What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-03-10 compared with 2021-03-09 · 139 added, 100 removed, 544 unchanged (31% of the section changed)

4 unchanged sentences

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Management recognizes that any controls

and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on our management’s evaluation (with the participation of our Chief Executive Officer and our Chief Financial Officer), as of the end of the period covered by this report, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

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Other Information.

Disclosure Regarding Foreign Jurisdictions That Prevent Inspections.

Directors, Executive Officers and Corporate Governance.

The information required by this Item 10 will be included in our Definitive Proxy Statement to be filed with the Securities and Exchange Commission, or SEC, with respect to our 2022 Annual Meeting of Stockholders and is incorporated herein by reference.

We have adopted a Code of Conduct that applies to all of our officers, directors, and employees, including our principal executive officer, principal financial officer, principal accounting officer, and controller, or persons performing similar functions, which is posted on our website.

Our Code of Conduct is a “code of ethics,” as defined in Item 406(b) of Regulation S-K.

We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our Code of Conduct on our website.

The information contained on, or accessible from, our website is not part of this Annual Report on Form 10-K by reference or otherwise.

Executive Compensation.

15 unchanged sentences

August 14, 2019

Restated Bylaws

April 15, 2020

Restated Bylaws, as amended

July 10, 2020

Form of Common Stock Certificate

1 unchanged sentence

Description of Common Stock Registered Under Section 12 of the Securities Exchange Act of 1934.

March 9, 2021

Form of Indemnification Agreement with directors and officers.

9 unchanged sentences

Amended and Restated Executive Employment Agreement, by and between the Registrant and Barry Ticho, effective as of October 21, 2020.

March 9, 2021

Change of Control and Severance Agreement, by and between the Registrant and Edward M.

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Change of Control and Severance Agreement, by and between the Registrant and Barry Ticho, effective as of October 21, 2020.

March 9, 2021

Filed/Furnished

Lease Agreement, dated August 20, 2018, by and between Homology Medicines, Inc., and the Registrant.

Lease Agreement dated January 2, 2019, by and between MIT 139 Main Street Leasehold LLC., and the Registrant.

Scientific Advisory Board Agreement

Lease Agreement, dated as of September 8, 2021, by and between ARE-MA Region No.

24, LLC and the Registrant.

November 8, 2021

Lease Agreement, by and between MIT 139 Main Street Leasehold LLC, and the Registrant., as amended to date

August 10, 2021

Scientific Advisory Board Agreement by and between the Registrant and Adrian Krainer, Ph.D., dated June 1, 2021

Controlled Equity Offering Sales Agreement, dated as of July 10, 2020, between the Registrant, Cantor Fitzgerald & Co.

9 unchanged sentences

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

XBRL Instance Document.

XBRL Taxonomy Extension Schema Document.

XBRL Taxonomy Extension Calculation Linkbase Document.

XBRL Taxonomy Extension Definition Linkbase Document.

XBRL Taxonomy Extension Label Linkbase Document.

XBRL Taxonomy Extension Presentation Linkbase Document.

Inline XBRL Instance Document.

Inline XBRL Taxonomy Extension Schema Document.

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Inline XBRL Taxonomy Extension Definition Linkbase Document.

Inline XBRL Taxonomy Extension Label Linkbase Document.

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Inline Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

Registrant has omitted certain portions of the exhibit pursuant to Item 601(b)(10) of Regulation S-K.

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Form 10-K Summary

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized .

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized .

STOKE THERAPEUTICS, INC.

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Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

POWER OF ATTORNEY

Each person whose individual signature appears below hereby authorizes and appoints Edward M.

Kaye and Stephen J.

Tulipano, and each of them, with full power of substitution and re-substitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

/s/ Edward M.

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We have audited the accompanying consolidated balance sheets of Stoke Therapeutics, Inc.

and subsidiary (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years in the two year period ended, December 31, 2020 and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two year period ended December 31, 2020, in conformity with U.S.

and subsidiary (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years then ended, in conformity with U.S.

generally accepted accounting principles.

