Edgewise Therapeutics, Inc. 10-Q

Item 1. Financial Statements EDGEWISE THERAPEUTICS, INC. Condensed Balance Sheets (In thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ As of ​ ​ March 31, ​ December 31, Assets 2021 ​ 2020 ​ ​ (Unaudited) ​ ​ Current assets ​ ​ ​ Cash and cash equivalents ​ $ 221,036 ​ $ 104,916 Marketable securities, available for sale ​ 88,835 ​ 24,178 Prepaid expenses and other assets ​ 674 ​ 551 Total current assets ​ 310,545 ​ 129,645 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Property and equipment ​ 1,008 ​ 946 Less: accumulated depreciation ​ ( 509 ) ​ ( 430 ) Total property and equipment ​ 499 ​ 516 Other non-current assets ​ 201 ​ 975 ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 311,245 ​ $ 131,136 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities, convertible preferred stock, and stockholders' equity (deficit) ​ ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ Accounts payable ​ $ 1,621 ​ $ 1,580 Accrued compensation ​ 672 ​ 1,175 Accrued other expenses ​ 2,558 ​ 1,587 Total current liabilities ​ 4,851 ​ 4,342 ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies (see note 5) ​ ​ ​ ​ ​ ​ ​ ​ ​ Convertible preferred stock ​ ​ Series A preferred stock, $ .0001 par value, no shares and 15,500,000 shares authorized, no shares and 8,187,100 shares issued and outstanding with an aggregate liquidation preference of $ 0 and $ 15,500 as of March 31, 2021 and December 31, 2020, respectively ​ — ​ 15,484 Series B-1 preferred stock, $ .0001 par value, no shares and 14,934,484 shares authorized, no shares and 7,888,392 issued and outstanding with an aggregate liquidation preference of $ 0 and $ 25,075 as of March 31, 2021 and December 31, 2020, respectively ​ — ​ 24,778 Series B-2 preferred stock, $ .0001 par value, no shares and 12,358,305 shares authorized, no shares and 6,527,654 shares issued and outstanding with an aggregate liquidation preference of $ 0 and $ 25,075 as of March 31, 2021 and December 31, 2020, respectively ​ — ​ 25,056 Series C preferred stock, $ .0001 par value, no shares and 24,525,629 shares authorized, no shares and 12,954,423 shares issued and outstanding with aggregate liquidation preference of $ 0 and $ 95,000 as of March 31, 2021 and December 31, 2020, respectively ​ — ​ 94,896 Total convertible preferred stock ​ — ​ 160,214 ​ ​ ​ ​ ​ ​ ​ Stockholders' equity (deficit) ​ ​ Preferred stock, $ .0001 par value per share; 200,000,000 shares and no shares authorized as of March 31, 2021 and December 31, 2020, respectively; no shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively ​ ​ — ​ ​ — Common stock, $ .0001 par value per share; 1,000,000,000 shares and 88,000,000 shares authorized, 49,254,311 shares and 1,009,479 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively ​ 5 ​ — Additional paid-in capital ​ 347,405 ​ 727 Accumulated other comprehensive loss ​ ​ ( 54 ) ​ ​ — Accumulated deficit ​ ( 40,962 ) ​ ( 34,147 ) Total stockholders' (deficit) equity ​ 306,394 ​ ( 33,420 ) ​ ​ ​ ​ ​ ​ ​ Total liabilities, convertible preferred stock and stockholders' equity (deficit) ​ $ 311,245 ​ $ 131,136 ​ The accompanying notes are an integral part of these condensed financial statements. 6 Table of Contents ​ EDGEWISE THERAPEUTICS, INC. Condensed Statements of Operations and Comprehensive Loss (In thousands, except per share data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended March 31, ​ 2021 2020 ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ Research and development ​ $ 5,360 ​ $ 2,967 General and administrative ​ 1,497 ​ 281 Total operating expenses ​ 6,857 ​ 3,248 ​ ​ ​ ​ ​ ​ ​ Loss from operations ​ ( 6,857 ) ​ ( 3,248 ) ​ ​ ​ ​ ​ ​ ​ Other income ​ ​ Interest income ​ 42 ​ 63 Total other income ​ 42 ​ 63 ​ ​ ​ ​ ​ ​ ​ Net loss ​ ​ ( 6,815 ) ​ ​ ( 3,185 ) ​ ​ ​ ​ ​ ​ ​ Other comprehensive loss: ​ ​ ​ ​ ​ ​ Unrealized loss on available-for-sale securities ​ ​ ( 54 ) ​ ​ — Total comprehensive loss ​ $ ( 6,869 ) ​ $ ( 3,185 ) ​ ​ ​ ​ ​ ​ ​ Net loss per share, basic and diluted ​ $ ( 4.37 ) ​ $ ( 7.57 ) Weighted-average shares outstanding, basic and diluted ​ 1,559,868 ​ 420,482 ​ The accompanying notes are an integral part of these condensed financial statements. ​ ​ 7 Table of Contents ​ EDGEWISE THERAPEUTICS, INC. Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (In thousands, except share data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Series A Convertible ​ Series B-1 Convertible ​ Series B-2 Convertible ​ Series C Convertible ​ Convertible ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ ​ Common Stock ​ Additional ​ Other Comprehensive ​ Accumulated ​ ​ ​ ​ Shares Amount Shares Amount Shares Amount Shares Amount Total Shares Amount Paid-In Capital Loss Deficit Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2019 8,187,100 ​ $ 15,484 7,888,392 ​ $ 24,778 — ​ $ — — ​ $ — ​ $ 40,262 ​ 419,004 ​ $ — ​ $ 171 ​ $ — ​ $ ( 17,024 ) ​ $ ( 16,853 ) Exercise of stock options — ​ — — ​ — — ​ — — ​ — ​ ​ 33,631 ​ — ​ 15 ​ ​ — ​ — ​ 15 Stock-based compensation — ​ — — ​ — — ​ — — ​ — ​ ​ — ​ — ​ 45 ​ ​ — ​ — ​ 45 Net loss — ​ — — ​ — — ​ — — ​ — ​ ​ — ​ — ​ — ​ ​ — ​ ( 3,185 ) ​ ( 3,185 ) Balance as of March 31, 2020 8,187,100 ​ $ 15,484 7,888,392 ​ $ 24,778 — ​ $ — — ​ $ — ​ $ 40,262 ​ 452,635 ​ $ — ​ $ 231 ​ $ — ​ $ ( 20,209 ) ​ $ ( 19,978 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Series A Convertible ​ Series B-1 Convertible ​ Series B-2 Convertible ​ Series C Convertible ​ Convertible ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ ​ Common Stock ​ Additional ​ Other Comprehensive ​ Accumulated ​ ​ ​ ​ ​ Shares Amount Shares Amount Shares Amount Shares Amount Total Shares Amount Paid-In Capital Loss ​ Deficit Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2020 ​ 8,187,100 ​ $ 15,484 ​ 7,888,392 ​ $ 24,778 ​ 6,527,654 ​ $ 25,056 ​ 12,954,423 ​ $ 94,896 ​ $ 160,214 ​ ​ 1,009,479 ​ $ — ​ $ 727 ​ $ — ​ $ ( 34,147 ) ​ $ ( 33,420 ) Convertible preferred stock converted into shares of common stock ( 8,187,100 ) ​ ( 15,484 ) ( 7,888,392 ) ​ ( 24,778 ) ( 6,527,654 ) ​ ( 25,056 ) ( 12,954,423 ) ​ ( 94,896 ) ​ ( 160,214 ) ​ 35,557,569 ​ 4 ​ 160,210 ​ ​ — ​ — ​ 160,214 Initial public offering of common stock, net of $ 2.1 million in offering costs — ​ — — ​ — — ​ — — ​ — ​ — ​ 12,650,000 ​ 1 ​ 186,147 ​ ​ — ​ — ​ 186,148 Exercise of stock options — ​ — — ​ — — ​ — — ​ — ​ — ​ 37,263 ​ — ​ 25 ​ ​ — ​ — ​ 25 Stock-based compensation — ​ — — ​ — — ​ — — ​ — ​ — ​ — ​ — ​ 296 ​ ​ — ​ — ​ 296 Other comprehensive loss ​ — ​ — — ​ — — ​ — — ​ — ​ — ​ ​ — ​ — ​ — ​ ​ ( 54 ) ​ ​ — ​ ​ ( 54 ) Net loss — ​ — — ​ — — ​ — — ​ — ​ — ​ — ​ — ​ — ​ ​ — ​ ( 6,815 ) ​ ( 6,815 ) Balance as of March 31, 2021 — ​ $ — — ​ $ — — ​ $ — — ​ $ — ​ $ — ​ 49,254,311 ​ $ 5 ​ $ 347,405 ​ $ ( 54 ) ​ $ ( 40,962 ) ​ $ 306,394 ​ The accompanying notes are an integral part of these condensed financial statements. ​ ​ 8 Table of Contents ​ EDGEWISE THERAPEUTICS, INC. Condensed Statements of Cash Flows (In thousands) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended March 31, ​ 2021 2020 Cash flows from operating activities ​ ​ ​ ​ ​ Net loss ​ $ ( 6,815 ) ​ $ ( 3,185 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ Depreciation ​ ​ 79 ​ 40 Stock-based compensation ​ 296 ​ 45 Changes in assets and liabilities: ​ ​ ​ Prepaid expenses and other assets ​ ( 66 ) ​ ( 41 ) Accounts payable ​ ( 63 ) ​ 458 Accrued compensation ​ ( 503 ) ​ ( 78 ) Accrued other expenses ​ 1,015 ​ 22 Net cash used in operating activities ​ ( 6,057 ) ​ ( 2,739 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities ​ ​ ​ Purchases of marketable securities ​ ( 64,711 ) ​ — Purchases of property and equipment ​ ( 62 ) ​ ( 9 ) Net cash used in investing activities ​ ( 64,773 ) ​ ( 9 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Proceeds from initial public offering of common stock, net of underwriting discounts and commissions and offering costs ​ 187,051 ​ — Payment of preferred stock issuance costs ​ ​ ( 124 ) ​ ​ ​ Exercise of stock options ​ 23 ​ — Net cash provided by financing activities ​ 186,950 ​ — ​ ​ ​ ​ ​ ​ ​ Net change in cash and cash equivalents ​ 116,120 ​ ( 2,748 ) Cash and cash equivalents at beginning of period ​ 104,916 ​ 23,653 Cash and cash equivalents at end of period ​ $ 221,036 ​ $ 20,905 Supplemental disclosures of non-cash financing activities: ​ ​ Receivable for option exercises ​ $ 2 ​ $ 15 Unpaid initial public offering costs included in accounts payable ​ $ 495 ​ $ — Unpaid initial public offering costs included in accrued expenses ​ $ 408 ​ $ — Conversion of convertible preferred stock upon closing of initial public offering ​ $ 160,214 ​ $ — ​ The accompanying notes are an integral part of these condensed financial statements. ​ 9 Table of Contents EDGEWISE THERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (Unaudited) NOTE 1 DESCRIPTION OF BUSINESS Organization and Description of Business Edgewise Therapeutics, Inc. (the Company) was incorporated as a Delaware corporation in May 2017, and it is headquartered in Boulder, Colorado. The Company is a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of innovative treatments for severe, rare muscle disorders for which there is significant unmet medical need. The Company’s lead product candidate, EDG-5506, is an orally administered small molecule designed to address the root cause of dystrophinopathies including Duchenne muscular dystrophy (DMD) and Becker muscular dystrophy (BMD). The Company is using its proprietary drug discovery platform to develop a pipeline of precision medicine product candidates that target key muscle proteins and modulators to address a broad array of genetically defined muscle disorders. Initial Public Offering and Reverse Stock Split On March 30, 