What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-13 compared with 2023-11-07 · 199 added, 155 removed, 286 unchanged (55% of the section changed)

3 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets:

3 unchanged sentences

Total current assets 211,804 84,880

Long-term marketable securities 35,873 —

Property and equipment, net 476 588

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Preferred stock, $ 0.0001 par value;

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

10,000,000 shares authorized and no shares issued or outstanding as of March 31, 2024 and December 31, 2023

Common stock, $ 0.0001 par value;

150,000,000 shares authorized;

128,547,336 shares issued and outstanding as of September 30, 2023, and 49,382,453 shares issued and outstanding as of December 31, 2022

13,258,047 shares issued and outstanding as of March 31, 2024, and 8,791,877 shares issued and outstanding as of December 31, 2023

Additional paid-in capital 923,141 723,577

Accumulated other comprehensive loss — ( 173 )

Accumulated other comprehensive income 3 —

Accumulated deficit ( 693,474 ) ( 653,921 )

6 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Collaboration revenue $ 431 $ 683

9 unchanged sentences

Net loss per share attributable to common stockholders, basic and diluted 1

$ ( 2.84 ) $ ( 10.58 )

Weighted average common shares outstanding, basic and diluted 1

13,904,374 3,540,185

1 Results have been retroactively adjusted to reflect the 1-for-15 reverse stock split effected on November 28, 2023.

See Note 2 for details.

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

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net loss $ ( 39,553 ) $ ( 37,455 )

Change in unrealized losses on marketable securities, net of tax — 144 173 ( 360 )

Change in unrealized gains on marketable securities, net of tax 3 154

Comprehensive loss $ ( 39,550 ) $ ( 37,301 )

6 unchanged sentences

Deficit Accumulated Other

Comprehensive Loss Total

Comprehensive Income Total

Stockholders’

2 unchanged sentences

Stock-based compensation expense — — 14,475 — — 14,475

Issuance of common stock from at-the-market public offerings, net of issuance costs 8,403,809 1 18,095 — — 18,096

Vesting of restricted stock units 172,798 — — — — —

Shares withheld for taxes for vesting of restricted stock units ( 43,317 ) — ( 127 ) — — ( 127 )

Issuance of common stock upon exercise of stock options 44,644 — 101 — — 101

Change in unrealized loss on marketable securities, net of tax — — — — 154 154

Net loss — — — ( 37,455 ) — ( 37,455 )

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 $ 10,836

3,802,025 — 161,649 — — 161,649

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

Stock-based compensation expense — — 5,763 — — 5,763

Issuance of common stock from at-the-market public offerings, net of issuance and commission costs of $ 376

209,852 — 6,169 — — 6,169

Issuance of common stock from a collaboration and license agreement 443,253 — 17,265 — — 17,265

Vesting of restricted stock units 11,095 — — — — —

1 unchanged sentence

Issuance of common stock upon exercise of stock options 3,634 — 143 — — 143

Change in unrealized gain on marketable securities, net of tax — — — — 3 3

Net loss — — — ( 39,553 ) — ( 39,553 )

Balance at September 30, 2023 128,547,336 $ 13 $ 713,786 $ ( 627,043 ) $ — $ 86,756

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

Balance at March 31, 2024 13,258,047 $ 13 $ 923,141 $ ( 693,474 ) $ 3 $ 229,683

Common Stock 1

Capital Accumulated

5 unchanged sentences

Stock-based compensation expense — — 7,593 — — 7,593

Issuance of common stock from at-the-market public offerings, net of issuance costs 70,410 — 1,368 — — 1,368

Vesting of restricted stock units 81,130 — — — — —

Shares withheld for taxes for vesting of restricted stock units ( 17,850 ) — ( 230 ) — — ( 230 )

Issuance of common stock upon exercise of stock options 72,278 — 333 — — 333

Change in unrealized loss on marketable securities, net of tax — — — — ( 430 ) ( 430 )

Net loss — — — ( 68,717 ) — ( 68,717 )

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

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

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

Issuance of common stock from at-the-market public offerings, net of commission costs of $ 560

560,253 1 18,095 — — 18,096

4 unchanged sentences

Net loss — — — ( 37,455 ) — ( 37,455 )

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

Balance at March 31, 2023 3,864,027 $ 6 $ 632,580 $ ( 568,099 ) $ ( 19 ) $ 64,468

1 Results have been retroactively adjusted to reflect the 1-for-15 reverse stock split effected on November 28, 2023.

See Note 2 for details.

