What changed in this filing

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Item 1. Financial Statements

2021-11-10 compared with 2021-08-12 · 78 added, 86 removed, 342 unchanged (32% of the section changed)

3 unchanged sentences

(amounts in thousands, except par value amounts)

September 30,

2021 December 31,

22 unchanged sentences

Redeemable convertible preferred stock:

Series A redeemable convertible preferred stock, par value $ 0.0001 per share, no shares and 80,247 shares authorized, issued and outstanding at June 30, 2021 and December 31, 2020, respectively;

Series A redeemable convertible preferred stock, par value $ 0.0001 per share, no shares and 80,247 shares authorized, issued and outstanding at September 30, 2021 and December 31, 2020, respectively;

liquidation preference of $ 69,012 at December 31, 2020

Series B redeemable convertible preferred stock, par value $ 0.0001 per share, no shares and 78,222 shares authorized, issued and outstanding at June 30, 2021 and December 31, 2020, respectively;

Series B redeemable convertible preferred stock, par value $ 0.0001 per share, no shares and 78,222 shares authorized, issued and outstanding at September 30, 2021 and December 31, 2020, respectively;

liquidation preference of $ 72,070 at December 31, 2020

Stockholders’ equity (deficit):

Preferred stock, $ 0.0001 par value, 5,000 shares and no shares authorized at June 30, 2021 and December 31, 2020, respectively;

no shares issued or outstanding as of June 30, 2021 or December 31, 2020

Common stock, $ 0.0001 par value, 200,000 shares and 193,500 shares authorized as of June 30, 2021 and December 31, 2020, respectively;

27,568 and 1,746 shares issued as of June 30, 2021 and December 31, 2020, respectively;

27,134 and 1,184 shares outstanding as of June 30, 2021 and December 31, 2020, respectively

Preferred stock, $ 0.0001 par value, 5,000 shares and no shares authorized at September 30, 2021 and December 31, 2020, respectively;

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

Common stock, $ 0.0001 par value, 200,000 shares and 193,500 shares authorized as of September 30, 2021 and December 31, 2020, respectively;

27,575 and 1,746 shares issued as of September 30, 2021 and December 31, 2020, respectively;

27,219 and 1,184 shares outstanding as of September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

8 unchanged sentences

( 13,795 ) ( 6,053 ) ( 32,203 ) ( 15,012 )

Other income:

Other income (expense):

Change in fair value of preferred stock tranche liability

— 7,301 — 7,301

Interest income

Other expense

Interest income (expense), net

37 ( 15 ) 89 73

Total other income

Total other income (expense)

37 ( 15 ) 89 7,374

Net (loss) income

( 13,758 ) ( 6,068 ) ( 32,114 ) ( 7,638 )

1 unchanged sentence

— — ( 151,942 ) ( 31 )

Net (loss) income attributable to common stockholders

$ ( 67,847 ) $ 2,226 $ ( 170,298 ) $ ( 1,601 )

Net (loss) income per share attributable to common stockholders, basic

$ ( 3.82 ) $ 2.35 $ ( 17.86 ) $ ( 1.80 )

Net (loss) income per share attributable to common stockholders, diluted

Net loss attributable to common stockholders

$ ( 13,758 ) $ ( 6,068 ) $ ( 184,056 ) $ ( 7,669 )

Weighted-average common shares outstanding, basic

Net loss per share attributable to common stockholders, basic and diluted

$ ( 0.51 ) $ ( 6.61 ) $ ( 11.89 ) $ ( 8.03 )

Weighted-average common shares outstanding, diluted

Weighted-average common shares outstanding, basic and diluted

27,188 918 15,485 955

18 unchanged sentences

Balance at June 30, 2020 80,246 56,173 — — 1,737 2 349 ( 25,978 ) ( 25,627 )

Stock-based compensation expense — — — — — — 133 — 133

Stock option exercises — — — — 3 — 4 — 4

— — — — — — — ( 6,068 ) ( 6,068 )

Balance at September 30, 2020 80,246 $ 56,173 — $ — 1,740 $ 2 $ 486 $ ( 32,046 ) $ ( 31,558 )

