PMV Pharmaceuticals, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. INDEX TO FINANCIAL STATEMENTS Audited Financial Statements Report of Independent Registered Public Accounting Firm 121 Balance Sheets as of December 31, 2020 and 2019 122 Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2020, 2019, and 2018 123 Statements of Convertible Preferred Stock and Stockholders’ (Deficit) Equity for the Years Ended December 31, 2020, 2019, and 2018 124 Statements of Cash Flows for the Years Ended December 31, 2020, 2019, and 2018 125 Notes to Financial Statements 126 120 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of PMV Pharmaceuticals, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of PMV Pharmaceuticals, Inc. (the Company) as of December 31, 2020 and 2019, the related statements of operations and comprehensive loss, convertible preferred stock and stockholders’ (deficit) equity and cash flows for each of the three years in the period ended December 31, 2020, 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 at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the 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. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. 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. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2017. Philadelphia, Pennsylvania March 3, 2021 121 PMV Pharmaceuticals, Inc. Balance Sheets (in thousands, except share and per share amounts) December 31, 2020 December 31, 2019 Assets Current assets Cash and cash equivalents $ 361,422 $ 73,278 Short-term marketable securities — 28,208 Prepaid expenses and other current assets 3,339 607 Total current assets 364,761 102,093 Property and equipment, net 569 739 Other assets 201 201 Total assets $ 365,531 $ 103,033 Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit) Current liabilities Accounts payable $ 1,607 $ 2,837 Accrued expenses 4,803 1,686 Total current liabilities 6,410 4,523 Other liabilities — 51 Total liabilities 6,410 4,574 Commitments and contingencies (see Note 6) — — Convertible preferred stock, accumulated liquidation value of $0 and $169,385 at December 31, 2020 and 2019, respectively — 168,933 Stockholders’ equity (deficit): Preferred stock, $0.00001 par value, 5,000,000 and no shares authorized at December 30, 2020 and 2019, respectively, no shares issued or outstanding at December 31, 2020 and 2019, respectively — — Common stock, $0.00001 par value, 1,000,000,000 and 33,250,829 shares authorized; 44,777,818 and 3,046,200 shares issued and outstanding at December 31, 2020 and 2019, respectively — — Additional paid-in capital 469,001 4,969 Accumulated deficit (109,880 ) (75,440 ) Accumulated other comprehensive loss — (3 ) Total stockholders’ equity (deficit) 359,121 (70,474 ) Total liabilities, convertible preferred stock, and stockholders’ equity (deficit) $ 365,531 $ 103,033 The accompanying notes are an integral part of these financial statements. 122 PMV Pharmaceuticals, Inc. Statements of Operations and Comprehensive Loss (in thousands, except share and per share amounts) Year Ended December 31, 2020 December 31, 2019 December 31, 2018 Operating Expenses: Research and development $ 23,933 $ 20,759 $ 13,853 General and administrative 11,009 5,878 5,039 Total operating expenses 34,942 26,637 18,892 Loss from operations (34,942 ) (26,637 ) (18,892 ) Other income: Interest income, net 651 1,301 1,341 Other (expense) income (143 ) (8 ) 16 Total other income 508 1,293 1,357 Loss before provision for income taxes (34,434 ) (25,344 ) (17,535 ) Provision for income taxes 6 8 3 Net loss (34,440 ) (25,352 ) (17,538 ) Unrealized gains on marketable securities, net of tax 3 10 52 Comprehensive loss $ (34,437 ) $ (25,342 ) $ (17,486 ) Net loss per share—basic and diluted $ (2.40 ) $ (8.35 ) $ (5.82 ) Weighted-average common shares outstanding 14,364,475 3,035,243 3,012,284 The accompanying notes are an integral part of these financial statements. 123 PMV Pharmaceuticals, Inc. Statements of Convertible Preferred Stock and Stockholders’ (Deficit) Equity (in thousands except share amounts) Convertible Preferred Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ (Deficit) Equity Shares Amount Shares Amount Balances at December 31, 2017 17,396,640 $ 107,228 3,012,284 $ — $ 2,882 $ (65 ) $ (32,550 ) $ (29,733 ) Stock-based compensation expense — — — — 1,079 — — 1,079 Net loss — — — — — — (17,538 ) (17,538 ) Unrealized gain on available for sale investments — — — — — 52 — 52 Balances at December 31, 2018 17,396,640 107,228 3,012,284 — 3,961 (13 ) (50,088 ) (46,140 ) Issuance of Series C convertible preferred stock, net of issuance costs of $168 5,469,606 61,705 — — — — — — Exercise of stock options — — 33,916 — 100 — — 100 Stock-based compensation expense — — — — 908 — — 908 Net loss — — — — — — (25,352 ) (25,352 ) Unrealized gain on available for sale investments — — — — — 10 — 10 Balances at December 31, 2019 22,866,246 168,933 3,046,200 — 4,969 (3 ) (75,440 ) (70,474 ) Issuance of Series D convertible preferred stock, net of issuance costs of $208 5,321,864 69,790 — — — — — — Conversion of convertible preferred stock to common stock (28,188,110 ) (238,723 ) 28,188,110 — 238,723 — — 238,723 Exercise of warrants — — 9,688 — 194 — — 194 Issuance of common stock, net of issuance costs of $20,359 — — 13,529,750 — 223,176 — — 223,176 Exercise of stock options — — 4,070 — 6 — — 6 Stock-based compensation expense — — — — 1,933 — — 1,933 Net loss — — — — — — (34,440 ) (34,440 ) Unrealized gain on available for sale investments — — — — — 3 — 3 Balance at December 31, 2020 — $ — 44,777,818 $ — $ 469,001 $ — $ (109,880 ) $ 359,121 The accompanying notes are an integral part of these financial statements. 124 PMV Pharmaceuticals, Inc. Statements of Cash Flows (in thousands) Year Ended December 31, 2020 December 31, 2019 December 31, 2018 Cash flows from operating activities: Net loss $ (34,440 ) $ (25,352 ) $ (17,538 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock based compensation 1,933 908 1,079 Depreciation 318 388 338 Amortization of premiums on marketable securities 152 62 319 Other 143 8 (13 ) Changes in operating assets and liabilities: Prepaid expenses and other assets (2,732 ) (275 ) (17 ) Accounts payable (1,230 ) 1,799 267 Accrued expenses 3,117 397 387 Net cash used in operating activities (32,739 ) (22,065 ) (15,178 ) Cash flows from investing activities: Acquisition of property and equipment (148 ) (109 ) (452 ) Purchase of marketable securities (14,512 ) (43,452 ) (48,678 ) Maturities of marketable securities 42,571 46,792 70,823 Net cash provided by investing activities 27,911 3,231 21,693 Cash flows from financing activities: Proceeds from issuance of convertible preferred stock, net of issuance costs 69,790 61,705 — Proceeds from issuance of common shares, net of issuance costs 223,176 — — Proceeds from exercise of stock options 6 100 — Net cash provided by financing activities 292,972 61,805 — Net increase in cash and cash equivalents 288,144 42,971 6,515 Cash and cash equivalents Cash and cash equivalents—beginning of period 73,278 30,307 23,792 Cash and cash equivalents—end of period $ 361,422 $ 73,278 $ 30,307 Supplemental disclosures of noncash financing activities Conversion of convertible preferred stock to common stock $ 238,723 $ — $ — Conversion of warrant liability to common stock $ 194 $ — $ — Supplemental disclosures of cash flow information Cash paid for income tax $ 6 $ 8 $ — The accompanying notes are an integral part of these financial statements. 