What changed in this filing

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Item 1. Financial Statements

2021-08-16 compared with 2021-06-24 · 346 added, 706 removed, 229 unchanged (82% of the section changed)

2 unchanged sentences

Condensed Balance Sheets

thousands, except share and per share amounts)

(in thousands, except share and per share amounts)

Current assets:

4 unchanged sentences

Restricted cash, noncurrent

Liabilities, redeemable convertible preferred stock, and stockholders

Non-marketable equity securities

Liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)

Current liabilities:

8 unchanged sentences

Redeemable convertible preferred stock, $ 0.001 par value;

182,772,372 shares authorized, issued

and outstanding as of March 31, 2021 and December 31, 2020;

Stockholders deficit

182,772,372 shares authorized, issued and outstanding as of June 30, 2021 and December 31, 2020 , respectively

Stockholders’ equity (deficit)

Preferred stock, $ 0.001 par value;

10,000,000 and 0 shares authorized as of June 30, 2021 and December 31, 2020, respectively;

no shares issued and outstanding as of June 30, 2021 and December 31, 2020

Class A common stock, $ 0.001 par value;

273,986,920 shares authorized as of March 31,

2021 and December 31, 2020;

468,979 and 355,296 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

Class B non-voting common stock, $0.001 par value;

21,593,607 shares authorized as of March 31, 2021 and December 31, 2020;

no shares issued and outstanding as of March 31, 2021 and December 31, 2020

Additional paid-in capital

500,000,000 and 273,986,920 shares authorized as of June 30, 2021 and December 31, 2020, respectively;

20,968,376 and 355,296 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Class B non-voting

common stock, $ 0.001 par value;

14,600,000 and 21,593,607 shares authorized as of June 30, 2021 and December 31, 2020, respectively;

309,238 and 0 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Additional paid-in

Accumulated deficit

Total stockholders deficit

Total liabilities, redeemable convertible preferred stock, and stockholders deficit

Total stockholders’ equity (deficit)

Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)

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

1 unchanged sentence

Condensed Statements of Operations and Comprehensive Loss

thousands, except share and per share amounts)

(in thousands, except share and per share amounts)

Three months ended

Six months ended

Operating expenses:

8 unchanged sentences

Change in fair value of convertible notes

Change in fair value of non-marketable

equity securities

Gain on sale of PNAi technology

Total other income (expense)

1 unchanged sentence

Net loss per share attributable to common stockholders, basic and diluted

Weighted-average common shares outstanding, basic and diluted

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

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

VERA THERAPEUTICS, INC.

Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders Deficit

thousands, except share amounts)

Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

Redeemable Convertible

Preferred Stock

Class A Common Stock

Class B Common

Stockholders’

Balance as of December 31, 2020

Issuance of common stock upon exercise of options

Issuance of Class A common stock upon exercise of options

Stock-based compensation

Balance as of March 31, 2020

Balances as of March 31, 2021

Class A common stock issued pursuant to initial public offering, net of issuance costs

Conversion of preferred stock into common stock

( 182,772,372

Issuance of Class A common stock upon exercise of options

Stock-based compensation

Balances as of June 30, 2021

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

VERA THERAPEUTICS, INC.

Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

Redeemable Convertible

2 unchanged sentences

Balance as of December

Issuance of Class A common stock upon exercise of options

Issuance of common stock upon exercise of options

Stock-based compensation

Balance as of March 31, 2021

Balances as of March 31, 2020

Issuance of common stock upon exercise of options

Stock-based compensation

Balance as of June 30, 2020

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

1 unchanged sentence

Condensed Statements of Cash Flows

Three Months Ended

(in thousands)

Six Months Ended

Cash flows from operating activities

3 unchanged sentences

Restructuring payments

Non-cash interest expense on convertible notes

interest expense on convertible notes

Issuance costs for convertible notes

Gain on issuance of convertible notes

Gain on sale of

PNAi technology

Change in fair value of convertible notes

Change in fair value of non-marketable

equity securities

Changes in operating assets and liabilities:

5 unchanged sentences

Cash flows from investing activities

Proceeds from sale of PNAi technology

Purchase of property and equipment

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities

1 unchanged sentence

Proceeds from issuance of convertible notes

Payment of deferred offering costs

Proceeds from issuance of Class A common

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

Payment of offering costs related to initial public offering

Payment issuance costs related to convertible promissory notes

Payment on capital lease obligations

Net cash (used in) provided by financing activities

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

Net cash provided by financing activities

Net increase in cash and cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

Cash, cash equivalents and restricted cash, end of period

Reconciliation of cash and cash equivalents and restricted cash to the balance

Reconciliation of cash and cash equivalents and restricted cash to the balance sheets

Cash and cash equivalents

3 unchanged sentences

Cash paid for interest

Deferred offering costs included in accounts payable

Deferred offering costs included in accrued and other current liabilities

Reclassification of redeemable convertible preferred stock in

to common stock upon initial public offering

Non-marketable equity securities received as partial proceeds from sale of PNAi technology

Lease assignment

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

1 unchanged sentence

Notes to Unaudited Condensed Financial Statements

(Dollar amounts in thousands, except per share data)

(Amounts in thousands, except share and per share data)

ORGANIZATION AND DESCRIPTION OF THE BUSINESS

Description of Business

Vera Therapeutics, Inc., (the

Company) is a clinical stage biotechnology company focused on developing and commercializing transformative treatments for patients with serious immunological diseases.

The Company is headquartered in South San Francisco, California and

was incorporated in May 2016 in Delaware.

Vera Therapeutics, Inc., (the “Company”) is a clinical stage biotechnology company focused on developing and commercializing transformative treatments for patients with serious immunological diseases.

The Company is headquartered in South San Francisco, California and was incorporated in May 2016 in Delaware.

In 2017, the Company acquired all of the outstanding shares of PNA Innovations, Inc.

1 unchanged sentence

Reverse Stock Split

On May 7, 2021, the Company filed a

certificate of amendment to its fourth amended and restated certificate of incorporation to effect a 11.5869-for-one reverse stock split of its issued and outstanding Class A common stock.

Adjustments corresponding to the reverse stock split were

made to the ratio at which the Companys redeemable convertible preferred stock will convert into Class A common stock.

Accordingly, all share and per share amounts related to Class A common stock, stock options and restricted stock awards for

all periods presented in the accompanying unaudited condensed financial statements and notes thereto have been retroactively adjusted, where applicable to reflect the reverse stock split.

On May 7, 2021, the Company filed a certificate of amendment to its fourth amended and restated certificate of incorporation to effect a 11.5869 -for-one

reverse stock split of its issued and outstanding Class A common stock.

Adjustments corresponding to the reverse stock split were made to the ratio at which the Company’s redeemable convertible preferred stock converted into Class A common stock.

Accordingly, all share and per share amounts related to Class A common stock, stock options and restricted stock awards for all periods presented in the accompanying unaudited condensed financial statements and notes thereto have been retroactively adjusted, where applicable to reflect the reverse stock split.

Initial Public Offering

On May 13, 2021, the

Companys registration statement on Form S-1 for its initial public offering (the IPO) was declared effective by the Securities and Exchange Commission (the SEC), and the shares of

its Class A common stock commenced trading on the Nasdaq Global Select Market on May 14, 2021.

The IPO closed on May 18, 2021, pursuant to which the Company issued and sold 4,350,000 shares of its Class A common stock at a public

offering price of $11.00 per share.

On May 13, 2021, the Company’s registration statement on Form S-1

for its initial public offering (the “IPO”) was declared effective by the Securities and Exchange Commission (the “SEC”), and the shares of its Class A common stock commenced trading on the Nasdaq Global Select Market on May 14, 2021.

The IPO closed on May 18, 2021, pursuant to which the Company issued and sold 4,350,000 shares of its Class A common stock at a public offering price of $ 11.00 per share.

On May 20, 2021, the Company issued 652,500 shares of its Class A common stock to the underwriters of the IPO pursuant to the exercise of the underwriters’ option to purchase additional shares.

Company received total net proceeds of approximately $48,400 from the IPO, after deducting underwriting discounts and commissions of $3,852, and offering costs of approximately $2,800, of which $1,294 was incurred as of March 31,2021.

the completion of the IPO, all shares of redeemable convertible preferred stock then outstanding were converted into 15,464,776 shares of Class A common stock and 309,238 shares of Class B common stock.

The unaudited condensed financial

statements as of March 31, 2021, including share and per share amounts, do not include proceeds from or shares issued in the IPO as it occurred after March 31, 2021.

Since inception, the Company has been

primarily performing research and development activities, establishing and maintaining its intellectual property, hiring personnel and raising capital to support and expand these operations.

The Company has incurred recurring net operating losses

since its inception and had an accumulated deficit of $96,161 as of March 31, 2021.

The Company had cash and cash equivalents of $49,505 as of March 31, 2021, and has not generated positive cash flow from operations.

The Company has funded

its operations primarily through the issuance of common stock, redeemable convertible preferred stock and convertible notes.

Management believes that the

net proceeds from the IPO, together with cash and cash equivalents as of March 31, 2021, will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the issuance date of these unaudited

condensed financial statements.

While the Company believes that its current cash and cash equivalents are adequate to meet its needs for the next 12 months, the Company will need to raise additional capital in order to achieve its longer-term

business objectives.

The Company received total net proceeds of $ 48,411 from the IPO, after deducting underwriting discounts and commissions of $ 3,852 , and offering costs of $ 2,765 .

Prior to the completion of the IPO, all shares of redeemable convertible preferred stock then outstanding were converted into 15,464,775 shares of Class A common stock and 309,238 shares of Class B common stock.

Since inception, the Company has been primarily performing research and development activities, establishing and maintaining its intellectual property, hiring personnel and raising capital to support and expand these operations.

The Company has incurred recurring net operating losses since its inception and had an accumulated deficit of $ 99,598 as of June 30, 2021.

The Company had cash and cash equivalents of $ 91,625 as of June 30, 2021, and has not generated positive cash flow from operations.

The Company has funded its operations primarily through the issuance of common stock, redeemable convertible preferred stock and convertible notes.

Management believes that the Company’s cash and cash equivalents as of June 30, 2021, will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the issuance date of these unaudited condensed financial statements.

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited

condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) and applicable rules and regulations of the SEC regarding interim financial reporting.

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

dollar is the Company’s functional and reporting currency.

Unaudited Interim Condensed Financial Statements

The accompanying condensed balance sheet as of March 31, 2021, and condensed statements of operations and comprehensive loss, condensed statements of cash

flows, and condensed statements of redeemable convertible preferred stock and stockholders deficit for the three months ended March 31, 2021 and 2020, are unaudited.

The balance sheet as of December 31, 2020 was derived from the

audited financial statements as of and for the year ended December 31, 2020.

