What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-09 compared with 2022-08-08 · 80 added, 56 removed, 310 unchanged (30% of the section changed)

3 unchanged sentences

(Amounts in thousands, except share and per share data)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Current assets:

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Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized and no shares issued or outstanding as of June 30, 2022 and December 31, 2021

10,000,000 shares authorized and no shares issued or outstanding as of September 30, 2022 and December 31, 2021

Common stock, $ 0.0001 par value;

150,000,000 shares authorized;

45,575,406 shares issued and outstanding as of June 30, 2022, and 45,300,514 shares issued and outstanding as of December 31, 2021

46,864,327 shares issued and outstanding as of September 30, 2022, and 45,300,514 shares issued and outstanding as of December 31, 2021

Additional paid-in capital 595,165 567,598

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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Total other income 345 73 677 201

Loss before income taxes $ ( 43,945 ) $ ( 44,700 ) $ ( 172,856 ) $ ( 108,474 )

Provision for income taxes — ( 5 ) — ( 5 )

Net loss $ ( 43,945 ) $ ( 44,705 ) $ ( 172,856 ) $ ( 108,479 )

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net loss $ ( 43,945 ) $ ( 44,705 ) $ ( 172,856 ) $ ( 108,479 )

Net unrealized (losses) gains on marketable securities, net of tax ( 74 ) 36 ( 504 ) ( 50 )

Change in unrealized losses on marketable securities, net of tax 144 25 ( 360 ) ( 25 )

Comprehensive loss $ ( 43,801 ) $ ( 44,680 ) $ ( 173,216 ) $ ( 108,504 )

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Balance at June 30, 2022 45,575,406 $ 5 $ 585,070 $ ( 445,526 ) $ ( 680 ) $ 138,869

Stock-based compensation expense — — 6,730 — — 6,730

Issuance of common stock from at-the-market public offerings, net of issuance costs of $ 109

1,105,006 — 2,962 — — 2,962

Vesting of restricted stock units 5,312 — — — — —

Shares withheld for taxes for vesting of restricted stock units ( 1,638 ) — ( 6 ) — — ( 6 )

Issuance of common stock upon exercise of stock options 180,241 — 409 — — 409

Change in unrealized loss on marketable securities, net of tax — — — — 144 144

Net loss — — — ( 43,945 ) — ( 43,945 )

Balance at September 30, 2022 46,864,327 $ 5 $ 595,165 $ ( 489,471 ) $ ( 536 ) $ 105,163

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

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Balance at June 30, 2021 44,693,162 $ 5 $ 547,145 $ ( 213,328 ) $ ( 50 ) $ 333,772

Stock-based compensation expense — — 6,521 — — 6,521

Issuance of common stock upon exercise of stock options 90,909 — 309 — — 309

Change unrealized loss on marketable securities, net of tax — — — — 25 25

Net loss — — — ( 44,705 ) — ( 44,705 )

Balance at September 30, 2021 44,784,071 $ 5 $ 553,975 $ ( 258,033 ) $ ( 25 ) $ 295,922

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

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(Amounts in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

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Operating lease liabilities ( 578 ) ( 566 )

Other 56 ( 65 )

Net cash used in operating activities ( 156,237 ) ( 79,697 )

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Maturities of marketable securities 157,761 14,000

Net cash provided (used) in investing activities 26,340 ( 164,239 )

Net cash provided by (used in) investing activities 74,295 ( 150,689 )

Cash flows from financing activities:

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Operating lease right-of-use assets obtained in exchange for operating lease liabilities $ — $ 4,086

Offering costs included in accounts payable and accrued expenses $ — $ 163

Purchases of property and equipment included in accounts payable $ — $ 83

Offering costs included in accrued expenses $ — $ 68

Purchases of property and equipment included in accrued expenses $ — $ 116

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

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Normal brain function requires a delicate balance of excitation and inhibition in neuronal circuits, which, when dysregulated, can lead to abnormal function and disease.

