What changed in this filing

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Item 1. Financial Statements

2022-05-09 compared with 2021-11-10 · 169 added, 254 removed, 289 unchanged (59% of the section changed)

3 unchanged sentences

(Amounts in thousands, except per share amounts)

September 30,

Current assets:

4 unchanged sentences

Property and equipment, net

Operating lease right-of-use assets

Liabilities and stockholders ’ equity

1 unchanged sentence

Accounts payable

Operating lease liabilities, current

Other current liabilities

Total current liabilities

Operating lease liabilities, net of current portion

Total liabilities

2 unchanged sentences

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized as of September 30, 2021 and December 31, 2020;

no shares issued and outstanding as of September 30, 2021 and December 31, 2020.

10,000,000 shares authorized as of March 31, 2022 and December 31, 2021;

no shares issued and outstanding as of March 31, 2022 and December 31, 2021.

Common stock, $ 0.0001 par value;

490,000,000 shares authorized as of September 30, 2021 and December 31, 2020;

40,277,390 and 40,169,738 shares issued as of September 30, 2021 and December 31, 2020, respectively;

39,681,298 and 39,308,238 shares outstanding as of September 30, 2021 and December 31, 2020, respectively.

490,000,000 shares authorized as of March 31, 2022 and December 31, 2021;

40,352,801 and 40,337,046 shares issued as of March 31, 2022 and December 31, 2021, respectively;

39,869,325 and 39,797,263 shares outstanding as of March 31, 2022 and December 31, 2021, respectively.

Additional paid-in capital

Accumulated other comprehensive income

Accumulated other comprehensive loss

Accumulated deficit

5 unchanged sentences

(Amounts in thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating expenses:

3 unchanged sentences

Loss from operations

Other income (expense):

Other income:

Interest income

Interest expense

Other income (expense)

Total other income (expense), net

Repurchase and retirement of Series A and Series A-1 convertible preferred stock

Other income:

Total other income

Net loss attributable to common stockholders

1 unchanged sentence

Weighted average shares used to compute net loss per share attributable to common stockholders, basic and diluted

Three Months Ended September 30,

Nine Months Ended September 30,

Other comprehensive income:

Net unrealized gain on marketable securities

Three Months Ended March 31,

Other comprehensive loss:

Net unrealized loss on marketable securities

Total comprehensive loss

1 unchanged sentence

Olema Pharmaceuticals, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Unaudited)

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(In thousands)

Preferred Stock

Comprehensive

Stockholders'

Income (Loss)

Balances at June 30, 2021

Balances at December 31, 2021

Vesting of early exercised stock options

1 unchanged sentence

Exercise of stock options

Issuance of shares under the employee stock purchase plan

Stock-based compensation expense

Employee stock purchase plan expense

Net unrealized gain on marketable securities

Balances at September 30, 2021

Preferred Stock

Net unrealized loss on marketable securities

Balances at March 31, 2022

Comprehensive

3 unchanged sentences

Vesting of restricted stock awards

Exercise of stock options

Issuance of shares under the employee stock purchase plan

Stock-based compensation expense

Employee stock purchase plan expense

Net unrealized gain on marketable securities

Balances at September 30, 2021

Preferred Stock

Stockholders'

Balances at June 30, 2020

Issuance costs of Series B convertible stock

Repurchase and retirement of Series A and Series A-1 convertible preferred stock

Issuance of Series C convertible preferred stock, net of issuance costs of $ 1,637

Exercise of stock options

Vesting of restricted stock awards

Stock-based compensation expense

Balances at September 30, 2020

Preferred Stock

Stockholders'

Balances at December 31, 2019

Beneficial conversion option recognized upon issuance of 2020 convertible notes

Beneficial conversion option recognized upon repurchase of 2020 convertible notes on settlement date

Extinguishment of 2020 convertible notes

Issuance of Series B convertible stock, net of issuance costs of $ 256

Issuance of Series B convertible preferred stock in connection with the conversion of convertible notes

Repurchase and retirement of Series A and Series A-1 convertible preferred stock

Issuance of Series C convertible preferred stock, net of issuance costs of $ 1,637

