Edgewise Therapeutics, Inc. 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO FINANCIAL STATEMENTS EDGEWISE THERAPEUTICS, INC. ​ ​ Page Report of Independent Registered Public Accounting Firm (KPMG LLP, Denver, CO, Auditor Firm ID: 185 ) 147 BALANCE SHEETS 148 STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 149 STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) 150 STATEMENTS OF CASH FLOWS 151 NOTES TO FINANCIAL STATEMENTS 152 146 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Edgewise Therapeutics, Inc.: Opinion on the Financial Statements We have audited the accompanying balance sheets of Edgewise Therapeutics, Inc. (the Company) as of December 31, 2021 and 2020, the related statements of operations and comprehensive loss, convertible preferred stock and stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ KPMG LLP We have served as the Company’s auditor since 2020. Denver, Colorado February 24, 2022 ​ 147 Table of Contents EDGEWISE THERAPEUTICS, INC. BALANCE SHEETS (In thousands, except for share and per-share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ As of ​ ​ December 31, ​ December 31, ​ 2021 ​ 2020 Assets ​ ​ ​ ​ Current assets ​ ​ ​ Cash and cash equivalents ​ $ 15,566 ​ $ 104,916 Marketable securities, available for sale ​ 265,223 ​ 24,178 Prepaid expenses and other assets ​ 2,984 ​ 551 Total current assets ​ 283,773 ​ 129,645 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Property and equipment ​ 1,614 ​ 946 Less: accumulated depreciation ​ ( 702 ) ​ ( 430 ) Total property and equipment ​ 912 ​ 516 Other non-current assets ​ 548 ​ 975 ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 285,233 ​ $ 131,136 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities, convertible preferred stock, and stockholders' equity (deficit) ​ ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ Accounts payable ​ $ 3,843 ​ $ 1,580 Accrued compensation ​ 2,797 ​ 1,175 Accrued other expenses ​ 3,881 ​ 1,587 Total current liabilities ​ 10,521 ​ 4,342 Other long term liabilities ​ ​ 329 ​ ​ — ​ ​ ​ ​ ​ ​ ​ Total liabilities ​ 10,850 ​ 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 December 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 December 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 December 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 December 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 December 31, 2021 and December 31, 2020, respectively; no shares issued and outstanding as of December 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, 49,500,308 shares and 1,009,479 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively ​ 5 ​ — Additional paid-in capital ​ 351,852 ​ 727 Accumulated other comprehensive loss ​ ​ ( 514 ) ​ ​ — Accumulated deficit ​ ( 76,960 ) ​ ( 34,147 ) Total stockholders' equity (deficit) ​ 274,383 ​ ( 33,420 ) ​ ​ ​ ​ ​ ​ ​ Total liabilities, convertible preferred stock and stockholders' equity (deficit) ​ $ 285,233 ​ $ 131,136 ​ The accompanying notes are an integral part of these financial statements. ​ ​ ​ 148 Table of Contents EDGEWISE THERAPEUTICS, INC. STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except for share and per-share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2021 2020 ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ Research and development ​ $ 32,189 ​ $ 14,983 General and administrative ​ 11,026 ​ 2,209 Total operating expenses ​ 43,215 ​ 17,192 ​ ​ ​ ​ ​ ​ ​ Loss from operations ​ ( 43,215 ) ​ ( 17,192 ) ​ ​ ​ ​ ​ ​ ​ Other income ​ ​ Interest income ​ 402 ​ 69 Total other income ​ 402 ​ 69 ​ ​ ​ ​ ​ ​ ​ Net loss ​ ​ ( 42,813 ) ​ ​ ( 17,123 ) ​ ​ ​ ​ ​ ​ ​ Other comprehensive loss: ​ ​ ​ ​ ​ ​ Unrealized loss on available-for-sale securities ​ ​ ( 514 ) ​ ​ — Total comprehensive loss ​ $ ( 43,327 ) ​ $ ( 17,123 ) ​ ​ ​ ​ ​ ​ ​ Net loss per share, basic and diluted ​ $ ( 1.14 ) ​ $ ( 23.17 ) Weighted-average shares outstanding, basic and diluted ​ 37,526,332 ​ 739,004 ​ The accompanying notes are an integral part of these financial statements. ​ ​ 149 Table of Contents ​ EDGEWISE THERAPEUTICS, INC. STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (In thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Series A ​ Series B-1 ​ Series B-2 ​ Series