Olema Pharmaceuticals, Inc. 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest rate risk We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities. As of December 31, 2021 and 2020, we had cash, cash equivalents and marketable securities of $287.3 million and $338.5 million, respectively. We generally hold our cash in interest-bearing bank accounts and money market funds. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. An immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our cash, cash equivalents and marketable securities. Financial institution risk Substantially all of our cash is held with a single financial institution. Due to its size, this financial institution represents a minimal credit risk. Cash amounts held at financial institutions are insured by the Federal Deposit Insurance Corporation up to $250,000. Foreign currency exchange risk Our expenses are generally denominated in U.S. dollars. To date, we have not had any significant foreign currency transactions, and we do not have a formal hedging program with respect to foreign currency. A 10.0% increase or decrease in current exchange rates would not have a material effect on our financial results. Effects of inflation Inflation generally affects us by increasing our cost of labor and research and development costs. We do not believe that inflation has had a material effect on our results of operations during the periods presented. 137 Table of Contents ​ Item 8. Consolidated Financial Statements and Supplementary Data. Olema Pharmaceuticals, Inc. Index to consolidated financial statements ​ Page Report of Independent Registered Public Accounting Firm (PCAOB ID 42 ) 139 Consolidated Balance Sheets 141 Consolidated Statements of Operations and Comprehensive Loss 142 Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) 143 Consolidated Statements of Cash Flows 144 Notes to Consolidated Financial Statements 145 ​ ​ 138 Table of Contents ​ Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Olema Pharmaceuticals, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Olema Pharmaceuticals, Inc. (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 28, 2022 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Adoption of ASU No.2016-02 As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in 2021 due to the adoption of Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), and the related amendments. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by 139 Table of Contents communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates. ​ ​ Clinical Trial Accrual Description of the Matter ​ As discussed in Note 2 in the consolidated financial statements, the Company enters into contracts with clinical research organizations (CRO) to conduct clinical services on their behalf. Judgments and estimates are required to determine the amounts accrued for estimated ongoing research and development costs. The Company analyzes the progress of the studies or clinical trials, including the phase or completion of activities, invoices received and contracted costs. Auditing the Company’s accrual for clinical trial costs is complex since the information necessary to estimate the accruals is accumulated from the CROs and the Company's assessment of that information is subject to variability and uncertainty. In addition, in certain circumstances, the determination of the nature and amounts of services that have been received during the reporting period requires judgment because the timing and pattern of vendor invoicing does not correspond to the level of services provided, and there may be delays in invoicing from clinical study sites and other vendors. ​ How We Addressed the Matter in Our Audit ​ We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls that addressed the risks identified above related to the information used in the Company’s process for recording accrued clinical trial costs. For example, we tested controls over management’s review of clinical trial progress in comparison to information and invoices received from third parties and over the completeness and accuracy of data used to calculate the accrual. To test the clinical trial accrual, our audit procedures included, among others, reading a sample of the Company’s agreement contracts with the CROs to understand key financial and contractual terms and testing the accuracy and completeness of the underlying data used in the accrual computations. We also evaluated management’s estimates of the vendor’s progress for a sample of clinical trials by inquiring of the Company’s operations personnel overseeing the clinical trials and obtaining information directly from third party vendors regarding their estimate of costs that have been incurred through December 31, 2021. We analyzed the data underlying the accrual balance to evaluate the impact of reasonable changes in the data on the recorded amount of the clinical trial accrual. To evaluate the completeness of the accruals, we also examined subsequent invoices from the service providers and cash disbursements to the service providers, to the extent such invoices were received, or payments were made prior to the date that the consolidated financial statements were issued. ​ /s/ Ernst & Young LLP We have served as the Company‘s auditor since 2020. Iselin, New Jersey February 28, 2022 ​ ​ 140 Table of Contents Olema Pharmaceuticals, Inc. Consolidated Balance Sheets (Amounts in thousands, except share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ December 31, ​ ​ 2021 ​ 2020 Assets ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents $ 13,812 $ 338,549 Marketable securities ​ ​ 273,438 ​ ​ — Prepaid expenses and other current assets ​ 3,435 ​ 3,588 Total current assets ​ 290,685 ​ 342,137 Property and equipment, net ​ 1,474 ​ 75 Operating lease right-of-use assets ​ ​ 3,246 ​ ​ — Other assets ​ 540 ​ 510 Total assets ​ $ 295,945 ​ $ 342,722 ​ ​ ​ ​ ​ ​ ​ Liabilities and stockholders ’ equity ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 23 ​ $ 719 Operating lease liabilities, current ​ ​ 931 ​ ​ — Other current liabilities ​ ​ 8,065 ​ 3,866 Total current liabilities ​ ​ 9,019 ​ 4,585 Operating lease liabilities, net of current portion ​ ​ 2,358 ​ ​ — Total liabilities ​ ​ 11,377 ​ 4,585 Commitments and contingencies (Note 14) ​ ​ ​ ​ ​ ​ Stockholders ’ equity: ​ ​ ​ ​ ​ ​ Preferred stock, $ 0.0001 par value; 10,000,000 shares authorized as of December 31, 2021 and December 31, 2020; no shares issued and outstanding as of December 31, 2021 and December 31, 2020. ​ ​ — ​ ​ — Common stock, $ 0.0001 par value; 490,000,000 shares authorized as of December 31, 2021 and December 31, 2020; 40,337,046 and 40,169,738 shares issued as of December 31, 2021 and December 31, 2020, respectively; 39,797,263 and 39,308,238 shares outstanding as of December 31, 2021 and December 31, 2020, respectively. ​ ​ 3 ​ 3 Additional paid-in capital ​ ​ 388,904 ​ 371,228 Accumulated other comprehensive loss ​ ​ ( 149 ) ​ ​ — Accumulated deficit ​ ​ ( 104,190 ) ​ ( 33,094 ) Total stockholders ’ equity ​ ​ 284,568 ​ 338,137 Total liabilities and stockholders ’ equity ​ $ 295,945 ​ $ 342,722 ​ See accompanying notes to the consolidated financial statements. ​ 141 Table of Contents Olema Pharmaceuticals, Inc. Consolidated Statements of Operations and Comprehensive Loss (Amounts in thousands, except share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2021 2020 2019 Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development $ 51,100 $ 13,704 $ 3,920 General and administrative ​ 20,391 ​ 7,824 ​ 403 Total operating expenses ​ 71,491 ​ 21,528 ​ 4,323 Loss from operations ​ ( 71,491 ) ​ ( 21,528 ) ​ ( 4,323 ) Other income (expense): ​ ​ ​ ​ Interest income ​ 442 ​ 60 ​ 7 Interest expense ​ — ​ ( 653 ) ​ — Other expense ​ ​ ( 47 ) ​ ​ — ​ ​ — Total other income (expense), net ​ 395 ​ ( 593 ) ​ 7 Net loss ​ $ ( 71,096 ) ​ $ ( 22,121 ) ​ $ ( 4,316 ) Repurchase and retirement of Series A and Series A-1 convertible preferred stock ​ ​ — ​ ​ ( 1,869 ) ​ ​ — Net loss attributable to common stockholders ​ ​ ( 71,096 ) ​ ​ ( 23,990 ) ​ ​ ( 4,316 ) Net loss per share attributable to common stockholders, basic and diluted ​ $ ( 1.80 ) ​ $ ( 3.42 ) ​ $ ( 1.66 ) Weighted average shares used to compute net loss per share attributable to common stockholders, basic and diluted ​ 39,524,272 ​ 7,021,468 ​ 2,593,316 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2021 2020 2019 Net loss ​ $ ( 71,096 ) ​ $ ( 22,121 ) ​ $ ( 4,316 ) Other comprehensive loss: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net unrealized loss on marketable securities ​ ​ ( 149 ) ​ ​ — ​ ​ — Total comprehensive loss ​ $ ( 71,245 ) ​ $ ( 22,121 ) ​ $ ( 4,316 ) ​ See accompanying notes to the consolidated financial statements. ​ ​ 142 Table of Contents Olema Pharmaceuticals, Inc. Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Amounts in thousands, except share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ Convertible ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ Total ​ ​ Preferred Stock ​ Common Stock ​ Paid-in ​ Comprehensive ​ Accumulated ​ Stockholders' ​ Shares Amount Shares Amount Capital Loss ​ ​ Deficit Equity (Deficit) Balances at December 31, 2018 4,628,215 $ 9,348 2,593,316 $ — $ 168 $ — ​ $ ( 6,446 ) $ ( 8,397 ) Net loss and comprehensive loss — ​ — — ​ — ​ — ​ — ​ ​ ( 4,316 ) ​ ( 4,316 ) Balances at December 31, 2019 4,628,215 ​ 9,348 2,593,316 ​ — ​ 168 ​ ​ ​ ​ ( 10,762 ) ​ ( 10,594 ) Beneficial conversion option recognized upon issuance of 2020 convertible notes — ​ — — ​ — ​ 1,054 ​ — ​ ​ — ​ 1,054 Beneficial conversion option recognized upon repurchase of 2020 convertible notes on settlement date — ​ — — ​ — ​ ( 2,568 ) ​ — ​ ​ — ​ ( 2,568 ) Extinguishment of 2020 convertible notes ​ — ​ ​ — ​ — ​ ​ — ​ ​ 2,148 ​ ​ — ​ ​ — ​ ​ 2,148 Issuance of Series B convertible preferred stock, net of issuance costs of $ 286 ​ 10,801,277 ​ ​ 50,607 ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Issuance of Series B convertible preferred stock in connection with the conversion of convertible notes ​ 638,270 ​ ​ 3,007 ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Repurchase and retirement of Series A and Series A-1 convertible preferred stock ​ ( 206,822 ) ​ ​ ( 420 ) ​ — ​ ​ — ​ ​ ( 1,658 ) ​ ​ — ​ ​ ( 211 ) ​ ​ ( 1,869 ) Issuance of Series C convertible preferred stock, net of issuance costs of $ 1,662 ​ 7,904,135 ​ ​ 85,776 ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Conversion of convertible preferred units to common stock ​ ( 23,765,075 ) ​ ​ ( 148,318 ) ​ 23,765,075 ​ ​ 2 ​ ​ 148,316 ​ ​ — ​ ​ — ​ ​ 148,318 Issuance of common stock in connection with initial public offering, net of underwriting discounts, commissions and offering costs of $ 19,840 ​ — ​ ​ — ​ 12,650,000 ​ ​ 1 ​ ​ 220,509 ​ ​ — ​ ​ — ​ ​ 220,510 Exercise of stock options ​ — ​ ​ — ​ 246,046 ​ ​ — ​ ​ 151 ​ ​ — ​ ​ — ​ ​ 151 Vesting of restricted stock awards ​ — ​ ​ — ​ 53,801 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Stock-based compensation expense ​ — ​ ​ — ​ — ​ ​ — ​ ​ 3,078 ​ ​ — ​ ​ — ​ ​ 3,078 ESPP expense ​ — ​ ​ — ​ — ​ ​ — ​ ​ 30 ​ ​ — ​ ​ — ​ ​ 30 Net loss and comprehensive loss ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 22,121 ) ​ ​ ( 22,121 ) Balances at December 31, 2020 ​ — ​ ​ — ​ 39,308,238 ​ ​ 3 ​ ​ 371,228 ​ ​ — ​ ​ ( 33,094 ) ​ ​ 338,137 Vesting of early exercised stock options ​ — ​ ​ — ​ 79,608 ​ ​ — ​ ​ 372 ​ ​ — ​ ​ — ​ ​ 372 Vesting of restricted stock awards ​ — ​ ​ — ​ 242,109 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Exercise of stock options ​ — ​ ​ — ​ 126,937 ​ ​ — ​ ​ 670 ​ ​ — ​ ​ — ​ ​ 670 Issuance of shares under the ESPP plan ​ — ​ ​ — ​ 40,371 ​ ​ — ​ ​ 721 ​ ​ — ​ ​ — ​ ​ 721 Stock-based compensation expense ​ — ​ ​ — ​ — ​ ​ — ​ ​ 15,680 ​ ​ — ​ ​ — ​ ​ 15,680 ESPP expense ​ — ​ ​ — ​ — ​ ​ — ​ ​ 233 ​ ​ — ​ ​ — ​ ​ 233 Net unrealized loss on marketable securities ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 149 ) ​ ​ — ​ ​ ( 149 ) Net loss ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 71,096 ) ​ ​ ( 71,096 ) Balances at December 31, 2021 ​ — ​ $ — ​ 39,797,263 ​ $ 3 ​ $ 388,904 ​ $ ( 149 ) ​ ​ ( 104,190 ) ​ $ 284,568 See accompanying notes to the consolidated financial statements. ​ ​ 143 Table of Contents Olema Pharmaceuticals, Inc. Consolidated Statements of Cash Flows (Amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2021 2020 2019 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 71,096 ) ​ $ ( 22,121 ) ​ $ ( 4,316 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ ​ ​ Depreciation and amortization expense ​ 163 ​ 11 ​ 9 Non-cash interest expense ​ — ​ 641 ​ — Non-cash lease expense ​ ​ 1,224 ​ ​ — ​ ​ — Premium amortization and discount accretion on marketable securities, net ​ ​ 276 ​ ​ — ​ ​ — Stock-based compensation expense, including ESPP expense ​ 15,913 ​ 3,108 ​ — Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Prepaid expenses and other current assets ​ ( 40 ) ​ ( 3,553 ) ​ 58 Other assets ​ ​ ( 30 ) ​ ​ ( 507 ) ​ ​ — Accounts payable ​ ​ ( 683 ) ​ ​ ( 220 ) ​ ​ 810 Other current liabilities ​ 4,571 ​ 2,775 ​ 358 Operating lease liabilities ​ ​ ( 988 ) ​ ​ — ​ ​ — Net cash used in operating activities ​ ( 50,690 ) ​ ( 19,866 ) ​ ( 3,081 ) Cash flows from investing activities: ​ ​ ​ ​ ​ ​ Purchase of equipment ​ ( 1,575 ) ​ ( 56 ) ​ — Maturities of marketable securities ​ ​ 213,104 ​ ​ — ​ ​ — Purchases of marketable securities ​ ​ ( 486,967 ) ​ ​ — ​ ​ — Net cash used in investing activities ​ ( 275,438 ) ​ ( 56 ) ​ — Cash flows from financing activities: ​ ​ ​ ​ ​ ​ Proceeds from exercise of stock options ​ ​ 670 ​ ​ 641 ​ ​ — Proceeds from issuance of common stock under the ESPP plan ​ ​ 721 ​ ​ — ​ ​ — Proceeds from the issuance of convertible notes ​ — ​ 3,000 ​ — Proceeds from issuance of Series B convertible preferred stock, net of issuance costs ​ — ​ 50,637 ​ — Proceeds from issuance of Series C convertible preferred stock, net of issuance costs ​ ​ — ​ ​ 85,776 ​ ​ — Repurchase of shares of Series A and Series A-1 convertible preferred stock ​ ​ — ​ ​ ( 2,289 ) ​ ​ — Proceeds from the settlement of non-recourse notes ​ ​ — ​ ​ 88 ​ ​ — Proceeds from issuance of common stock upon initial public offering, net of issuance costs ​ ​ — ​ ​ 220,550 ​ ​ — Net cash provided by financing activities ​ 1,391 ​ 358,403 ​ — Net (decrease) increase in cash and cash equivalents ​ ( 324,737 ) ​ 338,481 ​ ( 3,081 ) Cash and cash equivalents at beginning of period ​ 338,549 ​ 68 ​ 3,149 Cash and cash equivalents at end of period $ 13,812 ​ $ 338,549 ​ $ 68 Supplemental disclosure of non-cash investing and financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Conversion of convertible notes into Series B convertible preferred stock ​ $ — ​ $ 3,007 ​ $ — Conversion of series A, Series A-1, Series B and Series C stock into common stock ​ $ — ​ $ 148,318 ​ $ — Deferred offering costs included in other current liabilities ​ $ — ​ $ 70 ​ $ — Vesting of early exercised stock options ​ $ 372 ​ $ 41 ​ $ — ​ See accompanying notes to the consolidated financial statements. ​ 144 Table of Contents Olema Pharmaceuticals, Inc. Notes to consolidated financial statements 1. Nature of the Business and Basis of Presentation Olema Pharmaceuticals Inc. (“Olema” or the “Company”) is a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of next-generation targeted therapies for women’s cancers. The Company is initially focused on developing therapies for the treatment of breast cancer. The Company’s wholly owned, lead product candidate, OP-1250, is a novel oral therapy with combined activity as both a complete estrogen receptor (“ER”) antagonist (“CERAN”) and a selective ER degrader (“SERD”). The Company is currently evaluating OP-1250 in a Phase 1/2 dose escalation and expansion trial for the treatment of recurrent, locally advanced or metastatic estrogen receptor-positive (“ER+”), human epidermal growth factor receptor 2-negative (“HER2-”) breast cancer. The Company is located in San Francisco, California and was incorporated in Delaware on August 7, 2006 under the legal name of CombiThera, Inc. and on March 25, 2009 was renamed Olema Pharmaceuticals, Inc. The Company’s principal operations are based in San Francisco, California, and it operates in one business segment and therefore has only one reportable segment. The Company is subject to risks and uncertainties common to early-stage companies in the biopharmaceutical industry, including, but not limited to, successful discovery and development of its product candidates, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, protection of proprietary technology, compliance with governmental regulations, the impact of COVID-19, the ability to secure additional capital to fund operations and commercial success of its product candidates. OP-1250 and any future product candidates the Company may develop will require extensive nonclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel, and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales. Initial Public Offering In November 2020, the Company completed its initial public offering (“IPO”) of its common stock. In connection with its IPO, the Company issued and sold 12,650,000 shares of its common stock, at a price to the public of $ 19.00 per share. As a result of the IPO, the Company received $ 220.6 million in net proceeds, after deducting underwriting discounts and commissions and offering costs of $ 19.8 million. Upon the closing of the IPO, 23,765,075 shares of outstanding convertible preferred stock were automatically converted into 23,765,075 shares of common stock with the related carrying value of $ 148.3 million reclassified to common stock and additional paid-in capital. In connection with the IPO, the Company amended and restated its amended and restated certificate of incorporation to change the authorized capital stock to 490,000,000 shares designated as common stock and 10,000,000 shares designated as preferred stock, all with a par value of $ 0.0001 per share. Liquidity The Company had $ 287.3 million of cash, cash equivalents and marketable securities at December 31, 2021, which management believes is sufficient to fund its operating expenses and capital expenditure requirements for at least the next 12 months from the filing date of these consolidated financial statements. 