Mi lestone, and (iii) the occurrence of an event of default and may draw the Term C Loan during the period commencing on the date of the occurrence of the Term C Milestone and ending on the earliest of (i) December 31, 2020, (ii) 60 days after achieving the T erm C Milestone, and (iii) the occurrence of an event of default.

All of the Term Loans mature on June 1, 2024 (the Maturity Date) and will be interest-only payments through June 30, 2021, followed by 36 equal monthly payments of principal and interest;

15 unchanged sentences

The aggregate carrying amounts of the Term Loans are comprised of the following (in thousands):

September 30,

accreted liability for Final Payment fee

1 unchanged sentence

Upon the occurrence of certain events, including but not limited to the Company’s failure to satisfy its payment obligations under the Loan Agreement, the breach of certain of its other covenants under the Loan Agreement, or the occurrence of a material ad verse change, cross defaults to other indebtedness or material agreements, judgment defaults and defaults related to failure to maintain governmental approvals failure of which to maintain could result in a material adverse effect, the Lenders will have th e right, among other remedies, to declare all principal and interest immediately due and payable, to exercise secured party remedies, to receive the Final Payment and, if the payment of principal and interest is due prior to the Maturity Date, to receive t he applicable Prepayment Fee.

At June 30, 2020, the Company was in compliance with the covenants contained in the Loan Agreement.

Future maturities of the Term Loans, including the Final Payment fee, as of June 30, 2020 are as follows (in thousands):

At September 30, 2020 , the Company was in compliance with the covenants contained in the Loan Agreement.

Future maturities of the Term Loans, including the Final Payment fee, as of September 30, 2020 are as follows (in thousands):

September 30,

Remainder of 2020

19 unchanged sentences

In addition, the Company is obligated to pay Biocon up to an aggregate of $30 million in regulatory milestone payments upon the achievement of certain regulatory approvals and up to an aggregate of $565 million in sales milestone payments upon the achievement of first commercial sale of product and specified levels of product sales.

The Compan y is also required to pay royalties on tiers of aggregate annual net sales of Biocon Products by the Company, the Company’s affiliates and the Company’s sublicensees in the United States and Canada at percentages from the mid-single digits to sub-teen doub le-digits and on tiers of aggregate annual net sales of Biocon Products by the Company and the Company’s affiliates (but not the Company’s sublicensees) in Australia and New Zealand, in each case, subject to adjustments in certain circumstances.

The Company is also required to pay royalties on tiers of aggregate annual net sales of Biocon Products by the Company, the Company’s affiliates and the Company’s sublicensees in the United States and Canada at percentages from the mid-single digits to sub-teen double-digits and on tiers of aggregate annual net sales of Biocon Products by the Company and the Company’s affiliates (but not the Company’s sublicensees) in Australia and New Zealand, in each case, subject to adjustments in certain circumstances.

Biocon is also required to pay the Company royalties at comparable percentages for sales of itolizumab (EQ001) outside of the Company Territory if the approvals in such geographies included or referenced the Company’s data including data from certain of the Company’s clinical trials, subject to adjustments in certain circumstances.

Under the License Agreements, net sales are calculated on a country-by-country basis and are subject to adjustments, including whether the Biocon Product is sold in the form of a combinati on product.

As of June 30, 2020, the Company has not made or received payments in connection with the milestones or royalties within the agreement.

Under the License Agreements, net sales are calculated on a country-by-country basis and are subject to adjustments, including whether the Biocon Product is sold in the form of a combination product.

As of September 30, 2020, the Company has not made or received payments in connection with the milestones or royalties within the agreement.

Stockholders’ Equity

As of June 30, 2020, the Company’s authorized capital stock consisted of 200,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share.

The Company had 17,723,850 and 17,425,654 shares of common stock outstanding as of June 30, 2020 and December 31, 2019, respectively.

As of September 30, 2020, the Company’s authorized capital stock consisted of 200,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share.

The Company had 24,724,544 and 17,425,654 shares of common stock outstanding as of September 30, 2020 and December 31, 2019, respectively.

Follow-On Public Offering

In August 2020, the Company completed an underwritten public offering of 5,461,169 shares of common stock at $7.00 per share, which included 461,169 shares sold pursuant to the exercise of the underwriters’ option to purchase additional shares.

The Company received gross proceeds from this offering totaling $38.2 million.

The proceeds, net of underwriting discounts and related issuance costs, were $35.7 million.

