What changed in this filing

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Item 1. Financial Statements

2021-08-16 compared with 2021-05-12 · 137 added, 119 removed, 238 unchanged (52% of the section changed)

3 unchanged sentences

(In thousands, except share data)

March 31, 2021

June 30, 2021

December 31, 2020

6 unchanged sentences

Current liabilities:

Current portion of long-term debt

Equipment loan payable

Accounts payable

Accrued expenses and other current liabilities

Equipment loan payable

Current portion of long-term debt

Total current liabilities

5 unchanged sentences

Common stock, $ 0.0001 par value;

200,000,000 shares authorized at March 31, 2021 and December 31, 2020;

10,660,181 shares issued and outstanding at March 31, 2021;

200,000,000 shares authorized at June 30, 2021 and December 31, 2020;

11,812,792 shares issued and outstanding at June 30, 2021;

10,634,245 shares issued and outstanding at December 31, 2020

7 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating expenses:

3 unchanged sentences

Loss from operations

Interest expense, net

Interest income (expense), net

Per share information:

5 unchanged sentences

(In thousands, except share data)

Convertible preferred stock

Stockholders’ equity

Balance at March 31, 2021

Sale of common stock and common stock warrants, net of $ 596 in offering costs

Share-based compensation expense

Exercise of common stock warrants

Exercise of stock options

Balance at June 30, 2021

Convertible preferred stock

Stockholders’ equity

Balance at January 1, 2021

Sale of common stock and common stock warrants, net of $ 596 in offering costs

Share-based compensation expense

1 unchanged sentence

Exercise of stock options

Balance at June 30, 2021

Convertible preferred stock

Stockholders’ deficit

Balance at March 31, 2020

Sale of Series A convertible preferred stock

Share-based compensation expense

Exercise of stock options

Balance at June 30, 2020

Convertible preferred stock

3 unchanged sentences

Share-based compensation expense

Balance at March 31, 2020

Exercise of stock options

Balance at June 30, 2020

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

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

3 unchanged sentences

Deferred rent

Forgiveness of PPP Loan

Changes in operating assets and liabilities:

8 unchanged sentences

Proceeds from sale of Series A convertible preferred stock

Payment of Series A convertible preferred stock issuance costs

Proceeds from sale of common stock and common stock warrants

Payment of issuance costs related to the sale of common stock and common stock warrants

Proceeds from exercise of stock options

Proceeds from exercise of common stock warrants

Proceeds from exercise of stock warrants

Proceeds from long-term debt

Payment of equipment loan payable

1 unchanged sentence

Net cash provided by financing activities

Net decrease in cash and restricted cash

Cash and restricted cash at beginning of year

Cash and restricted cash at end of year

Net increase in cash and restricted cash

Cash and restricted cash at beginning of period

Cash and restricted cash at end of period

Supplemental disclosures of cash flow information:

Cash paid for interest

Supplemental disclosures of non-cash investing and financing activities:

Fair value of liability-classified warrants issued in connection with Series A convertible preferred stock

Purchases of property and equipment in accounts payable

Offering costs in accounts payable

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

6 unchanged sentences

The Company’s primary focus areas are oncology and infectious disease, including COVID-19.

Since its inception, the Company has devoted substantially all of its resources to research and development, raising capital, building its management team and building its intellectual property portfolio.

Since its inception, the Company has devoted substantially all its resources to research and development, raising capital, building its management team and building its intellectual property portfolio.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry including, but not limited to;

technical risks associated with the successful research, development and manufacturing of product candidates, uncertain results of preclinical and clinical testing, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and regulatory approval of product candidates and the ability to secure additional capital to fund operations.

The Company has incurred net losses since inception, including net losses of $ 3.9 million and $ 2.7 million for the three months ended March 31, 2021 and 2020, respectively, and it expects to generate losses from operations for the foreseeable future primarily due to research and development costs for its potential product candidates.

As of March 31, 2021, the Company had an accumulated deficit of $ 58.3 million.