145 Table of Contents Impact of COVID-19 The extent of the impact of the COVID-19 pandemic on the Company’s business, operations and development timelines and plans remains uncertain, and will depend on certain developments, including the duration of the outbreak and its impact on the Company’s development activities, planned clinical trial enrollment, future trial sites, clinical research organizations (“CROs”), third-party manufacturers, and other third parties with whom the Company does business, as well as its impact on regulatory authorities and the Company’s key scientific and management personnel. During 2021, although the Company modified its operations and practices due to the COVID-19 pandemic and to comply with federal, state and local requirements, its business, operations and development timelines were not material adversely affected. In October 2021, the Company re-opened its offices to administrative employees, however due to the resurgence of cases relating to the spread of the Delta and Omicron variants, the Company continued to limit access to its offices and may close its offices again in the future as the COVID-19 pandemic continues to evolve. The extent to which the COVID-19 pandemic may affect the Company’s business, operations and development timelines and plans in the future, including the resulting impact on its expenditures and capital needs, remains uncertain. 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding financial reporting, and the instructions to Form 10-K and Article 10 of Regulation S-X. These consolidated financial statements include the accounts of Olema Pharmaceuticals, Inc. and its wholly owned subsidiary, Olema Oncology Australia Pty Ltd incorporated on January 6, 2021. All intercompany balances and transactions have been eliminated upon consolidation. Use of Estimates The accompanying consolidated financial statements are prepared in accordance with GAAP. The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Significant areas that require management’s estimates include accruals of research and development expenses, including accrual of research contract costs, share-based compensation assumptions, and fair value of common stock and convertible preferred stock prior to the IPO. On an ongoing basis, the Company evaluates its estimates and judgments, which are based on historical and anticipated results and trends and on various other assumptions that management believes to be reasonable under the circumstances. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents are defined as short-term, highly liquid investments with original maturities of 90 days or less at the date of purchase. Cash deposits are all in reputable financial institutions in the United States and as of December 31, 2021 and 2020, cash and cash equivalents consisted of cash on deposit with U.S. banks, including the Company’s bank account for its Australia subsidiary, denominated in U.S. dollars and Australian dollars and investments in interest bearing money market funds. Marketable Securities All marketable securities have been classified as “available-for-sale” and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. Management determines the appropriate classification of its investments at the time of purchase and reevaluates such designation as of each balance sheet date. Unrealized gains and losses are excluded from earnings and are reported as a 146 Table of Contents component of comprehensive loss. Realized gains and losses and declines in fair value judged to be other than temporary, if any, on available-for-sale securities are included in other expense. The cost of securities sold is based on the specific-identification method. Interest earned on marketable securities is included in interest income. The Company periodically assesses its available-for-sale marketable securities for other-than-temporary impairment. For debt securities in an unrealized loss position, the Company first considers its intent to sell, or whether it is more likely than not that the Company will be required to sell the debt securities before recovery of their amortized cost basis. If either of these criteria are met, the amortized cost basis of such debt securities is written down to fair value through other expense. For debt securities in an unrealized loss position that do not meet the aforementioned criteria, the Company assesses whether the decline in the fair value of such debt securities has resulted from credit losses or other factors. The Company considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and any adverse conditions specifically related to the securities, among other factors. If this assessment indicates that a credit loss may exist, the Company then compares the present value of cash flows expected to be collected from such securities to their amortized cost basis. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded through other expense, limited by the amount that the fair value is less than the amortized cost basis. Any additional impairment not recorded through an allowance for credit losses is recognized in other comprehensive loss. The Company has not recorded any impairments for its marketable securities. Concentration of Credit Risk and Other Risks and Uncertainties Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents, and marketable securities. The Company invests in a variety of financial instruments and, by its policy, limits these financial instruments to high credit quality securities issued by the U.S. government, U.S. government-sponsored agencies and highly rated banks and corporations, subject to certain concentration limits. The Company’s cash, cash equivalents, and marketable securities are held by financial institutions in the United States that management believes are of high credit quality. Amounts on deposit with individual banking institutions may at times exceed the limits insured by the Federal Deposit Insurance Corporation (“FDIC”); however, the Company has not experienced any losses on such deposits. The Company’s future results of operations involve a number of other risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s current and potential future product candidates, uncertainty of market acceptance of the Company’s product candidates, competition from substitute products and larger companies, securing and protecting proprietary technology, strategic relationships and dependence on key individuals or sole-source suppliers. The Company’s product candidates require approvals from the U.S. Food and Drug Administration (“FDA”) and comparable foreign regulatory agencies prior to commercial sales in their respective jurisdictions. There can be no assurance that any product candidates will receive the necessary approvals. If the Company were denied approval, approval was delayed or the Company was unable to maintain approval for any product candidate, it could have a materially adverse impact on the Company. Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued new lease accounting guidance in Accounting Standard Update (“ASU”) 2016-02, Leases , and in July 2018 issued ASU 2018-10, Codification Improvements to Topic 842, Leases , and ASU 2018-11, Leases (Topic 842): Targeted Improvements (the foregoing ASUs collectively referred to as “Topic 842”). Under the new guidance, lessees are required to 147 Table of Contents recognize for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the consolidated statements of operations and comprehensive loss. At the inception of an arrangement, the Company determines if an arrangement is, or contains, a lease based on the facts and circumstances present in that arrangement. Lease classification, recognition, and measurement are then determined at the lease commencement date. For arrangements that contain a lease, the Company (i) identifies lease and non-lease components, (ii) determines the consideration in the contract, (iii) determines whether the lease is an operating or finance lease; and (iv) recognizes lease ROU assets and liabilities. Lease liabilities and their corresponding ROU assets are recorded based on the present value of future lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable and as such, the Company uses the incremental borrowing rate based on the information available at the lease commencement date, which represents an internally developed rate that would be incurred to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic environment. Most leases include options to renew and, or terminate the lease, which can impact the lease term. The exercise of these options is at the Company’s discretion. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company has operating leases for its manufacturing, research and development and office facilities. Fixed lease payments on operating leases are recognized over the expected term of the lease on a straight-line basis. Variable lease expenses that are not considered fixed are recognized as incurred. Fixed and variable lease expense on operating leases is recognized within operating expenses within our consolidated statements of operations and comprehensive loss. The Company elected to not apply the recognition requirements of Topic 842 to short-term leases with terms of 12 months or less. Additional information and disclosures required by Topic 842 are contained in Note 13 “Lease”. Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred to discover, research and develop product candidates. These costs are recorded within research and development expenses in the consolidated statements of operations and comprehensive loss and include personnel expenses, stock-based compensation expenses, allocated general and administrative expenses, and external costs including fees paid to consultants, CROs and contract manufacturing organizations (“CMOs”), in connection with nonclinical studies and clinical trials, and other related clinical trial fees, such as for investigator fees, patient screening, laboratory work, clinical trial database management, clinical trial material management and statistical compilation and analysis. Non-refundable prepayments for goods or services that will be used or rendered for future research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the goods are delivered or the related services are performed. Research Contract Costs and Accruals The Company has from time to time entered into various research and development and other agreements with commercial firms, researchers, universities and others for provisions of goods and services. These agreements are generally cancelable, and the related costs are recorded as research and development expenses as incurred. 