Exercise of stock options

Vesting of restricted stock awards

Stock-based compensation expense

Balances at September 30, 2020

Net unrealized loss on marketable securities

Balances at March 31, 2021

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

1 unchanged sentence

Depreciation and amortization expense

Non-cash interest expense

Non-cash lease expense

Premium amortization and discount accretion on marketable securities, net

1 unchanged sentence

Changes in operating assets and liabilities:

Prepaid expenses and other current assets and other assets

Prepaid expenses and other current assets

Accounts payable

Other current liabilities

Operating lease liabilities

Net cash used in operating activities

3 unchanged sentences

Purchases of marketable securities

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Proceeds from exercise of stock options

Proceeds from issuance of common stock under employee stock purchase plan

Proceeds from the issuance of convertible notes

Proceeds from issuance of Series B convertible preferred stock, net of issuance costs

Proceeds from issuance of Series C convertible preferred stock, net of issuance costs

Repurchase of shares of Series A and Series A-1 convertible preferred stock

Proceeds from the settlement of non-recourse notes

Payments of costs related to initial public offering

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

1 unchanged sentence

Supplemental disclosure of non-cash investing and financing activities:

Purchases of property and equipment included in accounts payable

Conversion of convertible notes into Series B convertible preferred stock

Deferred offering costs included in other current liabilities

Series C convertible preferred stock issuance costs included in other current liabilities

Reclassification of prepaid expenses and other current liabilities into other assets

Vesting of early exercised stock options

Purchases of property and equipment included in accounts payable and accrued liabilities

See accompanying notes to the condensed consolidated financial statements.

6 unchanged sentences

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.

It is currently being evaluated as a single agent in an ongoing Phase 1/2 clinical trial, and in Phase 1b combination with palbociclib, in patients with 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.

5 unchanged sentences

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 the initial public offering of its common stock (“IPO”).

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.

The Company had $ 306.0 million of cash, cash equivalents and marketable securities at September 30 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 condensed consolidated financial statements.

The Company had $ 267.9 million of cash, cash equivalents and marketable securities at March 31, 2022, which management believes is sufficient to fund its operating expenses and capital expenditure requirements into 2024.

Impact of COVID-19

1 unchanged sentence

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.

However, 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.

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.

In March 2022, the Company fully re-opened its offices to all employees and continues to comply with protocols implemented by respective health authorities.

The Company continues to monitor developments related to COVID-19 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.

Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United Stated (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting, and the instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting, and the instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements.

These condensed consolidated financial statements include the accounts of Olema Pharmaceuticals, Inc.

2 unchanged sentences

Unaudited Interim Financial Information

The interim condensed consolidated balance sheet as of September 30, 2021, the statements of operations and comprehensive loss, and stockholders’ equity (deficit) for the three and nine months ended September 30, 2021 and 2020, and the statements of cash flows for the nine months ended September 30, 2021 and 2020 are unaudited.

The interim condensed consolidated balance sheet as of March 31, 2022, and the statements of operations, comprehensive loss, and cash flows for the three months ended March 31, 2022 and 2021 are unaudited.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Company’s condensed consolidated financial statements included in this report.

The financial data and the other information disclosed in these notes to the condensed consolidated financial statements related to the three- and nine-month periods are also unaudited.

The results of operations for the nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other future annual or interim period.

The financial data and the other information disclosed in these notes to the condensed consolidated financial statements related to the three-month periods are also unaudited.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other future annual or interim period.

The condensed consolidated balance sheet as of December 31, 2021 included herein was derived from the audited financial statements as of that date.

These interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s Form 10-K as filed with the SEC on March 17, 2021.

Use of Estimates

The accompanying condensed consolidated financial statements are prepared in accordance with GAAP.

The accompanying condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

The preparation of the condensed 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 condensed 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.

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.

1 unchanged sentence

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 September 30, 2021 and December 31, 2020, cash and cash equivalents consisted of cash on deposit with U.S.

banks denominated in U.S.

dollars and investments in interest bearing money market funds.

Cash deposits are all in reputable financial institutions in the United States and as of March 31, 2022 and December 31, 2021, 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.

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 component of comprehensive loss.

2 unchanged sentences

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

12 unchanged sentences

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.

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 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.

For any lease modification, the Company reassesses the lease classification, remeasures the related lease liability using an updated discount rate that reflects the modified lease term, and adjusts the related ROU asset under the lease modification guidance under Topic 842.

The Company has operating leases for its 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 condensed 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” in the Company’s Form 10-K as filed with the SEC on February 28, 2022.

Research and Development Costs

1 unchanged sentence

Research and development expenses consist of costs incurred to discover, research and develop product candidates.

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.

These costs are recorded within research and development expenses in the condensed consolidated statements of operations and include personnel expenses, stock-based compensation expenses, allocated general and administrative expenses, and external costs including fees paid to consultants and clinical research organizations (“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 and other assets.

Such amounts are recognized as an expense as the goods are delivered or the related services are performed.

Costs incurred in obtaining technology licenses are charged immediately to research and development expense if the technology licensed has not reached technological feasibility and has no alternative future uses.

Research Contract Costs and Accruals

9 unchanged sentences

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 the three- and nine-month periods ended September 30, 2021 and 2020.

For purpose of this calculation, outstanding stock options, including unvested early exercised options, unvested restricted stock awards, and contingently issuable common stock related to the 2020 Employee Stock Purchase Plan (the “ESPP”) are considered potential dilutive common shares.

Since the Company was in a loss position for both periods presented, basic net loss per share is the same as diluted net loss per share for both periods as the inclusion of all potential common shares outstanding would have been anti-dilutive.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB under its ASC or other standard setting bodies.

The Company is an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”).

Under the JOBS Act, companies have extended transition periods available for complying with new or revised accounting standards.

The Company has elected to use this exemption to delay adopting new or revised accounting standards until such time as those standards apply to private companies.

As a result, the Company’s financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective date for new or revised accounting standards that are applicable to public companies.

The Company expects to lose its status as an emerging growth company on December

31, 2021, when it expects to qualify 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 intends to adopt all accounting pronouncements currently 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

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

Clarifying the Interaction between Topic 808 and Topic 606.

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 early adopted this guidance effective on January 1, 2021.

The adoption did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

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.

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 2018-15 are effective for fiscal years beginning after December 15, 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.

Recently Issued Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors).

The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee.

This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease.

A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification.

Leases with a term of 12 months or less may be accounted for similar to existing guidance for operating leases today.

In July 2018, the FASB issued ASU No.

2018-11, Leases:

Targeted Improvements, or ASU No.

In issuing ASU No.

2018-11, the FASB is permitting another transition method for ASU 2016-02, which allows the transition to the new lease standard by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

For non-public entities, ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years, and early adoption is permitted.

The Company expects to adopt this new guidance under ASU 2016-02 as of January 1, 2021 at December 31, 2021 on the Company’s 2021 Form 10-K filing using the modified retrospective approach.

The Company will elect the practical expedients upon transition to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs.

The Company will also elect the practical expedient for lessees to combine lease and non-lease components for all asset classes and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the statements of operations on a straight-line basis over the lease term.

Company is in the process of completing its review of its existing lease agreements under Topic 842 and assessment of the impact of adoption of the ASU.

The Company anticipates recording a right-of-use asset and lease liability to account for its facility leases and will record a cumulative-effect adjustment in the period of adoption.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments — Credit Losses (Topic 326):

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.

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.

In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which extends the effective date of the standard for smaller reporting companies to interim and annual periods beginning after December 15, 2022.

ASU 2019-11 also expands the scope of the practical expedient that allows entities to exclude the accrued interest component of amortized cost from various disclosures required by ASC 326 to also include certain disclosures required by ASC 320.

Entities that elect to apply the practical expedient must disclose the total amount of accrued interest that they exclude from their disclosures of amortized cost.

The amendments have the same effective dates as ASU 2016-13 for entities that have not yet adopted that standard.

These standards require using a modified retrospective approach with the cumulative effect recognized as an adjustment to retained earnings.

A prospective transition approach is required for debt securities that have recognized an other-than-temporary impairment prior to the effective date.

The Company expects to adopt the new guidance under ASU 2016-13 as of January 1, 2021 at December 31, 2021 on the Company’s 2021 Form 10-K filing.

Though the Company is currently evaluating the effect of these standards it does not expect the impact of the adoption of these standards on the Company’s financial position or results of operations to be material.

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.

Fair Value Measurement

6 unchanged sentences

● 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.

September 30, 2021

March 31, 2022

(in thousands)

1 unchanged sentence

Money market funds

Corporate bonds

Commercial paper

1 unchanged sentence

Government-sponsored enterprise securities

September 30, 2021

March 31, 2022

(in thousands)

5 unchanged sentences

The Company considers its investment portfolio of marketable securities to be available-for-sale.

As of December 31, 2020, all of the Company’s cash and cash equivalents consisted of cash on deposit with U.S.

The Company does not believe that the unrealized losses are credit related but are rather a reflection of current market yields and/or current marketplace bid/ask spreads.

The Company has not recognized an allowance for credit losses as of March 31, 2022.

In addition, no marketable securities had been in a consecutive loss position for more than 12 months as of March 31, 2022.

As of March 31, 2022, all of the Company’s cash and cash equivalents consisted of cash on deposit with U.S.

banks denominated in U.

dollars and Australian dollars.

Property and Equipment, net

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

September 30,

Lab equipment

5 unchanged sentences

Prepaid expenses and other current assets consisted of the following (in thousands):

September 30,

Prepaid clinical trial costs

Prepaid insurance

1 unchanged sentence

Prepaid research contracts

Prepaid clinical trial costs

Other Current Liabilities

Other current liabilities consisted of the following (in thousands):

September 30,

(in thousands)

Accrued R&D related costs

Accrued employee bonuses

Accrued professional fees

Accrued employee bonuses

Accrued payroll related costs

1 unchanged sentence

Accrued taxes

Convertible Notes

2020 Convertible Notes

On January 3, 2020 (“issuance date”), the Company issued convertible promissory notes (the “2020 Notes”) in the aggregate principal amount of $ 3.0 million.

The 2020 Notes bore interest at a rate of 1.21 % per annum, were unsecured and were due and payable, including accrued interest, on May 2, 2020 (“maturity date”).

The Company was not permitted to prepay the outstanding principal and interest without the consent of the note holders.

In the event of a default, all unpaid principal and accrued interest would become immediately due.

On the issuance date the Company determined that the conversion option associated with the 2020 Notes met the definition of a beneficial conversion feature (“BCF”) as the fair value of the underlying instrument at the time of issuance exceeded the contractual conversion price.

The BCF was recognized at its aggregate intrinsic value of $ 1.1 million as a debt discount with a corresponding credit to additional paid-in capital in the Company’s balance sheet.

The debt discount was amortized over the term of the 2020 Notes through the recognition of interest expense via the effective interest method.

On March 17, 2020 (the “settlement date”), the Company issued and sold 2,545,277 shares of Series B convertible preferred stock at $ 4.712 per share for gross proceeds of approximately $ 12.0 million (see Note 8, “Convertible Preferred Stock”).

On the settlement date, the principal and accrued interest then outstanding under the 2020 Notes of $ 3.0 million were converted into 638,270 shares of Series B convertible preferred stock (“March 2020 conversion”).

On the settlement date, the unamortized debt discount on the 2020 Notes was $ 0.4 million and the intrinsic value of the BCF was $ 2.6 million representing an increase of $ 1.5 million from the issuance date of the 2020

The March 2020 conversion was accounted for as a debt extinguishment.

However, as the note holders were previous investors of the Company, the increase in the intrinsic value of the BCF was deemed to be a capital contribution and therefore not income attributable to common stockholders, and accordingly, the Company recorded the $ 1.5 million gain on extinguishment of the debt within additional paid-in capital.

Convertible Preferred Stock

As of September 30, 2020, there were 23,765,075 shares of convertible preferred stock outstanding.

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 September 30, 2021 and December 31, 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.

Stock-Based Compensation

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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.

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.

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The 2020 Plan permits the grant of options restricted stock awards, stock appreciation rights, restricted stock unit awards, performance awards, and other awards.

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.

In 2022, the Company’s Board of Directors approved and adopted the 2022 Inducement Plan (the “2022 Inducement Plan”).

Under the 2022 Inducement Plan, initially 2,000,000 shares of common stock were reserved for issuance.

The exercise price for each option and stock appreciation right shall be established at 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.

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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:

September 30,

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 and the 2022 Inducement Plan were as follows, presented as a weighted average:

Risk-free interest rate

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Expected dividend yield

There were no stock options granted during the period.

Stock Option Activity

The following table summarizes the stock option activity under the 2014 Plan and the 2020 Plan:

The following table summarizes the stock option activity under the 2014 Plan, the 2020 Plan and the 2022 Inducement Plan:

Intrinsic Value

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Outstanding as of December 31, 2021

Outstanding as of September 30, 2021(2)

Options vested and exercisable as of September 30, 2021

Options expected to vest as of September 30, 2021

Outstanding as of March 31, 2022(2)

Options vested and exercisable as of March 31, 2022

Options expected to vest as of March 31, 2022

(1) Exercised amount includes vesting of early exercised options.

(2) Balance as of September 30, 2021 includes 53,588 unvested early exercised stock options.

(2) Balance as of March 31, 2022 includes 39,609 unvested early exercised stock options.

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 September 30, 2021, 81,937 of such shares had vested with the remaining shares vesting over their respective terms.

As of March 31, 2022, 95,916 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.

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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 September 30, 2021.

Accordingly, the Company has recorded the unvested portion of the exercise proceeds of $ 0.2 million in other current liabilities as of March 31, 2022.

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 nine months ended September 30, 2021:

The following table summarizes the restricted stock activity under the Plan during the three months ended March 31, 2022:

Number of Shares

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Unvested restricted stock as of December 31, 2021

Unvested restricted stock as of September 30, 2021

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 condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

General and administrative

Unvested restricted stock as of March 31, 2022

2020 Employee Stock Purchase Plan

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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 includes 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 consists of two (2) six-month

purchase periods (each a “Purchase Period”) during which payroll deductions of the participants are accumulated under the ESPP.

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 with a purchase date of November 15, 2021.

The second Purchase Period commenced on May 16, 2021 and had a purchase date of November 15, 2021.

The third Purchase Period commenced on November 16, 2021 and has a purchase date of May 16, 2022.

A total of 430,416 shares of common stock were initially reserved for issuance pursuant to the ESPP.

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The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock offered under the ESPP.

Stock-based compensation expense related to the ESPP was less than $ 0.1 million and $ 0.1 million for the three and nine months ended September 30, 2021, respectively.

Stock-based compensation expense related to the ESPP was $ 0.1 million and less than $ 0.1 million for the three months ended March 31, 2022 and 2021, respectively.

Stock-Based Compensation Expense

Stock-based compensation expense related to awards granted under the 2014 Plan, the 2020 Plan, the 2020 ESPP Plan and the 2022 Inducement Plan was classified in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

Three Months Ended March 31,

Research and development

General and administrative

Net Loss Per Share

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Basic and diluted net loss per share was calculated as follows (in thousands, except share and per share amounts):

Three Months Ended September 30,

Nine Months Ended September 30,

Repurchase and retirement of Series A and Series A-1 convertible preferred stock

Net loss attributable to common stockholders

Three Months Ended March 31,

Weighted average shares used to compute net loss per share attributable to common stockholders, basic and diluted

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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:

Three Months Ended March 31,

Unvested restricted common stock

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Employee stock purchase plan contingently issuable

Shares available for future grant under the 2014 Stock Plan

Convertible preferred stock (as converted to common shares)

Included in the potentially dilutive options to purchase common stock noted above are 211,621 shares issued upon exercise of options under non-recourse notes receivable during 2015 (see Note 9, “Stock-Based Compensation”).

The Company determined the purchase of the stock to be non-substantive, and as such, the 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 three and nine months ended September 30, 2020.

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 three and nine months ended September 30, 2021.

Also included in the potentially dilutive options to purchase common stock are 53,588

unvested stock options that were early exercised by an employee and a non-employee in September 2020 (see Note 9, “Stock-Based Compensation”).

Also included in the potentially dilutive options to purchase common stock are 39,609 unvested stock options that were early exercised by an employee and a non-employee in September 2020 (see Note 7, “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 three and nine months ended September 30, 2021.

Commitments and Contingencies

Accordingly, the Company has excluded these shares from the calculation of basic and diluted net loss per share for the three months ended March 31, 2022 and 2021.

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 at a monthly fee of $ 6,500 .

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 with a monthly fee of $ 5,600 .

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.

Rent for the Additional Space is $ 9,000 for the first year and $ 18,000 for the second and third years.

The Company recorded rent expense of $ 0.1 and $ 0.2 million during the three and nine months ended September 30, 2021, respectively.

The rent expense under the MandalMed Services Agreement during the three and nine months ended September 30, 2020 was immaterial.

(“MandalMed”) (the “MandalMed Services Agreement”) to have access to and use a portion of approximately 5,762 square feet of space for the use of laboratory benches, lab equipment, office space, and administrative and facilities services.

The Company subsequently entered into six amendments to extend the lease term to November 2023.

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.

According to the terms of the MandalMed Services Agreement, the Company paid a security deposit of less than $ 0.1 million and is required to pay monthly rent and common area charges.

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.

In April 2022, the Company extended the Office Space Lease Agreement up to August 31, 2023 and has one year renewal option to extend the term up to August 31, 2024.

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.

Monthly rent is $ 23,330 and $ 24,030 for the first and second years of the lease term, respectively.

The Company recorded rent expense under the Office Space Lease Agreement of $ 0.1 million during the three and $ 0.2 million during the nine months ended September 30, 2021, respectively.

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 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.

Monthly rent is $ 61,056 for the first year of the lease terms and increases to $ 68,676 by the fifth year of the lease term.

The Company recorded $ 0.2 million and $ 0.5 million rent expense for under the Laboratory Lease Agreement during the three and nine months ended September 30, 2021, respectively.

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 September 30, 2021, the Company did not have material contractual commitments with respect to these arrangements.

The following table summarizes the Company’s future contractual obligations and commitments related to the facility lease agreements discussed above as of September 30, 2021 (in thousands):

Year Ending December 31,

2021 (from October, 2021)

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 Laboratory 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 three months ended March 31, 2022 (in thousands):

Three Months Ended March 31

Straight-line operating lease expense

Short-term lease expense

Variable lease expense

Total operating lease expense

The following table summarizes supplemental cash flow information during the three months ended March 31, 2022 (in thousands):

Three Months Ended March 31

Cash paid for amounts included measurement of lease liabilities:

Operating cash flows from operating leases

The following table summarizes the Company’s future minimum lease payments and reconciliation of lease liabilities as of March 31, 2022 (in thousands):

Years Ended December 31,

2022 (from April 2022)

Total future minimum lease payments

Total lease liabilities at present value

Lease liabilities, current

Lease liabilities, non-current

The following table summarizes lease term and discount rate as of March 31, 2022:

Three Months Ended March 31

Weighted-average remaining lease term (years)

Weighted-average discount rate

Commitments and Contingencies

Clinical Collaboration and Supply Agreement

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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 nine months ended September 30, 2021, costs incurred reimbursable by Novartis were not material to the condensed consolidated financial statements.

For the three months ended March 31, 2022, costs incurred reimbursable by Novartis were not material to the condensed 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.

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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 condensed consolidated statements of operations for the three and nine months ended September 30, 2021.

Costs incurred in connection to the Pfizer Agreement are included in the Research and Development expense in the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2022 and 2021.

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.

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 March 31, 2022, the Company did not have material contractual commitments with respect to these arrangements.

Contingencies

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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 September 30, 2021, and December 31, 2020, the Company had not incurred any material costs as a result of such indemnifications.

As of March 31, 2022 and December 31, 2021, the Company had not incurred any material costs as a result of such indemnifications.

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