What changed in this filing

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Item 1. Financial Statements

2021-08-09 compared with 2021-05-10 · 125 added, 90 removed, 368 unchanged (37% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

(In thousands, except shares and per share data) March 31,

(In thousands, except shares and per share data) June 30,

2021 December 31,

5 unchanged sentences

Property and equipment, net 44,972 30,876

Long-term investments 21,411 —

Right-of-use assets 7,136 3,298

15 unchanged sentences

20,000,000 shares authorized at

March 31, 2021 (unaudited) and December 31, 2020;

shares issued, and no shares outstanding at March 31, 2021

June 30, 2021 (unaudited) and December 31, 2020;

shares issued, and no shares outstanding at June 30, 2021

(unaudited) and December 31, 2020

2 unchanged sentences

80,000,000 shares authorized at

March 31, 2021 (unaudited) and December 31, 2020;

and 19,714,220 shares issued and outstanding at March 31, 2021

June 30, 2021 (unaudited) and December 31, 2020;

and 19,714,220 shares issued and outstanding at June 30, 2021

(unaudited) and December 31, 2020, respectively

Additional paid-in capital 521,950 363,292

Accumulated other comprehensive income 3 6

Accumulated other comprehensive income (expense) ( 21 ) 6

Accumulated deficit ( 103,389 ) ( 71,214 )

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In thousands, except share and per share data) 2021 2020 2021 2020

25 unchanged sentences

Balances at March 31, 2021 22,204,057 $ — $ 517,675 $ 3 $ ( 87,026 ) $ 430,652

Issuance of common stock, net 975 — 14 — — 14

Stock-based compensation expense — — 4,261 — — 4,261

Unrealized loss on investments — — — ( 24 ) — ( 24 )

Net loss — — — — ( 16,363 ) ( 16,363 )

Balances at June 30, 2021 22,205,032 $ — $ 521,950 $ ( 21 ) $ ( 103,389 ) $ 418,540

Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Total

7 unchanged sentences

Balances at March 31, 2020 17,370,564 $ — $ 242,733 $ 24 $ ( 44,388 ) $ 198,369

Issuance of common stock, net 2,293,495 — 117,337 — — 117,337

Stock-based compensation expense — — 807 — — 807

Unrealized gain on investments — — — 16 — 16

Net loss — — — — ( 6,833 ) ( 6,833 )

Balances at June 30, 2020 19,664,059 $ — $ 360,877 $ 40 $ ( 51,221 ) $ 309,696

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

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Three Months Ended

Six Months Ended

(In thousands) 2021 2020

4 unchanged sentences

Stock-based compensation expense 6,508 1,346

Loss on disposals of fixed assets — 3

Non-cash interest expense 1,492 —

10 unchanged sentences

Proceeds from maturities of short-term investments 2,959 4,392

Purchases of long-term investments ( 21,458 ) —

Net cash used in investing activities ( 63,064 ) ( 2,267 )

3 unchanged sentences

Net cash provided by financing activities 144,105 117,712

Net increase (decrease) in cash and cash equivalents 133,903 ( 7,289 )

Net increase in cash and cash equivalents 61,258 104,164

Cash and cash equivalents at beginning of period 268,269 187,514

3 unchanged sentences

Unpaid offering costs $ 36 $ 132

Initial recognition of right-of-use assets and modification $ 4,060 $ —

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

5 unchanged sentences

On June 19, 2018, the Company incorporated Krystal Australia Pty Ltd., an Australian proprietary limited company, for the purpose of undertaking preclinical and clinical studies in Australia.

On April 24, 2019, the Company incorporated Jeune, Inc.

in Delaware, a wholly-owned subsidiary, for the purpose of undertaking preclinical and clinical studies for aesthetic skin conditions.

On April 24, 2019, the Company incorporated Jeune Aesthtics, Inc., formerly known as Jeune, Inc.

("Jeune"), in Delaware, a wholly-owned subsidiary, for the purpose of undertaking preclinical and clinical studies for aesthetic skin conditions.

We are a clinical stage biotechnology company leading the field of redosable gene therapy for the treatment of serious rare diseases.