The Company has incurred net losses since inception, including net losses $ 9.1 million and $ 5.4 million for the six months ended June 30, 2021 and 2020, respectively, and it expects to generate losses from operations for the foreseeable future primarily due to research and development costs for its potential product candidates.

As of June 30, 2021, the Company had an accumulated deficit of $ 63.5 million.

The Company expects to generate operating losses and negative operating cash flows for the foreseeable future.

On April 28, 2021, the Company sold 1,000,000 units, consisting of one share of the Company’s common stock and one warrant to purchase one-half a share of common stock in a private placement at a price of $ 27.00 per unit for net proceeds of $ 26.4 million.

On October 6, 2020, the Company closed its initial public offering (IPO), in which the Company issued and sold 3,250,000 shares of its common stock at a public offering price of $ 12.00 per share.

1 unchanged sentence

The Company received net proceeds of $ 41.7 million after deducting underwriting discounts and commissions of $ 3.1 million but before deducting other offering expenses.

The Company expects that its cash as of March 31, 2021 as well as an additional $ 27.0 million received from a private offering of the Company’s common stock in April 2021 (see Note 12, Subsequent Events) will be sufficient to fund the Company’s operations through fiscal year 2022.

Beyond that date, the Company will need additional financing to support its continuing operations and pursue its growth strategy.

The Company had cash of $ 59.8 million at June 30, 2021.

The Company expects that its cash 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.

However, additional funding will be necessary beyond this point to fund additional research and development, clinical development and operations in order to pursue its growth strategy.

If the Company cannot obtain the necessary funding, it will need to delay, scale back or eliminate some or all of its research and development programs or enter into collaborations with third parties to commercialize potential products or technologies that it might otherwise seek to develop or commercialize independently;

4 unchanged sentences

Operations of the Company are subject to certain risks and uncertainties including various internal and external factors that will affect whether and when the Company’s product candidates become approved drugs and how significant their market share will be, some of which are outside of the Company’s control.

The length of time and cost of

developing and commercializing these product candidates and/or failure of them at any stage of the drug approval process will materially affect the Company’s financial condition and future operations.

The length of time and cost of developing and commercializing these product candidates and/or failure of them at any stage of the drug approval process will materially affect the Company’s financial condition and future operations.

On March 11, 2020, the World Health Organization characterized the novel COVID 19 virus as a global pandemic.

6 unchanged sentences

These unaudited condensed financial statements and accompanying notes should be read in conjunction with the Company’s annual financial statements and the notes thereto included in the Company’s Form 10-K filed with the Securities and Exchange Commission on March 25, 2021.

The accompanying condensed financial statements as of March 31, 2021 and for the three months ended March 31, 2021 and 2020 are unaudited but include all adjustments that management believes to be necessary for a fair presentation of the periods presented.

The accompanying condensed financial statements as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020 are unaudited but include all adjustments that management believes to be necessary for a fair presentation of the periods presented.

Interim results are not necessarily indicative of results for a full year.

12 unchanged sentences

Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the assets or liability and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the price that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market

participants at the measurement date.

ASC 820 identifies fair value as

the price that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.

As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tiered value hierarchy that distinguishes between the following:

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A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Restricted cash

Restricted cash represents collateral provided for a letter of credit issued as a security deposit in connection with the Company’s lease of its corporate facilities.

This lease expires in 2022 at which time the cash will be released from restriction.

Restricted cash was $ 100,000 at both June 30, 2021 and 2020.

The following table provides a reconciliation of the components of cash and restricted cash reported in the Company’s condensed consolidated balance sheets to the total of the amount presented in the condensed consolidated statements of cash flows:

(in thousands)

June 30, 2021

June 30, 2020

Restricted cash

Equity issuance costs

The Company capitalized incremental legal, professional, accounting and other third-party fees that were directly associated with the IPO as other noncurrent assets until the IPO was consummated.