The Company is applying insights from genetic epilepsies to both rare and more prevalent neurological disorders, using its understanding of shared biological targets and circuits in the brain.

The Company is applying insights from genetic epilepsies to both rare and more prevalent neurological disorders, using its understanding of shared biological targets and circuits in the brain, to develop patient-guided therapies.

The Company applies a deliberate and pragmatic precision approach, leveraging a suite of translational tools including novel transgenic and predictive translational animal models and electrophysiology markers, to enable an efficient path to proof-of-concept in patients.

Through this approach, the Company has established a broad CNS portfolio with multiple programs, including product candidates across movement disorders, epilepsy and psychiatric disorders, with three clinical-stage product candidates.

The Company expects to announce topline results from the Phase 2b clinical trial in essential tremor, or ET, for its lead clinical-stage movement disorders program, the initiation of two first-in-patient studies for its lead small molecule epilepsy program and its lead antisense oligonucleotide, or ASO, epilepsy program and the launch of an additional clinical development program this year.

Through this approach, the Company has established a broad CNS portfolio including multiple programs across movement disorders and epilepsy, with four clinical-stage product candidates.

For its lead clinical-stage program, the Company expects to announce topline results from the Phase 2b clinical trial in essential tremor in the first quarter of 2023 and expects to initiate a Phase 2 clinical trial for the treatment of Parkinson's disease in the first quarter of 2023.

The Company expects the initiation of first-in-patient studies for its lead antisense oligonucleotide epilepsy program in the fourth quarter of 2022 and its lead small molecule epilepsy program in the first quarter of 2023, as well as the launch of an additional clinical epilepsy program this year.

In addition, the Company has established a robust pipeline of preclinical stage programs through internal research and in-licensing, including one of the largest portfolios of targeted epilepsy programs in the industry.

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The Company has funded its operations primarily with proceeds from the issuance of redeemable convertible preferred stock and from the sale of common stock through an initial public offering, a follow-on public offering and at-the-market offerings under its shelf registration statement.

From inception through June 30, 2022, the Company raised $ 517.8 million in aggregate cash proceeds from these transactions, net of issuance costs.

From inception through September 30, 2022, the Company raised $ 520.8 million in aggregate cash proceeds from these transactions, net of issuance costs.

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.

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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 a net loss of $ 128.9 million for the six months ended June 30, 2022.

In addition, as of June 30, 2022, the Company had an accumulated deficit of $ 445.5 million.

The Company has incurred recurring losses since its inception, including a net loss of $ 172.9 million for the nine months ended September 30, 2022.

In addition, as of September 30, 2022, the Company had an accumulated deficit of $ 489.5 million.

The Company expects to continue to generate operating losses for the foreseeable future.

The Company expects that its cash, cash equivalents and marketable securities as of June 30, 2022 of $ 165.4 million will be sufficient to fund the operating expenditures 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.

The analysis of the Company’s ability to continue as a going concern for the third quarter of 2022 included consideration of the Company’s current cash needs, ongoing research and development plans which are limited to advancing product candidates through, but not beyond their current clinical trial phases, anticipated cost savings resulting from its operational cost reduction plans, including ongoing efforts to eliminate costs not related to the

Company’s strategic focus.

Such estimates contain significant judgment as the Company’s ongoing efforts to eliminate costs not related to the Company’s strategic focus contains uncertainties as to whether the Company can attain such benefits.

Based on the analysis, the Company concluded that its available cash, cash equivalents and marketable securities as of September 30, 2022 will be sufficient to fund current prioritized operations and capital expenditure requirements into the first quarter of 2024, which is at least 12 months from the filing date of this Quarterly Report on Form 10-Q with the SEC.

As a result, the Company concluded that it did not identify conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date these financial statements were issued.

The Company’s current operating plan is based on assumptions that may prove to be wrong, and the Company could use its capital resources sooner than it expects, in which case the Company would evaluate further reductions in its expenses or obtaining additional financing sooner than it otherwise would, which additional financing may not be available or may only be available on terms that are not acceptable to the Company.

