Xilio Therapeutics, Inc. 10-Q

Item 1. Financial Statements XILIO THERAPEUTICS, INC. Condensed Consolidated Balance Sheets (In thousands, except share and per share data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, ​ ​ 2021 ​ 2020 ASSETS ​ ​ Current assets ​ ​ Cash and cash equivalents ​ $ 99,767 ​ $ 19,238 Prepaid expenses ​ 2,408 ​ 1,308 Other current assets ​ 3,397 ​ 44 Total current assets ​ 105,572 ​ 20,590 Restricted cash ​ 1,553 ​ 1,551 Property and equipment, net ​ 7,108 ​ 7,367 Operating lease right-of-use asset ​ 6,065 ​ 6,309 Other non-current assets ​ 427 ​ 500 Total assets ​ $ 120,725 ​ $ 36,317 LIABILITIES AND STOCKHOLDERS’ DEFICIT ​ ​ Current liabilities ​ ​ Accounts payable ​ $ 3,822 ​ $ 5,444 Accrued expenses ​ 8,194 ​ 13,732 Operating lease liability, current portion ​ 773 ​ 564 Notes payable, current portion ​ — ​ 2,333 Other current liabilities ​ 82 ​ 82 Total current liabilities ​ 12,871 ​ 22,155 Notes payable, net of current portion ​ 9,580 ​ 7,412 Operating lease liability, net of current portion ​ 10,316 ​ 10,908 Other liabilities, long-term ​ 1,525 ​ 1,127 Total liabilities ​ 34,292 ​ 41,602 Commitments and contingencies (Note 7) ​ ​ Convertible preferred stock (Series A, A-1, A-2(A), A-2(A-1), B and C), $ 0.0001 par value, 174,808,481 shares authorized and 174,783,481 shares issued and outstanding at September 30, 2021; 133,602,056 shares authorized and 66,788,528 shares issued and outstanding at December 31, 2020; aggregate liquidation preference of $ 225,500 and $ 80,250 at September 30, 2021 and December 31, 2020, respectively ​ 222,888 ​ 78,002 Stockholders’ deficit ​ ​ Common stock, $ 0.0001 par value; 220,400,000 shares authorized, 914,760 shares issued and 778,949 shares outstanding at September 30, 2021; 126,000,000 shares authorized, 973,898 shares issued and 689,929 shares outstanding at December 31, 2020 ​ — ​ — Additional paid-in capital ​ 4,730 ​ 1,799 Accumulated deficit ​ ( 141,185 ) ​ ( 85,086 ) Total stockholders’ deficit ​ ( 136,455 ) ​ ( 83,287 ) Total liabilities, convertible preferred stock and stockholders’ deficit ​ $ 120,725 ​ $ 36,317 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 6 Table of Contents XILIO THERAPEUTICS, INC. Condensed Consolidated Statements of Operations and Comprehensive Loss (In thousands, except share and per share data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ ​ 2021 2020 2021 2020 ​ Operating expenses ​ ​ ​ ​ Research and development ​ $ 10,470 ​ $ 11,460 ​ $ 39,836 ​ $ 26,243 ​ General and administrative ​ 5,491 ​ 3,163 ​ 15,652 ​ 7,725 ​ Total operating expenses ​ 15,961 ​ 14,623 ​ 55,488 ​ 33,968 ​ Loss from operations ​ ( 15,961 ) ​ ( 14,623 ) ​ ( 55,488 ) ​ ( 33,968 ) ​ Other income (expense), net ​ ​ ​ ​ ​ Other expense, net ​ ( 290 ) ​ ( 196 ) ​ ( 611 ) ​ ( 479 ) ​ Total other income (expense), net ​ ( 290 ) ​ ( 196 ) ​ ( 611 ) ​ ( 479 ) ​ Net loss and comprehensive loss ​ $ ( 16,251 ) ​ $ ( 14,819 ) ​ $ ( 56,099 ) ​ $ ( 34,447 ) ​ Net loss per share, basic and diluted ​ $ ( 21.27 ) ​ $ ( 24.19 ) ​ $ ( 76.18 ) ​ $ ( 72.02 ) ​ Weighted average common shares outstanding, basic and diluted ​ 763,869 ​ 612,657 ​ 736,416 ​ 478,283 ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ ​ 7 Table of Contents XILIO THERAPEUTICS, INC. Condensed Consolidated Statements of Preferred Units and Convertible Preferred Stock and Members’ and Stockholders’ Deficit (In thousands, except share and unit data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Series A Series A-1 Series B Series C ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Convertible ​ Convertible ​ Convertible ​ Convertible ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Members' and ​ ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ ​ Common Stock ​ Additional ​ Accumulated ​ Stockholders’ ​ Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Paid-In Capital Deficit Deficit Balance at December 31, 2020 ​ 7,500,000 ​ $ 7,309 ​ 19,565,216 ​ $ 20,740 ​ 39,723,312 ​ $ 49,953 ​ — ​ $ — ​ ​ 689,929 ​ $ — ​ $ 1,799 ​ $ ( 85,086 ) ​ $ ( 83,287 ) Issuance of Series B convertible preferred stock, net of issuance costs of $ 50 — ​ — — ​ — 39,723,312 ​ 50,200 — ​ — ​ — ​ — ​ — ​ — ​ — Issuance of Series C convertible preferred stock, net of issuance costs of $ 314 — ​ — — ​ — — ​ — 68,271,641 ​ 94,686 ​ — ​ — ​ — ​ — ​ — Vesting of restricted common stock — ​ — — ​ — — ​ — — ​ — ​ 27,989 ​ — ​ — ​ — ​ — Exercise of stock options — ​ — — ​ — — ​ — — ​ — ​ 4,473 ​ — ​ 24 ​ — ​ 24 Equity-based compensation expense — ​ — — ​ — — ​ — — ​ — ​ — ​ — ​ 794 ​ — ​ 794 Net loss — ​ — — ​ — — ​ — — ​ — ​ — ​ — ​ — ​ ( 16,668 ) ​ ( 16,668 ) March 31, 2021 7,500,000 ​ $ 7,309 19,565,216 ​ $ 20,740 79,446,624 ​ $ 100,153 68,271,641 ​ $ 94,686 ​ 722,391 ​ $ — ​ $ 2,617 ​ $ ( 101,754 ) ​ $ ( 99,137 ) Vesting of restricted common stock — ​ — — ​ — — ​ — — ​ — ​ 26,676 ​ — ​ — ​ — ​ — Exercise of stock options — ​ — — ​ — — ​ — — ​ — ​ 1,034 ​ — ​ 6 ​ — ​ 6 Equity-based compensation expense — ​ — — ​ — — ​ — — ​ — ​ — ​ — ​ 1,002 ​ — ​ 1,002 Net loss — ​ — — ​ — — ​ ​ — — ​ ​ — ​ — ​ — ​ — ​ ( 23,180 ) ​ ( 23,180 ) June 30, 2021 7,500,000 ​ $ 7,309 19,565,216 ​ $ 20,740 79,446,624 ​ $ 100,153 68,271,641 ​ $ 94,686 ​ 750,101 ​ $ — ​ $ 3,625 ​ $ ( 124,934 ) ​ $ ( 121,309 ) Vesting of restricted common stock — ​ — — ​ — — ​ — — ​ — ​ 26,263 ​ — ​ ​ ​ — ​ — Exercise of stock options — ​ — — ​ — — ​ — — ​ — ​ 2,585 ​ — ​ 14 ​ — ​ 14 Equity-based compensation expense — ​ — — ​ — — ​ — — ​ — ​ — ​ — ​ 1,091 ​ — ​ 1,091 Net loss — ​ — — ​ — — ​ ​ — — ​ ​ — ​ — ​ — ​ — ​ ( 16,251 ) ​ ( 16,251 ) September 30, 2021 7,500,000 ​ $ 7,309 19,565,216 ​ $ 20,740 79,446,624 ​ $ 100,153 68,271,641 ​ $ 94,686 ​ 778,949 ​ $ — ​ $ 4,730 ​ $ ( 141,185 ) ​ $ ( 136,455 ) ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 8 Table of Contents ​ XILIO THERAPEUTICS, INC. Condensed Consolidated Statements of Preferred Units and Convertible Preferred Stock and Members’ and Stockholders’ Deficit - Continued (In thousands, except share and unit data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Series A ​ Series A-1 ​ Series B ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Series A ​ Series A ‑ 1 ​ Series B ​ Convertible ​ Convertible ​ Convertible ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Members' and ​ ​ Preferred Units ​ Preferred Units ​ Preferred