What changed in this filing

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Item 1. Financial Statements

2022-05-11 compared with 2021-11-10 · 154 added, 153 removed, 264 unchanged (54% of the section changed)

2 unchanged sentences

Condensed Balance Sheets

(In thousands, except per share data)

September 30,

(In thousands, except share and per share data)

Current assets

6 unchanged sentences

Total property and equipment

Operating lease right-of-use asset

Other non-current assets

Liabilities, convertible preferred stock, and stockholders' equity (deficit)

Liabilities and stockholders' equity

Current liabilities

3 unchanged sentences

Total current liabilities

Operating lease long-term liability

Other long term liabilities

1 unchanged sentence

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 September 30, 2021 and December 31, 2020, respectively

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 September 30, 2021 and December 31, 2020, respectively

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 September 30, 2021 and December 31, 2020, respectively

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 September 30, 2021 and December 31, 2020, respectively

Total convertible preferred stock

Stockholders' equity (deficit)

Stockholders' equity:

Preferred stock, $ .0001 par value per share;

200,000,000 shares and no shares authorized as of September 30, 2021 and December 31, 2020, respectively;

no shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

200,000,000 shares authorized as of March 31, 2022 and December 31, 2021, respectively;

no shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

Common stock, $ .0001 par value per share;

1,000,000,000 shares and 88,000,000 shares authorized, 49,295,840 shares and 1,009,479 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

1,000,000,000 shares authorized, 49,556,306 shares and 49,500,308 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

1 unchanged sentence

Accumulated deficit

Total stockholders' equity (deficit)

Total liabilities, convertible preferred stock and stockholders' equity (deficit)

Total stockholders' equity

Total liabilities and stockholders' equity

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

1 unchanged sentence

Condensed Statements of Operations and Comprehensive Loss

(In thousands, except per share data)

Three months ended September 30,

Nine months ended September 30,

(In thousands, except share and per share data)

Three months ended March 31,

Operating expenses

5 unchanged sentences

Total other income

Other comprehensive income (loss):

Unrealized gain (loss) on available-for-sale securities

Other comprehensive loss:

Unrealized loss on available-for-sale securities

Total comprehensive loss

3 unchanged sentences

EDGEWISE THERAPEUTICS, INC.

Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity

(In thousands, except share data)

Series A Convertible

Series B-1 Convertible

Series B-2 Convertible

Series C Convertible

Preferred Stock

3 unchanged sentences

Preferred Stock

Comprehensive

Other Comprehensive

Paid-In Capital

6 unchanged sentences

( 12,954,423 )

Initial public offering of common stock, net of $ 16.3 million in issuance costs

Initial public offering of common stock, net of $ 2.1 million in offering costs

Exercise of stock options

2 unchanged sentences

Balance as of March 31, 2021

Exercise of stock options

Stock-based compensation

Other comprehensive income

Balance as of June 30, 2021

Exercise of stock options

Stock-based compensation

Other comprehensive income

Balance as of September 30, 2021

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

EDGEWISE THERAPEUTICS, INC.

Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity

(In thousands, except share data)

Series A Convertible

Series B-1 Convertible

Series B-2 Convertible

Series C Convertible

Preferred Stock

Other Comprehensive

Comprehensive

Paid-In Capital

3 unchanged sentences

Stock-based compensation

Other comprehensive income

Balance as of March 31, 2022

Exercise of stock options

Stock-based compensation

Balance as of June 30, 2020

Issuance of Series B-2 preferred stock, net of offering costs of $ 19 thousand

Exercise of stock options

Stock-based compensation

Balance as of September 30, 2020

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

2 unchanged sentences

(In thousands)

Nine months ended September 30,

Three months ended March 31,

Cash flows from operating activities

1 unchanged sentence

Stock-based compensation

Amortization (accretion) of premium (discount) on marketable securities, net

Amortization of right-of-use asset

Changes in assets and liabilities:

3 unchanged sentences

Accrued other expenses

Lease liability

Net cash used in operating activities

1 unchanged sentence

Purchases of marketable securities

Sales of marketable securities

Maturities of marketable securities

Purchases of property and equipment

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities

Proceeds from initial public offering of common stock, net of underwriting discounts and commissions and offering costs