Summary of Significant Accounting Policies

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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, 2022 are consistent with those discussed in Note 2 to the consolidated financial statements included in the Company's 2021 Annual Report on Form 10-K, other than as noted below.

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three and nine months ended September 30, 2022 are consistent with those discussed in Note 2 to the consolidated financial statements included in the Company's 2021 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, 2022, the condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021, the condensed consolidated statements of comprehensive loss for the three and six months ended June 30, 2022 and 2021, the condensed consolidated statements of cash flows for the six months ended June 30, 2022 and 2021 and the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2022 and 2021 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, 2022, the results of its operations for the three and six months ended June 30, 2022 and 2021 and its cash flows for the six months ended June 30, 2022 and 2021.

Financial statement disclosures for the three and six months ended June 30, 2022 and 2021 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, 2022 are not necessarily indicative of results to be expected for the year ended December 31, 2022, any other interim periods, or any future year or period.

The accompanying condensed consolidated balance sheet as of September 30, 2022, the condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021, the condensed consolidated statements of comprehensive loss for the three and nine months ended September 30, 2022 and 2021, the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 and the condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2022 and 2021 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 September 30, 2022, the results of its operations for the three and nine months ended September 30, 2022 and 2021 and its cash flows for the nine months ended September 30, 2022 and 2021.

Financial statement disclosures for the three and nine months ended September 30, 2022 and 2021 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 nine months ended September 30, 2022 are not necessarily indicative of results to be expected for the year ended December 31, 2022, any other interim periods, or any future year or period.

Use of Estimates

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Marketable Securities

The following is a summary of the Company's investment portfolio as of June 30, 2022 and December 31, 2021 (in thousands).

As of June 30, 2022

The following is a summary of the Company's investment portfolio as of September 30, 2022 and December 31, 2021 (in thousands):

As of September 30, 2022

Gross Unrealized Estimated

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Total available-for-sale securities $ 137,383 $ 1 $ ( 177 ) $ 137,207

As of June 30, 2022, the Company had 13 securities with a total fair market value of $ 76.4 million in an unrealized loss position.

As of September 30, 2022, the Company had 9 securities with a total fair market value of $ 48.3 million in an unrealized loss position.

As of December 31, 2021, the Company had 14 securities with a total fair market value of $ 95.8 million in an unrealized loss position.

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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, 2022 and 2021.

The Company did not record any impairment related to its available-for-sale securities during the three and nine months ended September 30, 2022 and 2021.

Fair Value Measurements

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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 indicate the level of the fair value hierarchy utilized to determine such fair values as of June 30, 2022 and December 31, 2021 (in thousands):

As of June 30, 2022

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values as of September 30, 2022 and December 31, 2021 (in thousands):

As of September 30, 2022

Level 1 Level 2 Level 3 Total

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Accrued expenses consisted of the following (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Accrued external research and development expenses $ 12,978 $ 17,763

5 unchanged sentences

The base rent increases by approximately 2 % annually.

The Company issued a letter of credit to the landlord related to the security deposit, secured by restricted cash, which is reflected within other non-current assets on the accompanying condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021.

The Company issued a letter of credit to the landlord related to the security deposit, secured by restricted cash, which is reflected within other non-current assets on the accompanying

condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021.

This lease qualifies as an operating lease.

Common Stock and Preferred Stock

As of June 30, 2022 and December 31, 2021, the authorized capital stock of the Company included 150,000,000 shares of common stock, $ 0.0001 par value.

As of June 30, 2022 and December 31, 2021, the Company did no t hold any treasury shares.

As of September 30, 2022 and December 31, 2021, the authorized capital stock of the Company included 150,000,000 shares of common stock, $ 0.0001 par value.

As of September 30, 2022 and December 31, 2021, 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:

September 30,

2022 December 31,

5 unchanged sentences

Preferred Stock

As of June 30, 2022 and December 31, 2021, the authorized capital stock of the Company included 10,000,000 shares of undesignated preferred stock, $ 0.0001 par value.