125 PMV Pharmaceuticals, Inc. Notes to Financial Statements December 31, 2020 and 2019 (in thousands except share and per share amounts) 1. Formation and Business of the Company Organization PMV Pharmaceuticals, Inc. (the “Company”) was incorporated in the state of Delaware in March 2013. Since inception, the Company has devoted substantially all of its time and efforts to performing research and development activities and raising capital. The Company is a precision oncology company pioneering the discovery and development of small molecule, tumor-agnostic therapies targeting p53 mutations. The Company’s headquarters are located in Cranbury, New Jersey. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry including, but not limited to, technical risks associated with the successful research, development and manufacturing of product candidates, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Current and future programs will require significant research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure. 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. On September 25, 2020, the Company completed an initial public offering (the “IPO”) of 13,529,750 shares of common stock, at a public offering price of $18.00 per share including the exercise in full by the underwriters of their option to purchase up to 1,764,750 additional shares of commons stock, for aggregate gross proceeds of $243,536 and its shares started trading on The Nasdaq Global Select Market under the ticker symbol “PMVP.” The Company received $223,176 in net proceeds after deducting underwriting discounts and commissions and other offering expenses payable by the Company. In connection with the closing of the IPO, all of the Company’s outstanding shares of convertible preferred stock outstanding at the time of the IPO automatically converted into 28,188,110 shares of common stock. On September 18, 2020, the Company amended its certificate of incorporation to effect a 5.2651-for-1 reverse stock split of its issued and outstanding common and convertible preferred stock. The accompanying financial statements and related notes give retroactive effect to the reverse stock split for all periods presented. The Company has incurred net losses and negative cash flows from operations. During the year ended December 31, 2020, the Company incurred a net loss of $34,440 and used $32,739 of cash for operations. At December 31, 2020, the Company had accumulated deficit of $109,880. Cash and cash equivalents at December 31, 2020 were $361,422. Management expects to incur substantial additional operating losses for the next several years and may need to obtain additional debt or equity financings in order to complete development of its products, obtain regulatory approvals, launch and commercialize its products and continue research and development programs. The Company believes it has adequate cash and financial resources to operate for at least the next twelve months from the date of issuance of these financial statements. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying financial statements 126 PMV Pharmaceuticals, Inc. Notes to Financial Statements December 31, 2020 and 2019 (in thousands except share and per share amounts) have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. The Company has limited operating history and its prospects are subject to risks, expenses and uncertainties frequently encountered by companies in the biotechnology industry. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. T he Company bases its estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, the fair values of common stock, convertible preferred stock and stock-based compensation. Actual results could differ materially from those estimates. Reverse Stock Split In September 2020, the Company’s board of directors and stockholders approved an amendment to the Company’s amended and restated certificate of incorporation to effect a 5.2651-for-1 reverse stock split of the Company’s common stock and convertible preferred stock, which was effected on September 24, 2020. The par value of the common stock and convertible preferred stock were not adjusted as a result of the reverse stock split. Accordingly, all common stock, convertible preferred stock, stock options, and related per share amounts in these financial statements have been retroactively adjusted for all periods presented to give effect to the reverse stock split. Fair Value of Financial Instruments The Company discloses and recognizes the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows: • Level 1 - Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. • Level 2 - Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, including inputs in markets that are not considered to be active. • Level 3 - Inputs are unobservable in which there is little or no market data available, which require the reporting entity to develop its own assumptions that are unobservable. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. 