2021, the Company completed its initial public offering (IPO) in which it issued and sold 12,650,000 shares of common stock at a price of $ 16.00 per share, including 1,650,000 shares sold pursuant to the underwriters’ full exercise of their option to purchase additional shares. The aggregate net proceeds received by the Company from the IPO was $ 186.1 million after deducting underwriting discounts and commissions of $ 14.2 million and offering expenses of approximately $ 2.1 million. In addition, in connection with the IPO, all shares of convertible preferred stock outstanding at the time of the IPO converted into 35,557,569 shares of common stock. On March 19, 2021, the Company amended its certificate of incorporation to effect a 1-for- 1.8932 reverse stock split of its issued and outstanding common and convertible preferred stock. The accompanying financial statements and related notes give retroactive effect to the reverse stock split for all periods presented. Risks and Uncertainties In March 2020, the World Health Organization declared the novel coronavirus disease (COVID-19) outbreak a pandemic. The Company cannot at this time predict the specific extent, duration, or full impact that the COVID-19 outbreak will have on its financial condition and operations. Beginning the week of March 16, 2020, the majority of the Company’s workforce began working from home. Disruptions caused by the COVID-19 pandemic, including the effects of the stay-at-home orders and work-from-home policies, have impacted productivity, have resulted in increased operational expenses, certain adjustments to the operations of the Company’s clinical trial, the suspension of enrollment of new patients at the Company’s clinical trial site, and delays in certain supply chain activities and collecting and analyzing data from patients in the Company’s clinical trial, and may further disrupt the business and delay the development programs and regulatory timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on the Company’s ability to conduct business in the ordinary course. As a result, research and development expenses and general and administrative expenses may vary significantly if there is an increased impact from COVID-19 on the costs and timing associated with the conduct of the clinical trial and other related business activities. The Company is carefully monitoring the pandemic and the potential length and depth of the resulting economic impact on its financial condition and results of operations. ​ Liquidity and Capital Resources The Company has an accumulated deficit of $ 41.0 million and, cash, cash equivalents and marketable securities of $ 309.9 million as of March 31, 2021. The Company’s ability to fund ongoing operations is highly dependent upon raising additional capital through the issuance of equity securities and issuing debt or other financing vehicles. The Company’s ability to secure capital is dependent upon success in developing its technology and product candidates. The Company cannot provide assurance that additional capital will be available on acceptable terms, if at all. 10 Table of Contents The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The financial statements do not reflect any adjustments relating to the recoverability and reclassification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern. The Company believes that the $ 309.9 million of cash, cash equivalents and marketable securities on hand as of March 31, 2021 will be sufficient to fund its operations in the normal course of business and meet its liquidity needs through at least the next 12 months from the issuance of these financial statements. ​ NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP) and applicable rules and regulations of the U.S. Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules and regulations, certain notes or other financial information normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The interim condensed financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal, recurring adjustments that are necessary to present fairly the Company’s results for the interim periods presented. The condensed balance sheet as of December 31, 2020, is derived from the Company’s audited financial statements. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021, or for any other future annual or interim period. The accompanying interim unaudited condensed financial statements should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2020, which are included in the Company’s prospectus related to the Company’s IPO, filed with the SEC on March 26, 2021, pursuant to Rule 424(b) under the Securities Act of 1933, amended. Segment Information The Company operates in one operating segment and, accordingly, no segment disclosures have been presented herein. All equipment and other fixed assets are physically located within the United States. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Cash Equivalents The Company considers all liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents as of March 31, 2021 primarily consist of money market accounts and cash equivalents as of December 31, 2020 primarily consist of money market accounts and commercial paper. Marketable Securities, Available For Sale All marketable securities have been classified as “available-for-sale” and are carried at fair value, based upon quoted market prices. The Company considers its available-for-sale portfolio as available for use in current operations. Accordingly, the Company may classify certain investments as short-term marketable securities, even though the stated maturity date may be one year or more beyond the current balance sheet date. Unrealized gains and losses, net of any related tax effects, are excluded from earnings and are included in other comprehensive income and reported as a separate component of stockholders’ equity (deficit) until realized. Interest income, realized gains and losses, and declines in value judged to be other than temporary, if any, on available-for-sale securities are included in other income, net. The cost of securities sold is based on the 11 Table of Contents specific-identification method. The amortized cost of securities is adjusted for amortization of premiums and accretion of discounts to maturity. In accordance with the Company’s investment policy, management invests in money market funds, corporate bonds, commercial paper, and asset-backed securities. The Company has not experienced any losses on its deposits of cash, cash equivalents, and marketable securities since inception. Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash, cash equivalents and marketable securities. Periodically, the Company may maintain deposits in financial institutions in excess of government insured limits. The Company believes that it is not exposed to significant credit risk as its deposits are held at financial institutions that management believes to be of high credit quality. The Company has not experienced any losses on deposits since inception. The Company regularly invests excess cash with major financial institutions in money market funds, corporate debt securities, and commercial paper, all of which can be readily purchased and sold using established markets. The Company believes that the market risk arising from our holdings of these financial instruments is mitigated based on the fact that many of these securities are of high credit rating. Deferred Offering Costs The Company capitalizes certain legal, professional, accounting and other third-party fees that are directly associated with in-process equity issuances as deferred offering costs until such equity issuances are consummated. After consummation of the equity issuance, these costs are recorded as a reduction in the capitalized amount associated with the equity issuance. Should the equity issuance be abandoned, the deferred offering costs are expensed immediately as a charge to operating expenses in the statement of operations. Deferred offering costs as of March 31, 2021 and December 31, 2020 were $ 0 and $ 0.7 million, respectively. Such costs are classified in other non-current assets in the accompanying balance sheets. Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is computed using the straight-line method over the estimated useful life of the related asset, which is generally three to five years , and in the case of leasehold improvements, the shorter of the estimated useful lives of the assets or the term of the lease. Depreciation expense was $ 79,000 and $ 40,000 for the three months ended March 31, 2021 and 2020, respectively. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or circumstances indicate that the carrying value of such assets may not be fully recoverable. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of the related asset compared to its carrying value. If impairment is recognized, the carrying value of the impaired asset is reduced to its fair value. There were no impairment charges or long-lived assets disposed of during the three months ended March 31, 2021 and 2020, respectively. Income Taxes Deferred income taxes are provided on temporary differences between financial statement and income tax reporting. Temporary differences are differences between the amounts of assets and liabilities reported for financial statement purposes and their tax bases. Deferred tax assets are recognized for temporary differences that will be deductible in future years’ tax returns and for operating loss and tax credit carryforwards. Deferred tax assets are reduced by a valuation allowance if such deferred tax assets are deemed more likely than not that some or all of the deferred tax assets will not be realized. Historically, we have not recognized these potential benefits in our financial statements and have fully reserved for such net deferred tax assets, as we believe it is more likely than not that the full benefit of these net deferred tax assets will not be realized before expiration. Deferred tax liabilities are recognized for temporary differences that will be taxable in future years. The Company evaluated its tax positions and determined it has no uncertain tax positions as of March 31, 2021. 