What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-05-11 · 148 added, 68 removed, 272 unchanged (44% of the section changed)

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

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 March 31, 2023 and December 31, 2022

10,000,000 shares authorized and no shares issued or outstanding as of June 30, 2023 and December 31, 2022

Common stock, $ 0.0001 par value;

150,000,000 shares authorized;

57,960,387 shares issued and outstanding as of March 31, 2023, and 49,382,453 shares issued and outstanding as of December 31, 2022

128,540,223 shares issued and outstanding as of June 30, 2023, and 49,382,453 shares issued and outstanding as of December 31, 2022

Additional paid-in capital 708,023 606,918

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Collaboration revenue $ 781 $ — $ 1,464 $ —

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Net loss $ ( 34,312 ) $ ( 60,194 ) $ ( 71,767 ) $ ( 128,911 )

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Balance at March 31, 2023 57,960,387 $ 6 $ 632,580 $ ( 568,099 ) $ ( 19 ) $ 64,468

Stock-based compensation expense — — 5,775 — — 5,775

Issuance of common stock from follow-on public offering and accompanying pre-funded warrants, net of underwriting discounts, commissions and offering costs of $ 4,484

64,449,690 6 63,433 — — 63,439

Issuance of common stock from at-the-market public offerings, net of issuance costs 5,888,128 1 6,031 — — 6,032

Issuance of common stock under employee stock purchase plan 234,947 — 208 — — 208

Vesting of restricted stock units 10,813 — — — — —

Shares withheld for taxes for vesting of restricted stock units ( 3,742 ) — ( 4 ) — — ( 4 )

Change in unrealized loss on marketable securities, net of tax — — — — 19 19

Net loss — — — ( 34,312 ) — ( 34,312 )

Balance at June 30, 2023 128,540,223 $ 13 $ 708,023 $ ( 602,411 ) $ — $ 105,625

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

PRAXIS PRECISION MEDICINES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)

(Amounts in thousands, except share data)

Common Stock Additional

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Balance at March 31, 2022 45,506,482 $ 5 $ 576,955 $ ( 385,332 ) $ ( 606 ) $ 191,022

Stock-based compensation expense — — 7,611 — — 7,611

Issuance of common stock under employee stock purchase plan 51,645 — 454 — — 454

Vesting of restricted stock units 6,361 — — — — —

Shares withheld for taxes for vesting of restricted stock units ( 2,225 ) — ( 17 ) — — ( 17 )

Issuance of common stock upon exercise of stock options 13,143 — 67 — — 67

Change in unrealized loss on marketable securities, net of tax — — — — ( 74 ) ( 74 )

Net loss — — — ( 60,194 ) — ( 60,194 )

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

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

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(Amounts in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

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Maturities of marketable securities 39,000 109,761

Net cash provided by (used in) investing activities 34,000 ( 8,550 )

Net cash provided by investing activities 39,000 26,340

Cash flows from financing activities:

Issuance of common stock from follow-on public offering and accompanying pre-funded warrants, net of underwriting discounts, commissions and offering costs 63,439 —

Proceeds from at-the-market offerings, net of issuance costs 24,128 1,368

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Payments of tax withholdings related to vesting of restricted stock units ( 131 ) ( 246 )

Proceeds from exercise of stock options 101 333

Proceeds from exercise of stock options and employee stock purchase plan purchases 309 853

Net cash provided by financing activities 87,745 1,713

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Total cash, cash equivalents and restricted cash $ 124,716 $ 56,455

Supplemental disclosures of non-cash activities:

Offering costs included in accrued expenses $ 259 $ —

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

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For the Company's most advanced product candidate under the Cerebrum™ platform, ulixacaltamide (also known as PRAX-944), topline results from the Phase 2b Essential1 clinical trial in essential tremor ("ET"), were announced in the first quarter of 2023.

An end-of-Phase 2 meeting is scheduled with the U.S.

Food and Drug Administration in June 2023 and the Company intends to initiate a Phase 3 study in ET in the second half of 2023.

The Company intends to initiate two Phase 3 studies in ET in the fourth quarter of 2023, with topline results expected in the second half of 2024.

The Company initiated its PRAX-562 Phase 2 EMBOLD study in the first quarter of 2023 and expects to announce topline results in the fourth quarter of 2023.