At-the-Market Offering Program

In November 2019, the Company entered into an Open Market Sales Agreement SM with Jefferies LLC (Jefferies) under which the Company may offer and sell shares of its common stock from time to time, through an “at-the-market” (ATM) equity offering program under which Jefferies acts as sales agent (2019 ATM Facility).

In November 2019, the Company entered into an Open Market Sales Agreement SM with Jefferies LLC (Jefferies) under which the Company may offer and sell shares of its common stock from time to time, through an “at-the-market”, or ATM, equity offering program under which Jefferies acts as sales agent (2019 ATM Facility).

The Company sets certain parameters for the sale of shares, which may include but are not limited to the number of shares to be issued, the time period during which sales are requested to be made, and any minimum price below which sales may not be made.

1 unchanged sentence

The maximum aggregate offering price of common stock that could be sold under the 2019 ATM Facility was $8.45 million.

During the six months ended June 30, 2020, the Company sold 174,649 shares of its common stock and received net proceeds of $0.8 million under the 2019 ATM Facility.

There were no sales of shares in the three months ended June 30, 2020.

On July 14, 2020, the Company entered into another Open Market Sales Agreement SM with Jefferies for a new ATM equity offering (2020 ATM Facility).

See Note 8 – Subsequent Events for further details.

During the three and nine months ended September 30, 2020, the Company sold an aggregate 750,840 and 925,489 shares of its common stock, respectively, and received gross proceeds of $7.5 million and $8.4 million, respectively, under the 2019 ATM Facility.

The Company paid commissions on the gross proceeds in the aggregate amount of approximately $0.2 million and $0.3 million, during the three and nine months ended September 30, 2020, respectively, resulting in net proceeds of $7.3 million and $8.1 million, respectively.

As of September 30, 2020, the 2019 ATM Facility was fully utilized.

On July 14, 2020, the Company entered into a new ATM equity offering program (2020 ATM Facility) with Jefferies under which the Company may offer and sell shares of the Company’s common stock having an aggregate price of up to $150 million, from time to time, through Jefferies acting as our sales agent.

For the three and nine months ended September 30, 2020, the Company sold an aggregate of 788,685 shares of common stock under the 2020 ATM Facility for gross proceeds of $10.4 million.

The Company paid cash commissions on the gross proceeds, plus reimbursement expenses to Jefferies and other issuance costs in the aggregate amount of approximately $0.4 million, resulting in net proceeds of $10.0 million.

Since September 30, 2020 and through the date of the filing of this quarterly report on Form 10-Q, there have been no additional sales of the Company’s stock under the 2020 ATM Facility.

Purchase Agreement

In March 2020, the Company entered into a purchase agreement (Purchase Agreement), with Lincoln Park Capital Fund, LLC (Lincoln Park), which provides that, upon the terms and subject to the conditions and limitations set forth therein, the Company may sell to Lincoln Park up to $15.0 million of shares of its common stock from time to time over the 36‑month term of the Purchase Agreement.

Company may sell to Lincoln Park up to $15.0 million of shares of its common stock from time to time over the 36 - month term of the Purchase Agreement.

Upon execution of the Purchase Agreement, the Company issued 65,374 shares of its common stock to Lincoln Park as commitment shares in accordance with the closing conditions contained within the Purchase Agreement.

The commitment shares were valued using the closing price of the Company’s common stock on the effective date of the Purchase Agreement resulting in a fair market value of approximately $0.2 million.

The fair market value of the commitment shares as well as other issuance costs associated with the Purchase Agreement totaled $0.4 million.

The fair market value of the com mitment shares as well as other issuance costs associated with the Purchase Agreement totaled $0.4 million.

These issuance costs are classified as prepaid expenses and other current assets in the accompanying condensed consolidated balance sheet.

As shares of common stock are sold to Lincoln Park in accordance with the Purchase Agreement, the issuance costs, including the fair value of the commitment shares, will be reclassified to additional paid-in capital on the Company’s condensed consolidated balance sheet .

During the three and six months ended June 30, 2020, there were no sales of the Company’s stock under this Purchase Agreement.

There have been no sales of the Company’s stock under this Purchase Agreement as of June 30, 2020 and through the date of the filing of this Quarterly Report on Form 10-Q.

During the three and nine months ended September 30, 2020, there were no sales of the Company’s stock under this Purchase Agreement.