C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Convertible ​ Convertible ​ Convertible ​ Convertible ​ Convertible ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ ​ Common Stock ​ Additional ​ 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 ) Issuance of Series B-2 preferred stock, net of offering costs of $ 19 — ​ — — ​ — 6,527,654 ​ ​ 25,056 — ​ — ​ 25,056 ​ — ​ — ​ — ​ ​ — ​ — ​ — Issuance of Series C preferred stock, net of offering costs of $ 105 — ​ — — ​ — — ​ — 12,954,423 ​ 94,896 ​ 94,896 ​ — ​ — ​ — ​ ​ — ​ — ​ — Exercise of stock options — ​ — — ​ — — ​ — — ​ — ​ — ​ 590,475 ​ — ​ 202 ​ ​ — ​ — ​ 202 Stock-based compensation — ​ — — ​ — — ​ — — ​ — ​ — ​ — ​ — ​ 354 ​ ​ — ​ — ​ 354 Net loss — ​ — — ​ — — ​ — — ​ — ​ — ​ — ​ — ​ — ​ ​ — ​ ( 17,123 ) ​ ( 17,123 ) 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 $ 16.3 million in issuance costs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12,650,000 ​ ​ 1 ​ ​ 186,147 ​ ​ — ​ ​ ​ ​ ​ 186,148 Exercise of stock options ​ — ​ — — ​ — — ​ — — ​ — ​ — ​ ​ 265,040 ​ ​ — ​ ​ 116 ​ ​ — ​ ​ — ​ ​ 116 Purchase of common stock under employee stock purchase plan ​ — ​ — — ​ — — ​ — — ​ — ​ — ​ ​ 18,220 ​ ​ — ​ ​ 248 ​ ​ — ​ ​ — ​ ​ 248 Stock-based compensation ​ — ​ — — ​ — — ​ — — ​ — ​ — ​ ​ — ​ ​ — ​ ​ 4,404 ​ ​ — ​ ​ — ​ ​ 4,404 Other comprehensive income ​ — ​ — — ​ — — ​ — — ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 514 ) ​ ​ — ​ ​ ( 514 ) Net loss ​ — ​ — — ​ — — ​ — — ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 42,813 ) ​ ​ ( 42,813 ) Balance as of December 31, 2021 ​ — ​ $ — — ​ $ — — ​ $ — — ​ $ — ​ $ — ​ 49,500,308 ​ $ 5 ​ $ 351,852 ​ $ ( 514 ) ​ $ ( 76,960 ) ​ $ 274,383 ​ ​ ​ The accompanying notes are an integral part of these financial statements. ​ ​ ​ 150 Table of Contents ​ EDGEWISE THERAPEUTICS, INC. STATEMENTS OF CASH FLOWS (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2021 2020 Cash flows from operating activities ​ ​ ​ ​ ​ Net loss ​ $ ( 42,813 ) ​ $ ( 17,123 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ Depreciation ​ ​ 272 ​ 185 Stock-based compensation ​ 4,404 ​ 354 Changes in assets and liabilities: ​ ​ ​ Prepaid expenses, other assets and other long-term liabilities ​ ( 2,392 ) ​ ( 417 ) Accounts payable ​ 2,654 ​ 521 Accrued compensation ​ 1,622 ​ 842 Accrued other expenses ​ 2,746 ​ 1,004 Net cash used in operating activities ​ ( 33,507 ) ​ ( 14,634 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities ​ ​ ​ Purchases of marketable securities ​ ( 288,203 ) ​ ( 24,178 ) Sales of marketable securities ​ ​ 3,444 ​ ​ — Maturities of marketable securities ​ ​ 43,200 ​ ​ — Purchases of property and equipment ​ ( 668 ) ​ ( 203 ) Net cash used in investing activities ​ ( 242,227 ) ​ ( 24,381 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Proceeds from initial public offering of common stock, net of underwriting discounts and commissions and offering costs ​ 186,148 ​ — Proceeds from issuance of Series B-2 convertible preferred stock ​ ​ — ​ ​ 25,075 Proceeds from issuance of Series C convertible preferred stock ​ ​ — ​ ​ 95,001 Payment of preferred stock issuance costs ​ ​ ( 124 ) ​ ​ — Exercise of stock options ​ 112 ​ 202 Proceeds from Employee Stock Purchase Plan ​ ​ 248 ​ ​ — Net cash provided by financing activities ​ 186,384 ​ 120,278 ​ ​ ​ ​ ​ ​ ​ Net change in cash and cash equivalents ​ ( 89,350 ) ​ 81,263 Cash and cash equivalents at beginning of period ​ 104,916 ​ 23,653 Cash and cash equivalents at end of period ​ $ 15,566 ​ $ 104,916 Supplemental disclosures of non-cash financing activities: ​ ​ Conversion of convertible preferred stock upon closing of initial public offering ​ $ 160,214 ​ $ — Deferred offering costs included in accounts payable and accrued other expenses ​ $ — ​ $ 719 Preferred stock issuance costs included in accrued other expenses ​ $ — ​ $ 124 ​ The accompanying notes are an integral part of these financial statements. ​ 151 ​ Table of Contents EDGEWISE THERAPEUTICS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020 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. 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 well as the spread, severity and potential resurgence of COVID-19, the impact of new COVID-19 variants, and vaccination deployment efforts. 