The Company also announced positive results from its PRAX-628 Phase 1 study in May 2023 and expects to initiate a Phase 2 study in focal epilepsy in the fourth quarter of 2023.

For the Company's most advanced product candidate under the Solidus™ platform, PRAX-222, it expects to announce topline results from the first dose cohort of its EMBRAVE study in the second half of 2023.

The Company also announced positive results from its PRAX-628 Phase 1 study in May 2023.

In June 2023, the Company initiated a Phase 2 proof of concept study evaluating PRAX-628 in patients with a Photo Paroxysmal Response ("PPR"), with results anticipated by year-end 2023.

Upon completion of the PPR study, Praxis plans to initiate a Phase 2 study of PRAX-628 in focal epilepsy in the first half of 2024.

For the Company's most advanced product candidate under the Solidus™ platform, PRAX-222, it initiated the first dose cohort of its EMBRAVE study in the second quarter of 2023 and expects to announce topline results in the second half of 2023.

Praxis was incorporated in 2015 and commenced operations in 2016.

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 March 31, 2023, the Company raised $ 544.1 million in aggregate cash proceeds from these transactions, net of issuance costs.

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

From inception through June 30, 2023, the Company raised $ 613.6 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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Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from product sales.

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 the condensed consolidated financial statements are issued.

The Company has incurred recurring losses since its inception, including a net loss of $ 37.5 million for the three months ended March 31, 2023.

In addition, as of March 31, 2023, the Company had an accumulated deficit of $ 568.1 million.

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 $ 71.8 million for the six months ended June 30, 2023.

In addition, as of June 30, 2023, the Company had an accumulated deficit of $ 602.4 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 March 31, 2023 may not be sufficient to fund operations for at least the next twelve months from the date of issuance of these condensed consolidated financial statements which raises substantial doubt about the Company's ability to continue as a going concern, and the Company will need to obtain additional funding.

The Company expects to finance its operations through potential public or private equity financings, debt financings, collaboration agreements or other capital sources.

The Company expects that its cash and cash equivalents as of June 30, 2023 of $ 124.3 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 analysis included consideration of the Company's current financial needs and ongoing research and development plans, which are limited to advancing product candidates through, but not beyond, their current clinical trials and the ulixacaltamide Phase 3 clinical trials in ET.

The future viability of the Company is dependent on its ability to raise additional capital to finance its operations.

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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 accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

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 months ended March 31, 2023 are consistent with those discussed in Note 2 to the consolidated financial statements included in the Company's 2022 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 six months ended June 30, 2023 are consistent with those discussed in Note 2 to the consolidated financial statements included in the Company's 2022 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 March 31, 2023, the condensed consolidated statements of operations for the three months ended March 31, 2023 and 2022, the condensed consolidated statements of comprehensive loss for the three months ended March 31, 2023 and 2022, the condensed consolidated statements of cash flows for the three months ended March 31, 2023 and 2022 and the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2023 and 2022 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 March 31, 2023, the results of its operations for the three months ended March 31, 2023 and 2022 and its cash flows for the three months ended March 31, 2023 and 2022.

Financial statement disclosures for the three months ended March 31, 2023 and 2022 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 months ended March 31, 2023 are not necessarily indicative of results to be expected for the year ended December 31, 2023, any other interim periods, or any future year or period.

The accompanying condensed consolidated balance sheet as of June 30, 2023, the condensed consolidated statements of operations for the three and six months ended June 30, 2023 and 2022, the condensed consolidated statements of comprehensive loss for the three and six months ended June 30, 2023 and 2022, the condensed consolidated statements of cash flows for the six months ended June 30, 2023 and 2022 and the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2023 and 2022 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, 2023, the results of its operations for the three and six months ended June 30, 2023 and 2022 and its cash flows for the six months ended June 30, 2023 and 2022.

Financial statement disclosures for the three and six months ended June 30, 2023 and 2022 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, 2023 are not necessarily indicative of results to be expected for the year ended December 31, 2023, 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, accrued and prepaid research and development expense, collaboration revenue, stock-based compensation expense and the recoverability of the Company’s net deferred tax assets and related valuation allowance.

Company’s net deferred tax assets and related valuation allowance.

Estimates are periodically reviewed in light of changes in circumstances, facts and experience.

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Actual results could differ materially from those estimates.