There have been no sales of the Company’s stock under this Purchase Agreement as of September 30, 2020 and through th e date of the filing of this Quarterly Report on Form 10-Q.

Repricing of Outstanding Options

4 unchanged sentences

Prior to the repricing, many of the options had exercise prices well above the recent market prices of the Company’s common stock, including prior to the recent market volatility that has generally been associated with the COVID-19 pandemic.

The effect of the repricing generated a total incremental cost of approximately $0.4 million, of which approximately $0.1 million was recognized as stock-based compensation expense in the three months ended June 30, 2020, with the remainder to be expensed over the remaining vesting periods.

The effect of the repricing generated a total incremental cost of approximately $0.4 million, of which approximately $26,000 and $0.1 million was recognized as stock-based compensation expense in the three and nine months ended September 30, 2020, respectively, with the remainder to be expensed over the remaining vesting periods.

Stock Options

The following table summarizes the stock option activity during the six months ended June 30, 2020:

Shares Subject to Options

Exercise Price Per Share

The following table summarizes the stock option activity during the nine months ended September 30, 2020:

Exercise Price

Intrinsic Value

2 unchanged sentences

Forfeitures and cancellations

Options outstanding at June 30, 2020

Options exercisable at June 30, 2020

Aggregate intrinsic value in this table was calculated as the positive difference, if any, between the closing price per share of the Company’s common stock on June 30, 2020 of $2.95 and the price of the underlying options.

The weighted-average exercise price per share of the options outstanding and exercisable as of June 30, 2020 includes the impact of the repricing of 1,475,093 options on April 22, 2020 at $2.45 per share.

At June 30, 2020, unamortized stock compensation for stock options was $8.5 million, with a weighted-average recognition period of 2.8 years.

Options outstanding at September 30, 2020

Options exercisable at September 30, 2020

Aggregate intrinsic value in this table was calculated as the positive difference, if any, between the closing price per share of the Company’s common stock on September 30, 2020 of $5.77 and the price of the underlying options.

The weighted-average exercise price per share of the options outstanding and exercisable as of September 30, 2020 includes the impact of the repricing of 1,475,093 options on April 22, 2020 at $2.45 per share.

At September 30, 2020, unamortized stock compensation for stock options was $8.0 million, with a weighted-average recognition period of 2.6 years.

On May 28, 2020, the Compensation Committee of the Company’s Board of Directors issued to its Executive Chairman, Chief Executive Officer and two non-management directors retention stock options to purchase an aggregate of 169,368 shares of the Company’s common stock.

These stock option grants immediately vested at the date of grant.

The non-cash stock-based compensation expense recognized in the three and six months ended June 30, 2020 associated with these stock option grants totaled $0.4 million.

At the time, the Executive Chairman and Chief Executive Officer voluntarily agreed to a 65% and an 85% reduction, respectively, in their base salaries otherwise payable for the remainder of 2020.

The non-cash stock-based compensation expense recognized in the three and nine months ended September 30, 2020 associated with these stock option grants totaled $0 million and $0.4 million, respectively.

At the time, the Executive Chairman and Chief

Executive Officer voluntarily agreed to a 65% and an 85% reduction, respectively, in their base salaries otherwise payable for the remainder of 2020.

The two non-management directors voluntarily agreed to forego 100% of their annual cash retainers otherwise payable to such directors for the remainder of 2020.

2 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

1 unchanged sentence

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance at June 30, 2020 is as follows:

Common stock reserved for future issuance at September 30, 2020 is as follows:

September 30,

Stock options issued and outstanding

2 unchanged sentences

Employee stock purchase plan

Subsequent Events

On July 14, 2020, the Company entered into the 2020 ATM Facility with Jefferies to sell shares of the Company’s common stock having aggregate sales proceeds of up to $150 million, from time to time, through an ATM equity offering program under which Jefferies acts as sales agent.

Subsequent to June 30, 2020 and through the date of the filing of this Quarterly Report on Form 10-Q, the Company has sold an aggregate of 1,539,525 shares of common stock under both of the 2019 ATM Facility and the 2020 ATM Facility, which includes shares sold pursuant to the 2020 ATM Facility, but not yet delivered to Jefferies, for gross proceeds of approximately $17.9 million.

The Company paid cash commissions on the gross proceeds, plus reimbursement expenses to Jefferies and legal fees in the aggregate amount of approximately $0.6 million, resulting in net proceeds of $17.3 million.

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