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The cell’s own machinery then transcribes and translates the encoded effector to treat or prevent disease.

We formulate our vectors for non-invasive or minimally invasive routes of administration at a doctor’s office or potentially in the patient’s home.

Our goal is to develop easy to use, redosable gene therapies to dramatically improve the lives of patients living with rare diseases.

We formulate our vectors for non-invasive or minimally invasive routes of administration at a doctor’s office or potentially in the patient’s home by a healthcare professional.

Our goal is to develop easy to use, medicines to dramatically improve the lives of patients living with rare diseases.

Our innovative technology platform is supported by in-house, commercial scale current good manufacturing practices ("cGMP") manufacturing capabilities.

As of March 31, 2021, the Company had an accumulated deficit of $ 87.0 million.

With the net proceeds raised from its public and private securities offerings, including the public offering of its common stock completed on February 1, 2021, the Company believes that its cash, cash equivalents and short-term investments of approximately $ 403.4 million as of March 31, 2021 will be sufficient to allow the Company to fund its planned operations for at least the next 12 months from the date of this Quarterly Report on Form 10-Q.

As of June 30, 2021, the Company had an accumulated deficit of $ 103.4 million.

With the net proceeds raised from its public and private securities offerings, including the public offering of its common stock completed on February 1, 2021, the Company believes that its cash, cash equivalents and short-term investments of approximately $ 367.7 million as of June 30, 2021 will be sufficient to allow the Company to fund its planned operations for at least the next 12 months from the date of this Quarterly Report on Form 10-Q.

As the Company continues to incur losses, a transition to profitability is dependent upon the successful development, approval and commercialization of its product candidates and the achievement of a level of revenues adequate to support the Company’s cost structure.

29 unchanged sentences

Financial instruments that potentially subject the Company to credit risk consist of cash, cash equivalents and investments.

The Company’s policy is to invest its cash, cash equivalents and investments in money market funds, certificates of deposit and various other bank deposit accounts.

The Company’s policy is to invest its cash, cash equivalents and investments in money market funds, certificates of deposit, corporate bonds, commercial paper, government agency securities and various other bank deposit accounts.

The counterparties to the agreements relating to the Company’s investments consist of financial institutions of high credit standing.

5 unchanged sentences

Cash equivalents are defined as short-term, highly liquid investments with original maturities of 90 days or less at the date of purchase.

Investments with maturities of greater than 90 days but less than one year are classified as short-term investments on the consolidated balance sheets and consist of certificates of deposit.

Investments with maturities of greater than one year are classified as long-term investments on the consolidated balance sheets and consist of certificates of deposit.

Accrued interest on certificates of deposit are also classified as short-term investments.

Investments with maturities of greater than 90 days but less than one year are classified as short-term investments on the consolidated balance sheets and consist of certificates of deposit, commercial paper, corporate bonds, and government agency securities.

Investments with maturities of greater than one year are classified as long-term investments on the consolidated balance sheets and consist of corporate bonds and government agency securities.

Accrued interest on corporate bonds and government agency securities are also classified as short-term investments.

As our entire investment portfolio is considered available for use in current operations, we classify all investments as available-for-sale securities.

Available-for-sale securities are carried at fair value, with unrealized gains and losses reported in accumulated other comprehensive loss, which is a separate component of stockholders’ equity in the consolidated balance sheets.

Fair Value of Financial Instruments

12 unchanged sentences

The Company classifies all of its investments as available-for-sale.

Our available-for-sale, short-term investments, which consist of certificates of deposit, are considered to be Level 2 valuations.

Our available-for-sale, short-term and long-term investments, which consist of certificates of deposit, commercial paper, corporate bonds, and government agency securities are considered to be Level 2 valuations.

The fair value of Level 2 financial assets is determined using inputs that are observable in the market or can be derived principally from or corroborated by observable market data, such as pricing for similar securities, recently executed transactions, cash flow models with yield curves, and benchmark securities.

8 unchanged sentences

Furniture and fixtures 3 years

Leasehold improvement shorter of 8 years or remaining life of lease

Leasehold improvement lesser of remaining useful life or remaining lease term

Construction in progress ("CIP") is not depreciated until the asset is placed in service.