Series A Redeemable Convertible Preferred Stock

17 unchanged sentences

Balance at June 30, 2021 — — — — 27,568 2 402,822 ( 221,268 ) 181,556

Stock-based compensation expense — — — — — — 1,479 — 1,479

Stock option exercises — — — — 7 — 26 — 26

— — — — — — — ( 13,758 ) ( 13,758 )

Balance at September 30, 2021 — $ — — $ — 27,575 $ 2 $ 404,327 $ ( 235,026 ) $ 169,303

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

2 unchanged sentences

(amounts in thousands)

Six Months Ended

Nine Months Ended

September 30,

Operating activities:

28 unchanged sentences

Net increase in cash and cash equivalents

91,755 13,886

Cash, cash equivalents and restricted cash—beginning of period

23 unchanged sentences

Upon completion of the Company’s IPO, all of the Company’s then outstanding preferred stock was automatically converted into an aggregate of 18,279,712 shares of common stock.

The Company had cash and cash equivalents of $ 183.2 million at June 30, 2021.

The Company had cash and cash equivalents of $ 170.4 million at September 30, 2021.

The Company expects that its cash and cash equivalents will enable it to fund its operating expenses and capital expenditure requirements for at least twelve months from the filing date of this Quarterly Report on Form 10-Q.

3 unchanged sentences

Basis of Presentation

The accompanying condensed consolidated financial statements as of June 30, 2021, and for the three and six months ended June 30, 2021 and 2020, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and generally accepted accounting principles in the United States of America (“GAAP”) as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”) for condensed consolidated financial information.

The accompanying condensed consolidated financial statements as of September 30, 2021, and for the three and nine months ended September 30, 2021 and 2020, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and generally accepted accounting principles in the United States of America (“GAAP”) as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”) for condensed consolidated financial information.

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

1 unchanged sentence

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s final prospectus for its IPO dated April 29, 2021 and filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the “Prospectus”).

The information presented in the condensed consolidated financial statements and related notes as of June 30, 2021, and for the three and six months ended June 30, 2021 and 2020, is unaudited.

The information presented in the condensed consolidated financial statements and related notes as of September 30, 2021, and for the three and nine months ended September 30, 2021 and 2020, is unaudited.

The December 31, 2020 condensed consolidated balance sheet included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including notes, required by GAAP for complete financial statements.

Interim results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021, or any future period.

Interim results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021, or any future period.

The accompanying condensed consolidated financial statements include the accounts of Werewolf Therapeutics, Inc.

3 unchanged sentences

The significant accounting policies and estimates used in the preparation of the condensed consolidated financial statements are described in the Company’s audited financial statements for the year ended December 31, 2020, and the notes thereto, which are included in the Prospectus.

There have been no material changes in the Company’s significant accounting policies during the six months ended June 30, 2021.

There have been no material changes in the Company’s significant accounting policies during the nine months ended September 30, 2021.

Use of Estimates

8 unchanged sentences

The Company has adopted the new guidance effective January 1, 2021 and the adoption did not have any material impact on the Company’s condensed consolidated balance sheets, condensed consolidated statements of operations or related disclosures.

Subsequent Events

The Company has evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued.

Other than as described in these financial statements, the Company did not identify any subsequent events that would have required adjustment to or disclosure in the financial statements .

Financial Instruments and Fair Value Measurements

9 unchanged sentences

The carrying amounts reflected in the condensed consolidated balance sheets for cash, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values, due to their short-term nature.

Assets measured at fair value on a recurring basis as of June 30, 2021 were as follows (in thousands):

Assets measured at fair value on a recurring basis as of September 30, 2021 were as follows (in thousands):

Quoted Price in

15 unchanged sentences

$ 92,570 $ — $ — $ 92,570

There were no changes in valuation techniques during the three or six months ended June 30, 2021.

There were no liabilities measured at fair value on a recurring basis as of June 30, 2021 or December 31, 2020.

There were no changes in valuation techniques during the three or nine months ended September 30, 2021.

There were no liabilities measured at fair value on a recurring basis as of September 30, 2021 or December 31, 2020.

Preferred Stock Tranche Liability — During 2019, the Company issued 48,675,140 shares of Series A redeemable convertible preferred stock (“Series A Preferred Stock”) which contained the preferred stock tranche liability.

2 unchanged sentences

Restricted Cash

The Company maintained restricted cash of $ 1.3 million and $ 0.2 million at June 30, 2021 and December 31, 2020, respectively.

