What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-09 compared with 2022-03-01 · 206 added, 256 removed, 597 unchanged (44% of the section changed)

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INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting F ir m (PCAOB ID No.

Balance Sheets as of December 31, 202 2 and 202 1

Statements of Operations and Comprehensive Loss for the Years ended December 31, 202 2 and 2021

Statements of Stockholders’ Equity (Deficit) for the Years ended December 31, 202 1 , 20 20 and 20 19

Statements of Stockholders’ Equity for the Years ended December 31, 202 2 and 202 1

Statements of Cash Flows for the Years ended December 31, 202 2 and 202 1

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We have audited the accompanying balance sheets of Pliant Therapeutics, Inc.

(the "Company") as of December 31, 2021 and 2020, the related statements of operations and comprehensive loss, redeemable 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 "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of 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 accounting principles generally accepted in the United States of America.

We have also 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 (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the financial statements, the Company has changed its method of accounting for leases effective January 1, 2021 due to the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standard Update (“ASU”) Topic 842, Leases (“ASC 842”), using the modified retrospective approach.

(the "Company") as of December 31, 2022 and 2021, the related statements of operations and comprehensive loss, stockholders’ equity, and cash flows, for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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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.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (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.

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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.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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.

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accrued Liabilities and Prepaid Expenses and Other Current Assets – Accrued and Prepaid Research and Development Expenses — Refer to Notes 2, 5 and 6 to the financial statements

Accrued Research and Development Liabilities and Prepaid Expenses and Other Current Assets – Accrued and Prepaid Research and Development Expenses — Refer to Notes 2 and 5 to the financial statements

Critical Audit Matter Description

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Any payments made in advance of services provided are recorded as prepaid assets, which are expensed as the contracted services are performed.

The Company estimates the amount of work completed through review of detailed budgets and timelines included in its contracts and agreements, and updates these estimates with

information obtained from third-party service providers and internal personnel on a quarterly basis.

The Company estimates the amount of work completed through review of detailed budgets and timelines included in its contracts and agreements, and updates these estimates with information obtained from third-party service providers and internal personnel on a quarterly basis.

As of December 31, 2022, accrued research and development expenses were $11.2 million and prepaid research and development expenses were $3.4 million.

Given the significant judgments made by management in estimating the progress or stage of completion of the services, auditing the Company’s accrued and prepaid research and development expenses was especially challenging.

Specifically, because the amount of accrued and prepaid research and development expenses is dependent on management’s receipt of timely and accurate reporting from third-party service providers, management’s estimates of work completed as of the balance sheet date, and management’s estimates of the period over which this work will be performed, auditing accrued and prepaid research and development expenses required a high degree of auditor judgment and an increased extent of effort.

Specifically, because the amount of accrued and prepaid research and development expenses is dependent on management’s receipt of

timely and accurate reporting from third-party service providers, management’s estimates of work completed as of the balance sheet date, and management’s estimates of the period over which this work will be performed, auditing accrued and prepaid research and development expenses required a high degree of auditor judgment and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s accrued and prepaid research and development expenses included the following, among others:

• We tested the design and operating effectiveness of internal controls related to the estimation of accrued and prepaid research and development expenses.

• For a sample of agreements and contracts, we read the related statement of work, purchase order, and inspected information the Company received from its third-party service providers.

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• We compared invoices received by the Company subsequent to December 31, 2022 to the accrued research and development expenses recognized by the Company as of that date.

/s/ Deloitte & Touche LLP (PCAOB ID No.

/s/ Deloitte & Touche LLP

San Francisco, California

February 28, 2022

March 9, 2023

We have served as the Company's auditor since 2018.

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Accounts payable $ 1,580 $ 2,971

Accrued liabilities (Note 6) 11,991 9,576

Accrued research and development 11,218 5,868

Accrued and other liabilities (Note 6) 8,658 6,123

Lease liabilities, current 2,457 1,869

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Lease liabilities, non-current 3,429 5,325

Other long-term liabilities (Note 6) — 866

Long-term debt (Note 7) 9,929 —

Total liabilities 37,271 22,156

Commitments and contingencies (Note 12)

Stockholders’ equity (deficit)

Stockholders’ equity

Common stock, $ 0.0001 par value;

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Year Ended December 31,

2021 2020 2019

Revenue $ 9,685 $ 7,572

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Interest and other income (expense), net 4,670 272

Interest expense ( 791 ) —

Net loss $ ( 123,321 ) $ ( 97,263 )

Accretion to redemption value and dividends on redeemable convertible

preferred stock

— — ( 6,225 )

Net loss attributable to common stockholders $ ( 123,321 ) $ ( 97,263 )

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Pliant Therapeutics, Inc.

Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Statements of Stockholders’ Equity

(In thousands, except number of shares and per share amounts)

Redeemable Convertible Preferred Stock Additional

Capital Accumulated

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Stockholders'

Series A Series B Series C Common Stock

Shares Amount Shares Amount Shares Amount Shares Amount

Shares Amount

Balance at December 31, 2021 36,083,301 $ 3 $ 414,348 $ ( 201 ) $ ( 215,091 ) $ 199,059

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— — — ( 1,757 ) — ( 1,757 )

Common stock issued in a public offering, net of offering expenses 12,432,432 2 215,399 — — 215,401

— — — — ( 123,321 ) ( 123,321 )

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Pliant Therapeutics, Inc.

Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Statements of Stockholders’ Equity

(In thousands, except number of shares and per share amounts)

Redeemable Convertible Preferred Stock Additional

Capital Accumulated

Comprehensive

Loss Accumulated

Deficit Total

Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total

Stockholders'

Series A Series B Series C Common Stock

Shares Amount Shares Amount Shares Amount Shares Amount

Shares Amount

Balance at December 31, 2020 35,552,795 $ 3 $ 400,918 $ ( 32 ) $ ( 117,828 ) $ 283,061

Issuance of Series C redeemable preferred stock, net of issuance costs

— — — — 28,527,313 52,019 — — — — — —

Issuance of common stock

upon initial public offering,

net of issuance costs — — — — — — 10,350,000 1 148,277 — — 148,278

Issuance of common stock

upon private placement — — — — — — 625,000 — 10,000 — — 10,000

Conversion of Series A, B, C

convertible preferred stock

to common stock ( 56,000,000 ) ( 62,468 ) ( 49,501,221 ) ( 75,860 ) ( 54,888,058 ) ( 99,966 ) 22,432,029 1 238,293 — — 238,294

Vesting of founders’ common stock and restricted stock awards

Vesting of restricted stock awards

103,164 — 9 — — 9

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— — — ( 169 ) — ( 169 )

Net loss — — — — — — — — — — ( 41,533 ) ( 41,533 )

Balance at December 31, 2020 — $ — — $ — — $ — 35,552,795 $ 3 $ 400,918 $ ( 32 ) $ ( 117,828 ) $ 283,061

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

Pliant Therapeutics, Inc.

Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(In thousands, except number of shares and per share amounts)

Redeemable Convertible Preferred Stock Additional

Capital Accumulated

Comprehensive

Loss Accumulated

Deficit Total

Stockholders'

Series A Series B Series C Common Stock

Shares Amount Shares Amount Shares Amount Shares Amount

Balance at December 31, 2018 56,000,000 $ 61,516 49,501,221 $ 70,587 — $ — 1,363,000 $ 1 $ — $ — $ ( 71,470 ) $ ( 71,469 )

Issuance of Series C redeemable preferred stock, net of issuance costs — — — — 26,360,745 47,947 — — — — — —

Vesting of founders’ common stock and restricted stock awards — — — — — — 440,964 — 28 — — 28

Option exercises — — — — — — 42,060 — 174 — — 174

Accretion to redemption value and cumulative dividends on redeemable convertible stock — 952 — 5,273 — — — — ( 2,031 ) — ( 4,194 ) ( 6,225 )

Stock-based compensation expense — — — — — — — — 1,829 — — 1,829

Net unrealized loss on short-term investments — — — — — — — — — ( 1 ) — ( 1 )

Net loss — — — — — — — — — — ( 631 ) ( 631 )

— — — — ( 97,263 ) ( 97,263 )

Balance at December 31, 2021 36,083,301 $ 3 $ 414,348 $ ( 201 ) $ ( 215,091 ) $ 199,059

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Year Ended December 31,

2021 2020 2019

Cash flows from operating activities:

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Noncash lease expense 1,858 1,669

Other 1,262 266 —

(Accretion) amortization on short-term investments ( 1,806 ) 1,262

Changes in operating assets and liabilities:

Tax credit receivable — 250 167

Accounts receivable 15 7,281

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Operating lease liabilities ( 2,258 ) ( 1,754 )

Deferred rent and other long-term liabilities — ( 17 ) 50

Net cash used in operating activities ( 94,631 ) ( 75,443 )

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Purchase of short-term investments ( 325,716 ) ( 219,887 )

Accretion on short-term investments — — ( 254 )

Maturity of short-term investments 177,272 295,539

Purchase of property and equipment ( 1,760 ) ( 1,953 )

Net cash used in investing activities 73,699 ( 210,866 ) ( 17,931 )

Net cash (used in) provided by investing activities ( 150,204 ) 73,699

Cash flows from financing activities:

Proceeds from issuance of common stock upon initial public offering, net of issuance costs

Proceeds from issuance of common stock upon completion of private placement — 10,000 —

Proceeds from issuance of Series C preferred stock, net of issuance costs — 52,019 47,947

Proceeds from issuances of common stock 2,984 442 174

Payment of deferred offering costs ( 457 ) — ( 2,582 )

Proceeds from sale of common stock in a public offering 216,201 —

Proceeds term loan, net of issuance costs 9,850 —

Proceeds from issuances of common stock under benefit plans 1,360 2,984

Payment of offering costs ( 557 ) ( 457 )

Net cash provided by financing activities 226,854 2,527

Net increase (decrease) in cash and cash equivalents 783 ( 34,925 ) 24,858

Net (decrease) increase in cash and cash equivalents ( 17,981 ) 783

Cash and cash equivalents at beginning of period 51,665 50,882

Cash and cash equivalents at end of period $ 33,684 $ 51,665

Supplemental disclosures of cash flow information:

Cash paid for interest $ 615 $ —

Supplemental disclosures of noncash investing and financing activities:

Purchase of property and equipment in accounts payable and accrued liabilities $ — $ 57

$ 57 $ 188 $ 159

Reclassification of restricted stock awards from liabilities to common stock upon vesting $ 2 $ 9

Accretion to redemption value and dividends on redeemable convertible preferred stock $ — — $ 6,225

Deferred offering costs in accounts payable and accrued liabilities $ — — $ 230

Net unrealized loss on short-term investments $ ( 1,757 ) $ ( 169 )

Right-of-use assets obtained in exchange for new operating lease liabilities $ 950 $ —

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

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The Company is located in South San Francisco, California, and was incorporated in the state of Delaware in June 2015.

Reverse Stock Split

On May 22, 2020, the Company implemented a 1-for-7.15 reverse stock split of the Company’s common stock.

Stockholders entitled to fractional shares as a result of the reverse stock split received a cash payment in lieu of receiving fractional shares.

All share and per share data shown in the accompanying financial statements and related notes have been retroactively revised to reflect the reverse stock split.

Shares of common stock underlying outstanding stock options and other equity instruments were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with the terms of the agreements governing such securities.

Shares of common stock reserved for issuance upon the conversion of the Company’s convertible preferred stock were proportionately reduced and the respective conversion prices were proportionately increased.

As of June 3, 2020, all outstanding preferred stock had been converted into common stock.

Initial Public Offering

In June 2020, the Company completed its initial public offering (the “IPO”), in which the Company issued and sold an aggregate of 10,350,000 shares of common stock, which consisted of 9,000,000 shares of common stock and 1,350,000 shares of common stock sold pursuant to the underwriters’ exercise of their option to purchase additional shares, at a public offering price of $ 16.00 per share.

The aggregate net proceeds received by the Company from the offering were $ 148.3 million, net of underwriting discounts, commissions and offering expenses of $ 5.7 million.

Upon the closing of the IPO, 160,389,279 shares of the Company’s outstanding convertible preferred stock were automatically converted to common stock on a 7.15 :1 basis and the related carrying amount of $ 238.3 million was reclassified to common stock and additional paid-in capital within stockholders’ equity (deficit).

Concurrent with the completion of the IPO, the Company also issued 625,000 shares of its common stock to Novartis Institutes for Biomedical Research, Inc.

(“Novartis”), a strategic partner and existing stockholder of the Company, in a private placement at a price of $ 16.00 per share for proceeds of $ 10.0 million, which resulted in Novartis owning approximately 6.1 % of the Company’s outstanding shares of common stock immediately after the IPO.

Public Offering

In July 2022, the Company completed a public offering of 12,432,432 shares of common stock, including the exercise in full of the underwriters' option to purchase 1,621,621 additional shares of common stock.

The shares were offered at a price of $ 18.50 per share, resulting in aggregate proceeds of approximately $ 215.4 million, net of underwriting discounts, commissions and offering expenses.

Summary of Significant Accounting Policies

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GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses as well as the disclosure of contingent assets and liabilities in the financial statements and accompanying notes.

On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, accruals for research and development costs, fair value of assets and liabilities, stock-based compensation, income taxes and uncertain tax positions.

On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, accruals for research and development costs, fair value of assets, stock-based compensation, income taxes and uncertain tax positions.

Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances, however, actual results may differ from those estimates.

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Fair value accounting is applied for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis.

The carrying amount of the Company’s financial instruments, including cash and cash equivalents, short-term investments, tax credit receivable, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities approximate fair value due to their short-term maturities.

The carrying amount of the Company’s financial instruments, including cash and cash equivalents, tax credit receivable, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities approximate fair value due to their short-term maturities.

Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, short-term investments and accounts receivable.

The Company invests in money market funds, treasury bill and notes, government notes and corporate debt securities.

The Company invests in money market funds, U.S.