148 Table of Contents The Company records accruals for estimated ongoing research and development costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ materially from the Company’s estimates. The Company’s historical accrual estimates have not been materially different from the actual costs. Patent Costs All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation, and insignificant for all periods presented. Depreciation is computed using the straight-line method over the estimated useful lives. The useful lives of equipment are as follows: ​ ​ ​ ​ ​ Estimated Useful Lives Lab equipment 5 – 7 years Computer equipment 5 years ​ When assets are sold or retired, the cost and related accumulated depreciation are removed from the balance sheets, with any resulting gain or loss recorded in operating expenses in the statements of operations and comprehensive loss. Costs of repairs and maintenance are expensed as incurred. Income Taxes Income taxes are computed using the asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements. In estimating future tax consequences, the Company considers all expected future events other than enactment of changes in tax laws or rates. A valuation allowance is recorded, if necessary, to reduce net deferred tax assets to their realizable values if management does not believe it is more likely than not that the net deferred tax assets will be realized. As of December 31, 2021 and 2020, the Company has recorded full valuation allowance against its net deferred tax assets. The Company had no unrecognized tax benefits for the years ended December 31, 2021 and 2020, respectively. The Company may be subject to U.S. Federal, state, and local tax examinations by tax authorities for years before 2021, which may include adjustments to carry-forward attributes (see Note 11, “Income Taxes”). The Company’s policy is to recognize interest and penalties related to uncertain tax positions in the provision for income taxes. As of December 31, 2021 and 2020, the Company had no accrued interest or penalties related to uncertain tax positions. Common Stock Valuation Due to the absence of an active market for the Company’s common stock prior to its IPO, the Company utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation, to estimate the fair value of its common stock. In determining the fair value of options granted prior to the IPO, the Company estimated fair value of its common stock as of each measurement date. Significant changes to the 149 Table of Contents key assumptions underlying the factors used could have resulted in different fair values of common stock at each valuation date. Follow the Company’s initial public offering, the fair market value of its common stock is determined based on the closing price of its common stock as reported by the Nasdaq Global Select Market on the date of grant. Comprehensive Loss Comprehensive loss includes net loss and other comprehensive loss for each period presented. Other comprehensive loss represents net unrealized loss on marketable securities. Stock-Based Compensation All stock-based compensation cost, including grants of stock options and restricted stock awards issued under the Company’s equity incentive plans and ESPP, is measured at the grant date based on the estimated fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. The Company recognizes stock compensation in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”). The Company’s determination of the fair value of stock options with time-based vesting on the date of grant utilizes the Black-Scholes option-pricing model. The Company estimates volatility using stock prices of peer companies and its historical data, risk-free rates using the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term, and dividend yield using the Company’s expectations and historical data. The Company uses the simplified method to calculate the expected term of employee stock option grants. Under the simplified method, the expected term is estimated to be the mid-point between the vesting date and the contractual term of the option. For awards with graded vesting, in which specified tranches of the options vest on different dates, the Company uses a single weighted average expected life to value the entire award, which is equal to the average of the weighted average vesting period of the award and the contractual term of the award. Equity instruments issued to nonemployees are recorded at their fair value on the grant date and without subsequent remeasurement. The amount of stock-based compensation expense recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest, including awards with graded vesting. As part of the requirements of ASC 718, the Company has elected to account for forfeitures of stock option grants as they occur. Net Loss Per Common Share Basic net loss per common share is computed by dividing the net loss per common share by the weighted average number of common shares outstanding for the period without consideration of common stock equivalents. Diluted net loss per common share is computed by adjusting net loss to reallocate undistributed earnings based on the potential impact of dilutive securities, and by dividing the diluted net loss by the weighted average number of common shares outstanding for the period, including potential dilutive common shares. For purpose of this calculation, outstanding stock options, including unvested early exercised options, unvested restricted stock awards, contingently issuable common stock related to the 2020 Employee Stock Purchase Plan (the “ESPP”), and convertible preferred stock are considered potential dilutive common shares. Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods as the inclusion of all potential common shares outstanding would have been anti-dilutive. The Company’s convertible preferred stock contractually entitled the holders of such shares to participate in dividends but did not contractually require the holders of such shares to participate in losses of the Company. Accordingly, in periods in which the Company reported a net loss, such losses were not allocated to such securities. In periods in which the Company reported a net loss, diluted net loss per common share is the same as basic net loss per common share, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss for all periods presented. 150 Table of Contents Recent Accounting Pronouncements The Company lost its status as an emerging growth company on December 31, 2021, when it qualified as a large accelerated filer based on its market capitalization as of June 30, 2021, according to Rule 12b-2 of the Securities Exchange Act of 1934, as amended. As a result, the Company adopted all accounting pronouncements formerly deferred under the extended transition period available for emerging growth companies according to public company standards at December 31, 2021. The adoption dates for the new accounting pronouncements disclosed below have been presented as such. Where allowable, the Company has early adopted certain standards as described below. Recently Adopted Accounting Pronouncements The Company adopted ASU No. 2016-02, Leases, Topic 842, or ASU 842 as of January 1, 2021 and recorded adoption entries during the fourth quarter of 2021 using the modified retrospective approach as required. The Company elected to apply the transition method that allows companies to continue applying the guidance under the lease standard in effect at that time in the comparative periods presented in the consolidated financial statements and recognize a cumulative-effect adjustment to the opening balance of accumulated deficit on the date of adoption. The Company elected to combine lease components (for example fixed rent payments) with non-lease components (for example, common-area maintenance costs) on the Company’s research and development and office facilities asset classes. The Company also elected the “package of practical expedients ”, which permits the Company not to reassess under the new standard the Company’s prior conclusions about lease identification, lease classification and initial direct costs. Lastly, the Company elected the hindsight expedient to determine the lease terms for existing leases. The election of the hindsight expedient did not have a significant impact on the calculation of the expected lease term. Upon the adoption of ASU 842 as of January 1, 2021 (recorded in the fourth quarter of 2021), the Company recorded operating lease right-of-use assets of $ 1.0 million, including the derecognition of prepaid rent of $ 0.1 million, with the corresponding operating lease liabilities of $ 0.9 million. There was no material impact to the opening balance of accumulated deficit upon the adoption. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326), or ASU 2016-13: Measurement of Credit Losses on Financial Instruments. This standard requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of current expected credit losses (“CECL”) is based on historical experience, current conditions, and reasonable and supportable forecasts that affect collectability. ASU 2016-13 also eliminates the concept of “other-than-temporary” impairment when evaluating available-for-sale debt securities and instead focuses on determining whether any impairment is a result of a credit loss or other factors. An entity will recognize an allowance for credit losses on available-for-sale debt securities rather than an other-than-temporary impairment that reduces the cost basis of the investment. This standard is effective for public companies who are SEC filers for fiscal years beginning after December 15, 2019, including interim periods within those years. These standards require using a modified retrospective approach with the cumulative effect recognized as an adjustment to retained earnings. The Company adopted the new guidance under ASU 2016-13 as of January 1, 2021 at December 31, 2021. The adoption did not have an impact on the Company’s consolidated financial position or results of operations. In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, or ASU 2018-15. ASU 2018-15 requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40, Intangibles—Goodwill and Other—Internal Use Software (ASC 350-40), to determine which implementation costs to capitalize as assets or expense as incurred. The internal-use software guidance in ASC 350-40 requires that certain costs incurred during the application development stage be capitalized and other costs incurred during the preliminary project and post-implementation stages be expensed as they are incurred. A customer’s accounting for the hosting component of the arrangement is not affected by this guidance. The amendments in ASU No. 2018-15 are effective for fiscal years beginning after December 15, 151 Table of Contents 2019 for public entities. For all other entities, the guidance is effective for annual reporting periods beginning after December 15, 2020 and interim periods within annual periods beginning after December 15, 2021. Early adoption permitted. The Company early adopted this guidance effective on January 1, 2021. The adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures. In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 , or ASU 2018-18. This standard provides guidance on the interaction between Revenue Recognition (Topic 606) and Collaborative Arrangements (Topic 808) by aligning the unit of account guidance between the two topics and clarifying whether certain transactions between collaborative participants should be accounted for as revenue under Topic 606. ASU 2018-18 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company adopted this guidance effective on January 1, 2021. The adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures. ​ 3 . Fair Value Measurement The Company assesses the fair value of financial instruments based on the provisions of ASC 820, Fair Value Measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: ● Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. ● Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 (in thousands) Level 1 ​ Level 2 ​ Level 3 ​ Total Financial Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash ​ $ 7,289 ​ $ — ​ $ — ​ $ 7,289 Money market funds ​ ​ 6,523 ​ ​ — ​ ​ — ​ ​ 6,523 Corporate bonds ​ ​ — ​ ​ 3,001 ​ ​ — ​ ​ 3,001 Commercial paper ​ — ​ ​ 185,921 ​ ​ — ​ ​ 185,921 U.S. government treasury bills ​ ​ 23,915 ​ ​ — ​ ​ — ​ ​ 23,915 Government-sponsored enterprise securities ​ — ​ ​ 60,601 ​ ​ — ​ ​ 60,601 Total ​ $ 37,727 ​ $ 249,523 ​ $ — ​ $ 287,250 ​ 152 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ ​ ​ Gross Gross ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Estimated (in thousands) Cost ​ Gains ​ Losses ​ Fair Value Financial Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 13,812 ​ $ — ​ $ — ​ $ 13,812 Short-term marketable securities (<12 months to maturity) ​ ​ 260,622 ​ ​ 7 ​ ​ ( 120 ) ​ ​ 260,509 Long-term marketable securities (>12 months to maturity) ​ 12,965 ​ — ​ ( 36 ) ​ ​ 12,929 Total ​ $ 287,399 ​ $ 7 ​ $ ( 156 ) ​ $ 287,250 ​ The Company considers its marketable securities with maturities beyond one year as current assets, based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. The Company considers its investment portfolio of marketable securities to be available-for-sale. The Company periodically reviews its available-for-sale marketable investments for other-than-temporary impairment. The Company considers factors such as the duration, severity and the reason for the decline in value, the potential recovery period and its intent to sell. For debt securities, the Company also considers whether (i) it is more likely than not that the Company will be required to sell the debt securities before recovery of their amortized cost basis, and (ii) the amortized cost basis cannot be recovered as a result of credit losses. During the year ended December 31, 2021, the Company did not recognize any other-than-temporary impairment loss. There was no allowance for losses on available-for-sale debt securities, which were attributable to credit risk for the year ended December 31, 2021. As of December 31, 2021, all of the Company’s cash and cash equivalents consisted of cash on deposit with U.S. banks, including the Company’s bank account for its Australia subsidiary, denominated in U. S. dollars and Australian dollars. 4 . Property and Equipment, net Property and equipment, net consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2021 ​ 2020 Lab equipment $ 1,639 $ 90 Computer equipment ​ ​ 59 ​ ​ 47 Property and equipment, gross ​ ​ 1,698 ​ ​ 137 Less: Accumulated depreciation ( 224 ) ​ ​ ( 62 ) Property and equipment, net $ 1,474 ​ $ 75 ​ ​ 153 Table of Contents 5 . Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2021 ​ 2020 Prepaid clinical trial costs ​ $ 916 ​ $ 1,148 Prepaid insurance ​ 1,766 ​ 1,663 Prepaid subscriptions and licenses ​ ​ 291 ​ ​ — Prepaid research contracts ​ ​ 239 ​ ​ 432 Prepaid rent ​ ​ — ​ ​ 196 Other 223 ​ ​ 149 Total $ 3,435 ​ $ 3,588 ​ ​ ​ ​ 6 . Other Current Liabilities Other current liabilities consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2021 ​ 2020 Accrued R&D related costs ​ $ 2,645 ​ $ 609 Accrued employee bonuses ​ ​ 3,752 ​ ​ 1,222 Accrued professional fees ​ ​ 1,011 ​ ​ 577 Early exercise of unvested stock options ​ ​ 206 ​ ​ 578 Accrued payroll related costs ​ ​ 191 ​ ​ 444 Accrued taxes ​ ​ 88 ​ ​ 198 Other 172 ​ ​ 238 Total $ 8,065 ​ $ 3,866 ​ ​ 7. Convertible Notes On March 17, 2020, then outstanding convertible promissory notes were settled with 2,545,277 shares of Series B convertible preferred stock at $ 4.712 per share for gross proceeds of approximately $ 12.0 million. As of December 31, 2021 and 2020, there were no convertible notes outstanding. Refer to Note 5 “Convertible Notes” included in the Annual Report on Form 10-K for the year ended December 31, 2020 filed on March 17, 2021 with the SEC. 8 . Convertible Preferred Stock Upon the closing of the Company’s IPO, each then outstanding share of convertible preferred stock was converted into one share of common stock. As of December 31, 2021 and 2020, there was no convertible preferred stock outstanding. Refer to Note 6 “Convertible Preferred Stock” included in the Annual Report on Form 10-K for the year ended December 31, 2020 filed on March 17, 2021 with the SEC. ​ ​ 154 Table of Contents 9. Common Stock As of each of the balance sheet dates below, the Company had reserved shares of common stock for issuance in connection with the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2021 ​ 2020 Options outstanding under the 2014 Stock Plan (1)(2) ​ ​ 2,447,889 ​ ​ 2,632,017 Options outstanding under the 2020 Equity Incentive Plan ​ ​ 3,320,139 ​ ​ 2,144,891 Shares available for future grant under the 2020 Equity Incentive Plan ​ ​ 818,010 ​ ​ 7,189 Available for the 2020 Employee Stock Purchase Plan ​ ​ 791,742 ​ ​ 430,416 Unvested restricted stock awards outstanding under the 2014 Stock Plan 493,185 ​ ​ 735,294 ​ ​ 7,870,965 ​ ​ 5,949,807 (1) Balance as of December 31, 2020 includes 126,206 unvested early exercised stock options (see Note 10, “Stock-Based Compensation”). (2) Balance as of December 31, 2021 includes 46,598 unvested early exercised stock options (see Note 10, “Stock-Based Compensation”). 