The unaudited condensed financial statements have been prepared on a basis consistent with the audited annual financial statements as of and for the year ended

December 31, 2020, and in the opinion of management, reflect all adjustments consisting solely of normal recurring adjustments, necessary for the fair presentation of the Companys financial position as of March 31, 2021, and the

condensed results of its operations and its cash flows for the three months ended March 31, 2021 and 2020.

The financial data and other information disclosed in these notes related to the three months ended March 31, 2021 and 2020 are also

The condensed results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year ending December 31, 2021 or any other period.

These unaudited condensed

financial statements should be read in conjunction with the Companys audited financial statements and the notes thereto for the year ended December 31, 2020 included in the Companys final prospectus dated May 13, 2021 for the

IPO filed with the SEC on May 17, 2021 pursuant to Rule 424(b)(4) relating to the Companys Registration Statement on Form S-1, as amended (File

The accompanying condensed balance sheet as of June 30, 2021, and condensed statements of operations and comprehensive loss, condensed statements of cash flows, and condensed statements of redeemable convertible preferred stock and stockholders’ equity (deficit) for the three and six months ended June 30, 2021 and 2020, are unaudited.

The balance sheet as of December 31, 2020, was derived from the audited financial statements as of and for the year ended December 31, 2020.

The unaudited condensed financial statements have been prepared on a basis consistent with the audited annual financial statements as of and for the year ended December 31, 2020 and in the opinion of management, reflect all adjustments consisting solely of normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of June 30, 2021, and the condensed results of its operations and its cash flows for the three and six months ended June 30, 2021 and 2020.

The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2021 and 2020, are also unaudited.

The condensed results of operations for the three and six months ended June 30, 2021, are not necessarily indicative of the results to be expected for the full year ending December 31, 2021, or any other period.

These unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2020, included in the Company’s final prospectus dated May 13, 2021, for the IPO filed with the SEC on May 17, 2021, pursuant to Rule 424(b)(4) relating to the Company’s Registration Statement on Form S-1,

as amended (File No.

Emerging Growth Company Status

The Company is an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”).

Under the JOBS Act, emerging

growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

The Company has elected to use this extended transition period

for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (1) is no longer an emerging growth company or (2) affirmatively and

irrevocably opts out of the extended transition period provided in the JOBS Act.

As a result, these unaudited condensed financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of

public company effective dates.

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

The Company has elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (1) is no longer an emerging growth company or (2) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act.

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

Use of Estimates

The preparation of the Companys unaudited condensed financial statements requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of expenses during the reporting period.

Management estimates that affect the

reported amounts of assets and liabilities include useful lives of fixed and intangible assets, the accrual of research and development expenses, restructuring liabilities, fair value of common stock and stock-based compensation expense, and the

valuation allowance for deferred tax assets.

The preparation of the Company’s unaudited condensed financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of expenses during the reporting period.

Management estimates that affect the reported amounts of assets and liabilities include useful lives of fixed and intangible assets, the accrual of research and development expenses, restructuring liabilities, fair value of common stock and stock-based compensation expense, and the valuation allowance for deferred tax assets.

The Company evaluates and adjusts its estimates and assumptions on an ongoing basis using historical experience and other factors.

1 unchanged sentence

Deferred Offering Costs

Deferred offering costs

consisting of legal, accounting and filing fees relating to the IPO are capitalized.

The deferred offering costs will be offset against offering proceeds in the period in which the offering is completed.

Deferred offering costs consisting of legal, accounting and filing fees relating to the IPO are capitalized.

The deferred offering costs were offset against the Company’s IPO proceeds upon the closing of the IPO.

Concentrations of Credit Risk and Other Risks and Uncertainties

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

Company maintains bank deposits in a federally insured financial institution and these deposits may exceed federally insured limits.

The Company is exposed to credit risk in the event of default by the financial institution holding its cash and cash

equivalents to the extent recorded in the balance sheet.

The Company maintains bank deposits in a federally insured financial institution and these deposits may exceed federally insured limits.

The Company is exposed to credit risk in the event of default by the financial institution holding its cash and cash equivalents to the extent recorded in the balance sheet.

The Company has not experienced any losses on its deposits of cash and cash equivalents.

Companys future results of operations involve a number of other risks and uncertainties.

Factors that could affect the Companys future operating results and cause actual results to vary materially from expectations include, but are not

limited to, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Companys current and potential future product candidates, uncertainty of market acceptance of the Companys product

candidates, competition from substitute products and larger companies, securing and protecting proprietary technology, strategic relationships and dependence on key individuals or sole-source suppliers.

The Company’s future results of operations involve a number of other risks and uncertainties.

Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s current and potential future product candidates, uncertainty of market acceptance of the Company’s product candidates, competition from substitute products and larger companies, securing and protecting proprietary technology, strategic relationships and dependence on key individuals or sole-source suppliers.

The Company’s product candidates require approvals from the U.S.

Food and Drug Administration and comparable foreign regulatory agencies prior to

commercial sales in their respective jurisdictions.

Food and Drug Administration and comparable foreign regulatory agencies prior to commercial sales in their respective jurisdictions.

There can be no assurance that any product candidates will receive the necessary approvals.

If the Company was denied approval, approval was delayed, or the Company was unable to maintain approval

for any product candidate, it could have a materially adverse impact on the Company.

If the Company was denied approval, approval was delayed, or the Company was unable to maintain approval for any product candidate, it could have a materially adverse impact on the Company .

Impact of the COVID-19

The COVID-19 pandemic continues to rapidly evolve.

The extent of the impact of the COVID-19 pandemic on the Companys business, operations and development timelines and plans remains uncertain, and will depend on certain developments, including the duration and spread of the outbreak and its

impact on the Companys development activities, planned clinical trial enrollment, future trial sites, contract research organizations, third-party manufacturers, and other third parties with whom the Company does business, as well as its

impact on regulatory authorities and the Companys key scientific and management personnel.

The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to

pandemic continues to evolve.

The extent of the impact of the COVID-19

pandemic on the Company’s business, operations, and development timelines and plans remains uncertain, and will depend on certain developments, including the duration and spread of the outbreak and its impact on the Company’s development activities, planned clinical trial enrollment, future trial sites, contract research organizations, third-party manufacturers, and other third parties with whom the Company does business, as well as its impact on regulatory authorities and the Company’s key scientific and management personnel.

The ultimate impact of the COVID-19

pandemic or a similar health epidemic is highly uncertain and subject to change.

To the extent possible, the Company is conducting business as usual, with necessary or advisable modifications to employee travel and with the Company’s employees working remotely.

The Company will continue to actively monitor the

rapidly evolving situation related to the COVID-19 pandemic and may take further actions that alter the Companys operations, including those that may be required by federal, state or local authorities,

or that the Company determines are in the best interests of its employees and other third parties with whom the Company does business.

At this point, the extent to which the COVID-19 pandemic may affect the

Companys business, operations and development timelines and plans, including the resulting impact on expenditures and capital needs, remains uncertain.

The Company will continue to actively monitor the evolving situation related to the COVID-19

pandemic and may take further actions that alter the Company’s operations, including those that may be required by federal, state or local authorities, or that the Company determines are in the best interests of its employees and other third parties with whom the Company does business.

At this point, the extent to which the COVID-19

pandemic may affect the Company’s business, operations and development timelines and plans, including the resulting impact on expenditures and capital needs, remains uncertain.

Cash and Cash Equivalents

The Company considers all

highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Cash equivalents consist of money market funds and are stated at fair value.

Restricted Cash

Restricted cash represents cash held by

a financial institution as collateral for a letter of credit securing its operating lease for office and laboratory space and as collateral for a credit card, which are classified within current and

non-current assets on the condensed balance sheets.

Restricted cash represents cash held by a financial institution as collateral for a letter of credit securing its operating lease for office and laboratory space and as collateral for a credit card, which are classified within current and non-current

assets on the condensed balance sheets.

Comprehensive Loss

Comprehensive loss consists of net loss and other gains and losses affecting redeemable convertible preferred stock and stockholders deficit that, under

Comprehensive loss consists of net loss and other gains and losses affecting redeemable convertible preferred stock and stockholders’ equity (deficit) that, under U.S.

GAAP, are excluded from net loss.

The Company has no items of other comprehensive loss for the three months ended March 31, 2021 and 2020.

The Company has no items of other comprehensive loss for the three and six months ended June 30, 2021 and 2020.

As such, net loss equals comprehensive loss.

Research and Development Costs

Research and development

costs are expensed as incurred and consist primarily of employees salaries and related benefits, including stock-based compensation and termination expenses for employees engaged in research and development efforts, allocated overhead

including rent, depreciation, information technology and utilities, contracted services, license fees, and external expenses to conduct and support the Companys operations that are directly attributable to the Companys research and

development efforts.

Research and development costs are expensed as incurred and consist primarily of employees’ salaries and related benefits, including stock-based compensation and termination expenses for employees engaged in research and development efforts, allocated overhead including rent, depreciation, information technology and utilities, contracted services, license fees, and external expenses to conduct and support the Company’s operations that are directly attributable to the Company’s research and development efforts.

Payments made to third parties under these arrangements in advance of the performance of the related services by the third parties are recorded as prepaid expenses until the services are rendered.

Costs incurred in obtaining technology licenses including upfront and milestone payments incurred under the Companys licensing agreements are recorded

as expense in the period in which they are incurred, provided that the licensed technology, method or process has no alternative future uses other than for the Companys research and development activities.

Costs incurred in obtaining technology licenses including upfront and milestone payments incurred under the Company’s licensing agreements are recorded as expense in the period in which they are incurred, provided that the licensed technology, method or process has no alternative future uses other than for the Company’s research and development activities .

Research Contract Costs and Accruals

The Company enters

into various research and development and other agreements with commercial firms, researchers, and others for provisions of goods and services from time to time.

These agreements are generally cancellable, and the related costs are recorded as

research and development expenses as incurred.

The Company enters into various research and development and other agreements with commercial firms, researchers, and others for provisions of goods and services from time to time.

These agreements are generally cancellable, and the related costs are recorded as research and development expenses as incurred.

The Company records accruals for estimated ongoing research and development costs.

When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical

trials, including the phase or completion of events, invoices received and contracted costs.

When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs.

Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period.

Actual results could differ materially

from the Companys estimates.

Actual results could differ materially from the Company’s estimates.

Redeemable Convertible Preferred Stock

The Company records all shares of redeemable convertible preferred stock at their respective fair values on the dates of issuance, net of issuance costs.

carrying value of the Companys redeemable convertible preferred stock is adjusted to reflect dividends if and when declared by the Companys board of directors.

The carrying value of the Company’s redeemable convertible preferred stock is adjusted to reflect dividends if and when declared by the Company’s board of directors.

No dividends have been declared by the board of directors since inception.