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

2 unchanged sentences

(Amounts in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

5 unchanged sentences

Amortization of premiums and discounts on marketable securities, net ( 84 ) 45

Non-cash collaboration and license agreement expense 2,500 —

Changes in operating assets and liabilities:

4 unchanged sentences

Deferred revenue ( 431 ) ( 683 )

Other ( 2 ) —

Net cash used in operating activities ( 20,857 ) ( 32,846 )

Cash flows from investing activities:

Purchases of property and equipment — ( 444 )

Purchases of marketable securities ( 91,220 ) —

Maturities of marketable securities — 34,000

Net cash provided by investing activities 39,000 74,295

Net cash (used in) provided by investing activities ( 91,220 ) 34,000

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 161,649 —

Proceeds from at-the-market offerings, net of issuance costs 24,128 4,330

Payment of issuance costs for at-the-market offerings — ( 262 )

Issuance of common stock from collaboration and license agreement 14,765 —

Proceeds from at-the-market offerings, net of issuance and commission costs 6,337 18,096

Payments of tax withholdings related to vesting of restricted stock units ( 137 ) ( 127 )

1 unchanged sentence

Net cash provided by financing activities 182,757 18,070

Increase (decrease) in cash, cash equivalents and restricted cash 39,470 ( 76,864 )

Increase in cash, cash equivalents and restricted cash 70,680 19,224

Cash, cash equivalents and restricted cash, beginning of period 81,716 62,031

5 unchanged sentences

Supplemental disclosures of non-cash activities:

Offering costs from follow-on public offering included in accounts payable $ 184 $ —

Purchases of property and equipment included in accounts payable $ 50 $ —

Issuance costs from at-the-market offering included in accrued expenses $ 168 $ —

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

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Praxis Precision Medicines, Inc.

(“Praxis” or the “Company”) is a clinical-stage biopharmaceutical company translating insights from genetic epilepsies into the development of therapies for central nervous system, or CNS, disorders characterized by neuronal excitation-inhibition imbalance.

(“Praxis” or the “Company”) is a clinical-stage biopharmaceutical company translating insights from genetic epilepsies into the development of therapies for central nervous system ("CNS"), disorders characterized by neuronal excitation-inhibition imbalance.

Normal brain function requires a delicate balance of excitation and inhibition in neuronal circuits, which, when dysregulated, can lead to abnormal function and both rare and more prevalent neurological disorders.

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

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.

The Company initiated its Phase 3 studies in ET in the fourth quarter of 2023, with enrollment expected to complete in the first half of 2024 and 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 first half of 2024.

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 in the fourth quarter of 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, elsunersen (also known as PRAX-222), the Company completed dosing in the first cohort of its EMBRAVE study and announced preliminary data from the first dose cohort in October 2023.

For the Company's most advanced product candidate under the Cerebrum™ platform, ulixacaltamide (formerly known as PRAX-944), it expects to announce topline results from the ongoing Phase 3 Essential3 clinical trials in essential tremor in the second half of 2024.

Within the Company's PRAX-628 program, it announced positive results from its Photo-Paroxysmal Response ("PPR") study in the first quarter of 2024 and plans to initiate the first of two efficacy studies of PRAX-628 in focal onset seizures in the second half of 2024, with topline results expected in 2025.

The Company plans to initiate a second PRAX-628 efficacy study in focal onset seizures in the first half of 2025, with topline results expected in the first half of 2026.

The Company's PRAX-562 Phase 2 EMBOLD study was initiated in the first quarter of 2023, with cohorts in SCN2A-DEE and SCN8A-DEE;

topline results are expected for both cohorts in the third quarter of 2024.

For the Company's most advanced product candidate under the Solidus™ platform, elsunersen (formerly known as PRAX-222), it shared results from Part 1 of the EMBRAVE study in the fourth quarter of 2023, and is currently completing multiple global regulatory interactions in anticipation of starting the pivotal phase of the program later in 2024.

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 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 September 30, 2023, the Company raised $ 613.6 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, from the sale of common stock through an initial public offering and at-the-market offerings under its shelf registration statement, and from follow-on public offerings of common stock and pre-funded warrants to purchase common stock.

From inception through March 31, 2024, the Company raised $ 785.3 million in aggregate cash proceeds from these transactions, net of issuance costs.

In April 2024, the Company raised net proceeds of $ 215.8 million from a follow-on public offering of common stock and pre-funded warrants.