10. Stock-Based Compensation In 2014, the Company’s Board of Directors and stockholders approved and adopted the 2014 Stock Plan (the “2014 Plan”). The 2014 Plan was intended to advance the interests of the Company and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Company and by motivating such persons to contribute to the growth and profitability of the Company. The 2014 Plan permitted the grant of options and restricted stock awards (including restricted stock purchase rights and restricted stock bonus awards). The maximum aggregate number of shares that may be subject to awards and sold under the 2014 Plan as of December 31, 2019 was 717,360 shares, which was subsequently increased to 4,842,180 in September 2020.The 2014 Plan was terminated on the date the 2020 Equity Incentive Plan (the “2020 Plan”), which is described below, became effective, and no additional awards will be made pursuant to the 2014 Plan. However, any outstanding awards granted under the 2014 Plan will remain outstanding, subject to the terms of the 2014 Plan award agreements, until such outstanding options are exercised or until any awards terminate or expire by their terms. In 2020, the Company’s Board of Directors and stockholders approved and adopted the 2020 Plan. The 2020 Plan is intended to advance the interests of the Company and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Company and by motivating such persons to contribute to the growth and profitability of the Company. The maximum number of shares of common stock that may be issued under the 2020 Plan will not exceed 6,494,510 shares of the Company’s common stock, which is the sum of (i) 2,152,080 new shares, plus (ii) an additional number of shares not to exceed 4,342,430 shares, consisting of any shares of the Company’s common stock subject to outstanding stock options or other stock awards granted under the Company’s 2014 Plan that, on or after the 2020 Plan becomes effective, terminate or expire prior to exercise or settlement; are not issued because the award is settled in cash; are forfeited because of the failure to vest; or are reacquired or withheld (or not issued) to satisfy a tax withholding obligation or the purchase or exercise price. In addition, the number of shares of the Company’s common stock reserved for issuance under the 2020 Plan automatically increases on January 1 of each year for a period of ten years , beginning on January 1, 2021 and continuing through January 1, 2030, in an amount equal to the lesser of (1) 5 % of the total number of shares of the Company’s common stock outstanding on December 31 of the immediately preceding year, or (2) a lesser number of shares determined by the Company’s board of directors no later than December 31 of the immediately preceding year. The maximum number of shares of the common stock that may be issued on the exercise of incentive stock options under the 2020 Plan is 19,483,530 shares. The 2020 Plan permits the grant of options restricted stock awards, stock appreciation rights, restricted stock unit awards, performance awards, and other awards. 155 Table of Contents The exercise price for each option and stock appreciation right is established in the discretion of the Board, provided that the exercise price of a stock option will not be less than 100 % of the fair market value of the Company’s common stock on the date of grant. Specific vesting for stock options and stock appreciation rights is service related and determined in each award agreement, where stock options and stock appreciation rights are fully vested at the grant date or follow a graded vesting schedule. Stock options and stock appreciation rights granted under the Plan generally expire ten years after the date of grant. Stock Option Valuation The fair value of stock option grants is estimated using the Black-Scholes option-pricing model. The Company lacks company-specific historical and implied volatility information. Therefore, it estimated its expected stock volatility based on the historical volatility of a publicly traded set of peer companies in addition to its own historical volatility. For options with service- based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to nonemployees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is 0 % since the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. The assumptions that the Company used to determine the estimated grant-date fair value of stock options granted to employees and directors under the 2020 Plan were as follows, presented as a weighted average: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2021 ​ 2020 Risk-free interest rate ​ 0.95 % ​ 0.51 % Expected term (in years) ​ ​ 5.97 ​ ​ 6.00 Expected volatility ​ ​ 77.55 % ​ ​ 76.69 % Expected dividend yield — ​ ​ — ​ Stock Option Activity The following table summarizes the stock option activity under the 2014 Plan and the 2020 Plan: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ Weighted ​ Average ​ ​ ​ ​ ​ ​ ​ Average ​ Remaining ​ ​ ​ ​ ​ Number of ​ Exercise ​ Contractual ​ Aggregate ​ ​ Shares ​ Price ​ Term ​ Intrinsic Value ​ ​ ​ ​ ​ ​ (in years) ​ (in thousands) Outstanding as of December 31, 2020 4,776,908 $ 10.83 9.67 $ 177,962 Granted ​ 1,299,433 ​ ​ 33.82 ​ 9.11 ​ ​ — Exercised(1) ​ ( 206,545 ) ​ ​ 5.04 ​ — ​ ​ — Forfeited ​ ( 101,768 ) ​ ​ 23.22 ​ — ​ ​ — Outstanding as of December 31, 2021(2) ​ 5,768,028 ​ $ 15.99 ​ 8.82 ​ $ 11,365 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options vested and exercisable as of December 31, 2021 ​ 1,715,441 ​ $ 11.33 ​ 8.54 ​ $ 5,257 Options expected to vest as of December 31, 2021 ​ 4,052,587 ​ $ 17.97 ​ 8.95 ​ $ 7,078 (1) Exercised amount includes vesting of early exercised options. (2) Balance as of December 31, 2021 includes 46,598 unvested early exercised stock options. 156 Table of Contents The weighted-average grant-date fair value per share of options granted during the year ended December 31, 2021, 2020, and 2019 was $ 21.87 , $ 7.26 , and $ 0 , respectively. For the years ended December 31, 2021, 2020, and 2019, there were 1,286,729 , 426,739 and 2,941 shares vested, respectively. The weighted-average grant date fair value per share of options vested during the year ended December 31, 2021 was $ 7.48 . The total fair value of options vested during the year ended December 31, 2021, 2020, and 2019 was $ 10.9 million, $ 1.7 million, and $ 1,000 , respectively. The aggregate intrinsic value of options exercised was $ 0.73 million, $ 0.1 million, and $ 0 for the years ended December 31, 2021, 2020, and 2019, respectively. As of December 31, 2021, the total unrecognized compensation expense related to unvested options was $ 43.8 million, which the Company expects to recognize over an estimated weighted average period of 2.8 years. Early Exercise of Stock Options In September 2020, one employee and one non-employee paid $ 0.6 million to early exercise 135,525 options with exercise prices ranging from $ 4.406 per share to $ 4.824 per share. As of December 31, 2021, 88,927 of such shares had vested with the remaining shares vesting over their respective terms. The terms of the 2014 Plan permit certain option holders to exercise options before their options are vested, subject to certain limitations. The early exercised options are subject to the same vesting provisions in the original stock option awards. Shares issued as a result of early exercise that have not vested are subject to repurchase by the Company upon termination of the purchaser’s employment, at the price paid by the purchaser. Such shares are not deemed to be outstanding for accounting purposes until they vest and are therefore excluded from shares outstanding and from basic and diluted net loss per share until the repurchase right lapses and the shares are no longer subject to the repurchase feature. A liability is recognized related to the cash proceeds of the unvested options and is reclassified into common stock and additional paid-in capital as the shares vest and the repurchase right lapses. Accordingly, the Company has recorded the unvested portion of the exercise proceeds of $ 0.2 million in other current liabilities as of December 31, 2021. Restricted Stock Awards In June 2020, the Company granted to certain employees 789,095 shares of restricted common stock (the “RSAs”) under the 2014 Plan as consideration for services with a deemed value of $ 2.40 per share, or $ 1.9 million. The following table summarizes the restricted stock activity under the Plan during the year ended December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of Shares ​ Grant Date Fair Value Unvested restricted stock as of December 31, 2020 ​ 735,294 $ 2.40 Granted ​ ​ — ​ ​ — Vested ​ ​ ( 242,109 ) ​ ​ 2.40 Forfeited ​ ​ — ​ ​ — Unvested restricted stock as of December 31, 2021 ​ 493,185 ​ $ 2.40 ​ The total grant date fair value of the RSAs vested during the year ended December 31, 2021, was $ 0.6 million . As of December 31, 2021, the total unrecognized compensation expense related to unvested RSAs was $ 1.2 million, which the Company expects to recognize over an estimated weighted average period of 2.5 years. 157 Table of Contents Stock-Based Compensation Expense Stock-based compensation expense related to awards granted under the 2014 Plan, including the RSAs, the 2020 Plan and the 2020 ESPP was classified in the consolidated statements of operations and comprehensive loss as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2021 ​ 2020 ​ 2019 Research and development $ 9,346 $ 1,970 $ — General and administrative 6,567 ​ ​ 1,108 ​ ​ — Total $ 15,913 ​ $ 3,078 ​ $ — ​ 2020 Employee Stock Purchase Plan In 2020, the Company’s board of directors and stockholders approved and adopted the 2020 Employee Stock Purchase Plan (the “ESPP”). The ESPP became effective immediately prior to the date of the underwriting agreement related to the IPO. The ESPP permits eligible employees who elect to participate in an offering under the ESPP to have up to 15 % of their eligible earnings withheld, subject to certain limitations, to purchase shares of common stock pursuant to the ESPP. The price of the common stock purchased under the ESPP is equal to the lesser of (i) 85 % of the fair market value of a share of the Company’s common stock on the first day of an offering; or (ii) 85 % of the fair market value of a share of the Company’s common stock on the date of purchase. Each offering period is not to exceed 27 months and will include one or more purchase periods (each a “Purchase Period”) as approved by the Company’s board of directors in the offering. The current offering period will consist of two (2) six-month purchase periods (each a “Purchase Period”) during which payroll deductions of the participants are accumulated under the ESPP. The last business day of each Purchase Period is referred to as the “Purchase Date.” The first Purchase Period commenced on November 18, 2020 with a purchase date of May 15, 2021. The second Purchase Period commenced on May 16, 2021 and had a purchase date of November 15, 2021. A total of 430,416 shares of common stock were initially reserved for issuance pursuant to the ESPP. The ESPP is a compensatory plan as defined by the authoritative guidance for stock-based compensation. The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock offered under the ESPP. The valuation methodology is similar to the stock options. Stock-based compensation expense related to the ESPP was $ 0.2 million and less than $ 0.1 million for the years ended December 31, 2021 and 2020, respectively. 