At June 30, 2021, $ 0.1 million of the Company’s restricted cash balance is included within “Prepaid expenses and other current assets” in the accompanying condensed consolidated balance sheets.

The Company maintained restricted cash of $ 1.3 million and $ 0.2 million at September 30, 2021 and December 31, 2020, respectively.

At September 30, 2021, $ 0.1 million of the Company’s restricted cash balance is included within “Prepaid expenses and other current assets” in the accompanying condensed consolidated balance sheets.

These amounts are comprised solely of letters of credit required pursuant to the Company’s leased office spaces.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities as of June 30, 2021 and December 31, 2020 were comprised as follows (in thousands):

Accrued expenses and other current liabilities as of September 30, 2021 and December 31, 2020 were comprised as follows (in thousands):

September 30,

2021 December 31,

11 unchanged sentences

Although Term Loan A was made available to the Company at the closing date, the Company elected to forgo making a draw, thereby incurring a delayed draw fee of $ 25,000 with PWB.

As of June 30, 2021, the Company had no t drawn down any Term Loans and had no outstanding borrowings under the Loan Agreement.

As of September 30, 2021, the Company had no t drawn down any Term Loans and had no outstanding borrowings under the Loan Agreement.

The Term Loans will bear interest on the outstanding daily balance at a floating annual rate equal to greater of:

5 unchanged sentences

The Company determined that the Success Fee constitutes a freestanding financial instrument and should be accounted for as a liability in connection with ASC 480— Distinguishing Liabilities from Equity.

The Company determined that the fair value of the Success Fee was immaterial at both issuance and as of June 30, 2021.

The Company determined that the fair value of the Success Fee was immaterial at both issuance and as of September 30, 2021.

Borrowings under the Loan Agreement are secured by the Company’s personal property (exclusive of any intellectual property) and are subject to acceleration in the event of default.

6 unchanged sentences

PWB has the right to accelerate all obligations of the Company in the event of a material adverse effect on (i) the operations, business or financial condition of the Company, (ii) the Company’s ability to repay any portion of the Term Loans or perform any of its other obligations under the Loan Agreement and (iii) the Company’s interest in, or the value, perfection or priority of PWB’s security interest in the collateral.

As of June 30, 2021, the Company had $ 14.0 million available to draw on the Term Loans and had no outstanding principal.

As of September 30, 2021, the Company had $ 14.0 million available to draw on the Term Loans and had no outstanding principal.

Common and Preferred Stock

1 unchanged sentence

Common stockholders are entitled to dividends if and when declared by the Company’s board of directors.

As of June 30, 2021, no dividends on common stock had been declared by the Company.

As of September 30, 2021, no dividends on common stock had been declared by the Company.

The Company had reserved shares of common stock for issuance as follows (in thousands):

As of June 30, As of December 31,

As of September 30, As of December 31,

Redeemable convertible preferred stock outstanding

31 unchanged sentences

The Company is authorized to issue 5.0 million shares of undesignated preferred stock in one or more series.

As of June 30, 2021, no shares of preferred stock were issued or outstanding.

As of September 30, 2021, no shares of preferred stock were issued or outstanding.

Stock-based Compensation

11 unchanged sentences

The number of shares added each year will be equal to the lesser of (i) 5 % of the number of outstanding common stock on such date and (ii) such amount as determined by the board of directors.

As of June 30, 2021, there were 2,361,250 shares available for future issuance under the 2021 Plan.

As of September 30, 2021, there were 1,961,320 shares available for future issuance under the 2021 Plan.

2021 Employee Stock Purchase Plan

3 unchanged sentences

The number of shares added each year will be equal to the lowest of (i) 488,000 shares of common stock, (ii) 1 % of the number of shares of outstanding common stock on such date, and (iii) such amount as determined by the board of directors.

No offering periods under the 2021 ESPP had been initiated as of June 30, 2021.

No offering periods under the 2021 ESPP had been initiated as of September 30, 2021.

Stock-Based Compensation Expense

Total stock-based compensation expense recognized in the condensed consolidated statements of operations for the three and six months ended June 30, 2021 and 2020 was as follows (in thousands):

Total stock-based compensation expense recognized in the condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020 was as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

8 unchanged sentences

The shares are recorded in stockholders’ deficit as they vest.