2 unchanged sentences

An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than the carrying amount of the asset.

The Company has no t recognized any impairment losses for the three months ended March 31, 2021 and 2020.

The Company has no t recognized any impairment losses for the three and six months ended June 30, 2021 and 2020.

The Company accounts for its lease agreements in accordance with FASB ASC Topic 842, Leases ("ASC 842").

Right-of-use lease assets represent our right to use the underlying asset during the lease term and the lease obligations represent our commitment to make lease payments arising from the lease.

Right-of-use lease assets and obligations were recognized based on the present value of remaining lease payments over the lease term.

Right-of-use lease assets represent our right to use an underlying asset during the lease term and the lease obligations represent our commitment to make lease payments arising from the lease.

Right-of-use lease assets and obligations are recognized based on the present value of remaining lease payments over the lease term.

As the Company’s lease agreements do not provide an implicit rate and as the Company does not have any external borrowings, we have used an estimated incremental borrowing rate based on the information available at lease commencement in determining the present value of lease payments.

4 unchanged sentences

Once the construction is complete, an assessment is performed to determine whether the lease meets certain "sale-leaseback" criteria.

If the sale-leaseback criteria are determined to be met, the Company will remove the asset and related financial obligation from the condensed consolidated balance sheet and treat the building lease as either an operating or finance lease based on our assessment of the guidance.

If the sale-leaseback criteria are determined to be met, the Company will remove the asset and related financial obligation from the condensed consolidated balance sheet and treat the lease as either an operating or finance lease based on our assessment of the guidance.

If, upon completion of construction, the project does not meet the "sale-leaseback" criteria, the lease will be treated as a financing obligation and the Company will depreciate the asset over its estimated useful life for financial reporting purposes once the asset has been placed into service.

30 unchanged sentences

We have not recorded any reclassifications from other comprehensive gains or losses to net loss during any period presented.

Recent Accounting Pronouncements

2020-08, Codification Improvements to Subtopic 310-20, Receivables - Nonrefundable Fees and Other Costs

In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables - Nonrefundable Fees and Other Costs ("ASU 2020-08") to provide further clarification and update the previously issued guidance in ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20:

Premium Amortization on Purchased Callable Debt Securities) ("ASU 2017-08").

ASU 2017-08 shortened the amortization period for certain callable debt securities purchased at a premium by requiring that the premium be amortized to the earliest call date.

ASU 2020-08 requires that at each reporting period, to the extent that the amortized cost of an individual callable debt security exceeds the amount repayable by the issuer at the next call date, the excess premium shall be amortized to the next call date.

The new standard was effective beginning January 1, 2021 and should be applied on a prospective basis as of the beginning of the period of adoption for existing or newly purchased callable debt securities.

The adoption of ASU 2020-08 did not have a material impact on the Company's financial position or results of operations upon adoption.

Net Loss Per Share Attributable to Common Stockholders

2 unchanged sentences

Common share equivalents consist of common stock issuable upon exercise of stock options and vesting of restricted stock awards.

There were 1,423,540 and 548,193 common share equivalents outstanding as of March 31, 2021 and 2020, respectively, in the form of stock options and unvested restricted stock awards, that have been excluded from the calculation of diluted net loss per common share as their effect would be anti-dilutive for all periods presented.

There were 1,688,965 and 831,110 common share equivalents outstanding as of June 30, 2021 and 2020, respectively, in the form of stock options and unvested restricted stock awards, that have been excluded from the calculation of diluted net loss per common share as their effect would be anti-dilutive for all periods presented.