After consummation of the IPO in October 2020, these costs were recorded in stockholders’ equity as a reduction of additional paid-in-capital generated as a result of the IPO.

As of March 31, 2021 and December 31, 2020, there were no deferred offering costs.

The Company capitalized incremental legal, professional, accounting and other third-party fees that were directly associated with the April 2021 equity offering and the IPO as other noncurrent assets until the offering and IPO each were consummated.

After consummation of the offering and IPO, these costs were recorded in stockholders’ equity as a reduction of additional paid-in-capital generated as a result of the offering and IPO.

As of June 30, 2021 and December 31, 2020, there were no deferred offering costs.

Government contract funding

5 unchanged sentences

Additionally, under the terms of the license agreements, the Company is obligated to make future payments should certain development and regulatory milestones be achieved.

No such costs have been incurred for the three months ended March 31, 2021 and 2020.

Costs for certain research and development activities are recognized based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as a prepaid or accrued expense.

No such costs have been incurred for the three and six months ended June 30, 2021 and 2020.

Costs for certain research and

development activities are recognized based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as a prepaid or accrued expense.

Net loss per share

4 unchanged sentences

Diluted net loss per share of common stock is computed by adjusting net loss to reallocate undistributed earnings based on the potential impact of dilutive securities.

Diluted net loss per share of common stock is computed by dividing the diluted net loss by the weighted average number of common shares

outstanding for the period, including potential dilutive common shares assuming the dilutive effect of common stock equivalents.

The following potentially dilutive securities outstanding as of March 31, 2021 and 2020 have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:

Three Months Ended March 31,

Diluted net loss per share of common stock is computed by dividing the diluted net loss by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of common stock equivalents.

The following potentially dilutive securities outstanding as of June 30, 2021 and 2020 have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:

Stock options (1)

2 unchanged sentences

(1) Represents common stock equivalents.

Prior to its conversion, the Company’s Series A convertible preferred stock contractually entitles the holders of such shares to participate in dividends but does not contractually require the holders of such shares to participate in losses of the Company.

Prior to its conversion, the Company’s Series A convertible preferred stock contractually entitled the holders of such shares to participate in dividends but did not contractually require the holders of such shares to participate in losses of the Company.

Accordingly, in periods in which the Company reported a net loss, such losses were not allocated to participating securities.

In periods in which the Company reports a net loss per share of common stock, diluted net loss per share of common stock is the same as basic net loss per share of common stock since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

The Company reported a net loss per share of common stock for the three months ended March 31, 2021 and 2020.

The Company reported a net loss per share of common stock for the three and six months ended June 30, 2021 and 2020.

Segment and geographic information

8 unchanged sentences

Food and Drug Administration (FDA).

The amount of funding being made available to the Company under this expense reimbursement contract is $ 13.3 million which, based on the Company’s anticipated expenditures, is expected to be received through 2021.

The Company recorded contra-research and development expense in the amount of $ 4.0 million for the three months ended March 31, 2021 in the condensed statements of operations.

There was no contra-research and development expense for the three months ended March 31, 2020.

As of March 31, 2021, the Company had an expense reimbursement receivable balance of $ 2.6 million due from the DoD in prepaid expenses and other current assets on the condensed balance sheet.

The amount of funding being made available to the Company under this expense reimbursement contract was $ 13.3 million.

2021, the Company and the DoD amended the OTA, pursuant to which the DoD award was increased from $ 13.3 million to $ 17.6 million.

Based on the Company’s currently anticipated expenditures, the $ 17.6 million is expected to be received through 2021.

The Company recorded contra-research and development expense in the amount of $ 4.1 million and $ 8.1 million for the three and six months ended June 30, 2021, respectively, in the condensed statements of operations.

There was no contra-research and development expense for the three and six months ended June 30, 2020.

As of June 30, 2021, the Company had an expense reimbursement receivable balance of $ 1.7 million due from the DoD in prepaid expenses and other current assets on the condensed balance sheet.

