What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-03-10 compared with 2021-03-29 · 377 added, 361 removed, 5 unchanged (99% of the section changed)

Market for Registrant’s

Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.

Market for Registrant’

s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our common stock trades

on Nasdaq under the symbol “GMTX”.

FSDC’s Class A ordinary shares were traded on Nasdaq under the symbol “FSDC”

prior to the consummation of the business combination.

As of March 15, 2021,

there were 42,998,664 holders of record of our common stock.

We have not paid any

cash dividends on our common stock to date and FSDC did not pay cash dividends prior to the consummation of the business combination.

The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and

general financial condition.

Our common stock trades on Nasdaq under the symbol “GMTX”.

As of February 28, 2022, there were 37 holders of record of our common stock.

The actual number of holders of our common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers or held by other nominees.

This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.

We have not paid any cash dividends on our common stock to date.

The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition.

The payment of any cash dividends will be within the discretion of our board of directors.

our board of directors is not currently contemplating and does not anticipate declaring stock dividends in the foreseeable future.

Securities Authorized for Issuance Under

Equity Compensation Plans

As of December 31,

2020, FSDC did not have any equity compensation plans.

In addition, our board of directors is not currently contemplating and does not anticipate declaring stock dividends in the foreseeable future.

Securities Authorized for Issuance Under Equity Compensation Plans

Information about our equity compensation plans is incorporated herein by reference to Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, of this Annual Report on Form 10-K.

Recent Sales of Unregistered Securities;

Use of Proceeds

from Registered Offerings

Except as previously disclosed in our Quarterly Reports on

Form 10-Q during 2020, we did not sell any securities that were not registered under the Securities Act during the period covered

by this Annual Report on Form 10-K.

Selected Financial Data

Not applicable.

MANAGEMENT’S DISCUSSION

References to “we”, “us”,

“our”

or the “Company”

are to FS Development Corp., except where the context requires otherwise.

The following

discussion should be read in conjunction with our financial statements and related notes thereto included elsewhere in this Annual

Report on Form 10-K.

Cautionary Note Regarding Forward-Looking

This Annual Report on Form 10-K includes forward-looking statements

within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act.

We have based these forward-looking

statements on our current expectations and projections about future events.

These forward-looking statements are subject to known

and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or

achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied

by such forward-looking statements.

In some cases, you can identify forward-looking statements by terminology such as “may,”

“should,”

“could,”

“would,”

“expect,”

“plan,”

“anticipate,”

“believe,”

“estimate,”

“continue,”

or the negative of such terms or other similar expressions.

Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other U.S.

Securities and Exchange Commission (“SEC”) filings.

We are a blank

check company incorporated in Delaware on June 25, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition,

share purchase, reorganization or similar business combination with one or more businesses (the “business combination”).

Our sponsor is FS Development Holdings, LLC, a Delaware limited liability company (our “Sponsor”).

Our registration statement for our Initial

Public Offering (the “Initial Public Offering”) became effective on August 11, 2020.

On August 14, 2020, we consummated

the Initial Public Offering of 12,075,000 shares of Class A common stock, including the issuance of 1,575,000 shares

of Class A Common Stock as a result of the underwriter’s exercise in full of its over-allotment option, (each, a “Public

and collectively, the “Public Shares”) at $10.00 per share, generating gross proceeds of approximately

$120.8 million, and incurring offering costs of approximately $7.1 million, inclusive of approximately $4.2 million in

deferred underwriting commissions.

Simultaneously with the closing of the

Initial Public Offering, we consummated the private placement (“Private Placement”) of 441,500 shares of Class

A common stock (each, a “Private Placement Share”

and collectively, the “Private Placement Shares”), at

a price of $10.00 per Private Placement Share to our Sponsor, generating proceeds of approximately $4.4 million.

Upon the closing of the Initial Public

Offering, the Private Placement, and the over-allotment option on August 14, 2020, approximately $120.8 million ($10.00

per share) of the net proceeds of the sale of the shares in the Initial Public Offering and the Private Placement were placed in

a trust account (“Trust Account”), located in the United States at J.P.

Morgan Chase Bank, N.A.

with Continental Stock

Transfer & Trust Company acting as trustee, and invested only in U.S.

“government securities”

within the meaning

of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting

certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S.

treasury obligations, until the earlier of:

(i) the completion of a Business Combination and (ii) the distribution of

the assets held in the Trust Account as described below.

Our certificate of incorporation provides

that, other than the withdrawal of interest to pay franchise and income taxes (less up to $100,000 to pay dissolution expenses),

none of the funds held in the Trust Account will be released until the earliest of:

(i) the completion of the initial business

(ii) the redemption of any Public Shares sold in the Initial Public Offering that have been properly tendered

in connection with a stockholder vote to amend our certificate of incorporation to affect the substance or timing of our obligation

to redeem 100% of such Public Shares if we have not consummated an initial business combination within 24 months from the

closing of the Initial Public Offering, or August 14, 2022 (the “Combination Period”);

or (iii) the redemption

of 100% of the Public Shares if we are unable to complete an initial business combination within the Combination Period.

deposited in the Trust Account could become subject to the claims of our creditors, if any, which could have priority over the

claims of our public stockholders.

Use of Proceeds from Registered Offerings

Except as previously disclosed in our Quarterly Reports on Form 10-Q during 2021, we did not sell any securities that were not registered under the Securities Act during the period covered by this Annual Report on Form 10-K.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K.

Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties.

As a result of many factors, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

We are a clinical-stage precision medicine company developing novel therapeutic compounds to treat genetically defined, age-related macular degeneration (“AMD”).

Our lead product candidate, GEM103, is a recombinant form of the human complement factor H protein (“CFH”) and is designed to address complement hyperactivity and overall dysregulation caused by loss of function mutations thus restoring retinal health in patients with AMD.

Native CFH serves multiple functions in maintaining retinal health, including regulating lipid metabolism in the retina, protecting the retina against lipid and protein by-products of oxidative stress, and regulating the complement system, which is part of the innate immune system.

This multifaceted regulation plays an integral role in engagement and maintenance of complement-mediated immune responses that are involved in pathogen defense and cellular debris clearance.

In January 2022, we announced that we discontinued both of our Phase 2a clinical trials of GEM103 , the ReGAtta study and the GEM103 as an Add-On to Anti-VEGF Therapy for the Treatment of Wet-AMD study.

