What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-11 compared with 2022-11-03 · 84 added, 174 removed, 301 unchanged (46% of the section changed)

3 unchanged sentences

(In thousands, except share and per share data)

September 30,

Current assets

11 unchanged sentences

Accrued other expenses

Short-term debt

Operating lease liability, current portion

Total current liabilities

Long-term debt, net

Operating lease liability, net of current portion

Other long term liabilities

Total liabilities

2 unchanged sentences

Preferred stock, $ .0001 par value per share;

200,000,000 shares authorized as of September 30, 2022 and December 31, 2021, respectively;

no shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

200,000,000 shares authorized and no shares issued or outstanding as of March 31, 2023 and December 31, 2022

Common stock, $ .0001 par value per share;

1,000,000,000 shares authorized, 63,208,828 shares and 49,500,308 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

1,000,000,000 shares authorized as of March 31, 2023 and December 31, 2022 ;

63,274,732 shares and 63,257,376 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital

7 unchanged sentences

(In thousands, except share and per share data)

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Operating expenses

5 unchanged sentences

Total other income

Other comprehensive income (loss):

Other comprehensive loss:

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

4 unchanged sentences

EDGEWISE THERAPEUTICS, INC.

Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity

Condensed Statements of 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

Paid-In Capital

(Loss) Income

Balance as of December 31, 2021

Convertible preferred stock converted into shares of common stock

( 8,187,100 )

( 7,888,392 )

( 6,527,654 )

( 12,954,423 )

Initial public offering of common stock, net of offering costs

Exercise of stock options

2 unchanged sentences

Balance as of March 31, 2022

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

(In thousands, except share data)

Comprehensive

Other Comprehensive

Paid-In Capital

(Loss) Income

Balance as of December 31, 2022

1 unchanged sentence

Stock-based compensation

Other comprehensive loss

Other comprehensive gain

Balance as of March 31, 2023

Exercise of stock options

Purchase of common stock under employee stock purchase plan

Stock-based compensation

Other comprehensive loss

Balance as of June 30, 2022

Issuance of common stock, net of offering costs

Exercise of stock options

Stock-based compensation

Other comprehensive income

Balance as of September 30, 2022

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

7 unchanged sentences

Accrued compensation

Accrued other expenses

Accrued other expenses and other liabilities

Lease liability

5 unchanged sentences

Purchases of property and equipment

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Cash flows from financing activities

Proceeds from issuance of common stock, net of underwriting discounts and commissions

Debt proceeds

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

Payment of preferred stock issuance costs

Exercise of stock options

Payment of offering costs and deferred offering costs

Proceeds from Employee Stock Purchase Plan

Net cash provided by financing activities

4 unchanged sentences

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 and accrued other expenses

Offering costs and deferred offering costs included in accounts payable and accrued other expenses

Property and equipment purchases included in debt

Conversion of convertible preferred stock upon closing of initial public offering

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

7 unchanged sentences

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 currently studying EDG-5506 in Phase 2 trials, which are being held in the U.S.

and certain countries in Europe.

In addition, the Company has identified EDG-7500, for the potential treatment of hypertrophic cardiomyopathy (HCM) and is conducting nonclinical studies to support advancing the compound into a Phase 1 clinical trial in late 2023.

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

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.

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.

The Board of Directors of the Company discusses with management macro-economic and geopolitical developments, including COVID-19, the Russia-Ukraine conflict and inflation and the impact on the Company’s personnel, cybersecurity and sanctions so that the Company can be prepared to react to new developments as they arise.

The Board and the management of the Company are carefully monitoring these developments and the resulting economic impact on its financial condition and results of operations.

The board of directors of the Company discusses with management macroeconomic and geopolitical developments, including inflation, instability in the banking and financial services sector, tightening of the credit markets, the Russia Ukraine conflict, COVID-19, cybersecurity and sanctions so that the Company can be prepared to react to new developments as they arise.

The board of directors and the management of the Company are carefully monitoring these developments and the resulting economic impact on its financial condition and results of operations.

