Praxis Precision Medicines, Inc. 10-Q

Item 1. Financial Statements. PRAXIS PRECISION MEDICINES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Amounts in thousands, except share and per share data) June 30, 2021 December 31, 2020 Assets Current assets: Cash and cash equivalents $ 175,879 $ 296,608 Marketable securities 163,305 — Prepaid expenses and other current assets 9,249 5,718 Total current assets 348,433 302,326 Property and equipment, net 182 82 Operating lease right-of-use assets 4,400 754 Other non-current assets 496 15 Total assets $ 353,511 $ 303,177 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 7,401 $ 4,088 Accrued expenses 7,826 10,869 Operating lease liabilities 553 763 Total current liabilities 15,780 15,720 Long-term liabilities: Non-current portion of operating lease liabilities 3,959 — Total liabilities 19,739 15,720 Commitments and contingencies (Note 6) Stockholders’ equity: Preferred stock, $ 0.0001 par value; 10,000,000 shares authorized and no shares issued or outstanding as of June 30, 2021 and December 31, 2020 — — Common stock, $ 0.0001 par value; 150,000,000 shares authorized; 44,693,162 shares issued and outstanding as of June 30, 2021, and 38,268,543 shares issued and outstanding as of December 31, 2020 5 4 Additional paid-in capital 547,145 437,007 Accumulated other comprehensive loss ( 50 ) — Accumulated deficit ( 213,328 ) ( 149,554 ) Total stockholders’ equity 333,772 287,457 Total liabilities and stockholders’ equity $ 353,511 $ 303,177 The accompanying notes are an integral part of these condensed consolidated financial statements. 1 PRAXIS PRECISION MEDICINES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in thousands, except share and per share data) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Operating expenses: Research and development $ 25,678 $ 9,050 $ 43,607 $ 15,918 General and administrative 10,805 2,520 20,295 4,121 Total operating expenses 36,483 11,570 63,902 20,039 Loss from operations ( 36,483 ) ( 11,570 ) ( 63,902 ) ( 20,039 ) Other income: Other income, net 82 5 128 133 Total other income 82 5 128 133 Loss before income taxes ( 36,401 ) ( 11,565 ) ( 63,774 ) ( 19,906 ) Benefit from (provision for) income taxes — ( 3 ) — 8 Net loss $ ( 36,401 ) $ ( 11,568 ) $ ( 63,774 ) $ ( 19,898 ) Accretion and cumulative dividends on redeemable convertible preferred stock — ( 2,039 ) — ( 4,103 ) Gain on repurchase of redeemable convertible preferred stock — — — 493 Net loss attributable to common stockholders $ ( 36,401 ) $ ( 13,607 ) $ ( 63,774 ) $ ( 23,508 ) Net loss per share attributable to common stockholders, basic and diluted $ ( 0.88 ) $ ( 8.28 ) $ ( 1.59 ) $ ( 14.37 ) Weighted average common shares outstanding, basic and diluted 41,569,782 1,642,484 40,028,807 1,635,913 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 PRAXIS PRECISION MEDICINES, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (Amounts in thousands) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Net loss $ ( 36,401 ) $ ( 11,568 ) $ ( 63,774 ) $ ( 19,898 ) Unrealized gains (losses) on marketable securities, net of tax 36 — ( 50 ) — Comprehensive loss $ ( 36,365 ) $ ( 11,568 ) $ ( 63,824 ) $ ( 19,898 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 3 PRAXIS PRECISION MEDICINES, INC. CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (Unaudited) (Amounts in thousands, except share data) Three Months Ended Series A Redeemable Convertible Preferred Stock Series B Redeemable Convertible Preferred Stock Series B-1 Redeemable Convertible Preferred Stock Series C Redeemable Convertible Preferred Stock Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders’ Equity (Deficit) Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Balance at March 31, 2021 — — — $ — — $ — — $ — 38,621,049 $ 4 $ 442,524 $ ( 176,927 ) $ ( 86 ) $ 265,515 Stock-based compensation expense — — — — — — — — — — 5,400 — — 5,400 Issuance of common stock from follow-on public offering, net of offering costs of $ 229 — — — — — — — — 5,750,000 1 98,412 — — 98,413 Issuance of common stock upon exercise of stock options — — — — — — — — 322,113 — 809 — — 809 Change in unrealized loss on marketable securities, net of tax — — — — — — — — — — — — 36 36 Net loss — — — — — — — — — — — ( 36,401 ) — ( 36,401 ) Balance at June 30, 2021 — $ — — $ — — $ — — $ — 44,693,162 $ 5 $ 547,145 $ ( 213,328 ) $ ( 50 ) $ 333,772 Balance at March 31, 2020 8,075,799 $ 10,092 14,913,704 $ 50,859 2,666,666 $ 10,630 3,980,584 $ 21,074 1,635,023 $ 1 $ — $ ( 90,763 ) — ( 90,762 ) Issuance of Series C redeemable convertible preferred stock, net of issuance costs of $ 4 — — — — — — 4,563,108 23,496 — — — — — — Vesting of restricted stock awards — — — — — — — — 13,142 — — — — — Stock-based compensation expense — — — — — — — — — — 285 — — 285 Accretion of redeemable convertible preferred stock to redemption value — 162 — 890 — 198 — 789 — — ( 285 ) ( 1,754 ) — ( 2,039 ) Net loss and comprehensive loss — — — — — — — — — — — ( 11,568 ) — ( 11,568 ) Balance at June 30, 2020 8,075,799 $ 10,254 14,913,704 $ 51,749 2,666,666 $ 10,828 8,543,692 $ 45,359 1,648,165 $ 1 $ — $ ( 104,085 ) $ — $ ( 104,084 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 4 PRAXIS PRECISION MEDICINES, INC. CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (Unaudited) (Amounts in thousands, except share data) Six Months Ended Series A Redeemable Convertible Preferred Stock Series B Redeemable Convertible Preferred Stock Series B-1 Redeemable Convertible Preferred Stock Series C Redeemable Convertible Preferred Stock Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders’ Equity (Deficit) Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Balance at December 31, 2020 — $ — — $ — — $ — — $ — 38,268,543 $ 4 $ 437,007 $ ( 149,554 ) $ — $ 287,457 Stock-based compensation expense — — — — — — — — — — 10,066 — — 10,066 Issuance of common stock from follow-on public offering, net of offering costs of $ 229 — — — — — — — — 5,750,000 1 98,412 — — 98,413 Issuance of common stock upon exercise of stock options — — — — — — — — 674,619 — 1,660 — — 1,660 Unrealized loss on marketable securities, net of tax — — — — — — — — — — — — ( 50 ) ( 50 ) Net loss — — — — — — — — — — — ( 63,774 ) — ( 63,774 ) Balance at June 30, 2021 — $ — — $ — — $ — — $ — 44,693,162 $ 5 $ 547,145 $ ( 213,328 ) $ ( 50 ) $ 333,772 Balance at December 31, 2019 8,075,799 9,932 14,913,704 49,969 2,666,666 10,431 9,805,827 50,789 1,621,880 1 — ( 81,009 ) — ( 81,008 ) Repurchase of Series C redeemable convertible preferred stock — — — — — — ( 5,825,243 ) ( 30,493 ) — — — 493 — 493 Issuance of Series C redeemable convertible preferred stock, net of issuance costs of $ 41 — — — — — — 4,563,108 23,459 — — — — — — Vesting of restricted stock awards — — — — — — — — 26,285 — — — — Stock-based compensation expense — — — — — — — — — — 432 — — 432 Accretion of redeemable convertible preferred stock to redemption value — 322 — 1,780 — 397 — 1,604 — — ( 432 ) ( 3,671 ) — ( 4,103 ) Net loss and comprehensive loss — — — — — — — — — — — ( 19,898 ) — ( 19,898 ) Balance at June 30, 2020 8,075,799 $ 10,254 14,913,704 $ 51,749 2,666,666 $ 10,828 8,543,692 $ 45,359 1,648,165 $ 1 $ — $ ( 104,085 ) $ — $ ( 104,084 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 5 PRAXIS PRECISION MEDICINES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in thousands) Six Months Ended June 30, 2021 2020 Cash flows from operating activities: Net loss $ ( 63,774 ) $ ( 19,898 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation expense 50 20 Stock-based compensation expense 10,066 432 Non-cash operating lease expense 475 341 Amortization of premiums and discounts on marketable securities, net 815 — Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 3,531 ) ( 11 ) Accounts payable 3,708 912 Accrued expenses ( 3,106 ) 22 Operating lease liabilities ( 373 ) ( 340 ) Other ( 65 ) 9 Net cash used in operating activities ( 55,735 ) ( 18,513 ) Cash flows from investing activities: Purchases of property and equipment ( 69 ) — Purchases of marketable securities ( 164,170 ) — Net cash used in investing activities ( 164,239 ) — Cash flows from financing activities: Proceeds from follow-on public offering, net of issuance costs 98,576 — Payment of issuance costs for initial public offering and issuance of redeemable convertible preferred stock ( 575 ) ( 13 ) Proceeds from exercise of options to purchase common stock 1,660 — Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs — 23,459 Repurchase of Series C redeemable convertible preferred stock — ( 30,000 ) Net cash provided by (used in) financing activities 99,661 ( 6,554 ) Decrease in cash, cash equivalents and restricted cash ( 120,313 ) ( 25,067 ) Cash, cash equivalents and restricted cash, beginning of period 297,208 45,415 Cash, cash equivalents and restricted cash, end of period $ 176,895 $ 20,348 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents 175,879 19,748 Restricted cash 1,016 600 Total cash, cash equivalents and restricted cash $ 176,895 $ 20,348 Supplemental disclosures of non-cash activities: Operating lease right-of-use assets obtained in exchange for operating lease liabilities $ 4,086 $ — Deferred offering costs included in accounts payable and accrued expenses $ 163 $ 372 Purchases of property and equipment included in accounts payable $ 83 $ — Accretion of redeemable convertible preferred stock to redemption value $ — $ 4,103 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 PRAXIS PRECISION MEDICINES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Nature of the Business Praxis Precision Medicines, Inc. (“Praxis” or the “Company”) is a clinical-stage biopharmaceutical company translating genetic insights into the development of therapies for central nervous system (“CNS”) disorders characterized by neuronal imbalance. The Company has established a broad portfolio, including multiple disclosed programs across CNS disorders, including depression, epilepsy, movement disorders and pain syndromes, with three clinical-stage product candidates. The Company intends to develop differentiated therapies that can deliver long-term benefits to human health by meaningfully impacting patients and society. The Company’s most advanced programs, PRAX-114 and PRAX-944, are currently in Phase 2/3 and Phase 2 development, respectively. PRAX-114 is an extrasynaptic GABA A receptor preferring positive allosteric modulator currently being developed for the treatment of major depressive disorder and perimenopausal depression. The Company plans to initiate Phase 2 trials of PRAX-114 in post-traumatic stress disorder and essential tremor ("ET") in the second half of 2021 and intends to disclose plans for a Phase 2b trial in women with menopausal and mood symptoms in the second half of 2021. PRAX-944 is a selective small molecule inhibitor of T-type calcium channels currently being developed for the treatment of ET. The Company plans to initiate a Phase 2 trial of PRAX-944 in Parkinson's disease in the first half of 2022. Praxis was incorporated in 2015 and commenced operations in 2016. The Company has funded its operations primarily with proceeds from the issuance of convertible debt and redeemable convertible preferred stock, and from the sale of common stock through an initial public offering and a follow-on public offering. From inception through June 30, 2021, the Company raised $ 509.4 million in aggregate cash proceeds from these transactions, net of issuance costs. In May 2021, the Company completed a follow-on public offering in which the Company issued and sold 5,750,000 shares of its common stock at a public offering price of $ 18.25 per share, including 750,000 shares of common stock issued and sold pursuant to the underwriters' exercise, in full, of their option to purchase additional shares of common stock, for aggregate gross proceeds of $ 104.9 million. The Company received approximately $ 98.4 million in net proceeds after deducting discounts, commissions and offering expenses payable by the Company. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including but not limited to, risks associated with completing preclinical studies and clinical trials, receiving regulatory approvals for product candidates, development by competitors of new biopharmaceutical products, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Programs currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from product sales. Liquidity In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40) , the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these condensed consolidated financial statements are issued. The Company has incurred recurring losses since its inception, including net losses of $ 63.8 million for the six months ended June 30, 2021. In addition, as of June 30, 2021, the Company had an accumulated deficit of $ 213.3 million. The Company expects to continue to generate operating losses for the foreseeable future. 7 The Company expects that its cash, cash equivalents and marketable securities as of June 30, 2021 of $ 339.2 million will be sufficient to fund the operating expenses and capital expenditure requirements necessary to advance its research efforts and clinical trials for at least one year from the date of issuance of these condensed consolidated financial statements. The future viability of the Company is dependent on its ability to raise additional capital to finance its operations. The Company’s inability to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue its business strategies. There can be no assurance that the current operating plan will be achieved or that additional funding will be available on terms acceptable to the Company, or at all. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“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 ASUs of the FASB. The significant accounting policies used in preparation of these condensed consolidated financial statements for the three and six months ended June 30, 2021 are consistent with those discussed in Note 2 to the consolidated financial statements included in the Company's 2020 Annual Report on Form 10-K, other than as noted below. Unaudited Interim Condensed Consolidated Financial Information The accompanying condensed consolidated balance sheet as of June 30, 2021, the condensed consolidated statements of operations for the three and six months ended June 30, 2021 and 2020, the condensed consolidated statements of comprehensive loss for the three and six months ended June 30, 2021 and 2020, the condensed consolidated statements of cash flows for the six months ended June 30, 2021 and 2020 and the condensed consolidated statements of redeemable convertible preferred stock and stockholders’ equity (deficit) for the three and six months ended June 30, 2021 and 2020 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited annual consolidated financial statements, and in the opinion of management reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of June 30, 2021, the results of its operations for the three and six months ended June 30, 2021 and 2020 and its cash flows for the six months ended June 30, 2021 and 2020. Financial statement disclosures for the three and six months ended June 30, 2021 and 2020 are condensed and do not include all disclosures required for an annual set of financial statements in accordance with GAAP. The results for the three and six months ended June 30, 2021 are not necessarily indicative of results to be expected for the year ended December 31, 2021, any other interim periods, or any future year or period. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, the accrual for research and development expenses, stock-based compensation expense, and the valuation of equity awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ materially from those estimates. Marketable Securities The Company invests its excess cash in money market funds and debt instruments of the U.S. Treasury, financial institutions, corporations and U.S. government agencies with strong credit ratings and an investment grade rating at or above A-1 or P-1 by two of the three nationally recognized statistical rating organizations. The Company does not believe that it is exposed to more than a nominal amount of credit risk in its marketable securities. The Company has established guidelines relative to diversification and maturities that maintain safety and liquidity, and periodically reviews and modifies these guidelines to maximize trends in yields and interest rates without 8 compromising safety and liquidity. The Company classifies its investments in debt instruments as available-for-sale. Available-for-sale investments are reported at fair value at each balance sheet date, and include any unrealized holding gains and losses in accumulated other comprehensive gain (loss), a component of stockholders’ equity. Realized gains and losses are included in the Company's condensed consolidated statements of operations. All of the Company's available-for-sale securities are available for use in its current operations. As a result, the Company has categorized all of these securities as current assets even though the stated maturity of some individual securities may be one year or more beyond the balance sheet date. The Company evaluates securities for impairment at the end of each reporting period. Impairment is evaluated considering numerous factors, and their relative significance varies depending on the situation. Factors considered include whether a decline in fair value below the amortized cost basis is due to credit-related factors or non-credit-related factors, the financial condition and near-term prospects of the issuer, and the Company's intent and ability to hold the investment to allow for an anticipated recovery in fair value. A credit-related impairment is recognized as an allowance on the balance sheet with a corresponding adjustment to earnings. Any impairment that is not credit- related is recognized in other comprehensive (loss) income, net of applicable taxes. Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes ("ASU 2019-12"). The ASU simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740, Income Taxes, related to the approach for allocating income tax expense or benefit for the year to continuing operations, discontinued operations, other comprehensive income, and other charges or credits recorded directly to shareholders’ equity; the methodology for calculating income taxes in an interim period; and the recognition of deferred tax liabilities for outside basis differences. On January 1, 2021, the Company early adopted ASU 2019-12 on a prospective basis, with no material impact on its condensed consolidated financial statements and related disclosures. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326)—Measurement of Credit Losses on Financial Instruments, which has been subsequently amended by ASU No. 2018-19, ASU No. 2019-04, ASU No. 2019-05, ASU No. 2019-10, ASU No. 2019-11 and ASU No. 2020-03 (“ASU 2016-13”). The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology and require a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for the Company on January 1, 2023, with early adoption permitted. The Company is currently evaluating the timing of its adoption of this standard, as well as the potential impact that this standard may have on its financial position and results of operations, but does not expect the impact to be significant. 3. Marketable Securities The following is a summary of the Company's investment portfolio at June 30, 2021 (in thousands). The Company did not have any marketable securities as of December 31, 2020. 9 Gross Unrealized Estimated Cost Gains Losses Fair Value Available-for-sale securities: Corporate debt securities $ 58,511 $ 7 $ ( 6 ) $ 58,512 Commercial paper 55,952 — — 55,952 Total securities with a maturity of one year or less $ 114,463 $ 7 $ ( 6 ) $ 114,464 Corporate debt securities 36,692 — ( 55 ) 36,637 Debt securities issued by U.S. government agencies 12,200 4 — 12,204 Total securities with a maturity of one to two years $ 48,892 $ 4 $ ( 55 ) $ 48,841 Total available-for-sale securities $ 163,355 $ 11 $ ( 61 ) $ 163,305 As of June 30, 2021, the Company had 12 securities with a total fair market value of $ 73.8 million in an unrealized loss position. The Company believes that any unrealized losses associated with the decline in value of its securities is temporary and primarily related to the change in market interest rates since purchase, and believes that it is more likely than not that it will be able to hold its debt securities to maturity. Therefore, the Company anticipates a full recovery of the amortized cost basis of its debt securities at maturity. Securities are evaluated for impairment at the end of each reporting period. The Company did not record any impairment related to its available-for-sale securities during the three and six months ended June 30, 2021. 4. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. The Company categorizes financial assets measured at fair value based on a fair value hierarchy. The following fair value hierarchy is used to classify financial assets based on observable inputs and unobservable inputs used to value the financial assets: • Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets; • Level 2: Quoted prices for similar assets in active markets, quoted prices in markets that are not active, or inputs which are unobservable, either directly or indirectly, for substantially the full term of the asset; or • Level 3: Prices or valuation techniques that require inputs that are both significant to the valuation of the asset and unobservable. The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values (in thousands): As of June 30, 2021 Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 172,274 $ — $ — $ 172,274 Marketable securities: Corporate debt securities — 95,149 — 95,149 Commercial paper — 55,952 — 55,952 Debt securities issued by U.S. government agencies 12,204 — — 12,204 $ 184,478 $ 151,101 $ — $ 335,579 10 As of December 31, 2020 Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 290,931 $ — $ — $ 290,931 $ 290,931 $ — $ — $ 290,931 5. Accrued Expenses Accrued expenses consisted of the following (in thousands): June 30, 2021 December 31, 2020 Accrued external research and development expenses $ 4,848 $ 4,206 Accrued personnel-related expenses 2,179 5,516 Accrued other 799 1,147 Total accrued expenses $ 7,826 $ 10,869 6. Commitments and Contingencies In May 2021, the Company entered into a sublease agreement for office space located in Boston, Massachusetts to be used as the Company's corporate headquarters. The sublease expires on January 31, 2026, with no option to renew or terminate early. The base rent increases by approximately 2 % annually. The Company issued a letter of credit to the landlord for $ 0.4 million related to the security deposit, secured by restricted cash, which is reflected within other non-current assets on the accompanying condensed consolidated balance sheet as of June 30, 2021. This lease qualifies as an operating lease. At inception, the Company recorded an operating lease right-of-use asset and operating lease liability of $ 4.1 million. As of June 30, 2021, the Company had an operating lease right-of-use asset of $ 4.0 million, current operating lease liability of approximately $ 0.2 million, and non-current operating lease liability of approximately $ 4.0 million included in the condensed consolidated balance sheet. Future lease payments under the non-cancellable sublease agreement as of June 30, 2021 were as follows (in thousands): Year Ended December 31, Future Lease Payments 2021 $ — 2022 1,160 2023 1,270 2024 1,296 2025 1,321 2026 110 Total future lease payments $ 5,157 Less: interest ( 1,035 ) Present value of operating lease liabilities $ 4,122 As of June 30, 2021, the remaining lease term and discount rate of the sublease agreement was 4.6 years and 9.0 %, respectively. In October 2018, the Company entered into a sublease agreement for office space located in Cambridge, Massachusetts that expires on December 31, 2021, with no option to renew or terminate early. The base rent increases by approximately 1 % annually. The Company issued a letter of credit to the landlord for $ 0.6 million related to the security deposit, secured by restricted cash, which is reflected within prepaid expenses and other current assets on the accompanying condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020, as the lease term expires less than twelve months from the condensed consolidated balance sheet dates. This lease qualifies as an operating lease. 11 7. Common Stock and Preferred Stock Common Stock As of June 30, 2021 and December 31, 2020, the authorized capital stock of the Company included 150,000,000 shares of common stock, $ 0.0001 par value. As of June 30, 2021 and December 31, 2020, the Company did no t hold any treasury shares. Shares Reserved for Future Issuance The Company has reserved the following shares of common stock for future issuance: June 30, 2021 December 31, 2020 Shares reserved for exercise of outstanding stock options 6,608,072 5,944,546 Shares reserved for future awards under the 2020 Stock Option and Incentive Plan 3,138,096 3,036,776 Shares reserved for future awards under the 2020 Employee Stock Purchase Plan 654,204 327,102 Shares reserved for vesting of restricted stock units 340,563 — Total shares of authorized common stock reserved for future issuance 10,740,935 9,308,424 Preferred Stock As of June 30, 2021 and December 31, 2020, the authorized capital stock of the Company included 10,000,000 shares of undesignated preferred stock, $ 0.0001 par value. 8. Stock-Based Compensation 2020 Stock Option and Incentive Plan The total number of shares of common stock authorized for issuance under the 2020 Stock Option Incentive Plan (the "2020 Plan”) as of June 30, 2021 and December 31, 2020 was 5,184,455 shares and 3,271,028 shares, respectively. 2017 Stock Incentive Plan The total number of shares of common stock authorized for issuance under the 2017 Stock Incentive Plan (the "2017 Plan”) as of June 30, 2021 and December 31, 2020 was 5,937,763 shares. Any authorization to issue new options under the 2017 Plan was cancelled upon the effectiveness of the 2020 Plan and no further awards will be granted under the 2017 Plan. 2020 Employee Stock Purchase Plan The total number of shares of common stock authorized for issuance under the 2020 Employee Stock Purchase Plan (the "2020 ESPP”) as of June 30, 2021 and December 31, 2020 was 654,204 shares and 327,102 shares, respectively. Restricted Stock Units The following table summarizes the Company’s restricted stock unit activity: Shares Weighted Average Grant Date Fair Value Unvested as of December 31, 2020 — $ — Issued 352,663 50.52 Vested — — Forfeited ( 12,100 ) 52.53 Unvested as of June 30, 2021 340,563 $ 50.45 12 Stock Options The following table summarizes the Company’s stock option activity: Number of Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In years) (In thousands) Outstanding as of December 31, 2020 5,944,546 $ 7.47 Granted 1,548,403 44.78 Exercised ( 674,619 ) 2.46 $ 17,696 Cancelled or Forfeited ( 210,258 ) 20.58 Outstanding as of June 30, 2021 6,608,072 $ 16.30 8.98 $ 56,586 Exercisable as of June 30, 2021 971,361 $ 3.97 7.86 $ 13,958 Vested and expected to vest as of June 30, 2021 6,458,407 $ 18.15 9.05 $ 54,961 The aggregate intrinsic value of stock options outstanding, exercisable, and vested and expected to vest is calculated as the difference between the exercise price of the underlying stock options and the estimated fair value of the Company’s common stock for those stock options that had exercise prices lower than the estimated fair value of the Company’s common stock at June 30, 2021. The aggregate intrinsic value of stock options exercised is calculated as the difference between the exercise price of the underlying stock options and the estimated fair value of the Company’s common stock on the date of exercise for those stock options that had exercise prices lower than the estimated fair value of the Company’s common stock on the exercise date. Stock Option Valuation The weighted-average assumptions that the Company used in the Black-Scholes option pricing model to determine the grant-date fair value of stock options granted to employees and non-employees on the date of grant were as follows for the three and six months ended June 30, 2021: Three Months Ended June 30, Six Months Ended June 30, 2021 2021 Risk-free interest rate 1.05 % 0.76 % Expected term (in years) 6.00 6.11 Expected volatility 86.42 % 85.58 % Expected dividend yield — % — % The weighted-average grant-date fair value of the Company’s stock options granted during the three and six months ended June 30, 2021 was $ 16.52 per share and $ 31.99 per share, respectively. Stock-Based Compensation Stock-based compensation expense was allocated as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Research and development $ 2,031 $ 153 $ 4,349 $ 255 General and administrative 3,369 132 5,717 177 Total stock-based compensation expense $ 5,400 $ 285 $ 10,066 $ 432 As of June 30, 2021, total unrecognized compensation expense related to unvested stock-based awards was $ 80.2 million, which is expected to be recognized over a weighted-average period of 3.06 years. 13 9. Net Loss per Share Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share data): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Numerator: Net loss $ ( 36,401 ) $ ( 11,568 ) $ ( 63,774 ) $ ( 19,898 ) Accretion and cumulative dividends on redeemable convertible preferred stock — ( 2,039 ) — ( 4,103 ) Gain on repurchase of redeemable convertible preferred stock — — — 493 Net loss attributable to common stockholders $ ( 36,401 ) $ ( 13,607 ) $ ( 63,774 ) $ ( 23,508 ) Denominator: Weighted average common shares outstanding, basic and diluted 41,569,782 1,642,484 40,028,807 1,635,913 Net loss per share attributable to common stockholders, basic and diluted $ ( 0.88 ) $ ( 8.28 ) $ ( 1.59 ) $ ( 14.37 ) The following potential shares of common stock, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have been anti-dilutive: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Outstanding stock options 6,608,072 3,220,201 6,608,072 3,220,201 Unvested restricted common stock and restricted stock units 340,563 21,905 340,563 21,905 Series A redeemable convertible preferred stock — 3,773,820 — 3,773,820 Series B redeemable convertible preferred stock — 6,969,173 — 6,969,173 Series B-1 redeemable convertible preferred stock — 1,246,133 — 1,246,133 Series C redeemable convertible preferred stock — 3,992,463 — 3,992,463 6,948,635 19,223,695 6,948,635 19,223,695 The shares of common stock issuable upon conversion of the redeemable convertible preferred stock for the three and six months ended June 30, 2020 assumed automatic conversion in the event of a qualified public offering. 10. Related Party Transactions On September 11, 2019, the Company entered into a Cooperation and License Agreement (the “License Agreement”) with RogCon Inc. (“RogCon”). Under the License Agreement, RogCon granted to the Company an exclusive, worldwide license under RogCon’s intellectual property to research, develop and commercialize products for the treatment of all forms of epilepsy and/or neurodevelopmental disorders in each case caused by any mutation of the SCN2A gene. Pursuant to the terms of the License Agreement, the Company will conduct, at its own cost and expense, the research and development activities assigned to it under the associated research plan. In addition, the Company is responsible for reimbursing RogCon for any costs associated with research and development activities RogCon performs at the request of the Company. One of the founders of RogCon became the Company’s General Counsel in June 2020. The Company continues to reimburse RogCon for its out-of-pocket costs incurred for activities performed under the License Agreement. Expenses incurred during all periods presented were not material. As of June 30, 2021, the Company had accrued expenses of $ 0.3 million due to RogCon under the License Agreement. 11. Subsequent Events The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the condensed consolidated financial statements to provide additional evidence for certain estimates or 14 to identify matters that require additional disclosure. The Company has concluded that no subsequent events have occurred that require disclosure. 15