Recently Issued Accounting Pronouncements

The Company does not expect any recently issued accounting pronouncements to have a material impact on its financial statements .

Common Stock Warrants

The Company accounts for warrants to purchase shares of its common stock in accordance with the guidance in FASB ASC No.

480, Distinguishing Liabilities from Equity (ASC 480) and ASC No.

815, Derivatives and Hedging (ASC 815).

The Company classifies warrants issued for the purchase of shares of its common stock as either equity or liability instruments based on an assessment of the specific terms and conditions of each respective contract.

Such assessment includes determining whether the warrants are freestanding financial instruments or embedded in a host instrument, whether the warrants are liabilities within the scope of ASC 480, whether the warrants meet the definition of a derivative in ASC 815 and whether the warrants meet the requirements for equity classification pursuant to the indexation and equity classification criteria in ASC 815.

The Company determines the classification for its warrants at the time of issuance and updates its assessment, as necessary.

Warrants that meet all of the criteria for equity classification are recorded as a component of additional paid-in capital.

Net Loss per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period.

The calculation of weighted average number of common shares outstanding excludes shares of restricted common stock that are not vested but includes shares of common stock underlying pre-funded warrants.

Diluted net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period, after giving consideration to the dilutive effect of potentially dilutive common shares.

For purposes of this calculation, outstanding options to purchase shares of common stock, unvested shares of restricted common stock and potential shares issuable under the 2020 ESPP are considered potentially dilutive common shares.

The Company has generated a net loss in all periods presented so the basic and diluted net loss per share are the same, as the inclusion of the potentially dilutive securities would be anti-dilutive.

Recently Adopted Accounting Pronouncements

On August 5, 2020, the FASB issued ASU No.

2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06).

ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.

ASU 2020-06 eliminates the separation models for convertible debt with cash conversion features and convertible instruments with beneficial conversion features and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity.

Additionally, ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments.

The new standard also introduces additional disclosures for convertible instruments.

ASU 2020-06 was effective for public companies that are not smaller reporting companies for fiscal years beginning after December 15, 2021.

For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020.

ASU 2020-06 is required to be adopted as of the beginning of a fiscal year.

ASU 2020-06 may be applied using either a full or modified retrospective method of transition.

The Company adopted ASU 2020-06 effective as of January 1.

The adoption of ASU 2020-06 did not have an impact on the Company’s financial statements.

Marketable Securities

The following is a summary of the Company's investment portfolio as of March 31, 2023 and December 31, 2022 (in thousands):

As of March 31, 2023

Gross Unrealized Estimated

Cost Gains Losses Fair Value

Available-for-sale securities:

Corporate debt securities $ 5,002 $ — $ ( 19 ) $ 4,983

Total securities with a maturity of one year or less $ 5,002 $ — $ ( 19 ) $ 4,983

Total available-for-sale securities $ 5,002 $ — $ ( 19 ) $ 4,983

The Company did not hold any marketable securities as of June 30, 2023.

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

As of December 31, 2022

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Total available-for-sale securities $ 39,047 $ — $ ( 173 ) $ 38,874

As of March 31, 2023, the Company had 1 security with a total fair market value of $ 5.0 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 and an allowance was not recognized.

As of December 31, 2022, the Company had 7 securities with a total fair market value of $ 38.9 million in an unrealized loss position.

The Company anticipated a full recovery of the amortized cost basis of its debt securities at maturity and an allowance was not recognized.

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 months ended March 31, 2023 and 2022.

The Company did not record any impairment related to its available-for-sale securities during the three and six months ended June 30, 2023 and 2022.

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 March 31, 2023 and December 31, 2022 (in thousands):

As of March 31, 2023

Level 1 Level 2 Level 3 Total

Cash equivalents:

Money market funds $ 62,976 $ — $ — $ 62,976

Marketable securities:

Corporate debt securities — 4,983 — 4,983

$ 62,976 $ 4,983 $ — $ 67,959

The Company did not hold any financial assets measured at fair value on a recurring basis as of June 30, 2023.