Treasury securities, government notes and corporate debt securities.

The Company limits its credit risk associated with its cash and cash equivalents by placing them with banks and institutions it believes are highly credit worthy and in highly rated investments.

However, the Company had deposits in excess of the Federal Deposit Insurance Corporation (“FDIC”) insured limit of $250,000.

The Company performs credit evaluations of its customer, and the risk with respect to accounts receivable is further mitigated by the short duration of customer payment terms, generally within 60 days, and the pedigree of the customer base.

of the customer base.

During the years ended December 31, 2022 and 2021, Novartis accounted for 100 % of the Company’s revenue and accounts receivable.

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The Company has classified and accounted for its short-term investments as available-for-sale securities as the Company may sell these securities at any time even prior to maturity and such investments represent cash available for current operations.

As a result, short-term investments may include securities with maturities beyond twelve months that are classified within

current assets in the Balance Sheets.

As a result, short-term investments may include securities with maturities beyond twelve months that are classified within current assets in the Balance Sheets.

As of December 31, 2022 and 2021, all of the Company’s short-term investments were classified as available-for-sale and were carried at fair market value with unrealized losses recorded in other comprehensive loss in the statements of operations and comprehensive loss.

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Once a decline in fair value is determined to be other-than-temporary, an impairment charge will be recorded to other expense, net, in the statements of operations and comprehensive loss and a new cost basis in the short-term investment will be established.

As of December 31, 2021, the Company had not recorded any impairment related to other-than-temporary declines in the fair value of short-term investments.

The Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) as of January 1, 2021, which did not have a significant impact on its financial statements.

For available-for-sale debt securities in unrealized loss positions, ASU 2016-13 requires the Company to record an allowance for credit losses using an expected loss model, which replaces the incurred loss model required under the previous guidance.

A credit loss is limited to the amount by which the amortized cost of an investment exceeds its fair value.

As of December 31, 2022, the Company had not recorded any impairment related to other-than-temporary declines in the fair value of short-term investments and long lived assets.

The Company records an allowance for credit losses using an expected loss model.

Credit losses are limited to the amount by which the amortized cost of an investment exceeds its fair value.

A previously recognized credit loss may be decreased in subsequent periods if the Company’s estimate of fair value for the investment increases.

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Repairs and maintenance are expensed as incurred.

Upon adoption of Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), the Company determines if an arrangement contains a lease at the inception of the contract and a records right-of-use (“ROU”) asset and lease liability on the balance sheet at lease commencement based on the present value of remaining lease payments over the lease term.

The Company determines if an arrangement contains a lease at the inception of the contract and a records right-of-use (“ROU”) asset and lease liability on the balance sheet at lease commencement based on the present value of remaining lease payments over the lease term.

The Company only considers payments that are fixed and determinable at the time of commencement.

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The Company has elected the short-term lease practical expedient to exclude leases with a term less than 12 months from its ROU assets and lease liabilities.

The Company records rent expense for short-term leases in its statements

of operations on a straight-line basis over the lease term and records variable lease payments as incurred.

The Company records rent expense for short-term leases in its statements of operations on a straight-line basis over the lease term and records variable lease payments as incurred.

The Company has also elected to not separate lease and non-lease components and, as a result, accounts for any lease and non-lease components as a single lease component.

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There was no impairment of long-lived assets during the years ended December 31, 2022 and 2021.

Redeemable Convertible Preferred Stock

All preferred stock was automatically converted into common stock upon the Company’s IPO in June 2020.

Prior to this conversion, the Company classified redeemable convertible preferred stock outside of stockholders’ equity (deficit) because, upon the occurrence of certain change in control events that were outside the Company’s control, including liquidation, sale or transfer of the Company’s assets, holders of the redeemable convertible preferred stock could have caused redemption for cash.

At any time on or after December 19, 2024, the holders of a majority of the outstanding redeemable convertible preferred stock could also have required the Company to redeem the redeemable convertible preferred stock by providing the Company a written notice requesting such redemption.

The Company recognized changes in the redemption value immediately as they occurred, for example changes in fair value of preferred stock, and adjustments in the carrying amount of the redeemable convertible preferred stock to equal the redemption value at the end of each reporting period up through December 19, 2019, when the Company entered into the Series C Preferred Stock Purchase Agreement.

See Note 9 for further details.

In the absence of retained earnings these accretion charges were recorded against additional paid in capital, if any, and then to accumulated deficit.

The Company analyzed all embedded derivatives and beneficial conversion features for its redeemable convertible preferred stock and concluded that none required bifurcation.

Research and Development Expenses

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

Payments made to third parties under these arrangements in advance of the performance of the related services are recorded as prepaid expenses and are expensed as services are rendered.

Payments made to third parties

under these arrangements in advance of the performance of the related services are recorded as prepaid expenses and are expensed as services are rendered.

Payments associated with licensing agreements to acquire exclusive licenses to develop, use, manufacture and commercialize products that have not reached technological feasibility and do not have alternate commercial use are expensed as incurred.

Stock-Based Compensation

The Company’s stock-based equity awards include restricted stock awards, stock options and shares that will be issued under the Company’s 2020 Employee Stock Purchase Plan (“ESPP”).

The Company’s stock-based equity awards include restricted stock awards, stock options, restricted stock units ("RSUs"), performance-based restricted stock units ("PSUs"), and shares that will be issued under the Company’s 2020 Employee Stock Purchase Plan (“ESPP”).

Stock-based compensation for awards that are granted to employees is accounted at fair value on the award grant date and the expense is recognized over the period the employee is required to provide service in exchange for the award, which is generally on a straight-line basis over the vesting period of the award.

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Forfeitures are accounted for as they occur.

The Black-Scholes option-pricing model, used to estimate fair value of stock-based awards, requires the use of the following assumptions:

The Company utilizes the Monte Carlo simulation model with significant inputs including volatility and closing price of stock on grant for estimating the fair value of equity awards with market-based vesting conditions and uses the closing price of common stock on the date of grant for PSUs and RSUs with a performance or service-based vesting condition.

The Black-Scholes option-pricing model, used to estimate fair value of stock options with service-based vesting conditions, requires the use of the following assumptions:

• Expected term —The expected term represents the period that the stock-based awards are expected to be outstanding.

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Therefore, the Company used an expected dividend yield of zero .

Prior to our IPO, the fair value of our common stock has been determined using independent third-party valuations based on relevant valuation methodologies as outlined in the American Institute of Certified Public Accountants (AICPA) Practice Aid, “Valuation of Privately-Held-Company Equity Securities Issued as Compensation ”.

The Company also considered the amount of time between the independent third-party valuation dates and the grant dates and used interpolation of the fair value between the two valuation dates to estimate common stock fair value at each grant date.

This determination included an evaluation of whether the subsequent valuation indicated that any significant change in valuation had occurred between the previous valuation and the grant date.

Following our IPO, the Company uses our stock price traded on NASDAQ to determine its fair value.

The Company provides for income taxes under the asset and liability method.

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As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate.

The recognition and measurement of tax benefits requires significant judgment.