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Cash and cash equivalents

Marketable securities

Prepaid expenses and other current assets

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Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

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Other income (expense):

Interest income

Other income, net

Interest income (expense), net

Other income (expense), net

Total other income (expense)

Net loss and comprehensive loss

Net loss per share—basic and diluted

Weighted average common shares outstanding—basic and diluted

Comprehensive loss:

Other comprehensive loss:

Unrealized loss on marketable securities

Total other comprehensive loss

Comprehensive loss

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

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(in thousands, except share and per share amounts)

Preferred Stock

Accumulated Other Comprehensive

Stockholders’

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Issuance of common stock upon exercise of stock options

Issuance of common stock upon initial public offering, net of underwriting discounts, commissions, and offering costs

Conversion of preferred stock to common stock

Issuance of common stock related to employee stock purchase plan

Issuance of common stock upon follow-on offering, net of underwriting discounts, commissions, and offering costs

Balance as of December 31, 2020

Unrealized loss on marketable securities

Stock-based compensation

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Adjustments to reconcile net loss to net cash used in operating activities:

Amortization and accretion of marketable securities

Stock-based compensation

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Accounts payable and accrued liabilities

Deferred rent

Net cash used in operating activities

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Purchases of property and equipment

Proceeds from sale of property and equipment

Purchases of marketable securities

Sales of marketable securities

Net cash used in investing activities

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Net cash provided by financing activities

Net increase in cash, cash equivalents and restricted cash

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

Cash, cash equivalents and restricted cash—beginning of year

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Supplemental Disclosure of Non-Cash Investing and Financing Activities:

Right-of-use assets recognized in exchange for operating leases upon

adoption of Topic 842

Right-of-use assets recognized in exchange for operating leases under Topic 842

Property and equipment included in accrued expense and accounts payable

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Stoke Therapeutics, Inc.

and subsidiar y

and subsidiary

Notes to consolidated financial statements

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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.

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 (“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 December 31, 2020, the Company has not issued any securities in connection with the Controlled Equity Offering Sales Agreement.

As of December 31, 2021, the Company had no t issued any securities in connection with the Sales Agreement.

(see note 12 for sales of common stock subsequent to year end)

Follow-on public offering

On November 24, 2020, pursuant to a prospectus supplement to the Registration Statement, we completed an underwritten public offering, of our common stock and issued and sold 2,875,000 shares of common stock at a public offering price of $ 39.00 per share, which included 375,000 shares sold upon full exercise of the underwriters’ option to purchase additional shares of common stock resulting in net proceeds of $ 104.9 million after deducting underwriting discounts and commissions and estimated offering expenses.

Initial public offering

On June 21, 2019, the Company completed an initial public offering (“IPO”) of its common stock and issued and sold 9,074,776 shares of common stock at a public offering price of $18.00 per share, which included 1,183,666 shares sold upon full exercise of the underwriters’ option to purchase additional shares, resulting in net proceeds of approximately $149.4 million after deducting underwriting discounts, commissions and offering costs of $13.9 million.

Upon closing of the IPO, the Company’s outstanding convertible preferred stock automatically converted into shares of common stock (see Note 7).

Upon conversion of the convertible preferred stock, the Company reclassified the carrying value of the convertible preferred stock to common stock and additional paid-in capital.

On June 6, 2019, the Company effected a one-for-9.95 reverse split of the Company’s issued and outstanding common and convertible preferred stock.

Upon the effectiveness of the reverse stock split, (i) all shares of outstanding common stock and convertible preferred stock were adjusted;

(ii) the number of shares of common stock for which each outstanding option to purchase common stock is exercisable were adjusted;

and (iii) the exercise price of each outstanding option to purchase common stock were adjusted.