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. ​ Liquidity and Capital Resources The Company has an accumulated deficit of $ 77.0 million and, cash, cash equivalents and marketable securities of $ 280.8 million as of December 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. The issuance of additional equity or debt securities will likely result in substantial dilution to the Company’s stockholders. Should additional capital not be available to the Company in the near term, or not be available on acceptable terms, the Company may be unable to realize value from the Company’s assets or discharge liabilities in the normal course of business, which may, among other alternatives, cause the Company to delay, substantially reduce, or discontinue operational activities to conserve 152 ​ Table of Contents cash balances, which could have a material adverse effect on the Company’s ability to achieve its intended business objectives. 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 $ 280.8 million of cash, cash equivalents and marketable securities on hand as of December 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 accounting principles generally accepted in the United States of America (U.S. GAAP). 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 December 31, 2021 primarily consist of money market accounts and cash equivalents and as of December 31, 2020 primarily consist of money market accounts and commercial paper. 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 December 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. 153 ​ Table of Contents 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 $ 0.3 million and $ 0.2 million for the years ended December 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 years ended December 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, the Company has not recognized these potential benefits in its financial statements and has fully reserved for such net deferred tax assets, as it believes 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 December 31, 2021. 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). 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 classifies its 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 154 ​ Table of Contents 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 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, asset-backed securities and government securities. The Company has not experienced any losses on its deposits of cash, cash equivalents, and marketable securities since inception. 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 December 31, 2021 ​ ​ Fair Value ​ Amortized ​ Unrealized ​ Unrealized ​ Fair Market ​ Hierarchy Cost Basis Gains Losses Value Cash equivalents: ​ ​ ​ ​ Money market funds Level 1 ​ $ 15,466 ​ $ — ​ $ — ​ $ 15,466 Marketable securities, available for sale: ​ ​ ​ ​ ​ Asset-backed securities Level 2 ​ 36,681 ​ — ​ ( 42 ) ​ 36,639 Corporate debt securities Level 2 ​ 88,084 ​ — ​ ( 160 ) ​ 87,924 Commercial paper Level 2 ​ 58,970 ​ — ​ — ​ 58,970 U.S. government treasury and agency securities ​ Level 2 ​ 59,596 ​ — ​ ( 222 ) ​ 59,374 Supranational and sovereign government securities ​ Level 2 ​ 22,406 ​ — ​ ( 90 ) ​ 22,316 Total financial assets ​ $ 281,203 ​ $ — ​ $ ( 514 ) ​ $ 280,689 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 debt securities, commercial paper and U.S. government treasury and agency securities, and supranational and sovereign government 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 debt securities, commercial paper, U.S. government treasury and agency securities, and supranational and sovereign government 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 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 years ended December 31, 2021 and 2020, there were no transfers of financial assets between Level 1 and Level 2. As of December 31, 2021, the remaining contractual maturities of $ 184.8 million of marketable securities were less than one year and $ 80.9 million were one to three years. The Company periodically reviews its portfolio of debt securities to determine if any investment is impaired due to credit loss or other potential valuation concerns. For debt securities where the fair value of the 155 ​ Table of Contents investment is