What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-03 compared with 2024-02-22 · 128 added, 86 removed, 450 unchanged (32% of the section changed)

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Edgewise Therapeutics, Inc.:

Opinion on the Financial Statements

Opinions on the Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying balance sheets of Edgewise Therapeutics, Inc.

(the Company) as of December 31, 2024 and 2023, the related statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with U.S.

We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with U.S.

generally accepted accounting principles.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these financial statements based on our audits.

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of prepaid and accrued research and development expenses

As discussed in Notes 2 and 10 to the financial statements, 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 contract research organizations (CROs) and contract development and manufacturing organizations (CDMOs).

At the end of each reporting period, the Company reviews open contracts and purchase orders, communications with their personnel, and communications from external service providers to estimate the level of service performed and associated cost incurred.

Depending on the timing of payments to the external service providers and the progress that the Company estimates has been made as a result of the service provided, the Company may record prepaid or accrued expense related to these costs.

Accrued research and development costs as of December 31, 2024 were $6.5 million.

Prepaid expenses and other current assets as of December 31, 2024 were $5.3 million, which includes prepaid research and development expenses.

We identified the evaluation of prepaid and accrued research and development expenses for CROs and CDMOs as a critical audit matter.

Specifically, evaluating the estimates of costs incurred by third parties required subjective auditor judgment due to the nature of available evidence.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to prepaid and accrued research and development expenses for CROs and CDMOs.

This included controls related to the evaluation of the estimation of costs incurred by third parties.

For a selection of prepaid and accrued research and development expenses provided by CROs and CDMOs, we evaluated management’s estimate of the prepaid or accrued expense based on confirmation of project status obtained from the relevant third-party, inquiry of project managers, and third-party invoices paid.

We have served as the Company’s auditor since 2020.

Denver, Colorado

February 22, 2024

March 3, 2025

EDGEWISE THERAPEUTICS, INC.

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Additional paid-in capital

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Accumulated deficit

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Other comprehensive income (loss):

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

Unrealized gain on available-for-sale securities

Total comprehensive loss

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Issuance of common stock, net of offering costs

Exercise of stock options

Exercise of stock options and vesting of restricted stock units

Purchase of common stock under employee stock purchase plan

Stock-based compensation

Other comprehensive loss

Other comprehensive income

Balance as of December 31, 2023

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Stock-based compensation

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

Accretion of discount on marketable securities, net

Amortization of right-of-use asset

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Purchases of property and equipment

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities

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The Company is a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of innovative treatments for severe muscle diseases 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 (Duchenne) and Becker muscular dystrophy (Becker).

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 initiated the Phase 1 study of EDG-7500, for the potential treatment of hypertrophic cardiomyopathy (HCM).

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.

The Company’s lead product candidates are sevasemten and EDG-7500.

Sevasemten is an orally administered small molecule designed to address the root cause of dystrophinopathies including Duchenne muscular dystrophy (Duchenne) and Becker muscular dystrophy (Becker).

The Company is currently studying sevasemten in Phase 2 trials, which are being held in the U.S.

and Israel and in certain countries in Europe and Australasia.

The Company is enrolling a multipart Phase 2 trial with EDG-7500, for the potential treatment of hypertrophic cardiomyopathy (HCM).

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, international conflicts, COVID-19, cybersecurity and sanctions so that the Company can be prepared to react to new developments as they arise.

presidential administration, international conflicts, public health pandemics, 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.

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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 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 .

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.

On June 16, 2023, the Company entered into a Sales Agreement (Sales Agreement) with BofA Securities, Inc.

(BofA Securities) under which the Company may offer and sell shares of common stock, having aggregate sales proceeds of up to $ 125,000,000 from time to time, through an “at the market offering” program (ATM Program) under which BofA Securities will act as sales agent.

On April 1, 2022, the Company entered into a Sales Agreement (Prior Sales Agreement) with Cowen and Company, LLC (Cowen), as agent, pursuant to which the Company was permitted to issue and sell shares of its common stock, having an aggregate offering price of up to $ 125,000,000 (Placement Shares), from time to time through Cowen.

Prior to termination, the Company had not sold any Placement Shares under the Prior Sales Agreement.

During the year ended December 31, 2023, the Company sold 6,928,044 shares of common stock under the ATM Program at a weighted average price of $ 7.63 per share.

(BofA Securities) under which the Company could offer and sell shares of common stock, having aggregate sales proceeds of up to $ 125,000,000 from time to time, through an “at the market offering” program (ATM Program) under which BofA Securities acted as sales agent.

Effective January 19, 2024, the Company suspended and terminated the prospectus related to the Company’s common stock issuable pursuant to the terms of the Sales Agreement (the ATM Prospectus).