All of the outstanding common stock share numbers (including shares of common stock subject to the Company’s options and as converted for the outstanding convertible preferred stock shares), share prices, exercise prices and per share amounts contained in the consolidated financial statements have been retroactively adjusted in the consolidated financial statements to reflect this reverse stock split for all periods presented.

The par value per share and the authorized number of shares of common stock and convertible preferred stock were not adjusted as a result of the reverse stock split.

On June 21, 2019, the Company filed an amended and restate 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, and 10 million shares of undesignated preferred stock, $ 0.0001 par value per share.

Uncertainties

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

As of the issuance date of its consolidated financial statements for the year ended December 31, 2020, the Company expects that its cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements into 2024.

The Company plans to seek additional funding through public or private equity offerings, debt financings, other collaborations, strategic alliances and licensing arrangements.

As of the issuance date of its consolidated financial statements for the year ended December 31, 2021, the Company expects that its cash and cash equivalents, and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements into 2024.

The Company plans to seek additional funding through public or private equity offerings, debt financings, other collaborations, strategic alliances and licensing arrangements (see note 12 for license and collaboration agreement entered in to January 2022) .

The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all.

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At December 31, 2021, 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 consolidated balance sheet to the statement of cash flows:

The following table reconciles cash and cash equivalents and restricted cash per the consolidated balance sheets to the statement of cash flows:

As of December 31,

1 unchanged sentence

Restricted cash

Marketable Securities

Marketable securities consist of government securities and obligations, corporate bonds and commercial paper with original maturities of more than 90 days.

Investments are classified as available-for-sale and are recorded on the balance sheet at fair value with unrealized gains or losses reported as a separate component of other comprehensive income/(loss).

Management determines the appropriate classification of its investments at the time of purchase and reevaluates such determination at each balance sheet date.

Concentration of credit risk

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Property and equipment

Property and equipment are initially recorded at cost less accumulated depreciation.

Property and equipment are recorded at cost less accumulated depreciation.

Cost includes the acquisition costs and all costs necessary to bring the asset to the location and working condition necessary for its intended use.

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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.

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 does 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 consolidated statements of operations.

The expense is included in operating expenses in the consolidated statements of operations and comprehensive loss.

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.

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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 new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (i) no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the

As a result, the Company’s consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

The Company will remain an emerging growth company until the earliest of (i) the last day of the Company’s first fiscal year (a) following the fifth anniversary of the completion of our IPO, (b) in which the Company has total annual gross revenues of at least $1.07 billion, or (c) when the Company is deemed to be a large accelerated filer, which means the market value of the Company’s common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30 th and (ii) the date on which the Company has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

The Company will remain an emerging growth company until the earliest of (i) 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 the Company’s common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30 th , (ii) the date on which the Company has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period, and (iii) December 31, 2024

The Company is also a “smaller reporting company,” meaning that in the event of an initial public offering the market value of its stock held by non-affiliates plus the proposed aggregate amount of gross proceeds to the Company as a result of such offering is less than $700 million and its 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.

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.

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For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements.

ASU 2018-13 will be effective for all entities, for fiscal years beginning after December 15, 2019 with early adoption permitted.

ASU 2018-13 is effective for all entities, for fiscal years beginning after December 15, 2019 with early adoption permitted.

We adopted this update on January 1, 2020 , and the adoption did not have a material impact on our consolidated financial statements.

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This ASU is effective for interim and annual periods beginning after December 15, 2020, and early adoption is permitted.

The Company is

currently evaluating the impact of this standard on its consolidated financial statements and related disclosures , but we do not expect that this standard will have a material impact on our consolidated financial statements .

The Company adopted this standard on January 1, 2021 and the adoption of this update did not have a material impact on its consolidated financial statements.

Fair value measurements

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Money market funds

Marketable Securities:

Corporate bonds

Commercial paper

US Government debt securities

Fair value measurements as of

2 unchanged sentences

Money market funds

Marketable Securities:

Corporate bonds

Commercial paper

US Government debt securities

The Company’s cash equivalents and marketable securities are carried at fair value, determined according to the fair value hierarchy described above and in Note 2.