In February 2022, we announced a corporate restructuring and that we have initiated a process to evaluate strategic alternatives.

We expect to devote substantial time and resources to exploring strategic alternatives that our board of directors believes will maximize shareholder value.

Despite devoting significant efforts to identify and evaluate potential strategic alternatives, there can be no assurance that this strategic review process will result in us pursuing any transaction or that any transaction, if pursued, will be completed on attractive terms or at all.

We have not set a timetable for completion of this strategic review process, and our board of directors has not approved a definitive course of action.

Additionally, there can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated or lead to increased stockholder value or that we will make any additional cash distributions to our stockholders.

Since inception in 2015, we have devoted substantially all of our efforts and financial resources to organizing and staffing our company, business planning, raising capital, discovering product candidates and securing related intellectual property rights and conducting research and development activities for our product candidates.

We do not have any products approved for sale, and we have not generated any revenue from product sales.

We may never be able to develop or commercialize a marketable product.

To the extent we continue to pursue clinical development of GEM103 or any other product candidate, o ur ability to generate revenue from product sales sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates.

We have not yet successfully completed any pivotal clinical trials, nor have we obtained any regulatory approvals, manufactured a commercial-scale drug, or conducted sales and marketing activities.

We are also working to advance GEM307 , that could be effective for treatment of systemic diseases, towards IND filing .

Recent developments

2022 Restructuring and Process to Evaluate Strategic Alternatives

On February 28, 2022, we announced a restructuring plan to reduce our operations to preserve financial resources, resulting in a reduction of our workforce by up to 24 positions, or approximately 80%, by the end of the second quarter of 2022.

As a result, we estimate that we will incur costs within the range of $1.6 million to $1.9 million, which are expected to consist of severance benefits for the affected employees and other restructuring costs and expenses.

The restructuring plan is expected to be completed by the end of the second quarter of 2022.

Additionally, we have initiated a process to evaluate strategic alternatives in order to maximize shareholder value.

There can be no assurance that this strategic review process will result in us pursuing any transaction or that any transaction, if pursued, will be completed on attractive terms or at all.

In addition, effective as of February 28, 2022, Georges Gemayel, Ph.D., our current Executive Chair, was appointed as interim President and Chief Executive Officer to succeed Jason Meyenburg, who has transitioned from his roles as President, CEO and Director and will continue to serve as an advisor to the Company.

Gemayel will continue to serve as the Chair of our Board.

2021 Restructuring

In October 2021, we announced a restructuring plan resulting in a reduction of our workforce by 11 positions, or approximately 26% of our then workforce.

In connection with the October 2021 restructuring, we incurred costs of $1.4 million related to severance benefits for the affected employees.

The restructuring plan was completed by the end of 2021.

Employment Agreement with Georges Gemayel

In November 2021, we entered into an employment agreement with Dr.

Georges Gemayel to serve as Executive Chair of our board of directors.

COVID-19 pandemic

In March 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) outbreak a pandemic.

The ongoing COVID-19 pandemic and the increased prevalence of variants of the virus, and government measures taken in response, have had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred;

supply chains have been disrupted;

facilities and production have been suspended;

and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen.

The ongoing COVID-19 pandemic and related impacts have resulted in, and will likely continue to result in, significant disruptions to the global economy and capital markets around the world.

We cannot predict the future progression or full impact of the outbreak and its effects on our business and operations.

We have not incurred impairment losses in the carrying values of our assets as a result of the ongoing COVID-19 pandemic, and we are not aware of any specific related event or circumstance that would require us to revise our estimates reflected in our consolidated financial statements.

Although the COVID-19 pandemic did not have a significant impact on our financial results in 2021, the full extent to which the ongoing COVID-19 pandemic may impact our business, results of operations, financial condition and cash flows will depend on future developments that are highly uncertain, and the estimates of the impact on our business may change based on new information that may emerge concerning COVID-19, including the duration of the pandemic, any potential subsequent waves or strains of COVID-19 infection, the effectiveness, distribution and acceptance of COVID-19 vaccines and the actions to contain it or treat its impact and the economic impact on local, regional, national and international markets.

Business Combination

On February 5, 2021, we consummated the

previously announced Business Combination.

In accordance with the terms and subject to the conditions of the Merger Agreement,

at the Effective Time of the Merger (i) all shares of Old Gemini Stock issued and outstanding immediately prior to the Effective

Time, whether vested or unvested, was converted into the right to receive their pro rata portion of the 17,942,274 shares of Common

Stock issued as Merger Consideration, provided that 2,150,000 shares of Common Stock are being held in escrow for a period of 12

months to satisfy any indemnification obligations of Old Gemini under the Merger Agreement;

(ii) each option exercisable for Old

Gemini Stock that was outstanding immediately prior to the Effective Time was assumed and continues in full force and effect on

the same terms and conditions as were previously applicable to such options, subject to adjustments to exercise price and number

of shares Common Stock issuable upon exercise based on the final conversion ratio calculated in accordance with the Merger Agreement,

and (iii) 4,264,341 shares of Common Stock were reserved for issuance under the newly adopted 2021 Plan.

In connection with the Closing, the PIPE

Investors subscribed for an aggregate of 9,506,000 shares of Common Stock for an aggregate purchase price of $95,060,000.

In connection with the Business Combination,

100 shares of Class A common Stock of FSDC were redeemed at a per share purchase price of approximately $10.00.

Upon the Closing,

Gemini had 42,998,664 shares of Common Stock outstanding.

As a result of the Business Combination,

FSDC was renamed Gemini Therapeutics, Inc., and Old Gemini became a wholly-owned subsidiary of Gemini.

Liquidity and Capital Resources

As of December

31, 2020, we had approximately $1.2 million in our operating bank account, approximately $5,000 of interest income available

in the Trust Account to pay the Company’s franchise and income tax obligations and working capital of approximately $740,000.

Further, we have incurred and expect to continue to incur significant costs in pursuit of our acquisition plans.

Our liquidity

needs to date have been satisfied through the $25,000 capital contribution to purchase founder shares by our Sponsor, the loan

proceeds under a promissory note of $200,000 from the Sponsor to cover the Company’s offering costs in connection with the

Initial Public Offering, and the net proceeds from the consummation of the Private Placement not held in the Trust Account.

balance of the promissory note was fully repaid on August 14, 2020.

