Edgewise Therapeutics, Inc. 10-Q

Item 1. Financial Statements EDGEWISE THERAPEUTICS, INC. Condensed Balance Sheets (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ As of ​ ​ March 31, ​ December 31, ​ 2023 ​ 2022 Assets ​ (unaudited) ​ ​ Current assets ​ ​ ​ Cash and cash equivalents ​ $ 48,230 ​ $ 21,993 Marketable securities, available for sale ​ 279,722 ​ 329,954 Prepaid expenses and other assets ​ 5,411 ​ 5,052 Total current assets ​ 333,363 ​ 356,999 ​ ​ ​ ​ ​ ​ ​ Property and equipment, net ​ 10,396 ​ 8,533 Operating lease right-of-use asset ​ ​ 2,390 ​ ​ 1,318 Other non-current assets ​ 251 ​ 251 ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 346,400 ​ $ 367,101 ​ ​ ​ ​ ​ ​ ​ Liabilities and stockholders' equity ​ ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ Accounts payable ​ $ 3,875 ​ $ 6,105 Accrued compensation ​ 2,074 ​ 4,032 Accrued other expenses ​ 5,969 ​ 5,840 Operating lease liability, current portion ​ ​ 797 ​ ​ 608 Total current liabilities ​ 12,715 ​ 16,585 Operating lease liability, net of current portion ​ ​ 4,845 ​ ​ 3,800 ​ ​ ​ ​ ​ ​ ​ Total liabilities ​ 17,560 ​ 20,385 ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies (see note 5) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders' equity: ​ ​ Preferred stock, $ .0001 par value per share; 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 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 ​ 6 ​ 6 Additional paid-in capital ​ 496,523 ​ 492,665 Accumulated other comprehensive loss ​ ​ ( 251 ) ​ ​ ( 1,355 ) Accumulated deficit ​ ( 167,438 ) ​ ( 144,600 ) Total stockholders' equity ​ 328,840 ​ 346,716 ​ ​ ​ ​ ​ ​ ​ Total liabilities and stockholders' equity ​ $ 346,400 ​ $ 367,101 ​ The accompanying notes are an integral part of these condensed financial statements. 6 Table of Contents EDGEWISE THERAPEUTICS, INC. Condensed Statements of Operations and Comprehensive Loss (In thousands, except share and per share data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended March 31, ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ Research and development ​ $ 19,876 ​ $ 11,124 General and administrative ​ 5,828 ​ 3,702 Total operating expenses ​ 25,704 ​ 14,826 ​ ​ ​ ​ ​ ​ ​ Loss from operations ​ ( 25,704 ) ​ ( 14,826 ) ​ ​ ​ ​ ​ ​ ​ Other income ​ ​ Interest income ​ 2,866 ​ 166 Total other income ​ 2,866 ​ 166 ​ ​ ​ ​ ​ ​ ​ Net loss ​ ​ ( 22,838 ) ​ ​ ( 14,660 ) ​ ​ ​ ​ ​ ​ ​ Other comprehensive loss: ​ ​ ​ ​ ​ ​ Unrealized gain (loss) on available-for-sale securities ​ ​ 1,104 ​ ​ ( 1,418 ) Total comprehensive loss ​ $ ( 21,734 ) ​ $ ( 16,078 ) ​ ​ ​ ​ ​ ​ ​ Net loss per share, basic and diluted ​ $ ( 0.36 ) ​ $ ( 0.30 ) Weighted-average shares outstanding, basic and diluted ​ 63,265,800 ​ 49,544,589 ​ The accompanying notes are an integral part of these condensed financial statements. ​ ​ 7 Table of Contents ​ EDGEWISE THERAPEUTICS, INC. Condensed Statements of Stockholders’ Equity (In thousands, except share data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Additional ​ Other Comprehensive ​ Accumulated ​ ​ ​ ​ Shares Amount Paid-In Capital Loss Deficit Total Balance as of December 31, 2021 49,500,308 ​ $ 5 ​ $ 351,852 ​ $ ( 514 ) ​ $ ( 76,960 ) ​ $ 274,383 Exercise of stock options 55,998 ​ — ​ 73 ​ ​ — ​ — ​ 73 Stock-based compensation — ​ — ​ 1,978 ​ ​ — ​ — ​ 1,978 Other comprehensive loss ​ — ​ — ​ — ​ ​ ( 1,418 ) ​ — ​ ( 1,418 ) Net loss ​ — ​ — ​ — ​ ​ — ​ ( 14,660 ) ​ ( 14,660 ) Balance as of March 31, 2022 49,556,306 ​ $ 5 ​ $ 353,903 ​ $ ( 1,932 ) ​ $ ( 91,620 ) ​ $ 260,356 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Additional ​ Other Comprehensive ​ Accumulated ​ ​ ​ ​ Shares Amount Paid-In Capital Loss Deficit Total Balance as of December 31, 2022 ​ 63,257,376 ​ $ 6 ​ $ 492,665 ​ $ ( 1,355 ) ​ $ ( 144,600 ) ​ $ 346,716 Exercise of stock options 17,356 ​ — ​ 21 ​ ​ — ​ — ​ 21 Stock-based compensation — ​ — ​ 3,837 ​ ​ — ​ — ​ 3,837 Other comprehensive gain — ​ — ​ — ​ ​ 1,104 ​ — ​ 1,104 Net loss — ​ — ​ — ​ ​ — ​ ( 22,838 ) ​ ( 22,838 ) Balance as of March 31, 2023 63,274,732 ​ $ 6 ​ $ 496,523 ​ $ ( 251 ) ​ $ ( 167,438 ) ​ $ 328,840 ​ ​ The accompanying notes are an integral part of these condensed financial statements. ​ 8 Table of Contents EDGEWISE THERAPEUTICS, INC. Condensed Statements of Cash Flows (In thousands) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended March 31, ​ 2023 2022 Cash flows from operating activities ​ ​ ​ ​ ​ Net loss ​ $ ( 22,838 ) ​ $ ( 14,660 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ Depreciation ​ ​ 195 ​ 83 Stock-based compensation ​ 3,837 ​ 1,978 Amortization (accretion) of premium (discount) on marketable securities, net ​ ​ ( 2,075 ) ​ ​ 670 Amortization of right-of-use asset ​ ​ 46 ​ ​ 44 Changes in assets and liabilities: ​ ​ ​ Prepaid expenses and other assets ​ ( 359 ) ​ 398 Accounts payable ​ ( 160 ) ​ 1,188 Accrued compensation ​ ( 1,958 ) ​ ( 1,451 ) Accrued other expenses and other liabilities ​ 370 ​ ( 846 ) Lease liability ​ 116 ​ ​ 24 Net cash used in operating activities ​ ( 22,826 ) ​ ​ ( 12,572 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities ​ ​ ​ ​ Purchases of marketable securities ​ ( 16,958 ) ​ ( 13,956 ) Sales of marketable securities ​ ​ 607 ​ ​ 8,832 Maturities of marketable securities ​ ​ 69,761 ​ ​ 36,879 Purchases of property and equipment ​ ( 4,368 ) ​ ( 369 ) Net cash provided by investing activities ​ 49,042 ​ 31,386 ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities ​ ​ Exercise of stock options ​ 21 ​ 73 Net cash provided by financing activities ​ 21 ​ 73 ​ ​ ​ ​ ​ ​ ​ Net change in cash and cash equivalents ​ 26,237 ​ 18,887 Cash and cash equivalents at beginning of period ​ 21,993 ​ 15,566 Cash and cash equivalents at end of period ​ $ 48,230 ​ $ 34,453 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 ​ $ 1,118 ​ $ 2,174 Deferred offering costs included in accrued expenses ​ $ — ​ $ 141 Property and equipment purchases included in accounts payable and accrued other expenses ​ $ 200 ​ $ 309 ​ The accompanying notes are an integral part of these condensed financial statements. 9 Table of Contents EDGEWISE THERAPEUTICS, INC. Notes to Condensed Financial Statements (Unaudited) NOTE 1 DESCRIPTION OF BUSINESS Organization and Description of Business Edgewise Therapeutics, Inc. (the Company) was incorporated as a Delaware corporation in May 2017, and it is headquartered in Boulder, Colorado. The Company is a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of innovative treatments for severe, rare muscle disorders for which there is significant unmet medical need. The Company’s lead product candidate, EDG-5506, is an orally administered small molecule designed to address the root cause of dystrophinopathies including Duchenne muscular dystrophy (DMD) and Becker muscular dystrophy (BMD). The Company is 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. Risks and Uncertainties 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 $ 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. The Company filed: (i) on April 1, 2022, 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) 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 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”). The underwriters exercised in full their option to purchase 1,744,186 additional shares of common stock. The aggregate gross proceeds from the September 2022 Offering were $ 138.0 million, and the net proceeds were $ 129.2 million after deducting underwriting discounts and commissions of $ 8.3 million and offering expenses of $ 0.5 million. 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. 10 Table of Contents The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The financial statements do not reflect any adjustments relating to the recoverability and reclassification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern. The Company believes that the $ 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 accounting principles generally accepted in the United States (U.S. 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. GAAP have been condensed or omitted. The interim condensed financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal, recurring adjustments that are necessary to present fairly the Company’s results for the interim periods presented. The condensed balance sheet as of December 31, 2022, is derived from the Company’s audited financial statements. 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 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 The Company operates in one operating segment and, accordingly, no segment disclosures have been presented herein. All equipment and other fixed assets are physically located within the United States. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Cash Equivalents The Company considers all liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents as of March 31, 2023 and December 31, 2022 primarily consist of money market funds and cash. 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. 11 Table of Contents Deferred Offering Costs The Company capitalizes certain legal, professional, accounting and other third-party fees that are directly associated with in-process equity issuances as deferred offering costs until such equity issuances are consummated. After consummation of the equity issuance, these costs are recorded as a reduction in the capitalized amount associated with the equity issuance. Should the equity issuance be abandoned, the deferred offering costs are expensed immediately as a charge to operating expenses in the statement of operations. Deferred offering costs as of March 31, 2023 and December 31, 2022 were $ 0.3 million. Such costs are classified in other non-current assets in the accompanying balance sheets. Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is computed using the straight-line method over the estimated useful life of the related asset, which is generally three to 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. Leases 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 The Company reviews long-lived assets for impairment whenever events or circumstances indicate that the carrying value of such assets may not be fully recoverable. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of the related asset compared to its carrying value. If impairment is recognized, the carrying value of the impaired asset is reduced to its fair value. There were no impairment charges or long-lived assets disposed of during the three months ended March 31, 2023 and 2022. 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 12 Table of Contents realized. Deferred tax liabilities are recognized for temporary differences that will be taxable in future years. The Company evaluated its tax positions and determined it has no uncertain tax positions as of March 31, 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) 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 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. The Company has not experienced any realized losses on its deposits of cash, cash equivalents, and marketable securities since inception. 13 Table of Contents The following tables summarize the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of March 31, 2023 ​ ​ Fair Value ​ Amortized ​ Unrealized ​ Unrealized ​ Fair Market ​ Hierarchy Cost Basis Gains Losses Value Cash equivalents: ​ ​ ​ ​ Money market funds Level 1 ​ $ 48,130 ​ $ — ​ $ — ​ $ 48,130 Marketable securities, available for sale: ​ ​ ​ ​ ​ ​ Asset-backed securities Level 2 ​ 17,268 ​ 253 ​ ( 24 ) ​ 17,497 Corporate debt securities Level 2 ​ 28,008 ​ 1 ​ ( 215 ) ​ 27,794 Commercial paper Level 2 ​ 154,421 ​ — ​ — ​ 154,421 U.S. government treasury and agency securities ​ Level 2 ​ 70,260 ​ 13 ​ ( 259 ) ​ 70,014 Supranational and sovereign government securities ​ Level 2 ​ 10,016 ​ — ​ ( 20 ) ​ 9,996 Total financial assets ​ $ 328,103 ​ $ 267 ​ $ ( 518 ) ​ $ 327,852 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2022 ​ ​ Fair Value ​ Amortized ​ Unrealized ​ Unrealized ​ Fair Market ​ ​ Hierarchy Cost Basis Gains Losses Value Cash equivalents: ​ ​ ​ ​ Money market funds Level 1 ​ $ 21,893 ​ $ — ​ $ — ​ $ 21,893 Marketable securities, available for sale: ​ ​ ​ ​ Asset-backed securities Level 2 ​ 23,020 ​ 8 ​ ( 44 ) ​ 22,984 Corporate debt securities Level 2 ​ 54,374 ​ — ​ ( 510 ) ​ 53,864 Commercial paper ​ Level 2 ​ ​ 144,730 ​ ​ — ​ ​ — ​ ​ 144,730 U.S. government treasury and agency securities ​ Level 2 ​ ​ 54,672 ​ ​ — ​ ​ ( 624 ) ​ ​ 54,048 Supranational and sovereign government securities Level 2 ​ 54,513 ​ 13 ​ ( 198 ) ​ 54,328 Total financial assets ​ $ 353,202 ​ $ 21 ​ $ ( 1,376 ) ​ $ 351,847 ​ 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 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 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. 14 Table of Contents 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 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. 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). 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 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 Adopted Accounting Pronouncements 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. ​ ​ 15 Table of Contents 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 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 . 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. 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 5,040,000 shares of the Company’s common stock were initially reserved for issuance pursuant to 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 (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 On September 19, 2017, the Company granted one of its founders the option to purchase 1,795,880 shares of the Company’s common stock at an exercise price of $ 0.18 per share which vest monthly over a four-year period that expires 15 years after the date of grant. This grant is separate from the Company’s equity incentive plans discussed above. As of March 31, 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, ​ 2023 2022 Research and development ​ $ 2,115 $ 1,216 General and administrative ​ 1,722 ​ 762 Total stock-based compensation expense ​ $ 3,837 ​ $ 1,978 ​ ​ 16 Table of Contents 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. 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, 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 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 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. ​ ​ ​ 17 Table of Contents Future minimum lease payments under the Lease as of March 31, 2023 are as follows (in thousands): ​ ​ ​ Year Ending December 31, ​ ​ 2023, remainder $ 580 2024 ​ 996 2025 1,013 2026 ​ 1,030 2027 ​ 1,048 Thereafter ​ 2,426 Total undiscounted future minimum lease payments ​ 7,093 Less: discount ​ ( 1,451 ) Total lease liability $ 5,642 ​ Litigation Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. The Company was not subject to any material legal proceedings during the three months ended March 31, 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. 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 March 31, 2023. ​ NOTE 6 NET LOSS PER SHARE Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration of potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, the convertible preferred stock and common stock options are considered to be potentially dilutive securities. Basic and diluted net loss per share is presented in conformity with the two-class method required for participating securities as the convertible preferred stock is considered a participating security. The Company’s participating securities do not have a contractual obligation to share in the Company’s losses. As such, the net loss was attributed entirely to common stockholders. As the Company has reported a net loss for all periods presented, diluted net loss per common share is the same as basic net loss per common share for those periods. ​ ​ ​ ​ ​ 18 Table of Contents 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, ​ 2023 2022 Numerator ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 22,838 ) ​ $ ( 14,660 ) Denominator ​ ​ ​ ​ Weighted-average shares outstanding used in computing net loss per share, basic and diluted ​ ​ 63,265,800 ​ ​ 49,544,589 Net loss per share, basic and diluted ​ $ ( 0.36 ) ​ $ ( 0.30 ) ​ The following weighted average outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended March 31, ​ 2023 2022 Options to purchase common stock ​ ​ 12,225,627 ​ ​ 9,089,966 Unvested restricted stock units ​ ​ 267,575 ​ ​ — Total ​ ​ 12,493,202 ​ ​ 9,089,966 ​ ​ NOTE 7 PROPERTY AND EQUIPMENT Property and equipment consisted of the following amounts (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ As of March 31, ​ As of December 31, ​ 2023 2022 Leasehold improvements ​ $ 8,210 ​ $ — Laboratory equipment ​ ​ 2,685 ​ ​ 1,979 Computers and software ​ ​ 281 ​ ​ 281 Furniture and fixtures ​ ​ 480 ​ ​ — Construction in process ​ ​ — ​ ​ 7,338 Property and equipment - at cost ​ ​ 11,656 ​ ​ 9,598 Less: accumulated depreciation ​ ​ ( 1,260 ) ​ ​ ( 1,065 ) Property and equipment - net ​ $ 10,396 ​ $ 8,533 ​ ​ 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 March 31, ​ As of December 31, ​ 2023 2022 Accrued research and development costs ​ $ 5,010 ​ $ 4,782 Accrued other ​ ​ 959 ​ ​ 1,058 Total accrued other expenses ​ $ 5,969 ​ $ 5,840 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 19 Table of Contents