What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-08 compared with 2021-08-02 · 130 added, 86 removed, 407 unchanged (35% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

Current assets

3 unchanged sentences

Total current assets

Capitalized software, net

Other noncurrent assets

15 unchanged sentences

100,000,000 shares authorized;

or outstanding as of June 30, 2021 and December 31, 2020, respectively

or outstanding as of September 30, 2021 and December 31, 2020, respectively

Common stock;

1 unchanged sentence

125,000,000 shares authorized;

42,721,566 shares issued and outstanding as of June 30, 2021 and December 31, 2020

42,721,566 shares issued and outstanding as of September 30, 2021 and December 31, 2020

Additional paid-in capital

7 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Collaborative revenue

28 unchanged sentences

( 269,358,007

Issuance of common stock in a public offering

Costs related to issuance of common stock

Vesting of restricted stock units

Stock-based compensation

Balances at September 30, 2020

( 277,470,620

Balances at January 1, 2021

6 unchanged sentences

( 304,189,343

Stock-based compensation

Balances at September 30, 2021

( 313,394,750

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

8 unchanged sentences

Prepaid expenses and other current assets

Capitalized software

Other noncurrent assets

Accounts payable

26 unchanged sentences

Notes to Condensed Consolidated Financial Statements

As of June 30, 2021 and for the Six Months Ended June 30, 2021 and 2020

As of September 30, 2021 and for the Nine Months Ended September 30, 2021 and 2020

NOTE 1 — NATURE OF OPERATIONS AND LIQUIDITY

1 unchanged sentence

Minerva Neurosciences, Inc.

(“Minerva” or the “Company”) is a clinical-stage biopharmaceutical company focused on the development and commercialization of product candidates to treat patients suffering from central nervous system diseases (“CNS”).

The Company’s lead product candidate is roluperidone (f/k/a MIN-101), a compound the Company is developing for the treatment of negative symptoms in patients with schizophrenia, and MIN-301, a compound the Company is developing for the treatment of Parkinson’s disease.

7 unchanged sentences

The Company has limited capital resources and has incurred recurring operating losses and negative cash flows from operations since inception.

As of June 30, 2021, the Company has an accumulated deficit of approximately $ 304.2 million and net cash used in operating activities was approximately $ 11.1 million during the six months ended June 30, 2021.

As of September 30, 2021, the Company has an accumulated deficit of approximately $ 313.4 million and net cash used in operating activities was approximately $ 19.8 million during the nine months ended September 30, 2021.

Management expects to continue to incur operating losses and negative cash flows from operations in the future.

The Company has financed its operations to date from proceeds from the sale of common stock, warrants, loans, convertible promissory notes, collaboration agreements and royalty sales.

As of June 30, 2021, the Company had cash, cash equivalents, and restricted cash of $ 74.3 million.

As of September 30, 2021, the Company had cash, cash equivalents, and restricted cash of $ 65.7 million.

The Company believes that its existing cash, cash equivalents, and restricted cash will be sufficient to meet its cash commitments for at least the next 12 months after the date that the interim condensed consolidated financial statements are issued.

4 unchanged sentences

The Company will need to raise additional capital in order to continue to fund operations and fully fund later stage clinical development programs.

Specifically, management continues to evaluate the MIN-301 program in regards to current liquidity, timing of future development, and potential revenue.

The Company believes that it will be able to obtain additional working capital through equity financings or other arrangements to fund future operations;

7 unchanged sentences

1:21-cv-10051 , respectively, against the Company and the Company’s Chairman and Chief Executive Officer (collectively, the “Defendants").

The complaints are nearly identical and allege that the Defendants made material false and/or misleading statements regarding the development of the Company’s drug candidate roluperidone purportedly causing losses to investors who acquired the Company’s common stock between May 15, 2017 and November 30, 2020.