Costs that have been reimbursed by the DoD but not yet expensed by the Company are recorded as a deferred research obligation liability for the period.

As of March 31, 2021, the Company has a deferred research obligation liability of $ 0.7 million.

As of June 30, 2021, the Company has a deferred research obligation liability of $ 0.5 million.

Accrued expenses

1 unchanged sentence

(in thousands)

March 31, 2021

June 30, 2021

December 31, 2020

2 unchanged sentences

Professional fees, contractors and other

Convertible promissory notes

From January 2019 through July 2019, the Company issued $ 6.8 million of non-interest bearing convertible promissory notes to several existing Series A Preferred shareholders and new investors.

These notes were scheduled to mature on February 2, 2020, if not converted or otherwise settled prior to maturity.

Upon completion of a qualified equity financing event, as defined in the notes, the notes automatically convert into shares of the stock sold in such qualified financing and at a price equal to 80 % of the subscription price.

Upon the sale of additional shares of Series A Preferred prior to a qualified financing event, the notes automatically convert into shares of Series A Preferred at a discount to the $ 9.00 per share subscription price.

The discount is equal to 1 % for each month that has lapsed from the initial note issuance date to the date in which the extended sale of Series A Preferred is consummated.

In November 2019, the Company completed the sale of its Series A Preferred and the notes automatically converted into 821,657 shares of Series A Preferred.

The effective conversion price of the notes was less than the fair value of the Series A Preferred and therefore, no beneficial conversion feature was recorded for the discount.

The Company accounted for the conversion upon a qualified financing event as a bifurcated redemption feature as settlement under this feature would be in a variable number of shares and at a substantial discount.

At issuance and over the term of the note, the Company determined the probability of settlement pursuant to the qualified financing event to be remote.

As such, the estimated fair value of the redemption feature was de minimis.

Equipment loan payables

The Company entered into various equipment financing agreements (the Agreements) to purchase laboratory equipment.

The Agreements provide for 36 to 38 monthly payments ranging from $ 1,000 to $ 8,000 .

Interest rates for the Agreements range from 9.03 % to 12.08 %.

Interest expense related to the equipment financing agreements was $ 2,000 and $ 8,000 for the three months ended March 31, 2021 and 2020, respectively.

Future payments for the Agreements are as follows as of March 31, 2021 (in thousands):

Year ending December 31,

2021 (represents remaining nine months in 2021)

Less amounts representing interest

Total equipment loan payable

Long-term debt

On April 30, 2020, the Company entered into a loan agreement with Silicon Valley Bank as the lender (Lender) for a loan in an aggregate principal amount of $ 0.5 million (the Loan) pursuant to the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and implemented by the U.S.

On April 30, 2020, the Company entered into a loan agreement with Silicon Valley Bank as the lender (Lender) for a loan in an aggregate principal amount of $ 0.5 million (the PPP Loan) pursuant to the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and implemented by the U.S.

Small Business Administration (SBA).

The Company used the proceeds of the Loan for payroll and other qualifying expenses.

Under the terms of the Loan, the Company may apply for forgiveness of amounts due under the Loan, with the amount of potential

loan forgiveness to be calculated in accordance with the requirements of the PPP based on payroll costs, any mortgage interest payments, any covered rent payments and any covered utilities payments during the 8 or 24-week period after the origination date of the Loan.

The Loan matures in two year s and bears interest at a rate of 1 % per year, with all payments deferred through the six-month anniversary of the date of the Loan or until a conclusion has been reached as to whether the Loan will be forgiven.

In January 2021, the Company applied to the SBA for forgiveness and is awaiting a decision.

While the Company believes that its use of the Loan proceeds will meet the conditions of forgiveness of the Loan, it cannot be assured that actions taken could cause the Company to be ineligible for forgiveness of the Loan, in whole or in part.

In the event the debt is forgiven in a future period, the Company will recognize a gain on extinguishment in the statement of operations.

Interest expense for each of the three months ended March 31, 2021 and 2020 was de minimis.