The recognition and

measurement of tax benefits requires significant judgment.

Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available.

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Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholders' equity (deficit) that result from transactions and economic events other than those with stockholders.

Comprehensive loss includes net loss as well as other changes in stockholders' equity that result from transactions and economic events other than those with stockholders.

The Company's comprehensive loss represents unrealized losses on short-term investments.

Interest and other income

Interest and other income includes interest income from our short-term investment portfolio.

Net Loss Per Share

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Diluted net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period and, if dilutive, the weighted-average number of potential shares of common stock.

Prior to the conversion of our preferred stock in our IPO, net loss or income per share attributable to common stockholders was calculated using the two-class method, which is based on an earnings allocation formula that determines net loss or income per share for the Company’s common stockholders and holders of participating securities.

The holders of preferred stock were entitled to receive dividends prior and in preference to any declaration or payment of any dividend on the common stock.

Under this method, net loss or income is increased or reduced by the amount of any dividends earned and accretion of redeemable convertible preferred stock to its redemption value, if any, during the period.

The undistributed earnings are allocated to common stock and each series of redeemable convertible preferred stock to the extent that each preferred security may share in the earnings as if all of the earnings for the period had been distributed.

Net loss or income attributable to common stockholders and participating preferred shares are allocated to each share on an as-converted basis as if all the earnings for the period had been distributed.

The participating securities do not include a contractual obligation to share in losses of the Company and are not included in the calculation of net loss per share in the periods in which a net loss is recorded.

Diluted net loss or income per share is computed using the more dilutive of (a) the two-class method or (b) the as-converted method.

The Company allocated earnings first to redeemable convertible preferred shares stockholders based on dividend rights and then to common and preferred stockholders based on ownership interests.

The weighted-average number of shares of common stock included in the computation of diluted net loss or income gives effect to all potentially dilutive common equivalent shares, including outstanding stock options and preferred stock.

Common stock equivalent shares are excluded from the computation of diluted net loss or income per share if their effect is antidilutive.

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The Company reported a net loss attributable to common stockholders during the years ended December 31, 2022 and 2021.

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No.

2016-2, Leases (“Topic 842”), which requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases.

Subsequent to this, the FASB issued various amendments to ASC 842, which affected certain aspects of the previously issued guidance.

One of the amendments included an additional transition option that allowed entities to apply the new standard on the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings.

These updates were effective for public companies for annual periods beginning after December 15, 2018, including interim periods therein.

Because the Company lost its EGC status on December 31, 2021, the standard became effective for the Company for its annual period beginning January 1, 2021.

Amounts prior to January 1, 2021 were not adjusted and continue to be reported in accordance with previous lease guidance, ASC Topic 840, Leases .

The Company adopted ASC 842 and all related amendments effective January 1, 2021 using the modified retrospective transition approach.

The Company elected the package of practical expedients upon adoption, which permitted the Company to not reassess under the new standard the Company's prior conclusions about lease identification, lease classification and initial direct costs.

In addition, the Company elected the short-term lease exception policy, permitting it to exclude the recognition requirements of this standard from leases with initial terms of 12 months or less.

The adoption of ASC 842 effective January 1, 2021 resulted in the recognition of operating lease ROU assets of $ 8.0 million and operating lease liabilities of $ 8.9 million in the Company’s balance sheet.

In connection with the adoption, pre-existing liabilities for deferred rent and lease incentives totaling $ 0.9 million were reclassified as an offset to the operating lease ROU assets.

The Company’s financial position and operating results for reporting periods prior to January 1, 2021 have not been adjusted and continue to be presented in accordance with the accounting standard in effect at that time.

The adoption of ASC 842 did not have a material impact on the 2021 quarterly or annual results of operations or cash flows and had no impact on retained earnings.

In 2016, the FASB issued ASU 2016-13, which requires entities to record expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity's current estimate of credit losses expected to be incurred.

For available-for-sale debt securities in unrealized loss positions, ASU 2016-13 requires

allowances to be recorded instead of reducing the amortized cost of the investment.

ASU 2016-13 became effective on January 1, 2021.

The adoption of ASU 2016-13 did not have an impact on the Company’s financial statements.

Financial Instruments

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The Company performs its analysis with the assistance of investment advisors.

There were no Level 3 assets or liabilities as of December 31, 2021 and 2020.

The following tables show the Company’s cash and cash equivalents, Money Market Funds and short-term investments by significant investment category as of December 31, 2021 and 2020 (in thousands):

There were no assets or liabilities recorded at fair value using Level 3 inputs as of December 31, 2022 and 2021.

The following tables show the Company’s cash and cash equivalents and short-term investments by significant investment category as of December 31, 2022 and 2021 (in thousands):

As of December 31, 2022

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Money Market Funds $ 28,312 $ — $ — $ 28,312

Treasury securities included in cash and cash equivalents and short-term investments 4,446 — ( 5 ) 4,441

government agency securities included in short-term investments

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Money Market Funds $ 15,329 $ — $ — $ 15,329

Treasury securities included in short-term investments

63,101 4 ( 1 ) 63,104

government agency securities included in short-term investments

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There have been no transfers between fair value measurement levels during the years ended December 31, 2022 and 2021.

In addition, there were no assets or liabilities measured at fair value on a non-recurring basis as of December 31, 2021 and 2020.

addition, there were no assets or liabilities measured at fair value on a non-recurring basis as of December 31, 2022 and 2021.

As of December 31, 2022, the Company had not recorded any impairment related to other-than-temporary declines in the fair value of short-term investments.

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Treasury, U.S.

government agency and corporate debt securities to interest and other income (expense), net in its statement of operations and comprehensive loss.

government agency and corporate debt securities to interest and other income in its statement of operations and comprehensive loss.

Property and Equipment, net

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Total property and equipment, net $ 4,486 $ 4,606

Depreciation expense during the years ended December 31, 2021, 2020 and 2019 was $ 1.5 million, $ 1.3 million, $ 1.1 million, respectively.

Depreciation expense during the years ended December 31, 2022, and 2021 was $ 1.8 million and $ 1.5 million, respectively.

Prepaid expenses and other current assets

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Interest receivable 1,078 385

Other 173 156

Total prepaid expenses and other current assets $ 7,058 $ 6,764

Accrued Liabilities and Other Long-Term Liabilities

Accrued Liabilities

Accrued and Other Liabilities

Accrued liabilities consisted of the following (in thousands):

Accrued research and development expenses $ 5,868 $ 3,274

Accrued compensation and benefits 7,200 5,216

Other accrued liabilities 1,458 907

Deferred rent — 85

Total accrued liabilities $ 11,991 $ 9,576

Total accrued and other liabilities $ 8,658 $ 6,123

Accrued compensation and benefits consist primarily of accrued bonuses and accrued vacation.

Other Long-Term Liabilities

Other long-term liabilities consisted of the following (in thousands):

Deferred rent $ — $ 581

Leasehold incentive obligation — 283

Other liabilities — deposits — 2

Total other long-term liabilities $ — $ 866

In May 2022, as amended in October 2022, we entered into a term loan facility (the “Oxford Loan Agreement”) with Oxford Finance LLC (the "Lender") for up to $ 100.0 million.