In addition, in order to finance transaction costs in connection

with a business combination, the Sponsor or an affiliate of the Sponsor, or certain of our officers and directors may, but are

not obligated to, provide us working capital loans (“Working Capital Loans”).

As of December 31, 2020, there were no

amounts outstanding under any Working Capital Loans.

Based on the foregoing, management believes

that we will have sufficient working capital and borrowing capacity from the Sponsor or an affiliate of the Sponsor, or certain

of our officers and directors to meet our needs through the earlier of the consummation of a business combination or one year from

Over this time period, we will be using these funds for paying existing accounts payable, identifying and evaluating

prospective initial business combination candidates, performing due diligence on prospective target businesses, paying for travel

expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the business

Management continues to evaluate the impact

of the COVID-19 pandemic and has concluded that the specific impact is not readily determinable as of the date of the balance sheet.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

On February 5, 2021, FSDC consummated the previously announced Business Combination pursuant to the terms of the Agreement and Plan of Merger, dated as of October 15, 2020 (as amended, supplemented or otherwise modified from time to time, the “Merger Agreement”), by and among Old Gemini, Stockholders’

Representative, and Merger Sub.

FSDC was incorporated in Delaware on June 25, 2020 and was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

On the day prior to the Closing Date, Old Gemini changed its name to “Gemini Therapeutics Sub, Inc.”

Pursuant to the Merger Agreement, on the Closing Date, (i) FSDC changed its name to “Gemini Therapeutics, Inc.”, and (ii) Old Gemini merged with and into Merger Sub (the “Merger”), with Old Gemini as the surviving company in the Merger and, after giving effect to such Merger, Old Gemini becoming a wholly-owned subsidiary of Gemini.

Upon the closing of the Business Combination, and pursuant to the terms of the Merger Agreement, the existing shareholders of Old Gemini exchanged their interests for shares of common stock of Gemini.

In connection with the Business Combination, certain investors purchased an aggregate of $95.1 million of our Common Stock in a private placement of public equity (the “PIPE Financing”).

Together with FSDC’s cash resources and funding of the PIPE Financing, we received net proceeds of approximately $195.9 million.

We accounted for the Business Combination as a reverse recapitalization, which is the equivalent of Old Gemini issuing stock for the net assets of FSDC, accompanied by a recapitalization, with FSDC treated as the acquired company for accounting purposes.

The net assets of FSDC were stated at historical cost with no goodwill or other intangible assets recorded.

Reported results from operations included herein prior to the Business Combination are those of Old Gemini.

The shares and

corresponding capital amounts and loss per share related to Old Gemini’s outstanding convertible preferred stock and common stock prior to the Business Combination have been retroactively restated to reflect the conversion ratio established in the Merger Agreement (1.00 Old Gemini share for 0.2180 shares of our company (the “Conversion Ratio ”) ).

For additional information on the Business Combination, please read Note 2, Business Combination , to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Financial Operations Overview

We have not generated any revenue since inception and do not expect to generate any revenue from the sale of products in the near future, if at all.

If our development efforts were to continue and be successful and we were to commercialize any of our product candidates, or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from product sales, as well as upfront, milestone and royalty payments from such collaboration or license agreements, or a combination thereof.

Operating expenses

Research and development expenses

Research and development expenses consist primarily of costs incurred for research activities, including drug discovery efforts and the clinical development of our product candidates.

We expense research and development costs as incurred, which include:

expenses incurred to conduct the necessary preclinical studies and clinical trials required to obtain regulatory approval;

expenses incurred under agreements with CROs that are primarily engaged in the oversight and conduct of our drug discovery efforts, preclinical studies, and clinical trials;

CMOs that are primarily engaged to provide preclinical and clinical drug substance and product for our research and development programs;

other costs related to acquiring and manufacturing materials in connection with our drug discovery efforts and preclinical studies and clinical trial materials, including manufacturing validation batches, as well as investigative sites and consultants that conduct our clinical trials, preclinical studies and other scientific development services;

payments made in cash or equity securities under third-party licensing, acquisition and option agreements;

employee-related expenses, including salaries and benefits, travel and stock-based compensation expense for employees engaged in research and development functions;

costs related to comply with regulatory requirements;

allocated facilities-related costs, depreciation and other expenses, which include rent and utilities.

We recognize external development costs as incurred.

Any advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses.

Such amounts are expensed as the related goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered.

We estimate and accrue for the value of goods and services received from CROs, CMOs and other third parties each reporting period based on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers.

This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs.

We do not track our research and development expenses on a program-by-program basis.

Our direct external research and development expenses consist primarily of external costs, such as fees paid to outside consultants, CROs, CMOs and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development

We do not allocate employee costs, costs associated with our discovery efforts, laboratory supplies, and facilities, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified.

We use internal resources primarily to conduct our research and discovery as well as for managing our preclinical development, process development, manufacturing and clinical development activities.

These employees work across multiple programs and, therefore, we do not track their costs by program.

Research and development activities have been central to our business model to date.

We anticipate that our research and development expenses will decrease in 2022 compared to 2021 due to our planned reduced clinical efforts in 2022 and recent restructurings announced in connection with our exploration of strategic alternatives.

If we continue to pursue development efforts and we believe a regulatory approval of a product candidate appears likely, we would anticipate an increase in payroll and other expenses as a result of our preparation of regulatory filings and precommercial activities.

At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that would be necessary to complete the preclinical and clinical development of any of our product candidates or when, if ever, material net cash inflows may commence from any of our product candidates.

The successful development and commercialization of any of our product candidates is highly uncertain.

This uncertainty is due to the numerous risks and uncertainties associated with product development and commercialization, including the uncertainty of the following:

the scope, progress, timing, outcome and costs of any continued preclinical development activities, clinical trials and other related development activities;

delays, suspensions, or other setbacks or interruptions encountered, including as a result of the ongoing COVID-19 pandemic;

establishing an appropriate safety and efficacy profile with any Investigational New Drug application (“IND”) enabling studies and obtaining clearance for future IND applications;

successful patient enrollment in and the initiation and completion of any clinical trials;

the timing, receipt and terms of any marketing approvals from applicable regulatory authorities including the U.S.

Food and Drug Administration (“FDA”) and non-U.S.

regulatory authorities;

the extent of any required post-marketing approval commitments to applicable regulatory authorities;

establishing clinical and commercial manufacturing capabilities or making arrangements with third-party manufacturers in order to ensure that we or our third-party manufacturers are able to make and scale our products successfully;

development and timely delivery of clinical-grade and commercial-grade drug formulations that can be used in our clinical trials and for commercial launch;

obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;

significant and changing government regulation;

launching commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others;

maintaining a continued acceptable safety profile of our product candidates following approval, if any, of our product candidates.

A change in any of these variables with respect to any of our programs would significantly change the costs, timing and viability associated with that program.

General and administrative expenses

General and administrative expenses consist primarily of employee-related expenses, including salaries and related benefits, travel and stock-based compensation for personnel in executive, business development, finance, human resources, legal, information technology and administrative functions.

General and administrative expenses also include direct and allocated

facility-related costs as well as insurance costs and professional fees for legal, patent, consulting, investor and public relations, accounting and audit services.

We expense general and administrative costs as incurred.

We anticipate that our general and administrative expenses will decrease in 2022 as compared to 2021 due to recent restructurings announced in connection with our exploration of strategic alternatives.

If, however, at any point in the future we believe a regulatory approval of a product candidate appears likely, we anticipate an increase in payroll and other expenses as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of that product candidate.

Other income (expense)

Interest expense

Interest expense consists of interest accrued on the Term Loan we entered into in February 2019 and the Notes, including the accretion of the beneficial conversion feature discount recognized on the issuance date of the Notes.

Interest income

Interest income consists of income earned on our cash, cash equivalents and restricted cash.

Loss on conversion of convertible notes

Immediately prior to the closing of the Business Combination, the outstanding principal and interest under the Notes converted into shares of Series B preferred stock, and we recorded other expense equal to the difference between the reacquisition price of the Notes and the net carrying amount of the Notes in the consolidated statements of operations and comprehensive loss.

Change in fair value of warrant liability

In February 2019, in conjunction with the Term Loan with SVB, we issued warrants to purchase 15,257 shares of Old Gemini’s Series A preferred stock.

We accounted for, and classified, these warrants as a liability on our balance sheet because the warrants were freestanding financial instruments.

We remeasured this liability to fair value at each reporting date and recognized changes in the fair value of the warrant liability in our consolidated statements of operations and comprehensive loss .

At the closing of the Business Combination, these warrants were automatically exercised for 15,257 shares of our common stock.

Provision for income taxes

We have not recorded any significant amounts related to income tax expense, we have not recognized any reserves related to uncertain tax positions, nor have we recorded any income tax benefits for the majority of our net losses we have incurred to date or for our research and development tax credits.

We account for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or our tax returns.

Deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax bases of existing assets and liabilities and for loss and credit carryforwards, which are measured using the enacted tax rates and laws in effect in the years in which the differences are expected to reverse.

The realization of our deferred tax assets is dependent upon the generation of future taxable income, the amount and timing of which are uncertain.

Valuation allowances are provided, if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

We continue to maintain a full valuation allowance against all of our net deferred tax assets based on our evaluation of all available evidence.

We file income tax returns in the United States (“U.S.”) federal tax jurisdiction and state jurisdictions and may become subject to income tax audit and adjustments by related tax authorities.

Our tax return period for U.S.

federal income taxes for the tax years since 2018 remain open to examination under the statute of limitations by the Internal Revenue Service and state jurisdictions.

We record reserves for potential tax payments to various tax authorities related to uncertain tax positions, if any.

The nature of uncertain tax positions is subject to significant judgment by management and subject to change, which may be substantial.

These reserves are based on a determination of whether and how much a tax benefit taken by us in our tax filings or positions is more likely than not to be realized following the resolution of any potential contingencies related to the tax benefit.

We develop our assessment of uncertain tax positions, and the associated cumulative probabilities, using internal expertise and assistance from third-party experts.

As additional information becomes available, estimates are revised and

Differences between estimates and final settlement may occur resulting in additional tax expense.

Potential interest and penalties associated with such uncertain tax positions is recorded as a component of our provision for income taxes.

To date, no amounts are being presented as an uncertain tax position.

In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,”

which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited.

We may experience ownership changes as a result of subsequent shifts in our stock ownership.

Results of operations

Our entire activity

since inception through December 31, 2020 related to our formation, the preparation for the Initial Public Offering, and

since the closing of the Initial Public Offering , the search for a prospective

initial business combination .

We have neither engaged in any operations nor generated any revenues to date.

generate any operating revenues until after completion of our initial business combination.

We will generate non-operating income

in the form of interest earned on cash equivalents held in Trust Account.

We expect to incur increased expenses as a result

of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the period

from June 25, 2020 (inception) through December 31, 2020, we had a net loss of approximately $812,000, which consisted of approximately

$717,000 in general and administrative expenses and approximately $100,000 of franchise tax expense, which was partially offset

by approximately $5,000 of interest earned on cash equivalents held in the Trust Account.

Related Party Transactions

Founder Shares and Private Placement

On June 30, 2020, our Sponsor purchased

2,875,000 shares of the Company’s Class B common stock, par value $0.0001 per share, (the “Founder Shares”) for

an aggregate price of $25,000.

On July 24, 2020, our Sponsor transferred 30,000 Founder Shares to each of its independent

director nominees at their original per-share purchase price, for an aggregate of 90,000 Founder Shares transferred.

11, 2020, we effected a 1:1.05 stock split of the Class B common stock, resulting in our Sponsor holding an aggregate of 2,928,750

Founder Shares and there being an aggregate of 3,018,750 Founder Shares outstanding.

All shares and the associated amounts

have been retroactively restated to reflect the aforementioned stock split.

Our Sponsor agreed to forfeit up to 393,750 Founder

Shares to the extent that the over-allotment option is not exercised in full by the underwriter, so that the Founder Shares would

represent 20.0% of our issued and outstanding shares of common stock after the Initial Public Offering (excluding the Private Placement

On August 14, 2020, the underwriter exercised the over-allotment option;

thus, these Founder Shares were no longer subject

to forfeiture.

Simultaneously with the closing of the

Initial Public Offering, we consummated the Private Placement of 441,500 Private Placement Shares, at a price of $10.00 per

Private Placement Share to the Sponsor, generating proceeds of approximately $4.4 million.

The Sponsor and FSDC’s officers and

directors (the “Initial Stockholders”) agreed, subject to limited exceptions, not to transfer, assign or sell any of

the Founder Shares or Private Placement Shares until the earlier to occur of:

(i) one year after the completion of the initial

Business Combination and (ii) the date on which we complete a liquidation, merger, capital stock exchange or other similar transaction

after the initial Business Combination that results in all of our stockholders having the right to exchange their Class A common

stock for cash, securities or other property;

except to certain permitted transferees and under certain circumstances.