127 PMV Pharmaceuticals, Inc. Notes to Financial Statements December 31, 2020 and 2019 (in thousands except share and per share amounts) Cash, Cash Equivalents and Marketable Securities Management considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company’s marketable debt securities have been classified and accounted for as available-for-sale at December 31, 2019. The Company had no marketable debt securities at December 31, 2020. The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Marketable debt securities with maturities of 12 months or less are classified as short-term and marketable debt securities with maturities greater than 12 months are classified as long-term. The Company’s marketable debt securities are carried at fair value, with unrealized gains and losses, net of taxes, reported as a component of accumulated other comprehensive loss in stockholders’ equity. Premiums and discounts on marketable debt securities are amortized into earnings over the life of the security, which is recorded in Interest income, net. For the years ending December 31, 2020, 2019, and 2018, the Company recorded $152, $62, and $319 of amortization, respectively. Property and Equipment Property and equipment are recorded at cost net of accumulated depreciation. Property and equipment are depreciated using the straight‑line method over the estimated useful lives of the assets, generally five years, except for leasehold improvements, which are amortized over the remaining term of the lease. Upon retirement or sale of assets, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operations. Repairs and maintenance costs are charged to operations as incurred. Impairment of Long-Lived Assets Long-lived assets, which are comprised of property and equipment to be held and used are tested for recoverability whenever events or changes in the business environment indicate that the carrying amount of the assets may not be fully recoverable. Factors considered by the Company when deciding when to perform an impairment review include significant underperformance of the business against expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset for recoverability, the Company compares forecasts of undiscounted cash flows resulting from the use and eventual disposition of the long-lived asset to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows resulting from the use of an asset are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset over its current fair value. To date, the Company has not recorded any impairment losses on long-lived assets. Comprehensive Income/Loss The Company recorded $3, $10, and $52 in other comprehensive income related to unrealized gains on marketable securities, net of tax for the years ended December 31, 2020, 2019, and 2018, respectively. The Company presents comprehensive income in a single statement within its financial statements. 128 PMV Pharmaceuticals, Inc. Notes to Financial Statements December 31, 2020 and 2019 (in thousands except share and per share amounts) Research and Development Expenses Research and development expenses include costs directly attributable to the conduct of research and development programs, including compensation costs, which includes allocated stock-based compensation, salary payroll taxes, employee benefits; materials; supplies; depreciation on and maintenance of research equipment; the cost of services provided by outside contractors; and the allocable portions of facility costs, such as rent, utilities, insurance, repairs and maintenance, depreciation, and general support services. Costs for certain research and development activities are recognized based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as a prepaid expenses or as accrued research and development expenses. All costs associated with research and development are expensed as incurred. Convertible Preferred Stock The Company’s convertible preferred stock is classified outside of stockholders’ deficit because the shares contain deemed liquidation rights that are a contingent redemption feature not solely within the control of the Company. The Company’s policy is not to accrete the carrying value and related issuance costs of the convertible preferred stock to its redemption value until it is probable that the security will become redeemable. The convertible preferred stock converted to common stock in connection with the Company’s Initial Public Offering (“IPO”) on September 25, 2020. Derivative Liabilities The Company may issue certain financial instruments with embedded features which may be accounted for as separate derivative assets or liabilities, dependent on their specific contractual terms or other conditions. These derivative assets or liabilities are required to be measured at fair value at issuance and remeasured at the end of each reporting period. To determine the fair value of these instruments the Company uses a discounted cash flow analysis, as these instruments are not quoted on an active market. Increases or decreases in fair value from initial measurement and each reporting period are recorded in the statement of operations and comprehensive loss as change in fair value of derivative liabilities. Stock‑Based Compensation The Company’s share-based compensation program allows for grants of stock options and restricted stock awards. Grants are awarded to employees and non-employees, including directors. The Company accounts for stock-based employee compensation arrangements in accordance with provisions of ASC 718, Compensation – Stock Compensation (“ASC 718”) . ASC 718 requires the recognition of compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option pricing or equity valuation model that is applied in a manner consistent with the fair value measurement objectives of ASC 718, is based on established principles of financial theory and reflects all of the substantive terms and conditions of the award. The Company uses the Black-Scholes option-pricing model (“Black-Scholes”) to value stock option grants to employees, non-employees and directors. The fair value of the Company’s common stock is used to determine the fair value of restricted stock awards and stock options. The Company’s stock-based compensation awards are subject to either service or performance-based vesting conditions. Compensation expense related to awards to employees and directors with service-based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is typically the vesting term. Compensation expense related to awards to employees with 129 PMV Pharmaceuticals, Inc. Notes to Financial Statements December 31, 2020 and 2019 (in thousands except share and per share amounts) performance-based vesting conditions is recognized based on grant date fair value over the requisite service period using the accelerated attribution method to the extent achievement of the of performance condition is probable. The Black-Scholes option pricing model requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. Due to the lack of a public market for the Company’s common stock and lack of company-specific historical and implied volatility data, the Company has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to the Company, including stage of product development and life science industry focus. The historical volatility is calculated based on a period of time commensurate with expected term assumption. The Company uses the simplified method to calculate the expected term for options granted to employees whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the options due to its lack of sufficient