What changed in this filing

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Item 1. Financial Statements

2020-11-12 compared with 2020-08-10 · 88 added, 71 removed, 296 unchanged (35% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

Current assets:

19 unchanged sentences

authorized, 33,361,188 and 32,861,842 shares issued and outstanding as

of June 30, 2020 and December 31, 2019, respectively

of September 30, 2020 and December 31, 2019, respectively

Additional paid-in capital

6 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses:

8 unchanged sentences

Net loss and comprehensive loss

Net loss per share attributable to common stockholders, basic

Weighted-average common shares outstanding, basic and diluted

Net loss per share attributable to common stockholders,

basic and diluted

Weighted-average common shares outstanding, basic

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

6 unchanged sentences

Stock-based compensation

Issuance of common stock

upon exercise of stock options

Issuance of common stock upon exercise of stock

Balance as of March 31, 2019

Stock-based compensation

Issuance of common stock upon

exercise of stock options

Issuance of common stock upon

initial public offering, net of

underwriting discounts,

Issuance of common stock upon exercise of stock

Issuance of common stock upon initial public

offering, net of underwriting discounts,

commissions, and offering costs

Conversion of preferred stock to

Conversion of preferred stock to common stock

Balance as of June 30, 2019

Stock-based compensation

Issuance of common stock upon exercise of stock

Balance as of September 30, 2019

Balance as of December 31, 2019

Stock-based compensation

Issuance of common stock upon

exercise of stock options

Issuance of common stock upon exercise of stock

Balance as of March 31, 2020

Stock-based compensation

Issuance of common stock upon

exercise of stock options

Issuance of common stock upon exercise of stock

Balance as of June 30, 2020

Stock-based compensation

Issuance of common stock upon exercise of stock

Issuance of common stock related to employee

stock purchase plan

Balance as of September 30, 2020

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

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

14 unchanged sentences

Proceeds from issuance of common stock upon exercise of stock options

Proceeds from Employee Stock Purchase Plan

Deferred Financing Costs

Proceeds from the issuance of common stock upon initial public offering

28 unchanged sentences

On June 21, 2019, the Company filed an amended and restated certificate of incorporation with the Secretary of State of the State of Delaware to authorize the issuance of up to 300 million shares of common stock, $0.0001 par value per share, and 10 million shares of undesignated preferred stock, $0.0001 par value per share.

Shelf Registration

In July 2020, the Company filed a universal Shelf Registration statement on Form S-3 (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”).

The Registration Statement was declared effective by the SEC on July 20, 2020, and contains two prospectuses:

a base prospectus, which covers the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $400,000,000 of our common stock, preferred stock, debt securities, warrants to purchase our common stock, preferred stock or debt securities, subscription rights to purchase our common stock, preferred stock or debt securities and/or units consisting of some or all of these securities;

and a sales agreement prospectus covering the offering, issuance and sale by us of up to a maximum aggregate offering price of $150,000,000 of our common stock that may be issued and sold under a Controlled Equity Offering Sales Agreement.

The specific terms of any securities to be offered pursuant to the base prospectus will be specified in a prospectus supplement to the base prospectus.

The $150,000,000 of common stock that may be offered, issued and sold under the sales agreement prospectus is included in the $400,000,000 of securities that may be offered, issued and sold by the Company under the base prospectus.

As of September 30, 2020, the Company has not issued any securities in connection with Registration Statement.

Uncertainties

4 unchanged sentences

The Company expects that its operating losses and negative cash flows will continue for the foreseeable future.

As of the issuance date of these unaudited condensed consolidated financial statements as of and for the three months ended June 30, 2020, the Company expects that its cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements through at least twelve months from the issuance date of its condensed consolidated financial statements.

As of the issuance date of these unaudited condensed consolidated financial statements the Company expects that its cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements through at least twelve months from the issuance date of these unaudited condensed consolidated financial statements.

Summary of significant accounting policies and recent accounting pronouncements

6 unchanged sentences

The accompanying interim unaudited condensed consolidated financial statements and related disclosures are unaudited and have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements and related footnotes as of and for the year ended December 31, 2019, which was filed with the Securities and Exchange Commission, or SEC, on March 23, 2020.

The Company’s financial information as of June 30, 2020, and for the three and six months ended June 30, 2020 and 2019 is unaudited, but in the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of the financial position, results of operations and cash flows at the dates and for the periods presented of the results of these interim periods have been included.

The Company’s financial information as of September 30, 2020, and for the three and nine months ended September 30, 2020 and 2019 is unaudited, but in the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of the financial position, results of operations and cash flows at the dates and for the periods presented of the results of these interim periods have been included.

The balance sheet information as of December 31, 2019 was derived from audited financial statements.

8 unchanged sentences

Restricted cash

At June 30, 2020, restricted cash consisted of money market accounts collateralizing letters of credit issued as security deposits in connection with the Company’s leases of its corporate facilities.

The following table reconciles cash and cash equivalents and restricted cash per the condensed consolidated balance sheet to the condensed consolidated statement of cash flows (in thousands):

As of June 30,

At September 30, 2020, restricted cash consisted of money market accounts collateralizing letters of credit issued as security deposits in connection with the Company’s leases of its corporate facilities.

The following table reconciles cash and cash equivalents and restricted cash per the condensed consolidated balance sheets to the condensed consolidated statements of cash flows (in thousands):

As of September 30,

Cash and cash equivalents

10 unchanged sentences

Level 3—Unobservable inputs developed using estimates of assumptions developed by the Company, which reflect those that a market participant would use.

To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the d etermination of fair values requires more judgment.

To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair values requires more judgment.

Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized as Level 3.

14 unchanged sentences

The Company will remain an emerging growth company until the earliest of (1) the last day of its first fiscal year (a) in which the Company has total annual gross revenues of at least $1.07 billion, or (b) in which the Company is deemed to be a large accelerated filer, which means the market value of its common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30 th , (2) the date on which it has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period and (3) December 31, 2024.

The Company is also a “smaller reporting company,” meaning that as of the date of its initial public offering, the market value of its stock held by non-affiliates is less than $700 million and our annual revenue is less than $100 million during the most recently completed fiscal year.

The Company may continue to be a smaller reporting company as long as either (i) the market value of its stock held by non-affiliates is less than $250 million or (ii) its annual revenue is less than $100 million during the most recently completed fiscal year and the market value of its stock held by non-affiliates is less than $700 million.

If the Company is a smaller reporting company at the time it ceases to be an emerging growth company, the Company may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

The Company is also a “smaller reporting company,” meaning that as of the date of its initial publi c offering, the market value of its stock held by non-affiliates is less than $ 700 million and ou r annual revenue is less than $100 million during the most recently completed fiscal year.

The Company may continue to be a smaller reporting company as long as either (i) the market value of its stock held by non-affiliates is less than $250 million or (ii) its annual revenue is less than $100 mil lion during the most recently completed fiscal year and the market value of its stock held by non-affiliates is less than $700 million.

If the Company is a smaller reporting company at the time it ceases to be an emerging growth company, the Company may co ntinue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

Specifically, as a smaller reporting company, the Company may choose to present only the two most recent fiscal years of audited financial statements in its Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

31 unchanged sentences

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

Fair value measurements as of June 30, 2020

Fair value measurements as of September 30, 2020

Cash equivalents:

4 unchanged sentences

The Company’s assets with fair value categorized as Level 1 within the fair value hierarchy include money market funds.

Money market funds are publicly traded mutual funds and are presented as cash equivalents on the condensed consolidated balance sheets as of June 30 , 20 20 and December 31, 201 9 .

Money market funds are publicly traded mutual funds and are presented as cash equivalents on the condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019.

There were no transfers among Level 1, Level 2, or Level 3 categories in the periods presented.

2 unchanged sentences

Accrued and other current liabilities consisted of the following (in thousands):

September 30,

Accrued employee compensation costs

16 unchanged sentences

The Company determined that it held operating leases for office and laboratory space as of January 1, 2020.

Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the lease commencement date.

Operating lease right-of-use assets and

operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the lease commencement date.

The discount rate used to determine the present value of the lease payments is the Company’s incremental borrowing rate based on the information available at lease inception, as the Company did not have information to determine the rate implicit in the leases.

Lease expense for operating leases is recognized on a straight-line basis over the reasonably assured lease term based on the total lease payments (which include initial direct costs and lease incentives).

The expense is included in operating expenses in the condensed consolidated statements of operations.

The expense is included in operating expenses in the condensed c onsolidated s tatements of o perations.

The Company’s lease agreements also contain variable payments, primarily maintenance-related costs, which are expensed as incurred and not included in the measurement of the right-of-use assets and lease liabilities.

2 unchanged sentences

The lease commencement date was December 10, 2018.

In December 2018, the Company en tered into an agreement to lease 2,485 square feet of space for a n initial term of three years.

The lease includes one renewal option for an additional two years , however, any time after the initial term the landlord may relocate the Company from the premi ses to a space reasonabl y comparable in size and utility.

As the C ompany does not have the right to control the use of the identified asset after the initial term, the renewal option was excluded from the lease liability calculation .

Lease terms commence a t $ 0.2 million per annum, with 2.5% annual base rent increases plus operating expenses, real estate taxes, utilities and janitorial fees.

In December 2018, the Company entered into an agreement to lease 2,485 square feet of space for an initial term of three years.

The lease includes one renewal option for an additional two years, however, any time after the initial term the landlord may relocate the Company from the premises to a space reasonably comparable in size and utility.

As the Company does not have the right to control the use of the identified asset after the initial term, the renewal option was excluded from the lease liability calculation.

Lease terms commence at $0.2 million per annum, with 2.5% annual base rent increases plus operating expenses, real estate taxes, utilities and janitorial fees.

The lease commencement date was May 1, 2019.

Future minimum lease payments under non-cancellable leases as of June 30, 2020 are as follows (in thousands):

Future minimum lease payments under non-cancellable leases as of September 30, 2020 are as follows (in thousands):

Total lease payments

2 unchanged sentences

Future minimum lease payments under non-cancellable leases as of December 31, 2019 are as follows (in thousands):

Lease balances as of June 30, 2020 are as follows (in thousands):

Lease balances as of September 30, 2020 are as follows (in thousands):

Operating right-of-use assets

2 unchanged sentences

Total operating lease liabilities

The weighted average remaining lease term and weighted average discount rate of our operating leases as of June 30, 2020 are as follows:

The weighted average remaining lease term and weighted average discount rate of our operating leases as of September 30, 2020 are as follows:

Weighted average remaining lease term in years

Weighted average discount rate

Rent expense incurred under operating leases was approximately $0.3 million for the three months and $0.6 million for the six months ended June 30, 2020 respectively.

Rent expense incurred under operating leases was approximately $0.3 million for the three months and $0.9 million for the nine months ended September 30, 2020 respectively.

Consulting agreement

In October 2014, the Company entered into a consulting agreement with a member of the Company’s board of directors, who is also an employee of Cold Spring Harbor Laboratory (“CSHL”), to provide consulting services related to scientific research related to the development of antisense-based drugs, therapies, diagnostic and research tools, products, services and intellectual property.

The Company recognized expenses of $0.02 million for the three-month period ended March 31, 2020 and did not recognize any additional expense in the three-month period ended June 30, 2020.

The Company recognized expenses of $0.02 million in the three-month period ending June 30, 2019 and $0.05 million in the six -month period ending June 30, 2019, for such consulting services.

The Company recognized expenses of $0.02 million for the three-month period ended March 31, 2020 and did not recognize any

additional expense in the nine -month period ended September 30, 2020 .

The Company recognized expenses of $0.02 million in the three-month period ending September 30, 2019 and $ 0.07 million in the nine -month period ending September 30, 2019 , for such consulting services.

The initial term of this agreement was five years and the parties mutually agreed not to extend the consulting agreement in April 2020.

Scientific Advisory Board Agreement

In June 2020, the Company entered into a scientific advisory board agreement with a member of the Company’s board of directors, who is also an employee of Cold Spring Harbor Laboratory (“CSHL”), to provide scientific advisory services related to the Company’s Targeted Augmentation of Nuclear Gene Output (“TANGO”) antisense oligonucleotide technology and other antisense oligonucleotide technologies, as well as current and future therapeutic targets and programs.

The Company recognized expense of $0.01 million in the six-month period ended June 30, 2020, for such scientific advisory services.

In June 2020, the Company entered into a scientific advisory board agreement with a member of the Company’s board of directors, who is also an employee of CSHL, to provide scientific advisory services related to the Company’s Targeted Augmentation of Nuclear Gene Output (“TANGO”) antisense oligonucleotide technology and other antisense oligonucleotide technologies, as well as current and future therapeutic targets and programs.

The Company recognized expense of $0.01 million in the three-month period ended September 30, 2020 and $0.04 million in the nine-month period ended September 30, 2020, for such scientific advisory services.

The term of this agreement is 12 months.

9 unchanged sentences

The maximum aggregate potential milestone payments payable total approximately $0.9 million.

Additionally, certain licenses under the CSHL Agreement require the Company to reimburse CSHL for certain past and ongoing patent related expenses, however there were no expenses related to these reimbursable patent costs during the three months and six months ended June 30, 2020 and 2019.

In April 2016, the Company entered into an exclusive, worldwide license agreement with the University of Southampton, (the “Southampton Agreement”), whereby the Company acquired rights to foundational technologies related to the Company’s TANGO technology.

4 unchanged sentences

In addition, if the Company sublicenses its rights under the Southampton Agreement, the Company is required to pay a mid-single digit percentage of the sublicense revenue to the University of Southampton.

The maximum aggregate potential milestone payments payable by the Company totaled approximately 0.4 million pounds sterling (approximately $0.5 million as of June 30, 2020).

As of June 30, 2020, and December 31, 2019, the Company had recorded no liabilities under the Southampton Agreement.

The maximum aggregate potential milestone payments payable by the Company totaled approximately 0.4 million pounds sterling (approximately $0.5 million as of September 30, 2020).

As of September 30, 2020, and December 31, 2019, the Company had recorded no liabilities under the Southampton Agreement.

Convertible preferred stock

1 unchanged sentence

On June 21, 2019, the Company completed its IPO and in conjunction therewith, all outstanding convertible preferred stock was converted into common stock.

Accordingly, as of June 30, 2020, there was no preferred stock outstanding.

Accordingly, as of September 30, 2020, there was no preferred stock outstanding.

Equity incentive plans

In June 2019, the Company’s board of directors and stockholders approved the 2019 Equity Incentive Plan (the “2019 Plan”) which became effective on June 17, 2019 and replaced the Company’s 2014 Equity Incentive Plan (the “2014 Plan”).

In addition to the shares of common stock reserved for future issuance under the 2014 Plan that were added to the 2019 Plan upon its effective date, the Company initially reserved 2,200,000 shares of common stock for issuance under the 2019 Plan.

In addition to the shares of common stock reserved for future issuance under the 2014 Plan that were added to the 2019 Plan upon its effective date, the

Company initially reserved 2,200,000 shares of common stock for issuance under the 2019 Plan.

The number of shares reserved for issuance under the Company’s 2019 Plan will increase automatically on January 1 of each of 202 0 through 2029 by the number of shares equal to 4% of the aggregate number of outstanding shares of the Company’s common stock as of the immediately preceding December 31, or a lesser number as may be determined by the Company’s board of directors.

As of June 30, 2020, there were no shares available for future issuance under the 2014 Plan and 2,526,551 shares were available under the 2019 Plan.

During the three months ended June 30, 2020, the Company granted options to purchase 114,990 shares of common stock to certain of its employees.

As of September 30, 2020, there were no shares available for future issuance under the 2014 Plan and 2,358,296 shares were available under the 2019 Plan.

During the three-months ended September 30, 2020, the Company granted options to purchase 168,255 shares of common stock to certain of its employees and 1,138,657 shares for the nine-months ended September 30, 2020.

The options vest over four years and are exercisable at a per share price equal to the fair value of the common stock on the grant date.

Stock-based compensation

As of June 30, 2020, there was $17.9 million of unrecognized compensation cost related to unvested stock-based compensation arrangements granted under the 2014 and 2019 Plans.

The compensation is expected to be recognized over a weighted average period of four years as of June 30, 2020.

As of September 30, 2020, there was $18.8 million of unrecognized compensation cost related to unvested stock-based compensation arrangements granted under the 2014 and 2019 Plans.

The compensation is expected to be recognized over a weighted average period of 3.01 years as of September 30, 2020.

Stock-based compensation expense recorded as research and development and general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive loss is as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

1 unchanged sentence

2019 Employee stock purchase plan

In June 2019, the Company adopted the 2019 Employee Stock Purchase Plan (“ESPP”), which became effective on June 18, 2019.

In June 2019, the Company adopted the 2019 Employee Stock Purchase Plan (the “ESPP”), which became effective on June 18, 2019.

The Company initially reserved 315,000 shares of common stock for sale under the ESPP.

At September 30, 2020, the Company had 297,609 shares available for issuance under the plan.

The average grant date fair value per share under the plan was $26.54 for 2020.

The total ESPP stock-based compensation expense for the nine-months ended September 30, 2020 was $0.2 million.

The number of shares reserved for issuance under the ESPP will increase automatically on January 1st of each of the first ten calendar years following the first offering date by the number of shares equal to the lesser of 1% of the total outstanding shares of the Company’s common stock as of the immediately preceding December 31 or a lower amount determined by the Company’s board of directors.

2 unchanged sentences

The following table summarizes the computation of basic and diluted net loss per share attributable to common stockholders of the Company (in thousands except share and per share amounts):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Weighted-average number of common shares,

3 unchanged sentences

The Company’s potential dilutive securities, which include Preferred Stock and common stock options, have been excluded from the computation of diluted net loss per share as the effect would be anti-dilutive.

Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

The Company excluded the following potential common shares, presented based on amounts outstanding at period end, from the computation of diluted net loss per share attributable to common stockholders for the period indicated because including them would have had an anti-dilutive effect:

Therefore, the weighted average number of commo n shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

The Company excluded the following potential common shares, presented based on amounts outstanding at period end, from the com putation of diluted net loss per share attributable to common stockholders for the period indicated because including them would have had an anti-dilutive effect:

September 30,

Preferred Stock

Outstanding options to purchase common stock

The Company did not record an income tax benefit in its condensed consolidated statement of operations for the three months and six months ended June 30, 2020 and 2019 as it is more likely than not that the Company will not recognize the federal and state deferred tax benefits generated by its losses.

The Company did not record an income tax benefit in its condensed consolidated statement of operations and comprehensive loss for the three months and nine months ended September 30, 2020 and 2019 as it is more likely than not that the Company will not recognize the federal and state deferred tax benefits generated by its losses.

The Company had net deferred tax assets and liabilities of $17.9 million at December 31, 2019.

The Company has provided a valuation allowance for the full amount of its net deferred tax assets and liabilities as of June 30, 2020 and December 31, 2019, as management has determined it is more likely than not that any future benefit from deductible temporary differences and net operating loss and tax credit carryforwards would not be realized.

The Company has provided a valuation allowance for the full amount of its net deferred tax assets and liabilities as of September 30, 2020 and December 31, 2019, as management has determined it is more likely than not that any future benefit from deductible temporary differences and net operating loss and tax credit carryforwards would not be realized.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic.

2 unchanged sentences

The Company has evaluated the impact of the CARES Act, and at present, the Company does not expect that the NOL carryback provision of the CARES Act would result in a cash benefit to us.

The Company did not record any amounts for unrecognized tax benefits as of June 30, 2020 or December 31, 2019.

The Company did not record any amounts for unrecognized tax benefits as of September 30, 2020 or December 31, 2019.

Employee benefits

2 unchanged sentences

On January 1, 2020, the Company began to make matching contributions up to 4% of annual salary for those employees who are participating in the 401(k) Plan.

For the three and six months ended June 30, 2020, the Company made matching contributions of $0.08 million and $0.16 million, respectively.

The Company was not required to make and did not make any contributions to the 401(k) Plan for the three and six months ended June 30, 2019.

For the three and nine months ended September 30, 2020, the Company made matching contributions of $0.08 million and $0.24 million, respectively.

The Company was not required to make and did not make any contributions to the 401(k) Plan for the three and nine months ended September 30, 2019.

Subsequent events

The Company has evaluated subsequent events through the issuance date of these interim condensed consolidated financial statements.

In July 2020, the Company filed a universal Shelf Registration statement on Form S-3 (the “Registration Statement”) with the SEC.

The Registration Statement was declared effective by the SEC on July 20, 2020, and contains two prospectuses:

The specific terms of any securities to be offered pursuant to the base prospectus will be specified in a prospectus supplement to the base prospectus.

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