12 Table of Contents Fair Value of Financial Instruments The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The Financial Accounting Standards Board (FASB) Accounting Standard Codification (ASC) Topic 820, Fair Value Measurements and Disclosures (ASC 820), establishes a hierarchy of inputs used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are those that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of financial instruments and is not a measure of the investment credit quality. The three levels of the fair value hierarchy are described below: Level 1—quoted prices in active markets for identical assets and liabilities. Level 2—other significant observable inputs (including quoted prices for similar assets and liabilities, interest rates, credit risk, etc.). Level 3—significant unobservable inputs (including the Company’s own assumptions in determining the fair value of assets and liabilities). The following tables summarize the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of March 31, 2021 ​ ​ Fair Value ​ Amortized ​ Unrealized ​ Unrealized ​ Fair Market ​ Hierarchy Cost Basis Gains Losses Value Cash equivalents: ​ ​ ​ ​ Money market funds Level 1 ​ $ 220,936 ​ $ — ​ $ — ​ $ 220,936 Marketable securities, available for sale: ​ ​ ​ ​ Asset-backed securities Level 2 ​ 19,540 ​ — ​ ( 14 ) ​ 19,526 Corporate debt securities Level 2 ​ 36,160 ​ — ​ ( 40 ) ​ 36,120 Commercial paper Level 2 ​ 28,077 ​ — ​ — ​ 28,077 U.S. government treasury securities ​ Level 2 ​ 5,112 ​ — ​ — ​ 5,112 Total financial assets ​ $ 309,825 ​ $ — ​ $ ( 54 ) ​ $ 309,771 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2020 ​ ​ Fair Value ​ Amortized ​ Unrealized ​ Unrealized ​ Fair Market ​ ​ Hierarchy Cost Basis Gains Losses Value Cash equivalents: ​ ​ ​ ​ Money market funds Level 1 ​ $ 94,020 ​ $ — ​ $ — ​ $ 94,020 Commercial paper Level 2 ​ 10,796 ​ — ​ — ​ 10,796 Marketable securities, available for sale: ​ ​ ​ ​ Asset-backed securities Level 2 ​ 7,246 ​ — ​ — ​ 7,246 Corporate debt securities Level 2 ​ 13,937 ​ — ​ — ​ 13,937 Commercial paper Level 2 ​ 2,995 ​ — ​ — ​ 2,995 Total financial assets ​ $ 128,994 ​ $ — ​ $ — ​ $ 128,994 ​ The Company’s money market funds are classified as Level 1 because they are valued using quoted market prices. Investments in asset-backed securities, corporate bonds, commercial paper and U.S. government treasury securities have been classified as Level 2 as they are valued using quoted prices in less active markets or other directly or indirectly observable inputs. Fair values of asset-backed securities, corporate bonds, commercial paper and U.S. government treasury securities were derived based on input of market prices from multiple sources at each reporting period. With regard to commercial paper, all of the securities had high credit 13 Table of Contents ratings and one year or less to maturity; therefore, fair value was derived from accretion of purchase price to face value over the term of maturity or quoted market prices for similar instruments if available. During the three months ended March 31, 2021, there were no transfers of financial assets between Level 1 and Level 2. As of March 31, 2021, the remaining contractual maturities of $ 54.7 million of marketable securities were less than one year and $ 34.1 million were one to two years. Comprehensive Loss Comprehensive loss is defined as the change in equity during a period from transactions and other events and/or circumstances from non-owner sources. The Company’s only element of other comprehensive loss was net unrealized loss on marketable securities. Stock-Based Compensation In accordance with ASC Topic 718, Compensation—Stock Compensation , the Company recognizes compensation expense for all stock-based awards issued to employees based on the estimated grant-date fair value, which is recognized as expense on a straight-line basis over the requisite service period. The Company has elected to recognize forfeitures as they occur. The fair value of stock options is determined using the Black-Scholes option-pricing model. The determination of fair value for stock-based awards on the date of grant using an option-pricing model requires management to make certain assumptions including expected volatility, expected term, risk-free interest rate and expected dividends in addition to the Company’s common stock valuation (see Note 4). Due to the absence of an active market for the Company’s common stock