The complaints are nearly identical and allege that

the Defendants made material false and/or misleading statements regarding the development of the Company’s drug candidate roluperidone purportedly causing losses to investors who acquired the Company’s common stock between May 15, 2017 and November 30, 2020.

The complaints do not quantify any alleged damages but, in addition to attorneys' fees and costs, plaintiffs seek to recover damages on behalf of themselves and others who acquired the Company’s stock during the putative class period at allegedly inflated prices and purportedly suffered financial harm as a result.

11 unchanged sentences

To support the health and well-being of its employees, partners and communities, the Company implemented work-from-home policies for its employees, which continue to be in effect.

While certain jurisdictions, including Massachusetts, have begun a phased re-opening of businesses and governmental agencies, there remain limitations on the physical operations of businesses and prohibitions on certain non-essential gatherings, and it is unclear if such phased re-openings will continue or be rolled back, and there is uncertainty about when, if, or how the Company’s workforce may return.

The effects of the state executive order, local shelter-in-place orders, government-imposed quarantines and the Company’s work-from-home policies, including the uncertainty about their duration, may negatively impact productivity, disrupt our business and delay the clinical programs and timelines.

While global vaccination efforts are underway and certain jurisdictions, including Massachusetts, have reopened businesses and governmental agencies, there remain limitations on the physical operations of businesses and prohibitions on certain non-essential gatherings, and we are unable to accurately predict the full impact that COVID-19 will have due to numerous uncertainties, including the duration of the outbreak, the result of vaccination efforts, resurgence of the virus, actions that may be taken by governmental authorities, the impact on our business including our clinical programs and timelines, and the impact to the business of our service providers and partners.

While the COVID-19 pandemic has not had a material adverse impact on the Company’s operations to date, this disruption, if sustained or recurrent, could have a material adverse effect on the Company’s operating results, its ability to raise capital needed to develop and commercialize products and the Company’s overall financial condition.

7 unchanged sentences

Under those rules, certain notes and financial information that are normally required for annual financial statements can be condensed or omitted.

In the opinion of the Company’s management, the accompanying financial statements contain all adjustments (consisting of items of a normal and recurring nature) necessary to present fairly the financial position as of June 30, 2021, the results of operations for the three and six months ended June 30, 2021 and 2020 and cash flows for the six months ended June 30, 2021 and 2020.

The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the full year.

When preparing financial statements in conformity with GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

Actual results could differ from those estimates.

In the opinion of the Company’s management, the accompanying financial statements contain all adjustments (consisting of items of a normal and recurring nature) necessary to present fairly the financial position as of September 30, 2021, the results of operations for the three and nine months ended September 30, 2021 and 2020 and cash flows for the nine months ended September 30, 2021 and 2020.

The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the full year.

The consolidated balance sheet as of December 31, 2020 was derived from the audited annual financial statements.

The accompanying unaudited condensed consolidated financial statements and notes thereto

should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 8, 2021.

The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 8, 2021.

Consolidation

18 unchanged sentences

Cash accounts with any type of restriction are classified as restricted.

The Company maintained restricted cash balances as collateral for corporate credit cards in the amount of $ 0.1 million at each of June 30, 2021 and December 31, 2020.

The Company maintained restricted cash balances as collateral for corporate credit cards in the amount of $ 0.1 million at each of September 30, 2021 and December 31, 2020.

Marketable securities

3 unchanged sentences

The Company’s investments in marketable securities were classified as Level 2 within the fair value hierarchy.

As of June 30, 2021, all marketable securities have matured.

As of September 30, 2021, all marketable securities have matured.

Research and development costs

6 unchanged sentences

If the actual timing of the performance of services or the level of effort varies from the estimate, the accrual is adjusted accordingly.

The expenses for some trials may be recognized on a straight-line basis if the anticipated costs are expected to

be incurred ratably during the period.

The expenses for some trials may be recognized on a straight-line basis if the anticipated costs are expected to be incurred ratably during the period.

Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the consolidated financial statements as prepaid or accrued expenses.