Three Months Ended

(In thousands, except shares and per share data) (Unaudited)

June 30, Six Months Ended

2021 2020 2021 2020

(In thousands, except shares and per share data) (Unaudited) (Unaudited)

Net loss per common share $ ( 16,363 ) $ ( 6,833 ) $ ( 32,174 ) $ ( 12,174 )

5 unchanged sentences

Fair Value Instruments

The following tables show the Company’s cash, cash equivalents and available-for-sale securities by significant investment category as of March 31, 2021 and December 31, 2020, respectively (in thousands):

March 31, 2021

The following tables show the Company’s cash, cash equivalents and available-for-sale securities by significant investment category as of June 30, 2021 and December 31, 2020, respectively (in thousands):

June 30, 2021

Amortized Cost Gross

3 unchanged sentences

Securities (1)

Cash $ 2,752 $ — $ — $ 2,752 $ 2,752 $ —

Money market instruments 399,420 — — 399,420 399,420 —

402,172 — — 402,172 402,172 —

Certificates of deposit 1,248 — — 1,248 — 1,248

1,248 — — 1,248 — 1,248

Securities (2)

Cash and cash equivalents $ 329,527 $ — $ — $ 329,527 $ 329,527 $ — $ —

Subtotal 329,527 — — 329,527 329,527 — —

Commercial paper 17,483 3 — 17,486 — 17,486 —

Corporate bonds 30,588 1 ( 22 ) 30,567 — 18,209 12,358

government agency securities 11,567 — ( 6 ) 11,561 — 2,508 9,053

Subtotal 59,638 4 ( 28 ) 59,614 — 38,203 21,411

Total $ 389,165 $ 4 $ ( 28 ) $ 389,141 $ 329,527 $ 38,203 $ 21,411

5 unchanged sentences

Securities (1)

Cash $ 9,463 $ — $ — $ 9,463 $ 9,463 $ —

Money market instruments 258,806 — — 258,806 258,806 —

Securities (2)

Cash and cash equivalents $ 268,269 $ — $ — $ 268,269 $ 268,269 $ — $ —

Subtotal 268,269 — — 268,269 268,269 — —

3 unchanged sentences

(1) The Company’s short-term marketable securities mature in one year or less.

(2) The Company's long-term marketable securities mature between one year and two years .

See Note 2 to these unaudited condensed consolidated financial statements for additional discussion regarding the Company’s fair value measurements.

11 unchanged sentences

Property and equipment, net $ 44,972 $ 30,876

Depreciation expense was $ 438 thousand and $ 335 thousand for the three months ended March 31, 2021 and 2020, respectively.

Depreciation expense was $ 475 thousand and $ 914 thousand for the three and six months ended June 30, 2021 and $ 394 thousand and $ 729 thousand three and six months ended June 30, 2020, respectively.

Accrued Expenses and Other Current Liabilities

6 unchanged sentences

Accrued construction in progress 9,170 1,049

Other current liabilities 151 26

Accrued financing costs 36 131

Other current liabilities 330 26

Total $ 15,920 $ 5,109

4 unchanged sentences

The 2016 Lease has been amended several times to increase the area leased, which currently consists of approximately 41,000 square feet.

As a result of the lease amendments, the lease expiration date was extended to February 28, 2027.

This lease includes our 7,500 square foot commercial scale cGMP-compliant manufacturing facility, ANCORIS.

As a result of the lease amendments, the lease expiration date was extended to October 31, 2031.

On December 26, 2019, we entered into a lease agreement for our second commercial gene therapy facility ("ASTRA") in the Pittsburgh, Pennsylvania area ("ASTRA lease") with Northfield I, LLC (the "Landlord" or "Northfield") with an initial lease term that expired on October 31, 2035.

The ASTRA lease contained an option ("Purchase Option") to purchase the

building, related improvements and take corresponding assignment of the Landlord's rights under its existing Ground Lease (the "Ground Lease").

The ASTRA lease contained an option ("Purchase Option") to purchase the building, related improvements and take corresponding assignment of the Landlord's rights under its existing Ground Lease (the

"Ground Lease").

A cash contribution in the amount of $ 2.4 million was paid to escrow on January 21, 2020.

The contribution was intended to reduce the amount of the building construction costs and had the effect of reducing the base rental rate of the lease and as such, was recorded as prepaid rent in the consolidated balance sheet at time of payment.

On October 5, 2020, the Company was provided with notice that the initial delivery conditions of the building had been met, including completion of the building shell, interior slab, and exterior doors, and on October 15, 2020, the Company gave the Landlord notice of its intent to purchase ASTRA for approximately $ 9.4 million, subject to the parties entering into a commercially reasonable purchase and sale agreement.