The carrying value of the Company’s accounts payable and accrued expenses approximate their fair values due to the short-term nature of these liabilities.

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 consolidated balance sheets as of December 31, 2020 and 2019.

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

The carrying value of cash, cash equivalents, accounts payable and accrued expenses that are reported on the consolidated balance sheets approximate their fair value due to the short-term nature of these assets and liabilities.

Money market funds are publicly traded mutual funds and are presented as cash equivalents on the consolidated balance sheets as of December 30, 2021 and December 31, 2020.

The Company measures its marketable securities at fair value on a recurring basis and classifies those instruments within Level 2 of the fair value hierarchy.

Marketable securities are valued using models or other valuation methodologies that use Level 2 inputs.

These models are primarily industry-standard models that consider various assumptions, including time value, yield curve, volatility factors, default rates, current market and contractual prices for the underlying financial instruments, as well as other economic measures.

Substantially all of these assumptions are observable in the marketplace, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

There were no transfers to Level 3 in the periods presented.

Marketable Securities

The following table summarizes the Company’s marketable securities as of December 31, 2021 (in thousands):

December 31, 2021

Amortized Cost

Unrealized Gains

Unrealized Loss

Marketable securities:

Corporate bonds

Commercial paper

US Government debt securities

There were no marketable securities as of December 31, 2020.

The weighted average maturity of the Company’s marketable securities as of December 31, 2021 ranges from approximately 0.2 years to 1.1 years.

The Company did no t record an allowance for credit losses as of December 31, 2021 related to our marketable securities.

Further, given the lack of significant change in the credit risk of these investments, the Company did not recognize any other-than-temporary impairment losses.

Property and equipment, net

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Accrued research and development costs

Accrued other

Current portion of operating lease liabilities

Other current liabilities

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The lease commencement date was December 10, 2018 .

In September 2021, the Company entered into an agreement to extend the initial term of the 23,000 square foot lease for a period of three years commencing on December 15, 2021 and ending December 31, 2024 .

In addition, this lease provides for the lease of an additional 15,000 square feet of rentable space beginning in April 2022 and ending on December 31, 2024 .

The Company recognized a right-of-use asset and operating lease liability of $ 3.5 million for the 23,000 square feet.

As the Company did not have access to the additional 15,000 square feet of space, a right of use asset was no t recognized as of December 31, 2021.

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

3 unchanged sentences

The lease commencement date was May 1, 2019 .

Future minimum lease payments under non-cancellable leases as of December 31, 2020 are as follows (in thousands):

In June 2021, the Company amended the agreement to extend the initial term of the 2,485 square foot lease for a period of three years commencing May 1, 2022 and ending April 30, 2025 .

In addition, the amendment provided for the lease of an additional 2,357 square feet of rentable space beginning on July 6, 2021 and ending on April 30, 2025 .

The amended lease provides the Company with the option to extend the term of the lease for an additional two years .

The Company recognized a right-of-use asset and operating lease liabilities of $ 0.7 million for the extension of the lease to April 30, 2025 and a right-of-use asset and operating lease liabilities of $ 0.8 million for the additional 2,357 square feet of rentable space.

Future minimum lease payments under non-cancellable leases as of December 31, 2021, including leases entered into where access has yet to be granted, are as follows (in thousands):

Total lease payments

1 unchanged sentence

Present value of lease liabilities

Lease balances as of December 31, 2020 are as follows (in thousands):

Lease balances as of December 31, 2021 and December 31, 2020 are as follows (in thousands):

As of December 31,

Operating right-of-use assets

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Weighted average discount rate

In accordance with Topic 842, lease expense incurred under operating leases was approximately $1.1 million for the year ended December 31, 2020.

For the year ended December 31, 2019, rent expense incurred was approximately $1.1 million.

In accordance with Topic 842, lease expense incurred under operating leases was approximately $ 1.4 million for the year ended December 31, 2021, and $ 1.1 million for the year ended December 31, 2020.

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 each for the years ended December 31, 2020 and 2019.

The Company recognized expenses of $ 0.02 million for the year ended December 31, 2020.

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

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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 $0.05 million in the year ended December 31, 2020, for such scientific advisory services.

Following the expiration of the initial scientific agreement in June 2021, the parties entered into a subsequent scientific board agreement.

The Company recognized expense of $ 0.05 million each for the years ended December 31, 2021 and 2020 for such scientific advisory services.

The term of this agreement is 12 months.

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Under the CSHL Agreement, the Company receives an exclusive (except with respect to certain government rights and non-exclusive licenses), worldwide license under certain patents and applications relating to TANGO.

As part of the CSHL Agreement, the Company granted CSHL 164,927 shares of common stock valued based on an independent appraisal at approximately $0.07 million.

The CSHL Agreement obligates the Company to make additional payments that are contingent upon certain milestones being achieved.

The CSHL Agreement obligates the Company to make payments that are contingent upon certain milestones being achieved.

The Company is also required to pay royalties, tiered based on the scope of patent coverage for each licensed product, ranging from a low-single digit percentage to a mid-single digit percentage on annual net sales.

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As of December 31, 2021, and 2020, the Company has recorded no liabilities under the Southampton Agreement.

For the year ended December 31, 2021 these expenses were $ 0.12 million compared to $ 0.09 million for the year ended December 31, 2020.

Additionally, certain licenses under the Southampton Agreement require the Company to reimburse the University of Southampton for certain past and ongoing patent related expenses.

(see note 12 for payments to University of Southampton)

The Company may periodically become subject to legal proceedings and claims arising in connection with ongoing business activities, including claims or disputes related to patents that have been issued or that are pending in the field of research on which it is focused.

As of December 31, 2021, the Company had no legal proceedings to which it was a party or to which its property was subject.

Convertible preferred stock

On June 6, 2019, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation which became effective on June 21, 2019 upon which the authorized capital stock of the Corporation consisted of 300 million shares of common stock, $0.0001 per share par value, and 10 million shares of undesignated preferred stock, $0.0001 per share par value.

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 December 31, 2020 and 2019, there was no preferred stock outstanding.

The following table summarizes the Company’s issued and outstanding Preferred Stock:

Total convertible

Balance, December 31, 2018

Conversion to Common

Stock upon initial

public offering

Balance, December 31, 2019

Share-Based Compensation

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During the years ended December 31, 2021 and December 31, 2020, the Company granted options to purchase 1,311,897 and 1,231,532 shares of common stock to certain of its employees, and directors, respectively.

The options vest over four years except for certain options granted to members of our board of directors which vest over one or three years and are exercisable at a per share price equal to the fair value of the common stock on the grant date.

The options vest up to four years except for certain options granted to members of our board of directors which vest over one or three years and are exercisable at a per share price equal to the fair value of the common stock on the grant date.

A summary of stock option activity for awards is presented below:

Outstanding as of January 1, 2019

Forfeited or expired

Outstanding as of December 31, 2020

Forfeited or expired

Outstanding as of December 31, 2021

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The compensation is expected to be recognized over a weighted average period of 2.8 years as of December 31, 2021.

Stock-based compensation expense recorded as research and development and general and administrative expenses in the accompanying consolidated statements of operations is as follows:

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

Year ended December 31,

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The average grant date fair value per share under the plan was $ 46.08 for 2021.

The total ESPP stock-based compensation expense for the year ended December 31, 2020 was $0.3 million.

The total ESPP stock-based compensation expense for the year ended December 31, 2021 was $ 0.3 million and for the year ended December 31, 2020 was $ 0.3 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.