Liquidity and Capital Resources

The Company has an accumulated deficit of $ 125.2 million and cash, cash equivalents and marketable securities of $ 364.8 million as of September 30, 2022.

The Company has an accumulated deficit of $ 167.4 million and cash, cash equivalents and marketable securities of $ 328.0 million as of March 31, 2023.

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.

2 unchanged sentences

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) on May 5, 2022 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).

As of September 30, 2022, the Company has not sold any shares under the “at the market” program.

As of March 31, 2023, the Company has not sold any shares under the “at the market” program.

On September 16, 2022, the Company closed an underwritten public offering of 13,372,093 shares of common stock at a public offering price of $ 10.32 per share (collectively with the underwriters’ option, the “September 2022 Offering”).

7 unchanged sentences

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 $ 364.8 million of cash, cash equivalents and marketable securities on hand as of September 30, 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.

The Company believes that the $ 328.0 million of cash, cash equivalents and marketable securities on hand as of March 31, 2023 will be sufficient to fund its operations in the normal course of business and meet its liquidity needs through at least the next 12 months from the issuance of these financial statements.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements have been prepared in conformity with U.S.

generally accepted accounting principles (U.S.

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States (U.S.

GAAP) and applicable rules and regulations of the SEC for interim reporting.

3 unchanged sentences

The condensed balance sheet as of December 31, 2022, is derived from the Company’s audited financial statements.

The results of operations for the three and nine months ended September 30, 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 results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, 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 23, 2023.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of our financial position as of September 30, 2022, the results of operations for the three and nine months ended September 30, 2022 and 2021 and cash flows for the nine months ended September 30, 2022 and 2021 have been made.

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, 2023, the results of operations for the three months ended March 31, 2023 and 2022 and cash flows for the three months ended March 31, 2023 and 2022 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, 2022 and December 31, 2021 primarily consist of money market accounts and cash.

Cash equivalents as of March 31, 2023 and December 31, 2022 primarily consist of money market funds 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, 2022 and December 31, 2021 were $ 0.3 million and $ 0 , respectively.

Deferred offering costs as of March 31, 2023 and December 31, 2022 were $ 0.3 million.

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

1 unchanged sentence

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 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 seven years , and in the case of leasehold improvements, the shorter of the estimated useful lives of the assets or the term of the lease.

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

16 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, 2022 and 2021, respectively.

There were no impairment charges or long-lived assets disposed of during the three months ended March 31, 2023 and 2022.

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

2 unchanged sentences

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.

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

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, 2022.

The Company evaluated its tax positions and determined it has no uncertain tax positions as of March 31, 2023.

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.

The Financial Accounting Standards Board (FASB) 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.

8 unchanged sentences

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 (loss) and reported as a separate component of stockholders’ equity 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.

Accordingly, the Company may classify 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 comprehensive loss and reported as a separate component of stockholders’ equity 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.

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.

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 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, 2022

As of March 31, 2023

Cash equivalents:

23 unchanged sentences

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 and nine months ended September 30, 2022, there were no transfers of financial assets between Level 1 and Level 2.

As of September 30, 2022, the remaining contractual maturities of $ 242.5 million of marketable securities were less than one year and $ 14.8 million were one to two years .

During the three months ended March 31, 2023, there were no transfers of financial assets between Level 1 and Level 2.

As of March 31, 2023, the remaining contractual maturities of $ 275.8 million of marketable securities were less than one year and $ 4.2 million were one to two 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 September 30, 2022 were primarily due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities.

Unrealized losses on marketable securities at March 31, 2023 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

4 unchanged sentences

The Company has elected to recognize forfeitures as they occur.

For restricted stock unit awards, the fair value is based on the closing price of the Company's common stock on the date of grant.

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 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.

Research and Development Expenses and Accrued Research and Development Expenses

9 unchanged sentences

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.

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.

1 unchanged sentence

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No.

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

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Statements (Topic 326) (ASU 2016-13), which intends to improve financial reporting by requiring earlier recognition of credit losses on certain financial assets, such as available-for-sale debt securities.

Subsequent to the issuance of ASU 2016-13, the FASB issued several additional ASUs to clarify implementation guidance, provide narrow-scope improvements and provide additional disclosure guidance.

ASU 2016-13 was adopted on January 1, 2023 and the adoption of the new standard did not have a material impact on the Company's financial statements.

The Company will monitor credit losses at each reporting period.

NOTE 3 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, 2022 the total number of shares authorized was 1,200,000,000 .

As of March 31, 2023 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 had no convertible preferred stock outstanding as of September 30, 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

6 unchanged sentences

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 2021 Plan share reserve increases 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.

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 September 30, 2022, 2,401,377 shares remained available for future grant under the 2021 Plan.

or (3) such other amount as the Company’s board of directors may determine.

As of March 31, 2023, there were 1,616,146 shares available for future issuance 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, 2022, 1,531,780 options were outstanding and exercisable.

There were no options exercised during the three and nine months ended September 30, 2022.

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

Three months ended September 30,

Nine months ended September 30,

As of March 31, 2023, 1,531,780 options were both outstanding and exercisable .

There were no options exercised during the three months ended March 31, 2023.

Total stock-based compensation expense related to all equity plans, including Founder Stock Options was allocated as follows (in thousands):

Three months ended March 31,

Research and development

1 unchanged sentence

Total stock-based compensation expense

Grant of stock options

During the nine months ended September 30, 2022, the Company issued 2,947,698 stock options with a fair value of $ 21.9 million that vest over a weighted average period of 3.8 years.

Restricted Stock Units

During the nine months ended September 30, 2022, the Company issued 268,031 restricted stock units with a fair value of $ 2.1 million that vest over a period of 3 years .

NOTE 5 COMMITMENTS AND CONTINGENCIES

4 unchanged sentences

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.

As of September 30, 2022, the Company has paid $ 0.5 million to OSIF under the license agreement.

Total costs incurred for license fees and milestones achieved under the OSIF license agreement were $ 6,000 for the three months ended March 31, 2023 and 2022.

As of March 31, 2023, the Company has paid $ 0.7 million for license fees and milestones achieved in connection with the license agreement.

Lease Agreements

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.

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 Boulder Lease) with aggregate base rent payments of approximately $ 3.3 million over the initial 8.2 -year term of the lease.

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 lessor and up to an additional $ 2.0 million (the “Finish Allowance”) of tenant improvement reimbursements as debt (see Note 8).

The New Boulder Lease includes two tenant improvement allowances, which includes one for $ 1.0 million in construction costs to be fully reimbursed by the lessor (the First Allowance) and one for $ 2.0 million in construction costs to be repaid to the lessor as additional rent payments over the initial term of the lease (the Second Allowance).

From lease commencement through March 31, 2023, $ 1.0 million and $ 1.9 million was received by the lessor under the First Allowance and Second Allowance, respectively.

The receipt of $ 1.9 million under the Second Allowance resulted in an increase to operating lease liabilities and an increase to aggregate base rent payments totaling $ 2.4 million.

In February 2023, the New Boulder Lease was modified to occupy an additional 9,624 square feet of office space (the Expansion Space) with aggregate payments of approximately $ 1.5 million over the initial 7.3 year term of the lease.

The Expansion space includes an improvement allowance in the amount of $ 0.5 million to be fully reimbursed by the lessor.

Under the New Boulder Lease and the Expansion Space (collectively, the Lease), the Company has the option to extend the Lease for two additional terms of five years each.

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 and are recognized as variable lease expense when they are incurred.

Variable lease expense under the New

Boulder Lease was $ 17,000 for the three and nine months ended September 30, 2022 and $ 0 for the three and nine months ended September 30, 2021.

The New Boulder Lease is classified as an operating lease.

In September 2022, we exercised an option in the New Boulder Lease to occupy an additional 9,624 square feet of office and laboratory space (the “Expansion Space”).

The lessor will deliver the Expansion Space on the earlier of January 1, 2023 or within three business days after the existing tenant vacates and surrenders legal possession.

On the delivery date, the Company will receive an improvement allowance in the same amount per square foot provided for the original premises, pro-rated for the reduced term of the lease with respect to the Expansion Space.

Base rent under the New Boulder Lease will be increased on a pro rata basis (at the same per square foot rental rate) based on the additional square footage of the Expansion Space.

The option exercised for the Expansion Space was not recognized as part of the Company’s lease liability and ROU lease asset, as the Company does not yet have control over the Expansion Space.

The Company recorded a lease liability and ROU lease asset 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 September 30, 2022, the weighted-average remaining lease term and the weighted-average discount rate for the New Boulder Lease was 7.5 years and 6 %, respectively.

Rent expense under the New Boulder Lease was $ 0.1 million and $ 0.3 million for the three and nine months ended September 30, 2022, respectively and $ 0 for the three and nine months ended September 30, 2021.

Tenant improvements totaling $ 1.0 million were incurred by the Company and reimbursed by the lessor during the nine months ended September 30, 2022.

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 September 30, 2022 are as follows (in thousands):

Such amounts are not included in the measurement of the lease liabilities and are recognized as variable lease expense when they are incurred.

Variable lease expense was $ 0.1 million and $ 0 for the three months ended March 31, 2023 and 2022, respectively.

The Lease is classified as an operating lease.

The Company recorded lease liabilities and ROU lease assets for the 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 Lease was not recognized as part of the Company’s lease liabilities and ROU lease assets, as such extensions are not reasonably certain to occur.

As of March 31, 2023, the weighted-average remaining lease term and the weighted-average discount rate for the Lease was 7.5 years and 6 %, respectively.

Rent expense under the Lease was $ 0.1 million for the three months ended March 31, 2023 and 2022.

Future minimum lease payments under the Lease as of March 31, 2023 are as follows (in thousands):

Year Ending December 31,

2 unchanged sentences

Total lease liability

The Company additionally leases office and lab space under lease agreements which were extended in July 2022, to expire in August 2023.

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 September 30, 2022 total $ 38,000 , all of which will be paid through the end of fiscal year 2022.

Total rent expense under these short term leases were $ 72,000 and $ 180,000 for the three and nine months ended September 30, 2022, respectively and $ 22,000 and $ 66,000 for the three and nine months ended September 30, 2021.

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, 2022 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, 2023 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.

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.

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 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, 2022.

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, 2023.

NOTE 6 NET LOSS PER SHARE

6 unchanged sentences

As the Company has reported a net loss for all periods presented, diluted net loss per common share is the same as basic net loss per common share for those periods.

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

Three months ended September 30,

Nine months ended September 30,

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

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:

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Options to purchase common stock

Unvested restricted stock units

Convertible preferred stock

NOTE 7 PROPERTY AND EQUIPMENT

Property and equipment consisted of the following amounts (in thousands):

As of September 30,

As of March 31,

As of December 31,

Leasehold improvements

Laboratory equipment

Computers and software

Furniture and fixtures

Construction in process

2 unchanged sentences

Property and equipment - net

Depreciation expense was $ 0.1 million and $ 0.3 million for the three and nine months ended September 30, 2022, respectively and $ 0.1 million and $ 0.2 million for the three and nine months ended September 30, 2021, respectively.

Pursuant to the Finish Allowance associated with the New Boulder Lease, the Company may request up to $ 2.0 million of tenant improvement reimbursements from the lessor.

Reimbursements received by the Company are repaid to the lessor monthly at 6 % interest during the initial term of the lease, maturing in March 2030.

During the nine months ended September 30, 2022, $ 0.1 million in reimbursements were received by the Company under the Finish Allowance.

Future minimum principal payments under the Finish Allowance as of September 30, 2022 are as follows (in thousands):

Year Ending December 31,

2022, remainder

Total future minimum principal payments

Depreciation expense was $ 0.2 million and $ 0.1 million for the three months ended March 31, 2023 and 2022, respectively.

NOTE 8 ACCRUED OTHER EXPENSES

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

As of September 30,

As of March 31,

As of December 31,

3 unchanged sentences

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