historical data. The risk-free interest rate is based on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. The Company recognizes forfeitures as they occur. Prior to the Company’s IPO, due to the absence of an active market for the Company’s common stock, the Company utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation, to estimate the fair value of its common stock. In determining the exercise prices for options granted, the Company considered the estimated fair value of the common stock as of the measurement date. Prior to the Initial Public Offering, the estimated fair value of the common stock was determined at each grant date based upon a variety of factors, including the illiquid nature of the common stock, arm’s-length sales of the Company’s capital stock (including convertible preferred stock), the effect of the rights and preferences of the preferred shareholders, and the prospects of a liquidity event. Among other factors are the Company’s financial position and historical financial performance, the status of technological developments within the Company’s research, the composition and ability of the current research and management team, an evaluation or benchmark of the Company’s competition, and the current business climate in the marketplace. Significant changes to the key assumptions underlying the factors used could result in different fair values of common stock at each valuation date. Segment Reporting Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the Company’s Chief Operating Decision Maker to make decisions with respect to resource allocation and assessment of performance. To date, the Company has viewed its operations and manages its business as one operating segment. Net Loss per Common Share Basic net loss per share is computed using the “two-class” method which includes the weighted average number of shares of common stock outstanding during the period and other securities that participate in dividends (a participating security). The Company’s convertible preferred stock are participating securities as defined by ASC 260-10, Earnings per Share . During the periods where the Company incurs net losses, the Company allocates no loss to participating securities because these securities have no contractual obligation to share in the losses of the Company. Under the two-class method, basic net loss per share applicable to common stockholders is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net loss per share is computed similar to basic net loss per share except that the denominator is increased to include the number of additional shares for the potential dilutive effects of a warrant, 130 PMV Pharmaceuticals, Inc. Notes to Financial Statements December 31, 2020 and 2019 (in thousands except share and per share amounts) convertible preferred stock and stock options outstanding during the period calculated in accordance with the treasury stock method, or the two-class method, whichever is more dilutive. The Company allocates net earnings on a pari passu (equal) basis to both common and preferred stockholders. Net losses are not allocated to preferred stockholders as they do not have an obligation to share in the Company’s net losses. For all periods presented, basic and diluted net loss per share are the same, as any additional share equivalents would be anti-dilutive. Income Taxes The Company accounts for income taxes in accordance with ASC 740, Income Taxes ("ASC 740"), which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. Under ASC 740, the liability method is used in accounting for income taxes. Deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of assets and liabilities and are measured using the enacted tax rates and law that will be in effect when the differences are expected to reverse. ASC 740 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized. The Company evaluates annually the realizability of the deferred tax assets by assessing the valuation allowance and by adjusting the amount of such allowance, if necessary. The factors used to assess the likelihood of realization include forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. In 2020 and 2019, the Company has recorded a full valuation allowance for the deferred tax assets based on the historical loss and the uncertainty regarding the ability to project future taxable income. In future periods if the Company is able to generate income, the Company may reduce or eliminate the valuation allowance. The Company accounts for uncertain tax positions in accordance with ASC 740. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax provision that an entity takes or expects to take in a tax return. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. Under ASC 740, an entity may only recognize or continue to recognize tax positions that meet a "more likely than not" threshold. In accordance with this accounting policy, the Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax. Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”) requiring lessees to recognize operating and financing lease liabilities on the balance sheet, as well as corresponding right-of-use assets. The new lease standard also makes some changes to lessor accounting and aligns key aspects of the lessor accounting model with the revenue recognition standard. In addition, disclosures will be required to enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. In June 2020, the FASB also issued ASU 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities, which requires nonpublic entities to adopt the provisions of ASU 2016-02 for fiscal years beginning after December 15, 2021, and for interim periods within fiscal years beginning after December 15, 2022. Upon its IPO, the Company qualified as an emerging growth company (“EGC”). Qualifying as an EGC allows the Company to employ extended transition provisions by using nonpublic business entity adoption dates for new or revised accounting standards, so long as the issuer maintains its status as an EGC. The Company expects to adopt this standard for the annual period ending December 31, 2021, with the provisions of the new standard reflected in quarterly periods of that annual period. The Company is currently evaluating the impact of this accounting standard update on its financial statements. 131 PMV Pharmaceuticals, Inc. Notes to Financial Statements December 31, 2020 and 2019 (in thousands except share and per share amounts) In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees. The pronouncement is effective for the Company in the annual period beginning after December 15, 2019, and early adoption is permitted. The Company adop ted this guidance , using the modified retrospective method, on January 1, 2020 , and the adoption did not have a material impact on its financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) . This standard modifies disclosure requirements related to fair value measurement and is effective for all entities for fiscal years beginning after December 15, 2019. Early adoption is permitted. Implementation on a prospective or retrospective basis varies by specific disclosure requirement. The standard also allows for early adoption of any removed or modified disclosures upon issuance while delaying adoption of the additional disclosures until their effective date. The Company adopted this guidance, using the retrospective method, on January 1, 2020, and the adoption did not have a material impact on its financial statements. Concentration of Credit Risk and Other Risks and Uncertainties Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash and cash equivalents and marketable securities. Cash and cash equivalents are held in accounts at two financial institutions. At times, such deposits may be in excess of insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents. The Company’s marketable debt securities are carried at fair value with unrealized gains and losses. Any investments with unrealized losses are considered to be temporarily impaired. The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, uncertainty of market acceptance of the product, competition from substitute products and larger companies, protection of proprietary technology, strategic relationships and dependence on key individuals. Products developed by the Company require clearances from the U.S. Food and Drug Administration or other international regulatory agencies prior to commercial sales. There can be no assurance the Company’s future products will receive the necessary clearances. If the Company was denied clearance, clearance was delayed or it was unable to maintain clearance, it could have a materially adverse impact on the Company. In January 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a “Public Health Emergency of International Concern,” which continues to spread throughout the world and has adversely impacted global commercial activity and contributed to significant declines and volatility in financial markets. The COVID-19 outbreak and government responses are creating disruption in global supply chains and adversely impacting many industries. The outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. The Company continues to monitor the impact of the COVID-19 outbreak closely. The extent to which the COVID-19 outbreak will impact its operations or financial results is uncertain. 132 PMV Pharmaceuticals, Inc. Notes to Financial Statements December 31, 2020 and 2019 (in thousands except share and per share amounts) 3. Financial Instruments and Fair Value Measurements The Company’s financial instruments consist of money market funds, U.S. government debt securities and corporate debt securities. The following tables show the Company’s cash equivalents and available-for-sale securities’ carrying amounts and fair values at December 31, 2020 and 2019: As of December 31, 2020 Carrying Amount Fair Value Quoted priced in active markets (level 1) Significant other observable inputs (level 2) Significant unobservable inputs (level 3) Assets Money market funds $ 240,033 $ 240,033 $ 240,033 $ – $ – Corporate securities 120,008 120,008 – 120,008 – Total assets $ 360,041 $ 360,041 $ 240,033 $ 120,008 $ – As of December 31, 2019 Carrying Amount Fair Value Quoted priced in active markets (level 1) Significant other observable inputs (level 2) Significant unobservable inputs (level 3) Assets Money market funds $ 1,680 $ 1,680 $ 1,680 $ – $ – Corporate securities 97,819 97,816 – 97,816 – Total assets $ 99,499 $ 99,496 $ 1,680 $ 97,816 $ – Liabilities Warrant liability 51 51 – – 51 Total liabilities $ 51 $ 51 $ – $ – $ 51 Cash Equivalents – Cash equivalents of $360.0 million as of December 31, 2020 consisted of money market funds of $240.0 million and corporate debt securities of $120.0 million. Cash equivalents of $71.3 million as of December 31, 2019 consisted of money market funds of $1.7 million and corporate debt securities of $69.6 million. Money market funds are classified within level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets, whereas corporate securities are classified within level 2 of the fair value hierarchy because they are valued using inputs other than quoted prices that are observable for the asset or liability either directly or indirectly. Marketable Securities – Marketable securities of $28.2 million as of December 31, 2019 consisted of corporate debt securities classified within level 2 of the fair value hierarchy because they are valued using inputs other than quoted prices that are observable for the asset or liability either directly or indirectly. There were no marketable securities as of December 31, 2020. Warrant Liability – The fair value of the warrants to purchase common stock is based on significant inputs not observable in the market, which represents a level 3 measurement within the fair value hierarchy. The warrants to purchase common stock were exercised on September 24, 2020 and the fair value of the liability was reclassified to additional paid-in capital. Warrant liability consisted of the following: 133 PMV Pharmaceuticals, Inc. Notes to Financial Statements December 31, 2020 and 2019 (in thousands except share and per share amounts) Warrant Liability Balance at December 31, 2018 $ 43 Changes in fair value 8 Balance at December 31, 2019 51 Changes in fair value 143 Reclassification to additional paid-in capital upon exercise (194 ) Balance at December 31, 2020 $ – 4. Property and Equipment, Net December 31, 2020 2019 Machinery & equipment $ 1,989 $ 1,898 Computers 8 8 Furniture & fixtures 9 9 Leasehold improvements 73 67 Assets not placed in service 51 – Total property and equipment 2,130 1,982 Less: Accumulated depreciation (1,561 ) (1,243 ) Property and equipment, net $ 569 $ 739 Depreciation expense for the years ended December 31, 2020, 2019, and 2018 was $318, $388, and $338, respectively. 