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 $ 96.4 million for the nine months ended September 30, 2023.

In addition, as of September 30, 2023, the Company had an accumulated deficit of $ 627.0 million.

The Company has incurred recurring losses since its inception, including a net loss of $ 39.6 million for the three months ended March 31, 2024.

In addition, as of March 31, 2024, the Company had an accumulated deficit of $ 693.5 million.

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

The Company expects that its cash and cash equivalents as of September 30, 2023 of $ 101.1 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.

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 condensed consolidated 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 this case, the Company would evaluate further reductions in its expenses or to obtain additional financing sooner than it otherwise would, which may not be available or may only be available on terms that are not acceptable to the Company.

The Company expects that its cash, cash equivalents and marketable securities as of March 31, 2024 of $ 243.3 million will be sufficient to fund its 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.

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 nine months ended September 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.

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three months ended March 31, 2024 are consistent with those discussed in Note 2 to the consolidated financial statements included in the Company's 2023 Annual Report on Form 10-K, other than as noted below.

Reverse Stock Split

On November 28, 2023, the Company filed a Certificate of Amendment to the Company's Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a 1-for-15 reverse stock split of its common stock (the "Reverse Stock Split").

The Reverse Stock Split became effective at 5:00 p.m., Eastern Time, on November 28, 2023 (the "Effective Time").

As a result of the Reverse Stock Split, every 15 shares of the Company's issued and outstanding common stock were automatically reclassified into one validly issued, fully-paid and non-assessable share of common stock.

Any fractional post-split shares as a result of the Reverse Stock Split were rounded down to the nearest whole post-split share.

The Reverse Stock Split did not affect the number of authorized shares of common stock or the par value of the common stock.

All share amounts and per share amounts for the periods prior to the Effective Time disclosed in this Quarterly Report on Form 10-Q have been restated to reflect the Reverse Stock Split on a retroactive basis.

Marketable Securities Classification

The Company may invest 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 related to any marketable securities it may invest in.

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 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 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.

The Company classifies marketable securities as either cash equivalents, short-term, or long-term based on their stated maturity dates as it is more-likely-than-not that the Company will hold these assets through to their maturity dates.

Unaudited Interim Condensed Consolidated Financial Information

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

Financial statement disclosures for the three and nine months ended September 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 nine months ended September 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.

The accompanying condensed consolidated balance sheet as of March 31, 2024, the condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023, the condensed consolidated statements of comprehensive loss for the three months ended March 31, 2024 and 2023, the condensed consolidated statements of cash flows for the three months ended March 31, 2024 and 2023 and the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2024 and 2023 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, 2024, the results of its operations for the three months ended March 31, 2024 and 2023 and its cash flows for the three months ended March 31, 2024 and 2023.

Financial statement disclosures for the three months ended March 31, 2024 and 2023 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, 2024 are not necessarily indicative of results to be expected for the year ended December 31, 2024, any other interim periods, or any future year or period.

Use of Estimates

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.

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.

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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 Company did not hold any marketable securities as of September 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

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements

On November 27, 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures .

2023-07 improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The amendments included in this ASU apply to all public entities that are required to report segment information in accordance with Topic 280, including those with a single reportable segment.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted and should be applied retrospectively to all prior periods presented in the financial statements.

Upon transition, the segment expenses categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.

The Company only has one reportable segment and this ASU impacts disclosures only.

The Company has determined that the effects of adopting the amendments in ASU 2023-07 will only impact its disclosures and not have a material impact on its consolidated financial position and the results of its operations when such amendment is adopted.

On December 14, 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures .

2023-09 provides more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and incomes taxes paid information.

For public companies, the amendments are effective for annual periods beginning after December 15, 2024 and should be applied prospectively.

The Company has determined that the effects of adopting the amendments in ASU 2023-09 will only impact its disclosures and will not have a material impact on its consolidated financial position and the results of its operations when such amendment is adopted.

Cash Equivalents and Marketable Securities

The following is a summary of the Company's investment portfolio as of March 31, 2024.

The Company did not hold any cash equivalents or marketable securities as of December 31, 2023 (in thousands):

As of March 31, 2024

Gross Unrealized Estimated

Cost Gains Losses Fair Value

Available-for-sale securities:

Cash equivalents:

Money market funds $ 15,971 $ — $ — $ 15,971

Debt securities issued by U.S.

government agencies 17,889 — — 17,889

Corporate debt securities 12,009 — ( 1 ) 12,008

Commercial paper 2,450 — ( 1 ) 2,449

Available-for-sale marketable securities:

Debt securities issued by U.S.

government agencies 59,722 12 — 59,734

Total securities with a maturity of one year or less $ 39,047 $ — $ ( 173 ) $ 38,874

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

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.

Corporate debt securities 26,602 — ( 2 ) 26,600

Commercial paper 1,934 — ( 3 ) 1,931

Other debt securities 3,046 — ( 2 ) 3,044

Total cash equivalents and marketable securities $ 139,623 $ 12 $ ( 9 ) $ 139,626

As of March 31, 2024, the Company had 33 securities with a total fair market value of $ 42.6 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.

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

Contractual maturities of the marketable securities at each balance sheet date are as follows (in thousands):

March 31, 2024 December 31, 2023

Within one year $ 87,782 $ —

After one year through five years 35,873 —

Total $ 123,655 $ —

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 nine months ended September 30, 2023 and 2022.

The Company did not record any impairment related to its available-for-sale securities during the three months ended March 31, 2024 and 2023.

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 Company did not hold any financial assets measured at fair value on a recurring basis as of September 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

The Company did not hold any financial assets measured at fair value on a recurring basis as of December 31, 2023:

As of March 31, 2024

Level 1 Level 2 Level 3 Total

1 unchanged sentence

Money market funds $ 15,971 $ — $ — $ 15,971

Marketable securities:

Debt securities issued by U.S.

government agencies 17,889 — — 17,889

Corporate debt securities — 12,008 — 12,008

Commercial paper — 2,449 — 2,449

Available-for-sale marketable securities:

Debt securities issued by U.S.

government agencies 59,734 — — 59,734

Corporate debt securities — 26,600 — 26,600

Commercial paper — 1,931 — 1,931

Other debt securities — 3,044 — 3,044

$ 93,594 $ 46,032 $ — $ 139,626

1 unchanged sentence

Accrued expenses consisted of the following (in thousands):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Accrued external research and development expenses $ 4,717 $ 2,957

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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 September 30, 2023 and December 31, 2022.

This lease qualifies as an operating lease.

Collaboration and License Agreements

UCB Option and License Agreement

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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 and nine months ended September 30, 2023, the Company recognized $ 0.5 million and $ 1.9 million, respectively, in collaboration revenue related to the Collaboration Agreement in the condensed consolidated statement of operations.

As of September 30, 2023, $ 3.1 million was included in deferred revenue in the condensed consolidated balance sheet, of which $ 1.6 million was classified as current.

During the three months ended March 31, 2024, the Company recognized $ 0.4 million in collaboration revenue related to the Collaboration Agreement in the condensed consolidated statement of operations.

As of March 31, 2024, $ 2.1 million was included in deferred revenue in the condensed consolidated balance sheet, of which $ 1.3 million was classified as current.

Tenacia Collaboration and License Agreement

On January 4, 2024, the Company entered into an exclusive collaboration and license Agreement (“the License Agreement”) with Tenacia Biotechnology (Shanghai) Co., Ltd.

(“Tenacia”), a China-based portfolio company of Bain Capital, which provides Tenacia an exclusive license to use certain intellectual property for the development and commercialization of ulixacaltamide and products containing ulixacaltamide in China, Hong Kong, Macau and Taiwan.

Tenacia is solely responsible for the development and commercialization under the arrangement, with the exception of the associated manufacturing.

The Company also entered into a Stock Purchase Agreement (“the Stock Purchase Agreement”) with BCPE Tenet Holdings Cayman, Ltd.

(“BCPE”), a related party of Tenacia.

Pursuant to the terms of the License Agreement, the Company was entitled to an up-front, non-refundable and non-creditable cash payment of $ 5.0 million, net of certain tax withholdings.

In addition, the Company is eligible to receive $ 264.0 million in success-based development and commercialization milestone payments as well as tiered royalties on net sales.

Pursuant to the terms of the Stock Purchase Agreement, the Company issued and sold 443,253 shares of its common stock to BCPE at a price per share of $ 22.5605 for aggregate gross proceeds of $ 10.0 million.

The per share price was based on a 20 % premium over the 30-day volume-weighted average price.

Under the terms of the License Agreement, the Company granted to Tenacia an exclusive license to use certain intellectual property for the development and commercialization of ulixacaltamide and products containing ulixacaltamide in China, Hong Kong, Macau and Taiwan.

Tenacia is solely responsible for the development and commercialization under the arrangement, with the exception of the associated manufacturing.

The Company concluded that the License Agreement and the Stock Purchase Agreement is a combined arrangement since they were executed at the same time and in contemplation of each other with the same counterparty or a related party thereof and the combined arrangement falls within the scope of Topic 606.

The Company’s obligations under the arrangement comprise a single promise, or one performance obligation, related to the exclusive development and commercialization license granted to Tenacia.

Total proceeds associated with the combined arrangement at inception were $ 14.8 million consisting of the following:

(i) $ 10.0 million gross proceeds from the sale of common stock under the Stock Purchase Agreement and (ii) $ 4.8 million, net of tax, related to the up-front payment under the License Agreement, both of which were received in January 2024.

During the three months ended March 31, 2024, the Company had not achieved any development or sales milestones or earned any royalties under the License Agreement.

The Company recorded the common stock sold to BCPE at its issuance date fair value of $ 38.95 per share, or $ 17.3 million in the aggregate, which exceeded the proceeds received which were calculated based on the 20 % premium over the prior 30-day volume-weighted average price.

Accordingly, there is no transaction price allocable to the performance obligation as of March 31, 2024.

The Company accounted for the excess of the fair value of the equity securities issued over the total proceeds received as consideration paid to a customer for which no distinct good or service was transferred in exchange.

As a result, the transaction gives rise to negative revenue on a cumulative basis in the amount of $ 2.5 million, which was recorded in research and development expense in the accompanying condensed consolidated statement of operations for the three months ended March 31, 2024.

For agreements where the licenses are considered separate performance obligations or represent the only performance obligation, the Company recognizes revenue at the point in time that the Company effectively grants the license, as the licenses or assignments represent functional intellectual property.

As of March 31, 2024, the Company did not have any receivables or deferred revenue related to the arrangement with Tenacia.

The Company did not recognize any contract assets related to costs to obtain a contract with a customer or costs to fulfill a contract with a customer through March 31, 2024 because no qualifying costs were incurred.

During the three months ended March 31, 2024, the Company did not recognize any revenue associated with the combined arrangement.

Common Stock and Preferred Stock

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

Reverse Stock Split

The Reverse Stock Split became effective at 5:00 p.m., Eastern Time, on November 28, 2023.

Any fractional post-split shares as a result of the Reverse Stock Split were rounded down to the nearest whole post-split share.

The Reverse Stock Split did not affect the number of authorized shares of common stock or the par value of the common stock.

All share amounts and per share amounts for the period prior to the Effective Time disclosed in this Quarterly Report on Form 10-Q have been restated to reflect the Reverse Stock Split on a retroactive basis.

As of March 31, 2024 and December 31, 2023, the authorized capital stock of the Company included 150,000,000 shares of common stock, $ 0.0001 par value.

As of March 31, 2024 and December 31, 2023, the Company did no t hold any treasury shares.

Follow-On Public Offerings

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.

(i) an aggregate of 4,296,646 shares of its common stock at a public offering price of $ 14.25 per share, including the underwriters’ full exercise of their option to purchase 619,979 additional shares of common stock, and (ii) pre-funded warrants to purchase 470,000 shares of common stock at a public offering price of $ 14.2485 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 $ 0.0015 per share exercise price for each underlying share.

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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 September 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 of March 31, 2024, none of the pre-funded warrants had been exercised and all remain outstanding.

January 2024 Public Offering

On January 16, 2024, the Company completed a public offering of:

(i) an aggregate of 3,802,025 shares of its common stock at a public offering price of $ 35.50 per share, including the underwriters' full exercise of their option to purchase 633,750 additional shares of commons stock, and (ii) pre-funded warrants to purchase 1,056,725 shares of common stock at a public offering price of $ 35.4999 per share of common stock underlying the warrants.

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

Total net proceeds generated from the offering were approximately $ 161.6 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 4.99 % (or 9.99 %), or the combined voting power of the securities beneficially owned by such holder, together with its affiliates, to exceed 4.99 % (or 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.

As of March 31, 2024, none of the pre-funded warrants had been exercised and all remained outstanding.

The Company determined that the pre-funded warrants related to both the June 2023 and January 2024 public offerings 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.

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The Company has reserved the following shares of common stock for future issuance:

September 30,

2024 December 31,

Shares reserved for exercise of outstanding stock options 1,084,026 666,163

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

Shares reserved for exercise of pre-funded warrants related to the June 2023 Financing 470,000 470,000

Shares reserved for exercise of pre-funded warrants related to the January 2024 Financing 1,056,725 —

Shares reserved for future awards under the 2020 Stock Option and Incentive Plan 111,028 148,264

Shares reserved for future awards under the 2020 Employee Stock Purchase Plan 141,029 53,111

Shares reserved for future awards under the 2024 Inducement Plan 996,950 —

Shares reserved for vesting of restricted stock units 97,601 47,145

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Preferred Stock

As of September 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.

As of March 31, 2024 and December 31, 2023, the authorized capital stock of the Company included 10,000,000 shares of undesignated preferred stock, $ 0.0001 par value.

Stock-Based Compensation

2024 Inducement Plan

In January 2024, the Board of Directors ("the Board") adopted the 2024 Inducement Plan (the "Inducement Plan") without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Stock Market LLC listing rules ("Rule 5635(c)(4)").

In accordance with Rule 5635(c)(4), the Inducement Plan allows the Company to grant awards only to a newly hired employee who was not previously an employee or non-employee director or to an employee who is being rehired following a bona fide period of non-employment if such award is a material inducement to such employee entering into employment.

The total number of shares of common stock authorized for issuance under the Inducement Plan as of March 31, 2024 was 1,000,000 shares.

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 September 30, 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 March 31, 2024 and December 31, 2023 was 1,100,833 shares and 661,240 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 September 30, 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 March 31, 2024 and December 31, 2023 was 395,850 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 September 30, 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 March 31, 2024 and December 31, 2023 was 175,145 shares and 87,227 shares, respectively.

Restricted Stock Units

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Forfeited ( 3,531 ) 35.63

Unvested as of September 30, 2023 633,615 $ 15.91

As of September 30, 2023, total unrecognized compensation cost related to unvested restricted stock units was $ 7.4 million, which is expected to be recognized over a weighted-average period of 2.04 years.

Unvested as of March 31, 2024 97,601 $ 88.63

As of March 31, 2024, total unrecognized compensation cost related to unvested restricted stock units was $ 7.8 million, which is expected to be recognized over a weighted-average period of 2.34 years.

Stock Options

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Cancelled or Forfeited ( 7,353 ) 124.58

Outstanding as of September 30, 2023 9,876,256 $ 10.90 7.97 $ 222

Exercisable as of September 30, 2023 5,223,043 $ 12.59 7.44 $ 112

Vested and expected to vest as of September 30, 2023 9,876,256 $ 10.90 7.97 $ 222

Outstanding as of March 31, 2024 1,084,026 $ 114.62 8.38 $ 14,197

Exercisable as of March 31, 2024 689,361 $ 129.09 8.06 $ 7,632

Vested and expected to vest as of March 31, 2024 1,084,026 $ 114.62 8.38 $ 14,197

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 and nine months ended September 30, 2023:

Three Months Ended

September 30, Nine Months Ended

September 30,

Risk-free interest rate 3.88 %

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Weighted average grant-date fair value per share $ 32.70

As of September 30, 2023, total unrecognized compensation cost related to unvested stock options was $ 29.1 million, which is expected to be recognized over a weighted-average period of 1.68 years.

As of March 31, 2024, total unrecognized compensation cost related to unvested stock options was $ 24.8 million, which is expected to be recognized over a weighted-average period of 1.88 years.

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Research and development $ 5,598 $ 2,223

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Outstanding stock options 1,084,026 712,737

2 unchanged sentences

1,209,454 775,038

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 nine months ended September 30, 2023.

Common shares issuable upon exercise of the pre-funded warrants that were sold in connection with the June 2023 and the January 2024 underwritten public offering are included in the calculation of basic weighted average number of common shares outstanding for the three months ended March 31, 2024.

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.

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

Related Party Transactions

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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 nine months ended September 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

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 to identify matters that require additional disclosure.

The Company has concluded that no subsequent events have occurred that require disclosure.

April 2024 Financing

On April 2, 2024 the Company completed a public offering of:

(i) an aggregate of 3,849,558 shares of its common stock at a public offering price of $ 56.50 per share, including the underwriters' full exercise of their option to purchase 530,973 additional shares of common stock, and (ii) pre-funded warrants to purchase 221,238 shares of common stock at a public offering price of $ 56.4999 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 of each underlying share.

Total net proceeds generated from the offering were approximately $ 215.8 million, after deducting underwriting discounts, commissions and other offering expenses payable by the Company.

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