The following table sets forth the Company’s future principal payments as of March 31, 2021 (in thousands):

Years ending December 31,

2021 (represents remaining nine months in 2021)

Less current portion of long-term debt

Long-term debt, net of current portion

The entire PPP Loan was forgiven on May 21, 2021 and recognized as other income in the statement of operations.

Commitments and contingencies

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The lease is subject to fixed rate escalation increases and the landlord waived the Company’s rent obligation for the first two months of the lease.

Deferred rent is $ 15,000 and $ 16,000 as of March 31, 2021 and December 31, 2020, respectively, and is being amortized as a reduction in rent expense over the term of the lease.

Deferred rent is $ 13,000 and $ 16,000 as of June 30, 2021 and December 31, 2020, respectively, and is being amortized as a reduction in rent expense over the term of the lease.

The Company recognizes rent expense on a straight-line basis over the expected lease term.

Future minimum lease payments for the Company’s operating leases are as follows as of March 31, 2021 (in thousands):

In August 2020, the Company entered into a one-year operating lease for laboratory equipment that expired in July 2021 and had fixed monthly payments of $ 18,000 .

Future minimum lease payments for the Company’s operating leases are as follows as of June 30, 2021 (in thousands):

Years ending December 31,

2021 (represents remaining nine months in 2021)

Rent expense was $ 0.1 million for each of the three months ended March 31, 2021 and 2020, respectively.

In August 2020, the Company entered into a one-year operating lease for laboratory equipment that expires in July 2021 and has fixed monthly payments of $ 18,000 .

2021 (represents remaining six months in 2021)

Rent expense was $ 0.1 million for each of the three months ended June 30, 2021 and 2020, respectively, and $ 0.1 million and $ 0.2 million for the six months ended June 30, 2021 and 2020, respectively.

Employment agreements

5 unchanged sentences

The Company assumes all administrative costs of the 401(k) Plan and makes matching contributions as defined in the 401(k) Plan document.

The Company made matching contributions of $ 39,000 and $ 16,000 to the 401(k) Plan for the three months ended March 31, 2021 and 2020, respectively.

The Company made matching contributions of $ 30,000 and $ 16,000 to the 401(k) Plan for the three months ended June 30, 2021 and 2020, respectively, and $ 69,000 and $ 32,000 for the six months ended June 30, 2021 and 2020, respectively.

Legal proceedings

1 unchanged sentence

At each reporting date, the Company evaluates whether a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies.

Patent License Agreement

In June 2021, the Company entered into an exclusive worldwide patent license agreement with several Philadelphia based universities and hospitals (“the Licensors”) to further discover, develop and commercialize human antibodies, identified using Immunome’s human hybridoma technology, for the treatment of diseases associated with the formation of bacterial biofilms.

The Licensors are eligible to receive up to $0.4 million in developmental milestone payments, up to $1.5 million in regulatory milestone payments, and up to $0.8 million commercial milestone payments.

In addition, the Licensors are eligible to receive low single digit royalty rates for net product sales, which are subject to adjustment in the event the Company sublicenses the approved technology.

Beginning in June 2022, the Company is subject to annual minimum payments to the Licensors of $20,000, which increases to $30,000 annually in June 2023 and thereafter.

Common stock and convertible preferred stock

2 unchanged sentences

In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, the holders of common stock shall be entitled to share ratably in the remaining assets of the Company available for distribution.

In October 2020, the Company closed the IPO in which the Company issued and sold 3,757,500 shares of its common stock at a public offering price of $ 12.00 per share, including 487,500 shares of the Company’s common stock sold pursuant to the underwriters’ option to purchase additional shares.

On April 28, 2021, the Company sold 1,000,000 units, each unit comprising one share of the Company’s common stock and one Series B Warrant (each, a Series B Warrant) to purchase one-half a share of common stock.

The units were issued in a private placement at a price of $ 27.00 per unit for gross proceeds of $ 27.0 million.