As of September 30, 2022 and December 31, 2021, the authorized capital stock of the Company included 10,000,000 shares of undesignated preferred stock, $ 0.0001 par value.

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 and Incentive Plan (the "2020 Plan”) as of June 30, 2022 and December 31, 2021 was 7,449,480 shares and 5,184,455 shares, respectively.

The total number of shares of common stock authorized for issuance under the 2020 Stock Option and Incentive Plan (the "2020 Plan”) as of September 30, 2022 and December 31, 2021 was 7,449,480 shares and 5,184,455 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, 2022 and December 31, 2021 was 5,937,763 shares.

The total number of shares of common stock authorized for issuance under the 2017 Stock Incentive Plan (the "2017 Plan”) as of September 30, 2022 and December 31, 2021 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, 2022 and December 31, 2021 was 981,306 shares and 654,204 shares, respectively.

The total number of shares of common stock authorized for issuance under the 2020 Employee Stock Purchase Plan (the "2020 ESPP”) as of September 30, 2022 and December 31, 2021 was 981,306 shares and 654,204 shares, respectively.

Restricted Stock Units

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Forfeited ( 210,185 ) 22.76

Unvested as of June 30, 2022 856,287 $ 24.76

As of June 30, 2022, total unrecognized compensation cost related to unvested restricted stock units was $ 18.6 million, which is expected to be recognized over a weighted-average period of 3.11 years.

Unvested as of September 30, 2022 789,419 $ 23.42

As of September 30, 2022, total unrecognized compensation cost related to unvested restricted stock units was $ 14.6 million, which is expected to be recognized over a weighted-average period of 2.88 years.

Stock Options

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Cancelled or Forfeited ( 976,226 ) 17.99

Outstanding as of June 30, 2022 9,826,672 $ 13.79 8.70 $ 753

Exercisable as of June 30, 2022 2,904,632 $ 13.88 7.63 $ 141

Vested and expected to vest as of June 30, 2022 9,826,672 $ 13.79 8.70 $ 753

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, 2022.

Outstanding as of September 30, 2022 9,159,415 $ 13.94 8.49 $ 327

Exercisable as of September 30, 2022 2,993,364 $ 14.69 7.55 $ 71

Vested and expected to vest as of September 30, 2022 8,956,409 $ 13.91 8.56 $ 318

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, 2022:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

Risk-free interest rate 2.76 % 2.50 %

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Weighted average grant-date fair value per share $ 2.16 $ 6.70

As of June 30, 2022, total unrecognized compensation cost related to unvested stock options was $ 65.3 million, which is expected to be recognized over a weighted-average period of 2.59 years.

As of September 30, 2022, total unrecognized compensation cost related to unvested stock options was $ 53.0 million, which is expected to be recognized over a weighted-average period of 2.38 years.

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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Expenses incurred during all periods presented were not material.

As of June 30, 2022, the Company had accrued expenses of $ 0.3 million due to RogCon under the License Agreement.

As of September 30, 2022, the Company had accrued expenses of $ 0.3 million due to RogCon under the License Agreement.

Restructuring

In June 2022, the Company began a strategic realignment to focus resources on its Movement Disorders and Epilepsy franchises, which resulted in a reduction of the Company’s workforce.

The Company incurred $ 1.0 million of costs related to the realignment, of which $ 0.6 million has been recognized in research and development expenses and $ 0.4 million has been recognized in general and administrative expenses in the condensed consolidated statement of operations during the three and six months ended June 30, 2022.

These costs relate to employee severance, benefits and related costs.

The Company does not expect to incur any additional significant costs related to the strategic realignment.

As of June 30, 2022, $ 0.5 million of the $ 1.0 million costs were paid.

The remaining $ 0.5 million of costs are included within accrued expenses on the condensed consolidated balance sheet as of June 30, 2022 and are expected to be disbursed during the period from July 1, 2022 through December 31, 2022.

As of September 30, 2022, all of the $ 1.0 million costs were paid.

Subsequent Events

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements