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) ​ ​ ​ ​ ​ ​ ​ ​ March 31, December 31, ​ ​ 2022 ​ 2021 ASSETS ​ ​ Current assets ​ ​ Cash and cash equivalents ​ $ 176,959 ​ $ 198,053 Prepaid expenses and other current assets ​ 4,128 ​ 4,464 Total current assets ​ 181,087 ​ 202,517 Restricted cash ​ 1,553 ​ 1,553 Property and equipment, net ​ 7,468 ​ 7,620 Operating lease right-of-use asset ​ 5,885 ​ 5,977 Other non-current assets ​ 359 ​ 393 Total assets ​ $ 196,352 ​ $ 218,060 LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ Current liabilities ​ ​ Accounts payable ​ $ 2,324 ​ $ 3,144 Accrued expenses ​ 7,323 ​ 8,751 Operating lease liability, current portion ​ 829 ​ 801 Notes payable, current portion ​ 1,667 ​ — Other current liabilities ​ 82 ​ 82 Total current liabilities ​ 12,225 ​ 12,778 Notes payable, net of current portion ​ 8,012 ​ 9,628 Operating lease liability, net of current portion ​ 9,894 ​ 10,107 Other liabilities, long-term ​ 100 ​ 118 Total liabilities ​ 30,231 ​ 32,631 Commitments and contingencies (Note 7) ​ ​ Stockholders’ equity ​ ​ Preferred stock, $ 0.0001 par value; 5,000,000 shares authorized, no shares issued or outstanding at March 31, 2022 and December 31, 2021 ​ ​ — ​ ​ — Common stock, $ 0.0001 par value; 200,000,000 shares authorized at March 31, 2022 and December 31, 2021; 27,471,607 shares issued and 27,376,473 shares outstanding at March 31, 2022; 27,468,950 shares issued and 27,358,375 shares outstanding at December 31, 2021 ​ 3 ​ 3 Additional paid-in capital ​ 348,357 ​ 346,312 Accumulated deficit ​ ( 182,239 ) ​ ( 160,886 ) Total stockholders’ equity ​ 166,121 ​ 185,429 Total liabilities and stockholders’ equity ​ $ 196,352 ​ $ 218,060 ​ 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 March 31, ​ 2022 2021 Operating expenses ​ ​ Research and development ​ $ 14,920 ​ $ 11,621 General and administrative ​ 6,304 ​ 4,899 Total operating expenses ​ 21,224 ​ 16,520 Loss from operations ​ ( 21,224 ) ​ ( 16,520 ) Other expense, net ​ ​ Other expense, net ​ ( 129 ) ​ ( 147 ) Total other expense, net ​ ( 129 ) ​ ( 147 ) Net loss and comprehensive loss ​ $ ( 21,353 ) ​ $ ( 16,667 ) Net loss per share, basic and diluted ​ $ ( 0.78 ) ​ $ ( 23.53 ) Weighted average common shares outstanding, basic and diluted ​ 27,367,377 ​ 708,264 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ ​ 7 Table of Contents XILIO THERAPEUTICS, INC. Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (In thousands, except share data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Series A Series A-1 Series B Series C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Convertible ​ Convertible ​ Convertible ​ Convertible ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ 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 ​ — ​ 25 ​ — ​ 25 Equity-based compensation expense — ​ — — ​ — — ​ — — ​ — ​ — ​ — ​ 794 ​ — ​ 794 Net loss — ​ — — ​ — — ​ — — ​ — ​ — ​ — ​ — ​ ( 16,667 ) ​ ( 16,667 ) Balance at 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 $ — $ 2,618 $ ( 101,753 ) $ ( 99,135 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Series A Series A-1 Series B Series C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Convertible ​ Convertible ​ Convertible ​ Convertible ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ 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 Equity Balance at December 31, 2021 ​ — ​ $ — ​ — ​ $ — ​ — ​ $ — ​ — ​ $ — ​ ​ 27,358,375 ​ $ 3 ​ $ 346,312 ​ $ ( 160,886 ) ​ $ 185,429 Vesting of restricted common stock — ​ — — ​ — — ​ — — ​ — ​ 15,441 ​ — ​ — ​ — ​ — Exercise of stock options — ​ — — ​ — — ​ — — ​ — ​ 2,657 ​ — ​ 16 ​ — ​ 16 Equity-based compensation expense — ​ — — ​ — — ​ — — ​ — ​ — ​ — ​ 2,029 ​ — ​ 2,029 Net loss — ​ — — ​ — — ​ — — ​ — ​ — ​ — ​ — ​ ( 21,353 ) ​ ( 21,353 ) Balance at March 31, 2022 — ​ $ — — ​ $ — — ​ $ — — ​ $ — ​ 27,376,473 ​ $ 3 ​ $ 348,357 ​ $ ( 182,239 ) ​ $ 166,121 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 8 Table of Contents XILIO THERAPEUTICS, INC. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ 2022 2021 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ Net loss $ ( 21,353 ) $ ( 16,667 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ Depreciation and amortization ​ 440 ​ 350 Non-cash interest expense ​ 53 ​ 38 Equity-based compensation expense ​ 2,029 ​ 794 Change in fair value of warrant and derivative liabilities ​ — ​ 15 Changes in operating assets and liabilities: ​ ​ ​ ​ Prepaid and other assets ​ 336 ​ 153 Operating lease right-of-use asset ​ 92 ​ 78 Accounts payable ​ ( 820 ) ​ ( 2,838 ) Accrued expenses and other liabilities ​ ( 1,427 ) ​ ( 4,627 ) Operating lease liability ​ ( 185 ) ​ ( 30 ) Net cash used in operating activities ​ ( 20,835 ) ​ ( 22,734 ) Cash flows from investing activities: ​ ​ Purchases of property and equipment ​ ( 254 ) ​ ( 170 ) Net cash used in investing activities ​ ( 254 ) ​ ( 170 ) Cash flows from financing activities: ​ ​ Payments of finance lease ​ ( 21 ) ​ ( 21 ) Proceeds from issuance of convertible preferred stock, net of issuance costs ​ ​ — ​ ​ 144,886 Proceeds from exercise of stock options ​ 16 ​ 25 Net cash (used in) provided by financing activities ​ ( 5 ) ​ 144,890 (Decrease) increase in cash, cash equivalents and restricted cash ​ ( 21,094 ) ​ 121,986 Cash, cash equivalents and restricted cash, beginning of period ​ 199,606 ​ 20,789 Cash, cash equivalents and restricted cash, end of period $ 178,512 $ 142,775 Supplemental cash flow disclosure: ​ ​ Cash paid for interest $ 119 $ 125 Supplemental disclosure of non-cash activities: ​ ​ ​ Capital expenditures included in accounts payable or accrued expenses ​ $ — ​ $ 249 Deferred offering costs included in accounts payable or accrued expenses ​ $ — ​ $ 201 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 9 Table of Contents XILIO THERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (Dollars in thousands, unless otherwise stated) (Unaudited) 1. Description of Business, Initial Public Offering and Liquidity and Capital Resources Description of Business Xilio Therapeutics, Inc. (“Xilio” or the “Company”), incorporated in Delaware in June 2020, is a clinical-stage biotechnology company focused on harnessing the immune system to achieve deep and durable clinical responses to improve the lives of patients with cancer. The Company’s headquarters are based in Waltham, Massachusetts. Initial Public Offering On October 26, 2021, the Company completed its initial public offering (“IPO”) of common stock, in which it issued and sold an aggregate of 7,353,000 shares at a public offering price of $ 16.00 per share. 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 partial exercise by the underwriters of their option to purchase additional shares. The Company received aggregate gross proceeds of $ 129.9 million or aggregate net proceeds of $ 116.4 million from its IPO, including the partial exercise of the underwriters’ option, after deducting underwriting discounts and commissions and offering expenses payable by the Company. In connection with the IPO, the Company effected a 1-for-9.5 reverse stock split of the Company’s issued and outstanding shares of common stock. The reverse stock split was effective on October 15, 2021. Accordingly, all share and per share amounts of common stock for all periods presented in these condensed consolidated financial statements and related notes have been retroactively adjusted to give effect to the reverse stock split. Upon 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). Liquidity and Capital Resources 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 the successful research, development and manufacturing of product candidates, and, if approved, any products, obtaining regulatory approvals for product candidates, and, if approved, commercialization of any products, protection and enforcement of intellectual property and proprietary technology, development by third parties of potentially competitive products or product candidates, compliance with governmental regulations, and the ability to secure additional capital to fund operations. Programs currently under development will require significant additional research and development efforts, including preclinical and clinical testing and manufacturing process development 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. As of March 31, 2022, the Company had cash and cash equivalents of $ 177.0 million. The Company expects that its cash and cash equivalents will be sufficient to meet its 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 and will need additional capital in the future to support its continuing operations and growth strategy as it continues to invest significantly in research and development of its product candidates, including preclinical and clinical testing and manufacturing process 10 Table of Contents development. To date, the Company has primarily funded its operations with proceeds from the sale of convertible preferred units and convertible preferred stock, a debt financing and the IPO. 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 capital sooner 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 (“GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission, (the “SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. 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. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: Xilio Therapeutics LLC, Xilio Concerto LLC, Xilio Development, Inc. and Xilio Securities Corporation, which is a Massachusetts subsidiary created to buy, sell and hold securities. All intercompany accounts and transactions have been eliminated in consolidation. Significant Accounting Policies The significant accounting policies used in preparation of the unaudited condensed consolidated financial statements are described in Note 2, “ Summary of Significant Accounting Policies ” of the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Unaudited Interim Condensed Consolidated Financial Information The accompanying condensed consolidated balance sheet as of March 31, 2022, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2022 and 2021, the statements of cash flows for the three months ended March 31, 2022 and 2021 and the condensed consolidated statements of convertible preferred stock and stockholders’ equity (deficit) for the three months ended March 31, 2022 and 2021 are unaudited. The financial data and other information contained in the notes thereto as of and for the three months ended March 31, 2022 and 2021 11 Table of Contents are also unaudited. The condensed consolidated balance sheet data as of December 31, 2021 was derived from the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. 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 normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of March 31, 2022, the results of its operations for the three months ended March 31, 2022 and 2021 and cash flows for the three months ended March 31, 2022 and 2021. 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, 2021, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The results for the three months ended March 31, 2022 are not necessarily indicative of results to be expected for the year ended December 31, 2022, 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, the valuation of equity-based compensation, including stock options and restricted common stock, the useful life of long-lived assets and income taxes. Actual results could differ from those estimates. Cash, 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ March 31, ​ 2022 2021 Cash and cash equivalents ​ $ 176,959 ​ $ 141,222 Restricted cash ​ 1,553 ​ 1,553 Total cash, cash equivalents and restricted cash as shown on the consolidated statement of cash flows ​ $ 178,512 ​ $ 142,775 ​ Recently Adopted Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326)—Measurement of Credit Losses on Financial Instruments , as amended (“ASU 2016-13”). The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the previously used incurred loss methodology and require a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted ASU 2016-13 as of January 1, 2022, and the adoption did not have a material effect on its condensed consolidated financial statements and related disclosures. 12 Table of Contents In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470 - 20) and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815 - 40) (“ASU 2020-06”), which reduces the number of accounting models for convertible debt instruments and convertible preferred stock as well as amends the derivatives scope exception for contracts in an entity’s own equity. The Company adopted ASU 2020-06 as of January 1, 2022, and the adoption did not have a material effect on its condensed consolidated financial statements and related disclosures. 3. Fair Value Measurements The Company measures the following financial assets at fair value on a recurring basis. The fair value of these assets was determined as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quoted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Prices in ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Active ​ Significant ​ ​ ​ ​ ​ ​ ​ ​ Markets for ​ Other ​ Significant ​ ​ ​ ​ ​ Identical ​ Observable ​ Unobservable ​ ​ March 31, ​ Assets ​ Inputs ​ Inputs ​ 2022 Level 1 Level 2 Level 3 Financial assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash equivalents—money market funds ​ $ 934 ​ $ 934 ​ $ — ​ $ — Total financial assets ​ $ 934 ​ $ 934 ​ $ — ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quoted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Prices in ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Active ​ Significant ​ ​ ​ ​ ​ ​ ​ ​ Markets for ​ Other ​ Significant ​ ​ ​ ​ ​ Identical ​ Observable ​ Unobservable ​ ​ ​ December 31, ​ Assets ​ Inputs ​ Inputs ​ 2021 Level 1 Level 2 Level 3 Financial assets: ​ ​ ​ ​ ​ Cash equivalents—money market funds ​ $ 8,534 ​ $ 8,534 ​ $ — ​ $ — Total financial assets ​ $ 8,534 ​ $ 8,534 ​ $ — ​ $ — ​ During the three months ended March 31, 2022 and March 31, 2021, the Company did not hold any investments and there were no transfers between Level 1, Level 2, and Level 3. 4. Property and Equipment, Net Property and equipment, net consists of the following as of March 31, 2022 and December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, December 31, ​ ​ 2022 ​ 2021 Laboratory equipment ​ $ 4,369 ​ $ 3,805 Computers and software ​ 228 ​ 228 Furniture and fixtures ​ 636 ​ 636 Leasehold improvements ​ 5,124 ​ 5,124 Construction in process ​ 229 ​ 539 Total property and equipment ​ $ 10,586 ​ $ 10,332 Less accumulated depreciation ​ ( 3,118 ) ​ ( 2,712 ) Property and equipment, net ​ $ 7,468 ​ $ 7,620 ​ The Company incurred depreciation and amortization expense related to property and equipment, net of $ 0.4 million for each of the three months ended March 31, 2022 and 2021, respectively. 13 Table of Contents 5. Accrued Expenses Accrued expenses consist of the following as of March 31, 2022 and December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, December 31, ​ ​ 2022 ​ 2021 External research and development ​ $ 4,987 ​ $ 2,794 Personnel-related ​ 1,483 ​ 5,145 Professional and consulting fees ​ 659 ​ 491 Other ​ ​ 194 ​ ​ 321 Total accrued expenses ​ $ 7,323 ​ $ 8,751 ​ ​ ​ ​ ​ 6. Loan and Security Agreement ​ Initial Loan Agreement ​ In November 2019, the Company entered into a loan and security agreement with Pacific Western Bank (“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 Initial 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. 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 Initial 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 Initial Loan Agreement using the effective interest method. ​ Amended Loan Agreement ​ On September 17, 2021, the Company entered into a third amendment (the “Third Amendment”) to the Initial Loan Agreement (as amended, 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 accrue 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 Third 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, as a result of the Third Amendment, 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 Third 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, which is approximately one year from the date of the Third Amendment. 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. ​ 14 Table of Contents 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 March 31, 2022, 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 March 31, 2022: ​ ​ ​ ​ ​ ​ Minimum Loan ​ ​ Payments 2022 ​ $ — 2023 ​ 6,667 2024 ​ ​ 3,333 Total future principal payments ​ 10,000 Less: unamortized discount ​ ( 321 ) Total notes payable ​ $ 9,679 ​ The Company recognized $ 0.2 million of interest expense related to the Loan Agreement during each of the three months ended March 31, 2022 and 2021, respectively, which is reflected in other expense, net on the consolidated statements of operations and comprehensive loss. ​ 7. Commitments and Contingencies Leases The Company has an operating lease for its facility and a finance lease for certain lab equipment. In August 2019, the Company entered into a lease agreement with a landlord providing funding for tenant improvements and occupancy of approximately 27,830 square feet of office and laboratory space at 828 Winter Street, Waltham, Massachusetts. The initial term of the lease expires in March 2030, unless terminated earlier in accordance with the terms of the lease. The Company has an option to extend the lease for a period of five years at then-market rates. The Company is obligated to pay its portion of real estate taxes and costs related to the premises, including costs of operations, maintenance, repair, replacement, and management of the leased premises, which it began paying simultaneous with the rent commencement date in March 2020. As of March 31, 2022, 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, which is classified as restricted cash on the condensed consolidated balance sheets. 15 Table of Contents 8. Preferred Stock and Common Stock Undesignated Preferred Stock As of March 31, 2022 and December 31, 2021, the Company’s certificate of incorporation, as amended, authorized the Company to issue up to 5,000,000 shares of undesignated preferred stock at $ 0.0001 par value per share. Convertible Preferred Stock 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 March 31, 2022 and December 31, 2021, the Company’s certificate of incorporation, as amended, authorized the Company to issue up to 200,000,000 shares of common stock, $ 0.0001 par value per share. Shares Reserved for Future Issuance As of March 31, 2022 and December 31, 2021, the Company had reserved shares of common stock for future issuance, including under the Company’s 2020 Stock Incentive Plan (as amended, the “2020 Plan”), 2021 Stock Incentive Plan (the “2021 Plan”) and 2021 Employee Stock Purchase Plan (the “2021 ESPP”) as follows: ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ ​ 2022 ​ 2021 Shares of common stock reserved for exercise of a warrant 2,631 2,631 Shares of common stock reserved for exercise of outstanding stock options under the 2021 and 2020 Stock Incentive Plans 4,948,376 4,088,456 Shares of common stock reserved for future awards under the 2021 Stock Incentive Plan 2,860,745 2,349,875 Shares of common stock reserved for purchase under the 2021 Employee Stock Purchase Plan ​ 566,720 ​ 292,031 Total shares reserved for future issuance 8,378,472 6,732,993 ​ ​ ​ 9. Equity-Based Compensation Equity Incentive Plans 2020 Stock Incentive Plan In July 2020, the Company’s stockholders approved the 2020 Plan. Under the 2020 Plan, the Company was authorized to issue shares of common stock to the Company’s employees, officers, directors, consultants, and advisors in the form of options, restricted stock awards or other stock-based awards. Upon the effectiveness of the 2021 Plan in October 2021, the Company ceased granting awards under the 2020 Plan. 2021 Stock Incentive Plan In September 2021, the Company’s board of directors adopted the 2021 Plan, which was approved by the Company’s stockholders and became effective immediately prior to the effectiveness of the Company’s registration statement on Form S-1, as amended (File No. 333-259973), which was declared effective by the SEC on October 21, 2021 (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 initially reserved for issuance under the 2021 Plan was 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 16 Table of Contents 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 the Company’s 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 (the “Evergreen Provision”). Effective January 1, 2022, the number of shares reserved for issuance under the 2021 Plan increased by 1,373,447 shares in accordance with the Evergreen Provision. As of March 31, 2022, there were 2,860,745 shares available for future issuance under the 2021 Plan. 2021 Employee Stock Purchase Plan In September 2021, the Company’s board of directors adopted the 2021 ESPP, which was approved by the stockholders and became effective on October 21, 2021, immediately prior to the effectiveness of the Registration Statement. The Company initially reserved 292,031 shares of the Company’s common stock for future issuance under the 2021 ESPP. 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 (the “ESPP Evergreen Provision”). Effective January 1, 2022, the number of shares reserved for issuance under the 2021 ESPP increased by 274,689 shares in accordance with the ESPP Evergreen Provision. As of March 31, 2022, no offering periods have commenced under the 2021 ESPP. Equity-Based Compensation Expense During the three months ended March 31, 2022 and 2021, the Company recorded compensation expense related to 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ 2022 2021 Research and development expense ​ $ 596 ​ $ 135 ​ General and administrative expense ​ 1,433 ​ 659 ​ Total equity-based compensation expense ​ $ 2,029 ​ $ 794 ​ ​ 17 Table of Contents Stock Options A summary of stock option activity under the 2021 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, 2021 4,088,456 $ 8.59 9.13 ​ $ 30,291 Granted 874,830 ​ $ 12.67 ​ Exercised ( 2,657 ) ​ $ 5.89 ​ Cancelled/forfeited ( 12,253 ) ​ $ 13.71 ​ Outstanding as of March 31, 2022 4,948,376 ​ $ 9.30 9.07 ​ $ 2,832 Exercisable as of March 31, 2022 1,064,255 ​ $ 7.09 8.27 ​ $ 1,115 Vested and expected to vest as of March 31, 2022 4,948,376 ​ $ 9.30 9.07 ​ $ 2,832 ​ Using the Black-Scholes option pricing model, the weighted average fair value of options granted to employees and directors during the three months ended March 31, 2022 and 2021 was $ 8.83 and $ 4.32 , respectively. The following assumptions were used in determining the fair value of options granted to employees the three months ended March 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ 2022 ​ 2021 ​ Risk-free interest rate ​ ​ 1.47  –  1.89 % ​ 0.63  –  1.15 % Expected dividend yield ​ ​ 0 % ​ 0 % Expected term (in years) ​ ​ 6.00  –  6.08 ​ ​ 5.52  –  10.00 ​ Expected volatility ​ ​ 80.75  – 80.92 % ​ 84.61  – 85.26 % ​ The achievement of the performance conditions underlying outstanding performance-based awards was not probable as of March 31, 2022; therefore, no compensation expense was recorded for these awards. As of March 31, 2022, total unrecognized compensation costs related to performance-based awards was less than $ 0.1 million. As of March 31, 2022, total unrecognized compensation cost related to unvested stock options, excluding performance-based awards, was approximately $ 25.4 million, which is expected to be recognized over a weighted-average period of 3.04 years. 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, 2021 ​ 110,575 ​ $ 5.51 Vested ​ ( 15,441 ) ​ $ 5.51 Canceled/Forfeited — $ — Unvested as of March 31, 2022 95,134 $ 5.51 ​ In June 2020, the Company granted 552,546 shares of common stock underlying restricted stock awards, and the Company has not subsequently granted any additional restricted stock awards. During the three months ended March 31, 2022, the aggregate fair value of the restricted stock awards that vested was $ 0.2 million. As of March 31, 2022, total unrecognized compensation cost related to unvested restricted stock awards was approximately $ 0.6 million, which is expected to be recognized over a weighted-average period of 1.57 years. ​ 18 Table of Contents 10. Income Taxes The Company did no t record a provision or benefit for income taxes during the three months ended March 31, 2022 and 2021. 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: ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ ​ 2022 ​ 2021 Convertible preferred stock — 18,398,248 Unvested restricted common stock 95,134 251,599 Outstanding stock options 4,948,376 2,775,671 Warrants 2,631 2,631 Total common stock equivalents 5,046,141 21,428,149 ​ ​ ​ ​ 19 Table of Contents