Proceeds from issuance of Series B-2 convertible preferred stock

Payment of preferred stock issuance costs

4 unchanged sentences

Cash and cash equivalents at end of period

Supplemental disclosures of non-cash financing activities:

Supplemental disclosures of non-cash investing and financing activities:

Right-of-use asset obtained in exchange for new operating lease liability, net of tenant improvement receivable

Deferred offering costs included in accrued expenses

Property and equipment purchases included in accounts payable

Receivable for option exercises

Unpaid initial public offering costs included in accounts payable

Unpaid initial public offering costs included in accrued expenses

Conversion of convertible preferred stock upon closing of initial public offering

9 unchanged sentences

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

Initial Public Offering

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.

1 unchanged sentence

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

5 unchanged sentences

Liquidity and Capital Resources

The Company has an accumulated deficit of $ 64.3 million and, cash, cash equivalents and marketable securities of $ 290.5 million as of September 30, 2021.

The Company has an accumulated deficit of $ 91.6 million and cash, cash equivalents and marketable securities of $ 265.8 million as of March 31, 2022.

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.

On April 1, 2022, the Company filed:

(i) a shelf registration statement on Form S-3 with the U.S.

Securities and Exchange Commission (SEC) that became effective on May 5, 2022 and allows us to undertake various equity and debt offerings up to $400,000,000;

and (ii) a prospectus supplement to the shelf registration statement that covers the offering, issuance and sale of up to $125 million of our common stock from time to time through an “at-the-market” program under the Securities Act of 1933, as amended (Securities Act).

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 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 $ 290.5 million of cash, cash equivalents and marketable securities on hand as of September 30, 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.

The Company believes that the $ 265.8 million of cash, cash equivalents and marketable securities on hand as of March 31, 2022 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

2 unchanged sentences

generally accepted accounting principles (U.S.

GAAP) and applicable rules and regulations of the U.S.

Securities and Exchange Commission (SEC) for interim reporting.

GAAP) and applicable rules and regulations of the 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.

2 unchanged sentences

The condensed balance sheet as of December 31, 2021, is derived from the Company’s audited financial statements.

The results of operations for the three months ended September 30, 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.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022, or for any other future annual or interim period.

The accompanying interim unaudited condensed financial statements should be read in conjunction with our audited financial statements included in our Annual Report on Form 10-K that was filed with the SEC on February 24, 2022.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of our financial position as of March 31, 2022, the results of operations for the three months ended March 31, 2022 and 2021, and cash flows for the three months ended March 31, 2022 and 2021 have been made.

Segment Information

7 unchanged sentences

The Company considers all liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Cash equivalents as of September 30, 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 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.

Cash equivalents as of March 31, 2022 and December 31, 2021 primarily consist of money market accounts and cash.

Concentrations of Credit Risk

9 unchanged sentences

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 September 30, 2021 and December 31, 2020 were $ 0 and $ 0.7 million, respectively.

Deferred offering costs as of March 31, 2022 and December 31, 2021 were $ 0.2 million and $ 0 , respectively.

Such costs are classified in other non-current assets in the accompanying balance sheets.

2 unchanged sentences

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 $ 64,000 and $ 194,000 for the three and nine months ended September 30, 2021, respectively and $ 49,000 and $ 135,000 for the three and nine months ended September 30, 2020, respectively.

Depreciation expense was $ 83,000 and $ 79,000 for the three months ended March 31, 2022 and 2021, respectively.

The Company accounts for its leases under Accounting Standards Codification (ASC) Topic 842, Leases (ASC 842).

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement.

Leases with a term greater than 12 months are recognized on the balance sheet as Right-of-Use (ROU) assets and current and non-current lease liabilities, as applicable.

The Company has elected not to recognize on the balance sheet leases with terms of 12 months or less.

The Company typically only includes an initial lease term in its assessment of a lease arrangement.

Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew.

The Company monitors its material leases on a quarterly basis.

Operating lease liabilities and their corresponding ROU assets are recorded based on the present value of future lease payments over the expected remaining lease term.

Lease cost for operating leases is recognized on a straight-line basis over the lease term as an operating expense.

Certain adjustments to the ROU asset may be required for items such as lease prepayments or incentives received.

The interest rate implicit in lease contracts is typically not readily determinable.