The Company classifies its redeemable convertible preferred stock separate from total stockholders deficit, as the redemption of such stock is not solely under the control of the Company.

The Company classifies its redeemable convertible preferred stock separate from total stockholders’ equity (deficit), as the redemption of such stock is not solely under the control of the Company.

Stock-Based Compensation

The Company recognizes

compensation expense based on estimated fair values for all stock-based payment awards made to the Companys employees, nonemployee directors and consultants that are expected to vest.

The valuation of stock option awards is determined at the

date of grant using the Black-Scholes option pricing model.

The Black-Scholes option pricing model requires the Company to make assumptions and judgements about the inputs used in the calculations, such as the fair value of the common stock,

expected term, expected volatility of the Companys common stock, risk-free interest rate and expected dividend yield.

The valuation of restricted stock awards is measured by the fair value of the Companys common stock on the date of the

For all stock options granted, the Company calculated the expected term using the simplified method (derived from the average midpoint between the

weighted average vesting period and the contractual term of the award) for plain vanilla stock option awards, as the Company has limited historical information to develop expectations about future exercise patterns and post vesting

employment termination behavior.

The Company recognizes compensation expense based on estimated fair values for all stock-based payment awards made to the Company’s employees, nonemployee directors and consultants that are expected to vest.

The valuation of stock option awards is determined at the date of grant using the Black-Scholes option pricing model.

The Black-Scholes option pricing model requires the Company to make assumptions and judgements about the inputs used in the calculations, such as the fair value of the common stock, expected term, expected volatility of the Company’s common stock, risk-free interest rate and expected dividend yield.

The valuation of restricted stock awards is measured by the fair value of the Company’s common stock on the date of the grant.

For all stock options granted, the Company calculated the expected term using the simplified method (derived from the average midpoint between the weighted average vesting period and the contractual term of the award) for “plain vanilla” stock option awards, as the Company has limited historical information to develop expectations about future exercise patterns and post vesting employment termination behavior.

The estimate of expected volatility is based on comparative companies’ volatility.

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The Company records forfeitures when they occur.

The fair value of the shares of common stock

underlying the stock options has historically been determined by the board of directors with the assistance of management and input from an independent third-party valuation firm, as there was no public market for the common stock.

directors determined the fair value of the Companys common stock by considering a number of objective and subjective factors, including the valuation of comparable companies, sales of redeemable convertible preferred stock, the Companys

operating and financial performance, the lack of liquidity of common stock, and general and industry specific economic outlook, amongst other factors.

The Company records compensation expense for service-based awards on a straight-line basis over the

requisite service period, which is generally the vesting period of the award.

The fair value of the shares of common stock underlying the stock options has historically been determined by the board of directors with the assistance of management and input from an independent third-party valuation firm, as there was no public market for the common stock.

The board of directors determined the fair value of the Company’s common stock by considering a number of objective and subjective factors, including the valuation of comparable companies, sales of redeemable convertible preferred stock, the Company’s operating and financial performance, the lack of liquidity of common stock, and general and industry specific economic outlook, amongst other factors.

The Company records compensation expense for service-based awards on a straight-line basis over the requisite service period, which is generally the vesting period of the award.

The amount of stock-based compensation expense recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest.

The Company did not record an income tax

provision for the three months ended March 31, 2021 and 2020, as net operating losses have been incurred since inception.

The Company did no t record an income tax provision for the three and six months ended June 30, 2021 and 2020 as net operating losses have been incurred since inception.

The net deferred tax assets generated from net operating losses are fully offset by a valuation allowance.

Net Loss Per Share Attributable to Common Stockholders

Net loss per share of common stock is computed using the two-class method required for multiple classes of common stock

and participating securities based upon their respective rights to receive dividends as if all income for the period has been distributed.

The rights, including the liquidation and dividend rights and sharing of losses, of the Class A and

Class B common stock are identical, other than voting rights.

As the liquidation and dividend rights and sharing of losses are identical, the undistributed earnings are allocated on a proportionate basis and the resulting net loss per share

attributed to common stockholders is therefore the same for Class A and Class B common stock on an individual or combined basis.

Companys participating securities include the Companys redeemable convertible preferred stock, as the holders are entitled to receive noncumulative dividends on a pari passu basis in the event that a dividend is paid on common stock.

Company also considers any shares issued on the early exercise of stock options subject to repurchase to be participating securities because holders of such shares have non-forfeitable dividend rights in the

event a dividend is paid on common stock.

The holders of redeemable convertible preferred stock, as well as the holders of early exercised shares subject to repurchase, do not have a contractual obligation to share in losses of the Company, and

therefore during periods of loss there is no allocation required under the two-class method.

Basic net loss per

share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, adjusted for outstanding shares that are

subject to repurchase.

Diluted net loss per share is computed by giving effect to all potentially dilutive securities outstanding for the period using

the treasury stock method or the if-converted method based on the nature of such securities.

For periods in which the Company reports net losses, diluted net loss per share attributable to common stockholders

is the same as basic net loss per share attributable to common stockholders, because potentially dilutive shares are not assumed to have been issued if their effect is anti-dilutive.

The Company leases office and laboratory space

under operating leases and laboratory equipment under capital leases.

Net loss per share of common stock is computed using the two-class

method required for multiple classes of common stock and participating securities based upon their respective rights to receive dividends as if all income for the period has been distributed.

The rights, including the liquidation and dividend rights and sharing of losses, of the Class A and Class B common stock are identical, other than voting rights.

As the liquidation and dividend rights and sharing of losses are identical, the undistributed earnings are allocated on a proportionate basis and the resulting net loss per share attributed to common stockholders is therefore the same for Class A and Class B common stock on an individual or combined basis.

The Company’s participating securities include the Company’s redeemable convertible preferred stock, as the holders were entitled to receive noncumulative dividends on a pari passu basis in the event that a dividend is paid on common stock.

The Company also considers any shares issued on the early exercise of stock options subject to repurchase to be participating securities because holders of such shares have non-forfeitable

dividend rights in the event a dividend is paid on common stock.

The holders of redeemable convertible preferred stock, as well as the holders of early exercised shares subject to repurchase, did not and do not have a contractual obligation to share in losses of the Company, and therefore during periods of loss there is no allocation required under the two-class

Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, adjusted for outstanding shares that are subject to repurchase.

Diluted net loss per share is computed by giving effect to all potentially dilutive securities outstanding for the period using the treasury stock method or the if-converted

method based on the nature of such securities.

For periods in which the Company reports net losses, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, because potentially dilutive shares are not assumed to have been issued if their effect is anti-dilutive.

The Company leases office and laboratory space under operating leases and laboratory equipment under capital leases.

Leases for which the Company assumes substantially all risks and rewards incidental to ownership of the leased assets are classified as capital leases.

The leased assets and the

corresponding lease liabilities (net of interest charges) are recognized on the balance sheet as property and equipment, based on the cost of the equipment, and borrowings, respectively, at the inception of the related lease.

Each lease payment is

apportioned between the reduction of the outstanding lease liability and the related interest expense.

The leased assets and the corresponding lease liabilities (net of interest charges) are recognized on the balance sheet as property and equipment, based on the cost of the equipment, and borrowings, respectively, at the inception of the related lease.

Each lease payment is apportioned between the reduction of the outstanding lease liability and the related interest expense.

The interest expense is recorded on a basis that reflects a constant periodic rate of interest on the outstanding finance lease liability.

Leases for which substantially all risks and rewards incidental to ownership are retained by the lessors are classified as operating leases.

Payments made

under operating leases (net of any incentive received from the lessors) are recorded on a straight-line basis over the period of the lease.

Payments made under operating leases (net of any incentive received from the lessors) are recorded on a straight-line basis over the period of the lease.

Restructuring Costs

Restructuring costs primarily

consist of contract termination costs related to leases and employee termination costs.

Restructuring costs primarily consist of contract termination costs related to leases and employee termination costs.

The Company recognizes restructuring charges when the liability has been incurred.

Key assumptions in determining the restructuring costs include the terms and

payments that may be negotiated to terminate certain contractual obligations, cease use date of leased property and equipment, and the timing of employees leaving the Company.

Key assumptions in determining the restructuring costs include the terms and payments that may be negotiated to terminate certain contractual obligations, cease use date of leased property and equipment, and the timing of employees leaving the Company.

Accretion expenses related to restructuring costs are included in general and administrative expenses.

Fair Value Option

The convertible notes issued in 2020, for which the Company elected the fair value option, are accounted for at fair value on a recurring basis with changes in

fair value recognized in the statement of operations and comprehensive loss.

The convertible notes issued in 2020, for which the Company elected the fair value option, are accounted for at fair value on a recurring basis with changes in fair value recognized in the statement of operations and comprehensive loss.

Interest accrued on the convertible notes is recorded to interest expense.

Fair Value Measurements

Fair value is defined as the

exchange price to sell an asset or transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.

Fair value should be based on

the assumptions market participants would use when pricing the asset or liability.

Fair value is defined as the exchange price to sell an asset or transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.

Fair value should be based on the assumptions market participants would use when pricing the asset or liability.

The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.

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Level 1 – Quoted unadjusted prices for identical instruments in active markets.

Level 2 Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that

are not active, and model-derived valuations in which all observable inputs and significant value drivers are observable in active markets.

Level 3 Model derived valuations in which one or more significant inputs or significant value drivers are unobservable, including

assumptions developed by the Company.

The carrying amounts of the Companys cash and cash equivalents, prepaid expenses and other current assets,

accounts payable and accrued expenses approximate their fair value due to their short-term nature.

Money market funds are highly liquid investments that

are actively traded.

Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all observable inputs and significant value drivers are observable in active markets.

Level 3 – Model derived valuations in which one or more significant inputs or significant value drivers are unobservable, including assumptions developed by the Company .

The carrying amounts of the Company’s cash and cash equivalents, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair value due to their short-term nature.

Money market funds are highly liquid investments that are actively traded.

The pricing information for the Company’s money market funds are readily available and can be independently validated as of the measurement date.

This approach results in the classification of these securities as

Level 1 of the fair value hierarchy.

This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

The Company’s non-marketable

equity securities (Note 5) are measured at fair value using an option pricing valuation methodology.

The option pricing methodology relies on risk-neutral valuation which calculates the value of an asset by discounting the expected value of its future payoffs at the risk-free rate of return.

The fair value of the non-marketable equity securities is derived from quoted prices for similar instruments and observable inputs in active markets.

This approach results in the classification of these securities as Level 2 of the fair value hierarchy.

There were no transfers between Levels 1, 2, or 3 for any of the periods presented.

As of March 31, 2021 and December 31, 2020, the Company held $48,303 and $52,301, respectively, in money market

funds with no unrealized gains or losses.

