What changed in this filing

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Item 1. Financial Statements

2023-05-08 compared with 2022-11-07 · 181 added, 219 removed, 313 unchanged (56% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data) September 30,

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

2023 December 31,

19 unchanged sentences

Stockholders' equity

Preferred stock;

$ 0.00001 par value;

20,000,000 shares authorized at

September 30, 2022 and December 31, 2021;

shares issued, and no shares outstanding at September 30, 2022

and December 31, 2021

Common stock;

$ 0.00001 par value;

80,000,000 shares authorized a September 30, 2022 and December 31, 2021;

25,709,664 shares issued and outstanding at September 30, 2022;

80,000,000 shares authorized at March 31, 2023 and December 31, 2022;

25,796,213 shares issued and outstanding at March 31, 2023;

and 25,763,743 shares issued and outstanding at December 31, 2022

8 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(In thousands, except share and per share data) 2023 2022

4 unchanged sentences

Loss from operations ( 48,823 ) ( 50,222 )

Other Income (Expense)

Interest and other income, net 3,526 257

Interest expense — — — ( 1,492 )

Net loss $ ( 45,297 ) $ ( 49,965 )

10 unchanged sentences

Stockholders'

(In thousands, except shares) Shares Amount Capital Income (Loss) Deficit Equity

(In thousands, except shares) Shares Amount Capital (Loss) Deficit Equity

Balances at January 1, 2023 25,763,743 $ — $ 803,718 $ ( 728 ) $ ( 280,759 ) $ 522,231

Issuance of common stock, net 42,021 — 2,208 — — 2,208

Shares surrendered for taxes and forfeitures ( 10,379 ) — ( 649 ) — — ( 649 )

Shares surrendered for taxes ( 9,551 ) — ( 749 ) — ( 749 )

Stock-based compensation expense — — 10,599 — — 10,599

Unrealized gain (loss) on investments and other — — — ( 1,034 ) — ( 1,034 )

Unrealized gain on investments and other — — — 574 — 574

Net loss — — — — ( 45,297 ) ( 45,297 )

Balances at March 31, 2023 25,796,213 $ — $ 815,776 $ ( 154 ) $ ( 326,056 ) $ 489,566

Issuance of common stock, net 472,706 — 30,748 — — 30,748

Shares surrendered for taxes and forfeitures ( 7,500 ) — — — — —

Stock-based compensation expense — — 8,335 — — 8,335

Unrealized gain (loss) on investments and other — — — ( 348 ) — ( 348 )

Net loss — — — — ( 28,108 ) ( 28,108 )

Balances at June 30, 2022

25,664,287 $ — $ 779,583 $ ( 1,545 ) $ ( 218,857 ) $ 559,181

Issuance of common stock, net 45,377 — 2,176 — — 2,176

Stock-based compensation expense — — 9,195 — — 9,195

Unrealized gain (loss) on investments and other — — — 70 — 70

Net loss — — — — ( 29,850 ) ( 29,850 )

Balances at September 30, 2022

25,709,664 $ — $ 790,954 $ ( 1,475 ) $ ( 248,707 ) $ 540,772

Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Total

Stockholders'

(In thousands, except shares) Shares Amount Capital Income (Loss) Deficit Equity

(In thousands, except shares) Shares Amount Capital (Loss) Deficit Equity

Balances at January 1, 2022 25,207,985 $ — $ 734,523 $ ( 163 ) $ ( 140,784 ) $ 593,576

Issuance of common stock, net 1,475 — 55 — — 55

Shares surrendered for taxes and forfeitures ( 10,379 ) — ( 649 ) — ( 649 )

Stock-based compensation expense — — 6,571 — — 6,571

Unrealized gain (loss) on investments and other — — — ( 3 ) — ( 3 )

Unrealized (loss) on investments and other — — — ( 1,034 ) — ( 1,034 )

Net loss — — — — ( 49,965 ) ( 49,965 )

Balances at March 31, 2022 25,199,081 $ — $ 740,500 $ ( 1,197 ) $ ( 190,749 ) $ 548,554

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

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

Unrealized gain (loss) on investments and other — — — ( 24 ) — ( 24 )

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

Balances at June 30, 2021

22,205,032 $ — $ 521,950 $ ( 21 ) $ ( 103,389 ) $ 418,540

Issuance of common stock, net 32,952 — 1,534 — — 1,534

Stock-based compensation expense — — 3,745 — — 3,745

Unrealized gain (loss) on investments and other — — — 7 — 7

Net loss — — — — ( 15,589 ) ( 15,589 )

Balances at September 30, 2021

22,237,984 $ — $ 527,229 $ ( 14 ) $ ( 118,978 ) $ 408,237

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

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Nine Months Ended

September 30,

Three Months Ended

(In thousands) 2023 2022

4 unchanged sentences

Stock-based compensation expense 10,437 6,430

Loss on disposals of fixed assets 22 —

Non-cash interest expense — 1,492

Other, net ( 605 ) ( 135 )

5 unchanged sentences

Accrued expenses and other current liabilities ( 3,465 ) 2,013

Accrued litigation settlement 12,500 25,000

Net cash (used in) operating activities ( 26,156 ) ( 15,493 )

3 unchanged sentences

Proceeds from maturities of investments 154,520 24,037

Net cash used in investing activities ( 108,875 ) ( 100,230 )

Net cash provided by (used in) investing activities 3,563 ( 55,908 )

Financing Activities

1 unchanged sentence

Taxes paid related to settlement of restricted stock awards ( 749 ) ( 649 )

Repayment of ASTRA build to suit liability — ( 7,960 )

Net cash provided by financing activities 32,278 145,613

Net (decrease) increase in cash and cash equivalents ( 154,837 ) 18,345

Net cash provided by (used in) financing activities 1,474 ( 542 )

Effect of exchange rate changes on cash and cash equivalents ( 36 ) —

Net (decrease) in cash and cash equivalents ( 21,155 ) ( 71,943 )

Cash and cash equivalents at beginning of period 161,900 341,246

7 unchanged sentences

Krystal Biotech, Inc.

(the “Company,” or “we” or other similar pronouns) commenced operations on April 15, 2016.

On March 31, 2017, the Company converted from a California limited liability company to a Delaware C-corporation, and changed its name from Krystal Biotech LLC to Krystal Biotech, Inc.

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

On April 23, 2019, the Company incorporated Jeune Aesthetics, 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.

On January 7, 2022 and August 25, 2022, the Company incorporated Krystal Biotech Switzerland GmbH and Krystal Biotech Netherlands, B.V., respectively, for the purpose of establishing initial operations in Europe for the development and commercialization of Krystal's pipeline.

(the “Company,” or “we” or other similar pronouns) commenced operations in April 2016.

In March 2017, the Company converted from a California limited liability company to a Delaware C-corporation, and changed its name from Krystal Biotech LLC to Krystal Biotech, Inc.

In June 2018, the Company incorporated a wholly-owned subsidiary in Australia for the purpose of undertaking preclinical and clinical studies in Australia.

In April 2019, the Company incorporated Jeune Aesthetics Inc ("Jeune Aesthetics"), in Delaware, a wholly-owned subsidiary, for the purpose of undertaking preclinical and clinical studies for aesthetic skin conditions.

In January 2022, August 2022, and December 2022, the Company incorporated wholly-owned subsidiaries in Switzerland, Netherlands, and France, respectively, for the purpose of establishing initial operations in Europe for the development and commercialization of Krystal's product pipeline.

We are a biotechnology company focused on developing and commercializing genetic medicines for patients with rare diseases.

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Our innovative technology platform is supported by in-house, commercial scale Current Good Manufacturing Practices ("CGMP") manufacturing capabilities.

As of September 30, 2022, the Company had an accumulated deficit of $ 248.7 million.

With the net proceeds raised from its public offerings, the Company believes that its cash, cash equivalents and short-term investments of approximately $ 394.4 million as of September 30, 2022 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 March 31, 2023, the Company had an accumulated deficit of $ 326.1 million.

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.

The Company may never achieve profitability and unless and until it does, the Company will continue to need to raise additional capital or obtain financing from other sources.

Management intends to fund future operations through the sale of equity and debt financings and may also seek additional capital through arrangements with strategic partners or other sources.

Management intends to fund future operations through its on hand cash and cash equivalents, the sale of equity, debt financings, and may also seek additional capital through arrangements with strategic partners or other sources.

There can be no assurance that additional funding will be available on terms acceptable to the Company, if at all.

The Company is subject to risks common to companies in the biotechnology industry, including but not limited to the failure of product candidates in clinical and preclinical studies, the development of competing product candidates or other technological innovations by competitors, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to c ommercialize product candidates.

The Company expects to incur significant costs to expand its commercialization capabilities in advance of the potential global regulatory approvals of its lead product, beremagene geperpavec (“B-VEC”).

The Company believes that its cash, cash equivalents and short-term investments of approximately $ 350.4 million as of March 31, 2023 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.

Summary of Significant Accounting Policies

3 unchanged sentences

All intercompany balances and transactions have been eliminated in consolidation.

Certain prior period amounts have been reclassified to conform to the current period presentation.

The reclassified amounts have no impact on the Company’s previously reported financial position or results of operation.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC on February 28, 2022.

Risks and Uncertainties

The coronavirus ("COVID-19") pandemic has resulted, and is likely to continue to result, in significant national and global economic uncertainty and may adversely affect the Company's business.

The Company is continuing to actively monitor the impact of the COVID-19 pandemic and the related effects on its financial condition, liquidity, operations, suppliers, industry, and workforce.

The full extent, consequences, and duration of the COVID-19 pandemic and the resulting impact on the Company cannot currently be predicted.

The Company will continue to evaluate the impact that the pandemic could have on the operations, financial position, and the results of operations and cash flows during fiscal year 2022.

Securities and Exchange Commission (“SEC”) on February 27, 2023.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes.

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes.

Actual results could materially differ from those estimates.

Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements.

Management considers many factors in developing the estimates and assumptions that are used in the preparation of these financial statements.

Management must apply significant judgment in this process.

1 unchanged sentence

The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates.

This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements.

Estimates are used in the following areas including stock-based compensation expense, accrued expenses, the fair value of financial instruments, the incremental borrowing rate for lease liabilities, and the valuation allowance included in the deferred income tax calculation.

Estimates are used in the following areas:

stock-based compensation expense, accrued expenses, the fair value of financial instruments, the incremental borrowing rate for lease liabilities, and the valuation allowance included in the deferred income tax calculation.

Segment and Geographical Information

13 unchanged sentences

Investments with maturities of greater than one year are classified as long-term investments on the condensed 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.

Accrued interest on investments is also classified as short-term investments on the condensed consolidated balance sheets.

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 condensed consolidated balance sheets.

Any premium arising at purchase is amortized to the earliest call date and any discount arising at purchase is accreted to maturity.

Amortization and accretion of premiums and discounts are recorded in interest and other income, net, in the consolidated statements of operations.

Fair Value of Financial Instruments

9 unchanged sentences

There have been no transfers between Level 1, Level 2, and Level 3 in any periods presented.

The carrying amounts of financial instruments consisting of cash and cash equivalents, investments, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities included in the Company’s condensed consolidated financial statements, are reasonable estimates of fair value, primarily due to their short maturities.

The carrying amounts of financial instruments consisting of cash and cash equivalents, investments, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities included in the Company’s condensed consolidated financial statements, approximate fair value, primarily due to their short maturities.

Our available-for-sale, short-term and long-term investments, which consist of commercial paper, corporate bonds, and U.S.

government agency securities are considered to be Level 2 valuations.

government agency securities are considered to be Level 2 financial instruments.

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.

5 unchanged sentences

Depreciation is recorded using the straight-line method over the estimated useful lives of the respective assets, which are as follows:

Buildings and building improvements 7 - 47 years

Computer equipment and software 3 - 7 years

Laboratory and manufacturing equipment 3 - 20 years

Manufacturing equipment 3 - 20 years

Laboratory equipment 3 - 10 years

Furniture and fixtures 3 - 7 years

Leasehold improvement lesser of remaining useful life or remaining lease term

Leasehold improvements lesser of useful life or remaining life of lease

The Company reviews the estimated useful lives of its property and equipment on a continuing basis.

2 unchanged sentences

Changes in estimates are accounted for on a prospective basis by depreciating the current carrying values of the assets over their revised remaining useful lives.

The review performed by the Company in the current year indicated that certain pieces of lab equipment would be functional for a longer term than previously estimated and as a result, the Company increased the useful lives of these assets from 7 to 15 years.

This change was effective and accounted for prospectively beginning in Q3 2022.

The effect of this change in useful life estimate did not result in a material change to depreciation expense.

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

Construction in progress is not depreciated until the asset is placed in service.

Impairment of Long-Lived Assets

The Company evaluates long-lived assets for potential impairment when events or changes in circumstances indicate the carrying value of the assets may not be recoverable.

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 and nine months ended September 30, 2022 and 2021, respectively.

We review the recoverability of the net book value of long-lived assets whenever events and circumstances indicate ("triggering events") that the net book value of an asset may not be recoverable from the estimated undiscounted future cash flows expected to result from its use and eventual disposition.

In cases where a triggering event occurs and undiscounted expected future cash flows are less than the net book value, we recognize an impairment loss equal to an amount by which the net book value exceeds the fair value of the asset.

Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

The Company has no t identified any triggering events or recognized any impairment losses for the three months ended March 31, 2023 and 2022, respectively.

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

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

Right-of-use lease assets represent the right to use an underlying asset during the lease term and the lease liabilities represent the 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.

2 unchanged sentences

Variable lease expense is recognized in the period in which the obligation for the payment is incurred.

In addition, the Company also has made an accounting policy election to exclude leases with an initial term of twelve months or less from its balance sheet and to account for lease and non-lease components of its operating leases as a single component.

In addition, the Company also has made an accounting policy election to exclude leases with an initial term of twelve months or less from its condensed consolidated balance sheets and to account for lease and non-lease components of its operating leases as a single component.

For lease arrangements where it has been determined that the Company has control over an asset that is under construction and is thus considered the accounting owner of the asset during the construction period, the Company records a construction in progress asset and corresponding financial obligation on the condensed consolidated balance sheet.

5 unchanged sentences

These costs include employee compensation costs, facilities and overhead, preclinical and clinical activities, clinical manufacturing costs, contract management services, regulatory and other related costs.

The Company estimates contract research and clinical trials materials manufacturing expenses based on the services performed pursuant to contracts with research organizations and manufacturing organizations that manufacture materials used in the Company’s ongoing preclinical and clinical studies.

The Company estimates contract research and manufacturing expenses based on the services performed pursuant to contracts with research organizations and manufacturing organizations that manufacture materials used in the Company’s ongoing preclinical and clinical studies.

Non-refundable advanced payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized.

1 unchanged sentence

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

These estimates are based on communications with the third-party service providers and the Company’s estimates of accrued expenses using information available at each balance sheet date.

These estimates are based on communications with third-party service providers and the Company’s estimates of accrued expenses using information available at each balance sheet date.

If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly.

1 unchanged sentence

The Company applies the fair value recognition provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification, or ASC, Topic 718, Compensation—Stock Compensation ("ASC 718"), to account for stock-based compensation.

Compensation costs related to stock options granted are based on the estimated fair value of the awards on the date of grant.

Compensation costs related to equity awards granted are based on the estimated fair value of the awards on the date of grant.

ASC 718 requires all stock-based payments, including grants of stock options and restricted stock, to be recognized in the consolidated statements of operations based on their grant-date fair values.

Compensation expense is recognized on a straight-line basis based on the grant-date fair value over the associated service period of the award, which is generally the vesting term.

Compensation expense for stock options, restricted stock awards, and restricted stock units is recognized on a straight-line basis based on the grant-date fair value over the associated service period of the award, which is generally the vesting term.

Compensation expense for performance-based restricted stock units is recognized for the awards that are probable of vesting over the service period of the award.

On a quarterly basis, management estimates the probable number of performance-based restricted stock units that would vest until such time that the ultimate achievement of the performance criteria are known.

The Company estimates the fair value of its stock options using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including:

3 unchanged sentences

and (iv) expected dividends.

Once the Company's own sufficient historical volatility data was

obtained, the Company eliminated the use of a representative peer group and began using only its own historical volatility data in its estimate of expected volatility.

The Company estimates the expected term of its stock options using the “simplified” method, whereby the expected term equals the arithmetic mean of the vesting term and the original contractual term of the option.

The risk-free interest rates are based on US Treasury securities with a maturity date commensurate with the expected term of the associated award.

The Company has never paid and does not expect to pay dividends in the foreseeable future.

The Company estimates stock price volatility by using its own historical data.

The expected term of the Company’s stock options is estimated using the “simplified” method, whereby the expected term equals the arithmetic mean of the vesting term and the original contractual term of the option.

The risk-free interest rates are based on U.S.

Treasury securities with a maturity date commensurate with the expected term of the associated award.

The Company has never paid and does not expect

to pay dividends in the foreseeable future.

The Company accounts for forfeitures as they occur.

2 unchanged sentences

Comprehensive loss is defined as the change in equity during a period from transactions from non-owner sources.

Unrealized gains or losses on available-for-sale securities is a component of other comprehensive gains or losses.

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

Unrealized gains or losses on available-for-sale securities is a component of other comprehensive gains or losses and is presented net of taxes.

We record reclassifications from other comprehensive gains or losses to interest and other income, net on the condensed consolidated statements of operations related to realized gains on sales of available-for-sale securities.

The Company reviews its securities quarterly to determine whether an other-than-temporary impairment has occurred.

The Company determined that there were no other-than-temporary impairments during the three months ended March 31, 2023 and 2022.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other accounting standard setting bodies that the Company adopts as of the specified effective date.

The Company does not believe that the adoption of recently issued standards have or may have a material impact on the condensed consolidated statements or disclosures.

From time to time, new accounting pronouncements are issued by the FASB that the Company adopts as of the specified effective date.

There were no recently adopted accounting pronouncements that had a material impact on the Company’s condensed consolidated financial statements, and no recently issued accounting pronouncements that are expected to have a material impact on the Company’s condensed consolidated financial statements.

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 3,565,110 and 1,900,638 common share equivalents outstanding as of September 30, 2022 and 2021, 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 3,829,535 and 3,226,962 common share equivalents outstanding as of March 31, 2023 and 2022, 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

September 30, Nine Months Ended

September 30,

(In thousands, except share and per share data) 2023 2022

6 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 September 30, 2022 and December 31, 2021, respectively (in thousands):

September 30, 2022

The following tables show the Company’s cash, cash equivalents and available-for-sale securities by significant investment category as of March 31, 2023 and December 31, 2022, respectively (in thousands):

March 31, 2023

Amortized Cost Gross

31 unchanged sentences

Property and equipment, net consist of the following (in thousands):

September 30,

2023 December 31,

1 unchanged sentence

Leasehold improvements 24,442 24,217

Manufacturing equipment 10,236 9,783

Building and building improvements 9,736 —

Laboratory equipment 2,108 2,089

Furniture and fixtures 1,164 957

Computer equipment and software 338 100

Laboratory and manufacturing equipment 10,968 5,530

Total property and equipment 170,959 168,477

1 unchanged sentence

Property and equipment, net $ 163,073 $ 161,684

Depreciation expense was $ 669 thousand and $ 1.6 million for the three and nine months ended September 30, 2022 and $ 474 thousand and $ 1.4 million for the three and nine months ended September 30, 2021, respectively.

Depreciation expense was $ 1.1 million and $ 462 thousand for the three months ended March 31, 2023 and 2022, respectively.

The Company placed a portion of its second commercial scale CGMP facility, ASTRA, into service during the three months ended March 31, 2023 as it was determined that certain assets were ready for their intended use.

On March 27, 2023, the Company received the permanent occupancy permit for ASTRA which allowed the Company to begin utilizing certain portions of the building.

As a result, assets relating to ASTRA were reclassified from construction in progress to leasehold improvements, manufacturing equipment, buildings and building improvements, furniture and fixtures, or computer equipment and software as of March 31, 2023.

As certain building improvements are not yet complete and certain qualification activities are still underway, the Company will continue to hold the remaining assets within construction in progress until validation has been completed and the assets are ready for their intended use.

Validation of the facility is expected to be completed in 2023.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

September 30,

2023 December 31,

Accrued litigation settlement $ 12,500 $ —

Accrued construction in progress 8,407 11,452

2 unchanged sentences

Accrued preclinical and clinical expenses 1,635 1,365

Accrued financing costs 10 26

Accrued taxes 122 83

Other current liabilities 321 267

Accrued taxes 51 43

Total $ 29,414 $ 23,305

Commitments and Contingencies

Significant Contracts and Agreements

Lease Agreements

On May 26, 2016, the Company signed an operating lease for laboratory and office space that commenced in June 2016 and was scheduled to expire on October 31, 2017 (the “2016 Lease”).

The 2016 Lease has been amended several times to increase the area leased, which currently consists of approximately 47,000 square feet and includes the commercial scale cGMP-compliant manufacturing facility, ANCORIS.

As a result of the lease amendments, the 2016 Lease expiration date was extended to October 31, 2031.

On September 30, 2022, the Company amended the 2016 Lease ("Short-Term Amendment") to add a short-term lease for additional office space that commenced on October 1, 2022 and expires on September 30, 2023.

The amendment increased the area leased by approximately 7,000 square feet through September 30, 2023, resulting in a total area leased of approximately 54,000 square feet.

On December 26, 2019, the Company entered into a lease agreement for a second commercial gene therapy facility ("ASTRA") in the Pittsburgh, Pennsylvania area ("ASTRA lease") with Northfield I, LLC (the "Landlord", "Northfield", or "Lessor") 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").

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.

As a result of the Company's ability to exercise its option to purchase ASTRA, the Company obtained control over the construction in progress of ASTRA as of October 5, 2020.

The Company recorded a $ 10.0 million CIP asset and a corresponding build to suit lease liability related to the costs incurred by the Landlord, offset by the previous cash contributions of $ 2.4 million.

On January 29, 2021, the Company entered into a Purchase and Sale Agreement ("PSA") for ASTRA with Northfield related to the purchase option exercised by the Company on October 15, 2020, for a purchase price of $ 9.4 million.

The Company held approximately $ 1.5 million on deposit with Northfield under the existing lease agreement and applied this deposit as a credit against the purchase price at closing.

On February 1, 2021, Northfield delivered the space as substantially complete and made the space available for access by the Company, thus triggering lease commencement.

As a result, the Company concluded that this transaction did not qualify for sale-leaseback accounting because it did not meet the definition of a sale.

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.

The building continues to be held under construction in progress as of September 30, 2022.

The interior of the building is currently under construction and is expected to be completed in 1H 2023.

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 Obligations" 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.

On December 15, 2021, the Company entered into a 3 year lease agreement for the Boston, Massachusetts office that commenced in January 2022 and expires in January 2025.

On May 16, 2022, the Company entered into a 16 month lease agreement for the Zug, Switzerland office that commenced on September 1, 2022 and expires December 31, 2023.

As of September 30, 2022, future minimum commitments under the Company’s operating leases with lease terms in excess of 12 months were as follows (in thousands):

2022 (remaining three months) $ 404

Thereafter 12,062

Future minimum operating lease payments $ 18,199

Interest 9,077

Present value of lease liability $ 9,122

Due to the Short-Term Amendment not exceeding twelve months, the Company has not recorded a right-of-use asset or corresponding lease liability for the amendment as of September 30, 2022.

Future minimum remaining operating lease payments under this amendment are $ 40 thousand and $ 121 thousand for the years ending December 31, 2022 and 2023, respectively.

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

September 30, 2022 December 31, 2021

Operating leases:

Right-of-use assets $ 8,253 $ 7,228

Current portion of lease liability 1,547 1,041

Lease liability 7,575 6,983

Total lease liability $ 9,122 $ 8,024

Weighted average remaining lease term, in years 12.6 14.4

Weighted average discount rate 9.4 % 9.5 %

The components of the Company's lease expense are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Operating lease expense $ 399 $ 339 $ 1,200 $ 836

Variable lease expense 48 65 168 183

Total lease expense $ 447 $ 404 $ 1,368 $ 1,019

Agreements with Contract Manufacturing Organizations and Contract Research Organizations

Agreements with Contract Research Organizations and Contract Manufacturing Organizations

The Company enters into various agreements in the normal course of business with Contract Research Organizations ("CROs"), Contract Manufacturing Organizations ("CMOs") and other third parties for preclinical research studies, clinical trials and testing and manufacturing services.

The agreements with CMOs relate to the manufacturing of sterile gel that is mixed with in-house produced vectors as part of the final drug product applied in certain of our clinical trials.

These agreements may also include research and development activities, storage, packaging, labeling, 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 September 30, 2022 under these agreements is approximately $ 2.4 million.

The agreements with CMOs primarily relate to the manufacturing of our cell and virus banks and for the manufacturing of our sterile gel that is mixed with in-house produced vectors as part of the final drug product for B-VEC.

Agreements with third parties may also include research and development consulting activities, clinical-

trial agreements, storage, packaging, labeling, and/or testing of our preclinical and clinical-stage or pre-commercial products.

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

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 $ 2.1 million and $ 5.1 million for each of the three and nine months ended September 30, 2022 and $ 744 thousand and $ 3.3 million for the three and nine months ended September 30, 2021.

Commercial Preparedness Activities

The Company has contracted with various third parties to facilitate, coordinate and perform agreed upon commercial preparedness and market research activities relating to our lead product candidate.

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

The estimated remaining commitment as of September 30, 2022 is $ 6.2 million.

The Company has incurred expenses under these activities of $ 3.2 million and $ 9.5 million for the three and nine months ended September 30, 2022 and $ 1.8 million and $ 4.1 million for the three and nine months ended September 30, 2021.

The estimated remaining commitment as of March 31, 2023 under these agreements is approximately $ 2.0 million.

The Company has incurred research and development expenses under these agreements of $ 2.0 million and $ 1.8 million for the three months ended March 31, 2023 and 2022, respectively.

ASTRA Contractual Obligations

The Company has contracted with various third parties to complete the interior build-out of our second CGMP facility, ASTRA.

Additionally, the Company has entered into various non-cancellable purchase agreements for long-lead materials to help avoid potential schedule disruptions or material shortages.

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 September 30, 2022 is $ 10.3 million.

The Company has included costs incurred to-date associated with ASTRA within construction in progress as of September 30, 2022.

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 interior construction of

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.

Effective September 13, 2021, the Company entered into a guaranteed maximum price amendment (the "Amendment") to the Agreement to set forth the guaranteed maximum price, as well as the date by which Whiting-Turner is to achieve Substantial Completion (as defined in the Agreement).

Under the Amendment, the guaranteed maximum price to be paid by the Company is $ 84.1 million, subject to certain additions and deductions by change orders as provided by the Agreement.

Whiting-Turner’s work under the Agreement represents a portion of the work necessary to complete construction of the ASTRA facility and, therefore the date of Substantial Completion of Whiting-Turner’s work under the Agreement does not equate to the date of completion of ASTRA.

The guaranteed maximum price under the Agreement with Whiting-Turner constitutes only a portion of the total estimated cost of building and equipping ASTRA as there are various other third parties engaged in the project for which contracts are not individually material.

The estimated remaining commitment as of March 31, 2023 is $ 11.9 million and primarily relates to the remaining building improvements and certain qualification activities of the facility.

The Company has included costs incurred to-date associated with the ongoing build-out of ASTRA within construction in progress.

As of March 31, 2023, Substantial Completion, as defined in the Standard Form of Contract for Construction and the corresponding General Conditions of the Contract for Construction (the “Agreement”) with Whiting-Turner Contracting Company (“Whiting-Turner”), the construction manager for ASTRA, had not been achieved.

Legal Proceedings

On May 1, 2020, a complaint was filed against the Company in the United States District Court for the Western District of Pennsylvania by PeriphaGen, Inc.

In May 2020, a complaint was filed against the Company in the United States District Court for the Western District of Pennsylvania by PeriphaGen, Inc.

("PeriphaGen"), which also named our Chief Executive Officer and President, R&D, Krish Krishnan and Suma Krishnan, respectively.

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If all milestones are achieved, the total consideration for settling the dispute, acquiring certain assets, and granting of a license from PeriphaGen will be $ 75.0 million.

The Company recorded the $ 25.0 million under litigation settlement expense on the condensed consolidated statements of operations for the nine months ended September 30, 2022.

The additional contingent milestone payments were not deemed probable due to uncertainty in the achievement of these milestones as of September 30, 2022, and therefore no additional accrual has been recorded.

The Company has received $ 0 and $ 768 thousand of insurance proceeds during the three and nine months ended September 30, 2022 and Company recorded an additional $ 372 thousand as a receivable within prepaid expenses and other current assets on the condensed consolidated balance sheet as management determined that the amount was probable of collection relating to legal defense costs and expenses associated with the PeriphaGen litigation.

The Company recorded the upfront settlement payment of $ 25.0 million under litigation settlement expense on the condensed consolidated statements of operations for the three months ended March 31, 2022.

In accordance with ASC Topic 450, Contingencies , the Company has determined that FDA approval of B-VEC is now probable, and accordingly has accrued for an additional $ 12.5 million litigation settlement liability as of March 31, 2023.

The remaining contingent milestone payments were not deemed probable due to uncertainty in the achievement of these milestones as of March 31, 2023, and therefore no additional accrual has been recorded.

The Company has received $ 0 and $ 768 thousand of insurance proceeds during the three months ended March 31, 2023 and 2022, respectively.

The reimbursements have been recorded as an offset to our legal fees included in general and administrative expenses on the condensed consolidated statements of operations and within operating activities on the condensed consolidated statements of cash flows.

As of March 31, 2023, future minimum commitments under the Company’s operating leases with lease terms in excess of 12 months were as follows (in thousands):

2023 (remaining nine months) $ 1,240

Thereafter 10,762

Future minimum operating lease payments $ 17,395

Interest 8,637

Present value of lease liability $ 8,758

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

March 31, 2023 December 31, 2022

Operating leases:

Right-of-use assets $ 7,814 $ 8,042

Current portion of lease liability 1,553 1,561

Lease liability 7,205 7,372

Total lease liability $ 8,758 $ 8,933

Weighted average remaining lease term, in years 12.4 12.5

Weighted average discount rate 9.4 % 9.4 %

The components of the Company's lease expense are as follows:

Three Months Ended

Operating lease expense $ 463 $ 409

Variable lease expense 59 49

Total lease expense $ 522 $ 458

Capitalization

Sale of Common Stock

The Company sells shares of common stock from time to time pursuant to its previously executed sales agreement (the "Sales Agreement") with Cowen and Company, LLC ("Cowen") with respect to an at-the-market equity offering program ("ATM Program") finalized on December 31, 2020, under which Cowen acts 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 common stock having an aggregate offering price up to $ 150.0 million ("Placement Shares").

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

During 2021, the

Company issued and sold 262,500 shares of common stock at a weighted average price of $ 66.50 per share for net proceeds of $ 16.9 million after deducting selling commissions of approximately $ 524 thousand.

During the nine months ended September 30, 2022, the Company issued and sold 434,782 shares of common stock at a weighted average price of $ 69.00 per share for net proceeds of $ 29.1 million after deducting selling commissions of approximately $ 900 thousand, resulting in a remaining $ 102.5 million available for issuance under the ATM Program.

On December 3, 2021, the Company completed an underwritten public offering of 2,866,667 shares of its common stock, including 200,000 shares purchased by the underwriters pursuant to their option to purchase additional shares, at $ 75.00 per share.

Net proceeds to the Company from the offering were $ 201.9 million after deducting underwriting discounts and commissions of approximately $ 12.9 million, and other offering expenses payable by the Company of $ 227 thousand.

On February 1, 2021, the Company completed an underwritten public offering of 2,211,538 shares of its common stock, including 288,461 shares purchased by the underwriters pursuant to their option to purchase additional shares, 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.

The Company sold shares of common stock from time to time pursuant to its previously executed sales agreement (the "Sales Agreement") with Cowen and Company, LLC ("Cowen") with respect to an at-the-market equity offering program ("ATM Program") finalized on December 31, 2020, under which Cowen acted as the Company's agent and/or principal and could issue and sell from time to time, during the term of the Sales Agreement, shares of common stock having an aggregate offering price up to $ 150.0 million ("Placement Shares").

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

There were no shares issued under the ATM Program during the three months ended March 31, 2023 and 2022.

As of March 31, 2023, there was a remaining $ 102.5 million available for issuance under the ATM Program.

The ATM Program expired on May 4, 2023.

Stock-Based Compensation

In 2017, the Company adopted the 2017 IPO Stock Plan (the “Plan”), which governs the issuance of stock options and restricted stock to employees, certain non-employee consultants, and directors.

Initially, the Company reserved 900 thousand shares for issuance under the Plan with an initial sublimit for incentive stock options of 900 thousand shares.

On an annual basis, the amount of shares available for issuance under the Plan increases by an amount equal to four percent of the total outstanding shares as of the last day of the preceding calendar year.

The sublimit of incentive stock options is not subject to the increase.

The Company has historically granted stock options and restricted stock awards to its employees.

In February 2023, the Company began issuing restricted stock units and performance-based restricted stock units to certain employees.

Stock Options

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

Options granted to employees and non-employees vest ratably over a four-year period and stock options granted to directors of the Company vest ratably over one -year to three -year periods.

Stock options have a life of ten years .

The Company granted 189,000 and 1,913,000 stock options to employees and directors of the Company during the three and nine months ended September 30, 2022, respectively, and 297,500 and 799,950 stock options to employees and directors of the Company during the three and nine months ended September 30, 2021, respectively.

The Company granted zero and 45,000 stock options to non-employees during the three and nine months ended September 30, 2022, respectively, and 50,000 stock options to non-employees during the three and nine months ended September 30, 2021, respectively.

The Company granted 287,600 and 1,179,500 stock options to employees, non-employees, and directors of the Company during the three months ended March 31, 2023 and 2022, respectively.

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

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Expired — $ —

Outstanding at September 30, 2022 3,498,510 $ 60.38 8.8 $ 37,213

Exercisable at September 30, 2022 637,315 $ 48.74 7.1 $ 14,225

(1) Aggregate intrinsic value represents the difference between the closing stock price of our common stock on September 30, 2022 and the exercise price of outstanding in-the-money options.

The total intrinsic value (the amount by which the fair market value exceeds the exercise price) of stock options exercised during the three and nine months ended September 30, 2022 was $ 1.3 million and $ 2.1 million, respectively, and during the three and nine months ended September 30, 2021 was $ 64 thousand and $ 872 thousand, respectively.

The weighted-average grant-date fair value per share of options granted to employees, non-employees, and directors during the three and nine months ended September 30, 2022 was $ 49.59 and $ 43.66 , respectively, and during the three and nine months ended September 30, 2021 was $ 34.85 and $ 43.31 , respectively.

There was $ 105.5 million of unrecognized stock-based compensation expense related to employees', non-employees', and directors’ option awards that is expected to be recognized over a weighted-average period of 3.1 years as of September 30, 2022.

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 nine months ended September 30, 2022 and 2021 as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Outstanding at March 31, 2023 3,785,135 $ 62.75 8.5 $ 66,066

Exercisable at March 31, 2023 961,428 $ 55.08 7.6 $ 24,033

(1) Aggregate intrinsic value represents the difference between the closing stock price of our common stock on March 31, 2023 and the exercise price of outstanding in-the-money options.

The total intrinsic value (the amount by which the fair market value exceeds the exercise price) of stock options exercised during the three months ended March 31, 2023 and 2022 was $ 1.1 million and $ 36 thousand, respectively

The weighted-average grant-date fair value per share of options granted to employees, non-employees, and directors during the three months ended March 31, 2023 and 2022 was $ 56.86 and $ 43.09 , respectively.

There was $ 109.2 million of unrecognized stock-based compensation expense related to employees', non-employees', and directors’ option awards that is expected to be recognized over a weighted-average period of 2.8 years as of March 31, 2023.

The Company has recorded 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, 2023 and 2022 as follows (in thousands):

Three Months Ended March 31,

Research and development $ 2,353 $ 1,368

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Total stock-based compensation $ 9,461 $ 5,950

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

There was $ 137 thousand and $ 423 thousand of stock-based compensation that was capitalized in the three and nine months ended September 30, 2022, respectively, and $ 79 thousand and $ 182 thousand of stock-based compensation that was capitalized in the three and nine months ended September 30, 2021, 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 nine months ended September 30, 2022 and 2021:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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, 2023 and 2022:

Three Months Ended March 31,

Expected stock price volatility 75 % 78 %

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Forfeiture rate — % — %

Dividend yield — % — %

Restricted Stock Awards

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

The Company granted zero RSAs to employees of the Company during the three and nine months ended September 30, 2022, respectively, and zero and 98,800 RSAs to employees of the Company during the three and nine months ended September 30, 2021, respectively.

The Company granted zero RSAs to employees of the Company during each of the three months ended March 31, 2023 and March 31, 2022.

Number of Shares Weighted Average

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Vested ( 12,649 ) $ 78.89

Surrendered for taxes ( 9,551 ) $ 78.89

Non-vested RSAs as of March 31, 2023

$ 44,400 $ 78.89

There was $ 3.3 million of unrecognized stock-based compensation expense related to employees’ RSAs that is expected to be recognized over a weighted-average period of 1.9 years as of March 31, 2023.

The Company recorded stock-based compensation expense related to RSAs in the condensed consolidated statement of operations for the three months ended March 31, 2023 and 2022 as follows (in thousands):

Three Months Ended March 31,

General and administrative $ 432 $ 480

Total stock-based compensation $ 432 $ 480

Restricted Stock Units

Restricted stock units (“RSUs”) granted to employees vest ratably over a four-year period.

The Company granted 186,900 and zero RSUs to employees of the Company during the three months ended March 31, 2023, and 2022, respectively.

Number of Shares Weighted Average

Non-vested RSUs as of December 31, 2022 —

Granted 186,900 $ 81.91

Surrendered or forfeited —

Non-vested RSAs as of September 30, 2022

Non-vested RSUs as of March 31, 2023

186,900 $ 81.91

There was $ 4.2 million of unrecognized stock-based compensation expense related to employees’ awards that is expected to be recognized over a weighted-average period of 2.4 years as of September 30, 2022.

The Company recorded stock-based compensation expense related to RSAs in the condensed consolidated statement of operations for the three and nine months ended September 30, 2022 and 2021 as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

There was $ 15.0 million of unrecognized stock-based compensation expense related to employees’ RSU awards that is expected to be recognized over a weighted-average period of 3.9 years as of March 31, 2023.

The Company recorded stock-based compensation expense related to RSUs in the condensed consolidated statement of operations for the three months ended March 31, 2023 and 2022 as follows (in thousands):

Three Months Ended March 31,

Research and Development $ 143 $ —

General and administrative 186 —

Total stock-based compensation $ 329 $ —

Performance-Based Restricted Stock Units

Performance-based restricted stock units (“PSUs”) granted to employees vest ratably over two years based upon continued service through the vesting date and the achievement of specific regulatory and commercial performance criteria as determined by the Compensation Committee of the Company’s Board of Directors.

The performance criteria are to be completed by the end of the year in which the PSU awards were granted.

Each PSU represents the right to receive one share of the Company's common stock upon vesting.

The Company recognizes stock-based compensation expense for the fair value of the PSU awards relating to the portion of the awards that are probable of vesting over the service period.

On a quarterly basis, management estimates the probable number of PSU’s that would vest until such time that the ultimate achievement of the performance criteria are known.

As of March 31, 2023, the Company estimates that 100 % of the PSUs granted will be eligible to vest.

The Company granted 60,000 and zero PSUs to employees of the Company during the three months ended March 31, 2023 and 2022, respectively.

Number of Shares Weighted Average

Non-vested PSUs as of December 31, 2022 —

Granted 60,000 $ 81.91

Surrendered or forfeited —

Non-vested PSUs as of March 31, 2023

60,000 $ 81.91

There was $ 4.7 million of unrecognized stock-based compensation expense related to employees’ PSU awards that is expected to be recognized over a weighted-average period of 1.9 years as of March 31, 2023.

The Company recorded stock-based compensation expense related to PSUs in the condensed consolidated statement of operations for the three months ended March 31, 2023 and 2022 as follows (in thousands):

Three Months Ended March 31,

General and administrative $ 215 $ —

Total stock-based compensation $ 215 $ —

Shares remaining available for grant under the Company’s stock incentive plan were 607,366 , with a sublimit for incentive stock options of 7,223 , at September 30, 2022.

Shares remaining available for grant under the Company’s stock incentive plan were 1,005,626 , with a sublimit for incentive stock options of 2,629 , at March 31, 2023.

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

There was $ 162 thousand and $ 141 thousand of stock-based compensation that was capitalized in the three months ended March 31, 2023 and 2022, respectively.

Subsequent Events

The Company evaluates events or transactions that occur after the balance sheet date, but prior to the issuance of the financial statements, to identify matters that require disclosure.

The Company evaluates events or transactions that occur after the balance sheet date, but prior to the issuance of the financial statements, to identify matters that require recognition or disclosure.

The Company concluded that no subsequent events have occurred that would require recognition or disclosure in the condensed consolidated financial statements.

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