What changed in this filing

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Item 1. Financial Statements

2022-05-10 compared with 2021-11-08 · 172 added, 147 removed, 257 unchanged (55% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

Current assets:

2 unchanged sentences

Prepaid expenses and other current assets

Restricted cash - short-term

Deferred financing costs

8 unchanged sentences

Accrued and other current liabilities

Deferred revenue - current portion

Total current liabilities

Long term liabilities

Deferred revenue - net of current portion

Other long term liabilities

Total long term liabilities

Total liabilities

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authorized, 39,044,669 and 36,902,499 shares issued and outstanding as

of September 30, 2021 and December 31, 2020, respectively

of March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

7 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended September 30,

Nine months ended

September 30,

Three Months Ended March 31,

Operating expenses:

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Issuance of common stock upon exercise of stock options

Balance as of March 31, 2020

Stock-based compensation

Issuance of common stock upon exercise of stock options

Balance as of June 30, 2020

Stock-based compensation

Issuance of common stock upon exercise of stock options

Issuance of common stock related to employee stock purchase plan

Balance as of September 30, 2020

Balance as of December 31, 2020

Stock-based compensation

Issuance of common stock upon exercise of stock options

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

1 unchanged sentence

Balance as of March 31, 2021

Unrealized loss on marketable securities

Balance as of December 31, 2021

Stock-based compensation

Issuance of common stock upon exercise of stock options

Balance as of June 30, 2021

Unrealized loss on marketable securities

Stock-based compensation

Issuance of common stock upon exercise of stock options

Shares sold as part of controlled equity offering sales agreement

Issuance of common stock related to employee stock purchase plan

Balance as of September 30, 2021

Balance as of March 31, 2022

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

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(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

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

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Amortization and accretion of marketable securities

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Accounts payable and accrued liabilities

Net cash used in operating activities

Deferred revenue

Net cash provided by (used in) operating activities

Cash flows from investing activities:

1 unchanged sentence

Purchases of property and equipment

Sales of marketable securities

Net cash used in investing activities

2 unchanged sentences

Proceeds from issuance of common stock upon exercise of stock options

Deferred Financing Costs

Payments of follow-on offering costs

Proceeds from controlled equity offering sales agreement

Net cash provided by financing activities

2 unchanged sentences

Cash, cash equivalents and restricted cash—end of period

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

Property and equipment included in accrued expense and accounts payable

Right of use asset recognized in exchange for operating lease

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

upon adoption of Topic 842

Deferred offering costs not yet paid

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

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(the “Company”) was founded in June 2014 and was incorporated under the laws of the State of Delaware .

The Company is a biotechnology company dedicated to addressing the underlying cause of severe diseases by up-regulating protein expression with RNA-based medicines.

The Company is a biotechnology company dedicated to addressing the underlying cause of severe diseases by upregulating protein expression with RNA-based medicines.

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 (“SEC”).

The Registration Statement was declared effective by the SEC in July 2020, and 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 the Company’s common stock, preferred stock or debt securities, subscription rights to purchase the Company’s common stock, preferred stock or debt securities and/or units consisting of some or all of these securities.

In July 2020, the Company entered into an “at-the-market” program and sales agreement with Cantor Fitzgerald & Co.

(“Cantor”) and Stifel, Nicolaus & Company, Incorporated, (“Stifel”), under which the Company may, from time to time, offer and sell common stock having an aggregate offering value of up to $ 150.0 million, referred to as our “at-the-market” offering with Cantor and Stifel.

As of September 30, 2021, no such shares of the Company’s common stock had been offered or sold pursuant to this “at-the-market” program with Cantor and Stifel.

The Company may terminate this at-the-market program at any time, pursuant to its terms.

Follow-on public offering

In November 2020, the Company completed an underwritten public offering 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 offering expenses.

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 (“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 March 31, 2022, the Company had issued approximately 2.1 million shares in connection with the Sales Agreement for net proceeds of $ 42.2 million.

Since April 1, 2022, the Company sold approximately 138,000 shares of our common stock and received $ 3.1 million after deducting commissions related to the Sales Agreement.

Uncertainties

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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, 2021, which was filed with the SEC on March 10, 2022.

The Company’s financial information as of September 30, 2021, and for the nine months ended September 30, 2021 and 2020 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 March 31, 2022 and for the three months ended March 31, 2022 and 2021 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, 20 2 1 was derived from audited financial statements.

