What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-05 · 128 added, 87 removed, 442 unchanged (33% of the section changed)

27 unchanged sentences

no shares issued and outstanding

Common stock, $ 0.00001 par value, 90,000,000 shares authorized 48,552,102 and 47,838,330 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

Common stock, $ 0.00001 par value, 90,000,000 shares authorized;

48,683,931 and 47,838,330 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

7 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended

Six Months Ended

License and collaboration revenue - related party

5 unchanged sentences

Interest income

Other income (expense), net

Other expense, net

Net loss per share, basic and diluted

4 unchanged sentences

(In thousands)

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Other comprehensive loss:

Gain (loss) on translation of foreign operations

Unrealized loss on marketable securities

Loss on translation of foreign operations

Unrealized (loss) gain on marketable securities

Comprehensive loss

5 unchanged sentences

Stockholders'

Three months ended March 31, 2022

Three months ended June 30, 2022

Balance at March 31, 2022

Issuance of common stock under equity incentive and employee stock purchase plans

Stock-based compensation expense

Issuance costs related to prior period common stock offering

Other comprehensive loss

Balance at June 30, 2022

Comprehensive

Stockholders'

Three months ended June 30, 2021

Balance at March 31, 2021

Issuance of common stock pursuant to public offering, net of issuance costs

Issuance of common stock under equity incentive and employee stock purchase plans

Stock-based compensation expense

Other comprehensive loss

Balance at June 30, 2021

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

PROTAGONIST THERAPEUTICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

Comprehensive

Stockholders'

Six months ended June 30, 2022

Balance at December 31, 2021

3 unchanged sentences

Stock-based compensation expense

Issuance costs related to prior period common stock offering

Other comprehensive loss

Balance at March 31, 2022

Balance at June 30, 2022

Comprehensive

Stockholders’

Three months ended March 31, 2021

Six months ended June 30, 2021

Balance at December 31, 2020

Issuance of common stock pursuant to public offering, net of issuance costs

Issuance of common stock under equity incentive and employee stock purchase plans

2 unchanged sentences

Other comprehensive loss

Balance at March 31, 2021

Balance at June 30, 2021

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

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended

Cash Flows from Operating Activities

17 unchanged sentences

Purchases of property and equipment

Net cash used in investing activities

Net cash provided by investing activities

Cash Flows from Financing Activities

2 unchanged sentences

Tax withholding payments related to net settlement of restricted stock units

Issuance costs related to prior common stock offering

Issuance costs related to prior period common stock offering

Net cash provided by financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

Net decrease in cash, cash equivalents and restricted cash

Net (decrease) increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

3 unchanged sentences

Issuance costs related to common stock offering included in accrued liabilities and other payables

Issuance costs related to common stock offering included in accrued liabilities and other payables at the end of the previous year

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

4 unchanged sentences

(the “Company”) is headquartered in Newark, California.

The Company is a biopharmaceutical company with multiple peptide-based new chemical entities in different stages of clinical development, all derived from the Company's proprietary technology platform.

The Company is a biopharmaceutical company with peptide-based new chemical entities rusfertide, PN-943 and PN-235 in different stages of clinical development, all derived from the Company’s proprietary technology platform.

The Company’s clinical programs fall into two broad categories of diseases;

(i) hematology and blood disorders, and (ii) inflammatory and immunomodulatory diseases.

Protagonist Pty Limited (“Protagonist Australia”) is a wholly-owned subsidiary of the Company and is located in Brisbane, Queensland, Australia.

2 unchanged sentences

The Company’s Chief Executive Officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for allocating and evaluating financial performance.

As of March 31, 2022, the Company had cash, cash equivalents and marketable securities of $ 305.3 million.

The Company has incurred net losses from operations since inception and had an accumulated deficit of $ 430.3 million as of March 31, 2022.

As of June 30, 2022, the Company had cash, cash equivalents and marketable securities of $ 291.9 million.