The following table summarizes restricted stock award activity during the six months ended June 30, 2021 (in thousands, except per share amounts):

The following table summarizes restricted stock award activity during the nine months ended September 30, 2021 (in thousands, except per share amounts):

Shares/Units Weighted-Average

3 unchanged sentences

( 206 ) $ 2.03

Unvested at June 30, 2021 434 $ 1.54

As of June 30, 2021, there was unrecognized stock-based compensation expense related to unvested restricted stock awards of $ 0.7 million, which the Company expects to recognize over a weighted-average period of approximately 1.8 years.

The aggregate fair value of restricted stock awards that vested during the three months ended June 30, 2021 and 2020, based upon the fair values of the stock underlying the restricted stock awards on the day of vesting, was $ 0.8 million and $ 0.3 million, respectively.The aggregate fair value of restricted stock awards that vested during the six months ended June 30, 2021 and 2020, based upon the fair values of the stock underlying the restricted stock awards on the day of vesting, was $ 1.1 million and $ 0.4 million, respectively.

Unvested at September 30, 2021 356 $ 1.35

As of September 30, 2021, there was unrecognized stock-based compensation expense related to unvested restricted stock awards of $ 0.5 million, which the Company expects to recognize over a weighted-average period of approximately 1.5 years.

The aggregate fair value of restricted stock awards that vested during the three months ended September 30, 2021 and 2020, based upon the fair values of the stock underlying the restricted stock awards on the day of vesting, was $ 1.5 million and $ 0.1 million, respectively.

The aggregate fair value of restricted stock awards that vested during the nine months ended September 30, 2021 and 2020, based upon the fair values of the stock underlying the restricted stock awards on the day of vesting, was $ 2.7 million and $ 0.5 million, respectively.

Stock Option Activity

The fair value of stock options granted during the three and six months ended June 30, 2021 and 2020 was calculated on the date of grant using the following weighted-average assumptions:

The fair value of stock options granted during the three and nine months ended September 30, 2021 and 2020 was calculated on the date of grant using the following weighted-average assumptions:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

7 unchanged sentences

77.7 % 95.1 % 78.8 % 91.1 %

Using the Black-Scholes option pricing model, the weighted-average grant date fair value of stock options granted during the three months ended June 30, 2021 and 2020 was $ 10.80 and $ 1.14 per share, respectively.

The weighted-average grant date fair value of stock options granted during the six months ended June 30, 2021 and 2020 was $ 8.15 and $ 1.14 per share, respectively.

The following table summarizes stock option activity during the six months ended June 30, 2021 (in thousands, except per share amounts):

Using the Black-Scholes option pricing model, the weighted-average grant date fair value of stock options granted during the three months ended September 30, 2021 and 2020 was $ 12.75 and $ 1.19 per share, respectively.

The weighted-average grant date fair value of stock options granted during the nine months ended September 30, 2021 and 2020 was $ 9.66 and $ 1.16 per share, respectively.

The following table summarizes stock option activity during the nine months ended September 30, 2021 (in thousands, except per share amounts):

Options Outstanding

4 unchanged sentences

( 49 ) $ 3.62

Outstanding, June 30, 2021 2,884 $ 6.30 9.42

Exercisable at June 30, 2021 108 $ 3.86 8.91

The aggregate intrinsic fair value of stock options exercised during the three and six months ended June 30, 2021 was $ 0.2 million and $ 0.3 million, respectively.

There were no stock options exercised during the three or six months ended June 30, 2020.

As of June 30, 2021, there was unrecognized stock-based compensation expense related to unvested stock options of $ 11.2 million, which the Company expects to recognize over a weighted-average period of approximately 3.4 years.

( 50 ) $ 3.85

Outstanding, September 30, 2021 3,276 $ 8.00 9.25

Exercisable at September 30, 2021 197 $ 4.67 8.69

The aggregate intrinsic fair value of stock options exercised during the three and nine months ended September 30, 2021 was $ 0.1 million and $ 0.4 million, respectively.

The aggregate intrinsic fair value of stock options exercised during both the three and nine months ended September 30, 2020 was less than $ 0.1 million.

As of September 30, 2021, there was unrecognized stock-based compensation expense related to unvested stock options of $ 15.5 million, which the Company expects to recognize over a weighted-average period of approximately 3.1 years.

Related Parties

For the three and six months ended June 30, 2020, the Company recorded $ 6,700 and $ 14,300 , respectively, of general and administrative expense in the accompanying condensed consolidated statements of operations related to the MPM Capital management services.

The Company did no t incur any expense with MPM Capital for the three or six months ended June 30, 2021.

For the three and nine months ended September 30, 2020, the Company recorded $ 9,100 and $ 23,400 , respectively, of general and administrative expense in the accompanying condensed consolidated statements of operations related to the MPM Capital management services.

The Company did no t incur any expense with MPM Capital for the three or nine months ended September 30, 2021.

In December 2019, the Company entered into a consulting agreement with Briggs Morrison, M.D., a member of the Company’s board of directors, for the provision of consulting, advisory and related services.

Pursuant to the consulting agreement, in December 2019, the Company issued Dr.

Pursuant to the consulting agreement, in December 2019, the

Company issued Dr.

Morrison a stock option grant for 46,570 shares of common stock at an aggregate grant date fair value of $ 50,000 , and agreed to reimburse certain of Dr.

Morrison’s expenses in connection with the performance of services under the agreement.

options have an exercise price of $ 1.56 per share and are scheduled to vest with respect to 2.0833 % of the shares underlying the grant in equal monthly installments over four years following November 2019, subject to continuous service.

The Company recognized $ 17,300 and $ 20,400 of expense related to this award in the research and development line in the condensed consolidated statements of operations for the three and six months ended June 30, 2021, respectively and recognized $ 3,100 and $ 6,200 in expenses for the three and six months ended June 30, 2020, respectively.

Net (Loss) Income Attributable to Common Stockholders per Share

Basic net (loss) income per share is calculated based on the weighted-average number of shares of common stock outstanding during the period, excluding the outstanding stock options and restricted stock awards that have been issued but are not yet vested.

Diluted net (loss) income per share is calculated based upon the weighted-average number of shares of common stock outstanding during the period plus the dilutive impact of weighted-average common-equivalent stock outstanding during the period.

The potentially dilutive shares of common stock resulting from the assumed exercise of outstanding stock options and the assumed vesting of the restricted stock awards were determined under the treasury stock method.

The following table summarizes the calculation of basic and diluted net (loss) income attributable to common stockholders per share (in thousands, except per share amounts):

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Net (loss) income attributable to common stockholders

$ ( 67,847 ) $ 2,226 $ ( 170,298 ) $ ( 1,601 )

Weighted-average common shares outstanding, basic

17,750 947 9,535 891

Dilutive effect of redeemable convertible preferred stock (as converted)

Dilutive effect of outstanding stock options

Dilutive effect of unvested restricted common stock

Dilutive effect of warrants to purchase common stock

Weighted-average common shares outstanding, diluted

17,750 10,327 9,535 891

Net (loss) income per share attributable to common stockholders, basic

$ ( 3.82 ) $ 2.35 $ ( 17.86 ) $ ( 1.80 )

Net (loss) income per share attributable to common stockholders, diluted

$ ( 3.82 ) $ 0.22 $ ( 17.86 ) $ ( 1.80 )

The following table sets forth the outstanding shares of common stock equivalents, presented based on amounts outstanding at each period end, which were excluded from the calculation of diluted net (loss) income attributable to common stockholders per share because their effect would be anti-dilutive, including the preferred shares that were outstanding as of June 30, 2020 that would have been issued under the if-converted method (in thousands):

The stock options have an exercise price of $ 1.56 per share and are scheduled to vest with respect to 2.0833 % of the shares underlying the grant in equal monthly installments over four years following November 2019, subject to continuous service.

The Company recognized $ 3,100 of expense related to this award in the research and development line in the condensed consolidated statements of operations for the three months ended September 30, 2021 and 2020, and $ 9,400 of expense for the nine months ended September 30, 2021 and 2020.

Net Loss Attributable to Common Stockholders per Share

For purposes of the diluted net loss attributable to common stockholders per share calculation, redeemable convertible preferred stock, outstanding stock options, unvested restricted stock awards and warrants to purchase common stock are considered to be potentially dilutive securities, however the following weighted-average amounts were excluded from the calculation of diluted net loss attributable to common stockholders per share because their effect would be anti-dilutive (in thousands):

September 30,

Redeemable convertible preferred stock (as converted)

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