As of June 30, 2021, and December 31, 2020, the Company held $ 86,805 and $ 52,301 , respectively, in money market funds with no unrealized gains or losses.

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740):

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12,

Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

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The Company adopted this standard as of January 1, 2021.

The adoption of this standard did not

have a material impact on its unaudited condensed financial statements.

On June 20, 2018, the FASB issued ASU

The adoption of this standard did not have a material impact on its unaudited condensed financial statements.

On June 20, 2018, the FASB issued ASU No.

Compensation—Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting , to reduce cost and complexity and to improve financial reporting for

share-based payments issued to nonemployees (for example, service providers, external legal counsel, suppliers, etc.).

This includes allowing for the measurement of awards at the grant date and recognition of awards with performance conditions when

those conditions are probable, both of which are earlier than under current guidance for nonemployee awards.

Improvements to Nonemployee Share-Based Payment Accounting

, to reduce cost and complexity and to improve financial reporting for share-based payments issued to nonemployees (for example, service providers, external legal counsel, suppliers, etc.).

This includes allowing for the measurement of awards at the grant date and recognition of awards with performance conditions when those conditions are probable, both of which are earlier than under current guidance for nonemployee awards.

The Company adopted this standard as of January 1, 2020 on a retrospective basis.

The adoption of this standard did not have a material

impact on its unaudited condensed financial statements.

The adoption of this standard did not have a material impact on its unaudited condensed financial statements.

In August 2018, the FASB issued ASU No.

Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement , which amends ASC 820, Fair Value Measurement.

This standard modifies the disclosure requirements for fair value measurements by removing,

modifying, or adding certain disclosures.

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement

, which amends ASC 820, Fair Value Measurement.

This standard modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures.

The Company adopted this standard as of January 1, 2020 on a retrospective basis.

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In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) , subsequently amended by ASU 2018-10, ASU 2018-11, ASU 2018-20, ASU 2019-01 and ASU

Leases (Topic 842)

, subsequently amended by ASU 2018-10,

and ASU 2019-10,

which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessors and lessees of a contract.

The new standard requires lessees to apply a dual

approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee.

This classification will determine whether lease expense is recognized based on

an effective interest method or on a straight-line basis over the term of the lease.

A lessee is also required to record a right-of-use asset and a lease liability for

all leases with a term of greater than 12 months regardless of their classification on the balance sheets.

The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee.

This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease.

A lessee is also required to record a right-of-use

asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification on the balance sheets.

Leases with a term of 12 months or less may be accounted for similar to existing guidance for operating leases today.

The Company intends to

utilize the modified retrospective approach to adopt this standard effective January 1, 2022.

Additionally, the Company intends to utilize the package of available practical expedients, which allows it to (i) not reassess whether any

expired or existing contracts are or contain leases;

The Company intends to utilize the modified retrospective approach to adopt this standard effective January 1, 2022.

Additionally, the Company intends to utilize the package of available practical expedients, which allows it to (i) not reassess whether any expired or existing contracts are or contain leases;

(ii) not reassess the lease classification for expired or existing leases;

and (iii) not reassess the treatment of initial direct costs for any existing leases.

The Company is currently

evaluating the impact this standard will have on its financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial InstrumentsCredit Losses (Topic 326):

The Company is currently evaluating the impact this standard will have on its financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13,

Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments

The objective of the standard is to provide information about expected credit losses on

financial instruments at each reporting date and to change how other-than temporary impairments on investment securities are recorded.

The objective of the standard is to provide information about expected credit losses on financial instruments at each reporting date and to change how other-than temporary impairments on investment securities are recorded.

The guidance is effective for the Company beginning on January 1, 2023, with early adoption permitted.

Company is currently evaluating the impact the standard may have on its financial statements and related disclosures.

In August 2020, the FASB issued ASU

2020-06, DebtDebt with Conversion and Other Options (Subtopic 470-20) and Derivatives and HedgingContracts in Entitys Own Equity (Subtopic 815-40) .

This standard simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20 that

requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock.

ASU 2020-06 is effective for the Company

for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2023, and early adoption is permitted.

The Company is currently evaluating the impact this standard will have on its financial

The Company is currently evaluating the impact the standard may have on its financial statements and related disclosures.

In August 2020, the FASB issued ASU No.

Debt—Debt with Conversion and Other Options (Subtopic 470-20)

and Derivatives and Hedging—Contracts in Entity

s Own Equity (Subtopic 815-40)

This standard simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20

that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock.

is effective for the Company for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2023, and early adoption is permitted.

The Company is currently evaluating the impact this standard will have on its financial statements.

OTHER FINANCIAL STATEMENT INFORMATION

Prepaid Expense and Other Current Assets

Prepaid expenses

and other current assets consist of the following.

Prepaid expenses

Deferred stock offering costs

Prepaid expenses and other current assets consist of the following.

Prepaid insurance

Prepaid contract costs

Receivables on exercise of options

Total prepaid expenses and other current assets

Accrued and Other Current Liabilities

Accrued and other current liabilities consist of the following.

Accrued contract costs

Accrued Expenses

and Other Current Liabilities

Accrued expenses

and other current liabilities consist of the following.

Accrued payroll

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Related party payable represents amounts due to Ares Trading S.A.

(Ares), an affiliate of Merck KGaA, Darmstadt,

Germany, related to manufacturing technology and know-how transfer services performed for atacicept pursuant to the license agreement between the Company and Ares (see Note 9).

(“Ares”), an affiliate of Merck KGaA, Darmstadt, Germany, related to manufacturing technology and know-how

transfer services performed for atacicept pursuant to the license agreement between the Company and Ares (see Note 11).

NEUBASE ASSET SALE

On January 27, 2021, the Company entered into an asset purchase agreement with NeuBase Therapeutics, Inc.

(“NeuBase”), whereby the Company agreed to sell all assets relating to its investment in PNAi, including all inventory, machinery, intellectual property, goodwill, and licenses, and NeuBase agreed to assume certain related liabilities.

The sale of the Company’s investment in PNAi closed on April 26, 2021.

The Company received

$ 796 in cash and

308,635 shares of NeuBase

common stock, with a fair market value of $ 1,759 based on the closing price reported on the Nasdaq Capital Market on the date the sale closed.

Of the total NeuBase

shares issued to the Company, 162,260 were placed in escrow to secure certain obligations under the asset purchase agreement.

In connection with the sale, the Company also assigned certain leases for research and laboratory equipment to NeuBase (see Note 13).

The Company recognized a gain of $ 2,691 on the sale of assets to NeuBase.

NON-MARKETABLE

EQUITY SECURITIES

The Company has an investment in NeuBase common stock with restrictions on the sale or transfer of the shares.

Fair value is determined using alternative pricing sources and models utilizing market observable inputs.

The Company reports the restricted equity securities as non-marketable equity securities on the balance sheet, and determines current or non-current

classification based on the expected duration of the restriction.

The Company recorded a net unrealized loss

of $ 281 in other expense for the three months ended June 30, 2021.

The carrying value is measured as the total initial cost, less the cumulative net unrealized loss

The carrying value of the non-marketable

equity securities as of June 30, 2021, is summarized below.

Initial cost as of April 26, 2021

Change in fair value

Balance as of June 30, 2021

CONVERTIBLE NOTES

In March 2020, the Company issued

convertible notes to certain existing investors of the Company for cash.

In March 2020, the Company issued convertible notes to certain existing investors of the Company for cash.

The principal amount of the convertible notes was $ 5,000 in the aggregate with a fixed accrued interest rate of 4 % per annum.

The convertible notes were either due on or after

December 31, 2020 or upon a change of control of the Company, unless earlier converted.

No principal or interest was payable prior to maturity as the convertible notes and any accrued interest would automatically convert upon a qualified

financing event at a conversion price equal to 85% of the price per share of the qualified financing.

Holders also had the option to convert their notes to shares of Series B redeemable convertible stock at a conversion price equal to $4.2926 per

share on the maturity date or upon a change of control of the Company, if no qualified financing occurred prior to such date.

Due to certain embedded

features within the convertible notes, the Company elected to account for the convertible notes under the fair value option.

In April and May 2020, the

Company issued additional convertible notes to certain existing investors of the Company for cash.

The convertible notes were either due on or after December 31, 2020, or upon a change of control of the Company, unless earlier converted.

No principal or interest was payable prior to maturity as the convertible notes and any accrued interest would automatically convert upon a qualified financing event at a conversion price equal to 85 % of the price per share of the qualified financing.

Holders also had the option to convert their notes to shares of Series B redeemable convertible stock at a conversion price equal to $ 4.2926 per share on the maturity date or upon a change of control of the Company, if no qualified financing occurred prior to such date .

Due to certain embedded features within the convertible notes, the Company elected to account for the convertible notes under the fair value option.

In April and May 2020, the Company issued additional convertible notes to certain existing investors of the Company for cash.

The principal amount of the convertible notes was $ 602 in the aggregate with the same terms as the convertible notes issued in March 2020.

In October 2020, the outstanding principal and accrued interest of $134, were automatically converted into 11,404,246 shares of the Companys Series C

redeemable convertible preferred stock in connection with the closing of the Companys Series C redeemable convertible preferred stock financing (see Note 5) at a conversion price of $0.5030 per share, which was 85% of the $0.5918 original

issuance price of the Series C redeemable convertible preferred stock.

In October 2020, the outstanding principal and accrued interest of $ 134 , were automatically converted into 11,404,246 shares of the Company’s Series C redeemable convertible preferred stock in connection with the closing of the Company’s Series C redeemable convertible preferred stock financing (see Note 7) at a conversion price of $ 0.5030 per share, which was 85 % of the $ 0.5918 original issuance price of the Series C redeemable convertible preferred stock.

REDEEMABLE CONVERTIBLE PREFERRED STOCK

As of March 31, 2021, the Companys redeemable convertible preferred stock consisted of the following balances (in thousands, except per share

As of December 31, 2020, the Company’s redeemable convertible preferred stock consisted of the following balances.

SHARES ISSUED

Series Seed-1

In October 2020, the Company issued 135,180,800 shares of Series C redeemable convertible preferred stock for a purchase price

of $0.5918 per share, payable in cash.

In October 2020, the Company issued 135,180,800 shares of Series C redeemable convertible preferred stock for a purchase price of $ 0.5918 per share, payable in cash.

Gross proceeds to the Company were $ 80,000 .

The Series C redeemable convertible preferred stock financing triggered the automatic conversion of the Companys outstanding convertible notes into 11,404,246

shares of Series C redeemable convertible preferred stock based on price of $0.5030 per share (85% of the $0.5918 original issuance price of the Series C redeemable convertible preferred stock).

In addition, the Company issued 22,171,553 shares of

Series C redeemable convertible preferred stock to Ares as the initial payment for the Companys license of atacicept from Ares (see Note 9).

As of March 31, 2021, the Companys certificate of incorporation, as amended and restated, authorized the Company to issue

273,986,920 shares of Class A common stock and 21,593,607 shares of Class B common stock, each with a par value of $0.001 per share.

Each share of Class A common stock entitles the holder to one vote on all matters submitted to a vote

of the Companys stockholders.

The Series C redeemable convertible preferred stock financing triggered the automatic conversion of the Company’s outstanding convertible notes into 11,404,246 shares of Series C redeemable convertible preferred stock based on price of $ 0.5030 per share ( 85 % of the $ 0.5918 original issuance price of the Series C redeemable convertible preferred stock).

In addition, the Company issued 22,171,553 shares of Series C redeemable convertible preferred stock to Ares as the initial payment for the Company’s license of atacicept from Ares (see Note 11).

In May 2021, immediately prior to the completion of the IPO (see Note 1), all outstanding shares of redeemable convertible preferred stock were automatically converted into 15,774,014 shares of common stock.

As of June 30, 2021, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue 500,000,000 shares of Class A common stock and 14,600,000 shares of Class B common stock, each with a par value of $ 0.001 per share.

Each share of Class A common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders.

Class B common stock is non-voting.

The holders of Class A common stock, voting exclusively and as a separate class, have the exclusive right to vote for the

election of one director of the Company.

The holders of Class A common stock, voting exclusively and as a separate class, have the exclusive right to vote for the election of one director of the Company.

Class A common stockholders and holders of Class B common stock are entitled to receive dividends, as may be declared by the board of directors.

Through March 31, 2021, no cash dividends had

been declared or paid.

Through June 30, 2021, no cash dividends have been declared or paid.

STOCK COMPENSATION

2017 Equity Incentive Plan

In 2017, the Companys

board of directors adopted the Vera Therapeutics, Inc.

2017 Equity Incentive Plan, which provides for the grant of qualified stock options, nonqualified stock options and other awards, including restricted stock awards, to the Companys

employees, directors, and consultants to purchase up to 286,578 shares of the Companys Class A common stock.

The grants of stock options and restricted stock awards generally vest either (i) over a four-year period, with 25% vesting

on the first anniversary of the grant date and on a ratable monthly basis thereafter for the following three years, or (ii) on a ratable monthly basis over a three-year period and expire ten years from the date of grant.

Certain awards provide

for accelerated vesting upon a change of control, as defined in the 2017 Equity Incentive Plan.

In 2020, the Companys board of directors voted to

amend the 2017 Equity Incentive Plan to increase the aggregate authorized number of Class A common stock to be 3,052,169 shares.

No other changes were made to the 2017 Equity Incentive Plan.

As of March 31, 2021, there were 876,429 shares

available for future grant under the 2017 Equity Incentive Plan.

In April 2021, the Company adopted the 2021 Employee Stock Purchase Plan (“ESPP”) and the 2021 Equity Incentive Plan (“2021 EIP”), each of which became effective in connection with the IPO.

The Company has reserved 220,251 and 2,212,335 shares of Class A common stock for future issuance under the ESPP and 2021 EIP, respectively.

The Company may not grant any additional awards under the 2017 Equity Incentive Plan (“2017 EIP”).

The 2017 EIP will continue to govern outstanding equity awards granted thereunder.

As of June 30, 2021, there

were 1,762,009 shares available for issuance under the 2021 EIP.

Stock option activity under the 2017 EIP and 2021 EIP was as follows:

Balance – December 31, 2020

Cancelled and forfeited

Balance – June 30, 2021

Options exercisable – June 30, 2021

Unvested and expected to vest –June 30, 2021

The aggregate intrinsic value of stock options exercised during the three and si x

months ended June 30, 2021, was $ 61 and $ 745 , respectively.

The weighted -average

grant date fair value of options granted during the three and six months ended June 30, 2021, was $ 8.60 and $ 7.11 , respectively, per share.

The weighted -average

grant date fair value of options vested during the three and six months ended June 30, 2021, was $ 2.22 and $ 2.42 , respectively, per share.

Stock-Based Compensation Expense

The following tables summarize the stock-based compensation expense for stock options and restricted stock awards granted to employees and nonemployees that

was recorded in the Companys statements of operations and comprehensive loss for the three months ended March 31, 2021 and 2020.

The following tables summarize the stock-based compensation expense for stock options and restricted stock awards granted to employees and nonemployees that was recorded in the Company’s statements of operations and comprehensive loss for the three and six months ended June 30, 2021 and 2020.

THREE MONTHS ENDED

SIX MONTHS ENDED

Research and development

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THREE MONTHS ENDED

SIX MONTHS ENDED

Total stock-based compensation expense

As of March 31, 2021, the Company had $4,998 of unrecognized stock-based compensation expense related to unvested stock

options and restricted stock awards, which is expected to be recognized over a weighted-average period of approximately 1.8 years, respectively.

value of stock options granted during the three months ended March 31, 2021 and 2020, was estimated using the Black-Scholes option pricing model based on the following weighted average assumptions.

As of June 30, 2021, the Company had $ 9,438 of unrecognized stock-based compensation expense related to unvested stock options and restricted stock awards, which is expected to be recognized over a weighted-average period of approximately 1.7 years, respectively.

The fair value of stock options granted during the three months ended June 30, 2021 and 2020 was estimated using the Black-Scholes option pricing model based on the following weighted average assumptions.

THREE MONTHS ENDED

SIX MONTHS ENDED

Expected term (in years)

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76.3 % – 76.6 %

74.0% 74.2%

Risk-free rate

1.0 % – 1.1 %

0.4 % – 1.7 %

Dividend yield

The following table summarizes the Companys option activity for the three months ended March 31, 2021.

Balance December 31, 2020

Cancelled and forfeited

Balance March 31, 2021

Options exercisable March 31, 2021

Unvested and expected to vest March 31, 2021

The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2021

The weighted average grant date fair value of options granted during the three months ended March 31, 2021 was $3.53 per share.

The weighted average grant date fair value of options vested during the three months ended March 31,

2021 was $2.60 per share.

Restricted Stock Awards

In October 2020, in conjunction with the Series C redeemable convertible preferred stock issuance, the Company restricted 49,636 shares of fully issued and

outstanding Class A common stock held by the Companys Chief Executive Officer and founder.

In October 2020, in conjunction with the Series C redeemable convertible preferred stock issuance, the Company restricted 49,636 shares of fully issued and outstanding Class A common stock held by the Company’s Chief Executive Officer and founder.

The restriction allows the Company to repurchase shares that have not vested.

The vesting term of restricted stock is one year .

The grant date fair

value of the restricted shares was $6.37.

The following table summarizes the activity for the Companys restricted stock for the three months ended

March 31, 2021.

The grant date fair value of the restricted shares was $ 6.37 .

The following table summarizes the activity for the Company’s restricted stock for the six months ended June 30, 2021.

Unvested as of December 31, 2020

Unvested as of March 31, 2021

For each of the three months ended March 31, 2021 and 2020, the Company recognized $79 and $0, respectively, of

stock-based compensation expense related to restricted stock awards that vested during the periods.

Unvested as of June 30, 2021

For each of the six months ended June 30, 2021 and 2020, the Company recognized $ 157 and $ 0 , respectively, of stock-based compensation expense related to restricted stock awards that vested during the periods.

EMPLOYEE BENEFIT PLANS

The Company sponsors a qualified 401(k) defined contribution plan covering eligible employees.

Participants may contribute a portion of their annual

compensation limited to a maximum annual amount set by the Internal Revenue Service.

There were no employer contributions under this plan for the three months ended March 31, 2021.

Participants may contribute a portion of their annual compensation limited to a maximum annual amount set by the Internal Revenue Service.

There were no employer contributions under this plan for the three and six months ended June 30, 2021.

LICENSES AND COLLABORATIONS

Yale University

In 2017, PNAi entered into a collaborative research agreement (the Yale CRA) and license agreement (the Yale License

Agreement) with Yale University, which were assigned to the Company upon the closing of the acquisition of PNAi by the Company in 2017.

The purpose of the agreements was to fund the Yale University research program in the field of nanoparticle-sized nucleic acid mimics and peptide nucleic acids as gene editing therapeutics in return for an exclusive license to certain related patent rights owned by Yale University and the option to license

any patents discovered or generated under the terms of the collaborative research agreement.

The Yale CRA required funding the labs of collaborators with

$1,500 per year for a minimum of two years.

In 2017, PNAi entered into a collaborative research agreement (the “Yale CRA”) and license agreement (the “Yale License Agreement”) with Yale University, which were assigned to the Company upon the closing of the acquisition of PNAi by the Company in 2017.

The purpose of the agreements was to fund the Yale University research program in the field of nanoparticle-sized

nucleic acid mimics and peptide nucleic acids as gene editing therapeutics in return for an exclusive license to certain related patent rights owned by Yale University and the option to license any patents discovered or generated under the terms of the collaborative research agreement.

The Yale CRA required funding the labs of collaborators with $1,500 per year for a minimum of two years.

The Yale CRA expired in 2019.

No payments were made to Yale University pursuant to the Yale CRA during the year ended December 31, 2019 with no future obligation under this commitment.

As consideration for the Yale License Agreement, PNAi paid an initial fee of $37 and had the option to issue 5% of the companys common stock on a fully

diluted, as converted basis.

As consideration for the Yale License Agreement, PNAi paid an initial fee of $ 37 and had the option to issue 5 % of the company’s common stock on a fully diluted, as converted basis.

If the shares were not issued, the agreement could be terminated at Yale University’s option.

After the completion of the merger with PNAi, the Company exercised the option and issued 264,301 shares of common stock

to Yale University with a fair value of $100.

After the completion of the merger with PNAi, the Company exercised the option and issued 264,301 shares of common stock to Yale University with a fair value of $ 100 .

Under the Yale License Agreement, the Company reimbursed Yale University for patent related expenses.

The Company reimbursed Yale University $45 for patent related expenses for the year ended

December 31, 2019.

The Company reimbursed Yale University $ 45 for patent related expenses for the year ended December 31, 2019.

The Company and Yale agreed to terminate the Yale License Agreement in 2020 and there are no future payment obligations under the Yale License Agreement.

Ares Trading S.A.

In October 2020, the Company entered

into a license agreement with Ares (the Ares Agreement), pursuant to which the Company obtained an exclusive worldwide license to certain patents and related know-how to research, develop,

manufacture, use and commercialize therapeutic products containing atacicept, a recombinant fusion protein used to inhibit B cell growth and differentiation, which could potentially treat some autoimmune diseases.

As consideration for the Ares Agreement, the Company issued to Ares a

non-refundable license issue fee of 22,171,553 shares of Series C redeemable convertible preferred stock resulting in Ares becoming a related party to the Company.