The Company has incurred net losses from operations since inception and had an accumulated deficit of $ 471.3 million as of June 30, 2022.

The Company’s ultimate success depends upon the outcome of its research and development and collaboration activities.

3 unchanged sentences

The Company is subject to risks and uncertainties as a result of the ongoing COVID-19 pandemic.

The impact of the COVID-19 pandemic on the Company's activities depends on a number of factors, including, but not limited to, the duration and severity of the pandemic, including the severity of any additional periods of increases or spikes in the number of cases in the areas the Company and its suppliers operate and areas where the Company’s clinical trial sites are located;

The impact of the COVID-19 pandemic on the Company’s activities depends on a number of factors, including, but not limited to, the duration and severity of the pandemic;

the development and spread of COVID-19 variants, the timing, extent, effectiveness and durability of COVID-19 vaccine programs or other treatments;

3 unchanged sentences

The extent of the impact of the COVID-19 pandemic remains difficult to predict as this event is ongoing and information continues to evolve.

Capital markets and economies worldwide have been negatively impacted and may be further impacted in the future.

Such economic disruption could have a material adverse effect on the Company’s business.

As of the date of issuance of these condensed consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact the Company’s future financial condition, liquidity or results of operations remains uncertain.

The Company is currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by domestic and global monetary and fiscal policy, geopolitical instability, an ongoing military conflict between Russia and Ukraine, and historically high domestic and global inflation.

In particular, the conflict in Ukraine has exacerbated market disruptions, including significant volatility in commodity prices, as well as supply chain interruptions, and has contributed to record inflation globally.

Federal Reserve and other central banks may be unable to contain inflation through more restrictive monetary policy and inflation may increase or continue for a prolonged period of time.

Inflationary factors, such as increases in the cost of clinical supplies, interest rates, overhead costs and transportation costs may adversely affect the Company’s operating results.

The Company continues to monitor these events and the potential impact on its business.

Although the Company does not believe that inflation has had a material impact on its financial position or results of operations to date, it may be adversely affected in the future due to domestic and global monetary and fiscal policy, supply chain constraints, consequences associated

with COVID-19 and the ongoing conflict between Russia and Ukraine, and such factors may lead to increases in the cost of manufacturing for and initiation of studies in the Company’s product candidates.

Summary of Significant Accounting Policies

1 unchanged sentence

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting.

statements at that date but does not include all of the information required by GAAP for complete consolidated financial statements.

As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the condensed consolidated balance sheet as of June 30, 2022 has been derived from the Company’s audited consolidated financial statements at that date but does not include all of the information required by GAAP for complete consolidated financial statements.

These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) that are necessary for a fair presentation of the Company’s condensed consolidated financial statements.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other interim period or for any other future year.

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other interim period or for any other future year.

The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K, filed with the SEC on February 28, 2022.

7 unchanged sentences

Management bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to forecasted amounts and future events.

Due to the ongoing COVID-19 pandemic and military conflict between Ukraine and Russia, there has been uncertainty and disruption in the global economy and financial markets.

Actual results could differ materially from these estimates.

Due to the ongoing COVID-19 pandemic, military conflict between Ukraine and Russia and inflationary pressures, there has been uncertainty and disruption in the global economy and financial markets.

The Company has taken into consideration any known impacts in its accounting estimates to date and is not aware of any additional specific events or circumstances that would require any additional updates to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this report.

8 unchanged sentences

Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies during the three months ended March 31, 2022 as compared to those disclosed in Note 2.

There have been no material changes to the Company’s significant accounting policies during the three and six months ended June 30, 2022 as compared to those disclosed in Note 2.

Significant Accounting Policies included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Recently Issued Accounting Pronouncements Not Yet Adopted as of March 31, 2022

Recently Issued Accounting Pronouncements Not Yet Adopted as of June 30, 2022

In June 2016, the FASB issued ASU No.

7 unchanged sentences

Based on the Company’s status as a smaller reporting company as of November 15, 2019, ASU 2016-13 is effective for the Company for fiscal years and interim periods beginning after December 15, 2022.

The Company is currently evaluating the impact of this new guidance on its condensed consolidated financial statements and disclosures.

The Company does not expect the adoption of this new guidance to have a material impact on its condensed consolidated financial statements and disclosures.

License and Collaboration Agreement

7 unchanged sentences

The Company also received a $ 5.0 million payment triggered by the successful nomination of a second-generation oral Interleukin (“IL”)-23 receptor antagonist development compound (“second-generation compound”) during the first quarter of 2020 and a $ 7.5 million payment triggered by the completion of data collection activities for the first Phase 1 clinical trial of a second-generation compound during the fourth quarter of 2021.

In March 2022, the Company became eligible to receive a $ 25.0 million milestone payment in connection with the dosing of the third patient in the first Phase 2 clinical trial for a second-generation compound.

In April 2022, the Company received a $ 25.0 million milestone payment in connection with the dosing of the third patient in the first Phase 2 clinical trial for a second-generation compound during the first quarter of 2022.

The Restated Agreement relates to the development, manufacture and commercialization of oral IL-23 receptor antagonist drug candidates.

3 unchanged sentences

Janssen is primarily responsible for the conduct of all future trials, including these anticipated Phase 2 trials, and the Company is primarily responsible for the conduct of the second-generation Phase 1 trials.

Pursuant to the Restated Agreement, the parties have:

Pursuant to the Restated Agreement, the parties:

● amended development milestones to reflect Janssen’s expected development of collaboration compounds for multiple indications in the IL-23 pathway;

22 unchanged sentences

and (c) any third indication.

With respect to second-generation compounds, milestone payments for second and third indications may be triggered by any second-generation compound (i.e., not necessarily the second-generation compound that triggered the initial payment for any indication, or the payment for a second indication).

With respect to second-generation compounds, milestone payments for second and third indications may be triggered by any second-generation

compound (i.e., not necessarily the second-generation compound that triggered the initial payment for any indication, or the payment for a second indication).

In addition, the opt-in payments contemplated by the Original Agreement related to the scope of Janssen’s license rights have been converted into development milestones in the Restated Agreement.

28 unchanged sentences

The contract duration is defined as the period in which parties to the contract have present enforceable rights and obligations.

For revenue recognition purposes, the duration of the Restated Agreement for the identified single initial performance obligations began on the Original Agreement effective date of July 13, 2017 and will end upon the

later of the end of Phase 2a for PTG-200 in CD or the completion of a Phase 1 clinical trial for either PN-232 or PN-235.

Final activities related to these trials are expected to be completed in 2022.

Final activities related to these trials were completed as of June 30, 2022.

The Company uses the most likely amount method to estimate variable consideration included in the transaction price.

3 unchanged sentences

Therefore, the consideration payable to Janssen is accounted for as a reduction in the transaction price.

The transaction price of the initial performance obligation under the Restated Agreement was $ 131.5 million as of March 31, 2022, an increase of $ 25.0 million from the transaction price of $ 106.5 million as of December 31, 2021.

The transaction price of the initial performance obligation under the Restated Agreement was $ 131.7 million as of June 30, 2022, an increase of $ 0.2 million from the transaction price of $ 131.5 million as of March 31, 2022.

In order to determine the transaction price, the Company evaluated all payments to be received during the duration of the contract, net of development costs reimbursement expected to be payable to Janssen.

The transaction price as of March 31, 2022 includes $ 87.5 million of nonrefundable payments received to date, the $ 25.0 million milestone payment receivable following dosing of the third patient in the Phase 2b clinical trial of PN-235, $ 17.9 million of reimbursement from Janssen for services performed for IL-23 receptor antagonist compound research costs and other services, and estimated variable consideration consisting of $ 8.2 million of development cost reimbursement receivable from Janssen, partially offset by $ 7.1 million of net cost reimbursement due to Janssen for services performed.

The Company concluded that the variable consideration constraint is appropriately reflected in the estimated transaction as of March 31, 2022, and that the achievement of future milestones is subject to additional development and/or regulatory uncertainty and therefore it is not probable at March 31, 2022 that a material reversal of such revenues would not occur.

The transaction price as of June 30, 2022 included $ 112.5 million of nonrefundable payments received to date, $ 17.9 million of reimbursement from Janssen for services performed for IL-23 receptor antagonist compound research costs and other services, and variable consideration consisting of $ 8.2 million of development cost reimbursement from Janssen, partially offset by $ 6.9 million of net cost reimbursement due to Janssen for services performed.

The Company concluded that the variable consideration constraint is appropriately reflected in the estimated transaction price as of June 30, 2022, and that the achievement of future milestones is subject to additional development and/or regulatory uncertainty and therefore it is not probable at June 30, 2022 that a material reversal of such revenues would not occur.

Janssen also opted in for certain additional services to be performed by the Company that are outside the initial performance obligation.

Revenue for these additional services is recognized as these services are performed.

The Company re-evaluates the transaction price, including variable consideration, at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur.

The Company and Janssen make quarterly cost sharing payments to one another in amounts necessary to ensure that each party bears its contractual share of the overall shared costs incurred.

The Company utilizes a cost-based input method to measure proportional performance and to calculate the corresponding amount of revenue to recognize.

1 unchanged sentence

These costs consist primarily of internal full-time equivalent effort and third-party contract costs.

Revenue will be recognized based on actual costs incurred as a percentage of total estimated costs as the Company completes its performance obligations.

Revenue is recognized based on actual costs incurred as a percentage of total estimated costs as the Company completes its performance obligations.

A cost-based input method of revenue recognition requires management to make estimates of costs to complete the Company’s performance obligations.

3 unchanged sentences

A significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods.

For the three months ended March 31, 2022 and 2021, the Company recognized license and collaboration revenue of $ 25.7 million and $ 5.6 million, respectively, which was primarily related to the transaction price under the Restated Agreement recognized based on proportional performance.

In addition, the Company recognized $ 0.6 million in revenue for the three months ended March 31, 2021 related to additional services provided by the Company under the agreement.

No such revenue related to additional services provided by the Company was recognized for the three months ended March 31, 2022.

For the three and six months ended June 30, 2022, the Company recognized license and collaboration revenue of $ 0.9 million and $ 26.6 million, respectively.

License and collaboration revenue for the three and six months ended June 30, 2022 was primarily related to the transaction price under the Restated Agreement recognized based on proportional performance.

The Company completed its performance obligation under the collaboration as of June 30, 2022.

For the three and six months ended June 30, 2021, the Company recognized license and collaboration revenue of $ 2.1 million and $ 7.7 million, respectively, which was primarily related to the transaction price under the Restated Agreement recognized based on proportional performance.

In addition, the Company recognized $ 0.2 million and $ 0.8 million in revenue for the three and six months ended June 30, 2021, respectively, related to additional services provided by the Company under the agreement.

The following tables present changes in the Company’s contract assets and liabilities during the periods presented (in thousands):

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Contract assets:

3 unchanged sentences

Payable to collaboration partner - related party

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

Contract assets:

3 unchanged sentences

Payable to collaboration partner - related party

During the three months ended March 31, 2022 and 2021, the Company recognized revenue of $ 13,000 and $ 1.1 million, respectively, from amounts included in the deferred revenue contract liability balance at the beginning of each period.

During the three and six months ended June 30, 2022, the Company recognized revenue of $ 0.9 million from amounts included in the deferred revenue contract liability balance at the beginning of each period.

During the three and six months ended June 30, 2021, the Company recognized revenue of $ 0.4 million and $ 1.5 million, respectively, from amounts included in the deferred revenue contract liability balance at the beginning of each period.

None of the costs to obtain or fulfill the contract were capitalized.

Fair Value Measurements

9 unchanged sentences

The following table presents the fair value of the Company’s financial assets determined using the inputs defined above (in thousands).

March 31, 2022

June 30, 2022

Money market funds

2 unchanged sentences

Treasury and agency securities

Supranational and sovereign government securities

Total financial assets carried at fair value

Total financial assets

December 31, 2021

11 unchanged sentences

Cash equivalents and marketable securities consisted of the following (in thousands):

March 31, 2022

June 30, 2022

Gross Unrealized

3 unchanged sentences

Treasury and agency securities

Supranational and sovereign government securities

Total cash equivalents and marketable securities

15 unchanged sentences

Total cash equivalents and marketable securities

Marketable securities – current of $ 206.8 million and $ 203.2 million held at March 31, 2022 and December 31, 2021, respectively, had contractual maturities of less than one year .

Marketable securities – current of $ 171.7 million and $ 203.2 million held at June 30, 2022 and December 31, 2021, respectively, had contractual maturities of less than one year .

The Company does not intend to sell its securities that are in an unrealized loss position, and it is not more likely than not that the Company will be required to sell its securities before recovery of their amortized cost basis, which may be at maturity.

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Accrued professional service fees

Accrued collaboration payments

Accrued payment to former collaboration partner

Total accrued expenses and other payables

10 unchanged sentences

Milestone payments to collaboration partners are recorded as research and development expense in the period that the expense is incurred.

No research and development expense was recorded under the Zealand collaboration agreement for the three months ended March 31, 2022 or March 31, 2021.

No research and development expense was recorded under the Zealand collaboration agreement for the three and six months ended June 30, 2022 and 2021.

Research and Development Tax Incentive

The Company did no t recognize any research and development cash tax incentive from Australian Tax Office (“ATO”) during the three months ended March 31, 2022.

During the three months ended March 31, 2021, the Company recognized AUD 1.0 million ($ 0.8 million) as a reduction of research and development expenses in connection with the research and development cash tax incentive from the ATO.

As of March 31, 2022 and December 31, 2021, the research and development cash tax incentive receivable was AUD 3.8 million ($ 2.9 million) and AUD 3.8 million ($ 2.8 million), respectively.

The Company did no t recognize any research and development cash tax incentive from Australian Tax Office (“ATO”) during the three and six months ended June 30, 2022.

During the three and six months ended June 30, 2021, the Company recognized AUD 1.3 million ($ 1.0 million) and AUD 2.3 million ($ 1.7 million), respectively, as a reduction of research and development expenses in connection with the research and development cash tax incentive from the ATO.

As of June 30, 2022 and December 31, 2021, the research and development cash tax incentive receivable was AUD 3.8 million ($ 2.6 million) and AUD 3.8 million ($ 2.8 million), respectively.

Commitments and Contingencies

3 unchanged sentences

however, if no estimate in the range is better than any other, it accrues the minimum amount in the range.

If the Company determines that a loss is reasonably possible and the loss or range of loss can be estimated, it discloses the possible loss.

If the Company determines that a material loss is reasonably possible and the loss or range of loss can be estimated, it discloses the possible loss.

On January 23, 2020, the Company initiated arbitration proceedings with the International Court of Arbitration of the International Chamber of Commerce against Zealand related to a collaboration agreement the Company and Zealand entered into in 2012 and terminated in 2014.

12 unchanged sentences

therefore, payments or milestone payments were recorded as research and development expenses.

As a result, no related legal accruals were recognized as of March 31, 2022.

Stockholders’ Equity

3 unchanged sentences

Warrants to purchase 1,375,000 shares of the Company’s common stock have an exercise price of $ 10.00 per share and Warrants to purchase 1,375,000 shares of the Company’s common stock have an exercise price of $ 15.00 per share.

The exercise price and number of shares of common stock issuable upon the exercise of the Warrants (the “Warrant Shares”) are subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Warrants.

transaction, as described in the Warrants.

Under certain circumstances, the Warrants may be exercisable on a “cashless” basis.

1 unchanged sentence

The common stock and warrants are classified as equity in accordance with Accounting Standards Codification Topic 480 , Distinguishing Liabilities from Equity (“ASC 480”), and the net proceeds from the transaction were recorded as a credit to additional paid-in capital.

As of March 31, 2022, none of the Warrants have been exercised.

In December 2018, the Company entered into an exchange agreement (the “Exchange Agreement”) with an Investor and its affiliates (the “Exchanging Stockholders”), pursuant to which the Company exchanged an aggregate of 1,000,000 shares of the Company’s common stock, par value $ 0.00001 per share, owned by the Exchanging Stockholders for pre-funded warrants (the “Exchange Warrants”) to purchase an aggregate of 1,000,000 shares of common stock (subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization,

reorganization or similar transaction, as described in the Exchange Warrants), with an exercise price of $ 0.00001 per share.

As of June 30, 2022, none of the Warrants have been exercised.

The Exchange Warrants will expire ten years from the date of issuance.

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The Company determined that the fair value of the Exchange Warrants is substantially similar to the fair value of the retired shares on the issuance date due to the negligible exercise price for the Exchange Warrants.

As of March 31, 2022, 400,000 of the Exchange Warrants remain unexercised.

As of June 30, 2022, 400,000 of the Exchange Warrants remain unexercised.

In October 2019, the Company filed a registration statement on Form S-3 (File No.

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In January 2022, the Company sold 422,367 shares of its common stock under its ATM financing facility pursuant to the 2019 Sales Agreement for net proceeds of $ 14.6 million, after deducting issuance costs.

As of March 31, 2022, a total of $ 79.3 million of securities remained available for sale under the 2019 Form S-3, $ 17.0 million of which remained available for sale under the ATM financing facility.

As of June 30, 2022, a total of $ 79.3 million of securities remained available for sale under the 2019 Form S-3, $ 17.0 million of which remained available for sale under the ATM financing facility.

The 2019 Form S-3 expires in October 2022.

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Awards granted under the 2016 Plan expire no later than ten years from the date of grant.

As of March 31, 2022, 1,095,340 shares were available for issuance under the 2016 Plan.

As of June 30, 2022, 817,303 shares were available for issuance under the 2016 Plan.

Inducement Plan

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Awards granted under the 2018 Inducement Plan expire no later than ten years from the date of grant.

As of March 31, 2022, 743,125 shares were available for issuance under the Amended and Restated 2018 Inducement Plan.

As of June 30, 2022, 601,042 shares were available for issuance under the 2018 Inducement Plan, as amended.

Stock Options

5 unchanged sentences

Options forfeited

Balances at March 31, 2022

Options exercisable – March 31, 2022

Options vested and expected to vest – March 31, 2022

(1) The aggregate intrinsic values were calculated as the difference between the exercise price of the options and the closing price of the Company’s common stock on March 31, 2022.

The calculation excludes options with an exercise price higher than the closing price of the Company’s common stock on March 31, 2022.

The estimated weighted-average grant-date fair value of common stock underlying options granted to employees during the three months ended March 31, 2022 was $ 22.56 per share.

Balances at June 30, 2022

Options exercisable – June 30, 2022

Options vested and expected to vest – June 30, 2022

(1) The aggregate intrinsic values were calculated as the difference between the exercise price of the options and the closing price of the Company’s common stock on June 30, 2022.

The calculation excludes options with an exercise price higher than the closing price of the Company’s common stock on June 30, 2022.

The estimated weighted-average grant-date fair value of common stock underlying options granted to employees during the six months ended June 30, 2022 was $ 19.92 per share.

Stock Options Valuation Assumptions

The fair value of employee stock option awards was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Expected term (in years)

2 unchanged sentences

88.0 % - 88.8 %

96.3 % - 99.9 %

88.0 % - 90.2 %

Risk-free interest rate

1 unchanged sentence

0.85 % - 1.11 %

1.64 % - 2.93 %

0.11 % - 1.11 %

Dividend yield

10 unchanged sentences

Restricted Stock Units

Restricted stock unit activity under the Company’s equity incentive plans is set forth below:

Restricted stock unit (“RSU”) activity under the Company’s equity incentive plans is set forth below:

Unvested RSUs at December 31, 2021

Unvested RSUs at March 31, 2022

Unvested RSUs at June 30, 2022

Performance Stock Units

1 unchanged sentence

Unvested PSUs at December 31, 2021

Unvested PSUs at March 31, 2022

Unvested PSUs at June 30, 2022

The terms of the unvested PSUs provide for 100 % of shares to be earned based on the achievement of certain pre-determined performance objectives, subject to the participant’s continued employment.

The PSUs will expire on February 28, 2026 if the performance objectives are not achieved.

The PSUs will vest, if at all, upon certification by the Compensation Committee of the Company’s Board of Directors of the actual achievement of the performance objectives, subject to specified change of control exceptions.

The PSUs will vest, if at all, upon certification by the Compensation Committee of the Company’s Board of Directors of the actual achievement of the related performance objective, subject to specified change of control exceptions.

Stock-based compensation expense associated with PSUs is based on the fair value of the Company’s common stock on the grant date, which equals the closing price of the Company’s common stock on the grant date.

The Company recognizes compensation expense over the vesting period of the awards that are ultimately expected to vest when the achievement of the related performance objective becomes probable.

The total fair value of outstanding PSUs as of March 31, 2022 was $ 2.5 million.

As of March 31, 2022, the achievement of the related performance objective was deemed not probable and, accordingly, no stock-based compensation for the PSUs has been recognized as expense as of March 31, 2022.

Company recognizes compensation expense over the vesting period of the awards that are ultimately expected to vest when the achievement of the related performance objectives becomes probable.

The total grant date fair value of unvested PSUs as of June 30, 2022 was $ 3.4 million.

As of June 30, 2022, the achievement of the related performance objective was deemed not probable and, accordingly, no stock-based compensation for the PSUs has been recognized as expense as of June 30, 2022.

Employee Stock Purchase Plan

1 unchanged sentence

At the end of each offering period, eligible employees are able to purchase shares at 85 % of the lower of the fair market value of the Company’s common stock at the beginning of the offering period or at the end of each applicable purchase period.

During the three months ended March 31, 2022, a total of 28,931 shares of common stock were issued under the 2016 ESPP, and 1,285,068 shares remain available for issuance as of March 31, 2022.

During the six months ended June 30, 2022, a total of 28,931 shares of common stock were issued under the 2016 ESPP, and 1,285,068 shares remain available for issuance as of June 30, 2022.

Stock-Based Compensation

Total stock-based compensation expense was as follows (in thousands):

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Research and development

1 unchanged sentence

Total stock-based compensation expense

As of March 31, 2022, total unrecognized stock-based compensation expense was approximately $ 73.6 million, which the Company expects to recognize over a weighted-average period of approximately 2.9 years.

As of June 30, 2022, total unrecognized stock-based compensation expense was approximately $ 69.0 million, which the Company expects to recognize over a weighted-average period of approximately 2.7 years.

Net Loss per Share

As the Company had net losses for the three months ended March 31, 2022 and 2021, all potential weighted average dilutive common shares were determined to be anti-dilutive.

As the Company had net losses for the three and six months ended June 30, 2022 and 2021, all potential weighted average dilutive common shares were determined to be anti-dilutive.

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share data):

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Weighted-average shares used to compute net loss per common share, basic and diluted

5 unchanged sentences

Performance stock units

Subsequent Event

On July 1, 2022, Exchange Warrants to purchase 400,000 shares of the Company’s common stock were net exercised, resulting in the issuance of 399,997 shares of common stock.

There were no outstanding Exchange Warrants following this transaction.

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