11. Income Taxes The reconciliation of the Federal statutory income tax benefit (provision) to the Company’s effective income tax provision is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ December 31, ​ 2021 2020 Federal statutory income tax ​ $ 14,930 ​ $ 4,760 State income taxes, net of federal tax benefit ​ 25 ​ ( 1 ) Permanent differences in non-tax-deductible executive compensation ​ ( 1,092 ) ​ — Other permanent items ​ ​ ( 105 ) ​ ​ ( 135 ) Other deferred items ​ ​ 158 ​ ​ 13 Valuation allowance ​ ( 13,916 ) ​ ( 4,637 ) Provision for income taxes ​ $ — ​ $ — ​ 158 Table of Contents Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company’s deferred income tax assets and liabilities at December 31, 2021 and 2020 were comprised of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2021 2020 Deferred tax assets: ​ ​ Net operating loss carryforwards ​ $ 17,889 ​ $ 6,168 Equity compensation ​ 2,530 ​ 500 Other ​ ​ 959 ​ ​ 578 Total deferred tax assets ​ $ 21,378 ​ $ 7,246 Deferred tax liabilities: ​ ​ Fixed assets ​ $ ( 310 ) ​ $ ( 15 ) Total deferred tax liabilities ​ ​ ( 310 ) ​ ​ ( 15 ) Valuation allowance ​ ​ ( 21,068 ) ​ ​ ( 7,231 ) Net deferred tax assets ​ $ — ​ $ — ​ In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the level of historical operating results and the uncertainty of the economic conditions, the Company has recorded a valuation allowance of $ 21.1 million and $ 7.2 million at December 31, 2021 and 2020, respectively. The change in the valuation allowance for the year end December 31, 2021 was an increase of $ 13.8 million. At December 31, 2021 and 2020, the Company had Federal net operating losses (NOLs) of approximately $ 81.8 million and $ 26.1 million, and state NOLs of $ 10.4 million and $ 9.8 million, respectively. As a result of the Tax Act, as modified by the CARES Act, for U.S. income tax purposes, NOLs generated in tax years beginning before January 1, 2018 can still be carried forward for up to 20 years , but net operating losses generated for tax years beginning after December 31, 2017 carryforward indefinitely and can be used to offset taxable income, but the deductibility of such Federal NOLs may be limited to 80 % of current year taxable income for tax years beginning on or after December 31, 2021. Of the total Federal net operating loss of $ 81.8 million, $ 3.3 million will begin to expire in 2032 and $ 78.4 million will not expire. The state NOL carryover of $ 10.4 million will begin to expire in 2032. Pursuant to Internal Revenue Code (IRC) Sections 382 and 383, annual use of the Company’s net operating loss and research and development credit carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period. The Company has not completed an ownership change analysis pursuant to IRC Section 382. If ownership changes within the meaning of IRC Section 382 are identified as having occurred, the amount of remaining tax attribute carryforwards available to offset future taxable income and income tax expense in future years may be significantly restricted or eliminated. Further, the Company’s deferred tax assets associated with such tax attributes could be significantly reduced upon realization of an ownership change within the meaning of IRC Section 382 that has occurred or may occur in the future. Any adjustment to the Company’s tax attributes as a result of an ownership change will result in a corresponding decrease to the valuation allowance recorded against the Company’s deferred tax assets. 159 Table of Contents The Company’s valuation allowance increased during the years ended December 31, 2021 and 2020 due primarily to the generation of net operating losses, as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ December 31, ​ 2021 2020 Valuation allowance at beginning of year ​ $ 7,231 ​ $ 2,708 Increase recorded to provision for income taxes ​ 13,837 ​ 4,523 Valuation allowance at end of year ​ $ 21,068 ​ $ 7,231 ​ The Company has not incurred any material interest or penalties as of the current reporting date with respect to income tax matters. The Company does not expect that there will be unrecognized tax benefits within 12 months of the reporting date. The Company is subject to U.S. Federal and state income taxes. The Federal and state income tax returns for tax years prior to 2021 may remain open to examination as carry-forward attributes generated prior may be adjusted upon examination. The unrecognized tax benefit amounts are not reflected in the determination of the Company’s deferred tax assets. If recognized, none of these amounts would affect the Company’s effective tax rate, since it would be offset by an equal corresponding adjustment in the deferred tax asset valuation allowance. 12. Net Loss Per Common Share Net Loss Per Common Share Basic and diluted net loss per common share was calculated as follows (in thousands, except share and per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2021 2020 ​ 2019 Numerator: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 71,096 ) ​ $ ( 22,121 ) ​ $ ( 4,316 ) Repurchase and retirement of Series A and Series A-1 convertible preferred stock ​ ​ — ​ ​ ( 1,869 ) ​ ​ — Net loss attributable to common stockholders ​ $ ( 71,096 ) ​ $ ( 23,990 ) ​ $ ( 4,316 ) Denominator: ​ ​ ​ Weighted average shares used to compute net loss per share attributable to common stockholders, basic and diluted ​ 39,524,272 ​ 7,021,468 ​ 2,593,316 Net loss per share attributable to common stockholders, basic and diluted ​ $ ( 1.80 ) ​ $ ( 3.42 ) ​ $ ( 1.66 ) ​ The potentially dilutive shares that were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ 2021 ​ 2020 ​ 2019 Unvested restricted common stock ​ 493,185 735,294 — Options to purchase common stock ​ 5,768,028 4,776,908 322,811 Employee stock purchase plan contingently issuable ​ ​ 17,110 ​ 5,602 ​ — Convertible preferred stock (as converted to common shares) ​ ​ — ​ — ​ 4,628,215 ​ ​ ​ 6,278,323 5,517,804 4,951,026 ​ Included in the potentially dilutive options to purchase common stock noted above for 2019 are 211,621 shares issued upon exercise of options under non-recourse notes receivable during 2015 (see Note 10, “Stock-Based Compensation”). The Company determined the purchase of the stock to be non-substantive, and as such, the 160 Table of Contents shares subject to the promissory notes will not be deemed outstanding until such time as the promissory notes have been repaid. Accordingly, the Company has excluded these shares from the calculation of basic and diluted net loss per share for the year ended December 31, 2019. As of December 31, 2020, all outstanding principal and accrued interest relating to the Non-Recourse Notes were settled in full by the two noteholders, and as a result, the Company issued 211,621 shares of common stock to the noteholders and included these shares in the basic and diluted net loss per share for year ended December 31, 2020. As of December 31, 2021, included in the potentially dilutive options to purchase common stock are 46,598 unvested stock options that were early exercised by an employee and a non-employee in September 2020 (see Note 10, “Stock-Based Compensation”). The Company determined the early exercises to be non-substantive as the shares were subject to repurchase rights. Accordingly, the Company has excluded these shares from the calculation of basic and diluted net loss per share for the year ended December 31, 2021. ​ 13. Lease Management Services Agreements The Company leases certain of its facilities under non-cancellable operating leases expiring at various dates through 2026. On June 1, 2013, the Company entered into a management services agreement with MandalMed, Inc. (“MandalMed”) (the “MandalMed Services Agreement”) to lease approximately 5,762 square feet of space for the use laboratory benches, lab equipment, office space, and administrative and facilities services. The Company subsequently entered into several amendments to extend the lease term to November 2020. On November 3, 2020, the Company entered into the sixth amendment to the MandalMed Services Agreement to extend the term to December 31, 2021. As part of the sixth amendment, the Company leased additional space of approximately 2,130 square feet (the “Additional Space”) for a three year period commencing on December 1, 2020 and ending on November 30, 2023. On August 27, 2020, the Company entered into a lease agreement with 512 2nd Street LLC to lease approximately 3,500 square feet of office space in San Francisco, California (the “Office