less than the amortized cost basis, the Company has assessed at the individual security level for various quantitative factors including, but not limited to, the nature of the investments, changes in credit ratings, interest rate fluctuations, industry analyst reports, and the severity of impairment. Unrealized losses on marketable securities at December 31, 2021 were primarily due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities. Comprehensive Income (Loss) Comprehensive income (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 income (loss) was net unrealized gain (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 156 ​ 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 initial 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 estimates that there will be no material effect on the financial statements upon adoption. ​ 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 December 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 had no convertible preferred stock outstanding as of December 31, 2021. 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 were outside of the Company’s control whereby the Company could be obligated to redeem the convertible preferred stock. The Company did not adjust 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 would have become redeemable as of the December 31, 2020 balance sheet date. As of December 31, 2020, the rights and preferences of the convertible preferred stock were as follows: Dividends Each holder of convertible preferred stock is entitled to non-cumulative dividends at an annual rate of 8.0 % of the original issue price of such series of convertible preferred stock. Such dividends are payable only when, and if declared by the Company’s Board of Directors. As of December 31, 2020, the Company’s Board of Directors has not declared any dividends. 157 ​ Table of Contents Liquidation preference In the event of a liquidation event, the holders of shares of convertible preferred stock then outstanding would be entitled to be paid out of the proceeds of such liquidation event prior to the holders of common stock. The entitled amount per share would be equal to the sum of the applicable original issue price for such share of convertible preferred stock, plus any declared but unpaid dividends on each such share of convertible preferred stock. If upon such liquidation event, the assets of the Company legally available for distribution to the holders of convertible preferred stock are insufficient to permit the payment to such holders of the full amounts specified, then the entire assets of the Company legally available for distribution whould be distributed with equal priority and pro rata among the holders of convertible preferred stock in proportion to the full amounts they would otherwise be entitled to receive pursuant to the Company’s certificate of incorporation. The convertible preferred stock was subject to automatic redemption in the consolidation or merger of the Company or sale of all or substantially all of the Company’s assets in which the stockholders of the Company immediately prior to the transaction hold less than 50% of the outstanding securities of the surviving entity. Proceeds available for distribution from such transaction would be distributed consistent with a liquidation event. In the event of any liquidation event, the holders of shares of Series C convertible preferred stock then outstanding would be entitled to be paid on a pro rata basis out of the proceeds of such liquidation event before payment would be made to the holders of Series A or Series B convertible preferred stock. After the payment in full of all amounts due to the holders of Series C convertible preferred stock, the holders of shares of Series A and Series B convertible preferred stock then outstanding would be entitled to be paid on a pari passu basis out of the remaining proceeds before any payment shall be made to the holders of the Company’s common stock. Upon completion of distribution of the Series A, Series B and Series C convertible preferred stock liquidation preference, all of the remaining proceeds of such liquidation event would be distributed pro rata among the holders of common stock and the holders of Series A and Series B convertible preferred stock on an as-converted to common stock basis at the then effective applicable conversion rate for such series of convertible preferred stock. Conversion The Company’s convertible preferred stock had conversion rights which entitled the holders to convert their preferred shares into common stock. The conversion rate would be determined by dividing the original issue price of the series of convertible preferred stock by the applicable conversion price at the time of conversion (which is initially the original issue price) for such series of convertible preferred stock. Each share of convertible preferred stock would automatically convert into common stock (i) upon the election of certain holders of Series A, Series B and Series C convertible preferred stock or (ii) upon the completion of a firm underwritten public offering of the Company’s common stock for which the public offering price per share was not less than $ 8.80 and pursuant to which the Company received gross proceeds of at least $ 70.0 million, prior to deductions for underwriting discounts, commissions and expenses. Voting The holder of each share of convertible preferred stock was entitled to one vote for each share of common stock into which it would convert. Series B-1 Convertible Preferred Stock On August 27, 2019, the Company sold an aggregate of 7,888,392 shares of Series B-1 convertible preferred stock at a price of $ 3.178 per share for aggregate gross proceeds of approximately $ 25.1 million to the Company. 158 ​ 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 Equity Incentive Plans 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. Upon adoption of the 2021 Plan, the Company restricted the grant of future equity awards under its 2017 Equity Incentive Plan, as amended and restated (the 2017 Plan). ​ 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. A total of 5,040,00 shares of the Company’s common stock were initially reserved for issuance pursuant to the 2021 Plan. The 2021 Plan share reserve will be increased by the number of shares under the 2017 Plan that are repurchased, forfeited, expired or cancelled after the effective date of the 2021 Plan up to the limit 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 (1) 5,040,000 shares, (2) five percent ( 5 % ) of the outstanding shares of its common stock as of the last day of the immediately preceding fiscal year; or (c) such other amount as the Company’s Board of Directors may determine. ​ As of December 31, 2021, there were 3,010,909 shares available for future issuance under the 2021 Plan. ​ ​ 159 ​ Table of Contents Option activity for the year ended December 31, 2021 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ Weighted ​ ​ ​ ​ Remaining ​ ​ ​ ​ Average ​ Total Intrinsic ​ Contractual Life ​ Options Exercise Price Value (Years) Outstanding as of December 31, 2020 6,020,752 $ 1.14 ​ ​ ​ ​ Granted 2,249,347 ​ $ 17.42 ​ ​ ​ ​ ​ Exercised ( 265,040 ) ​ $ 0.44 ​ ​ ​ ​ ​ Cancelled ​ ( 414,332 ) ​ $ 1.41 ​ ​ ​ ​ ​ Outstanding as of December 31, 2021 ​ 7,590,727 ​ $ 5.98 ​ $ 76,599 ​ 8.8 Options exercisable as of December 31, 2021 ​ 2,140,103 ​ $ 1.99 ​ $ 28,583 ​ 8.3 ​ The Company recognized $ 4.4 million and $ 0.3 million in stock-based compensation expense in connection with the equity incentive plan for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, there was unrecognized stock-based compensation cost of $ 25.2 million, which is expected to be recognized over a term of 3.4 years. The aggregate intrinsic value of options exercised during the years ended December 31, 2021 and 2020 was $ 4.3 million and $ 58,000 respectively. For options granted during the years ended December 31, 2021 and 2020, the weighted-average grant date fair value was $ 11.30 and $ 0.89 per share, respectively. There were additional options issued outside of this plan as discussed under Founder Stock Options. 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 December 31, 2021, 1,531,780 options were both outstanding and exercisable . There were no options exercised during the year ended December 31, 2021. Compensation expense with respect to these options was $ 17,000 and $ 35,000 for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, there was no unrecognized stock-based compensation expense. As of December 31, 2021, the intrinsic value of options outstanding and exercisable was $ 23.1 million. The weighted-average remaining contractual life of stock options is 10.5 years as of December 31, 2021. Fair Value Assumptions The fair value of option grants is estimated on the date of grant using the Black-Scholes option-pricing model, which requires the use of the following assumptions: ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2021 2020 Expected term (Years) ​ 5.06 - 6.71 ​ 6 - 6.08 Expected volatility ​ 75.0 % - 76.4 % ​ 75.0 % Risk-free interest rate ​ 0.60 % - 1.36 % ​ 0.37 % - 0.51 % Expected dividend rate ​ — ​ — Fair value common stock ​ $ 1.93 - $ 28.87 ​ $ 0.64 - $ 1.93 ​ The expected term is based on the “simplified method” described in the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin Topic 14 which is determined as the midpoint between the vesting date and the contractual end of the option grant. Stock price volatility was estimated based on the estimated stock price volatility of a peer group of publicly traded companies over a similar term. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield in effect at the time of grant. The dividend yield was zero as the Company has never declared or paid dividends and has no plans to do so in the foreseeable future. 160 ​ Table of Contents 2021 Employee Stock Purchase Plan The 2021 Employee Stock Purchase Plan (ESPP) enables eligible employees of the Company to purchase shares of common stock at a discount. As of December 31, 2021, the Company has reserved for issuance 485,780 shares of common stock pursuant to the ESPP. Each offering period is approximately twelve months long. ESPP participants will purchase shares of common stock at a price per share equal to 85 % of the lesser of (1) the fair market value per share of the common stock on the first trading day of the offering period or (2) the fair market value of the common stock on the purchase date. ​ Total stock-based compensation expense related to all equity plans was allocated as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ 2021 2020 Research and development $ 2,790 $ 228 General and administrative ​ 1,614 ​ 126 Total stock-based compensation expense ​ $ 4,404 ​ $ 354 ​ ​ ​ 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 lease agreements. These leases expire in August 2022. Rent expense was $ 110,000 and $ 77,000 for the years ended December 31, 2021 and 2020, respectively. Future minimum rentals as of December 31, 2021 were $ 141,000 , all of which is to be paid within the next 12 months. In January 2022, the Company entered into a lease agreement for additional office and laboratory space. Please refer to Note 10 for further information. 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 year ended December 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 161 ​ 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 December 31, 2021. ​ NOTE 6 INCOME TAXES Since inception, the Company has incurred net taxable losses, and accordingly, no current provision for income taxes has been recorded. The effective income tax rate of the provision for income taxes differs from the federal statutory rate as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2021 ​ 2020 ​ Federal tax at statutory rate ​ 21.0 % ​ 21.0 % State taxes, net of federal deduction ​ 4.5 % ​ 3.7 % Research and development credits ​ 1.8 % ​ 1.7 % Change in valuation allowance ​ ( 27.3 ) % ​ ( 26.4 ) % Effective income tax rate ​ — ​ ​ — ​ ​ Deferred tax assets and liabilities are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2021 ​ 2020 Deferred tax assets (liabilities): ​ ​ ​ ​ ​ ​ Federal net operating loss carryforward ​ $ 14,570 ​ $ 7,117 State net operating loss carryforward ​ ​ 3,187 ​ ​ 1,240 Federal R&D credit ​ ​ 1,130 ​ ​ 398 Accrued expenses ​ ​ 773 ​ ​ — Stock-based compensation ​ ​ 771 ​ ​ 39 Other ​ ​ 141 ​ ​ 90 Property and equipment ​ ​ ( 42 ) ​ ​ ( 34 ) Total net deferred tax asset ​ ​ 20,530 ​ ​ 8,850 Valuation allowance ​ ​ ( 20,530 ) ​ ​ ( 8,850 ) Net deferred tax asset (liability) ​ $ — ​ $ — ​ The Company has federal and state net operating loss carryforwards (NOLs) of approximately $ 69.4 million and $ 33.9 million as of December 31, 2021 and 2020, respectively. The state NOLs and approximately $ 1.2 million of the federal NOLs as of December 31, 2021 and 2020 expire in 2037. The remaining federal NOLs of approximately $ 68.2 million and $ 32.7 million as of December 31, 2021 and 2020 do not expire. As of December 31, 2021 and 2020, a valuation allowance was recorded equal to 100 % of net deferred tax assets as the Company does not believe it is more likely than not that it will realize the recorded net deferred tax assets. The increase in the recorded valuation allowance was $ 11.7 million and $ 4.5 million in 2021 and 2020, respectively. The Company had federal research tax credit carryforwards of approximately $ 1.1 million and $ 0.4 million as of December 31, 2021 and 2020, respectively. The Company has performed a formal research and development credit study with respect to these credits. The federal credits will begin to expire in 2039, if unused. Pursuant to Internal Revenue Code (IRC) Sections 382 and 383, the Company’s ability to use NOL and research tax credit carry forwards to offset future taxable income may be limited if the Company experiences a cumulative change in ownership of more than 50% within a three-year testing period. The Company has not completed an ownership change analysis pursuant to IRC Section 382. If ownership changes within the meaning of IRC Section 382 are identified as having occurred, the amount of NOL and research tax carryforwards available to offset future taxable income and income tax liabilities in future years may be significantly restricted or eliminated. Further, deferred tax assets associated with such NOLs and research tax 162 ​ Table of Contents credits could be significantly reduced upon realization of an ownership change within the meaning of IRC Section 382. ​ NOTE 7 EMPLOYEE BENEFIT PLANS In 2017, the Company established a qualified 401(k) plan which covers all employees who meet eligibility requirements. The Company’s contribution to the plan, as determined by the Company’s Board of Directors, was discretionary until September 2021 when the Company initiated a match with a maximum amount of 4 % of the participant’s compensation. During the years ended December 31, 2021 and 2020, the Company made matching contributions of $ 47,000 and $ 0 respectively. ​ NOTE 8 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 Numerator ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 42,813 ) $ ( 17,123 ) Denominator ​ ​ ​ ​ Weighted-average shares outstanding used in computing net loss per share, basic and diluted ​ ​ 37,526,332 ​ ​ 739,004 Net loss per share, basic and diluted ​ $ ( 1.14 ) ​ $ ( 23.17 ) ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 Options to purchase common stock ​ ​ 8,193,012 ​ ​ 4,252,258 Convertible preferred stock ​ ​ 8,670,206 ​ ​ 19,599,132 Total ​ ​ 16,863,218 ​ ​ 23,851,390 ​ ​ ​ 163 ​ Table of Contents NOTE 9 ACCRUED OTHER EXPENSES Accrued other expenses consisted of the following amounts (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ As of December 31, ​ 2021 2020 Accrued research and development costs ​ $ 3,470 ​ $ 550 Accrued IPO costs ​ ​ — ​ 452 Accrued license fees ​ — ​ 300 Accrued other ​ ​ 411 ​ ​ 285 Total accrued other expenses ​ $ 3,881 ​ $ 1,587 ​ ​ ​ ​ ​ ​ NOTE 10 SUBSEQUENT EVENTS In January 2022 the Company entered into a lease agreement for approximately 18,614 square feet of office and laboratory space in Boulder, Colorado. The new lease commences on or around September 1, 2022 and includes escalating rent payments and a 84-month term. The lease agreement includes a tenant improvement allowance for $ 1.0 million of construction costs to be paid for by the landlord and up to an additional $ 2.0 million of tenant improvement allowance for which the Company will repay the landlord on an amortized straight-line basis over the initial term of the lease, commencing on the commencement date and continuing for the duration of the initial term at 6 % interest. Future minimum lease payments are as follows (in thousands): ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 ​ $ — 2023 ​ ​ 328 2024 ​ 446 2025 ​ ​ 457 2026 ​ ​ 468 2027 and thereafter ​ ​ 1,603 Total future minimum lease payments ​ $ 3,302 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 164 ​ Table of Contents ​ Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None