The Series B Warrants are equity-classified, exercisable at any time, have an exercise price of $ 45.00 per share and will terminate at three years from the date of issuance.

The fair value of the warrants on the date of issuance was $ 6.0 million.

The fair value of the warrants was estimated using a Black-Scholes Option Pricing Model.

The significant assumptions used in preparing the option pricing model for valuing the Company's warrants to purchase shares of common stock as of April 28, 2021 included (i) volatility of 82.7 %, (ii) risk free interest rate of 0.35 %, (iii) strike price of $ 45.00 er share, (iv) fair value of common stock of $ 28.70 per share, and (v) expected life of three years.

The Series B Warrants are callable by the Company in certain circumstances.

On October 6, 2020, the Company closed the IPO in which the Company issued and sold 3,737,500 shares of its common stock at a public offering price of $ 12.00 per share, including 487,500 shares of the Company’s common stock sold pursuant to the underwriters’ option to purchase additional shares.

The Company received net proceeds of $ 41.7 million after deducting underwriting discounts and commissions of $ 3.1 million but before deducting other offering expenses.

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At the time of issuance, the redeemable convertible preferred stock was recorded at its issuance price, less issuance costs.

During the year ended December 31, 2019, the Company sold 512,826 shares of its Series A Preferred at $ 9.00 per share in exchange for $ 4.6 million in gross proceeds and incurred $ 35,000 of related issuance costs and issued 821,657 shares of Series A Preferred in connection with the conversion of the promissory notes of $ 6.8 million (see Note 5, Convertible Promissory Notes).

In 2020, the Company completed the sale of an additional 1,226,925 shares of Series A Preferred at $ 9.00 per share, resulting in gross cash proceeds of $ 11.0 million, which includes 4,722 shares issued in January 2020 for gross receipts of $ 45,000 .

During the three months ended March 31, 2020, the Company received $ 1.0 million in advanced payments for shares of Series A Preferred that would be sold in June 2020.

In addition to the shares of Series A Preferred, the Company issued 1,035,196 warrants to purchase shares of the Company’s Series A Preferred with a fair value of $ 1.5 million.

The warrants were exercisable at any time and had an exercise price of $ 9.00 per share and were to terminate at the earlier of (i) three years from the date of issuance, (ii) upon liquidation of the Company and (iii) upon the Company’s securities trading at $ 27.00 per share for at least 10 days out of a consecutive 20 -day trading period beginning after the first anniversary of the IPO.

In connection with the Company’s sale of its Series A Preferred in 2015, a future milestone closing provision (the Future Milestone) was included requiring the Company to sell, on the same terms and conditions as the initial offering, an aggregate of $ 3.5 million of additional Series A Preferred upon achievement of certain development and strategic milestones, as defined in the purchase agreement and at $ 9.00 per share, or 388,888 shares of Series A Preferred.

The Future Milestone was not achieved and the Company’s obligations under this right terminated upon completion of the Company’s IPO.

During the six months ended June 30, 2020, the Company sold 1,226,925 shares of Series A Preferred for net proceeds of $ 9.5 million and issued 1,035,196 warrants to purchase shares of the Company’s Series A Preferred with a fair value of $ 1.5 million.

The warrants were exercisable at any time and had an exercise price of $ 9.00 per share and were to terminate at the earlier of (i) three years from the date of issuance, (ii) upon liquidation of the Company and (iii) upon the Company’s securities trading at $ 27.00 per unit for at least 10 days out of a consecutive 20 -day trading period beginning after the first anniversary of the IPO.

The warrants were originally liability-classified as the underlying Series A convertible preferred stock was contingently redeemable and outside of the Company’s control.

Upon completion of the IPO on October 6, 2020, the warrants became exercisable for shares of the Company’s common stock and the $ 7.1 million warrant liability was reclassified to additional paid-in capital.

an aggregate of $ 3.5 million of additional Series A Preferred upon achievement of certain development and strategic milestones, as defined in the purchase agreement and at $ 9.00 per share, or 388,888 shares of Series A Preferred.