Space Lease Agreement”). The Office Space Lease Agreement is for a period of two years commencing on September 1, 2020 and ending August 31, 2022. According to the terms of the Office Space Lease Agreement, the Company paid a $ 0.1 million security deposit and is required to pay monthly rent and common area charges. On December 15, 2020, the Company entered into a lease agreement with Tennieh LLC to lease approximately 9,800 square feet of office space in San Francisco, California (the “Laboratory Lease Agreement”). The Laboratory Lease Agreement is for a period of five years commencing approximately February 1, 2021 and ending January 31, 2026. According to the terms of the Office Space Lease Agreement, the Company paid a $ 0.4 million security deposit and is required to pay monthly rent and common area charges. The following table summarizes total lease expense during the year ended December 31, 2021 (in thousands): ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2021 Straight-line operating lease expense $ 1,224 Variable lease expense 64 Short-term lease expense 112 Total operating lease expense $ 1,400 ​ 161 Table of Contents Rent expense was $ 0.2 million and $ 0.1 million for the years ended December 31, 2020 and 2019, respectively. Rent expense is measured based upon amortizing minimum lease payments, including rent escalations under the lease term, using the straight-line method over the term of the lease. The following table summarizes supplemental cash flow information during the year ended December 31, 2021 (in thousands): ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2021 Cash paid for amounts included measurement of lease liabilities: ​ ​ ​ Operating cash flows from operating leases $ 988 ROU asset obtained in exchange for a new operating lease liability (*) 3,152 ​ (*) Relates to the Laboratory Lease Agreement. The following table summarizes the Company’s future minimum lease payments and reconciliation of lease liabilities as of December 31, 2021 (in thousands): ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ 2022 $ 1,168 2023 973 2024 799 2025 ​ ​ 822 2026 69 Thereafter — Total future minimum lease payments ​ 3,831 Less: Interest ​ ​ ( 542 ) Total lease liabilities at present value ​ ​ 3,289 Lease liabilities, current ​ ​ 931 Lease liabilities, non-current ​ $ 2,358 ​ The following table summarizes lease term and discount rate as of December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2021 Weighted-average remaining lease term (years) ​ 3.63 Weighted-average discount rate ​ 8.65 % ​ ​ 14. Commitments and Contingencies Clinical Collaboration and Supply Agreement On July 22, 2020, the Company entered into a non-exclusive clinical collaboration and supply agreement with Novartis Institutes for BioMedical Research, Inc. (“Novartis”) (the “Novartis Agreement”). The collaboration is focused on the evaluation of the safety, tolerability and efficacy of OP-1250 in combination with Novartis’ proprietary CDK4/6 inhibitor Kisqali® (ribociclib) and/or Novartis’ proprietary phosphatidylinositol 3-kinase inhibitor Piqray® (alpelisib) (collectively the “Novartis Study Drugs”) as part of the Company’s planned Phase 1b clinical trial of OP-1250 in patients with metastatic estrogen receptor-positive breast cancer. The Company will be responsible for the conduct of the clinical trials for the combined therapies in accordance with a mutually agreed development plan. As part of the collaboration, the parties granted to each other a non-exclusive, royalty- free license under certain of the parties’ respective background patent rights and other technology to 162 Table of Contents use the parties’ respective study drugs in research and development, solely to the extent reasonably needed for the other party’s activities in the collaboration. All inventions and data developed in the performance of the clinical trials for the combined therapies (other than those specific to each component study drug), will be jointly owned by the parties. The Company is responsible for manufacturing, packaging and labeling OP-1250, and for packaging and labeling all drugs used in the clinical trials for the combined therapies (other than the Novartis Study Drugs). Novartis is responsible for manufacturing and delivering to the Company the Novartis Study Drugs in such quantities as reasonably needed for the clinical trials for the combined therapies. In accordance with an agreed budget, subject to certain thresholds, Novartis will reimburse the Company for a majority of the direct outside costs that the Company incurs related to conducting the activities under the agreed development plan in conducting the clinical trials for the combined therapies. The Novartis Agreement will terminate upon completion of all activities outlined in the development plan and the relevant protocols. Either party may terminate the Novartis Agreement for the uncured material breach or insolvency of the other party, if it reasonably deems it necessary in order to protect the safety, health or welfare of subjects enrolled in the clinical trials for the combined therapies due to the existence of a material safety issue, or in certain circumstances for an unresolved clinical hold with respect to either the Novartis Study Drugs or OP-1250. In addition, Novartis may terminate the Novartis Agreement if certain disputes between the parties are not resolved after following the applicable dispute resolution procedures, and the Company may terminate the Novartis Agreement in the event the Company terminates all clinical trials of the combined therapies other than due to a material safety issue or upon a clinical hold. For the year ended December 31, 2021 and 2020, costs incurred reimbursable by Novartis were not material to the consolidated financial statements. Clinical Trial Agreement In November 2020, the Company entered into a non-exclusive clinical trial agreement with Pfizer Inc. (“Pfizer”) (the “Pfizer Agreement”), to evaluate the safety and tolerability of OP-1250 in combination with Pfizer’s proprietary CDK4/6 inhibitor IBRANCE® (palbociclib) in patients with recurrent, locally advanced or metastatic ER+, HER2- breast cancer in a clinical trial. Under the terms of the non-exclusive agreement, the Company will be responsible for conducting the clinical trial for the combined therapies and Pfizer is responsible for supplying IBRANCE® to the Company at no cost to the Company. The Company is responsible for manufacturing, packaging and labeling OP-1250, and for packaging and labeling all drugs used in the clinical trials for the combined therapies (other than IBRANCE® (palbociclib)). Pfizer is responsible for manufacturing and delivering to us IBRANCE® (palbociclib) in such quantities as reasonably needed for the clinical trials for the combined therapies. The Pfizer Agreement will terminate upon completion of all activities outlined in the study plan and the relevant protocols. Either party may terminate the Pfizer Agreement for the uncured material breach or insolvency of the other party, if it reasonably deems it necessary in order to protect the safety, health or welfare of subjects enrolled in the clinical trials for the combined therapies due to the existence of a material safety issue, or in certain circumstances for an unresolved clinical hold with respect to either the IBRANCE® (palbociclib) or OP-1250. In addition, either party may terminate the Pfizer Agreement if certain disputes between the parties are not resolved after following the applicable dispute resolution procedures or if either party determines to discontinue clinical development for medical, scientific, legal or other reasons. The Pfizer Agreement does not grant any right of first negotiation to participate in future clinical trials, and each of the parties retains all rights and ability to evaluate their respective compounds. Costs incurred in connection to the Pfizer Agreement are included in the Research and Development expense in the consolidated statements of operations for the year ended December 31, 2021 and 2020. 163 Table of Contents Management Services Agreements The Company conducts research and development programs internally and through third parties that include, among others, arrangements with vendors, consultants, CMOs, and CROs. The Company has contractual arrangements in the normal course of business with these parties, however, the contracts with these parties are cancelable generally on reasonable notice within one year and the Company’s obligations under these contracts are primarily based on services performed through termination dates plus certain cancelation charges, if any, as defined in each of the respective agreements. In addition, these agreements may, from time to time, be subjected to amendments as a result of any change orders executed by the parties. As of December 31, 2021, the Company did not have material contractual commitments with respect to these arrangements. Contingencies From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. For all periods presented, the Company was not a party to any pending material litigation or other material legal proceedings. Indemnification Agreements In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its Board of Directors and executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. As of December 31, 2021 and 2020, the Company had not incurred any material costs as a result of such indemnifications. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.