5. Accrued Expenses Accrued expenses consists of the following: December 31, 2020 2019 Accrued compensation $ 3,109 $ 1,647 Accrued research and development costs 1,595 – Other accrued liabilities 99 39 Total $ 4,803 $ 1,686 6. Commitments and Contingencies The Company leases office and laboratory space in Cranbury, New Jersey; South Brunswick, New Jersey; and Lexington, Massachusetts. At December 31, 2020, the minimum lease payments under these leases are as follows: 134 PMV Pharmaceuticals, Inc. Notes to Financial Statements December 31, 2020 and 2019 (in thousands except share and per share amounts) 2021 $ 479 2022 252 2023 4 Thereafter – Total future minimum lease payments $ 735 Rent expense recorded during the years ended December 31, 2020, 2019, and 2018 was $561, $580, and $479, respectively. In January 2021, we signed a lease for 50,581 square feet of office and laboratory space at One Research Way in Princeton, New Jersey. That lease term extends through 2032, has a five-year extension option, and is intended to replace our two existing facilities. Payments under this lease will total $19.6 million through May 2032. At December 31, 2020, there were no purchase commitments with third-party suppliers. Contingencies From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when future expenditures are probable and such expenditures can be reasonably estimated. 7. Convertible Preferred Stock As of December 31, 2019, the Company’s Certificate of Incorporation, as amended and restated, authorized the Company to issue up to 22,883,426 shares of convertible preferred stock with a par value of $0.00001 per share . 1,657,903 shares were designated as Series Seed convertible preferred stock (Series Seed Preferred), 8,076,985 shares were designated as Series A convertible preferred stock (Series A Preferred), 7,672,560 shares were designated as Series B convertible preferred stock (Series B Preferred) and 5,475,978 shares were designated as Series C convertible preferred stock (Series C Preferred). At December 31, 2019, the Company had an aggregate of 22,866,246 shares of Series Seed Preferred, Series A Preferred, Series B Preferred and Series C Preferred (collectively, “Preferred Stock”) issued and outstanding. All share amounts presented are reverse-split adjusted. As of December 31, 2019, the Preferred Stock consisted of the following (in thousands except for share data): Preferred stock authorized Preferred stock issued and outstanding Carrying value Liquidation preference Common stock issuable upon conversion Series Seed Preferred 1,657,903 1,647,102 $ 3,008 $ 3,050 1,647,102 Series A Preferred 8,076,985 8,076,982 30,593 30,734 8,076,982 Series B Preferred 7,672,560 7,672,556 73,627 73,728 7,672,556 Series C Preferred 5,475,978 5,469,606 61,705 61,873 5,469,606 22,883,426 22,866,246 $ 168,933 $ 169,385 22,866,246 135 PMV Pharmaceuticals, Inc. Notes to Financial Statements December 31, 2020 and 2019 (in thousands except share and per share amounts) In July 2020, the Company issued 5,321,864 shares of Series D Preferred Stock at a price of $13.1533 per share, resulting in gross proceeds of $70,000. In connection with the IPO on September 25, 2020, all of the Company’s convertible preferred stock, including Series D Preferred Stock, outstanding at the time of the IPO automatically converted into an aggregate of 28,188,110 shares of common stock. The holders of Preferred Stock have the rights, preferences, privileges and restrictions as set forth below: Dividends: The holders of Preferred Stock are entitled to receive non-cumulative dividends prior to and in preference to any declaration of payment of dividends on common stock, when and if declared by the Board of Directors. Any additional dividends will be paid ratably to holders of common and Preferred Stock, with the holders of Preferred Stock participating on an as-if converted basis. No dividends have been declared or paid as of December 31, 2019. Voting Rights: The holders of each share of Preferred Stock are entitled to voting rights equal to the number of shares of common stock into which the shares could be converted. As long as any shares of Preferred Stock remain outstanding, the holders of Preferred Stock, voting together as a class, shall be entitled to elect four members of the Company’s Board of Directors. The holders of common stock, voting together as a single class, shall be entitled to elect two members of the Company’s Board of Directors. Remaining members of the Company’s Board of Directors will be elected by the holders of a majority of the shares of Preferred Stock and common stock, voting together as a single class. Liquidation Rights: In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of Preferred Stock have liquidation preferences, before any distribution or payment is made to holders of any common stock, in an amount per share equal to the original issue price of $1.8517 for Series Seed Preferred, $3.7266 for Series A Preferred, $9.6093 for Series B Preferred and $11.3121 for Series C Preferred, as adjusted for stock splits, stock dividends, combinations, recapitalizations and the like, plus any declared but unpaid dividends. If the assets and funds to be distributed among the holders of Preferred Stock are insufficient to permit the payment to such holders, then the entire assets and funds of the Company legally available for distribution will be distributed ratably among the holders of Preferred Stock in proportion to the preferential amount each such holder is otherwise entitled to receive. Upon completion of the payment of the full liquidation preference of Preferred Stock , the remaining assets of the Company, if any, shall be distributed with equal priority and ratably to the holders of common stock and Preferred Stock, with the Preferred Stock being treated as if the Preferred Stock had been converted to shares of common stock at the then applicable conversion rate. Notwithstanding the foregoing, the aggregate distributions made with respect to any shares of Preferred Stock may not exceed the greater of (i) an amount equal to two times the original issue price plus any declared but unpaid dividends on such share or (ii) the amount the holder would have received if all shares of the Preferred Stock were deemed to have been converted into common stock as of immediately prior to such liquidation, dissolution or winding up of the Company. Conversion: Each share of Preferred Stock is convertible into shares of common stock, at the option of the holder, at any time after date of issuance. Each share of Preferred Stock automatically converts to the number of shares of common 136 PMV Pharmaceuticals, Inc. Notes to Financial Statements December 31, 2020 and 2019 (in thousands except share and per share amounts) stock determined in accordance with the conversion rate upon the earlier of ( i ) written consent of two-thirds of the then outstanding shares of Preferred Stock , voting together as a single class , and written consent of the majority of the then outstanding shares of Series C Preferred or (ii) the closing of a public offering, in which the gross cash proceeds are at least $ 40,000 and the initial offering price to the public is at least $ 11 . 3121 per share (as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations, reorganizations, reclassifications or the like) . At December 31, 2019, the conversion price for each share of Series Seed Preferred, Series A Preferred, Series B Preferred and Series C Preferred is $ 1 . 8517 , $ 3.7266 , $ 9 . 6093 and $ 11 . 3121 , respectively. Redemption: The Preferred Stock is not currently redeemable. Upon certain change in control events that are outside of the Company’s control, including liquidation, sale or transfer of control of the Company, the Preferred Stock is contingently redeemable. 8. Common Stock The Company is authorized to issue up to 1,000,000,000 shares of common stock with a par value of $0.00001 per share, and 5,000,000 shares of preferred stock with a par value of $0.00001 per share. At December 31, 2020 and 2019, there were 44,777,818 and 3,046,200 shares of common stock issued and outstanding, respectively. As of December 31, 2020, no dividends on common stock had been declared by the Company. At December 31, 2020 and 2019, the Company had reserved shares of common stock for issuance as follows: December 31, 2020 2019 Convertible preferred stock outstanding – 22,866,246 Warrants issued and outstanding – 10,800 Options issued and outstanding 4,090,970 2,767,868 Shares available for future stock option grants 4,609,725 1,530,523 Shares available for employee stock purchase plan 400,752 – Total 9,101,447 27,175,437 9. Stock Plan 2020 Equity Incentive Plan The 2020 Equity Incentive Plan (the “2020 Plan”) was approved by the board of directors on September 24, 2020. The 2020 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, restricted stock awards, unrestricted stock awards, cash-based awards and dividend equivalent rights to the Company’s officers, employees, directors and consultants. The number of shares initially reserved for issuance under the 2020 Plan is 4,406,374, which shall be cumulatively increased on January 1, 2021 and each January 1 thereafter by 5% of the number of shares of the Company’s common stock outstanding on the immediately preceding December 31. As of December 31, 2020, there were 4,372,183 shares available for issuance under the Plan. 137 PMV Pharmaceuticals, Inc. Notes to Financial Statements December 31, 2020 and 2019 (in thousands except share and per share amounts) 2020 Employee Stock Purchase Plan The 2020 Employee Stock Purchase Plan (the “2020 ESPP”) was approved by the board of directors on September 24, 2020. A total of 400,752 shares of common stock were initially reserved for issuance under this plan, which shall be increased on January 1, 2021 to the lesser of (i) 801,504 shares of common stock, (ii) 1% of the outstanding shares of common stock on the last day of the immediately preceding Fiscal Year, or (iii) an amount determined by the Administrator no later than the last day of the immediately preceding Fiscal Year. The 2020 ESPP allows employees to purchase shares of Company common stock at a 15% discount using payroll deductions. Offering periods last six months each, and employees are entitled to purchase shares at the end of the offering period based on the discount as applied to the lower of the price at the beginning of the period or the end of the period. No shares were issued under the 2020 ESPP in 2020. 2013 Equity Incentive Plan In 2014, the Company adopted the 2013 Stock Plan (the “Plan”). On September 24, 2020, this plan was replaced by the 2020 Plan, and future issuances of incentive instruments will be governed by that plan. Options Outstanding Weighted- Average Weighted Remaining Aggregate Shares Number Average Contractual Intrinsic Available of Exercise Life Value for Grant Options Price (in years) (in 000s) Balances, December 31, 2018 697,042 2,685,615 $ 2.00 7.88 $ 4,118 Shares reserved for issuance 949,650 - Options granted (249,758 ) 249,758 $ 3.53 Options forfeited / cancelled 133,589 (133,589 ) $ 2.95 Options exercised - (33,916 ) $ 3.00 Balances, December 31, 2019 1,530,523 2,767,868 $ 2.05 7.08 $ 5,048 Shares reserved for issuance 4,406,374 - Options granted (1,375,196 ) 1,375,196 $ 5.23 Options forfeited / cancelled 48,024 (48,024 ) $ 1.89 Options exercised - (4,070 ) $ 1.59 Balances, December 31, 2020 4,609,725 4,090,970 $ 3.14 7.13 $ 238,792 At December 31, 2020 Vested 2,593,714 $ 2.11 6.17 $ 154,075 Exercisable 2,683,468 $ 2.14 6.20 $ 159,309 The weighted average grant date fair value of stock options granted during the year ended December 31, 2020 and 2019 was $3.34 and $2.30, respectively. The aggregate intrinsic value of options vested and exercisable as of December 31, 2020 and 2019 is calculated based on the difference between the exercise price and the fair value of our common stock. The intrinsic value of options exercised in 2020 and 2019 was $245 and $20, respectively. 138 PMV Pharmaceuticals, Inc. Notes to Financial Statements December 31, 2020 and 2019 (in thousands except share and per share amounts) At December 31, 20 20 , the total compensation cost related to nonvested service-based awards not yet recognized is $ 4,602 . The weighted-average period over which the nonvested awards is expected to be recognized is 2 .9 years . During the year ended December 31, 2018, the Company granted 119,012 stock options at a grant-date fair value of $2.58 per share to an executive that begins vesting only upon the attainment of certain liquidity events. With the completion of the IPO on September 25, 2020, the performance condition was satisfied. The compensation cost associated with this award of $305 will be recognized ratably over the four-year vesting period commencing on September 25, 2020. During the year ended December 31, 2020, the Company granted 45,332 stock options at a grant-date fair value of $4.22 per share to a board member that vested upon the attainment of certain liquidity events. With the completion of the IPO on September 25, 2020, the performance condition was satisfied. The compensation cost associated with this award of $113 was recognized in the year ended December 31, 2020. The Company estimated the fair value of stock options using the Black-Scholes options valuation model. The fair value of employee stock options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value of employee stock options was estimated using the following assumptions: Year Ended December 31, 2020 2019 2018 Risk-free interest rate 0.31% - 1.51% 1.49% - 2.51% 2.68% - 2.83% Expected life (in years) 4.92 - 6.40 5.27 - 6.37 5.99 Dividend yield 0% 0% 0% Expected volatility 70.70% - 77.60% 72.07% - 72.69% 63.74% - 81.20% The weighted average assumptions used to estimate the fair value of stock options granted and stock purchase rights under the ESPP are as follows: Year Ended December 31, 2020 Risk-free interest rate 0.11% Expected life (in years) 0.65 Dividend yield 0% Expected volatility 76% Total Stock-Based Compensation S tock-based compensation expense recorded under ASC 718 (and under ASC 718 and ASC 505 in 2019 and 2018, prior to the adoption of ASU 2018-07) related to options granted was allocated to research and development and general and administrative expense as follows: For the Years Ended December 31, 2020 2019 2018 Research and development $ 836 $ 302 $ 314 General and administrative 1,097 606 765 Total stock-based compensation $ 1,933 $ 908 $ 1,079 139 PMV Pharmaceuticals, Inc. Notes to Financial Statements December 31, 2020 and 2019 (in thousands except share and per share amounts) 10. Income Taxes The provision for income taxes consisted of current state taxes of $6, $8, and $3 for the years ended December 31, 2020, 2019, and 2018, respectively. The effective tax rate for the Company for the years ended December 31, 2020, 2019, and 2018 was zero percent, respectively. A reconciliation of income tax computed at the statutory federal income tax rate to the provision for income taxes included in the accompanying statements of operations for the Company is as follows: For the Years Ended December 31, 2020 December 31, 2019 December 31, 2018 Income tax provision at statutory rate 21 % 21 % 21 % State income taxes, net of federal benefit 8 % 7 % 8 % Tax credits 2 % 1 % 1 % Other (1 )% 0 % (1 )% Change in valuation allowance (30 )% (29 )% (29 )% Effective income tax rate 0 % 0 % 0 % For the years ended December 31, 2020, 2019, and 2018, the Company’s effective tax rate is below the federal statutory income tax rate of 21% primarily due to state income taxes, net of federal benefit and the Company’s position to establish a full valuation allowance on its deferred tax assets. The tax effect of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets and liabilities are presented below: As of December 31, 2020 2019 Deferred tax assets: Net operating loss carryforwards $ 27,511 $ 18,707 Stock compensation 748 473 Research and development credits 2,414 1,497 Accruals and reserves 830 490 Total deferred tax assets 31,503 21,167 Valuation allowance (31,458 ) (21,106 ) Deferred tax assets recognized 45 61 Deferred tax liabilities: Fixed assets and depreciation (45 ) (61 ) Total deferred tax liabilities (45 ) (61 ) Net deferred tax assets $ - $ - The Company has recorded a valuation allowance for its deferred tax assets that it does not believe will be realizable at a more likely than not level based on analysis of all available sources of taxable income. 140 PMV Pharmaceuticals, Inc. Notes to Financial Statements December 31, 2020 and 2019 (in thousands except share and per share amounts) At December 31, 20 20 and 2019, the Company had net operating loss carryforwards of $ 9 7 , 665 and $ 66,352 , respectively. At December 31, 20 20 , the Company had state net operating loss carryforwards for New Jersey, California and Massachusetts of approximately $ 9 2 , 805 , $ 4,912 , and $ 9 50 respectively. At December 31, 2019, the Company had state net operating loss carryforwards for New Jersey, California and Massachusetts of approximately $ 61,503 , $ 4,912 and $ 901 , respectively. The federal and state net operating loss carryforwards expire beginning in the year 2033 . The Company also has federal and state research and development credit carryforward of approximately $ 3 , 470 and $ 2,169 , respectively, at December 31, 20 20 and 2019. The federal credits will begin to expire in 2034 if not utilized. The California state credits carryforward indefinitely and the New Jersey state credits expire starting in 202 2 . The above net operating losses and research and development credits are subject to Sections 382 and 383 of the Internal Revenue Code. In the event of a change in ownership as defined by these code sections, the usage of the net operating losses and research and development credits may be limited. The Company accrues interest and penalties related to unrecognized tax benefits in the Provision for income taxes line item in the statements of operations and comprehensive loss . As of December 31, 2020 and 2019, the Company had not accrued any interest or penalties related to uncertain tax positions. If the ending balance of $877 and $543 of unrecognized tax benefits as of December 31, 2020 and 2019, respectively, were recognized, none of the recognition would affect the income tax rate. The following table summarized the activity related to the Company’s unrecognized tax benefits: For the Years Ended December 31, 2020 December 31, 2019 Unrecognized tax benefits, beginning of year $ 543 $ 415 Increases (decreases) related to prior year tax positions 5 (31 ) Increases related to current year tax positions 329 159 Unrecognized tax benefits, end of year $ 877 $ 543 The Company does not anticipate any material change in its unrecognized tax benefits over the next twelve months. The unrecognized tax benefits may change during the next year for items that arise in the ordinary course of business. The Company files U.S. federal and state income tax returns with varying statutes of limitations. The Company’s tax years 2013 to 2020 will remain open for examination by the federal and state authorities for three and four years, respectively, from the date of utilization of any net operating loss credits. 11. Net Loss per Share The following outstanding potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share for the periods presented due to their antidilutive effect: For the Years Ended December 31, 2020 2019 2018 Convertible preferred stock (as converted) – 22,866,246 17,396,640 Warrants to purchase common stock – 10,800 10,800 Common stock options issued and outstanding 4,090,970 2,767,868 2,685,615 Total 4,090,970 25,644,914 20,093,055 141 PMV Pharmaceuticals, Inc. Notes to Financial Statements December 31, 2020 and 2019 (in thousands except share and per share amounts) For the Years Ended December 31, 2020 2019 2018 Net loss $ (34,440 ) $ (25,352 ) $ (17,538 ) Weighted-average number of shares - basic and diluted 14,364,475 3,035,243 3,012,284 Net loss per share - basic and diluted $ (2.40 ) $ (8.35 ) $ (5.82 ) 12. Related Parties The Company has consulting agreements with two members of the Board of Directors. Consulting fees paid in the year ended December 31, 2020, 2019, and 2018 were $112. There were no amounts owed under the consulting agreement at December 31, 2020 or 2019. An investor provided financing consulting services to the Company. Fees paid to the investor in the year ended December 31, 2020 were $65. 142 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None .