The Future Milestone did not occur and the Company’s obligations under this right terminated upon completion of the Company’s IPO.

The Company determined that the future tranche right related to the Future Milestone did not meet the definition of a freestanding financial instrument as it was not legally detachable.

2 unchanged sentences

Warrants to acquire shares of common stock

At March 31, 2021 there were 1,023,530 warrants outstanding to acquire shares of the Company’s common stock.

The warrants were issued in connection with the June 2020 sale of the Company’s Series A convertible preferred stock and originally entitled the holders to acquire shares of the Company’s Series A convertible preferred stock.

These warrants were originally liability-classified as the underlying Series A convertible preferred stock was contingently redeemable and outside of the Company’s control.

The warrants had a grant date fair value of $ 1.5 million and a warrant liability was recorded in the balance sheet upon issuance.

During the three months ended March 31, 2021, 11,666 warrants were exercised at a price of $ 9.00 per warrant for gross proceeds of $ 0.1 million and 11,666 shares of the Company’s common stock were issued.

At June 30, 2021 common stock warrants outstanding were as follows:

Exercise Price per Share

Expiration Date

April 28, 2024

During the six months ended June 30, 2021, 100,695 warrants were exercised and the Company received proceeds of $ 0.9 million and 100,695 shares of the Company’s common stock were issued.

Additionally, 72,320 warrants were cashless exercised during the six months ended June 30, 2021 and 45,322 shares of the Company’s common stock were issued.

Share-based compensation

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On September 24, 2020, the 2018 Plan was terminated and replaced with the 2020 Equity Incentive Plan (the 2020 Plan).

The remaining 298,277 shares available for grant under the 2018 Plan are available for issuance under the 2020 Plan and an additional 1,701,723 shares were authorized under the 2020 Plan.

Additionally, the number of shares of our common stock reserved for issuance under our 2020 Plan will automatically increase on January 1 of each year, beginning on January 1, 2021 and continuing through and including January 1, 2030, by 4 % of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by our board of directors.

As of June 30, 2021, there were 1,591,121 shares available for future issuance under the 2020 Plan.

The Company also adopted the 2020 Employee Stock Purchase Plan (the ESPP Plan) on September 18, 2020 which provides for the grant of purchase rights to purchase shares of the Company’s common stock to eligible employees, as defined by the ESPP Plan.

The maximum number of shares of common stock that may be issued under the ESPP Plan will not exceed 125,000 shares of common stock, plus the number of shares of common stock that are automatically added on January 1st of each calendar year for a period of up to ten years , commencing on the first January 1st following the year in which an IPO occurs and ending on, and including, January 1, 2030, in an amount equal to the lesser of (i) 1 % of the total number of shares of common stock outstanding on December 31st of the preceding calendar year, and (ii) 1,000,000 shares of common stock.

No awards have been granted under the ESPP Plan as of March 31, 2021.

No awards have been granted under the ESPP Plan as of June 30, 2021.

The 2020 Plan and the ESPP Plan are administered by the board of directors.

2 unchanged sentences

Vesting periods for awards under the Plans and the 2020 Plan are determined at the discretion of the board of directors.

Incentive stock options and non-

statutory stock options granted to employees, officers, members of the board of directors and consultants of the Company typically vest over two to four years .

Incentive stock options and non-statutory stock options granted to employees, officers, members of the board of directors and consultants of the Company typically vest over two to four years .

Certain options provide for accelerated vesting if there is a change in control, as defined in the Plans and the 2020 Plan.

Share-based compensation expense recorded as research and development and general and administrative expenses in the condensed statements of operations is as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

In thousands)

General and administrative

Research and development

Unrecognized compensation cost related to unvested options was $ 7.3 million as of March 31, 2021 and will be recognized over an estimated weighted average period of 3.61 years.