2 unchanged sentences

Such assets are initially measured at their acquisition date fair values.

The initial fair values of the research projects are recorded as intangible assets on the balance sheet, rather than expensed, regardless of whether these assets have an alternative future use.

The initial fair values of the

research projects are recorded as intangible assets on the balance sheet, rather than expensed, regardless of whether these assets have an alternative future use.

The amounts capitalized are being accounted for as indefinite-lived intangible assets, subject to impairment testing, until completion or abandonment of research and development efforts associated with the project.

5 unchanged sentences

Alternatively, the Company may bypass this qualitative assessment for some or all of its indefinite-lived intangibles and perform the quantitative impairment test that compares the fair value of the indefinite-lived intangible asset with the asset’s carrying amount.

There was no impairment of IPR&D for the three and six months ended June 30, 2021 or 2020.

There was no impairment of IPR&D for the three and nine months ended September 30, 2021 or 2020.

Stock-based compensation

4 unchanged sentences

The fair value of restricted stock units (“RSUs”) is equal to the closing price of the Company’s common stock on the date of grant.

An accounting policy change was made by the Company related to the accounting for non-employee awards on January 1, 2019 as a result of the adoption of ASU No.

2018-07, Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting for which the Company now accounts for non-employee awards in the same manner as employee awards.

See Note 8 for information on the Company’s performance-based restricted stock units (“PRSU”) grants.

The date of expense recognition for grants to non-employees is the earlier of the date at which a commitment for performance by the counterparty to earn the equity instrument is reached or the date at which the counterparty’s performance is complete.

19 unchanged sentences

Expenditures for maintenance and repairs are charged to expense as incurred.

Effective January 1, 2019, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), using the required modified retrospective approach and utilizing the effective date as its date of initial application, for which prior periods are presented in accordance with the previous guidance in ASC 840, Leases (“ASC 840”).

The Company accounts for capitalized software in accordance with the Financial Accounting Standards Board (“ FASB”) Accounting Standards Codification (“ ASC”) Topic 350, Intangibles—Goodwill and Other (“ASC 350-40”), which provides guidance for computer software developed or obtained for internal use.

The Company is required to continually evaluate the stage of the implementation process to determine whether costs are expensed or capitalized.

Costs incurred during the preliminary project phase or planning and research phase are expensed as incurred.

Costs incurred during the development phase, such as material and direct services costs, compensation costs of employees associated with the development and interest cost, are capitalized as incurred.

Costs incurred during the post-implementation or operation phase, such as training and maintenance costs, are expensed as incurred.

In addition, costs incurred to modify existing software that result in additional functionality are capitalized as incurred.

Capitalized costs are amortized over the expected useful life of the asset.

In August 2018, the FASB issued ASU No.

2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract .

This new guidance requires a customer in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred.

Also, capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement.

8 unchanged sentences

As a result, the Company utilizes its incremental borrowing rate, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term and in a similar economic environment.

In transition to ASC 842, the Company utilized the remaining lease term of its leases in determining the appropriate incremental borrowing rates.

In transition to FASB ASC Topic 842, Leases (“ASC 842”), the Company utilized the remaining lease term of its leases in determining the appropriate incremental borrowing rates.

In accordance with ASC 842, components of a lease should be allocated between lease components (e.g., land, building, etc.) and non-lease components (e.g., common area maintenance, consumables, etc.).

6 unchanged sentences

If required, the Company compares the estimated undiscounted future net cash flows to the related asset’s carrying value to determine whether there has been an impairment.

If an asset is considered impaired, the asset is written down to fair value, which is based either on discounted cash flows or appraised values in the period the impairment becomes known.

The Company believes that all long-lived assets are recoverable, and no impairment was deemed necessary at June 30, 2021 and 2020.

If an asset is considered impaired, the asset is written down to fair value, which is based either on discounted cash flows or appraised

values in the period the impairment becomes known.

The Company believes that all long-lived assets are recoverable, and no impairment was deemed necessary at September 30, 2021 and 2020.

The Company tests its goodwill for impairment annually, or whenever events or changes in circumstances indicate an impairment may have occurred, by comparing its reporting unit’s carrying value to its fair value.

4 unchanged sentences

The Company tested its goodwill for impairment as of November 30, 2020.

There was no impairment of goodwill for the six months ended June 30, 2021 and 2020.

There was no impairment of goodwill for the nine months ended September 30, 2021 and 2020.

Revenue recognition

21 unchanged sentences

As a result, the Company recorded the upfront payment of $ 60 million from this transaction as a liability related to the sale of future royalties to be amortized to interest expense using the effective interest rate method over the life of the arrangement.

The liability related to sale of future royalties and the related interest expense are based on our current estimates of future royalties expected to be paid over the life of the arrangement.

Under the terms of the agreement, all payments from Royalty Pharma to Minerva, including the initial upfront payment of $60 million as well as amortized interest expense, are not repayable to Royalty Pharma in the event that Janssen discontinues the clinical development of seltorexant or ceases to pursue its commercialization at a future date for any reason.

The liability related to sale of future royalties and the related interest expense is based on our current estimates of future royalties expected to be paid over the life of the arrangement.

The Company will periodically assess the expected royalty payments using a combination of internal projections and forecasts from external sources.

To the extent the Company’s future estimates of royalty payments are greater or less than previous estimates or the estimated timing of such payments is materially different than its previous estimates, the Company will prospectively recognize related non-cash interest expense.

To the extent the Company’s future estimates of royalty

payments are greater or less than previous estimates or the estimated timing of such payments is materially different than its previous estimates, the Company will prospectively recognize related non-cash interest expense.

For further discussion of the sale of future royalties, please refer to Note 6, Sale of Future Royalties.

7 unchanged sentences

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

Recently adopted accounting pronouncements

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808):

Clarifying the Interaction between Topic 808 and Topic 606 .

This update is intended to clarify that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606.

The Company adopted the new standard on January 1, 2020.

In January 2017, the FASB issued ASU No.

2017-04, Intangibles — Goodwill and Other (Topic 350).

The new standard simplifies the test for goodwill impairment.

The Company adopted the new standard on January 1, 2020.

NOTE 3 — ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consist of the following:

June 30, 2021

September 30, 2021

December 31, 2020

8 unchanged sentences

The following table sets forth the computation of basic and diluted (loss) income per share for common stockholders:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Net (loss) income

5 unchanged sentences

Net (loss) income per ordinary share:

The following securities outstanding at June 30, 2021 and 2020 have been excluded from the calculation of weighted average shares outstanding as their effect on the calculation of (loss) income per share is antidilutive:

Three Months Ended June 30,

Six Months Ended June 30,

The following securities outstanding at September 30, 2021 and 2020 have been excluded from the calculation of weighted average shares outstanding as their effect on the calculation of (loss) income per share is antidilutive:

Three Months Ended September 30,

Nine Months Ended September 30,

Common stock options

Restricted stock units

Performance-based restricted stock units

Common stock warrants

9 unchanged sentences

T he Company does not have any future performance obligations under the agreement and would recognize any future royalty revenues in the periods of the sale of the related products.

January 2021, the Company sold its rights to these potential royalties to Royalty Pharma.

In January 2021, the Company sold its rights to these potential royalties to Royalty Pharma.

Please refer to Note 6 further discussion of the sale of future royalties.

NOTE 6 — SALE OF FUTURE ROYALTIES

On January 19, 2021, the Company entered into an agreement with Royalty Pharma under which Royalty Pharma acquired Minerva’s royalty interest in seltorexant for an upfront payment of $ 60 million and up to an additional $ 95 million in additional milestone payments.

These milestone payments are contingent upon the achievement of certain clinical, regulatory and commercial milestones for seltorexant by Janssen or any other party in the event that Janssen sells seltorexant.

1 unchanged sentence

As such, the Company applied the debt recognition guidance under ASC 470, Debt , and recorded the upfront payment of $ 60 million as a liability related to the sale of future royalties (“Royalty Obligation”), which will be amortized under the interest method over the estimated life of the agreement.

In addition, in accordance with ASC 470, Debt , the Company will account for any royalties received in the future as non-cash royalty revenue.

1 unchanged sentence

In order to determine the amortization of the Royalty Obligation, the Company is required to estimate the total amount of future royalty payments to Royalty Pharma over the life of the Agreement.

In addition to the $60 million upfront payment, up to an additional $95 million in additional milestone payments will also be recorded as a liability related to the sale of future royalties when they are received and amortized under the interest method over the estimated remaining life of the agreement.

In addition to the $60 million upfront payment, up to an additional $95

million in potential milestone payments will also be recorded as a liability related to the sale of future royalties when they are received and amortized under the interest method over the estimated remaining life of the agreement.

At execution, the Company’s estimate of this total interest expense resulted in an effective annual interest rate of approximately 10.5 %.

As of September 30, 2021, the Company estimated the effective annual interest rate to be approximately 10.7 %.

This estimate contains significant assumptions that impact both the amount recorded at execution and the interest expense that will be recognized over the royalty period.

4 unchanged sentences

Changes to any of these factors could result in increases or decreases to both royalty revenues and interest expense.

The following table shows the activity of the Royalty Obligation since the transaction inception through June 30, 2021:

June 30, 2021

The following table shows the activity of the Royalty Obligation since the transaction inception through September 30, 2021:

September 30, 2021

Upfront payment from the sale of future royalties

12 unchanged sentences

The fair value of the warrants was included as a discount to the term loans drawn at such time and also as a component of additional paid-in capital and were amortized to interest expense over the term of the loan.

Although the term loans were repaid in August 2018, all related warrants were outstanding and exercisable as of June 30, 2021.

Although the term loans were repaid in August 2018, all related warrants were outstanding and exercisable as of September 30, 2021.

NOTE 8 — STOCK AWARD PLAN AND STOCK-BASED COMPENSATION

3 unchanged sentences

In June 2020, the Company increased the aggregate number of shares of common stock authorized for issuance under the Plan by 2,000,000 shares.

Stock option activity for employees and non-employees for the six months ended June 30, 2021 is as follows:

Option Exchange Program

On June 11, 2021, the Company’s stockholders, upon recommendation of the board of directors of the Company, approved a one-time stock option exchange program (the “Exchange Program”) for certain employee option holders (including its named executive officers) (the “Eligible Participants”) who remained employed by the Company through the completion of the Exchange Program.

The Exchange Program permitted Eligible Participants to surrender stock options issued and outstanding under the Plan granted before July 1, 2020, with a per-share exercise price of $ 4.47 or greater (the “Eligible Options”), in exchange for a grant of performance-based restricted stock units (“PRSUs”) that will settle in shares of the Company’s common stock upon vesting.

50 % of the new PRSUs will vest upon the U.S.

Food and Drug Administration’s (“FDA”) acceptance of a new drug application for roluperidone, provided that such acceptance is not “over protest” and occurs within three years after the grant date.

The remaining new PRSUs will vest upon roluperidone receiving FDA marketing approval provided that such approval occurs within five years after the grant date.

On July 6, 2021, the Company filed with the SEC a Tender Offer Statement on Schedule TO disclosing the terms and conditions of the Exchange Program.

The Exchange Program closed on August 3, 2021.

On August 6, 2021, options to purchase 7,631,844 shares of the Company’s common stock were exchanged for 3,813,150 PRSUs.

Options surrendered in the Exchange Program were cancelled and shares subject to the cancelled options again became available for issuance under the Plan .

The non-cash incremental stock-based compensation cost associated with the Exchange Program was $ 0.5 million.

This incremental cost was measured as the excess of the fair value of each new PRSU, measured as of the date the new PRSUs were granted, over the fair value of the stock options surrendered in exchange for the new PRSU, measured immediately prior to the cancellation.

This incremental compensation cost will be recognized when it is deemed probable that the two vesting conditions of the PRSUs will be achieved.

Stock Option Awards

Stock option activity for employees and non-employees for the nine months ended September 30, 2021 is as follows:

Stock Options

2 unchanged sentences

Outstanding January 1, 2021

Outstanding June 30, 2021

Exercisable June 30, 2021

Cancelled/Forfeited (1)

Outstanding September 30, 2021

Exercisable September 30, 2021

Available for future grant

The weighted average grant-date fair value of stock options outstanding on June 30, 2021 was $ 4.13 per share.

Total unrecognized compensation costs related to non-vested stock options at June 30, 2021 were approximately $ 7.6 million and are expected to be recognized within future operating results over a weighted-average period of 1.64 years.

The total intrinsic value of the options exercised during the six months ended June 30, 2021, and 2020 was zero and approximately $ 0.9 million, respectively.

7,631,844 shares of the Company’s common stock were cancelled during the Exchange Program .

The weighted average grant-date fair value of stock options outstanding on September 30, 2021 was $ 3.13 per share.

Total unrecognized compensation costs related to non-vested stock options at September 30, 2021 were approximately $ 1.5 million and are expected to be recognized within future operating results over a weighted-average period of 1.2 years.

The total intrinsic value of the options exercised during the nine months ended September 30, 2021, and 2020 was zero and approximately $ 0.9 million, respectively.

The expected term of the employee-related options was estimated using the “simplified” method as defined by the SEC’s Staff Accounting Bulletin No.

7 unchanged sentences

The Company uses the Black-Scholes model to estimate the fair value of stock options granted.

For stock options granted during the six months ended June 30, 2021 and 2020, the Company utilized the following assumptions:

Six Months Ended June 30,

For stock options granted during the nine months ended September 30, 2021 and 2020, the Company utilized the following assumptions:

Nine Months Ended September 30,

Expected term (years)

2 unchanged sentences

Weighted average grant date fair value per share of

Restricted Stock Units

RSUs awarded to employees generally vest one-fourth per year over four years from the anniversary of the date of grant , provided the employee remains continuously employed with the Company.

1 unchanged sentence

The fair value of RSUs is equal to the closing price of the Company’s common stock on the date of grant.

The total unrecognized compensation costs related to non-vested RSUs at June 30, 2021 was zero.

There were no unvested RSUs as of June 30, 2021 and December 31, 2020, respectively.

The total unrecognized compensation costs related to non-vested RSUs at September 30, 2021 was zero.

There were no unvested RSUs as of September 30, 2021 and December 31, 2020, respectively.

Performance-Based Restricted Stock Units

On August 6, 2021, the Company granted 3,813,150 PRSUs through the Exchange Program.

The Exchange Program was treated as a Type II modification (Probable-to improbable) under ASC 718.

The Company will recognize the unrecognized grant-date fair value of the pre-modification stock options as well as any incremental non-cash compensation cost of the PRSUs granted in the Exchange Program, if the vesting conditions of the PRSUs are achieved or if they become probable.

The Company is using the pre-modification stock options for determining the compensation cost related to the PRSUs as the vesting conditions remain uncertain for the new PRSUs.

The total unrecognized compensation costs related to non-vested stock options at September 30, 2021 were approximately $ 4.5 million and are expected to be recognized within future operating results over a weighted-average period of 1.6 years.

As of September 30, 2021, no PRSUs have vested.

The following table presents stock-based compensation expense included in the Company’s consolidated statements of operations:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

8 unchanged sentences

(the “Sublandlord”) to sublease approximately 5,923 rentable square feet of office space located at 1601 Trapelo Road, Waltham, MA 02451 (the “Premises”).

The term of the Sublease began on November 1, 2017 and will expire on July 31, 2021 (the “Term”), with a monthly rental rate starting at $ 14,808 and escalating to a maximum monthly rental rate of $ 16,288 in the final 12 months of the Term.

The Sublandlord provided the Premises to the Company free of charge for the first two months of the Term.

The Company will recognize the remaining expense in accordance with ASC 842.

On May 5, 2021, the Company entered into an office license agreement with BP Reservoir Place to license approximately 5,923 rentable square feet of office space located at 1601 Trapelo Road, Waltham, MA 02451.

The term of the license agreement is scheduled to begin on August 1, 2021 and will expire on July 31, 2022, with an annual rate of $239,881.50 payable in equal monthly installments.

The Company has elected to not recognize the license agreement on the balance sheet as the term of the agreement is 12 months or less.

Please refer to Note 2 for additional information on ASC 842, Leases .

Throughout the Term, the Company is responsible for paying certain costs and expenses, in addition to the rent, as specified in the Sublease, including a proportionate share of applicable taxes, operating expenses and utilities.

The term of the Sublease began on November 1, 2017 and expired on July 31, 2021 (the “Term”), with a monthly rental rate starting at $ 14,808 and escalating to a maximum monthly rental rate of $ 16,288 in the final 12 months of the Term.

Sublandlord provided the Premises to the Company free of charge for the first two months of the Term.

The Company recognized the expense in accordance with ASC 842.

Throughout the Term, the Company was responsible for paying certain costs and expenses, in addition to the rent, as specified in the Sublease, including a proportionate share of applicable taxes, operating expenses and utilities.

In applying the ASC 842 transition guidance, the Company retained the classification of this Sublease as operating and recorded a lease liability and a right-of-use asset on the ASC 842 effective date.

The following table contains a summary of the Sublease costs recognized under ASC 842 and other information pertaining to the Company’s operating Sublease for the six months ended June 30, 2021:

Six Months Ended

June 30, 2021

The following table contains a summary of the Sublease costs recognized under ASC 842 and other information pertaining to the Company’s operating Sublease for the nine months ended September 30, 2021:

Nine Months Ended

September 30, 2021

Sublease cost

5 unchanged sentences

Weighted average discount rate

Future minimum Sublease payments under the Company’s non-cancelable operating Sublease as of June 30, 2021 and December 31, 2020 are as follows:

Future Operating Sublease Payments

Six Months Ended

June 30, 2021

2021 (excluding the six months ended June 30, 2021)

Total Sublease payments

imputed interest

Total operating Sublease liabilities at June 30, 2021

The Sublease agreement expired on July 31, 2021 and there were no future minimum payments under the Sublease agreement as of September 30, 2021.

Future minimum Sublease payments under the Company’s non-cancelable operating Sublease as of December 31, 2020 were as follows:

Future Operating Sublease Payments

3 unchanged sentences

Total operating Sublease liabilities at December 31, 2020

On May 5, 2021, the Company entered into an office lease agreement with BP Reservoir Place to lease approximately 5,923 rentable square feet of office space located at 1601 Trapelo Road, Waltham, MA 02451.

The term of the lease agreement began on August 1, 2021 and will expire on July 31, 2022, with an annual rate of $239,881.50 payable in equal monthly installments.

The Company has elected to not recognize the lease agreement on the balance sheet as the term of the agreement is 12 months or less.

Please refer to Note 2 for additional information on ASC 842, Leases .

The total operating lease costs during the nine months ended September 30, 2021 were $ 39,980 .

Future minimum lease payments under the Company’s non-cancelable operating lease as of September 30, 2021 were as follows:

Future Operating Lease Payments

Nine Months Ended

September 30, 2021

2021 (excluding the nine months ended September 30, 2021)

Total lease payments

imputed interest

Total operating lease liabilities at September 30, 2021

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