As a result, the Company utilizes its incremental borrowing rate, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment.

For all asset classes of its leases, the Company has elected to account for the lease and non-lease components together for existing classes of underlying asset.

Costs determined to be variable and not based on an index or rate are not include in the measurement of the lease liability.

Impairment of Long-Lived Assets

2 unchanged sentences

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 and nine months ended September 30, 2021 and 2020, respectively.

There were no impairment charges or long-lived assets disposed of during the three months ended March 31, 2022 and 2021, respectively.

Deferred income taxes are provided on temporary differences between financial statement and income tax reporting.

1 unchanged sentence

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 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 its 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 September 30, 2021.

The Company evaluated its tax positions and determined it has no uncertain tax positions as of March 31, 2022.

Fair Value of Financial Instruments

8 unchanged sentences

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 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.

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.

Company has not experienced any realized 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 September 30, 2021

As of March 31, 2022

Cash equivalents:

10 unchanged sentences

Money market funds

Commercial paper

Marketable securities, available for sale:

2 unchanged sentences

Commercial paper

government treasury and agency securities

Supranational and sovereign government securities

Total financial assets

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.

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 bonds, commercial paper, U.S.

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 three months ended September 30, 2021, there were no transfers of financial assets between Level 1 and Level 2.

As of September 30, 2021, the remaining contractual maturities of $ 170.1 million of marketable securities were less than one year and $ 109.8 million were one to three years.

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.

During the three months ended March 31, 2022, there were no transfers of financial assets between Level 1 and Level 2.

As of March 31, 2022, the remaining contractual maturities of $ 186.4 million of marketable securities were less than one year and $ 46.9 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 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 March 31, 2022 were primarily due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities.

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

1 unchanged sentence

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 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).

2 unchanged sentences

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.

The fair value of the common stock had previously 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.

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.

13 unchanged sentences

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

Recently Adopted Accounting Pronouncements

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.

2016-02, Leases (Topic 842) (ASU 2016-02), which requires the lessee to recognize a ROU asset and a lease liability for operating leases, initially measured at the present value of lease payments, in its consolidated balance sheet.

The Company adopted ASU 2016-02 effective January 1, 2022, using the alternative modified transition method, which applies ASU 2016-02 as of the adoption date and therefore, the Company has not applied the standard to the comparative periods presented in the Company's financial statements.

The Company elected the “package of practical expedients,” which permits the Company to not reassess its prior conclusions about lease identification, lease classification and initial direct costs.

The Company also elected the hindsight practical expedient to determine the lease term, the practical expedient to not separate lease and non-lease components and the policy election to not recognize ROU assets or lease liabilities for short-term leases.

The adoption of ASC 842 did not have a material effect on our balance sheet as of January 1, 2022 due to the terms related to our existing leases.

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 September 30, 2021 the total number of shares authorized was 1,200,000,000 .

As of March 31, 2022 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 .

3 unchanged sentences

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.

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.

The Company had no convertible preferred stock outstanding as of March 31, 2022.

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

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.

1 unchanged sentence

Options granted expire 10 years after the date of grant.

As of September 30, 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, 2,092,598 shares were subject to outstanding awards, and 3,013,513 shares remained available for future grant under the 2021 Plan.

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 nine months ended September 30, 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 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.

As of September 30, 2021, 5,681,770 options were outstanding under the 2017 Plan.

A total of 5,040,000 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.

In February 2022, the number of shares of common stock authorized for issuance under the 2021 Plan was increased from 5,040,000 to 7,515,015 .

As of March 31, 2022, 5,491,108 shares remained available for future grant under the 2021 Plan.

Founder Stock Options

1 unchanged sentence

This grant is separate from the Company’s equity incentive plans discussed above.

As of September 30, 2021, 1,531,780 options were outstanding and there were no options exercised during the nine months ended September 30, 2021.

Total stock-based compensation expense related to all stock options granted was allocated as follows (in thousands):

As of March 31, 2022, 1,531,780 options were outstanding and exercisable.

There were no options exercised during the three months ended March 31, 2022.

Total stock-based compensation expense related to all equity awards granted was allocated as follows (in thousands):

Three months ended

Nine months ended

September 30,

Research and development

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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.

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 $ 22,000 and $ 66,000 for the three and nine months ended September 30, 2021, respectively and $ 22,000 and $ 55,000 for the three and nine months ended September 30, 2020, respectively.

Future minimum rentals as of September 30, 2021 were $ 173,000 , all of which is to be paid within the next 12 months.

In January 2022, we entered into a lease agreement for approximately 18,614 square feet of office and laboratory space in Boulder, Colorado (the “New Boulder Lease”) with aggregate payments of approximately $ 3.3 million over the initial 8.2 -year term of the lease.

The Company has the option to extend the New Boulder Lease for two additional terms of five years each.

Further, the Company provided a standby letter of credit (LOC) of $ 0.8 million during the term of the lease as collateral for the Company’s obligations under the lease.

Provided there has been no event of default by the Company during the initial 36-month term, the Company will replace the initial LOC with a replacement LOC in the amount of $ 0.5 million.

The lease agreement includes a tenant improvement allowance for $ 1.0 million of construction costs to be reimbursed 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.

The Company is obligated to pay the lessor an amount not to exceed 5 % of the net rents from the property for operating costs.

Such amounts are not included in the measurement of the lease liability but will be recognized as variable lease expense when they are incurred.

The New Boulder Lease is classified as an operating lease.

The Company recorded lease liabilities and ROU lease assets for the New Boulder Lease based on the present value of lease payments over the expected lease term, discounted using the Company’s incremental borrowing rate.

The option to extend the New Boulder Lease was not recognized as part of the Company’s lease liability and ROU lease asset, as such extensions are not reasonably certain to occur.

As of March 31, 2022, the weighted-average remaining lease term and the weighted-average discount rate for the New Boulder Lease was 8.0 years and 6 %, respectively.

Rent expense under the New Boulder Lease was $ 67 thousand for the three months ended March 31, 2022.

Tenant improvements totaling $ 326 thousand were incurred during the period and are expected to be reimbursed by the lessor.

As of December 31, 2021, future minimum lease payments totaled $141,000, all of which will be paid in 2022.

Future minimum lease payments under the New Boulder Lease as of March 31, 2022 are as follows (in thousands):

Year Ending December 31,

2022, remainder

Total undiscounted future minimum lease payments

tenant improvement receivable

Total long-term operating lease liability

The Company additionally leases office and lab space under lease agreements which expire in August 2022.

These leases were excluded from our lease liability and ROU asset calculations due to their short-term nature.

Future minimum lease payments under these short-term leases as of March 31, 2022 total $ 87,000 , all of which will be paid through the end of fiscal year 2022.

Total rent expense under these short term leases were $ 54,000 and $ 22,000 for the three months ended March 31, 2022 and 2021, respectively.

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 nine months ended September 30, 2021 and no material legal proceedings are currently pending or threatened.

The Company was not subject to any material legal proceedings during the three months ended March 31, 2022 and no material legal proceedings are currently pending or threatened.

Indemnification Agreements

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

The Company is not aware of any claims under indemnification arrangements, and it has not accrued any liabilities related to such obligations in its financial statements as of September 30, 2021.

The Company is 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, 2022.

NOTE 6 NET LOSS PER SHARE

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The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except share and per share amounts):

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Nine months ended

September 30,

Three Months Ended March 31,

Weighted-average shares outstanding used in computing net loss per share, basic and diluted

1 unchanged sentence

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:

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Nine months ended

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Three Months Ended March 31,

Options to purchase common stock

2 unchanged sentences

Accrued other expenses consisted of the following amounts (in thousands):

As of September 30,

As of March 31,

As of December 31,

Accrued research and development costs

Accrued IPO costs

Accrued license fees

Accrued other

Total accrued other expenses

NOTE 8 SUBSEQUENT EVENT

On April 1, 2022, the Company entered into a Sales Agreement with Cowen and Company, LLC, as the Company’s sales agent pursuant to which the Company may offer and sell from time to time through the Agents up to $125 million in shares (the “Shares”) of the Company’s common stock through an “at-the-market” program.

The Shares will be offered and sold pursuant to the Company’s shelf registration statement on Form S-3 (File No.

333-264083) which was declared effective on May 5, 2022.

The Company filed a prospectus supplement dated May 5, 2022 with the SEC in connection with the offer and sale of the Shares.

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

What changed 10-Q

Item 1. Financial Statements