General and administrative

Unrecognized compensation cost related to unvested options was $ 12.9 million as of June 30, 2021, and will be recognized over an estimated weighted average period of 3.6 years.

Stock options

The weighted average assumptions used in the Black-Scholes option-pricing model for stock options granted were:

Three Months Ended March 31,

Six Months Ended June 30,

Expected volatility

3 unchanged sentences

Fair value of common stock

A summary of option activity during the three months ended March 31, 2021 is as follows:

A summary of option activity during the six months ended June 30, 2021 is as follows:

exercise price

Outstanding at January 1, 2021

Outstanding at March 31, 2021

Exercisable at March 31, 2021

Vested or expected to vest at March 31, 2021

The weighted-average grant date fair value per share of stock options granted during the three months ended March 31, 2021 and 2020 was $ 22.46 and $ 0.22 , respectively.

The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2021 was $ 0.4 million.

The aggregate intrinsic value of stock options outstanding at March 31, 2021 is $ 45.1 million.

Outstanding at June 30, 2021

Exercisable at June 30, 2021

Vested or expected to vest at June 30, 2021

The weighted-average grant date fair value per share of stock options granted during the six months ended June 30, 2021 and 2020 was $ 18.00 and $ 1.32 , respectively.

The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2021 was $ 0.8 million.

The aggregate intrinsic value of stock options outstanding at June 30, 2021 is $ 20.3 million.

In August 2020, the Company granted stock options exercisable for a total of up to 92,169 shares of common stock to two of its officers, which option awards included both performance-based and service-based vesting conditions.

These option awards were subsequently modified in September 2020 to eliminate the performance-based criteria.

As a result of the modification, only service-based vesting conditions remained.

As a result of

the modification, only service-based vesting conditions remained.

All other terms and conditions of these option awards remain unchanged.

3 unchanged sentences

License agreements

The Company has entered into license agreements with certain stockholders of the Company.

Expenses with these related parties were de minimis for each of the three months ended March 31, 2021 and 2020, respectively.

There were no amounts owed to these related parties as of March 31, 2021 and December 31, 2020.

The Company has entered into license agreements with certain stockholders of the Company, including an additional license agreement in June 2021 with licensors that include one of these stockholders.

Expenses with these related parties were de minimis for each of the three and six months ended June 30, 2021 and 2020, respectively.

There were no amounts owed to these related parties as of June 30, 2021 and December 31, 2020.

Broadband services agreement

1 unchanged sentence

Under the Broadband MSA, the Company engages Broadband Capital as a consultant for advice in connection with senior management matters related to the Company’s business, administration and policies in exchange for a cash fee to Broadband Capital of $ 20,000 per month.

The Broadband MSA expires in June 2021.

In June 2021, the Company extended the Broadband MSA to continue through June 2022.

Pursuant to the Broadband MSA, the Company previously issued an aggregate of 827,640 shares of its common stock to Broadband Advisory and has no further obligation to issue additional shares under the Broadband MSA.

The Company recorded $ 0.1 million during each of the three months ended March 31, 2021 and 2020, related to the Broadband MSA which is included in general and administrative expenses in the condensed statements of operations.

Subsequent events

On April 28, 2021, the Company sold 1,000,000 shares of the Company’s common stock in a private placement at a price of $ 27.00 per share for gross proceeds of $ 27.0 million.

In connection with the private placement, the Company also issued Series B Warrants (the Series B Warrants) to purchase 500,000 shares of common stock.

The Series B Warrants are exercisable at any time, have an exercise price of $ 45.00 per share and will terminate at the earlier of (i) three year s from the date of issuance and (ii) upon liquidation or deemed liquidation of the Company.

The Series B Warrants are callable by the Company in certain circumstances.

The Company recorded $ 0.1 million during each of the three months ended June 30, 2021 and 2020 and $ 0.1 million and $ 0.1 million during the six months ended June 30, 2021 and 2020, respectively, related to the Broadband MSA, which is included in general and administrative expenses in the condensed statements of operations.

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