Units ​ Preferred Stock ​ Preferred Stock ​ Preferred Stock ​ ​ Common Units ​ Common Stock ​ Additional ​ Accumulated ​ Stockholders’ ​ Units Amount Units Amount Units Amount Shares Amount Shares Amount Shares Amount Units Amount Shares Amount Paid-In Capital Deficit Deficit Balance at December 31, 2019 ​ 7,500,000 ​ $ 7,309 ​ 19,565,216 ​ $ 20,740 ​ 31,818,174 ​ $ 39,984 ​ — ​ $ — ​ — ​ $ — ​ — ​ $ — ​ ​ 409,303 ​ $ — ​ — ​ $ — ​ $ 344 ​ $ ( 29,867 ) ​ $ ( 29,523 ) Issuance of Series B Preferred units, net of issuance costs of $ 31 ​ — ​ — — ​ — 7,905,138 ​ 9,969 — ​ — — ​ — — ​ — ​ — ​ — — ​ — ​ — ​ — ​ — Equity-based compensation expense — ​ — — ​ — — ​ — — ​ — — ​ — — ​ — ​ — ​ — — ​ — ​ 96 ​ — ​ 96 Net loss — ​ — — ​ — — ​ — — ​ — — ​ — — ​ — ​ — ​ — — ​ — ​ — ​ ( 8,118 ) ​ ( 8,118 ) March 31, 2020 7,500,000 ​ $ 7,309 19,565,216 ​ $ 20,740 39,723,312 ​ $ 49,953 — ​ $ — — ​ $ — — ​ $ — ​ 409,303 ​ $ — — ​ $ — ​ $ 440 ​ $ ( 37,985 ) ​ $ ( 37,545 ) Effect of reorganization ( 7,500,000 ) ​ ( 7,309 ) ​ ( 19,565,216 ) ​ ( 20,740 ) ( 39,723,312 ) ​ ( 49,953 ) 7,500,000 ​ $ 7,309 19,565,216 ​ $ 20,740 39,723,312 ​ $ 49,953 ​ ( 409,303 ) ​ — 409,303 ​ — ​ — ​ — ​ — Vesting of restricted common stock — ​ — — ​ — — ​ — — ​ — — ​ — — ​ — ​ — ​ — 188,976 ​ — ​ — ​ — ​ — Equity-based compensation expense — ​ — — ​ — — ​ — — ​ — — ​ — — ​ — ​ — ​ — — ​ — ​ 151 ​ — ​ 151 Net loss — ​ — — ​ — — ​ ​ — — ​ — — ​ — — ​ ​ — ​ — ​ — — ​ — ​ — ​ ( 11,510 ) ​ ( 11,510 ) June 30, 2020 — ​ $ — — ​ $ — — ​ $ — 7,500,000 ​ $ 7,309 19,565,216 ​ $ 20,740 39,723,312 ​ $ 49,953 ​ — ​ $ — 598,279 ​ $ — ​ $ 591 ​ $ ( 49,495 ) ​ $ ( 48,904 ) Vesting of restricted common stock — ​ — — ​ — — ​ — — ​ — — ​ — — ​ — ​ — ​ — 29,326 ​ — ​ — ​ — ​ — Exercise of stock options — ​ — — ​ — — ​ — — ​ — — ​ — — ​ — ​ — ​ — 1,027 ​ — ​ 6 ​ — ​ 6 Equity-based compensation expense — ​ — — ​ — — ​ — — ​ — — ​ — — ​ — ​ — ​ — — ​ — ​ 683 ​ — ​ 683 Net loss — ​ — — ​ — — ​ ​ — — ​ — — ​ — — ​ ​ — ​ — ​ — — ​ — ​ — ​ ( 14,819 ) ​ ( 14,819 ) September 30, 2020 — ​ $ — — ​ $ — — ​ $ — 7,500,000 ​ $ 7,309 19,565,216 ​ $ 20,740 39,723,312 ​ $ 49,953 ​ — ​ $ — 628,632 ​ $ — ​ $ 1,280 ​ $ ( 64,314 ) ​ $ ( 63,034 ) ​ ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 9 Table of Contents XILIO THERAPEUTICS, INC. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ 2021 2020 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ Net loss $ ( 56,099 ) $ ( 34,447 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ Depreciation and amortization ​ 1,105 ​ 724 Non-cash interest expense ​ 121 ​ ( 2 ) Equity-based compensation expense ​ 2,887 ​ 930 Loss on disposal of property and equipment ​ ​ 19 ​ ​ — Change in fair value of warrant and derivative liabilities ​ 199 ​ 431 Changes in operating assets and liabilities: ​ ​ ​ ​ Prepaid and other assets ​ ( 3,597 ) ​ 2,802 Operating lease right-of-use asset ​ 244 ​ 224 Accounts payable ​ ( 1,626 ) ​ 338 Accrued expenses and other liabilities ​ ( 6,459 ) ​ 5,743 Operating lease liability ​ ( 383 ) ​ ( 129 ) Net cash used in operating activities ​ ( 63,589 ) ​ ( 23,386 ) Cash flows from investing activities: ​ ​ Purchases of property and equipment ​ ( 722 ) ​ ( 2,080 ) Net cash used in investing activities ​ ( 722 ) ​ ( 2,080 ) Cash flows from financing activities: ​ ​ Repayments of debt principal ​ ​ ( 1,000 ) ​ ​ — Proceeds from debt issuance, net of issuance costs ​ 975 ​ — Payments of finance lease ​ ( 63 ) ​ ( 71 ) Proceeds from issuance of Series B preferred units, net of issuance costs ​ — ​ 9,969 Proceeds from issuance of Series B convertible preferred stock, net of issuance costs ​ ​ 50,200 ​ ​ — Proceeds from issuance of Series C convertible preferred stock, net of issuance costs ​ ​ 94,686 ​ ​ — Proceeds from exercise of stock options ​ 44 ​ 6 Net cash provided by financing activities ​ 144,842 ​ 9,904 Increase (decrease) in cash, cash equivalents & restricted cash ​ 80,531 ​ ( 15,562 ) Cash, cash equivalents and restricted cash, beginning of period ​ 20,789 ​ 49,039 Cash, cash equivalents and restricted cash, end of period $ 101,320 $ 33,477 Supplemental cash flow disclosure: ​ ​ Cash paid for interest $ 371 $ 410 Supplemental disclosure of non-cash activities: ​ ​ Right-of-use assets obtained in exchange for operating lease liabilities $ — $ 39 Right-of-use assets obtained in exchange for finance lease liabilities $ — $ 423 Tenant improvements funded by landlord $ — $ 2,827 Capital expenditures included in accounts payable or accrued expenses ​ $ 47 ​ $ 30 Deferred offering costs included in accounts payable or accrued expenses ​ $ 879 ​ $ — Recognition of derivative liability in connection with long-term debt facility $ 250 $ — ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 10 Table of Contents XILIO THERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (Dollars in thousands, unless otherwise stated) (Unaudited) 1. Description of Business, Organization and Liquidity Description of Business Xilio Therapeutics, Inc., incorporated in Delaware in June 2020, is a biotechnology company focused on harnessing the immune system to achieve deep and durable clinical responses to improve the lives of patients with cancer. For purposes of these condensed consolidated financial statements, the “Company” refers to Xilio Therapeutics LLC (formerly Akriveia Therapeutics Inc., Akriveia Therapeutics LLC and Akrevia Therapeutics LLC) prior to the reorganization described below, and Xilio Therapeutics, Inc. after such reorganization. The Company’s headquarters are based in Waltham, Massachusetts. Organization Akriveia Therapeutics Inc. was incorporated in Delaware in June 2015. In May 2016, Akriveia Therapeutics Inc. completed its first tax free reorganization, and the parent entity became Akriveia Therapeutics LLC. Akriveia Therapeutics LLC subsequently changed its name to Akrevia Therapeutics LLC in May 2018 and then to Xilio Therapeutics LLC in February 2020. In June 2020, the Company completed a series of transactions pursuant to which Xilio Therapeutics LLC became a direct, wholly owned subsidiary of Xilio Therapeutics, Inc., and all of the outstanding membership interests of Xilio Therapeutics LLC were exchanged for equity securities of Xilio Therapeutics, Inc. and Xilio Therapeutics, Inc. became the parent entity (the “Reorganization”). The purpose of the transaction was to reorganize the corporate structure so that existing investors would own capital stock in a corporation rather than equity interests in a limited liability company. Upon consummation of the Reorganization, the historical consolidated financial statements of Xilio Therapeutics LLC became the historical consolidated financial statements of Xilio Therapeutics, Inc. Liquidity Since inception, the Company has devoted substantially all of its financial resources and efforts to research and development activities. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including but not limited to, risks associated with completing research programs and conducting additional research programs, advancing the Company’s current and future product candidates into preclinical and clinical development, seeking marketing approvals for any product candidates that successfully complete clinical trials, obtaining, expanding, maintaining and defending the Company’s intellectual property, and hiring additional clinical, regulatory, and scientific personnel. Programs currently under development will require significant additional research and development efforts, including preclinical and clinical testing and will need to obtain regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from product sales. On October 26, 2021, the Company completed its initial public offering (“IPO”) of common stock and issued and sold an aggregate of 7,353,000 shares of its common stock at a public offering price of $ 16.00 per share, and on November 1, 2021, the Company issued and sold an additional 766,106 shares of common stock at a public offering price of $ 16.00 per share pursuant to the exercise by the underwriters of their option to purchase additional shares. The Company received aggregate gross proceeds of approximately $ 129.9 million or aggregate net proceeds of approximately $ 116.3 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. Upon 11 Table of Contents the closing of the IPO, all shares of the Company’s then outstanding preferred stock automatically converted into an aggregate of 18,398,248 shares of common stock (see Note 8). Prior to its IPO, the Company had primarily funded its operations with proceeds from the sale of convertible preferred units and convertible preferred stock and a debt financing. As of September 30, 2021, the Company had cash and cash equivalents of $ 99.8 million. The Company expects that its cash and cash equivalents, including the net proceeds from the IPO, will be sufficient to meet the Company’s projected operating requirements and capital expenditures for at least twelve months from the date of issuance of these condensed consolidated financial statements. The Company expects to continue to generate negative cash flows from operations and net losses for the foreseeable future as it continues to invest significantly in research and development of its product candidates, including preclinical, clinical and manufacturing process development. Management’s conclusion with respect to its ability to fund operations is based on estimates that are subject to risks and uncertainties that may prove to be incorrect. If actual results differ from management’s estimates, the Company may be required to seek additional funding or curtail planned activities to reduce operating expenses, which may have an adverse impact on the Company’s ability to achieve its business objectives. 2. Summary of Significant Accounting Policies Basis of Presentation These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission, (the “SEC”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”). In April 2012, the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) was enacted. Section 107(b) of the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company can adopt the new or revised standard at the time private companies adopt the new or revised standard and may do so until such time that the Company either (1) irrevocably elects to “opt out” of such extended transition period or (2) no longer qualifies as an emerging growth company. The Company may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of its initial public offering or such earlier time that it is no longer an emerging growth company. The Company’s significant accounting policies are disclosed in the audited consolidated financial statements included in the Company’s final prospectus for its IPO, dated October 22, 2021, and filed with the SEC, pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the “Prospectus”). Since the date of such audited consolidated financial statements, there have been no changes to the Company’s significant accounting policies except as noted below. Unaudited Interim Condensed Consolidated Financial Information The accompanying condensed consolidated balance sheet as of September 30, 2021, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2021 and 2020, the statements of cash flows for the nine months ended September 30, 2021 and 2020 and the condensed consolidated statements of preferred units and convertible preferred stock and members’ and stockholders’ deficit for the nine months ended September 30, 2021 and 2020 are unaudited. The financial data and other information contained in the notes thereto as of and for the three and nine months ended September 30, 2021 and 2020 are also unaudited. The condensed consolidated balance sheet data as of December 31, 2020 was derived from the Company’s audited consolidated financial statements included in the Prospectus. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements, and in the opinion of management, reflect all adjustments, which include only 12 Table of Contents normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of September 30, 2021, the results of its operations for the three and nine months ended September 30, 2021 and 2020 and cash flows for the nine months ended September 30, 2021 and 2020. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2020, and the notes thereto, included in the Prospectus. The results for the three and nine months ended September 30, 2021 are not necessarily indicative of results to be expected for the year ended December 31, 2021, or any other interim periods, or any future year or period. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and judgments that may affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the date of the financial statements and the related reporting of expenses during the reporting period. Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these condensed consolidated financial statements. Factors that may affect estimates, include expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. Significant estimates of accounting reflected in these condensed consolidated financial statements include, but are not limited to, estimates related to accrued expenses, contingent liabilities associated with the consummation of specified transactions, including an initial public offering, the valuation of equity-based compensation, including incentive units, stock options and restricted common stock, and income taxes. Actual results could differ from those estimates. Cash Equivalents and Restricted Cash The Company considers all short-term, highly liquid investments with original maturities of 90 days or less at acquisition date to be cash equivalents. Cash equivalents, which consist of money market accounts, are stated at fair value. Restricted cash primarily represents a letter of credit issued to the landlord of the Company’s facility lease and is reflected in non-current assets on the accompanying condensed consolidated balance sheets. Cash, cash equivalents and restricted cash consists of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2021 2020 Cash and cash equivalents ​ $ 99,767 ​ $ 19,238 Restricted cash ​ 1,553 ​ 1,551 Total cash, cash equivalents and restricted cash as shown on the condensed consolidated statement of cash flows ​ $ 101,320 ​ $ 20,789 ​ Deferred Offering Costs The Company capitalizes certain legal, professional, accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until the related financings are consummated. After consummation of the equity financing, such costs are reclassified as a reduction to additional paid-in capital generated as a result of the related financing. Should an in-process equity financing be abandoned, the deferred offering costs will be expensed immediately and accounted for as operating expenses in the condensed consolidated statements of operations and comprehensive loss. Deferred offering costs are presented as a component of other current assets on the condensed consolidated balance sheets. As of September 30, 2021, the Company capitalized $ 3.4 million of deferred offering costs related to its IPO. There were no deferred offering costs as of December 31, 2020. 13 Table of Contents Comprehensive Loss Comprehensive loss is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive loss includes net loss and the change in accumulated other comprehensive loss for the period. The Company did not have any items of comprehensive loss other than its net loss for the three and nine months ended September 30, 2021 and 2020. Equity-Based Compensation The Company utilizes significant estimates and assumptions in determining the fair value of its equity and equity-based awards. Beginning in the nine months ended September 30, 2021, the Company determined the fair value of shares of its common stock underlying stock-based awards granted using a hybrid approach. The hybrid approach is a scenario-based analysis and where one or more of the scenarios allocate the equity value utilizing the option-pricing method (“OPM”). When using the hybrid approach, the Company estimates the probability-weighted value across multiple scenarios but used the OPM to estimate the allocation of value within at least one of the scenarios. In addition to a scenario using the OPM, the hybrid method also considers an initial public offering scenario in which the shares of convertible preferred stock are assumed to convert to common stock. The future value of the common stock in the initial public offering scenario was discounted back to the valuation date at an appropriate risk adjusted discount rate. In the hybrid method, the present value indicated for each scenario was probability weighted to arrive at an indication of value for the Company’s common stock. Recently Adopted Accounting Pronouncements The Company did not adopt any new accounting standards during the nine-month period ended September 30, 2021. The Company continues to evaluate accounting standards that were recently issued but not yet adopted as of September 30, 2021. 14 Table of Contents 3. Fair Value Measurements The Company measures the following financial liabilities at fair value on a recurring basis. The fair value of these liabilities was determined as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quoted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Prices in ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Active ​ Significant ​ ​ ​ ​ ​ ​ ​ ​ Markets for ​ Other ​ Significant ​ ​ ​ ​ ​ Identical ​ Observable ​ Unobservable ​ ​ September 30, ​ Assets ​ Inputs ​ Inputs ​ 2021 Level 1 Level 2 Level 3 Financial liabilities: ​ ​ ​ ​ Debt derivative liability ​ $ 750 ​ $ — ​ $ — ​ $ 750 Other derivative liability ​ 500 ​ — ​ — ​ 500 Warrant to purchase Series A convertible preferred stock ​ 25 ​ — ​ — ​ 25 Total financial liabilities ​ $ 1,275 ​ $ — ​ $ — ​ $ 1,275 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quoted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Prices in ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Active ​ Significant ​ ​ ​ ​ ​ ​ ​ ​ Markets for ​ Other ​ Significant ​ ​ ​ ​ ​ Identical ​ Observable ​ Unobservable ​ ​ ​ December 31, ​ Assets ​ Inputs ​ Inputs ​ 2020 Level 1 Level 2 Level 3 Financial liabilities: ​ ​ ​ ​ Debt derivative liability ​ $ 396 ​ $ — ​ $ — ​ $ 396 Other derivative liability ​ ​ 407 ​ ​ — ​ ​ — ​ ​ 407 Warrant to purchase Series A convertible preferred stock ​ 22 ​ — ​ — ​ 22 Total financial liabilities ​ $ 825 ​ $ — ​ $ — ​ $ 825 ​ During the nine months ended September 30, 2021 and the year ended December 31, 2020, the Company did not hold any investments and there were no transfers between Level 1, Level 2, and Level 3. The fair value of the warrant liability is calculated utilizing the Black-Scholes option-pricing model and contains significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The fair values of the debt derivative liability and the other derivative liability that are contingently payable upon the consummation of specified transactions, including an initial public offering, are based on significant inputs not