prior to the closing of the Company’s IPO, the Company utilized methodologies, approaches and assumptions consistent with the American Institute of Certified Public Accountants Audit and Accounting Practice Aid Series: 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 options granted, the Company considered the fair value of the common stock as of the grant date. The fair value of the common stock has been determined based upon a variety of factors, including the Company’s financial position, historical performance and operating results, the Company’s stage of development, the progress of the Company’s research and development programs, the prices at which the Company sold its convertible preferred stock, the superior rights, preferences and privileges of the Company’s convertible preferred stock relative to its common stock, external market conditions affecting the biotechnology industry, the lack of marketability of the Company’s common stock and the prospects of a liquidity event and the analysis of IPO and market performance of similar companies as well as recently completed mergers and acquisitions of peer companies. Significant changes to the key assumptions underlying the factors used could result in different fair values of common stock at each valuation date. Following the completion of the Company’s IPO, the fair value of its common stock is determined based on the closing price of its common stock on the date of grant. Research and Development Expenses and Accrued Research and Development Expenses Expenditures made for research and development are charged to expense as incurred. External costs consist primarily of payments to contract research organizations (CROs), contract development and manufacturing organizations (CDMOs), sample acquisition costs and laboratory supplies purchased in connection with the Company’s discovery and preclinical activities, and process development and clinical development activities. Internal costs consist primarily of employee-related costs, facilities, depreciation and costs related to compliance with regulatory requirements. Non-refundable advance payments for goods and services that will be used in future research and development activities are capitalized and recorded as expense in the period that the Company receives the goods or when services are performed. The Company records expenses related to external research and development services based on its estimates of the services received and efforts expended pursuant to quotes and contracts with multiple CROs and CDMOs that supply, conduct and manage preclinical studies and clinical trials on its behalf. The financial terms of these contracts vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be 14 Table of Contents expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company adjusts the accrual or the amount of prepaid expenses accordingly. Emerging Growth Company Status The Company is an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act). Under the JOBS Act, emerging growth companies can take advantage of an extended transition period for complying with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies. The Company has elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (1) no longer an emerging growth company or (2) 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. Recently Issued Accounting Standards Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (ASC Topic 842) . The new guidance maintains two classifications of leases: finance leases, which replace capital leases, and operating leases. Lessees will need to recognize a right-of-use asset and a lease liability on the statement of financial position for those leases previously classified as operating leases under the old guidance. The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for direct costs. The accounting standard will be effective for the Company beginning January 1, 2022. The Company is currently evaluating the impact of the lease guidance on the Company’s financial statements. ​ NOTE 3 CONVERTIBLE PREFERRED STOCK AND COMMON STOCK The Company is authorized to issue two classes of stock designated as common stock and preferred stock. As of March 31, 2021 the total number of shares authorized was 1,200,000,000 . The total number of shares of common stock authorized was 1,000,000,000 . The total number of shares of preferred stock authorized was 200,000,000 . All shares of the Company’s capital stock have a par value of $ 0.0001 per share. Common stockholders are entitled to dividends if and when declared by the Board of Directors of the Company and after any convertible preferred share dividends are fully paid. The holder of each share of common stock is entitled to one vote. The Company’s convertible preferred stock was classified in the December 31, 2020 balance sheet as temporary equity in the accompanying balance sheets given that the number of members on the Company’s Board of Directors and the voting interests held by convertible preferred stockholders which could cause certain events to occur that are outside of the Company’s control whereby the Company could be obligated to redeem the convertible preferred stock. The Company has not adjusted the carrying values of the convertible preferred stock to the respective liquidation preferences of such shares as the instruments were not redeemable, and the Company believed it was not probable that the instruments will become redeemable as of the December 31, 2020 balance sheet date. 15 Table of Contents Series B-2 Convertible Preferred Stock The Company’s Series B-1 and Series B-2 Convertible Preferred Stock Agreement contained a provision for a closing of 6,527,654 shares of Series B-2 convertible preferred stock at $ 3.841 per share, or $ 25.1 million. Such issuance and sale of the Company’s Series B-2 convertible preferred stock was to occur within 120 days of delivery of notice by the Company to its investors upon the earliest of the following on or before August 27, 2021: (i) the Company filed an Investigational New Drug (IND) for a Type II Myosin Inhibitor with the U.S. Food and Drug Administration (FDA) and had not received communication from the FDA within 35 days after such filing that prevents the IND from becoming ineffective; (ii) the first dosing of a human subject in one of the United Kingdom, France, Germany, Italy, Spain, Canada, Belgium, Netherlands, Luxembourg, Finland, Australia, New Zealand and Japan with a Type II Myosin inhibitor; and (iii) holders of a majority of the Series B-1 convertible preferred stock approved the closing of the second tranche of Series B-2 convertible preferred stock. The Company performed an assessment of the Series B-2 convertible preferred stock purchase agreement in accordance with the authoritative guidance and concluded that the mandatory closing did not meet the definition of a freestanding financial instrument as it was not legally detachable or separately exercisable. If Series B-1 convertible preferred stockholders did not participate in this closing, every 5.282 shares of Series A and Series B-1 convertible preferred stock held would have automatically converted into one share of common stock. In July 2020, the closing of Series B-2 convertible preferred stock was triggered upon the filing and related acceptance of the Company’s IND by the FDA. The closing of the Series B-2 convertible preferred stock issuance occurred on August 12, 2020 with all Series B-1 stockholders participating. Series C Convertible Preferred Stock On December 3, 2020, the Company sold an aggregate of 12,954,423 shares of Series C convertible preferred stock at a price of $ 7.333 per share for aggregate gross proceeds of approximately $ 95.0 million to the Company. Immediately prior to the completion of the IPO in March 2021, all outstanding shares of the Company’s convertible preferred stock were automatically converted into 35,557,569 shares of common stock. ​ ​ NOTE 4 STOCK-BASED COMPENSATION AWARDS 2021 Equity Incentive Plan In March 2021, the Company’s Board of Directors adopted, and its stockholders approved, the Company’s 2021 Equity Incentive Plan (2021 Plan), which became effective in March 2021 in connection with the IPO. The 2021 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to the Company’s employees and any of its parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units, and performance shares to its employees, directors, and consultants and its subsidiary corporations’ employees and consultants. The vesting of stock options is stated in each individual grant agreement, which is generally four years . Options granted expire 10 years after the date of grant. As of March 31, 2021, 5,040,000 shares were reserved for the issuance of common stock options to employees, directors and consultants for the purchase of the Company’s common stock, 186,298 shares were subject to outstanding awards, and 4,853,702 shares remained available for future grant under the 2021 Plan. The number of shares available for issuance under the 2021 Plan increases annually on the first day of each fiscal year beginning with the Company’s 2022 fiscal year, equal to the least of 5,040,000 shares; five percent ( 5 % ) of the outstanding shares of its common stock as of the last day of the immediately preceding fiscal year; or such other amount as the Company’s Board of Directors may determine. ​ 2017 Equity Incentive Plan The Company’s Board of Directors adopted the Company’s 2017 Equity Incentive Plan (2017 Plan) in June 2017 to provide long-term incentives for its employees, non-employee directors and certain consultants. For the three months ended March 31, 2021, 87,749 options were granted under the 2017 Plan, which terminated in connection with the Company’s IPO, and the Company will not grant any additional awards under 16 Table of Contents the 2017 Plan thereafter. However, the 2017 Plan will continue to govern the terms and conditions of the outstanding awards previously granted under the 2017 Plan. Founder Stock Options On September 19, 2017, the Company granted one of its founders the option to purchase 1,795,880 shares of the Company’s common stock at an exercise price of $ 0.18 per share which vest monthly over a four-year period that expires 15 years after the date of grant. This grant is separate from the Company’s equity incentive plans discussed above. As of March 31, 2021, 1,531,780 options were outstanding and there were no options exercised during the three months ended March 31, 2021. Total stock-based compensation expense related to all stock options granted was allocated as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended March 31, ​ 2021 2020 Research and development ​ $ 144 $ 31 General and administrative ​ 152 ​ 14 Total stock-based compensation expense ​ $ 296 ​ $ 45 ​ ​ ​ NOTE 5 COMMITMENTS AND CONTINGENCIES License Agreements On November 20, 2020 the Company exclusively licensed intellectual property from The Ohio State Innovation Foundation (OSIF) pursuant to a license agreement. Under the license agreement, the Company is obligated to make payments to OSIF aggregating up to $ 1.3 million per product covered by the OSIF licensed patent rights upon the achievement of specified development and regulatory approval milestones and approximately $ 2.3 million per product covered by the OSIF licensed patent rights upon the achievement of specified sales milestones. The Company is also obligated to pay low single-digit royalties to OSIF based on net sales by the Company and its affiliates and sublicensees of each product covered by the OSIF licensed patent rights. In addition, in the event the Company sublicenses the OSIF licensed patent rights, the Company is obligated to pay OSIF a specified portion of income received from sublicensing. Lease Agreements The Company leases office and lab space under long-term lease agreements. These leases expire in August 2021. Rent expense was $ 22,000 and $ 17,000 for the three months ended March 31, 2021 and 2020, respectively. Future minimum rentals as of March 31, 2021 were $ 35,000 , all of which is to be paid in 2021. Litigation Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. The Company was not subject to any material legal proceedings during the three months ended March 31, 2021 and no material legal proceedings are currently pending or threatened. Indemnification Agreements In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its Board of Directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is 17 Table of Contents not aware of any claims under indemnification arrangements, and it has not accrued any liabilities related to such obligations in its financial statements as of March 31, 2021. ​ ​ ​ NOTE 6 NET LOSS PER SHARE Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration of potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, the convertible preferred stock and common stock options are considered to be potentially dilutive securities. Basic and diluted net loss per share is presented in conformity with the two-class method required for participating securities as the convertible preferred stock is considered a participating security. The Company’s participating securities do not have a contractual obligation to share in the Company’s losses. As such, the net loss was attributed entirely to common stockholders. As the Company has reported a net loss for all periods presented, diluted net loss per common share is the same as basic net loss per common share for those periods. The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except share and per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended March 31, ​ 2021 2020 Numerator ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 6,815 ) ​ $ ( 3,185 ) Denominator ​ ​ ​ ​ Weighted-average shares outstanding used in computing net loss per share, basic and diluted ​ ​ 1,559,868 ​ ​ 420,482 Net loss per share, basic and diluted ​ $ ( 4.37 ) ​ $ ( 7.57 ) ​ The following weighted average outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended March 31, ​ 2021 2020 Options to purchase common stock ​ ​ 7,371,325 ​ ​ 3,733,463 Convertible preferred stock ​ ​ 35,162,501 ​ ​ 16,075,492 Total ​ ​ 42,533,826 ​ ​ 19,808,955 ​ ​ ​ 18 Table of Contents NOTE 7 ACCRUED OTHER EXPENSES Accrued other expenses consisted of the following amounts (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of March 31, ​ As of December 31, ​ 2021 2020 Accrued research and development costs ​ $ 1,590 ​ $ 550 Accrued IPO costs ​ ​ 408 ​ 452 Accrued license fees ​ 300 ​ 300 Accrued other ​ ​ 260 ​ ​ 285 Total accrued other expenses ​ $ 2,558 ​ $ 1,587 ​ ​ 19 Table of Contents