As of the date of the suspension of the ATM Prospectus, the Company had sold 7,560,068 shares of our common stock at a weighted average price of $ 7.93 per share.

The gross proceeds were $ 59.9 million, and the net proceeds were $ 59.4 million after deducting underwriting discounts and commissions of $ 0.2 million and offering expenses of $ 0.3 million.

On January 23, 2024, the Company closed an underwritten registered direct offering of 21,818,182 shares of common stock at a public offering price of $ 11.00 per share (the January 2024 Offering).

The aggregate gross proceeds from the January 2024 Offering were $ 240.0 million, and the net proceeds were $ 231.9 million after deducting underwriting discounts and commissions of $ 7.5 million and offering expenses of $ 0.6 million.

On May 10, 2024, we filed an automatic shelf registration statement on Form S-3ASR that allows us to undertake various equity and debt offerings.

Additionally, the Company filed a prospectus supplement to the shelf registration statement and entered into a sales agreement with Leerink Partners LLC (Leerink Sales Agreement) under which the Company may offer and sell shares of common stock, having aggregate sales proceeds of up to $ 175,000,000 from time to time, through an “at the market offering” program (Leerink ATM) under which Leerink Partners LLC will act as sales agent.

The Company has not yet offered or sold any shares of common stock related to the Leerink ATM.

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.

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.

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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.

The Company is organized as a single operating and reportable segment, focused on the discovery, development, and manufacture of drug products for the treatment of severe muscle diseases;

segment information is presented in Note 11.

All equipment and other fixed assets are physically located in the United States.

Use of Estimates

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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.

Should the equity issuance be abandoned, the deferred offering costs are expensed immediately as a

charge to operating expenses in the statement of operations.

Deferred offering costs as of December 31, 2024 and December 31, 2023 were $ 0.3 million.

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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.

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

Impairment of Long-Lived Assets

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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.

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.

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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 debt securities, 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.

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government treasury and agency securities

Supranational and sovereign government securities

Total financial assets

As of December 31, 2023

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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.

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With regard to commercial paper, all of the securities had high credit ratings and one year or less to maturity; therefore, fair value was derived from accretion of purchase price to face value over the term of maturity or quoted market prices for similar instruments if available.

During the years ended December 31, 2023 and 2022, there were no transfers of financial assets between Level 1 and Level 2.

As of December 31, 2023, the remaining contractual maturities of $ 232.2 million of marketable securities were less than one year .

There were no transfers of financial assets between Level 1, Level 2, or Level 3, during the periods presented.

As of December 31, 2024, remaining contractual maturities of $ 394.4 million of marketable securities were less than one year and $ 33.7 million of marketable securities were between 1 and 2 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.

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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.

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 an expense in the period that the Company receives the goods or when services are performed.

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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

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The Company monitors credit losses at each reporting period.

Accounting Standards Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

This update is effective beginning with the Company’s 2024 fiscal year annual reporting period, with early adoption permitted.

The Company is currently evaluating the impact that the adoption of this standard will have on its financial statements.

Improvements to Reportable Segment Disclosures to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance, in particular requiring public entities with a single reportable segment to provide all segment disclosures required by the update, as well as existing segment disclosures in Topic 280.

ASU 2023-07 was adopted for the Company’s annual report for the fiscal year ended December 31, 2024 and all quarterly and annual reports thereafter.

As the Company has a single reportable segment, the update resulted in additional footnote disclosure related identification of the Company’s chief operating decision maker and significant segment expenses (see Note 11).

Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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The Company is currently evaluating the impact that the adoption of this standard will have on its financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

This ASU is expected to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, SG&A, and research and development) This ASU is effective beginning with the Company’s 2027 fiscal year annual reporting period and interim periods thereafter, with early adoption permitted.

The Company is currently evaluating the impact that the adoption of this standard will have on its financial statements.

NOTE 3 PREFERRED STOCK AND COMMON STOCK

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As of December 31, 2024 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 common

stock authorized was 1,000,000,000 .

The total number of shares of preferred stock authorized was 200,000,000 .

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Outstanding as of December 31, 2023

( 1,621,074 )

Outstanding as of December 31, 2024

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The vesting of stock options is stated in each individual grant agreement, which is generally four years .

As of December 31, 2023, there was unrecognized stock-based compensation cost of $ 44.3 million, which is expected to be recognized over weighted-average term of 2.7 years.

As of December 31, 2024, there was unrecognized stock-based compensation cost of $ 56.1 million, which is expected to be recognized over a weighted-average term of 2.7 years.