Any permitted

transferees will be subject to the same restrictions and other agreements of the Initial Stockholders with respect to any Founder

Shares or Private Placement Shares.

Notwithstanding the foregoing, if (1) the closing price of the Class A common stock equals

or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like)

for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial business combination

or (2) if the Company consummates a transaction after the initial business combination which results in the Company’s stockholders

having the right to exchange their shares for cash, securities or other property, the Founder Shares and Private Placement Shares

will be released from the lock-up.

Related Party Loans

On June 30, 2020, our Sponsor agreed to

loan the Company an aggregate of up to $200,000 to cover expenses related to the Initial Public Offering pursuant to a promissory

This promissory note is non-interest bearing and payable upon the completion of the Initial Public Offering.

borrowed $200,000 under the promissory, and fully repaid it on August 14, 2020.

In addition, in order to finance transaction

costs in connection with an initial business combination, our Sponsor or an affiliate of our Sponsor, or certain of our officers

and directors may, but are not obligated to, loan us funds as may be required as Working Capital Loans.

If we complete an initial

business combination, we will repay the Working Capital Loans out of the proceeds of the Trust Account released to us.

the Working Capital Loans would be repaid only out of funds held outside the Trust Account.

In the event that an initial business

combination does not close, we may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans

but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.

Except for the foregoing, the terms

of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans.

Working Capital Loans would either be repaid upon consummation of an initial business combination or, at the lender’s discretion,

up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post initial business combination

entity at a price of $1.00 per warrant.

To date, we have no borrowings under the Working Capital Loans.

Forward Purchase

In connection with the execution of the

Merger Agreement, an affiliate of the Sponsor entered into a subscription agreement to purchase 1,500,000 shares of Class A Common

Stock at a purchase price of $10 per share in a private placement that would occur concurrently with the closing of the Merger

(the “Closing”).

The affiliate of the Sponsor has assigned to the Sponsor its obligation to purchase its shares under

the subscription agreement so that the Sponsor will purchase 1,500,000 of such shares at the Closing.

At the time of the Initial

Public Offering, the Sponsor had originally indicated an interest to purchase up to $25.0 million of shares in connection with

the initial business combination.

This purchase of 1,500,000 shares represents the Sponsor’s allocation of shares in the

PIPE Investment.

In addition, the Initial Stockholders entered into the Parent Support Agreement in which they agreed to vote,

at any meeting of the stockholders of the Company, and in any action by written consent of the stockholders of the Company, all

of such holders’

Class A common stock and Class B common stock (i) in favor of the Merger Agreement, each of the Parent Proposals

(as defined in the Merger Agreement) and the transactions contemplated by the Merger Agreement and the Parent Support Agreement,

and (ii) in favor of any other matter reasonably necessary to the consummation of the transactions contemplated by the Merger Agreement

and the approval of the Parent Proposals.

Also, in connection with the Closing, the Sponsor and certain other stockholders will

enter into a Voting Agreement with us, and the Initial Stockholders and certain other stockholders will enter into a Registration

Rights Agreement with us that will replace the existing registration rights agreement in its entirety.

For a description of the

Voting Agreement and the Registration Rights Agreement see Item 13 “Certain Relationships and Related Transactions and Director

Independence”

in this report.

Administrative Services Agreement

We have entered into an agreement that

provides that, commencing on the date that the Company’s securities are first listed on Nasdaq and continuing until the earlier

of the consummation of a Business Combination and our liquidation, we will pay our Sponsor a total of $10,000 per month for office

space, secretarial and administrative services provided to members of the Company’s management team.

Additionally, our Sponsor,

and our officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred

in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable

Business Combinations.

Our audit committee will review on a quarterly basis all payments that were made to our Sponsor, our officers

or directors, or their affiliates.

Contractual Obligations

Registration Rights

The Initial Stockholders are entitled to

registration rights pursuant to a registration rights agreement.

The Initial Stockholders will be entitled to make up to three

demands, excluding short form registration demands, that we register such securities for sale under the Securities Act.

these holders will have “piggy-back”

registration rights to include their securities in other registration statements

We will bear the expenses incurred in connection with the filing of any such registration statements.

In connection

with the Closing, the Initial Stockholders and certain other stockholders will enter into a Registration Rights Agreement with

us that will replace the existing registration rights agreement in its entirety.

See the description of the Registration Rights

Agreement elsewhere in this report.

Underwriting Agreement

The underwriter was entitled to an underwriting

discount of $0.20 per share, or approximately $2.4 million in the aggregate, paid upon the closing of the Initial Public Offering.

In addition, $0.35 per share, or approximately $4.2 million in the aggregate will be payable to the underwriter for deferred underwriting

The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event

that we complete a Business Combination, subject to the terms of the underwriting agreement.

Critical Accounting Policies and Estimates

Investments Held in the Trust Account

Our portfolio of investments held in the

Trust Account is comprised of U.S.

government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company

Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S.

government securities, or a

combination thereof.

Our investments held in the Trust Account are classified as trading securities.

Trading securities are presented

on the balance sheet at fair value at the end of each reporting period.

Gains and losses resulting from the change in fair value

of these investments are included in interest earned from investments held in Trust Account in the statement of operations.

estimated fair values of investments held in the Trust Account are determined using available market information, other than for

investments in open-ended money market funds with published daily net asset values (“NAV”), in which case the Company

uses NAV as a practical expedient to fair value.

The NAV on these investments is typically held constant at $1.00 per unit.

Class A Common Stock Subject

to Possible Redemption

We account for our Class A common

stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.”

Shares of Class A common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured

at fair value.

Shares of conditionally redeemable Class A common stock (including Class A common stock that feature redemption

rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely

within our control) are classified as temporary equity.

At all other times, shares of Class A common stock are classified

as stockholders’

Our Class A common stock features certain redemption rights that are considered to be outside

of our control and subject to the occurrence of uncertain future events.

Accordingly, as of December 31, 2020, 11,226,874 shares

of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’

equity section of our balance sheet.

Net Loss Per Common Share

We comply with

accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.”

Net income per share is computed

by dividing net income (loss) applicable to common stockholders by the weighted average number of common shares of common stock

outstanding for the period.

Our statement of operations includes a

presentation of income per share for common stock subject to redemption in a manner similar to the two-class method of

income per share.

Net income per common share, basic and diluted for Class A common stock subject to redemption is calculated

by dividing the interest earned from cash equivalents held in the Trust Account of approximately $4,500, net of applicable franchise

taxes of approximately $4,500 for the period from June 25, 2020 (inception) through December 31, 2020, by the weighted average

number of shares of Class A common stock subject to redemption that is outstanding for the period.

Net loss per common share,

basic and diluted for Class B common stock and non-redeemable Class A common stock for the period from June 25, 2020 (inception)

through December 31, 2020 is calculated by dividing the general and administration expenses of approximately $717,000 and franchise

taxes of approximately $95,000, resulting in a net loss of approximately $812,000, by the weighted average number of Class B common

stock and non-redeemable Class A common stock outstanding for the period.

Off-Balance Sheet Arrangements and Contractual Obligations

As of December 31, 2020, we did not

have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii)

of Regulation S-K and did not have any commitments or contractual obligations.

The Jumpstart

Our Business Startups Act of 2012 (the “JOBS Act”) contains provisions that, among other things, relax certain reporting

requirements for qualifying public companies.

We qualify as an “emerging growth company”

and under the JOBS Act are

allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies.

We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised

accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.

a result, the financial statements may not be comparable to companies that comply with new or revised accounting pronouncements

as of public company effective dates.

Additionally,

we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act.

Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,”

we choose to rely on

such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system

of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may

be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii)

comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s

report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv)

disclose certain executive compensation related items such as the correlation between executive compensation and performance and

comparisons of the CEO’s compensation to median employee compensation.

These exemptions will apply for a period of five years

following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,”

Recent Accounting

Pronouncements

Our management

does not believe there are any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, that

would have a material effect on our financial statements.

QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined

by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Please see our Financial Statements beginning on page F-1 of

this Annual Report.

CHANGES IN AND DISAGREEMENTS

WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Comparison of the years ended December 31, 2021 and 2020

The following table summarizes our results of operations for the years ended December 31, 2021 and 2020 ( in thousands ):

Year Ended December 31,

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expense):

Interest expense

Interest income

Loss on conversion of convertible notes

Change in fair value of warrant liability

Other expense

Net loss and comprehensive loss

Research and development expenses

Research and development expenses were $48.7 million for the year ended December 31, 2021, compared to $28.2 million for the year ended December 31, 2020.

The increase of $20.5 million was primarily due to an increase in external research and development costs related to clinical trial activities of GEM103.

In addition, research and development personnel costs were higher period over period, including stock-based compensation, due to an increase in headcount in our research and development function to support the advancement of our programs.

General and administrative expenses

General and administrative expenses were $20.3 million for the year ended December 31, 2021, compared to $5.9 million for the year ended December 31, 2020.

The increase of $14.4 million was primarily due to higher personnel-related costs, including stock-based compensation, in support of organizational growth and higher legal, insurance and other professional fees incurred in connection with operating as a public company.

Interest expense

Interest expense was $2.2 million for the year ended December 31, 2021, compared to $6.8 million for the year ended December 31, 2020.

The decrease of $4.6 million was due to the accretion of the beneficial conversion feature discount recognized at the issuance date of the Notes in 2020.

Loss on conversion of convertible notes

The loss on conversion of convertible notes was $0.7 million for the year ended December 31, 2021, compared to $0 for the year ended December 31, 2020.

The increase reflects the difference between the reacquisition price of the Notes and the net carrying amount of the Notes at the time that the Notes converted into shares of Series B preferred stock immediately prior to the closing of the Business Combination.

Liquidity and capital resources

Sources of liquidity and capital

Since inception, we have not generated any revenue from any product sales or any other sources and have incurred significant operating losses and negative cash flows from our operations.

We have not yet commercialized any of our product candidates and do not expect to generate revenue from sales of any product candidates for several years, if at all.

Our net loss was $71.9 million for the year ended December 31, 2021.

As of December 31, 2021, we had an accumulated deficit of $184.7 million.

Prior to the Business Combination, we funded our operations to date primarily with proceeds from the sale of preferred stock, borrowings under convertible promissory notes and borrowings under loan agreements.

In January 2020, we received gross proceeds of $20.1 million from the sale of our preferred stock.

In August 2020, we received gross proceeds of $14.0 million from borrowings under convertible promissory notes.

In February 2021, in connection with the Business Combination, we received net proceeds of $195.9 million.

As of December 31, 2021, we had cash and cash equivalents of $136.6 million.

Continued cash generation is highly dependent on our ability to finance our operations through a combination of equity offerings, debt financings, collaboration arrangements and strategic transactions.

However, our resource requirements could materially change to the extent we identify and enter into any strategic transaction.

Until required for use in our business, we typically invest our cash in investments that are highly liquid, readily convertible to cash with original maturities of 90 days or less at the date of purchase.

We attempt to minimize the risks related to our cash and cash equivalents by maintaining balances in accounts only with accredited financial institutions and, consequently, we do not believe we are subject to unusual credit risk beyond the normal credit risk associated with ordinary commercial banking relationships.

The following table summarizes our cash flows for the year ended December 31, 2021 and 2020 ( in thousands ):

Year Ended December 31,

Net cash used in operating activities

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Net increase in cash, cash equivalents and restricted cash

Operating activities

We do not generate any cash inflows from our operating activities.

Our cash flows from operating activities are significantly influenced by our use of cash for operating expenses and working capital requirements to support the business.

We have historically experienced negative cash flows from operating activities as we invested in developing our platform, drug discovery efforts and related infrastructure.

During the year ended December 31, 2021, we used cash in operating activities of $59.7 million, reflecting a net loss of $71.9 million, partially offset by non-cash charges of $10.3 million and a net change of $1.9 million in our operating assets and liabilities.

The non-cash charges consist primarily of $7.8 million of stock-based compensation expense, $1.6 million accretion of the discount on the Notes, and $0.7 million of expense related to the conversion of the Notes.

The net change in our operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses and other current liabilities and a decrease in deferred offering costs, partially offset by an increase in prepaid expenses and other current assets.

During the year ended December 31, 2020, we used cash in operating activities of $32.7 million, reflecting a net loss of $40.8 million, offset by non-cash charges of $7.8 million and a net change of $0.3 million in our operating assets and liabilities.

The non-cash charges primarily consist of $5.9 million accretion of the discount on the Notes, $1.0 million of stock-based compensation expense and $0.6 million of non-cash interest expense.

The net change in our operating assets and liabilities was primarily due to a decrease in prepaid expenses and other current assets, partially offset by an increase in deferred offering costs.

Investing activities

During the year ended December 31, 2021, net cash provided by investing activities was $0.3 million, consisting primarily of proceeds from the sale of property and equipment, compared to net cash used in investing activities of less than $0.1 million during the year ended December 31, 2020, consisting of purchases of laboratory equipment.

Financing activities

During the year ended December 31, 2021, net cash provided by financing activities was $191.5 million, consisting primarily of $195.9 million of net proceeds received in connection with the Business Combination, partially offset by principal payments made on our term loan.

During the year ended December 31, 2020, net cash provided by financing activities was $34.2 million, consisting primarily of $20.1 million of net proceeds from the issuance of our Series B preferred stock and $14.0 million of net proceeds from the issuance of the convertible promissory notes.

Funding requirements

Our primary use of cash is to fund operating expenses, primarily related to our research and development activities.

However, our resource requirements could materially change to the extent we identify and enter into any strategic transaction.

Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid expenses.

We expect our expenses to decrease in 2022 compared to 2021 due to our planned reduced clinical efforts in 2022 and the restructurings announced in October 2021 and February 2022 in connection with our exploration of strategic alternatives.

To the extent we continue to pursue the development of our product candidates, the timing and amount of our operating expenditures will depend largely on our ability to:

advance preclinical development of our early-stage programs and clinical trials of our product candidates;

manufacture, or have manufactured on our behalf, including sourcing raw materials, our preclinical and clinical drug material and develop processes for late stage and commercial manufacturing;

seek regulatory approvals for any product candidates that successfully complete clinical trials;

establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval and intend to commercialize on our own;

maintain and protect our intellectual property portfolio;

manage the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights, including enforcing and defending intellectual property related claims;

manage the costs of operating as a public company;

realize the anticipated benefits of our restructuring plans.

Identifying potential product candidates and conducting preclinical studies and clinical trials is a time consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales.

In addition, our product candidates, if approved, may not achieve commercial success.

Our commercial revenues, if any, would be derived from sales of products that we do not expect to be commercially available for many years, if ever.

Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.

As of December 31, 2021, we had cash and cash equivalents of $136.6 million.

We believe that our cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements through at least the next twelve months from the filing of this Annual Report on Form 10-K.

We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.

However, our resource requirements could materially change to the extent we identify and enter into any strategic transaction.

Until such time as we can generate substantial product revenue, if ever, and subject to our pursuit of a strategic transaction, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders.

Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates, or grant licenses on terms that may not be favorable to us.

If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves.

Working capital

Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical product candidates, we are unable to estimate the exact amount of our working capital requirements.

Subject to our pursuit of a strategic transaction, our future funding requirements will depend on and could increase significantly as a result of many factors, including:

the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical and clinical trials;

the costs, timing and outcome of regulatory review of our product candidates;

the costs, timing and ability to manufacture our product candidates to supply our clinical and preclinical development efforts and our clinical trials;

the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval;

the costs of raw materials and manufacturing commercial-grade product and necessary inventory to support commercial launch;

the ability to receive additional non-dilutive funding, including grants from organizations and foundations;

the revenue, if any, received from commercial sale of our products, should any of our product candidates receive marketing approval;

the costs of preparing, filing and prosecuting patent applications, obtaining, maintaining, expanding and enforcing our intellectual property rights and defending intellectual property-related claims;

our ability to establish and maintain collaborations and strategic alliances on favorable terms, if at all;

the extent to which we acquire or in-license other product candidates and technologies.

Contractual obligations and commitments

In February 2019, we entered into a term loan facility of up to $10.0 million (the “Term Loan”) with SVB.

The proceeds were used for general corporate and working capital purposes.

Concurrent with the Term Loan, we issued SVB warrants to purchase 15,257 shares of Old Gemini’s Series A preferred stock at an exercise price of $5.46.

At the closing of the Business Combination, these warrants were automatically exercised for 15,257 shares of our common stock.

As of December 31, 2021 and 2020, we had $5.4 million and $10.0 million, respectively, in principal outstanding under the Term Loan.

The Term Loan is governed by a loan and security agreement, entered into in February 2019, between Gemini and SVB (the “SVB Loan Agreement”).

The SVB Loan Agreement provided for two separate tranches under which we could borrow.

April 2019, we borrowed $7.5 million under the first tranche, and in December 2019, we borrowed $2.5 million under the second tranche.

The Term Loan matures in January 2023 and accrues interest at a floating rate per annum equal to the greater of 3.75% or the prime rate minus 1.5% (1.75% as of September 30, 2021).

The Term Loan provides for monthly interest-only payments until February 2021.

Thereafter, payments are payable in equal monthly installments of principal, plus all accrued and unpaid interest.

We may prepay the Term Loan in whole upon 5 days’

prior written notice to SVB.

Any such prepayment of the Term Loan is subject to a prepayment charge of 0.5% of the then outstanding principal balance.

Amounts outstanding during an event of default are payable upon SVB’s demand and will accrue interest at an additional rate of 5.0% per annum of the past due amount outstanding.

In April 2020, we entered into a deferral agreement with SVB to defer scheduled principal repayments on its term loan by six months.

The deferral agreement was offered in connection with SVB’s venture debt relief initiative, which was started due to the COVID-19 pandemic.

Our first principal payment under our credit facility occurred in February 2021.

The required monthly interest-only payment was not impacted by the deferral.

The Term Loan’s new maturity date is January 2023.

At the end of the loan term (whether at maturity, by prepayment in full or otherwise), we are required to pay a final end of term charge to SVB in the amount of 4.0% of the aggregate original principal amount advanced by SVB.

Convertible promissory notes

In August 2020, we entered into a purchase agreement with existing investors to issue $14.0 million in convertible promissory notes, (the “Notes”).

The Notes accrued simple interest at 8% per annum and matured in February 2021.

The Notes served as a bridge loan prior to the PIPE Financing that was completed in connection with the closing of the Business Combination.

The Notes were amended to allow for the principal and interest to convert to shares of Series B preferred stock prior to the closing of the Business Combination.

Accordingly, immediately prior to the closing of the Business Combination, the outstanding principal and interest under the Notes converted into 2,341,316 shares of Series B preferred stock at a per share conversion price of $6.1986.

Contract research and manufacturing organizations

We enter into contracts in the normal course of business with CMOs, CROs and other third parties for the manufacture of our product candidates and to support clinical trials and preclinical research studies and testing.

These contracts are generally cancelable at any time by us following a certain period of notice.

Payments due upon cancellation consist only of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation.

We recorded accrued expenses of approximately $4.0 million in our consolidated balance sheet for expenditures incurred by CROs and CMOs as of December 31, 2021.

Tax-related obligations

To date, we have not recognized any reserves related to uncertain tax positions.

As of December 31, 2021, we had no accrued interest or penalties related to uncertain tax positions.

Critical accounting policies and significant judgments and estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).

The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses.

We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

We evaluate our estimates and assumptions on an ongoing basis.

Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in Note 3 to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

Accrued research and development expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses.

This process involves reviewing open contracts and purchase orders, communicating with our applicable personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs.

The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met;

however, some require advance payments.

We make estimates of our accrued expenses as of each balance sheet date in the consolidated financial statements based on facts and circumstances known to us at that time.

We periodically confirm the accuracy of the estimates with the service providers and make adjustments if necessary.

Examples of estimated accrued research and development expenses include fees paid to:

vendors, including research laboratories, in connection with preclinical development activities;

CROs and investigative sites in connection with preclinical studies and clinical trials;

CMOs in connection with drug substance and drug product formulation of preclinical studies and clinical trial materials.

We base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple research institutions and CROs that supply, conduct and manage preclinical studies and clinical trials on our behalf.

The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows.

There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense.

Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones.

In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period.

If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or the prepaid expense accordingly.

Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period.

To date, our estimated accruals have not differed materially from actual costs incurred.

Stock-based compensation

We measure all stock-based awards granted to employees, directors and non-employees based on the fair value on the date of grant and recognize compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award.

Forfeitures are accounted for as they occur.

We grant stock options and restricted stock awards that are subject to either service or performance-based vesting conditions .

For awards with service-based vesting conditions, we recognize equity-based compensation expense on a straight-line basis over the vesting period.

Compensation expense related to awards to employees and non-employees with performance-based vesting conditions is recognized based on the grant date fair value over the requisite service period using the accelerated attribution method to the extent achievement of the performance condition is probable.

We estimate the probability that certain performance criteria will be met and do not recognize compensation expense until it is probable that the performance-based vesting condition will be achieved.

We classify stock-based compensation expense in our consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.

Determination of Fair Value

Subsequent to the closing of the Business Combination, the fair value of each share of common stock underlying stock-based awards is determined based on the closing price of our common stock as reported by Nasdaq on the date of grant.

We estimate the fair value of stock options using the Black-Scholes option pricing model, which uses as inputs the fair value of our common stock, and certain management estimates, including the expected stock price volatility, the expected term of the award, the risk-free rate, and expected dividends.

Expected volatility is calculated based on reported volatility data for a representative group of publicly traded companies for which historical information is available.

We select companies with comparable characteristics with historical share price information that approximates the expected term of the equity-based awards.

We compute the historical volatility data using the daily closing prices for the selected companies’

shares during the equivalent period that approximates the calculated expected term of the stock options.

We will continue to apply this method until a sufficient amount of historical information regarding the volatility of its stock price becomes available.

The risk-free

interest rate is based on the U.S.

Treasury yield curve in effect at the time of grant commensurate with the expected term assumption.

We use the simplified method, under which the expected term is presumed to be the midpoint between the vesting date and the end of the contractual term.

We utilize this method due to lack of historical exercise data.

The expected dividend yield is assumed to be zero as we have no current plans to pay any dividends on common stock.

Prior to the completion of the Business Combination, given there had been no public market for our common stock, the estimated fair value of our common stock was determined by the board of directors as of the date of each award grant, with input from management, considering our most recently available third-party valuations of common stock.

These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’

Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation .

Our common stock valuations were prepared using an option pricing method (“

OPM ”) or a hybrid method, both of which used market approaches to estimate enterprise value.

The OPM treats common stock and preferred stock as call options on the total equity value of a company, with exercise prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes.

Under this method, the common stock has value only if the funds available for distribution to stockholders exceeded the value of the preferred stock liquidation preferences at the time of the liquidity event, such as a strategic sale or a merger.

A discount for lack of marketability of the common stock is then applied to arrive at an indication of value for the common stock.

The hybrid method is a probability-weighted expected return method (“

PWERM ”) where the equity value in one or more scenarios is calculated using an OPM.

The PWERM is a scenario-based methodology that estimates the fair value of our common stock based upon an analysis of our future values, assuming various outcomes.

The common stock value is based on the probability-weighted present value of expected future investment returns considering each of the possible outcomes available as well as the rights of each class of stock.

The future value of the common stock under each outcome is discounted back to the valuation date at an appropriate risk-adjusted discount rate and probability weighted to arrive at an indication of value for the common stock.

There are significant judgments and estimates inherent in the determination of the fair value of our common stock.

These estimates and assumptions include a number of objective and subjective factors, including external market conditions, the prices at which we sold shares of preferred securities, the superior rights and preferences of securities senior to the common securities at the time of, and the likelihood of, achieving a liquidity event, such as an initial public offering or sale.

Significant changes to the key assumptions used in the valuations could result in different fair values of common stock at each valuation date.

Recently issued accounting pronouncements

Refer to Note 3, Summary of Significant Accounting Policies, to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information regarding recently issued accounting pronouncements.

Emerging growth company and smaller reporting company status

We are an “emerging growth company,”

as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies.

We may take advantage of these exemptions until we are no longer an emerging growth company under Section 107 of the JOBS Act, which provides that an emerging growth company can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards.

We have elected to avail ourselves of the extended transition period and, therefore, while we are an emerging growth company, we will not be subject to new or revised accounting standards at the same time that they become applicable to other public companies that are not emerging growth companies, unless we choose to early adopt a new or revised accounting standard.

We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Additionally, we are a “smaller reporting company”

as defined in Item 10(f)(1) of Regulation S-K.

Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.

We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common stock held by non-affiliates exceeds $250 million as of the prior June 30, or (ii) our annual revenues exceed $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30.

Quantitative and Qualitative D isclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

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 5. Market for Registrant’s Common Equity