The following table presents 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 as of December 31, 2022 (in thousands):

As of December 31, 2022

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Accrued expenses consisted of the following (in thousands):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Accrued external research and development expenses $ 3,972 $ 10,734

Accrued milestone expense 6,937 —

Accrued personnel-related expenses 1,617 2,803

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Total accrued expenses $ 13,317 $ 15,850

At June 30, 2023, accrued expenses included $ 6.9 million of milestone expense related to the Research Collaboration, Option and License Agreement between the Company and Ionis Pharmaceuticals, Inc., earned upon initiation of the Company's PRAX-222 EMBRAVE study in the second quarter of 2023.

The milestone was paid in July 2023.

Commitments and Contingencies

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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 March 31, 2023 and December 31, 2022.

This lease qualifies as an operating lease.

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The Company recognizes revenue for its research services performance obligation over time using an input method over the duration of the research services.

During the three months ended March 31, 2023, the Company recognized $ 0.7 million in collaboration revenue related to the Collaboration Agreement in the condensed consolidated statement of operations.

As of March 31, 2023, $ 4.3 million was included in deferred revenue in the condensed consolidated balance sheet, of which $ 2.5 million was classified as current.

During the three and six months ended June 30, 2023, the Company recognized $ 0.8 million and $ 1.5 million, respectively, in collaboration revenue related to the Collaboration Agreement in the condensed consolidated statement of operations.

As of June 30, 2023, $ 3.5 million was included in deferred revenue in the condensed consolidated balance sheet, of which $ 2.0 million was classified as current.

Common Stock and Preferred Stock

As of March 31, 2023 and December 31, 2022, the authorized capital stock of the Company included 150,000,000 shares of common stock, $ 0.0001 par value.

As of March 31, 2023 and December 31, 2022, the Company did no t hold any treasury shares.

As of June 30, 2023 and December 31, 2022, the authorized capital stock of the Company included 150,000,000 shares of common stock, $ 0.0001 par value.

As of June 30, 2023 and December 31, 2022, the Company did no t hold any treasury shares.

June 2023 Public Offering

On June 21, 2023, the Company completed a public offering of:

(i) an aggregate of 64,449,690 shares of its common stock at a public offering price of $ 0.95 per share, including the underwriters’ full exercise of their option to purchase 9,299,690 additional shares of common stock, and (ii) pre-funded warrants to purchase 7,050,000 shares of common stock at a public offering price of $ 0.9499 per share of common stock underlying the warrants.

The purchase price per share for each pre-funded warrant represents the per share offering price for the common stock, less the $ 0.0001 per share exercise price for each underlying share.

Total net proceeds generated from the offering were approximately $ 63.4 million, after deducting underwriting discounts, commissions and other offering expenses payable by the Company.

The pre-funded warrants are exercisable at any time on or after the date of issuance at the option of the holder, subject to a beneficial ownership blocker that may limit exercisability.

No holder may exercise any portion of the warrants that would cause either the aggregate number of shares of common stock beneficially owned by such holder, together with its affiliates, to exceed 9.99 %, or the combined voting power of the securities beneficially owned by such holder, together with its affiliates, to exceed 9.99 %.

A holder of a pre-funded warrant may increase or decrease this percentage up to 19.99 % by providing at least 61 days’ prior notice to the Company.

The pre-funded warrants do not expire.

The pre-funded warrants may be settled through either physical or net share settlement.

Following the occurrence of certain fundamental transactions, the holders of the pre-funded warrants have the right to receive upon exercise of the warrants the same amount and kind of securities, cash, or property as they would have been entitled to receive if they had been holders of the common shares issuable under the warrants immediately prior to such transaction.

In the event of certain fundamental transactions where the consideration payable to the holders of shares of common stock consists solely of cash and/or marketable securities, the pre-funded warrants will automatically be deemed to be exercised in full pursuant to a cashless exercise effective immediately prior to and contingent upon the consummation of such transaction.

As of June 30, 2023, none of the pre-funded warrants had been exercised and remain outstanding.

The Company determined that the pre-funded warrants are freestanding financial instruments because they are both legally detachable and separately exercisable from the common stock sold in the offering.

As such, the Company evaluated the pre-funded warrants to determine whether they represent instruments that require liability classification pursuant to the guidance in ASC 480.

However, the Company concluded that the pre-funded warrants are not a liability within the scope of ASC 480 due to their characteristics.

Further, the Company determined that the pre-funded warrants do not meet the definition of a derivative under ASC 815 because they do not meet the criteria regarding no or little initial net investment.

Accordingly, the Company assessed the pre-funded warrants relative to the guidance in ASC No.

815-40, Contracts in Entity’s Own Equity , to determine the appropriate treatment.

The Company concluded that the pre-funded warrants are both indexed to its own stock and meet all other conditions for equity classification.

Accordingly, the Company has classified the pre-funded warrants as permanent equity.

Shares Reserved for Future Issuance

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Shares reserved for exercise of outstanding stock options 10,114,195 8,838,028

Shares reserved for exercise of pre-funded warrants 7,050,000 —

Shares reserved for future awards under the 2020 Stock Option and Incentive Plan 2,343,012 1,650,955

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Preferred Stock

As of March 31, 2023 and December 31, 2022, the authorized capital stock of the Company included 10,000,000 shares of undesignated preferred stock, $ 0.0001 par value .

As of June 30, 2023 and December 31, 2022, 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 March 31, 2023 and December 31, 2022 was 9,918,602 shares and 7,449,480 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 June 30, 2023 and December 31, 2022 was 9,918,602 shares and 7,449,480 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 March 31, 2023 and December 31, 2022 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 June 30, 2023 and December 31, 2022 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 March 31, 2023 and December 31, 2022 was 1,308,408 shares and 981,306 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 June 30, 2023 and December 31, 2022 was 1,308,408 shares and 981,306 shares, respectively.

Restricted Stock Units

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Forfeited ( 211,524 ) 11.72

Unvested as of March 31, 2023 754,756 $ 15.40

As of March 31, 2023, total unrecognized compensation cost related to unvested restricted stock units was $ 10.5 million, which is expected to be recognized over a weighted-average period of 2.50 years.

Unvested as of June 30, 2023 657,365 $ 15.94

As of June 30, 2023, total unrecognized compensation cost related to unvested restricted stock units was $ 8.7 million, which is expected to be recognized over a weighted-average period of 2.27 years.

Stock Options

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Cancelled or Forfeited ( 1,492,830 ) 11.87

Outstanding as of March 31, 2023 10,691,062 $ 11.53 8.23 $ 23

Exercisable as of March 31, 2023 4,517,923 $ 13.74 7.33 $ 23

Vested and expected to vest as of March 31, 2023 10,488,056 $ 11.47 8.46 $ 23

Outstanding as of June 30, 2023 10,114,195 $ 11.20 8.03 $ 68

Exercisable as of June 30, 2023 4,922,220 $ 13.13 7.28 $ 34

Vested and expected to vest as of June 30, 2023 10,114,195 $ 11.20 8.03 $ 68

Valuation of Stock Options

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 months ended March 31, 2023:

Three Months Ended

June 30, Six Months Ended

Risk-free interest rate 3.84 % 3.53 %

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Weighted average grant-date fair value per share $ 0.72 $ 2.12

As of March 31, 2023, total unrecognized compensation cost related to unvested stock options was $ 40.8 million, which is expected to be recognized over a weighted-average period of 2.05 years.

As of June 30, 2023, total unrecognized compensation cost related to unvested stock options was $ 34.3 million, which is expected to be recognized over a weighted-average period of 1.87 years.

Stock-Based Compensation

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Research and development $ 1,918 $ 2,987 $ 4,141 $ 6,201

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Outstanding stock options 10,114,195 9,826,672 10,114,195 9,826,672

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10,932,939 10,738,203 10,932,939 10,738,203

Common shares issuable upon exercise of the pre-funded warrants that were sold in connection with the June 2023 underwritten public offering are included in the calculation of weighted average number of common shares outstanding for the three and six months ended June 30, 2023.

Consistent with the guidance in ASC 260-10-45-13, the underlying common shares are issuable for little to no consideration and there are no vesting conditions or contingencies associated with the warrants.

Accordingly, the aggregate number of common shares underlying the pre-funded warrants have been considered outstanding for purposes of the calculation of net loss per share from the date of issuance.

Related Party Transactions

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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.

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.

Restructuring

In June 2022, the Company began a strategic realignment across the Cerebrum™ and Solidus™ platforms, 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 was recognized in research and development expenses and $ 0.4 million was recognized in general and administrative expenses in the consolidated statement of operations during the three and six months ended June 30, 2022.

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

As of December 31, 2022, all costs related to the strategic realignment had been paid.

Subsequent Events

2 unchanged sentences

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