9 unchanged sentences

Outstanding options to purchase common stock

A reconciliation of the expected income tax expense (benefit) computed using the federal statutory income tax rate to the Company’s effective income tax rate is as follows:

A reconciliation of the expected income tax expense (benefit) computed using the federal statutory income tax rate the Company’s effective income tax rate is as follows:

Year ended December 31,

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Additionally, the Company uses its best judgment in attempting to quantify and reserve for these tax obligations.

However, a challenge by a taxing authority, the Company’s ability to utilize tax benefits such as carryforwards or tax credits, or a deviation from other tax-related assumptions could have a material adverse effect on our business, results of operations, or financial condition.

Utilization of the net operating loss carryforwards and research and development tax credit carryforwards may be subject to a substantial annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the Code) due to ownership changes that have occurred previously or that could occur in the future.

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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 year ended December 31, 2020, the Company made matching contributions of $0.02 million.

The Company was not required to make and did not make any contributions to the 401(k) Plan for the year ended December 31, 2019.

Selected Quarterly Financial Information (Unaudited)

Selected quarterly results from operations for the years ended December 31, 2020 and 2019 are as follows:

(in thousands, except for per share data)

2020 Quarter End

Operating expenses

Loss from operations

Net loss per share, basic and diluted

2019 Quarter End

Operating expenses

Loss from operations

Net loss per share, basic and diluted

For the year ended December 31, 2021, the Company made matching contributions of $ 0.5 million and for the year ended December 31, 2020, the Company made matching contributions of $ 0.2 million.

Subsequent events

In January 2022, the Company entered into a license and collaboration agreement with Acadia Pharmaceuticals Inc.

(“Acadia”) for the discovery, development and commercialization of novel RNA-based medicines for the treatment of severe and rare genetic neurodevelopmental diseases of the central nervous system (the “CNS”).

The agreement focuses on the targets SYNGAP1, MECP2 (Rett syndrome), and an undisclosed neurodevelopmental target of mutual interest.

In connection with each target, the Company will collaborate with Acadia to identify potential treatments for further development and commercialization as licensed products.

With respect to SYNGAP1, the Company has agreed with Acadia to co-develop and co-commercialize licensed products for such target globally, and in connection therewith the Company granted to Acadia worldwide, co-exclusive (with the Company) licenses for such licensed products.

With respect to MECP2 and the neurodevelopmental target, the Company granted to Acadia worldwide, exclusive licenses to develop and commercialize licensed products for such targets.

Pursuant to the terms of the agreement, the Company received an upfront payment of $ 60 million from Acadia.

Acadia agreed to fund the research to identify potential licensed products for MECP2 and the neurodevelopmental target, and the Company will equally fund with Acadia the research to identify potential licensed products for SYNGAP1.

The Company is eligible to receive up to $ 907.5 million in potential total milestone payments based upon the achievement of certain development, regulatory, first commercial sales and sales milestone events across the programs for the three targets, assuming each milestone were achieved at least once.

With respect to licensed products for MECP2 and the neurodevelopmental target, the Company is also eligible to receive tiered royalties at percentages ranging from the mid-single digits to the mid-teens on future net sales by Acadia of licensed products worldwide.

Royalties payable under the agreement are subject to standard royalty reductions.

For SYNGAP1 licensed products that the Company is co-developing and co-commercializing, the Company will be responsible for 50% of the development and commercialization costs and will receive 50% of the profits from global commercialization.

As a result of and related to the out-license of SYNGAP1, the Company is obligated to make payments to the University of Southampton under certain licensed patents and applications relating to TANGO.

Since December 31, 2021, the Company sold approximately 403,000 shares of our common stock and received $ 7.5 million after deducting commissions related to the Sales Agreement.

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

The Company has concluded that no events or transactions have occurred that require disclosure in the accompanying consolidated financial statements.

The Company has concluded that no events or transactions other than those described above have occurred that require disclosure in the accompanying consolidated financial statements.

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-K

Item 9A. Controls and Procedures