6 unchanged sentences

As control did not transfer to the Lessor at lease commencement, the transaction continued to be accounted for as construction in progress and a financing obligation.

On March 5, 2021, the purchase closed and the Company determined that reclassification of the construction in progress to buildings and leasehold improvements was not appropriate as the interior of the building was not yet ready for its intended use and as such the building continues to be held under construction in progress as of March 31, 2021.

The building continues to be held under construction in progress as of June 30, 2021.

The interior of the building is currently under construction and is expected to be completed and validated in 2022.

From construction completion to the closing of the purchase, the Company recognized interest expense to accrete the financial obligation to a balance that equaled the cash consideration that was paid upon the close of purchase.

For more information about the expected construction costs associated with ASTRA, see "ASTRA Contractual Obligation" below.

As part of the transaction, the Company also became the accounting owner of the Ground Lease, due to obtaining control over ASTRA, and recorded the applicable operating right-of-use asset and corresponding lease liability as of October 5, 2020.

When the PSA was finalized, the Company took assignment of the Lessor's Ground Lease, in accordance with the Purchase Option, of which lease payments are based on annual payments of $ 82 thousand, and are subject to a cumulative 10 % escalation clause every 5 years through 2071.

As of March 31, 2021, future minimum commitments under the Company’s operating leases were as follows (in thousands):

2021 (remaining nine months) $ 507

As of June 30, 2021, future minimum commitments under the Company’s operating leases were as follows (in thousands):

2021 (remaining six months) $ 457

Thereafter 12,480

3 unchanged sentences

Supplemental condensed consolidated balance sheet information related to leases is as follows:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Operating leases:

5 unchanged sentences

Weighted average discount rate 9.3 % 9.4 %

The Company recorded operating lease costs of $ 218 thousand and $ 164 thousand for the three months ended March 31, 2021 and March 31, 2020, respectively, and variable lease costs of $ 37 thousand and $ 14 thousand for the three months ended March 31, 2021 and March 31, 2020, respectively.

Clinical Supply and Product Manufacturing Agreements

The Company has entered into various product manufacturing and clinical supply agreements with Contract Manufacturing Organizations (“CMOs”) for the manufacture of clinical trial materials and Contract Research Organizations (“CROs”) for clinical trial services.

The product manufacturing and clinical supply agreements provide the terms and conditions under which the CMOs and CROs will formulate, fill, inspect, package, label and test our drug product candidates, B-VEC and KB105 for clinical supply.

The Company is obligated to make milestone payments.

Additionally, certain raw materials, supplies, outsourced testing and other services for the purposes of batch production will be invoiced separately by the CMOs.

The estimated remaining commitment as of March 31, 2021 under these agreements for the manufacturing of our drug product is approximately $ 3.0 million.

The Company recorded operating lease costs of $ 278 thousand and $ 497 thousand for the three and six months ended June 30, 2021 and $ 145 thousand and $ 310 thousand for the three and six months ended June 30, 2020, respectively, and variable lease costs of $ 81 thousand and $ 118 thousand for the three and six months ended June 30, 2021 and $ 15 thousand and $ 28 thousand for the three and six months ended June 30, 2020, respectively.

Agreements with Contract Manufacturing Organizations and Contract Research Organizations

The Company has entered into various agreements with Contract Manufacturing Organizations (“CMOs”) for the manufacture of sterile excipients that are formulated with in-house produced vectors as part of the final drug product applied in certain of our clinical trials.

The Company has also entered into agreements with third-party Contract Research Organizations ("CROs") to provide research and development services to further the Company’s analysis of its product candidates.

The agreements entered into with the CMOs and CROs provide the terms and conditions for their respective services, which may include research and development activities, storage, packaging, labelling, and/or testing of our preclinical and clinical-stage products.

The Company is obligated to make milestone payments under certain of these agreements.

The estimated remaining commitment as of June 30, 2021 under these agreements is approximately $ 3.8 million.

The Company may also be responsible for the payment of a monthly service fee for project management services for the duration of any agreements.

The Company has incurred expenses under these agreements of $ 1.8 million and $ 634 thousand for the three months ended March 31, 2021 and March 31, 2020, respectively.

The Company has incurred expenses under these agreements of $ 718 thousand and $ 2.5 million for the three and six months ended June 30, 2021 and $ 330 thousand and $ 964 thousand for the three and six months ended June 30, 2020, respectively.

Other Contractual Obligations

2 unchanged sentences

Business activities being performed under these contracts primarily include market research and other related activities.

The estimated remaining commitment as of March 31, 2021 is $ 3.5 million.

The Company has incurred expenses under these activities of $ 1.3 million and zero for the three months ended March 31, 2021 and March 31, 2020, respectively.

The estimated remaining commitment as of June 30, 2021 is $ 4.0 million.

The Company has incurred expenses under these activities of $ 974 thousand and $ 2.3 million for the three and six months ended June 30, 2021 and $ 489 thousand for the three and six months ended June 30, 2020, respectively.

ASTRA Contractual Obligations

2 unchanged sentences

These contracts typically call for the payment of fees for services or materials upon the achievement of certain milestones.

The estimated remaining commitment as of March 31, 2021 is $ 13.3 million.

The Company has included costs incurred to-date associated with ASTRA within construction in progress as of March 31, 2021.

The estimated remaining commitment as of June 30, 2021 is $ 38.0 million.

The Company has included costs incurred to-date associated with ASTRA within construction in progress as of June 30, 2021.

On June 30, 2021, the Company entered into a Standard Form of Contract for Construction and the corresponding General Conditions of the Contract for Construction (collectively, the “Agreement”) with The Whiting-Turner Contracting Company (“Whiting-Turner”), pursuant to which Whiting-Turner is constructing and managing the construction of ASTRA.

Subject to certain conditions in the Agreement, the Company will pay Whiting-Turner a contract price consisting of the cost of work plus a fee equal to 1.75 % of the cost of work, subject to a guaranteed maximum price to be agreed upon in an amendment to the Agreement at a later date.

Legal Proceedings

2 unchanged sentences

We answered the complaint on June 26, 2020 by denying the allegations and brought a counterclaim asking the court to declare that we did not misappropriate PeriphaGen’s trade secrets or confidential information, and to further declare that we are the rightful and sole owner of our product candidates and STAR-D platform.

In addition, we filed a third-party complaint against two principals of PeriphaGen, James Wechuck and David Krisky, alleging breach of contract and seeking contribution and

indemnification from them in the event PeriphaGen is awarded damages.

In addition, we filed a third-party complaint against two principals of PeriphaGen, James Wechuck and David Krisky, alleging breach of contract and seeking contribution and indemnification from them in the event PeriphaGen is awarded damages.

On July 29, 2020, PeriphaGen filed its response to our answer and counterclaim, denying the allegations in the counterclaim.

On the same day, Messrs Wechuck and Krisky filed a motion to dismiss the third-party complaint on various grounds, and we have opposed the motion.

On the same day, Messrs Wechuck and Krisky filed a motion to dismiss the third-party complaint on various grounds, and we opposed the motion.

On December 1, 2020, the court ruled on Messrs.

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Sale of Common Stock

On May 21, 2020, the Company completed a public offering of 2,275,000 shares of its common stock to the public at $ 55.00 per share.

Net proceeds to the Company from the offering were $ 117.2 million after deducting underwriting discounts and commissions of approximately $ 7.5 million, and other offering expenses payable by the Company of approximately $ 463 thousand.

On December 31, 2020, the Company entered into a sales agreement (the "Sales Agreement") with Cowen and Company, LLC ("Cowen") with respect to an at-the-market equity offering program ("ATM Program"), under which Cowen will act as the Company's agent and/or principal and may issue and sell from time to time, during the term of the Sales Agreement, shares of its common stock, par value $ 0.0001 per share, having an aggregate offering price up to $ 150.0 million ("Placement Shares").

Related offering expenses payable by the Company were $ 172 thousand.

The issuance and sale of the Placement Shares by the Company under the Sales Agreement will be made pursuant to the Company's effective "shelf" registration statement on Form S-3.

