What changed in this filing

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Item 1. Financial Statements

2022-05-10 compared with 2021-11-12 · 109 added, 137 removed, 271 unchanged (48% of the section changed)

3 unchanged sentences

(in thousands, except share data)

September 30,

Current assets:

3 unchanged sentences

Total current assets

Restricted cash

Property and equipment, net

Right-of-use asset

Deferred offering costs

Liabilities and stockholders’ equity

11 unchanged sentences

487,149,741 shares authorized;

35,789,759 and 32,595,301 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

36,293,331 and 36,200,299 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

Non-voting common stock, $ 0.0001 par value;

12,850,259 shares authorized;

11,402,037 and 11,110,371 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

11,402,037 and 11,402,037 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

6 unchanged sentences

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands, except share and per share data)

9 unchanged sentences

Comprehensive loss

Unrealized gain (loss) on marketable securities, net of tax

Unrealized loss on marketable securities, net of tax

Comprehensive loss

1 unchanged sentence

PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

Stockholders’ equity (deficit)

8 unchanged sentences

Exercise of stock options

Sale of common stock,

net of offering costs of $ 739

Unrealized loss on marketable securities

Stock-based compensation

Balance at March 31, 2022

Exercise of stock options

Stock-based compensation

Balance at June 30,2021

Exercise of stock options

Unrealized gain (loss) on

marketable securities

Stock-based compensation

Balance at September 30,2021

See accompanying notes to unaudited interim financial statements.

PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)

Convertible preferred stock

Stockholders’ equity (deficit)

3 unchanged sentences

Balance at January 1, 2021

Sale of Series B convertible

preferred stock, net of

offering costs of $ 58

Stock-based compensation

expense, including

issuance of RSAs

Balance at March 31, 2020

Exercise of stock options

Stock-based compensation

Balance at June 30, 2020

Exercise of stock options

Sale of Series C convertible

preferred stock, net of

offering costs of $ 174

Conversion of convertible

preferred stock into

voting and non-voting

common stock upon initial

public offering

Sale of common stock in

initial public offering,

Sale of common stock,

net of offering costs of $ 739

Stock-based compensation

expense, including issuance

of restricted stock awards

Balance at September 30, 2020

Balance at March 31, 2021

See accompanying notes to unaudited interim financial statements.

1 unchanged sentence

STATEMENTS OF CASH FLOWS

Nine months ended September 30,

Three months ended March 31,

(in thousands)

11 unchanged sentences

Net cash used in operating activities

Cash flows used in investing activities:

Purchases of marketable securities

Cash flows provided by (used in) investing activities:

Proceeds from maturities of marketable securities

Purchases of property and equipment

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows provided by financing activities:

Proceeds from the issuance of common stock upon initial public offering, net of offering costs

Proceeds from the sale of common stock, net of offering costs

Proceeds from the sale of Series C convertible preferred stock, net of offering costs

Proceeds from the sale of Series B convertible preferred stock, net of offering costs

Payment of capital lease obligation

Proceeds from the exercise of stock options

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Net increase in cash and cash equivalents

Cash, cash equivalents, and restricted cash at beginning of period

Cash, cash equivalents, and restricted cash at end of period

Supplemental disclosures:

1 unchanged sentence

Property and equipment in accounts payable

Unrealized gain (loss) on marketable securities

Offering costs in accounts payable

Offering costs in accrued expenses and other current liabilities

Unrealized loss on marketable securities

See accompanying notes to unaudited interim financial statements.

1 unchanged sentence

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

Prelude Therapeutics Incorporated (the “Company”) was incorporated in Delaware on February 5, 2016 and is a clinical-stage precision oncology company focused on discovering and developing small molecule therapies optimized to target the key driver mechanisms in cancers with high unmet need.

Prelude Therapeutics Incorporated (the “Company”) was incorporated in Delaware on February 5, 2016 and is a clinical-stage fully integrated oncology company built on a foundation of drug discovery excellence to deliver novel precision cancer medicines to underserved patients.

Since beginning operations, the Company has devoted substantially all its efforts to research and development, conducting preclinical and clinical studies, recruiting management and technical staff, administration, and raising capital.

7 unchanged sentences

In addition, the Company is dependent upon the services of its employees, consultants and contractors.

Since its inception, the Company has incurred operating losses and has an accumulated deficit of $ 186.3 million at September 30, 2021.

Since its inception, the Company has incurred operating losses and has an accumulated deficit of $ 248.6 million at March 31, 2022.

The Company has no revenue to date and devotes its efforts to research and development.

The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product candidates currently in development.

The Company believes that its cash, cash equivalents, and marketable securities as of September 30, 2021 will be sufficient to fund its operating expenses and capital expenditure requirements into the second half of 2023.

The Company believes that its cash, cash equivalents, and marketable securities as of March 31, 2022 will be sufficient to fund its operating expenses and capital expenditure requirements into the second half of 2024.

To fund its operating expenses and capital expenditure requirements after that date, the Company plans to seek additional funding through public or private equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements.

16 unchanged sentences

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

The accompanying unaudited interim financial statements should be read in conjunction with the annual audited financial statements and related notes as of and for the year ended December 31, 2021 found in the Form 10-K filed with the SEC on March 17, 2022.

6 unchanged sentences

Based upon the historical and anticipated future losses, management has determined that the deferred tax assets generated by net operating losses and research and development credits do not meet the more likely than not threshold for realizability.

Accordingly, a full valuation allowance has been recorded against the Company’s net deferred tax assets as of September 30, 2021 and December 31, 2020.

Accordingly, a full valuation allowance has been recorded against the Company’s net deferred tax assets as of March 31, 2022 and December 31, 2021.

Cash, Cash Equivalents and Restricted cash

The Company’s cash equivalents include short-term highly liquid investments with an original maturity of 90 days or less when purchased and are carried at fair value in the accompanying balance sheets.

Restricted cash comprises a letter of credit for the benefit of the landlord in connection with the Company’s Chestnut Run Lease.

See Note 8 for further details.

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the balance sheet that total to the amounts shown in the statement of cash flows:

(in thousands)

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents, and restricted cash shown in statement of cash flows

Marketable Securities

1 unchanged sentence

The securities are carried at fair value with the unrealized gains and losses, net of tax, included in accumulated other comprehensive income (loss), a component of stockholders’ equity (deficit).

Realized gains and losses and declines in value determined to be other than temporary are included in the Company's statements of operations.

Realized gains and losses as well as credit losses, if

any, on marketable securities are included in the Company's statements of operations.

The Company classifies marketable securities that are available for use in current operations as current assets on the balance sheets .

2 unchanged sentences

The weighted-average number of shares of common stock outstanding used in the basic net loss per share calculation does not include unvested restricted stock awards as these instruments are considered contingently issuable shares until they vest.

Diluted net loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as stock options and convertible preferred stock, and the effect from unvested restricted stock awards which would result in the issuance of incremental shares of common stock.

Diluted net loss per share of common stock includes the effect, if any, from the potential exercise of securities, such as stock options, and the effect from unvested restricted stock awards and restricted stock units which would result in the issuance of incremental shares of common stock.

For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive.

The Company’s convertible preferred stock and unvested restricted stock entitles the holder to participate in dividends and earnings of the Company, and, if the Company were to recognize net income, it would have to use the two-class method to calculate earnings per share.

The two-class method is not applicable during periods with a net loss, as the holders of the convertible preferred stock and unvested restricted stock have no obligation to fund losses.

The Company’s unvested restricted stock awards entitle the holder to participate in dividends and earnings of the Company, and, if the Company were to recognize net income, it would have to use the two-class method to calculate earnings per share.

The two-class method is not applicable during periods with a net loss, as the holders of the unvested restricted stock awards have no obligation to fund losses.

The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:

September 30,

Unvested restricted stock awards

10 unchanged sentences

Recently Adopted Accounting Pronouncements

On January 1, 2021 , the Company adopted ASC 842 issued by the FASB in February 2016, which was subsequently supplemented by clarifying guidance to improve financial reporting of leasing transactions.

The new lease accounting guidance requires lessees to recognize lease liabilities and right-of-use assets on the balance sheet for all leases with initial terms longer than 12 months and provides enhanced disclosures on key information of leasing arrangements.

The Company adopted the new standard using the modified retrospective transition method utilizing the optional transition method and elected the package of practical expedients.

Accordingly, prior periods were not restated to reflect the adopted standard.

In accordance with the guidance in ASC 842 , components of a lease should be split into three categories:

lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.).

The Company has elected the practical expedient to account for the lease and non-lease components of each of its operating leases as a single lease component and allocate all of the contract consideration to the lease component only .

Upon adoption, the Company recorded a right of use asset of $ 2.5 million and corresponding operating lease liabilities of $ 2.5 million, with an offset to accrued expenses and other current liabilities of approximately $ 64,000 to eliminate deferred rent on the balance sheets.

At lease commencement, the Company records a lease liability based on the present value of lease payments over the expected lease term including any options to extend the lease that the Company is reasonably certain to exercise.

The Company calculates the present value of lease payments using an incremental borrowing rate as the Company’s leases do not provide an implicit interest rate.

The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

At the lease commencement date, the Company records a corresponding right-of-use lease asset based on the lease liability, adjusted for any lease incentives received and any initial direct costs paid to the lessor prior to the lease commencement date.

The Company may enter into leases with an initial term of 12 months or less (“Short-Term Leases”).

For Short-Term Leases, the Company records the rent expense on a straight-line basis and does not record the leases on the balance sheet.

The Company entered into a short-term lease in June 2021 and elected the short-term lease exemption that allows the Company to record the rent expense on a straight-line basis and does not require the recognition of a right-of-use asset or corresponding operating lease liability.

Refer to Note 8 for the Company’s lease disclosures.

After lease commencement, the Company measures its leases as follows:

(i) the lease liability based on the present value of the remaining lease payments using the discount rate determined at lease commencement and (ii) the right-of-use lease asset based on the re-measured lease liability, adjusted for any unamortized lease incentives received, any unamortized initial direct costs and the cumulative difference between rent expense and amounts paid under the lease agreement.

Any lease incentives received, and any initial direct costs incurred are amortized on a straight-line basis over the expected lease term.

Rent expense is recorded on a straight-line basis over the expected lease term.

The adoption of the new lease accounting standard did not have a material impact on the Company’s results of operations or cash flows for the nine months ended September 30, 2021.

Accounting guidance not yet adopted

In June 2016, the FASB issued ASU No.

In June 2016, the FASB iss ued ASU No.

2016-13, “ Financial Instruments-Credit Losses:

7 unchanged sentences

GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

This guidance is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022 and must be adopted using a modified retrospective approach, with certain exceptions.

The Company is currently evaluating the impact of this standard on its financial statements and related disclosures.

The Company early adopted this standard as of January 1, 2022 using a modified retrospective approach.

It did not have a material impact on the Company’s financial statements and related disclosures.

In November 2021, the FASB issued ASU No.

2021-10, “Government Assistance:

Disclosures by Business Entities about Government Assistance” .

The amendments in this Update improve financial reporting by requiring disclosures that increase the transparency of transactions with a government.

The amendments require the following annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy (i) the type of transaction (ii) the accounting for the transaction, and (iii) the effect of the transaction on the entity’s financial statements.

The Company adopted this

standard as of January 1, 2022 using a prospe ctive approach and i t did no t have a material impact on the Company’s financial statements and related disclosures.

Marketable Securities

The following is a summary of the Company’s marketable securities as of September 30, 2021.

The Company did not have any marketable securities as of December 31, 2020.

The following is a summary of the Company’s marketable securities.

(in thousands)

2 unchanged sentences

Gross unrealized loss

Marketable securities

March 31, 2022

Corporate debt securities

Commercial paper

The Company’s marketable securities generally have contractual maturity dates of between four and 21 months.

December 31, 2021

Corporate debt securities

Commercial paper

The Company’s marketable securities generally have contractual maturity dates of 15 months or less.

The Company believes that any unrealized losses associated with the decline in value of its securities is temporary, is primarily related to market factors 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 for credit losses was not recognized.

Fair Value of Financial Instruments

12 unchanged sentences

Quoted prices

September 30, 2021:

March 31, 2022:

Cash equivalents (Money Market Funds)

4 unchanged sentences

Cash equivalents (Money Market Funds)

Marketable securities

Corporate debt securities

Commercial paper

Accrued Expenses and Other Current Liabilities

1 unchanged sentence

(in thousands)

September 30,

Compensation and related benefits

10 unchanged sentences

However, this ownership limitation may be increased (not to exceed 19.99 %) or decreased to any other percentage designated by such holder of non-voting common stock upon 61 days’ notice to the Company.

The Company leases office and laboratory space in Wilmington, Delaware under a noncancelable lease (the “Lease”), which expires in December 2022, which was amended during the third quarter of 2021 to include additional office and laboratory space to accommodate the Company’s growth.

The Company has an option to renew the Lease for an additional 1 -year period.

This option to extend was not recognized as part of the Company’s measurement of the right-of-use asset and operating lease liability as of September 30, 2021 .

The Company leases office and laboratory space in Wilmington, Delaware under a noncancelable lease (the “Lease”).

During the first quarter of 2022, the Lease was amended to allow the Company the option to renew the Lease for two 6 -month periods and the Company exercised its option to renew the lease for an additional 6 months until June 30, 2023.

The second option to extend the Lease for an additional 6 months was not recognized as part of the Company’s measurement of the right-of-use asset and operating lease liability as of March 31, 2022 .

The discount rate used to account for the Company’s operating lease under ASC 842 is the Company’s estimated incremental borrowing rate of 6.0 %.

In June 2021, the Company entered into a 12 -month noncancelable lease, which commenced on July 1, 2021 and will expir e on June 30, 2022 and has remaining lease payments of approximately $ 0.1 million and $ 0.2 million in 2021 and 2022, respectively.

The Company adopted the short-term lease election as afforded by ASC 842 and did no t recognize a right-of-use asset and operating lease liability related to this short-term lease.

Rent expense for the three months ended September 30, 2021 and 2020 was $ 0.5 million and $ 0.3 million, respectively.

Rent expense for the nine months ended September 30, 2021 and 2020 was $ 1.2 million and $ 0.8 million, respectively .

Future minimum annual lease payments under the L ease at September 30, 2021 is as follows:

Rent expense for the three months ended March 31, 2022 and 2021 was $ 0.5 million and $ 0.3 million, respectively.

Future minimum annual lease payments under the L ease at March 31, 2022 is as follows:

(in thousands)

3 unchanged sentences

Current and noncurrent lease liability

During the fourth quarter of 2021, the Company entered into a lease agreement (the “Chestnut Run Lease”) with a commencement date of the earlier of (i) the Landlord Work Substantial Completion Date (as such term is defined in the Chestnut Run Lease), or (ii) the date the Company takes possession of the premises for the conduct of the Company’s business (the “Commencement Date”).

The Chestnut Run Lease premises includes approximately 81,000 square feet, located at Chestnut Run Plaza in Wilmington, Delaware (the Premises).

The Premises contains both office and lab space the Company intends to use for administrative, research and development and other activities.

Upon the Commencement Date, the Company will recognize a right-of-use asset and operating lease liability in accordance with ASC 842.

The Chestnut Run Lease has an initial term of 162 months with 3 five-year extension options and certain expansion rights.

The aggregate estimated rent payments due over the initial term of the Chestnut Run Lease is approximately $ 33.8 million.

The estimated rent payments due for the remainder of 2022 along with each of the next five years and thereafter is as follows:

(in thousands)

2022 (remaining 9 months)

The Company paid a security deposit for the Chestnut Run Lease in the form of a letter of credit of $ 4.0 million, which is included in the balance sheet as restricted cash as of March 31, 2022.

The security deposit may be reduced to $ 0.5 million over time in accordance with the terms of the Chestnut Run Lease.

In connection with the Company’s expansion of operations in the State of Delaware, the Company was approved for a grant from the State of Delaware in 2021 that will provide up to $ 5.5 million in reimbursements over three years for the development of lab space in addition to increasing jobs in Delaware to meet specific targeted levels through 2023 .

During the first quarter of 2022, the Company received cash of $ 2.4 million from the grant for the development of lab space.

The Company has deferred the recognition of these grant funds as they relate to capitalized costs and has classified them as long-term liabilities on the balance sheet.

The Company will recognize the grant funds in other income as grant income over the useful life of the related assets.

If, after two years from the disbursement date, the incurred costs for lab space are less than the $ 2.4 million received, the Company is required to pay back the difference between total funds received and allowable costs incurred.

Additionally, if the Company leaves the State of Delaware within five years of the disbursement, the Company is required to return an amount equal to the amount of grant funds disbursed on a pro-rated basis.

During the first quarter of 2022, the Company also received cash of $ 0.3 million for satisfying the first performance benchmark measurement.

The Company recognized this in other income, net on the statement of operations and comprehensive loss.

To the extent the Company’s employee headcount is fewer than the performance benchmark, the Company is required to repay the amount of grant funds received for the number of employees below the benchmark.

Employment Agreements

4 unchanged sentences

The Company provides a safe harbor match with a maximum amount of 3 % of the participant’s compensation.

During the three and nine months ended September 30, 2021, the Company made matching contributions of $ 0.1 million and $ 0.4 million, respectively .

For both the three months ended March 31, 2022 and 2021, the Company made matching contributions of $ 0.2 million.

Research Collaboration Agreement

11 unchanged sentences

the 2016 Equity Incentive Plan, as amended, and the 2020 Equity Incentive Plan.

New awards can only be granted under the 2020 Equity Incentive Plan (the “Plan”) and as of September 30, 2021, 4,782,468 shares were available for future grants.

New awards can only be granted under the 2020 Equity Incentive Plan (the “Plan”) and as of March 31, 2022, 6,240,398 shares were available for future grants.

The number of shares of the Company’s common stock that may be issued pursuant to rights granted under the Plan shall automatically increase on January 1st of each year, commencing on January 1, 2021, and continuing for ten years , in an amount equal to five percent of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year, subject to the discretion of the board of directors or compensation committee to determine a lesser number of shares shall be added for such year.

The Plan provides for the granting of common stock, incentive stock options, nonqualified stock options, restricted stock awards, and/or stock appreciation rights to employees, directors, and other persons, as determined by the Company’s board of directors.

The Plan provides for the granting of common stock, incentive stock options, nonqualified stock options, restricted stock awards, restricted stock units and/or stock appreciation rights to employees, directors, and other persons, as determined by the Company’s board of directors.

The Company’s stock options vest based on the terms in each award agreement, generally over four-year periods with 25 % of options vesting after 1 year and then monthly thereafter, and have a term of ten years .

2 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands)

5 unchanged sentences

Outstanding at January 1, 2022

Outstanding at September 30, 2021

Exercisable at September 30, 2021

At September 30, 2021, the aggregate intrinsic value of outstanding options and exercisable options was $ 139.3 million and $ 52.8 million, respectively.

The following table summarizes information about stock options outstanding at September 30, 2021 under the Plan:

Outstanding at March 31, 2022

Exercisable at March 31, 2022

At March 31, 2022, the aggregate intrinsic value of outstanding options and exercisable options was $ 11.3 million and $ 6.7 million, respectively.

The following table summarizes information about stock options outstanding at March 31, 2022 under the Plan:

Options Outstanding

6 unchanged sentences

$11.73 - $13.04

The weighted-average grant date fair value of options granted was $ 24.88 and $ 8.44 per share for the nine months ended September 30, 2021 and 2020, respectively.

The aggregate intrinsic value of options exercised was $ 22.8 million for the nine months ended September 30, 2021.

The Company recorded stock-based compensation expense of $ 6.7 million and $ 1.2 million for the three months ended September 30, 2021 and 2020, respectively, related to stock options.

The Company recorded stock-based compensation

expense of $ 14.4 million and $ 1.9 million for the nine months ended September 30, 2021 and 2020 , respectively, related to stock options.

As of September 30, 2021 , the total unrecognized compensation expense related to unvested stock option awards was $ 83.1 million, which the Company expects to recognize over a weighted-average period of 3.22 years .

$13.05 - $31.13

$31.14 - $88.98

The weighted-average grant date fair value of options granted was $ 7.62 and $ 68.39 per share for the three months ended March 31, 2022 and 2021, respectively.

The aggregate intrinsic value of options exercised was $ 0.6 million for the three months ended March 31, 2022.

The Company recorded stock-based compensation expense of $ 6.5 million and $ 3.7 million for the three months ended March 31, 2022 and 2021, respectively, related to stock options.

As of March 31, 2022, the total unrecognized compensation expense related to unvested stock option awards was $ 72.2 million, which the Company expects to recognize over a weighted-average period of 3.01 years.

The fair value of each option was estimated on the date of grant using the weighted average assumptions in the table below:

Nine months ended

September 30,

Three months ended

Expected volatility

11 unchanged sentences

Unvested balance at January 1, 2022

Unvested balance at September 30, 2021

The Company recorded stock-based compensation expense of $ 0.3 million and $ 0.3 million for the three months ended September 30, 2021 and 2020, respectively, related to RSAs.

The Company recorded stock-based compensation expense of $ 0.7 million and $ 0.6 million for the nine months ended September 30, 2021 and 2020, respectively, related to RSAs.

As of September 30, 2021, the total unrecognized expense related to all RSAs was $ 1.6 million, which the Company expects to recognize over a weighted-average period of 2.05 years.

During the nine months ended September 30, 2021, the Company granted 25,000 restricted stock units (“RSU”) to an employee that vest over a four-year period with 25 % of awards vesting after one year and then quarterly thereafter.

Unvested balance at March 31, 2022

The Company recorded stock-based compensation expense of $ 0.2 million for both the three months ended March 31, 2022 and 2021 related to RSAs.

As of March 31, 2022, the total unrecognized expense related to all RSAs was $ 1.1 million, which the Company expects to recognize over a weighted-average period of 1.63 years.

In 2021, the Company granted restricted stock units (“RSU”) to employees that generally vest over a four-year period with 25 % of awards vesting after one year and then quarterly thereafter.

Any unvested units will be forfeited upon termination of services.

The Company recorded stock-based compensation expense of $ 0.1 million for the three and nine months ended September 30, 2021, respectively, related to RSUs.

At September 30, 2021 the total unrecognized expense related to the RSUs was $ 0.8 million, which the Company expects to recognize over 3.70 years.

At March 31, 2022 there were 20,000 RSUs outstanding which had a weighted-average grant date fair value of $ 18.32 .

There were no RSUs granted or forfeited during the three months ended March 31, 2022.

The Company recorded stock-based compensation expense of $ 24 thousand for the three months ended March 31, 2022 related to RSUs.

At March 31, 2022 the total unrecognized expense related to the RSUs was $ 0.3 million, which the Company expects to recognize over 3.51 years.

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan (the “ESPP”), which, as of September 30, 2021, had 957,056 shares of common stock reserved for future issuance.

The number of shares of the Company’s common stock that may be issued pursuant to rights granted under the ESPP shall automatically increase on January 1st of each year and continuing for ten years beginning in 2021, in an amount equal to one percent of the total number of shares of all classes of the Company’s common stock outstanding on December 31st of the preceding calendar year, subject to the discretion of the board of directors or compensation committee to determine a lesser number of shares shall be added in any particular year.

No shares have been issued from the ESPP as of September 30, 2021.

The Company has an Employee Stock Purchase Plan (the “ESPP”), which, as of March 31, 2022, had 1,407,365 shares of common stock reserved for future issuance.

On January 1, 2022, 476,023 shares were added to the ESPP.

Under the ESPP, eligible employees can purchase the Company’s common stock through accumulated payroll deductions at such times as are established by the compensation committee.

4 unchanged sentences

Accordingly, share-based compensation expense is determined based on the option’s grant-date fair value as estimated by applying the Black Scholes option-pricing model and is recognized over the withholding period.

The Company recognized share-based compensation expense of $ 0.1 million for the three and nine months ended September 30, 2021, respectively, related to the ESPP.

The Company recognized share-based compensation expense of $ 0.1 million and nil for the three months ended March 31, 2022 and 2021, respectively, related to the ESPP.

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