At closing, we entered into a term loan for $ 10.0 million of an initial $ 25.0 million tranche, with the remaining $ 15.0 million available through mid-February 2023.

The Oxford Loan Agreement provides for an additional $ 75.0 million over three tranches, $ 50.0 million of which is at our option upon the satisfaction of certain conditions related to the development of bexotegrast and one of our preclinical product candidates, and $ 25.0 million at the Lender's discretion.

In connection with the Oxford Loan Agreement, we granted a security interest in substantially all of our current and future assets.

There are no warrants or financial covenants associated with the Oxford Loan Agreement.

Borrowings under the Oxford Loan Agreement bear interest at a rate per annum equal to 1-month term Secured Overnight Financing Rate (SOFR) plus 8.5 %, subject to an agreed upon floor and cap.

The Oxford Loan Agreement requires the Company to make monthly interest-only payments until July 1, 2026 (extendable to July 1, 2027) with monthly interest and principal payments thereafter until the maturity date of May 1, 2027 (extendable to May 1, 2028).

The estimated fair value of the term loan as of December 31, 2022 was measured using Level 3 inputs and approximates the carrying value recorded to the balance sheet.

The effective interest rate for the term loan is 12.69 % and interest expense during the year ended December 31, 2022 was $ 0.8 million.

We had no outstanding debt and did not incur interest expense in 2021.

Future maturities of debt as of December 31, 2022 are as follows (in thousands):

As of December 31, 2022

Thereafter $ —

Total $ 10,000

unamortized debt issuance costs ( 133 )

Accretion of final payment 62

Total $ 9,929

Novartis Collaboration and License Agreement (the "Novartis Agreement")

In 2019, we entered into the Novartis Agreement, for the development and commercialization of our preclinical product candidate, PLN-1474 and up to three additional integrin research targets.

PLN-1474 is an internally discovered small molecule selective inhibitor of integrin αvβ1, currently being developed for the treatment of liver fibrosis associated with nonalcoholic steatohepatitis (“NASH”).

PLN-1474 is an internally discovered oral, small molecule selective inhibitor of integrin αvβ1, currently being developed for the treatment of liver fibrosis associated with nonalcoholic steatohepatitis (“NASH”).

Pursuant to the agreement, we received an upfront, non-refundable license fee of $ 50.0 million and were eligible to receive additional payments of $ 416.0 million contingent upon achievement of specified research, development, regulatory and commercial events and royalties on world-wide net sales thereafter.

Additionally, Novartis agreed to fund up to $ 19.6 million associated with research and development services for PLN-1474 and up to $ 13.4 million for research and development services on the integrin research targets.

Additionally, Novartis is funding up to $ 20.0 million associated with research and development services for PLN-1474 and up to $ 18.4 million for research and development services on the integrin research targets.

We assessed the Novartis Agreement in accordance with ASC 606 and determined that Novartis is a customer and identified the following performance obligations:

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We determined that the license to PLN-1474 was functional intellectual property and distinct as Novartis is capable to benefit from the license on its own or together with other resources that are readily available, and the research and development services we promise to deliver are not transformative in nature.

Additionally, we concluded that the non-exclusive license rights to integrin research targets were not distinct in the context of the arrangement as the promised research and development services on integrin research targets were expected to significantly modify the license and Novartis could not benefit from the non-exclusive license without such services.

Novartis could not benefit from the non-exclusive license without such services.

Therefore, the non-exclusive license rights and research and development services on integrin research targets were considered a single performance obligation.

We determined the transaction price of the PLN-1474 research and development services and integrin target research and development services was $ 20.0 million and $ 18.4 million, respectively, as of December 31, 2022, and the performance obligations associated with the aggregate unrecognized transaction price of $ 1.4 million would be satisfied in 2023.

As of December 31, 2021, variable consideration associated with specified research and development milestones totaling $ 391 million have been constrained from the transaction prices but remain eligible for achievement.

As of December 31, 2022, variable consideration associated with specified research and development milestones totaling $ 387.0 million have been constrained from the transaction prices.

In February 2023, Novartis issued a termination notice for the collaboration and license agreement, and is returning global rights for PLN-1474 as well as the early research targets and associated compounds.

P lease refer to Note 19 to our financial statements for additional information.

We are utilizing a cost-based input method to measure proportional performance and to calculate the corresponding amount of revenue to recognize.

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A significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods.

In the second quarter of 2022, Novartis exercised their right to opt-in to a research program and secured an exclusive license to compounds associated with an integrin research target, which entitled us to a $ 4.0 million payment, which was recognized in revenue and collected during 2022.

To date, we have received $ 29.0 million in contingent payments and $ 387.0 million remain eligible for achievement.

During the year ended December 31, 2022, we recognized revenue of $ 9.7 million which consisted of revenue generated from research and development services and recognition of one contingent payment of $ 4.0 million associated with the integrin research target program.

During the year ended December 31, 2021, we recognized revenue of $ 7.6 million which consisted of revenue generated from research and development services.

During the year ended December 31, 2020, we recognized revenue of $ 41.8 million, which consisted of $ 25.0 million from the achievement of the first patient dosing milestone of the Novartis agreement in the first quarter of 2020 and $ 16.8 million of revenue generated from research and development services performed during the year.

During the year ended December 31, 2019, Company recognized revenue of $ 50.0 million related to the license fee and $ 7.1 million from research and development services.

As of December 31, 2022 and 2021, there was a receivable of $ 2.0 million and $ 2.0 million, respectively, related to the Novartis Agreement.

There were no contract assets or contract liabilities as of December 31, 2022 and 2021.

Regents of the University of California License Agreement (the “UC Agreement”)

In 2015, we entered into the UC Agreement to obtain an exclusive, worldwide license relating to the use of certain patents and technology relating to αvß1 compound in fibrosis indications.

Pursuant to the UC Agreement, we made a $ 2.4 million milestone payment upon the close of our IPO in June 2020.

Subsequently, we determined the licensed technology was no longer relevant to the development of our product candidates and, therefore, we exercised our right to terminate the UC Agreement which became effective in the first quarter of 2021.

No further obligations or financial commitments survive the termination.

Adimab Development and Option Agreement (the "Adimab Agreement")

In 2018, we entered into a development and option agreement with Adimab, LLC (“Adimab”) for the discovery and optimization of proprietary antibodies as potential therapeutic product candidates.

Under the Adimab Agreement, we will select biological targets against which Adimab will use its proprietary platform technology to research and develop antibody proteins using a mutually agreed upon research plan.

We are required to pay Adimab an agreed upon rate for its full-time employees during the discovery period while Adimab performs research on each target under the applicable research plan.

We have an exclusive option to obtain a worldwide, royalty-bearing, sublicensable license under Adimab platform patents and other Adimab technology to research, develop and commercialize up to 24 antibodies of our selection.

During the years ended December 31, 2021, 2020 and 2019, we recognized research and development expenses associated with full-time employee costs of $ 28,000 , $ 0.2 million and $ 0.2 million, respectively.

Redeemable Convertible Preferred Stock

Under the Company’s Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”), the Company is authorized to issue two classes of shares:

preferred and common stock.

The preferred stock may be issued in series, and the Company’s Board of Directors is authorized to determine the rights, preferences, and terms of each series.

These rights preferences and terms could include dividend rights, conversion rights, voting rights, terms of redemptions, liquidation preferences and sinking fund terms.

As a result of the IPO in June 2020, all then outstanding convertible preferred stock was converted into shares of common stock.

There are no outstanding shares of preferred stock as of December 31, 2021.

As of December 31, 2022 and 2021, the Company had 300,000,000 authorized shares of common stock, at a par value of $ 0.0001 per share.

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No dividends have been declared or paid by the Company since its inception.

After payment of the respective liquidation preferences to the holders of shares of Preferred Stock, the holders of shares of common stock are entitled to share ratably in the Company’s remaining assets available for distribution to its stockholders in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or upon occurrence of a deemed liquidation event.

The holders of shares of common stock are entitled to share ratably in the Company’s remaining assets available for distribution to its stockholders in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or upon occurrence of a deemed liquidation event.

Shares reserved for future issuance

Outstanding stock option awards 5,569,567 3,620,180

Vesting of RSUs 507,925 —

Vesting of PSUs* 531,796 —

Shares of common stock available for future grants under the 2020 Stock Option and Incentive Plan 2,937,769 4,234,213

Shares of common stock available for future issuance under the 2020 Employee Stock Purchase Plan 888,184 613,098

Shares of common stock available for future issuance under the 2022 Inducement Plan 1,000,000 —

Total shares reserved for future issuance 11,435,241 8,467,491

*PSUs granted and outstanding based on target level of achievement of 100 %.

Stock-Based Compensation

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As of December 31, 2022, the 2020 Plan had 2,937,769 shares of common stock available for future issuance.

In 2022, the Board of Directors adopted the 2022 Inducement Plan ("Inducement Plan"), under which the Company may grant restricted stock units, stock options, stock appreciation rights, and restricted stock awards.

As of December 31, 2022, 1,000,000 shares of common stock were available for issuance.

Options under the 2020 Plan may be granted for periods of up to 10 years and at prices no less than the market price of the Company’s common stock on the date of grant, provided, however, that the exercise price of an incentive stock option granted to a 10 % shareholder shall not be less than 110 % of the estimated fair value of the shares on the date of grant and the option is not exercisable after the expiration of five years from the date of grant.

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As shares of restricted stock vested, the Company reclassified the liability to common stock and additional paid in capital.

As of December 31, 2021 and 2020, the Company recorded a liability included in accrued expenses and other liabilities of $ 2,000 and $ 10,000 , respectively.

As of December 31, 2022 and 2021, the Company recorded a liability included in accrued expenses and other liabilities of nil and $ 2,000 , respectively.

There were no grants of restricted stock awards during the years ended December 31, 2022 and 2021.

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Vested ( 21,841 ) $ 2.16

Repurchases ( 1,517 ) $ 2.12

Outstanding and unvested, as of December 31, 2022 — $ —

The aggregate fair value of restricted stock awards vested during the years ended December 31, 2021 and 2020 was $ 0.2 million each year.

Total intrinsic value of outstanding unvested restricted stock awards as of December 31, 2021 and 2020 was $ 0.3 million and $ 2.9 million, respectively.

The aggregate fair value of restricted stock awards vested during the years ended December 31, 2022 and 2021 was $ 47,000 and $ 0.2 million, respectively.

Total intrinsic value of outstanding unvested restricted stock awards as of December 31, 2022 and 2021 was nil and $ 0.3 million, respectively.

As of December 31, 2022, there was no unrecognized compensation costs related to restricted stock awards.

Incentive Stock Options and Nonqualified Stock Options

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Year Ended December 31,

2021 2020 2019

Expected volatility 73.78 % - 80.64 % 74.83 % - 76.31 %

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Term (in Years) Aggregate

Value (in thousands)

Outstanding as of December 31, 2021 3,620,180 $ 14.56 8.25 $ 16,735

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Exercisable as of December 31, 2022 2,517,687 $ 12.06 7.01 $ 23,522

Vested and expected to vest as of December 31, 2021 3,620,180 $ 14.56 7.66 $ 16,735

Aggregate intrinsic value represents the difference between the fair value of the underlying common stock and the exercise price as of December 31, 2021 and 2020.

As of December 31, 2022, there was $ 27.7 million of unrecognized compensation costs that is expected to be recognized over the weighted-average periods of 2.6 years related to stock options.

The total intrinsic value of time-based stock options exercised was $ 2.0 million and $ 6.9 million for December 31, 2022 and 2021, respectively.

Intrinsic value represents the difference between the current fair value of the underlying stock and the exercise price of the stock option.

The weighted-average grant date fair value of options granted during years ended December 31, 2022 and 2021 was $ 7.82 per share and $ 16.94 per share, respectively.

Restricted Stock Units

The service-based condition for restricted stock units ("RSUs") is generally satisfied over two years .

The following table sets forth the outstanding RSUs and related activity for the year ended December 31, 2022:

Restricted Stock Units Weighted Average Grant Date Fair Value

Unvested balance as of December 31, 2021 — —

Granted 525,825 17.43

Forfeited ( 17,900 ) 17.30

Unvested balance as of December 31, 2022 507,925 17.43

As of December 31, 2022, the Company had $ 6.9 million of unrecognized stock-based compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of 1.6 years.

Performance-Based Restricted Stock Units

Performance-based restricted stock units ("PSUs") vest upon the achievement of market and performance conditions.

Market conditions include the Company's total shareholder return ("TSR") relative to the NASDAQ Biotechnology Index over the term of the award ending on June 30, 2024, and performance conditions consist of multiple clinical development milestones associated with bexotegrast.

The performance vesting conditions generally must be satisfied within a two-year period and are forfeited if the vesting conditions are not met.

Additionally, the number of shares of common stock issued upon vesting will range from 0 % to 200 % of the PSUs based on achievement of certain targets.

The fair value of PSUs with clinical development vesting conditions were determined to be equal to the fair market value of the Company's share price on the date of grant.

The fair value of the TSR PSUs were derived from a Monte Carlo simulation model that used the following key assumptions:

Valuation date share price $ 17.57

Award term (years) 1.92

Volatility 70.62 %

Correlation coefficient 0.3508

Average peer group volatility 79.69 %

Average peer group correlation coefficient 0.4397

Risk free interest rate 2.84 %

The following table sets forth the outstanding PSUs associated with the TSR goal and related activity for the year ended December 31, 2022:

Performance Stock Units Weighted Average Grant Date Fair Value

Unvested balance as of December 31, 2021 — —

Granted* 354,532 29.15

Unvested balance as of December 31, 2022* 354,532 29.15

*PSUs granted and outstanding based on target level of achievement of 100 %.