observable in the market, including estimates regarding the probability of certain potential future events and outcomes and estimates regarding timing of those events and outcomes, with an applied discount rate representative of time value which represents a Level 3 measurement within the fair value hierarchy. The following table summarizes the changes in the fair market value of the Company’s warrant liability, debt derivative liability and other derivative liability, which are classified within the Level 3 fair value hierarchy (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ Debt ​ Other ​ level 3 ​ ​ Warrant ​ derivative ​ derivative ​ financial ​ liability liability liability liabilities Balance at December 31, 2020 ​ $ 22 ​ $ 396 ​ $ 407 ​ $ 825 Change in fair value of liability ​ 3 ​ 354 ​ 93 ​ 450 Balance at September 30, 2021 ​ $ 25 ​ $ 750 ​ $ 500 ​ $ 1,275 ​ ​ As discussed further in Note 6, the change in fair value of the debt derivative liability includes the impact of an amendment to the loan and security agreement with Pacific Western Bank (“PacWest”) in September 2021, which resulted in the 15 Table of Contents increase of the one-time fee the Company was obligated to pay to PacWest upon the occurrence of specified liquidation events, including an initial public offering, from $ 0.5 million to $ 0.8 million. 4. Property and Equipment, Net Property and equipment, net consists of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, ​ ​ 2021 ​ 2020 Laboratory equipment ​ $ 3,490 ​ $ 2,925 Computers and software ​ 228 ​ 228 Furniture and fixtures ​ 636 ​ 482 Leasehold improvements ​ 5,092 ​ 5,092 Construction in process ​ 15 ​ — Total property and equipment ​ $ 9,461 ​ $ 8,727 Less accumulated depreciation ​ ( 2,353 ) ​ ( 1,360 ) Property and equipment, net ​ $ 7,108 ​ $ 7,367 ​ The Company incurred depreciation and amortization expense related to property and equipment, net of $ 1.0 million and $ 0.7 million for the nine months ended September 30, 2021 and 2020, respectively. 5. Accrued Expenses Accrued expenses consist of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, ​ ​ 2021 ​ 2020 External research and development ​ $ 3,238 ​ $ 11,060 Personnel related ​ 3,100 ​ 2,013 Professional services ​ 1,569 ​ 481 Other ​ ​ 287 ​ ​ 178 Total accrued expenses ​ $ 8,194 ​ $ 13,732 ​ ​ ​ ​ ​ 6. Loan and Security Agreement ​ Initial Loan Agreement ​ In November 2019, the Company entered into a loan and security agreement with PacWest, as amended by a first amendment, dated March 12, 2021, and a second amendment, dated May 10, 2021 (the “Initial Loan Agreement”). Pursuant to the Initial Loan Agreement, the Company borrowed $ 10.0 million under a term loan. Interest on the outstanding initial loan balance accrued at a variable annual rate equal to the greater of (i) the prime rate, as defined in the Loan Agreement, plus 0.25 % or (ii) 5.00 %. The Company was required to make interest only payments on the loan on a monthly basis through May 21, 2021. Subsequent to the interest-only period, the Company was required to make equal monthly payments of principal plus interest until the scheduled loan maturity on November 21, 2023. In addition, under the Initial Loan Agreement, the Company was obligated to pay a one-time $ 0.5 million fee to PacWest upon the occurrence of specified liquidation events, including an initial public offering. The fee represented a derivative instrument that the Company bifurcated from the debt arrangement and carried at fair value with any changes in such fair value recorded to other income (expense), net in the Company’s consolidated statements of operations and comprehensive loss. This debt derivative is recorded as a component of other liabilities, long-term on the Company’s condensed consolidated balance sheets. Upon the closing of the loan, the fair value of the debt derivative liability was $ 0.4 million that, together with certain legal and other fees incurred by the Company and associated with the Loan Agreement, was recognized as a debt discount and reflected as a reduction in the carrying value of the debt. The debt discount has been accreted and recognized as additional interest expense over the term of the Loan Agreement using the effective interest method. 16 Table of Contents Amended Loan Agreement ​ On September 17, 2021, the Company entered into a third amendment to the Initial Loan Agreement (as amended, the “Amended Loan Agreement” and together with the Initial Loan Agreement, the “Loan Agreement”), pursuant to which the Company borrowed $ 10.0 million under a new term loan and used the proceeds of such new term loan to repay the outstanding balance on the prior term loan. In addition, as a result of the amendment, prior to December 31, 2022, the Company has the ability to request one or more additional term loans in an aggregate principal amount of $ 10.0 million. Interest on amounts outstanding under the Loan Agreement accrued at a variable annual rate equal to the greater of (i) the prime rate plus 0.25 % or (ii) 4.75 %. As a result of the amendment, the Company is required to make interest-only payments on any outstanding balances through December 31, 2022. Subsequent to the interest-only period, the Company will be required to make equal monthly payments of principal plus interest until the loan matures on June 30, 2024. In addition, under the Amended Loan Agreement, the one-time fee the Company was obligated to pay to PacWest upon the occurrence of specified liquidation events, including an initial public offering, was increased from $ 0.5 million to an amount between $ 0.8 million and $ 1.0 million, depending on the timing and occurrence of specified events, including the closing of the IPO. The Company paid the one-time fee of $ 0.8 million to PacWest in October 2021 upon the closing of the IPO. As a result of the amendment, the Company is also obligated to pay PacWest a fee of 1.0 % of the aggregate principal amounts then outstanding if any term loans are repaid prior to September 17, 2022. Using the net present value method, the Company concluded the amendment should be accounted for as a debt modification as the present value of the remaining cash flows of the amended term loan are not substantially different from the present value of the remaining cash flows of the initial term loan. The Loan Agreement contains customary representations, warranties and covenants and also includes customary terms covering events of default, including payment defaults, breaches of covenants, a change of control provision and occurrence of a material adverse effect. As security for its obligations under the Loan Agreement, the Company granted PacWest a first priority security interest on substantially all of the Company’s assets (other than intellectual property), subject to certain exceptions. ​ The Company has determined that the risk of subjective acceleration under the material adverse effect clause is not probable and therefore has classified the long-term portion of the outstanding principal in non-current liabilities. Upon the occurrence and continuation of an event of default, a default interest rate of an additional 5 % per annum may be applied to the outstanding loan balance, and the administrative agent, collateral agent, and lender may declare all outstanding obligations immediately due and payable and exercise all of their rights and remedies as set forth in the Loan Agreement and under applicable law. As of September 30, 2021, the Company was in compliance with all covenants under the Loan Agreement. ​ The Company has the following minimum aggregate future loan payments under the Loan Agreement at September 30, 2021 (in thousands): ​ ​ ​ ​ ​ ​ Minimum Loan ​ ​ Payments 2021 ​ $ — 2022 ​ — 2023 ​ ​ 6,667 2024 ​ 3,333 Total future principal payments ​ 10,000 Less: unamortized discount ​ ( 420 ) Total notes payable ​ $ 9,580 ​ During the nine months ended September 30, 2021 and September 30, 2020, the Company recognized $ 0.5 million and $ 0.4 million of interest expense related to the Loan Agreement, which is reflected in other expense on the consolidated statements of operations and comprehensive loss. ​ 17 Table of Contents 7. Commitments and Contingencies Leases The Company has an operating lease for its facility and a finance lease for certain lab equipment. As of September 30, 2021, the Company has a letter of credit for the benefit of its landlord in the amount of $ 1.6 million, collateralized by a money market fund. Legal Proceedings From time to time, the Company may be party to legal proceedings or litigation arising in the ordinary course of business. The Company was not subject to any material legal proceedings during the nine months ended September 30, 2021 or during the year ended December 31, 2020. Guarantees and Indemnifications In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. In addition, the Company has entered into indemnification agreements with members of its board of directors and executive officers that may require the Company, among other things, to indemnify them against liabilities that may arise by reason of their status or service as directors or officers. The Company maintains a general liability insurance policy that covers certain liabilities of its directors and officers arising out of claims based on acts or omissions in their capacities as directors or officers. 8. Convertible Preferred Stock and Common Stock Convertible Preferred Stock As of December 31, 2020, the Company had authorized 133,602,056 shares of convertible preferred stock, which consisted of the following: 7,525,000 shares of Series A convertible preferred stock, 19,565,216 shares of Series A-1 convertible preferred stock, 7,500,000 shares of Series A-2(A) convertible preferred stock, 19,565,216 shares of Series A-2(A-1) convertible preferred stock, and 79,446,624 shares of Series B convertible preferred stock. On January 20, 2021, the Company issued 39,723,312 shares of Series B convertible preferred stock to existing Series B convertible preferred stockholders at $ 1.265 per share for cash proceeds of $ 50.2 million, net of issuance costs. On February 22, 2021, the Company amended and restated its certificate of incorporation to authorize 174,808,481 shares of Convertible Preferred Stock, of which 7,525,000 shares are designated as Series A convertible preferred stock, 19,565,216 shares are designated as Series A-1 convertible preferred stock, 79,446,624 shares are designated as Series B convertible preferred stock, and 68,271,641 shares are designated as Series C convertible preferred stock. On February 23, 2021, the Company entered into a stock purchase agreement with existing and new investors whereby the Company issued and sold 68,271,641 shares of Series C convertible preferred stock to investors at $ 1.3915 per share for cash proceeds of $ 94.7 million, net of issuance costs. The Company has evaluated the convertible preferred stock and determined that they should be considered an “equity host” and not a “debt host.” The evaluation was necessary to determine if any embedded features required bifurcation and separate accounting as a derivative financial instrument. The Company’s analysis was based on a consideration of the economic characteristics and risks and more specifically, evaluated all the stated and implied substantive terms and features including (i) whether the convertible preferred stock included redemption features, (ii) how and when any redemption 18 Table of Contents features could have been exercised, (iii) whether the convertible preferred stock were entitled to dividends, (iv) the voting rights of the convertible preferred stock and (v) the existence and nature of any conversion rights. As a result of its evaluation that the convertible preferred stock is an “equity host,” the various embedded conversion options are not considered a separate, embedded derivative. The Company’s convertible preferred stock (collectively, the “Convertible Preferred Stock”) consisted of the following (in thousands, except share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of September 30, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common ​ ​ ​ ​ Preferred ​ ​ ​ ​ ​ Shares ​ ​ Preferred ​ Shares ​ ​ ​ ​ ​ Issuable ​ ​ Shares ​ Issued and ​ Carrying ​ Liquidation ​ Upon ​ Authorized Outstanding Value Preference Conversion Series A convertible preferred stock ​ 7,525,000 ​ 7,500,000 ​ $ 7,309 ​ $ 7,500 ​ 789,473 Series A‑1 convertible preferred stock 19,565,216 19,565,216 ​ 20,740 ​ 22,500 2,059,496 Series B convertible preferred stock 79,446,624 79,446,624 ​ 100,153 ​ 100,500 8,362,793 Series C convertible preferred stock 68,271,641 68,271,641 ​ 94,686 ​ 95,000 7,186,486 ​ 174,808,481 174,783,481 ​ $ 222,888 ​ $ 225,500 18,398,248 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2020 ​ ​ ​ ​ Preferred ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares ​ ​ ​ ​ ​ ​ ​ Common Shares ​ ​ Preferred Shares Issued and ​ Carrying ​ Liquidation Issuable Upon ​ Authorized Outstanding Value Preference Conversion Series A convertible preferred stock 7,525,000 7,500,000 ​ $ 7,309 ​ $ 7,500 789,473 Series A‑1 convertible preferred stock 19,565,216 19,565,216 ​ 20,740 ​ 22,500 2,059,496 Series A‑2(A) convertible preferred stock 7,500,000 — ​ — ​ — — Series A‑2(A‑1) convertible preferred stock 19,565,216 — ​ — ​ — — Series B convertible preferred stock 79,446,624 39,723,312 ​ 49,953 ​ 50,250 4,181,390 ​ 133,602,056 66,788,528 ​ $ 78,002 ​ $ 80,250 7,030,359 ​ Upon the closing of the IPO in October 2021, all shares of the Company’s then outstanding preferred stock automatically converted into an aggregate of 18,398,248 shares of common stock. Common Stock As of September 30, 2021 and December 31, 2020, the Company’s certificate of incorporation, as amended, authorized the Company to issue 220,400,000 and 126,000,000 shares of common stock, $ 0.0001 par value per share, respectively. 19 Table of Contents Shares Reserved for Future Issuance The Company had reserved shares of common stock for the conversion of outstanding Convertible Preferred Stock and for future issuance under the 2020 Stock Incentive Plan (as amended, the “2020 Plan”) as of the following dates: ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ ​ 2021 ​ 2020 Shares of common stock reserved for conversion of convertible preferred stock outstanding 18,398,248 7,030,359 Shares of common stock reserved for conversion of convertible preferred shares issuable upon exercise of a warrant 2,631 2,631 Shares of common stock reserved for exercise of outstanding stock options under the 2020 Stock Incentive Plan 3,391,136 810,358 Shares of common stock reserved for future awards under the 2020 Stock Incentive Plan 429,109 151,769 Total shares reserved for future issuance 22,221,124 7,995,117 ​ ​ ​ 9. Equity-Based Compensation Equity Incentive Plans During the nine months ended September 30, 2021, the Company amended its 2020 Plan to increase the common stock issuable under the plan from 991,021 shares to 3,773,235 shares, plus up to 364,120 of additional shares of common stock equal to the number of shares of unvested restricted stock issued in exchange for incentive units as part of the Reorganization, to the extent such shares have been or will be forfeited. Restricted Stock A summary of the Company’s restricted stock activity and related information is as follows: ​ ​ ​ ​ ​ ​ ​ ​ Number Weighted ​ ​ of Shares ​ Average ​ ​ of Restricted ​ Grant Date ​ Stock Fair Value Unvested as of December 31, 2020 ​ 283,969 ​ $ 5.51 Vested ​ ( 80,928 ) ​ ​ 5.51 Canceled/Forfeited ( 67,230 ) ​ 5.51 Unvested as of September 30, 2021 135,811 ​ 5.51 ​ The Company had granted 552,546 shares of common stock underlying restricted stock awards as of June 30, 2020 in connection with the Reorganization. During the nine months ended September 30, 2021, the aggregate fair value of the restricted stock awards that vested was $ 0.7 million. As of September 30, 2021, total unrecognized compensation cost related to unvested restricted stock awards was approximately $ 0.8 million, which is expected to be recognized over a weighted-average period of 1.98 years. 20 Table of Contents Stock Options A summary of stock option activity under the 2020 Plan is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Remaining ​ Aggregate ​ ​ ​ ​ Weighted ​ Contractual ​ Intrinsic ​ ​ Number of ​ Average ​ Term ​ Value ​ Stock Options Exercise Price (In years) (In thousands) Outstanding as of December 31, 2020 810,358 $ 5.51 9.52 ​ $ — Granted 2,993,919 ​ ​ 7.32 ​ Exercised ( 8,092 ) ​ 5.55 ​ Cancelled/forfeited ( 405,049 ) ​ 6.17 ​ Outstanding as of September 30, 2021 3,391,136 ​ 7.03 9.14 ​ $ 15,795 Exercisable as of September 30, 2021 555,282 ​ 5.84 7.63 ​ $ 3,243 Vested and expected to vest as of September 30, 2021 3,391,136 ​ 7.03 9.14 ​ $ 15,795 ​ Using the Black-Scholes option pricing model, the weighted average fair value of options granted to employees and directors during the nine months ended September 30, 2021 and 2020 was $ 5.16 and $ 3.60 . The following assumptions were used in determining the fair value of options granted to employees during the nine months ended September 30, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ ​ Nine Months Ended September 30, ​ ​ 2021 ​ 2020 ​ 2021 ​ 2020 ​ Risk-free interest rate ​ 0.92 –  0.93 % ​ ​ 0.16  –  0.36 % ​ ​ 0.63  –  1.15 % ​ 0.16  –  0.36 % Expected dividend yield ​ 0 % ​ ​ 0 % ​ ​ 0 % ​ 0 % Expected term (in years) ​ 6.00  –  6.08 ​ ​ ​ 2.25  –  6.08 ​ ​ ​ 5.52  –  10.00 ​ ​ 2.25  –  6.08 ​ Expected volatility ​ 80.60  – 80.76 % ​ ​ 78.84  – 96.73 % ​ ​ 80.60  – 85.26 % ​ 78.84  – 96.73 % ​ The achievement of the performance conditions underlying outstanding performance-based awards was not probable as of September 30, 2021; therefore, no compensation expense was recorded for these awards. As of September 30, 2021, total unrecognized compensation costs related to performance-based awards was $ 0.5 million. As of September 30, 2021, total unrecognized compensation cost related to unvested stock options, excluding performance-based awards, was approximately $ 13.1 million, which is expected to be recognized over a weighted-average period of 3.22 years. During the nine months ended September 30, 2021, the Company entered into separation agreements with two former employees. Pursuant to the separation agreements, the former employees terminated their employment with the Company and agreed to provide certain consulting services to the Company through October 15, 2021 and November 30, 2021, respectively, during which the former employees’ equity awards will continue to vest. In addition, the Company extended the former employees’ periods to exercise their vested option until 90 days from the termination date of the respective consulting periods. Because the services to be performed during the consulting period are considered non-substantive, the Company concluded that the former employees’ equity awards were modified. As a result of these modifications, the Company recognized $ 0.2 million in equity-based compensation expense in the statement of operations and comprehensive loss during the nine months ended September 30, 2021. 21 Table of Contents Equity-Based Compensation Expense During the three and nine months ended September 30, 2021 and 2020, the Company recorded compensation expense related to incentive units, stock options, and restricted common stock for employees and non-employees, which was allocated as follows in the condensed consolidated statements of operations and comprehensive loss (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ ​ 2021 2020 2021 2020 Research and development expense ​ $ 378 ​ $ 183 ​ $ 864 ​ $ 240 ​ General and administrative expense ​ 713 ​ 500 ​ 2,023 ​ 690 ​ Total equity-based compensation expense ​ $ 1,091 ​ $ 683 ​ $ 2,887 ​ $ 930 ​ ​ ​ 10. Income Taxes The Company did no t record a provision or benefit for income taxes during the nine months ended September 30, 2021 and 2020. The Company continues to maintain a full valuation allowance against all of its deferred tax assets. The Company has evaluated the positive and negative evidence involving its ability to realize its deferred tax assets and has considered its history of cumulative net losses incurred since inception and its lack of any commercially ready products. The Company has concluded that it is more likely than not that it will not realize the benefits of its deferred tax assets. The Company reevaluates the positive and negative evidence at each reporting period. 11. Net Loss Per Share The following table sets forth the outstanding shares of common stock equivalents, presented based on amounts outstanding at each period end, that were excluded from the calculation of diluted net loss per share attributable to common stockholders during each period because including them would have been anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ ​ ​ 2021 ​ 2020 ​ Convertible preferred stock 18,398,248 7,030,359 Unvested restricted common stock 135,811 331,607 Outstanding stock options 3,391,136 854,978 Warrants 2,631 2,631 Total common stock equivalents 21,927,826 8,219,575 ​ ​ 12. Subsequent Events Reverse Stock Split The Company’s board of directors and stockholders approved an amendment to the Company’s certificate of incorporation, which became effective on October 15, 2021. The amendment effected a 1 -for-9.5 reverse stock split of the Company’s issued and outstanding common stock and eliminated the minimum price per share of common stock for an underwritten public offering that would result in the automatic conversion of the Company’s outstanding convertible preferred stock. Accordingly, all common share and per share amounts in the condensed consolidated financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to the reverse stock split, including reclassifying an amount equal to the reduction in par value of common stock to additional paid-in capital. Initial Public Offering On October 26, 2021, the Company completed its IPO and issued and sold an aggregate of 7,353,000 shares of its common stock at a public offering price of $ 16.00 per share, and on November 1, 2021, the Company issued and sold an additional 766,106 shares of common stock at a public offering price of $ 16.00 per share pursuant to the exercise by the underwriters 22 Table of Contents of their option to purchase additional shares. The Company received aggregate gross proceeds of approximately $ 129.9 million or aggregate net proceeds of approximately $ 116.3 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. Upon the closing of the IPO, all shares of the Company’s then outstanding Convertible Preferred Stock automatically converted into an aggregate of 18,398,248 shares of common stock (see Note 8). 2021 Stock Incentive Plan In September 2021, the Company’s board of directors adopted, and in October 2021, the Company’s stockholders approved, the 2021 Stock Incentive Plan (the “2021 Plan”), which became effective on October 21, 2021, immediately prior to the effectiveness of the Company’s registration statement on Form S-1 filed with the SEC on October 1, 2021, as amended (the “Registration Statement”). The 2021 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards. The number of shares of the Company’s common stock reserved for issuance under the 2021 Plan is the sum of (1) 2,654,828 ; plus (2) the number of shares (up to 3,967,038 shares) as is equal to the sum of (x) the number of shares of the Company’s common stock reserved for issuance under the 2020 Plan that remained available for grant under the 2020 Plan immediately prior to the effectiveness of the Registration Statement and (y) the number of shares of the Company’s common stock subject to outstanding awards whether granted under the 2020 Plan or outside of the 2020 Plan which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by us at their original issuance price pursuant to a contractual repurchase right and that, prior to the effectiveness of the 2021 Plan, would have become available for issuance under the 2020 Plan; plus (3) an annual increase, to be added on the first day of each fiscal year, beginning with the fiscal year, commencing on January 1, 2022 and continuing until, and including, January 1, 2031, equal to the lesser of (i) 5 % of the number of shares of our common stock outstanding on the first day of such fiscal year and (ii) the number of shares of common stock determined by the Company’s board of directors. 2021 Employee Stock Purchase Plan In September 2021, the Company’s board of directors adopted, and in October 2021, the Company’s stockholders approved the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which became effective on October 21, 2021, immediately prior to the effectiveness of the Registration Statement. The 2021 ESPP initially provides participating employees with the opportunity to purchase up to an aggregate of 292,031 shares of the Company’s common stock. The number of shares of common stock reserved for issuance under the 2021 ESPP will automatically increase on each January 1, beginning on January 1, 2022 and ending on January 1, 2031, by the lesser of (i) 584,062 shares of common stock, (ii) 1 % of the number of shares of the Company’s common stock outstanding on such date, and (iii) a number of shares of common stock as determined by the Company’s board of directors. ​ 23 Table of Contents