1 unchanged sentence

Use of estimates

The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity, expenses and disclosure of contingent assets and liabilities.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity, expenses and disclosure of contingent assets and liabilities.

Estimates are periodically reviewed in light of changes in circumstances, facts and experience.

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The Company deposits its cash in checking, sweep and money market accounts.

At September 30, 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.

At March 31, 2022, 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.

Cash and cash equivalents, and restricted cash in the condensed consolidated statements of cash flows consists of the following (in thousands):

As of September 30,

As of March 31,

Cash and cash equivalents

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Total cash, cash equivalents and 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

Financial instruments that potentially expose the Company to concentrations of credit risk primarily consist of cash and cash equivalents.

The Company maintains its cash and cash equivalents at an accredited financial institution in amounts that exceed federally insured limits.

The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

Fair value of financial instruments

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A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Deferred offering costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated.

After consummation of the equity financing, these costs are recorded in the condensed consolidated statement of stockholders’ equity as a reduction of additional paid-in capital.

Revenue recognition

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers , or ASC 606.

This standard applies to all contracts with customers, except for contracts that are within the scope of other standards.

Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

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

(“Acadia”) which is within the scope of ASC 606 (see Note 7).

In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under this agreement, the Company performs the following steps:

(i) identification of the promised goods or services in the contract;

(ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract;

(iii) measurement of the transaction price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance obligations;

and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

As part of the accounting for this arrangements, the Company must use its judgment to determine:

(a) the number of performance obligations based on the determination under step (ii) above;

(b) the transaction price under step (iii) above;

(c) the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above;

and (d) the contract term and pattern of satisfaction of the performance obligations under step (v) above.

The Company uses judgment to determine whether milestones or other variable consideration, except for royalties, should be included in the transaction price as described.

The transaction price is allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied.

Amounts due to the Company for satisfying the revenue recognition criteria or that are contractually due based upon the terms of the collaboration agreements are recorded as accounts receivable in the Company’s condensed consolidated balance sheets.

Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in the Company’s condensed consolidated balance sheets.

Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current deferred revenue.

Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, net of current portion.

Upfront license fees

The licenses of the Company’s intellectual property granted to Acadia was not determined to be distinct from the other promises or performance obligations identified in the arrangement.

Accordingly, such licenses are therefore combined with other promises in the arrangement.

The Company exercises judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue.

The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Customer options

If an arrangement is determined to contain customer options that allow the customer to acquire additional goods or services, the goods and services underlying the customer options are not considered to be performance obligations at the outset of the arrangement, as they are contingent upon option exercise.

The Company evaluates the customer options for material rights or options to acquire additional goods or services for free or at a discount.

If the customer options are determined to represent a material right, the material right is recognized as a separate performance obligation at the outset of the arrangement.

No such material rights were identified in the arrangement with Acadia.

If such material rights were identified, then the Company would allocate the transaction price to material rights based on the relative standalone selling price, which is determined based on the identified discount and the probability that the customer will exercise the option.

Amounts allocated to a material right are not recognized or begin to be recognized as revenue until, at the earliest, the option is exercised.

Research and development services

The promises under the Company’s collaboration agreement with Acadia includes research and development services to be performed by the Company for or on behalf of the customer.

Payments or reimbursements resulting from the Company’s research and development efforts are recognized as the services are performed and presented on a gross basis because the Company is the principal for such efforts.

Milestone payments

At the inception of the Acadia arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method.

If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price.

Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.

The Company evaluates factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcome to achieve the particular milestone in making this assessment.

There is judgment involved in determining whether it is probable that a significant revenue reversal would not occur.

At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

The development milestones in the Acadia arrangement are not considered probable of achievement at the outset of the arrangement.

Emerging growth company and smaller reporting company status

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Recently adopted accounting pronouncements

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842).

This standard established a right-of-use model that requires all lessees to recognize right-of-use assets and lease liabilities on their balance sheet that arise from leases as well as provide disclosures with respect to certain qualitative and quantitative information related to a company's leasing arrangements.

The Company adopted Topic 842 on January 1, 2020 using the modified retrospective approach and elected to apply the transition method that allows companies to continue applying guidance under the lease standard in effect at that time in the comparative period financial statements and recognize a cumulative-effect adjustment to the balance sheet on the date of adoption.

The Company elected the package of practical expedients to not reassess its prior conclusions about lease identification, lease classification and indirect costs and to not separate lease and non-lease components.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815):

Accounting for Certain Financial Instruments with Down Round Features;

Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception .

Part I of this update addresses the complexity of accounting for certain financial instruments with down round features.

Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings.

Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option.

Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the

FASB Accounting Standards Codification.

This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests.

The amendments in Part II of this update do not have an accounting effect.

For public business entities, the amendments in Part I of ASU-2017-11 were effective for fiscal years and interim periods within those years beginning after December 15, 2018.

For all other entities, the amendments in Part I of this update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.

Early adoption is permitted for all entities, including adoption in an interim period.

The Company adopted Part 1 of this standard on January 1, 2020 and the adoption of this update did not have a material impact on its consolidated financial statements and financial statement disclosures.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820), Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”.

This ASU removed the following disclosure requirements:

(1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy;

(2) the policy for timing of transfers between levels;

and (3) the valuation processes for Level 3 fair value measurements.

Additionally, this update added the following disclosure requirements:

(1) the changes in unrealized gains and losses for the period included in other comprehensive income and loss for recurring Level 3 fair value measurements held at the end of the reporting period;

(2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

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

The Company adopted this standard on January 1, 2020 and the adoption of this update did not have a material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

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

Fair value measurements

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 September 30, 2021

Fair value measurements as of March 31, 2022

Cash equivalents:

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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 Company’s cash equivalents and marketable securities are carried at fair value, determined according to the fair value hierarchy described 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 condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020.

Money market funds are publicly traded mutual funds and are presented as cash equivalents on the condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021.

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.

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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 transfers among the Level 1 to Level 2 category in the September 30, 2021 period presented.

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

Marketable Securities

The following table summarizes the Company’s marketable securities as of September 30, 2021 (in thousands):

September 30, 2021

The following table summarizes the Company’s marketable securities as of March 31, 2022 (in thousands):

March 31, 2022

Amortized Cost

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US Government debt securities

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

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

The weighted average maturity of the Company’s marketable securities as of March 31, 2022 ranged from approximately 0.3 years to 0.9 years.

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

The Company did no t record an allowance for credit losses as of March 31, 2022 related to its 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.

Accrued and other current liabilities

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

September 30,

Accrued employee compensation costs

2 unchanged sentences

Current portion of operating lease liabilities

Accrued other

Other current liabilities

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Operating lease

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842).

The Company elected the

package of practical expedients to not reassess its prior conclusions about lease identification, lease classification and indirect costs and to not separate lease and non-lease components.

Upon adoption of Topic 842 on January 1, 2020, the Company recorded right-of-use assets of $ 2.2 million, operating lease liabilities of $ 2.2 million and the elimination of deferred rent of $ 0.03 million.

Adoption of the standard did no t result in the Company recording a cumulative effect adjustment to accumulated deficit.

The Company determines whether an arrangement is a lease at inception.

The Company accounts for a lease when it has the right to control the leased asset for a period of time while obtaining substantially all of the assets’ economic benefits.

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.

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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 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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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 on April 1, 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 not recognized as of March 31, 2022.

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

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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.

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 liabilities 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 asst was no t recognized as of September 30, 2021.

Future minimum lease payments under non-cancellable leases as of September 30, 2021 are as follows (in thousands):

Total lease payments

Less imputed interest

Present value of lease liabilities

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

Future minimum lease payments under non-cancellable leases as of March 31, 2022, including leases entered into where access has yet to be granted, were as follows (in thousands):

Total lease payments

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Present value of lease liabilities

Lease balances as of September 30, 2021 are as follows (in thousands):

Lease balances as of March 31, 2022 were as follows (in thousands):

Operating right-of-use assets

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Total operating lease liabilities

The weighted average remaining lease term and weighted average discount rate of our operating leases as of September 30, 2021 are as follows:

The weighted average remaining lease term and weighted average discount rate of our operating leases as of March 31, 2022 were as follows:

Weighted average remaining lease term in years

Weighted average discount rate

In accordance with Topic 842, lease expense incurred under operating leases was approximately $ 0.4 million for the three months ended March 31, 2022, and $ 0.3 million for three months ended March 31, 2021.

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 (“ASO”) technology and other ASO 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, 2021, and $ 0.03 million for the nine month period ended September 30, 2021, compared to $ 0.01 million for 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 initial term of this agreement was for 12 months.

This agreement was renewed in June 2021 .

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.

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

The Company recognized expense of $ 0.01 million each for the three months ended March 31, 2022 and 2021 for such scientific advisory services.

The term of this agreement is 12 months.

License and research agreements

In July 2015, the Company entered into a worldwide license agreement (the “CSHL Agreement”), with CSHL, with respect to TANGO patents.

In July 2015, the Company entered into a worldwide license agreement with CSHL (the “CSHL Agreement”) with respect to TANGO patents.

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.

These royalty obligations apply on a licensed product-by-licensed product and country-by-country basis until the latest of (i) the expiration of the last valid claim of a CSHL patent covering the applicable licensed product or (ii) the expiration of any regulatory exclusivity for the applicable licensed product.

In addition, if the Company sublicenses the rights under the CSHL Agreement, the Company is required to pay a maximum of twenty percent of the sublicense revenue to CSHL, which may be reduced to a mid-teens or a mid-single digit percentage upon achievement of certain clinical milestones for the applicable licensed product.

In addition, if the Company sublicenses the rights

under the CSHL Agreement, the Company is required to pay a maximum of twenty percent of the sublicense revenue to CSHL, which may be reduced to a mid-teens or a mid-single digit percentage upon achievement of certain clinical milestones for the applicable licensed product.

Finally, the Company is required to pay an annual license maintenance fee of $ 0.01 million, which amount is creditable against any owed royalty or milestone payments.

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 nine months ended September 30, 2021 and 2020.

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 month s ende d March 31, 2022 a nd 20 2 1 .

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.

Under the Southampton Agreement, the Company receives an exclusive, worldwide license under certain licensed patents and applications relating to TANGO.

As part of the Southampton Agreement, the Company paid 0.06 million pounds sterling (approximately $ 0.07 million as of the date thereof) as an up-front license fee.

Under the Southampton Agreement, the Company may be obligated to make additional payments that are contingent upon certain milestones being achieved, as well as royalties on future product sales.

These royalty obligations survive until the latest of (i) the expiration of the last valid claim of a licensed patent covering a subject product or (ii) the expiration of any regulatory exclusivity for the subject product in a country.

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 total ed approximately 0.4 million pounds sterling (approximately $ 0.5 million as of September 30, 2021 ).

As of September 30, 2021 , and December 31, 2 020 , the Company ha d recorded no liabilities under the Southampton Agreement.

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

For the three months ended September 30, 2021 these expense s were $ 0.03 million compared to $ 0.02 million for three months ended September 30, 2020 and for the nine month s ended September 30, 2021 these expense s were $ 0.09 million compared to $ 0.04 million for the nine month s ended September 30, 2020.

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.

As of March 31, 2022, the Company has recorded a liability of $ 0.5 million under the Southampton Agreement due to the Acadia Pharmaceuticals Inc.

license and collaboration agreement (see Note 7) and had no recorded liability as of March 31, 2021.

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

For the three months ended March 31, 2022 these expenses were $ 0.08 million compared to $ 0.01 million for the three months ended March 31, 2021.

License and Collaboration Agreement with Acadia Pharmaceuticals Inc.

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 (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 Stoke) 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 $ 907,500,000 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.

The Company is provided with a co-development and co-commercialization opt out option relating to the SYNGAP1 target indication at the Company’s discretion.

Such opt-out would reduce development and commercialization milestones but would provide the Company with royalties on an escalating basis attributable to net sales milestones.

Acadia Agreement Accounting

At the commencement of the Acadia agreement the Company identified three performance obligations consisting of pre-clinical research activities for each of the three targets, SYNGAP1, MECP2, and the undisclosed neurodevelopmental target.

The exclusive or co-exclusive licenses granted to Acadia to conduct pre-clinical research activities on each of the three targets, and participation on each of the respective joint research committees were identified as promised services.

However, the licenses granted to Acadia and the research activities were determined to be not distinct from each other, and therefore are considered a combined performance obligation for each of the three targets.

Participation on each of the joint research committees was determined to be quantitatively and qualitatively immaterial in the context of the arrangement with Acadia.

The Company is recognizing the transaction price for the pre-clinical research activities for each of the three targets over time as the research services are provided.

The transfer of control to Acadia occurs over this time period , and in management’s judgment, is the best measure of progress towards satisfying the performance obligation.

An input method is used that measures the cost incurred to date in satisfying each of the three research activities in relation to the estimated total projected cost of each of the research activities to fulfill the respective obligations.

The cumulative effect of revisions to estimated costs and/or the transaction price to complete the research performance obligations will be recorded in the period in which changes are identified and amounts can be reasonably estimated.

Milestone payments that are not within the control of the Company, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.

For other milestones, the Company evaluated factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone in making this assessment.

Milestones that are outside of the Company’s or Acadia’s control will not be recognized until such milestones are achieved.

As to the other milestones, to date, no milestone payments have been included in the transaction price due the uncertainty as to whether these milestones will be achieved.

The Company will at the end of each reporting period reevaluate the probability of achievement of all milestones subject to constraint and, if necessary, adjust its estimate of the overall transaction price for each of the research activities on the three targets.

Any such adjustments will be recorded on a cumulative catch-up basis.

As of March 31, 2022, the Company had $ 58.0 million in upfront consideration associated with the Acadia agreement relating to performance obligations that are unsatisfied or partially unsatisfied.

Equity incentive plans

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The number of shares reserved for issuance under the Company’s 2019 Plan will increase automatically on January 1 of each of 2020 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 September 30, 2021, there were no shares available for future issuance under the 2014 Plan and 2,384,112 shares were available under the 2019 Plan.

During the nine months ended September 30, 2021, the Company granted options to purchase 1,250,947 shares of common stock to certain of its employees.

As of March 31, 2022, there were no shares available for future issuance under the 2014 Plan and 2,076,273 shares were available under the 2019 Plan.

During the three months ended March 31, 2022, the Company granted options to purchase 2,061,975 shares of common stock to certain of its employees.

The options vest up to 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 September 30, 2021, there was $ 48.7 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 3.02 years as of September 30, 2021.

As of March 31, 2022, there was $ 66.5 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 2.96 years as of March 31, 2022.

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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Research and development

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2019 Employee stock purchase plan

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

In June 2019, the Company adopted the 2019 Employee Stock Purchase Plan (“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, 2021, the Company had 642,887 shares available for issuance under the plan.

At March 31, 2022, the Company had 995,298 shares available for issuance under the plan.

The average grant date fair value per share under the plan was $ 23.01 for 2022.

The total ESPP stock-based compensation expense for the three and nine months ended September 30, 2021 was $ 0.07 million and $ 0.2 million, respectively, and for the three and 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.

The total ESPP stock-based compensation expense for the three months ended March 31, 2022 was $ 0.1 million and for the three months ended March 31, 2021 was $ 0.1 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.

The aggregate number of shares issued over the term of the ESPP will not exceed 3,150,000 shares of the Company’s common stock.

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Weighted-average number of common shares,

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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 indicated because including them would have had an anti-dilutive effect:

September 30,

Outstanding options to purchase common stock

The Company did no t record an income tax benefit in its condensed consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2021 and 2020 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 no t record an income tax benefit in its condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2022 and 2021 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 $ 66.0 million at December 31, 2021.

The Company has provided a valuation allowance for the full amount of its net deferred tax assets and liabilities as of September 30, 2021 and December 31, 2020, 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.

The CARES Act, among other things, permits net operating loss (“NOL”) carryovers and carrybacks to offset 100 % of taxable income for taxable years beginning before 2021.

In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.

The Company has evaluated the impact of the CARES Act, and at present, the Company does no t expect that the NOL carryback provision of the CARES Act would result in a cash benefit to us.

The Company did no t record any amounts for unrecognized tax benefits as of September 30, 2021 or December 31, 2020.

The Company has provided a valuation allowance for the full amount of its net deferred tax assets and liabilities as of March 31, 2022 and December 31, 2021, 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 did no t record any amounts for unrecognized tax benefits as of March 31, 2022 or December 31, 2021.

Subsequent events

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

Since April 1, 2022, the Company sold approximately 138,000 shares of our common stock and received $ 3.1 million after deducting commissions related to the Sales Agreement.

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