The Series C redeemable convertible preferred

stock had a deemed issuance price of $0.5918 per share, or $13,121 in the aggregate.

In December 2020, the Company paid Ares $25,000 in milestone

payments upon delivery and initiation of the transfer of specified information and materials.

The Company is obligated to pay Ares aggregate milestone payments of up to $176,500 upon the achievement of specified BLA filing or regulatory approval

milestones and up to $515,000 upon the achievement of specified commercial milestones.

The non-refundable license

issue fee of $13,121 and milestone payments of $25,000 were recorded to research and development expense.

Ares is performing manufacturing technology and

know-how transfer to the Company over a period not to exceed two years from the effective date of the Ares Agreement.

The Company accrued $299 due to Ares for these services during the three months ended

March 31, 2021.

Commencing on the first commercial sale of licensed products, the Company is obligated to pay Ares tiered royalties of low

double-digit to mid-teen percentages on annual net sales of the licensed products covered by the license.

The Company is obligated to pay royalties on a licensed product-by- licensed product and country-by-country basis from the first commercial sale of a product in a country until the

latest of (i) 15 years after the first commercial sale of such licensed product in such country;

(ii) the expiration of the last valid claim of a licensed patent that covers such licensed product in, or its use, importation or manufacture with

respect to, such country;

In October 2020, the Company entered into a license agreement with Ares (the “Ares Agreement”), pursuant to which the Company obtained an exclusive worldwide license to certain patents and related know-how

to research, develop, manufacture, use and commercialize therapeutic products containing atacicept, a recombinant fusion protein used to inhibit B cell growth and differentiation, which could potentially treat some autoimmune diseases.

As consideration for the Ares Agreement, the Company issued to Ares a non-refundable

license issue fee of 22,171,553 shares of Series C redeemable convertible preferred stock resulting in Ares becoming a related party to the Company.

The Series C redeemable convertible preferred stock had a deemed issuance price of $ 0.5918 per share, or $ 13,121 in the aggregate.

In December 2020, the Company paid Ares $ 25,000 in milestone payments upon delivery and initiation of the transfer of specified information and materials.

The Company is obligated to pay Ares aggregate milestone payments of up to $ 176,500 upon the achievement of specified BLA filing or regulatory approval milestones and up to $ 515,000 upon the achievement of specified commercial milestones.

The non-refundable

license issue fee of $ 13,121 and milestone payments of $ 25,000 were recorded to research and development expense.

Ares is performing manufacturing technology and know-how

transfer to the Company over a period not to exceed two years from the effective date of the Ares Agreement.

The Company accrued $ 418 and $ 717 due to Ares for these services during the three and six months ended June 30, 2021, respectively.

Commencing on the first commercial sale of licensed products, the Company is obligated to pay Ares tiered royalties of low double-digit to mid-teen

percentages on annual net sales of the licensed products covered by the license.

The Company is obligated to pay royalties on a licensed product-by-

licensed product and country-by-country

basis from the first commercial sale of a product in a country until the latest of (i) 15 years after the first commercial sale of such licensed product in such country;

(ii) the expiration of the last valid claim of a licensed patent that covers such licensed product in, or its use, importation or manufacture with respect to, such country;

and (iii) expiration of all applicable regulatory exclusivity periods, including data exclusivity, in such country with respect to such product.

If the Company were to sublicense its rights under the Ares Agreement,

the Company is obligated to pay Ares a percentage ranging from the mid single-digit to the low double-digits of specified sublicensing income received.

If the Company were to sublicense its rights under the Ares Agreement, the Company is obligated to pay Ares a percentage ranging from the mid single-digit to the low double-digits of specified sublicensing income received.

COMMITMENTS AND CONTINGENCIES

The aggregate future

minimum lease payments for operating leases as of March 31, 2021 are as follows (in thousands).

Year ending December 31,

The aggregate future minimum lease payments for operating leases as of June 30, 2021, are as follows.

2021 (remaining 6 months)

2 unchanged sentences

Facilities Leases

In April 2015, PNAi entered a lease

for approximately 3,800 square feet of office and laboratory space for a term of 39 months in Woburn, Massachusetts.

In April 2015, PNAi entered a lease for approximately 3,800 square feet of office and laboratory space for a term of 39 months in Woburn, Massachusetts.

In January 2018, the Company elected to renew this lease for three years , beginning in August 2018.

In connection with the lease,

the Company maintains a letter of credit issued to the lessor in the amount of $50, which is secured by restricted cash that is classified as noncurrent based on the term of the underlying lease.

In April 2018, the Company entered into a lease for approximately 24,606 square feet of office and life science research space, which commenced on

October 1, 2018, when the Company obtained control of the rented space for a term of 84 months in South San Francisco, California (the South San Francisco Lease).

In connection with the South San Francisco Lease, the Company

maintains a letter of credit issued to the lessor in the amount of $293, which is secured by restricted cash that is classified as noncurrent based on the term of the underlying lease.

The Companys total future minimum commitment due pursuant to the South San Francisco Lease is $11,046

as of March 31, 2021.

In November 2020, the Company entered into a non-cancellable sublease agreement for the facility, under the terms of which the Company is entitled to receive $8,854 in sublease

payments over the term of the sublease, which ends concurrently with the original lease in September 2025.

In connection with the lease, the Company maintains a letter of credit issued to the lessor in the amount of $ 50 , which is secured by restricted cash that is classified as noncurrent based on the term of the underlying lease.

In April 2018, the Company entered into a lease for approximately 24,606 square feet of office and life science research space, which commenced on October 1, 2018, when the Company obtained control of the rented space for a term of 84 months in South San Francisco, California (“the South San Francisco Lease”).

In connection with the South San Francisco Lease, the Company maintains a letter of credit issued to the lessor in the amount of $ 293 , which is secured by restricted cash that is classified as noncurrent based on the term of the underlying lease.

The Company’s total future minimum commitment due pursuant to the South San Francisco Lease is $ 10,500 as of June 30, 2021.

In November 2020, the Company entered into a non-cancellable

sublease agreement for the facility, under the terms of which the Company is entitled to receive $ 8,412 in sublease payments over the term of the sublease, which ends concurrently with the original lease in September 2025.

As tenant, the Company remains responsible for the $ 10,500 minimum lease commitment on the facilities.

The Company recorded rent expense totaling $535 for the three months ended March 31, 2020.

No rent expense was recorded during the three months ended

March 31, 2021.

The Company recorded rent expense totaling $ 535 and $ 1,070 for the three and six months ended June 30, 2020, respectively.

No rent expense was recorded during the three and six months ended June 30, 2021.

Equipment Lease

has certain leases on research and laboratory equipment with total future minimum commitments of $141 as of March 31, 2021.

The Company recorded rent expense totaling $128 for the three months ended March 31, 2020.

No rent expense was

recorded during the three months ended March 31, 2021.

The Company had certain leases on research and laboratory equipment which were assigned to a certain third party as of June 30, 2021.

The Company recorded rent expense totaling $ 128 and $ 256 for the three and six months ended June 30, 2020, respectively.

No rent expense was recorded during the three and six months ended June 30, 2021.

RESTRUCTURING AND RELATED ACTIVITIES

During the year ended December 31, 2019, the Company completely vacated its leased facilities in Woburn, Massachusetts.

In connection with vacating the

leased spaces, the Company recorded a discounted lease-related restructuring liability, which was calculated as the present value of the estimated future facility costs for which the Company would obtain no future economic benefit over the term of

the lease, reduced for actual or estimated sublease rentals.

In July 2020, the Company initiated a restructuring plan to reduce operating expense as a

result of the disposal of PNAi technology.

In connection with vacating the leased spaces, the Company recorded a discounted lease-related restructuring liability, which was calculated as the present value of the estimated future facility costs for which the Company would obtain no future economic benefit over the term of the lease, reduced for actual or estimated sublease rentals.

In July 2020, the Company initiated a restructuring plan to reduce operating expense as a result of the disposal of PNAi technology.

The restructuring plan included reducing the number of employees, vacating leased facilities, and ceasing use of leased equipment.

As a result of this restructuring plan, the Company completely vacated its leased facilities in South San Francisco, California, which was subleased to a

third party in November 2020, and returned certain leased equipment to the lessor.

The Company recorded a discounted lease-related restructuring liability of $2,228 and $768 for the abandonment of the leased facilities and equipment, which was

calculated as the present value of the estimated future lease costs for which the Company would obtain with no future economic benefit over the term of the leases.

In addition, the Company recognized restructuring liability of $321 related to

severance and other employee termination costs related to the reduction in the number of employees.

The Company expects this restructuring plan to be completed in 2021.

The activity related to the restructuring liabilities for the three months ended March 31, 2021, is as follows.

Lease -related

As a result of this restructuring plan, the Company completely vacated its leased facilities in South San Francisco, California, which was subleased to a third party in November 2020, and returned certain leased equipment to the lessor.

The Company recorded a discounted lease-related restructuring liability of $ 2,228 and $ 768 for the abandonment of the leased facilities and equipment, which was calculated as the present value of the estimated future lease costs for which the Company would obtain with no future economic benefit over the term of the leases.

In addition, the Company recognized restructuring liability of $ 321 related to severance and other employee termination costs related to the reduction in the number of employees.

The activity related to the restructuring liabilities for the three months ended June 30, 2021, is as follows.

Balance as of March 31, 2021

Cash payments

Lease assignment to NeuBase

Balance as of June 30, 2021

The activity related to the restructuring liabilities for the six months ended June 30, 2021, is as follows.

Balance as of December 31, 2020

Cash payments

Balance as of March 31, 2021

NET LOSS PER COMMON SHARE

The following outstanding potentially dilutive shares were excluded from the computation of diluted net loss per share attributable to common stockholders for

the periods presented, because including them would have been anti-dilutive (on an as-converted basis).

Lease assignment to NeuBase

Balance as of June 30, 2021

NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS

The following outstanding potentially dilutive shares were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented, because including them would have been anti-dilutive (on an as-converted

THREE MONTHS ENDED

SIX MONTHS ENDED

Redeemable convertible preferred stock

2 unchanged sentences

RELATED PARTY TRANSACTIONS

In October 2018, the Company entered into a sublease agreement for a portion of its South San Francisco office space, the term for which commenced on

December 7, 2018.

In October 2018, the Company entered into a sublease agreement for a portion of its South San Francisco office space, the term for which commenced on December 7, 2018.

The Chief Executive Officer of the sublessor is a member of the Company’s board of directors.

The initial sublease was established for approximately 400 square feet of space.

Prior to the initial expiration of the

sublease in April 2019, the space was expanded to approximately 3,700 square feet with the term of the lease extended for an additional two years.

The monthly rent charged by the Company to the subtenant is subject to escalating rent payments

according to the terms of the Companys lease agreement, and the subtenant is required to reimburse the Company for monthly facility operating expenses based on its proportionate share of total square footage pursuant to the lease.

Companys lease agreement provides that 50% of any profit resulting from the excess of the amount collected from the subtenant less the sum of monthly rent, operating expenses and reimbursement of direct expenditures made by the Company in

order to arrange and maintain the sublease is to be shared with the lessor.

To date, no profit has been realized on the sublease arrangement as the monthly collections from the subtenant are equivalent to the Companys cost of rent, operating

expense and recovery of professional fees to arrange the sublease.

Prior to the initial expiration of the sublease in April 2019, the space was expanded to approximately 3,700 square feet with the term of the lease extended for an additional two years .

The monthly rent charged by the Company to the subtenant is subject to escalating rent payments according to the terms of the Company’s lease agreement, and the subtenant is required to reimburse the Company for monthly facility operating expenses based on its proportionate share of total square footage pursuant to the lease.

The Company’s lease agreement provides that 50 % of any profit resulting from the excess of the amount collected from the subtenant less the sum of monthly rent, operating expenses and reimbursement of direct expenditures made by the Company in order to arrange and maintain the sublease is to be shared with the lessor.

To date, no profit has been realized on the sublease arrangement as the monthly collections from the subtenant are equivalent to the Company’s cost of rent, operating expense and recovery of professional fees to arrange the sublease.

In June 2020, the sublease agreement was terminated.

During the three months ended March 31, 2020 the Company recognized $78 of sublease income under this agreement, which was

recorded as a reduction to the Companys rent expense.

In October 2020, the Company entered into the Ares Agreement with Ares, pursuant to which the

Company obtained an exclusive worldwide license to certain patents and related know-how to research, develop, manufacture, use and commercialize therapeutic products containing atacicept, a recombinant fusion

protein used to inhibit B cell growth and differentiation, which could potentially treat some autoimmune diseases (See Note 3 and Note 9).

SUBSEQUENT EVENTS

Neubase Asset Sale

January 27, 2021, the Company entered into an asset purchase agreement with Neubase Therapeutics, Inc.

(Neubase), whereby the Company agreed to sell all assets relating to its investment in PNAi, including all inventory, machinery,

intellectual property, goodwill and licenses, including the CMU License Agreement, and Neubase agreed to assume certain related liabilities.

The sale of the Companys investment in PNAi closed on April 26, 2021.

The Company received $796

in cash and 308,635 shares of Neubase common stock, with a fair market value of $1,759 based on the closing price reported on the Nasdaq Capital Market on the date the sale closed.

Of the total Neubase shares issued to the Company, 162,260 were

placed in escrow to secure certain obligations under the agreement.

2021 Employee Stock Purchase Plan and 2021 Equity Incentive Plan

In April 2021, the Company adopted the 2021 Employee Stock Purchase Plan (ESPP) and the 2021 Equity Incentive Plan (2021 EIP), each of

which became effective in connection with the IPO.

The Company has reserved 220,251 and 2,212,335 shares of common stock for future issuance under the ESPP and 2021 EIP, respectively.

Managements Discussion and Analysis of Financial Condition

and Results of Operations 1

You should read the following discussion and

analysis of our financial condition and results of operations together with our unaudited condensed financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our

audited financial statements and notes thereto and the related Managements Discussion and Analysis of Financial Condition and Results of Operations included in our prospectus dated May 13, 2021 that forms a part of our Registration

Statement on Form S-1, as amended (File No.

333-255492), as filed with the Securities and Exchange Commission (SEC) pursuant to Rule 424(b) under the

Securities Act of 1933, as amended (the Securities Act), on May 17, 2021 (Prospectus).

Forward-Looking Statements

In addition to historical financial information, this discussion contains forward-looking statements based upon current

expectations that involve risks and uncertainties.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled Risk

Factors under Part II, Item 1A below.

In some cases, you can identify forward-looking statements by terminology such as anticipate, believe, continue, could, estimate,

expect, intend, may, plan, potentially, predict, should, will or the negative of these terms or other similar expressions.

In addition, statements that we believe and similar statements reflect our beliefs and opinions on the relevant subject.

statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information

may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.

These statements are inherently uncertain and investors

are cautioned not to unduly rely upon these statements.

We are a clinical stage biotechnology company focused on developing and commercializing transformative treatments for patients with serious

immunological diseases.

Our lead product candidate is atacicept, a fusion protein self-administered as a subcutaneous injection once weekly that blocks both B lymphocyte stimulator and a proliferation-inducing ligand (APRIL), which

stimulate B cells and plasma cells to produce autoantibodies contributing to certain autoimmune diseases.

We are conducting a Phase 2b clinical trial of atacicept in patients with immunoglobulin A nephropathy (IgAN), a disease with a

high unmet medical need and no approved therapies.

IgAN is a serious and progressive autoimmune disease of the kidney that is driven by the production of immunogenic galactose-deficient IgA1

IgAN patients with elevated Gd-IgA1 are at increased risk of kidney-related morbidity and mortality.

As reported in a Phase 2a clinical trial of

16 patients conducted by Merck KGaA, Darmstadt, Germany, atacicept is the first molecule in development to demonstrate a 60% or greater reduction in plasma Gd-IgA1 in IgAN patients (75 mg dose, n=4 at 24

weeks), which we believe can be disease modifying.

We initiated patient screening for our Phase 2b clinical trial in IgAN in the second quarter of 2021.

In addition, we are evaluating additional diseases where atacicepts reduction of

autoantibodies may prove medically useful, including lupus nephritis (LN), a severe renal manifestation of systemic lupus erythematosus (SLE).

Since our inception, we have devoted substantially all of our resources to our research and development efforts, pre-clinical studies, establishing and maintaining our intellectual property portfolio, hiring personnel, raising capital, and providing general and administrative support for these operations.

We do not have any product candidates approved for commercial sale, and we have not generated any revenue from product sales.

Our ability to

generate revenue sufficient to achieve profitability, if ever, will depend on the successful development and eventual commercialization of one or more of our product candidates, which we expect, if they ever occur, will take a number of years.

also do not own or operate, and currently have no plans to establish, any manufacturing facilities.

We rely, and expect to continue to rely, on third parties for the manufacture of our product candidates for nonclinical and clinical testing, as well

as for commercial manufacturing if any of our product candidates obtain marketing approval.

We believe that this strategy allows us to maintain a more efficient infrastructure by eliminating the need for us to invest in our own manufacturing

facilities, equipment, and personnel while also enabling us to focus our expertise and resources on the development of our product candidates.

To date, we have funded our operations primarily through proceeds from the sale of shares of

our Class A common stock, redeemable convertible preferred stock and convertible promissory notes.

As of March 31, 2021, we had $49.5 million in unrestricted cash and cash equivalents.

In May 2021, we consummated our initial

public offering (IPO) and issued 5,002,500 shares of Class A common stock for net proceeds of approximately $48.4 million, after deducting underwriting discounts and commissions and offering related expenses.

We believe, based on our

current operating plan, that the net proceeds from our IPO, together with our cash and cash equivalents as of March 31, 2021, will be sufficient to fund our operations for at least the next 12 months.

We have incurred significant operating losses since the commencement of our operations.

Our net losses were $4.7 million and

$2.5 million for the three months ended March 31, 2021 and 2020, respectively, and we expect to incur significant and increasing losses for the foreseeable future as we continue to advance our product candidate, atacicept, and as we

transition to operating as a public company.

Our net losses may fluctuate significantly from period to period, depending on the timing of expenditures on our research and development activities.

As of March 31, 2021, we had an accumulated

deficit of $96.2 million.

Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures and general and administrative expenditures.

Cash used to fund operating expenses depends on the

timing of when we pay these expenses, as reflected in the changes in our prepaid expense, accounts payable and other current liabilities balances.

We expect to continue to incur net operating losses for at least the next several years, and we expect our research and development expenses,

general and administrative expenses, and capital expenditures will continue to increase.

We expect our expenses and capital requirements will increase significantly in connection with our ongoing activities as we:

continue our ongoing and planned research and development of our product candidate, atacicept, for the treatment

of IgAN and LN;

conduct clinical trials and nonclinical studies for atacicept and any additional product candidates that we may

pursue in the future;

seek to discover and develop additional product candidates and further expand our clinical product pipeline;

seek regulatory approvals for any product candidates that successfully complete clinical trials;

continue to scale up external manufacturing capacity with the aim of securing sufficient quantities to meet our

capacity requirements for clinical trials and potential commercialization;

establish a sales, marketing and distribution infrastructure to commercialize any approved product candidates and

related additional commercial manufacturing costs;

develop, maintain, expand, protect and enforce our intellectual property portfolio, including patents, trade

secrets and know how;

acquire, develop or in-license other product candidates and technologies;

attract, hire and retain additional clinical, scientific, quality control, and manufacturing management and

administrative personnel;

add clinical, operational, financial and management information systems and personnel, including personnel to

support our product development and planned future commercialization efforts;

incur additional legal, accounting, investor relations and other expenses associated with operating as a public

We also expect to increase the size of our administrative function to support the growth of

our business.

Our net losses may fluctuate significantly from quarter-to-quarter and

year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.

We will require substantial additional funding to develop our product candidates and support our continuing operations.

Until such time that

we can generate significant revenue from product sales or other sources, if ever, we expect to finance our operations through the sale of equity, debt financings, or other capital sources, which could include income from collaborations, strategic

partnerships, or marketing, distribution, licensing or other strategic arrangements with third parties, or from grants.

We may be unable to raise additional funds or to enter into such agreements or arrangements on favorable terms, or at all.

ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the

ongoing COVID-19 pandemic and otherwise.

Our failure to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on our business, results of operations or financial

condition, including requiring us to have to delay, reduce or eliminate our product development or future commercialization efforts.

Insufficient liquidity may also require us to relinquish rights to product candidates at an earlier stage of

development or on less favorable terms than we would otherwise choose.

The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our development efforts.

We cannot provide assurance that

we will ever be profitable or generate positive cash flow from operating activities.

COVID-19 Pandemic

Since it was reported to have surfaced in December 2019, a novel strain of coronavirus

(COVID-19) has spread across the world and has been declared a pandemic by the World Health Organization.

Efforts to contain the spread of COVID-19 have intensified and

governments around the world, including in the United States, Europe and Asia, have implemented travel restrictions, social distancing requirements, stay-at-home orders

and have delayed the commencement of non-COVID-19-related clinical trials, among other restrictions.

As a result, the current COVID-19 pandemic has presented a substantial public health and economic challenge around the world and is affecting our employees, patients, communities and business operations, as well as contributing to

significant volatility and negative pressure on the U.S.

economy and in financial markets.

As a result of the outbreak, many companies

have experienced disruptions in their operations and in markets served.

To date, we have initiated some and may take additional temporary precautionary measures intended to help ensure our employees well-being and minimize business disruption.

For the safety of our employees and their families, we have temporarily reduced the presence of our employees in our facilities.

Certain of our third-party service providers have also experienced shutdowns or other business disruptions.

continuing to assess the impact of the COVID-19 pandemic on our current and future business and operations, including our expenses and planned clinical trial and other development timelines, as well as on our

industry and the healthcare system.

As a result of the COVID-19 pandemic, or similar pandemics

and outbreaks, we have and may in the future experience severe disruptions, including:

interruption of or delays in receiving products and supplies from the third parties we rely on to, among other

things, manufacture components of our instruments, due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems, which may impair our ability to sell our products and consumables;

limitations on our business operations by the local, state, or federal government that could impact our ability

to sell or deliver our instruments and consumables;

business disruptions caused by workplace, laboratory and office closures and an increased reliance on employees

working from home, travel limitations, cybersecurity and data accessibility limits, or communication or mass transit disruptions;

limitations on employee resources that would otherwise be focused on the conduct of our activities, including

because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people.

Results of Operations

Comparison of Three Months Ended March 31, 2021 and 2020

The following table summarizes our results of operations for the periods presented.

ENDED MARCH 31,

(dollars in thousands)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expense):

Interest income

Interest expense

Gain on issuance of convertible notes

Change in fair value of convertible notes

Total other income (expense)

Net loss and comprehensive loss

Not meaningful

Research and Development Expenses

Research and development expenses represent a substantial portion of our operating expenses.

Our research and development expenses consist

primarily of direct and indirect expenses incurred in connection with the discovery and development of our product candidates.

Since October 2020, we have been engaged in the development of atacicept.

Research and development expenses are recorded as expense in the period they are incurred, and payments we make prior to the receipt of goods

or services to be used in research and development efforts are deferred as prepaid expenses until the goods or services are received and used.

The cost incurred in obtaining technology licenses, including initial and subsequent milestone payments

incurred under our licensing agreements, are recorded as expense in the period in which they are incurred, as the licensed technology, method or process has no alternative future uses other than for our research and development activities.

The following table summarizes our research and development expenses incurred during the respective periods.

ENDED MARCH 31,

(dollars in thousands)

Direct research and development expenses

Consulting and contract research

Internal laboratory expenses

Indirect research and development expenses

Compensation and related benefits

Facilities, depreciation and other

Research and development expenses

Not meaningful

Research and development expenses increased by $1.5 million, or 104%, to

$2.9 million in the three months ended March 31, 2021, from $1.4 million in the three months ended March 31, 2020.

The increase was primarily due to an increase of $1.8 million in consulting and contract research expense

resulting primarily from start-up expenses for the Phase 2b clinical trial of atacicept, and an increase of $0.5 million of compensation and related expense to employees resulting primarily from the

market rates at which clinical development professionals are compensated compared to those for personnel conducting internal preclinical research.

These were partially offset by decreases of $0.4 million for facilities, depreciation and other

expenses, as a result of the vacating and sublease of our leased facilities in South San Francisco in November 2020, and a decrease of $0.2 million of internal research and development resulting from our ceasing of internal research in

September 2020.

General and Administrative

General and administrative expenses consist primarily of compensation and personnel-related expenses, including stock-based compensation, for

our personnel in executive management, legal, finance, human resources, and other administrative functions.

General and administrative expenses also include professional fees paid for accounting, auditing, legal, tax and consulting services, and

other general overhead costs to support our operations.

General and administrative expenses are recorded as expense in the period they are incurred, and payments we make prior to the receipt of goods or services to be used for general and

administrative purposes efforts are deferred as prepaid expenses until the goods or services are received and used.

ENDED MARCH 31,

(dollars in thousands)

General and administrative

General and administrative expenses increased by $0.8 million, or 73%, to $1.8 million in the three

months ended March 31, 2021, from $1.0 million in the three months ended March 31, 2020, due primarily to an increase of $0.3 million in accounting, audit and tax fees, an increase of $0.3 million in stock-based compensation

and an increase of $0.2 million in legal expenses.

Total Other Income (Expense)

ENDED MARCH 31,

(dollars in thousands)

Total other income (expense)

The increase of $5,000 in total other income to $2,000 total other income in the three months ended March 31,

2021, from $3,000 other expense in the three months ended March 31, 2020, was due to a decrease of $24,000 in interest expense.

This decrease in interest expense was partially offset by a net decrease of $15,000 in other income related to the

issuance of convertible notes in 2020 and a decrease of $4,000 in interest income.

Liquidity and Capital Resources

To date, we have funded our operations primarily through the issuance and sale of redeemable convertible preferred stock and convertible notes.

From our inception through March 31, 2021, we have raised aggregate net cash proceeds of $141.6 million from the issuance and sale of redeemable convertible preferred stock and convertible notes.

Subsequent to March 31, 2021, we

raised additional net cash proceeds of $48.4 million from our IPO.

Since the date of our incorporation, we have not generated any revenue from product sales and have incurred substantial operating losses and negative cash flows from operations.

We use our cash to fund operations, primarily to fund our research and development efforts, clinical trials, establishing and maintaining

our intellectual property portfolio, hiring personnel, raising capital, and providing general and administrative support for these operations.

Cash used to fund operating expenses is affected by the timing of when we pay these expenses, as reflected

in the change in our outstanding accounts payable, accrued expenses and prepaid assets.

We anticipate that we will continue to incur net

losses for the foreseeable future as we continue research and development activities of atacicept, hire additional staff, including clinical, operational, financial and management personnel, and incur additional expenses associated with operating as

a public company.

We expect to incur significant expenses and operating losses for the foreseeable future as we advance our clinical development activities.

We expect that our research and development and general and administrative costs will

increase in connection with conducting additional clinical trials and clinical trials for our current and future research programs and product candidates, contracting with third parties to support nonclinical studies and clinical trials, expanding

our intellectual property portfolio, and providing general and administrative support for our operations.

As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings,

collaborations, licensing arrangements, or other sources.

On May 18, 2021, we completed the sale of shares of our Class A

common stock in our IPO.

In connection with our IPO, we issued and sold 5,002,500 shares of Class A common stock, including 652,500 shares associated with the full exercise on May 20, 2021 of the underwriters option to purchase

additional shares, at a price to the public of $11.00 per share, resulting in net proceeds to us of approximately $48.4 million, after deducting underwriting discounts and commissions and offering related expenses payable by us.

issued and sold were registered pursuant to a registration statement on Form S-1, as amended (File No.

333-255492), declared effective by the SEC on May 13,

As of March 31, 2021, we had unrestricted cash and cash equivalents balance of $49.5 million.

We believe, based on our

The following table

summarizes our cash flows for the periods indicated.

ENDED MARCH 31,

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by (used in) financing activities

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

Operating Activities

In the three months ended March 31, 2021, we used $4.1 million of cash in operating activities, attributable to a net loss of

$4.7 million and a decrease of $0.6 million in the liability for restructuring, net of cash paid, partially offset by $0.4 million of non-cash stock-based compensation and a net change of

$0.7 million in our net operating assets and liabilities.

The net change of $0.7 million in our net operating assets and liabilities resulted primarily from a $1.1 million increase in accrued and other liabilities, partially offset by

a $0.2 million decrease in accounts payable and a $0.1 million increase in prepaid expense and other assets.

In the three months ended March 31, 2020, we used $2.3 million of cash in

operating activities, attributable to a net loss of $2.5 million, partially offset by non-cash expenses of $0.2 million resulting from $0.1 million of stock-based compensation and

$0.1 million of depreciation and amortization.

Investing Activities

There was no use of cash for investing activities during the three months ended March 31, 2021.

In the three months ended March 31, 2020, we used $0.1 million of cash for investing activities, for the purchase of property and

equipment used for research and development activities and for general and administrative operations.

Financing Activities

In the three months ended March 31, 2021, our financing activities used $28,000 of cash resulting from payments of $369,000 for deferred

offering costs primarily related to our IPO, partially offset by proceeds of $342,000 from the exercise of stock options to purchase Class A common stock.

In the three months ended March 31, 2020, our financing activities provided $5.0 million of cash resulting from the issuance of

convertible notes payable that were converted into Series C redeemable convertible preferred stock in a subsequent period in 2020.

During the three months ended March 31, 2021, there were no material changes to our contractual obligations and

commitments from those described under Managements Discussion and Analysis of Financial Condition and Results of Operations in the Prospectus.

We enter into agreements in the normal course of business with various third parties for preclinical, clinical and other services.

contracts are generally cancellable without material penalty upon written notice.

Payments associated with these agreements are not included in this table of contractual obligations.

Critical Accounting Policies and Significant Judgments and Estimates

The discussion and analysis of our financial condition and results of operations is based on our unaudited condensed financial statements,

which have been prepared in accordance with United States generally accepted accounting principles (GAAP).

The preparation of these unaudited condensed financial statements requires us to make estimates and assumptions that affect the

reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities, at the date of the financial statements, as well as revenue and expenses incurred during the reporting periods.

Our estimates are based on our

historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from

other sources.

Actual results may differ from these estimates under different assumptions or conditions.

Our critical accounting policies

are described in the section titled Managements Discussion and Analysis of Financial Condition and Results of OperationsCritical Accounting Policies, Significant Judgments and Use of Estimates in the Prospectus and the notes

to our unaudited condensed financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

During the three months ended March 31, 2021, there were no material changes to our critical

accounting policies from those discussed in the Prospectus.

Emerging Growth Company Status

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act).

Under the JOBS Act,

emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

Other exemptions and reduced reporting requirements

under the JOBS Act for emerging growth companies include presentation of only two years audited financial statements in a registration statement for an initial public offering, an exemption from the requirement to provide an auditors report on

internal controls over financial reporting pursuant to the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act), an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm

rotation, and less extensive disclosure about our executive compensation arrangements.

We have elected to use the 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 (i) we are no longer an emerging growth company or (ii) we affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.

As a result, our financial

statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

We will remain an emerging growth company under the JOBS Act until the earliest of (i) the last day of our first fiscal year in which we

have total annual gross revenue of $1.07 billion or more, (ii) the date on which we have issued more than $1.0 billion of non-convertible debt instruments during the previous three fiscal years,

(iii) the date on which we are deemed a large accelerated filer under the rules of the SEC with at least $700.0 million of outstanding equity securities held by non-affiliates, or

(iv) December 31, 2026.

During the three and six months ended June 30, 2020, the Company recognized $ 82 and $ 160 of sublease income under this agreement, which was recorded as a reduction to the Company’s rent expense.

In October 2020, the Company entered into the Ares Agreement with Ares, pursuant to which the Company obtained an exclusive worldwide license to certain patents and related know-how

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