During the three months ended March 31, 2021, 262,500 shares of common stock were issued pursuant to the ATM Program at a weighted average price of $ 66.50 per share for net proceeds of $ 16.9 million, resulting in a remaining $ 132.5 million available for issuance under the ATM Program.

On February 1, 2021, the Company completed a public offering of 2,211,538 shares of its common stock, including 288,461 shares purchased by the underwriters, at $ 65.00 per share.

Net proceeds to the Company from the offering were $ 134.9 million after deducting underwriting discounts and commissions of approximately $ 8.6 million, and other offering expenses payable by the Company of $ 198 thousand.

On December 31, 2020, the Company entered into a sales agreement (the "Sales Agreement") with Cowen and Company, LLC ("Cowen") with respect to an at-the-market equity offering program ("ATM Program"), under which Cowen will act as the Company's agent and/or principal and may issue and sell from time to time, during the term of the Sales Agreement, shares of our common stock, par value $ 0.0001 per share, having an aggregate offering price up to $ 150.0 million ("Placement Shares").

Related offering expenses payable by the Company were $ 172 thousand.

The issuance and sale of the Placement Shares by the Company under the Sales Agreement will be made pursuant to the Company's effective "shelf" registration statement on Form S-3.

During the six months ended June 30, 2021, 262,500 shares of common stock were issued pursuant to the ATM Program at a weighted average price of $ 66.50 per share for net proceeds of $ 17.5 million, resulting in a remaining $ 132.5 million available for issuance under the ATM Program.

On May 21, 2020, the Company completed a public offering of 2,275,000 shares of its common stock to the public at $ 55.00 per share.

Stock-Based Compensation

Stock Options

Stock options granted to employees vest ratably over a four-year period and options granted to directors of the company vest ratably over one year and four-year periods.

Stock options granted to employees vest ratably over four-year periods and options granted to directors of the company vest ratably over one year to four-year periods.

Stock options have a life of ten years .

The Company granted 502,450 and 229,000 stock options to employees and directors of the Company during the three months ended March 31, 2021 and 2020, respectively.

The Company granted 297,500 and 799,950 stock options to employees and directors of the Company during the three and six months ended June 30, 2021, respectively, and 315,400 and 544,400 stock options to employees and directors of the Company during the three and six months ended June 30, 2020, respectively.

The following table summarizes the Company’s stock option activity:

7 unchanged sentences

Cancelled or forfeited ( 46,525 ) $ 53.79

Outstanding at March 31, 2021 1,324,740 $ 54.60 9.2 $ 30,445

Exercisable at March 31, 2021 157,611 $ 21.83 7.3 $ 8,702

(1) Aggregate intrinsic value represents the difference between the closing stock price of our common stock on March 31, 2021 and the exercise price of outstanding in-the-money options.

The total intrinsic value (the amount by which the fair market value exceed the exercise price) of stock options exercised during the three months ended March 31, 2021 and 2020 was $ 808 thousand and $ 656 thousand, respectively.

The weighted-average grant-date fair value per share of options granted to employees during the three months ended March 31, 2021 and 2020 was $ 50.04 and $ 34.37 , respectively.

There was $ 41.2 million of unrecognized stock-based compensation expense related to employees’ option awards that is expected to be recognized over a weighted-average period of 3.5 years as of March 31, 2021.

The Company has recorded aggregate stock-based compensation expense related to the issuance of stock option awards in the condensed consolidated statements of operations for the three months ended March 31, 2021 and 2020 as follows (in thousands):

Three Months Ended March 31,

Outstanding at June 30, 2021 1,590,165 $ 56.77 9.0 $ 22,838

Exercisable at June 30, 2021 253,189 $ 29.73 6.9 $ 9,690

(1) Aggregate intrinsic value represents the difference between the closing stock price of our common stock on June 30, 2021 and the exercise price of outstanding in-the-money options.

The total intrinsic value (the amount by which the fair market value exceed the exercise price) of stock options exercised during the three and six months ended June 30, 2021 was $ 808 thousand and $ 872 thousand, respectively, and during the three and six months ended June 30, 2020 was $ 656 thousand and $ 1.2 million, respectively.