The aggregate intrinsic value of options exercised during the years ended December 31, 2024 and 2023 was $ 30.3 million and $ 1.0 million, respectively.

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In previous years, there were additional options issued outside of this plan as discussed under Founder Stock Options.

Inducement Equity Incentive Plan

Effective August 10, 2024, the Company’s board of directors adopted the Company’s 2024 Inducement Equity Incentive Plan (Inducement Plan) and, subject to the adjustment provisions of the Inducement Plan, reserved 2,000,000 shares of the Company’s common stock for issuance pursuant to equity awards granted under the Inducement Plan.

The Inducement Plan was adopted without stockholder approval pursuant to the applicable The Nasdaq Stock Market LLC’s (Nasdaq) Listing Rules.

The Inducement Plan provides for the grant of equity-based awards, including nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units, and performance awards, and its terms are substantially similar to the 2021 Plan, including with respect to treatment of equity awards in the event of a “merger” or “change in control” as defined under the Inducement Plan, but with such other terms and conditions intended to comply with the Nasdaq inducement award exception or to comply with the Nasdaq acquisition and merger exception.

In accordance with the Nasdaq Listing Rules, awards under the Inducement Plan may only be made to individuals not previously employees or non-employee directors of the Company (or following such individuals’ bona fide period of non-employment with the Company), as an inducement material to the individuals’ entry into employment with the Company, or, to the extent permitted by the Nasdaq Listing Rules, in connection with a merger or acquisition.

As of December 31, 2024, there were 2,000,000 shares available for future issuance under the Inducement Plan.

Founder Stock Options

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

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

There were no options exercised during the year ended December 31, 2023.

As of December 31, 2023, there was no unrecognized stock-based compensation expense.

As of December 31, 2023, the intrinsic value of options outstanding and exercisable was $ 16.5 million.

The weighted-average remaining contractual life of stock options is 8.5 years as of December 31, 2023.

As of December 31, 2024, 1,356,780 options were both outstanding and exercisable and there was no unrecognized stock-based compensation expense.

175,000 were options exercised during the year ended December 31, 2024 with an intrinsic value of $ 4.6 million.

As of December 31, 2024, the intrinsic value of options outstanding and exercisable was $ 36.0 million with a weighted-average remaining contractual life of 7.5 years.

Fair Value Assumptions

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A restricted stock unit (RSU) represents the right to receive one share of common stock upon vesting of the RSU.

The fair value of each RSU is based on the closing price of the Company’s common stock on the date of grant and vest over 3 years .

The fair value of each RSU is based on the closing price of the Company’s common stock on the date of grant and vest over 3 or 4 years .

RSU activity for the year ended December 31, 2024 is as follows:

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Issued and unvested as of December 31, 2024

As of December 31, 2023, there was unrecognized stock-based compensation cost of $ 0.9 million, which is expected to be recognized over a term of 1.3 years.

As of December 31, 2024, there was unrecognized stock-based compensation cost of $ 8.7 million, which is expected to be recognized over a weighted-average term of 3.5 years.

The total fair value of RSUs vested during each of the years ended December 31, 2024 and 2023 was $ 0.7 million.

2021 Employee Stock Purchase Plan

The 2021 Employee Stock Purchase Plan (2021 ESPP) enables eligible employees of the Company to purchase shares of common stock at a discount.

A total of 504,000 shares of the Company’s common stock were initially reserved for issuance pursuant to the 2021 ESPP.

The number of shares available for issuance under the 2021 ESPP increases annually on the first day of each fiscal year beginning with the Company’s 2022 fiscal year, equal to the least of (1) 1,008,000 shares, (2) one percent ( 1 %) of the outstanding shares of 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 December 31, 2024, the Company has reserved for issuance 2,027,407 shares of common stock pursuant to the 2021 ESPP.

Each offering period is approximately twelve months long.

The 2021 ESPP provides for two offering periods of up to twelve months’ duration with purchase periods commencing on the first trading day on or after either May 15 and November 15, and terminating the last trading day on or before either May 15 or November 15 of the same year, and May 15 of the following year, respectively.

Contributions under the 2021 ESPP are limited to 15 % of an employee’s eligible compensation, IRS limitations, and a maximum of 6,000 shares during each offering period.

2021 ESPP participants will purchase shares of common stock at a price per share equal to 85 % of the lesser of (1) the fair market value per share of the common stock on the first trading day of the offering period or (2) the fair market value of the common stock on the purchase date.

Additionally, during the years ended December 31, 2024 and 2023, a total of 147,086 and 95,259 shares of common stock were issued under the ESPP at a weighted-average per share price of $ 6.03 and $ 6.26 , respectively.

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

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NOTE 5 COMMITMENTS AND CONTINGENCIES

License Agreements

The Company exclusively licensed intellectual property from The Ohio State Innovation Foundation (OSIF) in a license agreement which was made effective November 20, 2020.

Under the licensing agreement, the Company was 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 was 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 sublicensed the OSIF licensed patent rights, the Company was obligated to pay OSIF a specified portion of income received from sublicensing.

On July 27, 2023, the Company provided notice to OSIF to terminate the license agreement because the licensed technology is no longer relevant to the Company’s business.

The license agreement was terminated effective, October 25, 2023 and as a result, the Company no longer has any payment obligations to OSIF.

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

Lease Agreements

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

As of December 31, 2023, $ 0 was received by the lessor under the allowance associated with the expansion space.

As of December 31, 2024, $ 0.5 million was received by the lessor under the allowance associated with the expansion space.

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.

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As of December 31, 2024, the weighted-average remaining lease term and the weighted-average discount rate for the Lease was 5.3 years and 6.4 %, respectively.

Rent expense under the Lease was $ 0.5 million and $ 0.3 million for the years ended December 31, 2023 and 2022, respectively.

Rent expense under the Lease was $ 0.5 million for each of the years ended December 31, 2024 and 2023.

Future minimum lease payments under the Lease as of December 31, 2024 are as follows (in thousands):

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Total undiscounted future minimum lease payments

tenant improvement receivable

Total lease liability

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the remaining $ 32.7 million have an indefinite carryforward period.

The Company also has $ 8.7 million of federal research and development tax credits carryforwards, which will begin to expire in 2039 and $ 0.7

million of federal orphan drug tax credit carryforward, which will begin to expire in 2043.

After weighing all available and positive and negative evidence, the Company determined a full valuation allowance was necessary, consistent with the prior year.

The Company also has $ 16.6 million of federal research related tax credits carryforwards, which will begin to expire in 2039.

The Company also has

$ 0.9 million of state research related tax credits carryforward, of which $ 0.5 million will begin to expire in 2037;

the remaining $ 0.4 million have an indefinite carryforward period.

In accordance with Section 382 and Section 383, utilization of the NOL and tax credit carryforwards may subject to limitations based on prior or future ownership changes.

Also, after weighing all available and positive and negative evidence, the Company determined a full valuation allowance was necessary, consistent with prior year.

The Company is subject to income tax in multiple jurisdictions, including federal and several states.

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Total accrued other expenses

NOTE 11 SUBSEQUENT EVENTS

Effective January 19, 2024, the Company suspended and terminated the prospectus related to the Company’s common stock (the ATM Prospectus) issuable pursuant to the terms of the Sales Agreement.

As a result, the Company will not make any sales of the Company’s securities pursuant to the Sales Agreement unless and until a new prospectus, prospectus supplement or a new registration statement is filed.

As of the date of the suspension of the ATM Prospectus, the Company had sold 7,560,068 shares of our common stock at an average price of $ 7.93 per share totaling aggregate gross proceeds of $ 59.9 million.

On January 23, 2024, the Company closed an underwritten registered direct offering of 21,818,182 shares of common stock at a public offering price of $ 11.00 per share (the January 2024 Offering).

The aggregate gross proceeds from the January 2024 Offering were $ 240.0 million.

NOTE 11 SEGMENT REPORTING

The Company has one reportable segment focused on the discovery, development, and manufacture of drug products for the treatment of various muscular disorders.

Our determination that we operate as a single segment is consistent with the financial information regularly reviewed by the chief operating decision maker (CODM) for purposes of evaluating performance, allocating resources, and planning and forecasting for future periods.

Our business activities are managed on a consolidated basis based on net loss that is also reported on the Statement of Operations and Comprehensive Loss as Net Loss.

The Company’s CODM is the President and Chief Executive Officer (CEO).

The measure of segment assets is reported on the balance sheet as total assets.

Substantially all of the Company’s assets are used to support the research, manufacture, and development of drug products for the treatment of muscular disorders;

clinical and research data are key drivers in deciding how to allocate resources.

The CEO uses net loss and significant segment expenses to monitor budget versus actual results and make

decisions on whether to invest in internal or external resources to support the Company’s research and development programs, as well as determine if additional funding is needed for the Company’s research efforts.

Year Ended December 31,

Operating expenses:

Contracted research expense

Personnel expense

Stock-based compensation expense

Other segment expense (a)

Segment net loss

Reconciliation of net loss

Interest income

a Other segment expense included in Segment net loss includes contracted administrative expenses, intellectual property fees, software costs, occupancy & equipment costs, and other overhead expenses.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data