The following table sets forth the outstanding PSUs associated with clinical development milestones and related activity for the year ended December 31, 2022:

Performance Stock Units Weighted Average Grant Date Fair Value

Unvested balance as of December 31, 2021 — —

Granted* 354,532 17.57

Vested ( 177,266 ) 17.57

Unvested balance as of December 31, 2022* 177,266 17.57

*PSUs granted and outstanding based on target level of achievement of 100 %.

In December 2022, the first milestone applicable to PSUs with clinical development vesting conditions was achieved, resulting in a $ 3.1 million cumulative catch-up of stock-based compensation expense for such PSUs.

As of December 31, 2022 the Company considered the remaining clinical development performance conditions probable of achievement.

As of December 31, 2022, the Company had $ 15.4 million of unrecognized stock-based compensation expense related to outstanding PSUs expected to be recognized over a remaining weighted-average period of 1.6 years.

2020 Employee Stock Purchase Plan

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The Company reserved 700,000 shares of common stock for future issuance under the plan.

The 2020 ESPP provides that the

number of shares reserved and available for issuance will automatically increase on January 1 of each calendar year, beginning January 1, 2021, by the least of (i) 1.0 % of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, (ii) 700,000 shares or (iii) such lesser amount as determined by the administrator of the 2020 ESPP, which is the compensation committee of the Board of Directors of the Company.

The 2020 ESPP provides that the number of shares reserved and available for issuance will automatically increase on January 1 of each calendar year, beginning January 1, 2021, by the least of (i) 1.0 % of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, (ii) 700,000 shares or (iii) such lesser amount as determined by the administrator of the 2020 ESPP, which is the compensation committee of the Board of Directors of the Company.

Under the 2020 ESPP, eligible employees may purchase shares of our common stock through payroll deductions that cannot exceed 15 % of each employee’s salary.

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At the end of the purchase period, eligible employees are permitted to purchase shares of common stock at the lower of 85 % of the fair market value at the beginning of the offering period or 85 % of the fair market value at the end of the purchase period, subject to tax limitations on the total value of the purchase.

The 2020 ESPP is considered a compensatory plan, and the Company recorded $ 0.5 million, $ 0.5 million and nil in stock-based compensation expense for year ended December 31, 2021, 2020 and 2019.

As of December 31, 2021, 86,902 shares of common stock were issued under the 2020 ESPP.

The Company used Black-Scholes option pricing model to estimate stock-based compensation expense for the 2020 ESPP with the following assumptions:

The 2020 ESPP is considered a compensatory plan, and the Company recorded $ 0.4 million and $ 0.5 million in stock-based compensation expense for years ended December 31, 2022, and 2021, respectively.

During the year ended December 31, 2022, 85,969 shares of common stock were issued under the 2020 ESPP.

The Company used the Black-Scholes option pricing model to estimate stock-based compensation expense for the 2020 ESPP with the following assumptions:

Year Ended December 31,

2021 2020 2019

Risk-free interest rate 0.60 % - 3.34 %

0.06 % - 0.07 %

Expected term of options (in years) 0.50 0.50

Expected stock price volatility 63.17 % - 82.02 %

67.16 % - 89.51 %

Expected dividends — % — %

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Year Ended December 31,

2021 2020 2019

Restricted stock awards $ 36 $ 182

Stock options and ESPP $ 13,280 $ 10,255

Restricted stock units $ 1,892 $ —

Performance-based restricted stock units $ 7,390 $ —

Total stock-based compensation expense $ 22,598 $ 10,437

Research and development expenses $ 8,730 $ 3,928

General and administrative expenses 13,867 6,509

Total stock-based compensation expense $ 10,437 $ 3,895 $ 1,829

As of December 31, 2021, there was $ 37,000 of unrecognized compensation costs that is expected to be recognized over the weighted-average periods of 0.38 years related to restricted stock awards.

As of December 31, 2021, there was $ 24.2 million of unrecognized compensation costs that is expected to be recognized over the weighted-average periods of 2.5 years related to stock options.

The Company had a pre-tax U.S.

book loss of $ 97.3 million, $ 41.5 million, and $ 0.6 million for the years ended December 31, 2021, 2020 and 2019 respectively.

book loss of $ 123.3 million, and $ 97.3 million, for the years ended December 31, 2022 and 2021, respectively.

During the years ended December 31, 2022 and 2021, the Company did not record an income tax provision.

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Year Ended December 31,

2021 2020 2019

Income tax computed at federal statutory rate 21.0 % 21.0 %

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Other 1,706 775

Deferred rent — 266

Capitalized research and development 13,900 —

Lease liability 1,638 2,000

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Annual limitations may result in the expiration of the net operating losses and tax credit carryforwards before they are utilized.

The Company performed a IRC Section 382 analysis through December 31, 2021 and does not expect any previous ownership changes to result in a limitation that will reduce the total amount of net operating loss and

tax credit carryforwards disclosed that can be utilized.

The Company performed a IRC Section 382 analysis through December 31, 2022 and does not expect any previous ownership changes to result in a limitation that will reduce the total amount of net operating loss and tax credit carryforwards disclosed that can be utilized.

Subsequent ownership changes may affect the limitation in future years.

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Year Ended December 31,

2021 2020 2019

January 1 $ 3,505 $ 2,007

Additions based on tax positions related to current year 1,547 1,081

Additions (reductions) for tax positions of prior year 417 139 ( 70 )

Additions for tax positions of prior year 144 417

December 31 $ 5,196 $ 3,505

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "Cares Act") was enacted.

The CARES Act changed net loss carryforward and back provisions and the business interest expenses limitation.

The Company has evaluated the impact of the CARES Act and determined that none of the changes would result in a material cash benefit to the Company.

Effective January 1, 2022, we are subject to mandatory capitalization of Section 174 research and development expenditures.

The capitalized expenses are subject to amortization over five and fifteen years for expenses incurred within the U.S.

and outside of U.S., respectively.

Commitments and Contingencies

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License and Collaboration Agreements

Potential payments related to the Company’s license and research agreements, including milestone and royalty payments, are detailed in Notes 6 and 7.

Potential payments related to the Company’s license and research agreements, including milestone and royalty payments, are detailed in Note 8.

Legal Proceedings

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The Company currently has directors’ and officers’ insurance.

On January 1, 2021, the Company adopted ASC 842 and the following disclosures as of and for the year ended December 31, 2021 are presented under ASC 842.

On January 1, 2021, the Company adopted ASC 842 and the following disclosures as of and for the years ended December 31, 2022 and 2021 are presented under ASC 842.

In February 2018, the Company entered into a non-cancelable lease agreement (the “Lease”) for premises consisting of approximately 32,974 square feet located in South San Francisco, California (the “Premises”).

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This lease does not contain material variable rent payments, residual value guarantees, covenants, or other restrictions.

For the year ended December 31, 2021, the Company recognized expenses associated with the operating leases of $ 2.3 million.

Additionally, the Company incurred variable lease costs of $ 0.9 million which is comprised primarily of the Company's proportionate share of operating expenses, property taxes, and insurance.

Short-term lease expense and variable lease payments recorded in operating expenses were immaterial for the year ended December 31, 2021.

Cash paid for amounts included in the measurement of operating lease liabilities was $ 2.4 million.

Maturities of the Company's operating lease liability as of December 31, 2021 were as follows:

In August 2022, the Company entered into a non-cancelable lease agreement for premises consisting of approximately 12,456 square feet located in South San Francisco, California.

The premises is being used as additional office space for the Company.

The term of the lease is 18 months, which commenced on August 1, 2022.

Base rent is $ 0.1 million per month during the first year of the lease term, with specified annual increases of 3 % thereafter.

The Company has the right to extend the lease term by 3 years with monthly payments equal to the market rate of rent.

The exercise of lease renewal options is at the sole discretion of the Company and is not included in the right-of-use (ROU) asset and lease liability as it is not reasonably certain of exercise.

This lease does not contain material variable rent payments, residual value guarantees, covenants, or other restrictions.

For the years ended December 31, 2022 and 2021, the Company recognized expenses associated with the operating leases of $ 2.5 million and $ 2.3 million, respectively.

Additionally for those same years, the Company incurred variable lease costs of $ 0.7 million and $ 0.9 million, respectively, which is comprised primarily of the Company's proportionate share of operating expenses, property taxes, and insurance.

Short-term lease expense and variable lease payments recorded in operating expenses were immaterial for the years ended December 31, 2022 and 2021.

For the years ended December 31, 2022 and 2021, cash paid for amounts included in the measurement of operating lease liabilities was $ 2.7 million and $ 2.4 million, respectively.

The undiscounted future non-cancellable lease payments of the Company's operating lease liability as of December 31, 2022 were as follows (in thousands):

Year ending December 31:

Operating Lease

Operating Leases

Total lease payments $ 6,460

Present value discount 574

Total operating lease liabilities $ 7,194

Total current operating lease liabilities $ 2,457

Total non-current operating lease liabilities $ 3,429

The weighted-average remaining lease terms and discount rates related to the Company's operating leases were as follows:

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Weighted-average discount rate 8.20 % 7.9 %

Total rent expense under ASC 840 was $ 2.5 million during each of the years ending December 31, 2020 and 2019.

Future minimum lease payments under the Lease as of December 31, 2021 were as follows (in thousands):

Year ending December 31:

Operating Lease

Total lease payments $ 7,660

Related Party Transactions

In 2019, certain employees of Third Rock Ventures, a stockholder of the Company, provided consulting services to the Company.

Commencing January 2020, Third Rock Ventures ceased providing management consulting services to the Company.

The Company recorded no consulting expenses for consulting services provided by Third Rock Ventures during the years ended December 31, 2021 and 2020.

The Company recorded Third Rock Ventures consulting expenses to general and administrative expense of $ 36,000 during the year ended December 31, 2019.

In June 2021, the Company granted 26,572 stock options with a grant date fair value of $ 0.5 million to partners of Third Rock Ventures who are also serving as non-employee directors on the Company's Board of Directors.

In June 2022 and 2021, the Company granted 15,000 and 26,572 stock options with a grant date fair value of $ 0.1 million and $ 0.5 million to partners of Third Rock Ventures who were also serving as non-employee directors on the Company's Board of Directors.

Both of the non-employee directors resigned from the Company's Board of Directors in 2022.

The shares of common stock subject to these options ve st 25 % on the first day of each calendar quarter for three quarters with the final vest date being the earlier of (i) the one-year anniversary of the grant date or (ii) the next Annual Meeting of Stockholders.

In March 2020, the Company granted 26,573 stock options with a grant date fair value of $ 0.1 million to a partner at Third Rock Ventures, who is also serving as a non-employee director on the Company’s Board of Directors.

The common shares subject to these options vest 1/12th on the last day of each calendar quarter over a three-year period and commenced vesting upon our IPO.

In order to vest at each calendar quarter end date, the shareholder must be providing continuous service to the Company through such vesting date.

The stock-based compensation expense related to these options was immaterial during the years ended December 31, 2021.

The stock-based compensation expense related to these options was immaterial during the years ended December 31, 2022, and 2021.

Defined Contribution Plan

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Employee contributions are voluntary and are determined on an individual basis subject to the maximum allowable under federal tax regulations.

The Company made contributions to the plan of $ 0.6 million, $ 0.4 million and $ 0.2 million during the years ended December 31, 2021, 2020 and 2019, respectively.

The Company made contributions to the plan of $ 0.8 million and $ 0.6 million during the years ended December 31, 2022 and 2021, respectively.

Net Loss Per Share Attributable to Common Stockholders

The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented, because including them would have been antidilutive:

The following common share equivalents were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented, because including them would have been antidilutive:

Year Ended December 31,

2021 2020 2019

Redeemable convertible preferred stock (on an as-converted basis) — — 18,442,233

Options to purchase common stock 5,569,567 3,620,180

Restricted stock awards granted and not purchased — 4,195 4,195

Restricted stock units 507,925 —

Performance-based restricted stock units* 354,532 —

Unvested restricted shares — 21,841

Total 6,432,024 3,642,021

*PSUs outstanding based on target level of achievement of 100 %.

A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net loss per share attributable to common stockholders is as follows (in thousands, except share and per share amounts):

Year Ended December 31,

2021 2020 2019

Net loss per share:

Net loss $ ( 123,321 ) $ ( 97,263 )

accretion to redemption value and dividends on redeemable convertible preferred shares

— — ( 6,225 )

Net loss attributable to common stockholders $ ( 123,321 ) $ ( 97,263 )

5 unchanged sentences

Diluted $ ( 2.94 ) $ ( 2.71 )

Subsequent Events

In January 2023, the Company completed a public offering of 9,583,334 shares of common stock, including the exercise in full of the underwriters' option to purchase 1,250,000 additional shares of common stock.

The shares were

offered at a price of $ 30.00 per share, resulting in aggregate proceeds of approximately $ 269.9 million, net of underwriting discounts, commissions and offering expenses.

On February 17, 2023, we received notice from Novartis Institutes for BioMedical Research, Inc.

(“Novartis”) that Novartis has elected to exercise its right to terminate the Collaboration and License Agreement by and between the Company and Novartis, dated October 17, 2019 (the “Collaboration Agreement”), as amended by Amendment No.

1 to the Collaboration and License Agreement between the Company and Novartis, dated as of November 15, 2022 (“Amendment No.

Novartis informed the Company of its decision, as part of its new strategy focusing on a limited number of therapeutic areas, to divest clinical NASH assets and, as a result, to discontinue the development of PLN-1474, a small molecule selective inhibitor of integrin αvß1, being developed for the treatment of liver fibrosis associated with NASH.

The termination will take effect on April 18, 2023.

Effective upon the termination of the Collaboration Agreement, all rights and licenses granted thereunder, including development candidates targeting the validated Research Target, PLN-1474 and the related IND, will revert back to the Company.

The payment obligations of Novartis with respect to future milestones, royalties and research and development funding will also terminate.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

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-K

Item 8. Financial Statements and Supplementary Data