The weighted-average grant-date fair value per share of options granted to employees during the three and six months ended June 30, 2021 was $ 42.53 and $ 47.25 , respectively, and during the three and six months ended June 30, 2020 was $ 29.78 and $ 31.71 , respectively.

There was $ 49.0 million of unrecognized stock-based compensation expense related to employees’ option awards that is expected to be recognized over a weighted-average period of 3.4 years as of June 30, 2021.

The Company has recorded aggregate stock-based compensation expense related to the issuance of stock option awards in the condensed consolidated statements of operations for the three and six months ended June 30, 2021 and 2020 as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(unaudited) (unaudited)

Research and development $ 1,084 $ 181 $ 1,600 $ 370

2 unchanged sentences

We capitalize the portion of stock-based compensation that relates to work performed on the construction of new buildings.

There was $ 37 thousand and zero of stock-based compensation that was capitalized in the three months ended March 31, 2021 and 2020, respectively.

The Company recorded stock-based compensation expense of $ 2.1 million and $ 539 thousand for the three months ended March 31, 2021 and 2020, respectively.

The fair value of options was estimated at the date of grant using the Black-Scholes valuation model with the following weighted-average assumptions for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

There was $ 66 thousand and $ 103 thousand of stock-based compensation that was capitalized in the three and six months ended June 30, 2021, respectively, and zero of stock-based compensation that was capitalized in the three and six months ended June 30, 2020, respectively.

The Company recorded stock-based compensation expense of $ 3.7 million and $ 5.8 million for the three and six months ended June 30, 2021, respectively, and $ 807 thousand and $ 1.3 million for the three and six months ended June 30, 2020, respectively.

The fair value of options was estimated at the date of grant using the Black-Scholes valuation model with the following weighted-average assumptions for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Expected stock price volatility 72 % 76 % 72 % 75 %

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Restricted Stock Awards

Restricted stock awards ("RSAs") granted to employees vest ratably over one year and four-year periods.

Restricted stock awards ("RSAs") granted to employees vest ratably over a four-year period.

Restricted stock awards have a life of ten years .

The Company granted 98,800 and zero RSAs to employees of the Company during the three months ended March 31, 2021 and 2020, respectively.

The Company granted zero and 98,800 RSAs to employees of the Company during the three and six months ended June 30, 2021, respectively, and zero RSAs to employees of the Company during the three and six months ended June 30, 2020, respectively.

The following table summarizes the Company’s RSA activity:

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Forfeited — $ —

Non-vested RSAs as of March 31, 2021 98,800 $ 78.89

As of March 31, 2021, 98,800 RSAs were outstanding.

Non-vested RSAs as of June 30, 2021 98,800 $ 78.89

As of June 30, 2021, 98,800 RSAs were outstanding.

The fair value of each restricted stock was $ 78.89 reflecting the closing price of our common stock on the grant date.

The Company recorded stock-based compensation expense related to RSAs of $ 182 thousand and zero for the three months ended March 31, 2021 and 2020, respectively, within general and administrative expenses in the accompanying condensed consolidated statements of operations (in thousands):

Three Months Ended March 31,

The Company recorded stock-based compensation expense related to RSAs of $ 486 thousand and $ 668 thousand for the three and six months ended June 30, 2021 and zero for the three and six months ended June 30, 2020, respectively, within general and administrative expenses in the accompanying condensed consolidated statements of operations (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(unaudited) (unaudited)

General and administrative $ 486 $ — $ 668 $ —

Total stock-based compensation $ 486 $ — $ 668 $ —

Shares remaining available for grant under the Company’s stock incentive plan were 1,893,631 , with a sublimit for incentive stock options of 402,692 , at March 31, 2021.

Shares remaining available for grant under the Company’s stock incentive plan were 1,626,006 , with a sublimit for incentive stock options of 379,566 , at June 30, 2021.

Related Party Transactions

In December 2019, the Company advanced $ 420 thousand to a member of our management team to cover the personal payroll and income taxes on their taxable income from NSO exercises.

This employee repaid the Company in the full amount on January 6, 2020.

This employee repaid the Company in full in January 2020.

Subsequent Events

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements