Item 8. Financial Statements and Supplementary Data
Item 8. Financial Statements and Supplementary Data.
Page
Report of Independent Registered Public Accounting Firm
143
Balance Sheets
144
Statements of Operations and Comprehensive Loss
145
Statements of Redeemable Convertible Preferred Stock and Stockholders Equity (Deficit)
146
Statements of Cash Flows
147
Notes to Financial Statements
148
142
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Silverback Therapeutics, Inc.
Opinion on the Financial Statements
We have audited the
accompanying balance sheets of Silverback Therapeutics Inc. (the Company) as of December 31, 2020 and 2019, the related statements of operations, comprehensive loss, redeemable convertible preferred stock and stockholders equity (deficit)
and cash flows for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with U.S. generally accepted
accounting principles.
Basis for Opinion
These
financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the Companys financial statements based on our audits. We are a public accounting firm registered with the Public
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Companys auditor
since 2020.
Seattle, Washington
March 29, 2021
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Silverback Therapeutics, Inc.
Balance Sheets
(in
thousands, except share and par value data)
December 31,
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
386,569
$
9,976
Prepaid expenses and other current assets
4,087
552
Total current assets
390,656
10,528
Property and equipment, net
1,618
1,316
Restricted cash
350
550
Right-of-use asset
2,180
3,253
Total assets
$
394,804
$
15,647
Liabilities, redeemable convertible preferred stock, and stockholders equity (deficit)
Current liabilities:
Accounts payable
$
2,583
$
3,518
Accrued expenses
5,278
2,112
Term loan payable, net
844
1,522
Convertible notes, net
9,991
Current portion of lease liability
896
783
Total current liabilities
9,601
17,926
Lease liability, net of current portion
2,326
3,324
Total liabilities
11,927
21,250
Commitments and contingencies (Note 12)
Redeemable convertible preferred stock, $0.0001 par value per share; no shares and 17,142,854 shares
authorized, no shares and 15,714,283 shares issued and outstanding with aggregate liquidation preference of $0 and $55,000 at December 31, 2020 and 2019, respectively
53,174
Stockholders equity (deficit):
Preferred Stock, $0.0001 par value per share; 10,000,000 and no shares authorized at December 31, 2020
and 2019, respectively; no shares issued and outstanding at December 31, 2020 and 2019
Common stock, $0.0001 par value per share; 200,000,000 and 23,500,000 shares authorized, 34,801,537 and
670,477 shares issued, and 34,701,274 and 664,431 shares outstanding at December 31, 2020 and 2019, respectively
3
Additional paid-in capital
479,608
5,010
Accumulated deficit
(96,734
)
(63,787
)
Total stockholders equity (deficit)
382,877
(58,777
)
Total liabilities, redeemable convertible preferred stock, and stockholders equity (deficit)
$
394,804
$
15,647
The accompanying notes are an integral part of these financial statements.
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Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)
Years ended
December 31,
2020
2019
Operating expenses:
Research and development
$
24,577
$
21,505
General and administrative
8,341
2,562
Total operating expenses
32,918
24,067
Loss from operations
(32,918
)
(24,067
)
Interest income (expense), net
(29
)
100
Net loss and comprehensive loss
$
(32,947
)
$
(23,967
)
Net loss per share applicable to common stockholders, basic and diluted
$
(11.33
)
$
(36.27
)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and
diluted
2,907,542
660,893
The accompanying notes are an integral part of these financial statements.
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Silverback Therapeutics, Inc.
Statements of Redeemable Convertible Preferred Stock and Stockholders Equity (Deficit)
(in thousands, except share data)
Redeemable Convertible
Preferred Stock
Common Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Total
Stockholders
Equity (Deficit)
Shares
Amount
Shares
Amount
Balance as of December 31, 2018
15,714,283
$
53,174
656,820
$
$
4,843
$
(39,820
)
$
(34,977
)
Exercise of common stock options and vesting of early exercised common stock options
7,611
19
19
Stock-based compensation
148
148
Net loss and comprehensive loss
(23,967
)
(23,967
)
Balance as of December 31, 2019
15,714,283
$
53,174
664,431
$
$
5,010
$
(63,787
)
$
(58,777
)
Issuance of Series B redeemable convertible preferred stock for cash, net of $76 in issuance costs
31,760,528
68,401
Issuance of Series B redeemable convertible preferred stock upon conversion of convertible notes
4,673,388
10,095
Issuance of Series C redeemable convertible preferred stock for cash, net of $53 in issuance costs
24,926,685
84,897
Redeemable convertible preferred stock converted into shares of common stock
(77,074,884
)
(216,567
)
20,758,098
2
216,565
216,567
Initial public offering of common stock, net of $22,386 in issuance costs
13,225,000
1
255,338
255,339
Exercise of common stock options and warrants and vesting of early exercised common stock options
53,745
55
55
Stock-based compensation
2,640
2,640
Net loss and comprehensive loss
(32,947
)
(32,947
)
Balance as of December 31, 2020
$
34,701,274
$
3
$
479,608
$
(96,734
)
$
382,877
The accompanying notes are an integral part of these financial statements.
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Silverback Therapeutics, Inc.
Statements of Cash Flows
(in thousands)
Year ended
December 31,
2020
2019
Cash flows from operating activities:
Net loss
$
(32,947
)
$
(23,967
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense
637
544
Amortization of debt issuance costs
31
75
Stock-based compensation expense
2,640
148
Non-cash lease expense
1,073
1,002
Changes in operating assets and liabilities:
Prepaid expenses and other current assets
(3,535
)
66
Accounts payable and accrued expenses
1,790
4,014
Lease liability
(885
)
(780
)
Net cash used in operating activities
(31,196
)
(18,898
)
Cash flows from investing activities:
Purchase of property and equipment
(917
)
(96
)
Net cash used in investing activities
(917
)
(96
)
Cash flows from financing activities:
Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs
153,351
Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and
commissions
258,284
Payment of deferred offering costs
(2,606
)
Proceeds from issuance of convertible notes
10,000
Payment of convertible notes issuance costs
(9
)
Principal payments on term loan payable
(700
)
(1,400
)
Proceeds from exercise of common stock options
177
19
Net cash (used in) provided by financing activities
408,506
8,610
Change in cash, cash equivalents, and restricted cash
376,393
(10,384
)
Cash, cash equivalents, and restricted cash at beginning of period
10,526
20,910
Cash, cash equivalents, and restricted cash at end of period
$
386,919
$
10,526
Supplemental disclosure of cash flow information:
Unpaid initial public offering costs included in accounts payable and accrued expenses
$
339
$
Change in early exercise liability included in accounts payable and accrued expenses
$
122
$
Issuance of Series B redeemable convertible preferred stock upon conversion of convertible notes
$
10,095
$
Conversion of redeemable convertible preferred stock upon closing of initial public offering
$
216,567
$
The accompanying notes are an integral part of these financial statements.
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Silverback Therapeutics, Inc.
Notes to Financial Statements
1. Nature of Business
Silverback Therapeutics, Inc.
(Silverback or the Company) is a clinical-stage biopharmaceutical company focused on leveraging its proprietary ImmunoTAC technology platform to develop systemically delivered and tissue targeted therapeutics for the
treatment of cancer, chronic viral infections, and other serious diseases. The Companys platform enables us to strategically pair proprietary linker-payloads that modulate key disease-modifying pathways with monoclonal antibodies directed at
specific disease sites. The Company was formed in Seattle, Washington, and incorporated in the state of Delaware on January 4, 2016.
Reverse Stock Split
In November 2020, the Companys Board of Directors approved an amendment to the Companys certificate of incorporation to effect a
reverse split of shares of the Companys common stock on a one-for-3.713 basis, which was effected on November 30, 2020 (the Reverse Stock Split).
The number of authorized shares and the par values of the common stock and redeemable convertible preferred stock were not adjusted as a result of the Reverse Stock Split. In connection with the Reverse Stock Split, the conversion ratio for the
Companys outstanding redeemable convertible preferred stock was proportionately adjusted such that the common stock issuable upon conversion of such preferred stock was decreased in proportion to the Reverse Stock Split. All references to
common stock and options to purchase common stock share data, per share data, and related information contained in the financial statements have been retroactively adjusted to reflect the effect of the Reverse Stock Split for all periods presented.
Initial Public Offering and Related Transaction
On December 3, 2020, the Companys registration statement on Form S-1 (File No. 333-250009) for its initial public offering of common stock (IPO) was declared effective by the Securities and Exchange Commission (SEC). On December 8, 2020, the Company issued
and sold 13,225,000 shares of common stock in the IPO at a public offering price of $21.00 per share, resulting in net proceeds of $255.3 million after deducting underwriting discounts and commissions and offering expenses paid by the
Company.
In connection with the IPO, all 77,074,884 shares of redeemable convertible preferred stock outstanding at the time of the IPO converted
into 20,758,098 shares of the Companys common stock.
Risks and Uncertainties
The Company is subject to a number of inherent risks which include, but are not limited to, the need to obtain adequate additional funding, possible
failure of clinical trials or other events demonstrating a lack of clinical safety or efficacy of its product candidates, dependence on key personnel, reliance on third-party service providers for manufacturing drug product and conducting clinical
trials, the ability to successfully secure its proprietary technology, and risks related to the regulatory approval and commercialization of a product candidate. Additionally, the development and commercialization of new drug products is highly
competitive. Products or technologies developed by competitors may diminish or render obsolete the Companys existing products under development.
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Notes to Financial Statements
Liquidity and Capital Resources
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred net
operating losses since its inception and had an accumulated deficit of $96.7 million as of December 31, 2020. The Company had cash and cash equivalents of $386.6 million as of December 31, 2020 and has not generated positive cash
flows from operations. To date, the Company has been able to fund its operations primarily through the issuance of redeemable convertible preferred stock and convertible notes. During 2020, the Company has received an aggregate of $68.4 million
in gross proceeds from the issuance of shares of its Series B redeemable convertible preferred stock and an aggregate of $84.9 million in gross proceeds from the issuance of shares of its Series C redeemable convertible preferred stock. In
December 2020, the Company completed an initial public offering in which it sold 13,225,000 shares of common stock at $21.00 per share and received net proceeds, after underwriting discounts and offering costs, of $255.3 million. The
Companys currently available cash and cash equivalents as of December 31, 2020 are sufficient to meet its anticipated cash requirements for the 12 months following the date the financial statements are issued. Management considers that
there are no conditions or events, in the aggregate, that raise substantial doubt about the entitys ability to continue as a going concern for a period of at least 12 months from the date the financial statements are issued.
Management expects operating losses to continue for the foreseeable future. There can be no assurance that the Company will ever earn revenues or
achieve profitability, or if achieved, that they will be sustained on a continuing basis. In addition, the preclinical manufacturing, and clinical development activities as well as the commercialization of the Companys products, if approved,
will require significant additional financing. The Company may be unable to secure such financing when needed, or if available, such financings may be under terms that are unfavorable to the Company or the current stockholders. If the Company is
unable to raise additional funds when needed, it may be required to delay, reduce the scope of, or eliminate development programs, which may adversely affect its business and operations.
2. Summary of Significant Accounting Policies
Basis of Presentation
The financial statements have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP). Any
reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (ASC), and Accounting Standards Update (ASU), of the Financial Accounting
Standards Board (FASB).
Use of Estimates
The preparation of the Companys financial statements requires it to make estimates and assumptions that impact the reported amounts of assets,
liabilities and expenses in the Companys financial statements and accompanying notes. The most significant estimates in the Companys financial statements relate to accruals for research and development expenses, valuation of equity
awards, and valuation allowances for deferred tax assets. These estimates and assumptions are based on current facts, historical experience, future expectations, and various other factors believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these
estimates.
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Notes to Financial Statements
The full extent to which the coronavirus (COVID-19) pandemic
will directly or indirectly impact the Companys business, results of operations and financial condition, including expenses, clinical trials and research and development costs, will depend on future developments that are highly uncertain,
including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19, as well as the economic impact on local,
regional, national and international markets. The Company has considered potential impacts arising from the COVID-19 pandemic and is not presently aware of any events or circumstances that would require the
Company to update its estimates, judgments or revise the carrying value of its assets or liabilities.
Segments
The Company has determined that it operates and manages one operating segment, which is the business of developing and commercializing tissue targeted
therapeutics. The Companys chief operating decision maker, its chief executive officer, reviews financial information on an aggregate basis for the purpose of allocating resources.
Cash and Cash Equivalents
Cash equivalents are
comprised of short-term, highly-liquid investments with maturities of 90 days or less at the date of purchase. As of December 31, 2020 and 2019, the Companys cash equivalents consisted of money market funds.
Restricted Cash
Restricted cash consists of a deposit
securing a collateral letter of credit issued in connection with the Companys facility operating lease.
The following table provides a
reconciliation of cash and cash equivalents and restricted cash reported within the balance sheets that sum to the amounts shown in the statements of cash flows (in thousands):
December 31,
2020
2019
Cash and cash equivalents
$
386,569
$
9,976
Restricted cash
350
550
Total cash and cash equivalents and restricted cash
$
386,919
$
10,526
Concentrations of Credit Risk
The Company is subject to credit risk from holding its cash and cash equivalents at one commercial bank. The Company limits its exposure to credit
losses by investing in money market funds through a U.S. bank with high credit ratings. Cash may consist of deposits held with banks that may at times exceed federally insured limits, however, exposure to credit risk in the event of default by the
financial institution is limited to the extent of amounts recorded on the balance sheets. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the
financial position of the depository institutions in which those deposits are held.
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Notes to Financial Statements
Prepaid Expenses and Other Current Assets
Prepaid expenses consist primarily of operating expenses paid in advance.
Property and Equipment, Net
Property and equipment,
net consists of furniture and fixtures and laboratory equipment and is stated at cost, less accumulated depreciation. Furniture and fixtures and laboratory equipment are depreciated over the estimated useful lives of the assets (each three to five
years) using the straight-line method. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operations in the period
realized. Repairs and maintenance costs are charged to expense as incurred.
Leases
Leases consist of the Companys operating lease. In accordance with ASC 842, Leases , the Company determines if an arrangement is a lease at
inception and evaluates each lease agreement to determine whether the lease is an operating or finance lease. For leases where the Company is the lessee, right-of-use
(ROU) assets represent the Companys right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at
the lease commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease
payments. The operating lease ROU asset also includes any prepaid lease payments, lease incentives received, and costs which will be incurred in exiting a lease. The Companys lease includes options to extend or terminate the lease. Periods
covered by an option to extend the lease are included in the lease term when it is reasonably certain that the Company will exercise that option. Periods covered by an option to terminate the lease are included in the lease term when it is
reasonably certain that the Company will not exercise that option. At the inception of the lease and as of December 31, 2020, the Company was not reasonably certain that it will exercise its option to extend the lease and was not reasonably
certain that it will not exercise its option to terminate the lease, therefore, the periods covered by the options are not included within the lease term. Short-term leases with an initial term of 12 months or less are not recorded on the balance
sheet. The Company does not have material short-term lease costs. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. For real estate leases, the Company does not separate lease and non-lease components. The Companys lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Impairment of Long-Lived Assets
Long-lived assets
consist of property and equipment and ROU assets. These assets are reviewed for impairment whenever facts or circumstances either internally or externally may suggest that the carrying value of an asset or asset group may not be recoverable. An
impairment loss is recorded if and when events and circumstances indicate that assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. The Company has not
recognized any impairment losses through December 31, 2020.
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Notes to Financial Statements
Research and Development Expenses
All research and development costs are expensed in the period incurred. Research and development expenses consist primarily of direct and indirect costs
incurred in connection with the development of the Companys ImmunoTAC technology platform, discovery efforts, and preclinical study and clinical trial activities related to the Companys program pipeline, including the Companys lead
product candidate, SBT6050. Direct costs include expenses incurred under agreements with contract research organizations (CROs) and other vendors that conduct the Companys preclinical and clinical activities, expenses associated
with manufacturing the Companys product candidates including under agreements with contract development and manufacturing organizations (CDMOs) and other vendors, and consulting fees. Indirect costs include personnel-related
expenses, consisting of employee salaries, bonuses, benefits, and stock-based compensation expense and recruiting costs for personnel engaged in research and development activities, facility and equipment related expenses, consisting of indirect and
allocated expenses for rent, depreciation, and equipment maintenance, and other unallocated research and development expenses incurred in connection with the Companys research and development programs, including laboratory materials and
supplies and license fees. Research and development expenses are charged to operating expenses as incurred when these expenditures relate to the Companys research and development efforts and have no alternative future use.
The Company is obligated to make upfront payments upon execution of certain research and development agreements. Advance payments, including
nonrefundable amounts, for goods or services that will be used or rendered for future research and development activities are capitalized until such goods are delivered or the related services are performed, or such time when the Company does not
expect the goods to be delivered or services to be performed. The Company estimates the period over which such services will be performed and the level of effort to be expended in each period. If actual timing of performance or the level of effort
varies from the estimate, the Company will adjust the amounts recorded accordingly. Since inception, the Company has not experienced any material differences between accrued or prepaid costs and actual costs.
General and Administrative Expenses
General and
administrative expenses consist primarily of personnel-related expenses, including employee salaries, bonuses, benefits, and stock-based compensation, and recruiting costs for personnel in executive, finance, and other administrative functions.
Other significant general and administrative expenses include legal fees relating to intellectual property and corporate matters, professional fees for accounting, tax and consulting services, insurance costs, travel expenses and facility related
expenses. General and administrative costs are expensed as incurred.
Stock-Based Compensation
The Company has stock-based compensation plans that are described in Note 9. As of December 31, 2020, the Company had issued stock options and
permitted eligible employees to participate in an employee stock purchase plan whereby shares of the Companys common stock may be purchased at a discount. Further discussion of the measurement and expense methodology related to these programs
is described below:
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Notes to Financial Statements
Stock Option Awards
The cost of employee services received in exchange for an award of an equity instrument is measured at the grant date based on the awards estimated
fair value using the Black-Scholes option pricing model. The estimated fair value of the awards is recognized into expense on a straight-line basis over the requisite service period. Stock-based compensation expense for an award with a performance
condition is recognized when the achievement of such performance condition is determined to be probable. If the outcome of such performance condition is not determined to be probable or is not met, no compensation expense is recognized, and any
previously recognized compensation expense is reversed. Management evaluates when the achievement of a performance condition is probable based on the expected satisfaction of the performance condition at each reporting date. Forfeitures are
recognized as a reduction of stock-based compensation expense as they occur. The option plan permits, but does not require, the inclusion of early exercise provisions in individual awards. Proceeds from early option exercises are recorded as a
liability until the underlying restricted shares vest. While the restricted shares have voting rights, they are not considered outstanding for accounting purposes.
Employee Stock Purchase Plan
In December 2020, the
Companys Employee Stock Purchase Plan (ESPP) became effective, pursuant to which eligible employees can purchase shares of the Companys common stock at a discount to the fair market value at semi-annual intervals. In
determining the grant date fair value of shares expected to be purchased under the ESPP, the Company uses the Black-Scholes option pricing model. Black-Scholes inputs are determined in the same manner as for stock option awards. The estimated grant
date fair value of shares expected to be purchased is recognized into expense on a straight-line basis over the requisite service period.
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial
statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in
the period that includes the enactment date.
The Company recognizes net deferred tax assets to the extent that the Company believes these assets
are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If management determines that the Company is more likely than not able to realize its deferred tax assets in the future in excess of their net recorded
amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes in the period in which the adjustment is made.
The Company records uncertain tax positions on the basis of a two-step process whereby (1) management
determines whether it is more likely than not that the tax positions will be sustained on
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Notes to Financial Statements
the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, management
recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits within
income tax expense. Any accrued interest and penalties are included within the related tax liability. The Company did not have any uncertain tax positions as of December 31, 2020 and 2019.
Comprehensive Loss
Comprehensive loss is defined as a
change in equity during a period from transactions and other events and circumstances from non-owner sources. The Companys comprehensive loss was equal to net loss for the years ended December 31,
2020 and 2019.
Net Loss Per Share Attributable to Common Stockholders
Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the
weighted-average number of shares of common stock outstanding for the period, without consideration of potentially dilutive securities. Diluted net loss per share attributable to common stockholders is the same as basic net loss per share
attributable to common stockholders since the effect of potentially dilutive securities is anti-dilutive given the net loss of the Company. For purposes of this calculation, redeemable convertible preferred stock, stock options, employee stock
purchase rights, and unvested common stock subject to repurchase are considered to be common stock equivalents but are not included in the calculations of diluted net loss per share for the periods presented as their effect would be antidilutive.
Emerging Growth Company Status
The Company is an
emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of
the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public
and private companies until the earlier of the date that it is (1) no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial
statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
Recently
Adopted Accounting Pronouncements
In August 2018, the FASB issued ASU 2018-13, Fair Value
Measurement (Topic 820): Disclosure FrameworkChanges to the Disclosure Requirements for Fair Value Measurement . The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those
fiscal years. Early adoption is permitted. The Company adopted ASU 2018-13 on January 1, 2020 and the standard did not have a material impact on its financial statements and related disclosures.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for
Income Taxes , which simplifies the accounting for income taxes, eliminates certain
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Notes to Financial Statements
exceptions within ASC 740, Income Taxes , and clarifies certain aspects of the current guidance to promote consistency among reporting entities. The guidance is effective for fiscal years
beginning after December 15, 2021, with early adoption permitted. The Company adopted ASU 2019-12 on January 1, 2020 and the standard did not have a material impact on its financial statements and
related disclosures.
Recently Issued Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, Financial InstrumentsCredit Losses (Topic 326): Measurement
of Credit Losses on Financial Instruments . The objective of the standard is to provide information about expected credit losses on financial instruments at each reporting date and to change how other-than temporary impairments on investment
securities are recorded. The guidance is effective for the Company beginning on January 1, 2023, with early adoption permitted. The Company is currently evaluating the impact the standard may have on its financial statements and related
disclosures.
3. Fair Value Measurements
The Company
follows authoritative accounting guidance, which among other things, defines fair value, establishes a consistent framework for measuring fair value, and expands disclosure for each major asset and liability category measured at fair value on either
a recurring or nonrecurring basis. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (at exit price) in the principal or most advantageous market for the asset or liability in an
orderly transaction between market participants on the measurement date. The three levels of inputs that may be used to measure fair value include:
Level 1: Quoted prices in active markets for identical assets or liabilities. The Companys Level 1
assets consist of money market funds.
Level 2: Observable inputs other than Level 1 prices, such as
quoted prices for similar assets or liabilities in active markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs that are supported by little or no market activity.
The following table identifies the Companys assets and liabilities that were measured at fair value on a recurring basis (in thousands):
Level 1
Level 2
Level 3
December 31, 2020
Assets:
Money market funds
$
386,369
$
$
December 31, 2019
Assets:
Money market funds
$
9,976
$
$
There were no transfers between the Level 1 and Level 2 categories or into or out of the Level 3 category
during the years ended December 31, 2020 and 2019.
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4. Property and Equipment, Net
Property and equipment are summarized as follows (in thousands):
December 31,
2020
2019
Furniture and fixtures
$
269
$
156
Laboratory equipment
3,401
2,610
Property and equipment, gross
3,670
2,766
Less accumulated depreciation and amortization
(2,052
)
(1,450
)
Property and equipment, net
$
1,618
$
1,316
Depreciation and amortization expense was $0.6 million and $0.5 million for the years ended December 31,
2020 and 2019, respectively.
5. Accrued Expenses
Accrued expenses consisted of the following (in thousands):
December 31,
2020
2019
Research and development expenses
$
2,063
$
827
Employee compensation and benefits
2,634
1,024
Professional services and other
581
261
Total accrued expenses
$
5,278
$
2,112
6. Leases
The Company leases
an office and laboratory space in Seattle, Washington. The components of lease expense and related cash flows were as follows (in thousands):
Year Ended
December 31,
2020
2019
Lease expense
Operating lease expense
$
1,388
$
1,388
Variable lease expense
386
334
Total lease expense
$
1,774
$
1,722
Operating cash outflows from operating leases
$
1,591
$
1,522
The remaining term on the Companys lease was 1.8 years and 2.8 years as of December 31, 2020 and 2019,
respectively. To compute the present value of the lease liability, the Company used a discount rate of 8.5%.
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Future minimum commitments due under the operating lease agreement as of December 31, 2020 are as
follows (in thousands):
Year Ending December 31,
Amount
2021
$
1,132
2022
2,454
Thereafter
Total undiscounted lease payments
3,586
Present value adjustment
(364
)
Total present value of lease payments
$
3,222
7. Convertible Notes and Other Debt
Convertible Notes
In October 2019, the Company issued
convertible promissory notes for proceeds of $10.0 million. The notes were unsecured, bore an interest rate of 3% per year, and had a maturity date of March 31, 2020. On March 4, 2020, these notes and accrued interest of
$0.1 million converted into 4,673,388 shares of the Companys Series B redeemable convertible preferred stock at the Series B redeemable convertible preferred stock issuance price of $2.16 per share.
Term Loan Payable
In November 2016, the Company
entered into a loan and security agreement with Silicon Valley Bank (SVB) that allowed borrowings up to $5.0 million in two tranches. $3.5 million was immediately drawn as a term loan by the Company. In conjunction with the term loan, SVB
received a warrant to purchase 7,601 shares of the Companys common stock with an exercise price of $2.31 per share. The warrant was recorded as a discount to the loan and an increase in additional
paid-in capital. In December 2020, the warrant was exercised in full.
Under the terms of the agreement, the
Company was able to draw an additional $1.5 million through a second tranche before December 31, 2017 if it met certain financing milestones. SVB was eligible to receive an additional warrant contingent upon the Companys draw of this
additional tranche. However, in December 2017, the Company amended the loan and security agreement to extend the second tranche draw window to March 31, 2018. This tranche expired undrawn. In exchange for the extension, SVB received an
additional warrant to purchase 1,553 shares of the Companys common stock with an exercise price of $2.42 per share and, because the tranche expired undrawn, an unused term loan fee. Neither the additional warrant to purchase common stock or
the unused term loan fee were material to the financial statements. In December 2020, the warrant was exercised in full.
The outstanding principal
amount of the term loan accrues interest at an annual rate of 1.75% per annum. At closing, the Company incurred de minimis debt issuance costs and owed a final payment fee of $0.3 million, both of which are amortized to interest expense over
the remaining term of the debt under the effective interest method. The effective interest rate of the Companys term loan is 5.14%. Interest expense under the term loan was not material to the financial statements for the year ended
December 31, 2020 and totaled $0.1 million for the year ended December 31, 2019.
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The term loan is collateralized by the Companys tangible and intangible assets, excluding
intellectual property. The proceeds are to be used as working capital and to fund general business requirements. The agreement includes customary nonfinancial covenants and events of default that include, among other things, non-payment, inaccuracy of representations and warranties, covenant breaches, cross default to material indebtedness or material agreements, bankruptcy and insolvency, material judgments, a change of control, or any
material adverse event. The Company was in compliance with all related covenants as of December 31, 2020 and 2019. Given the existence of a subjective acceleration clause, all amounts due to SVB are classified as a current liability at
December 31, 2020 and 2019, though SVB has not accelerated any amounts due under the debt agreement.
The term loans original maturity
date was November 1, 2020. However, in April 2020 the Company amended the loan and security agreement to defer principal payments for six months and extend the maturity date to May 1, 2021. There were no costs or additional warrant
issuances in connection with this amendment. The Company accounted for the amendment as a debt modification and is amortizing the remaining debt discount over the remaining term.
8. Redeemable Convertible Preferred Stock and Stockholders Equity (Deficit)
Authorized Shares
In connection with the completion of
the Companys IPO in December 2020, the Company amended its Certificate of Incorporation to authorize 200,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share.
Redeemable Convertible Preferred Stock
Prior to its
conversion to common stock, the Companys redeemable convertible preferred stock was classified as mezzanine equity on the Companys balance sheets as the shares are contingently redeemable upon a deemed liquidation such as a change in
control and in that event, there is no guarantee that all stockholders would be entitled to receive the same form of consideration. No accretion to redemption value was recorded during the years ended December 31, 2020 and 2019 as a deemed
liquidation event was not considered probable.
The Company did not issue any redeemable convertible preferred stock during the year ended
December 31, 2019. During the year ended December 31, 2020, the Company issued convertible preferred stock as follows:
In March 2020, the
Company issued 14,701,054 shares of its Series B redeemable convertible preferred stock, including 4,673,388 shares issued upon conversion of then outstanding convertible notes and accrued interest, and 10,027,666 shares issued for cash at a
purchase price of $2.16 per share, resulting in gross proceeds of $21.5 million. The Series B purchase agreement provides that the Company will issue, and the Series B holders will purchase, an additional 21,732,862 shares of the Companys
Series B redeemable convertible preferred stock across two tranches for aggregate proceeds of $46.9 million in the event that certain agreed upon milestones are achieved or the preferred majority approves their closing. The future Series B
tranches did not meet the definition of freestanding instruments or the definition of derivatives, therefore, they were not accounted for separately or bifurcated.
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In July 2020, the Company issued 10,669,834 shares of its Series B redeemable convertible preferred
stock for cash at a purchase price of $2.16 per share, resulting in gross proceeds of $23.0 million.
In September 2020, the Company issued
11,063,028 additional shares of its Series B redeemable convertible preferred stock for cash at a purchase price of $2.16 per share, resulting in gross proceeds of $23.9 million, and 24,926,685 shares of its Series C redeemable convertible
preferred stock for cash at a purchase price of $3.41 per share, resulting in gross proceeds of $84.9 million.
Common Stock
The Company has reserved shares of common stock for the following potential future issuances:
December 31,
2020
2019
Conversion of outstanding redeemable convertible preferred stock
4,232,232
Shares underlying outstanding equity awards
6,316,569
555,636
Shares available for future equity award grants
1,506,806
433,729
Shares underlying early exercised equity awards
100,263
6,046
Exercise of common stock warrants
9,154
Shares underlying ESPP withholdings
4,393
Total
7,928,031
5,236,797
9. Stock-Based Compensation
Stock-based compensation expense recognized for all equity awards has been reported in the statements of operations and comprehensive loss as follows (in
thousands):
Year Ended
December 31,
2020
2019
Research and development expense
$
1,180
$
131
General and administrative expense
1,460
17
Total stock-based compensation expense
$
2,640
$
148
As of December 31, 2020, the total unrecognized stock-based compensation expense was $60.8 million, which is
expected to be recognized over a remaining weighted-average period of approximately 3.4 years.
Stock-based compensation expense includes October
2020 and November 2020 grants that were originally granted with a strike price based upon the estimated grant date fair market value of our common stock as a private company; however, when determining the Black-Scholes value of these stock options,
we utilized the public offering price of $21.00 per share as the estimated grant date fair market value of common stock.
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Stock Option Awards
In November 2020, the Companys board of directors and stockholders approved the 2020 Equity Incentive Plan (the 2020 Plan). The 2020
Plan became effective upon the date of the underwriting agreement related to the IPO. Upon adoption of the 2020 Plan, the Company restricted future grants from its 2016 Equity Incentive Plan, as amended (the 2016 Plan).
Under the 2020 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock awards,
performance cash awards and other forms of stock awards to employees, directors, and consultants, including employees and consultants of the Companys affiliates. A total of 4,132,681 new shares of common stock were initially reserved for
issuance under the 2020 Plan. The number of shares reserved under the 2020 Plan also includes 67,319 shares of common stock that remained available for issuance under the 2016 Plan at the time the 2020 Plan became effective and will be increased by
the number of shares under the 2016 Plan that are repurchased, forfeited, expired or cancelled on or after the effective date of the 2020 Plan. In addition, the number of shares of common stock available for issuance under the 2020 Plan will
automatically increase on January 1 of each calendar year, starting on January 1, 2021 through January 1, 2030, in an amount equal to 5% of the total number of shares of Common Stock outstanding on December 31 of the preceding
year, or a lesser number of shares determined by the Companys board of directors.
As of December 31, 2020, the Companys plans
authorized a total of 7,824,721 shares, of which 1,506,806 shares are available for future grant, and 6,316,569 shares are outstanding. Not included in the outstanding option balance are 100,263 shares pursuant to stock options that were early
exercised and subject to repurchase under the 2016 Plan that remain unvested as of December 31, 2020.
As of December 31, 2020, the
Company has granted stock options under its equity incentive plans. Stock options granted under these plans expire no later than 10 years from the date of grant and generally vest over a four year period, with vesting either occurring at a rate of
25% at the end of the first and thereafter in 36 equal monthly installments or on a monthly basis. In the case of awards granted to our non-employee board members, vesting generally occurs on a monthly basis over three years. The Company issues new
shares of common stock upon the exercise of stock options.
A summary of the Companys stock option activity for the year ended
December 31, 2020 is as follows (in thousands, except share and per share data and years):
Stock Options Outstanding
Shares
Subject to
Options
Outstanding
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Balance at December 31, 2019
555,636
$
1.61
8.5
$
154
Granted
5,906,735
$
11.57
Exercised
(139,478
)
$
1.27
$
6,285
Canceled
(6,324
)
$
1.29
Balance at December 31, 2020
6,316,569
$
10.93
9.5
$
223,647
Vested at December 31, 2020
449,290
$
2.20
7.5
$
19,832
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Notes to Financial Statements
The total fair value of shares vested during the years ended December 31, 2020 and 2019 was
$1.1 million and $0.1 million, respectively. The aggregate intrinsic value in the table above is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the Companys common
stock for all options that were in-the-money at December 31, 2020. The weighted-average grant date fair value per share of option grants for the years ended December 31, 2020 and 2019 was $10.50 and $0.96, respectively.
The grant date fair value of stock options was estimated using a Black-Scholes option pricing model with the following weighted-average assumptions:
Year Ended
December 31,
2020
2019
Expected term (in years)
6.0
6.1
Expected volatility
81
%
80
%
Risk-free interest rate
0.51
%
2.08
%
Expected dividend yield
The fair value of stock options was determined using the Black-Scholes option-pricing model and the assumptions below.
Each of these inputs is subjective and generally requires significant judgement.
Fair Value of Common Stock. The grant date
fair market value of the shares of common stock underlying stock options is determined by the Companys board of directors. Following the closing of the Companys IPO, the fair market value of our common stock is based on its closing price
as reported on the date of grant on the primary stock exchange on which the Companys common stock is traded. Prior to the Companys IPO, because there was no public market for the Companys common stock, the board of directors
exercised reasonable judgment and considered a number of objective and subjective factors to determine the best estimate of the fair market value, which included contemporaneous valuations performed by an independent third-party, the Companys
results of operations and financial position, including its levels of available capital resources, its stage of development and material risks related to the Companys business, progress of the Companys research and development
activities, the Companys business conditions and projections, the lack of marketability of the Companys common stock and preferred stock as a private company, the prices at which the Company sold shares of its redeemable convertible
preferred stock to outside investors in arms-length transactions, the rights, preferences and privileges of the Companys redeemable convertible preferred stock relative to those of its common stock, the analysis of IPOs and the market
performance of similar companies in the biopharmaceutical industry, the likelihood of achieving a liquidity event for the Companys securityholders, such as an IPO or a sale of the company, given prevailing market conditions, the hiring of key
personnel and the experience of management, trends and developments in the Companys industry and external market conditions affecting the life sciences and biotechnology industry sectors.
Expected Term. The expected term represents the period that the options granted are expected to be outstanding. The expected term
of stock options issued is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term) as the Company has concluded that its stock option exercise history does not provide a reasonable
basis upon which to estimate expected term.
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Expected Volatility. Given the Companys limited historical stock price
volatility data, the Company derived the expected volatility from the average historical volatilities over a period approximately equal to the expected term of comparable publicly traded companies within its peer group that were deemed to be
representative of future stock price trends as the Company has limited trading history for its common stock. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own
stock price becomes available.
Risk-free Interest Rate. The risk-free interest rate is based on the U.S. Treasury rate, with
maturities similar to the expected term of the stock options.
Expected Dividend Yield. The Company has never paid
dividends on its common stock and does not anticipate paying any dividends in the foreseeable future. Therefore, the Company uses an expected dividend yield of zero.
Employee Stock Purchase Plan
In November 2020, the
Companys board of directors and stockholders approved and adopted the 2020 ESPP. The ESPP became effective immediately prior to the date of the underwriting agreement related to the IPO. The ESPP permits eligible employees who elect to
participate in an offering under the ESPP to have up to 15% of their eligible earnings withheld, subject to certain limitations, to purchase shares of common stock pursuant to the ESPP. The price of common stock purchased under the ESPP is equal to
85 percent of the lower of the fair market value of the common stock at the commencement date of each offering period or the relevant date of purchase. A total of 350,000 shares of common stock were initially reserved for issuance under the
ESPP. In addition, the number of shares of common stock available for issuance under the ESPP will automatically increase on January 1 of each calendar year, starting on January 1, 2021 through January 1, 2030, in an amount equal to
the lesser of (i) 1% of the total number of shares of the Companys common stock outstanding on December 31st of the preceding calendar year, and (ii) 700,000 shares of the Companys common stock, or a lesser number of shares determined by
the Companys board of directors.
As of December 31, 2020, no shares were issued under the ESPP. The weighted average per share fair
value rights granted during the year ended December 31, 2020 was $10.28.
In determining the grant date fair value of shares to be issued under
the ESPP, the Company uses the Black-Scholes option pricing model. The Black-Scholes inputs are determined in the same manner as for stock option awards. The weighted average inputs used for the ESPP for the year ended December 31, 2020, were
as follows:
Year Ended
December 31,
2020
Expected term (in years)
1.2
Expected volatility
82
%
Risk-free interest rate
0.11
%
Expected dividend yield
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10. Income Taxes
The Companys effective tax rates for the years ended December 31, 2020 and 2019 differ from the U.S. federal statutory rate as follows (in
thousands):
Year Ended
December 31,
2020
2019
Tax at the federal statutory rate
$
(6,919
)
$
(5,033
)
Benefit from R&D tax credits
(586
)
(561
)
Stock-based compensation
331
Other temporary and permanent differences
21
(3
)
Change in valuation allowance
7,153
5,597
Total provision for income taxes
$
$
The significant components of the Companys deferred tax assets and liabilities were as follows (in thousands):
December 31,
2020
2019
Deferred tax assets:
Net operating loss carryforward
$
18,832
$
12,575
Lease liability
677
862
R&D tax credit carryforward
1,502
941
Other deferred tax assets
336
41
Total deferred tax assets
21,347
14,419
Deferred tax liabilitiesRight of use asset
(458
)
(683
)
Valuation allowance
(20,889
)
(13,736
)
Net deferred tax assets
$
$
At December 31, 2020, the Company had net operating loss carryforwards for income tax purposes of approximately
$89.7 million. If not used, $18.2 million of this carryforward will begin to expire in 2036 and $71.5 million has no expiration. At December 31, 2020, the Company also had research and development tax credits of approximately
$1.5 million which will begin to expire in 2037 if left unused. The Company did not have any foreign tax provision and did not generate material net operating losses in any states with an income tax.
FASB ASC 740 requires that the tax benefit of net operating losses, temporary differences, and credit carryforwards be recorded as an asset to the
extent that management assesses the realization is more likely than not. Realization of the future tax benefits from the net operating losses or credit carryforwards, if any, is dependent on the Companys ability to generate
sufficient taxable income within the applicable carryforward period. Because of the Companys recent history of operating losses, the Company maintains a full valuation allowance in the amount of $20.9 million and $13.7 million for
the years ended December 31, 2020 and 2019, respectively.
The Company may have already experienced one or more ownership changes. Depending on
the timing of any future utilization of its carryforwards, the Company may be limited as to the amount that
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can be utilized each year as a result of such previous ownership changes. However, the Company does not believe such limitations will cause its carryforwards to expire unutilized.
Future changes in the Companys stock ownership as well as other changes that may be outside the Companys control could potentially result in
further limitations on the Companys ability to utilize its net operating loss and tax credit carryforwards.
As of December 31, 2020 and
2019, the Company did not have any liabilities for unrecognized income tax benefits associated with uncertain tax positions, including any interest and penalties.
11. Licensing Agreement
Cell Line License Agreement with WuXi
Biologics (Hong Kong) Limited
In October 2019, the Company entered into a cell line license agreement with WuXi Biologics (Hong Kong)
Limited (WuXi Bio). Under the license agreement, WuXi Bio granted the Company a non-exclusive, worldwide, sublicensable, under certain of WuXi Bios intellectual property rights, know-how and biological materials (WuXi Bio Licensed Technology), to make, use, sell, offer for sale and import a product developed through the use of the WuXi Bio Licensed Technology (WuXi Bio
Licensed Product). The WuXi Bio Licensed Technology is currently used to manufacture a component of the Companys lead product, SBT6050.
In consideration for the license, the Company paid WuXi Bio a license fee of $100,000 which was recorded as research and development expense in 2019
accordance with ASC 730. In 2020 we incurred an additional license fee of $50,000 to WuXi Bio which was recorded in research and development expense in 2020. In the event the Company manufactures its commercial supplies of a product produced by the
Licensed Cell Line using a manufacturer other than WuXi Bio or its affiliates, the Company will become obligated to pay WuXi Bio aggregate milestone payments, upon achievement of certain sales milestones, of up to $10.8 million.
The Company has the right to terminate the license by giving at least six months prior written notice to WuXi Bio and paying all amounts due to them
through the termination date. In the event the Company fails to pay all amounts due to WuXi Bio under the license agreement, and fails to pay the amounts within 30 days after receiving written notice of such failure, WuXi Bio may terminate the
license with 45 days written notice to the Company. In the event either party commits a material breach under the license and fails to cure the breach within 30 days after receiving written notice from the other party of such breach, either party
may terminate the license immediately upon written notice to the other party.
12. Commitments and Contingencies
Legal Proceedings
From time to time, the Company may
have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made and can be reasonably estimated. Significant
judgment is required to determine both probability and the estimated amount.
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Indemnifications
In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the
Company may indemnify, hold harmless, and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third party actions. In some cases, the indemnification
will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits
or settle claims related to these indemnification provisions. The Company intends to enter into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that
may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. The Company currently has directors and officers insurance coverage that reduces its exposure and enables
the Company to recover a portion of any future amounts paid. The Company believes the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is minimal.
COVID-19
The
global COVID-19 pandemic continues to rapidly evolve, and management continue to monitor the situation closely. The extent of the impact of COVID-19 on the
Companys business, operations and clinical development timelines and plans remains uncertain, and will depend on certain developments, including the duration and spread of the outbreak and its impact on the Companys clinical trial
enrollment, trial sites, CROs, third-party manufacturers, and other third parties with whom the Company does business, as well as its impact on regulatory authorities and the Companys key scientific and management personnel. The ultimate
impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change. To the extent possible, management is conducting business as usual, with necessary or advisable
modifications to employee travel and most of the Companys non-lab based employees working remotely. Management will continue to actively monitor the rapidly evolving situation related to COVID-19 and may take further actions that alter Company operations, including those that may be required by federal, state or local authorities, or that management determines are in the best interests of the
Companys employees and other third parties with whom the Company does business. At this point, the extent to which the COVID-19 pandemic may affect the Companys business, operations and clinical
development timelines and plans, including the resulting impact on Company expenditures and capital needs, remains uncertain and is subject to change.
13.
Related Party Transactions
The Company reimburses certain travel expenses incurred by one of its investors to support the business. Amounts due
to the investor totaled less than $0.1 million as of December 31, 2020 and 2019. Reimbursable travel expenses incurred by the investor totaled less than $0.1 million during each of the years ended December 31, 2020 and 2019.
14. Employee Benefit Plans
The Company maintains a
retirement plan, which is qualified under section 401(k) of the Internal Revenue Code of 1986, as amended, for the Companys U.S. employees. The plan allows eligible
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employees to defer, at the employees discretion, pretax compensation up to the IRS annual limits. The Company does not match contributions made by employees.
15. Net Loss Per Share Attributable to Common Stockholders
The following outstanding shares of potentially dilutive securities were excluded from the computation of the diluted net loss per share attributable to
common stockholders for the periods presented because their effect would have been anti-dilutive:
Year Ended December 31,
2020
2019
Redeemable convertible preferred stock
4,232,232
Common stock options
6,316,569
555,636
Unvested common stock
100,263
6,046
Common stock warrants
9,154
ESPP withholdings
4,393
Total potentially dilutive shares
6,421,225
4,803,068
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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure.
None
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.