What changed in this filing

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Item 1. Financial Statements

2023-08-14 compared with 2023-05-09 · 70 added, 55 removed, 225 unchanged (36% of the section changed)

28 unchanged sentences

Common stock, $ 0.0001 par value;

200,000,000 shares authorized at March 31, 2023 and December 31, 2022;

27,470,534 shares issued and 27,439,820 shares outstanding at March 31, 2023;

200,000,000 shares authorized at June 30, 2023 and December 31, 2022;

27,539,620 shares issued and 27,518,895 shares outstanding at June 30, 2023;

27,471,607 shares issued and 27,425,447 shares outstanding at December 31, 2022

7 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating expenses

20 unchanged sentences

Balance at March 31, 2023

Issuance of common stock under employee stock purchase plan

Vesting of restricted common stock

Exercise of stock options

Stock-based compensation expense

Balance at June 30, 2023

Stockholders’

5 unchanged sentences

Balance at March 31, 2022

Vesting of restricted common stock

Stock-based compensation expense

Balance at June 30, 2022

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

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

3 unchanged sentences

Stock-based compensation expense

Loss on disposal of property and equipment

Changes in operating assets and liabilities:

11 unchanged sentences

Payments of finance lease

Proceeds from issuance of common stock under employee stock purchase plan

Proceeds from exercise of stock options

15 unchanged sentences

(Dollars in thousands, unless otherwise stated)

Description of Business and Liquidity and Capital Resources

Description of Business and Liquidity and Going Concern

Description of Business

2 unchanged sentences

The Company was incorporated in Delaware in June 2020, and its headquarters are located in Waltham, Massachusetts.

Liquidity and Capital Resources

Liquidity and Going Concern

Since its 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, 2023, the Company had cash and cash equivalents of $ 93.3 million.

The Company believes that its existing cash and cash equivalents will be sufficient to enable the Company to fund its operating expenses and capital expenditure requirements into the end of the second quarter of 2024, which is 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 development.

To date, the Company has primarily funded its operations with proceeds from the sale of preferred units and convertible preferred stock, a debt financing and its initial public offering (“IPO”), completed in the fourth quarter of 2021, in which the Company received net proceeds of $ 116.4 million.

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.

As of June 30, 2023, the Company had an accumulated deficit of $ 291.1 million and has incurred significant operating losses, including net losses of $ 42.0 million and $ 46.0 million for the six months ended June 30, 2023 and 2022, respectively.

The Company expects its operating losses and negative operating cash flows to continue for the foreseeable future as it continues to advance its product candidates through clinical trials, maintains the infrastructure necessary to support these activities and continues to incur costs associated with operating as a public company.

The Company anticipates its existing cash and cash equivalents of $ 75.4 million as of June 30, 2023 will not be sufficient to enable the Company to fund its current operating plan and capital expenditure requirements for at least twelve months from the date of issuance of these condensed consolidated financial statements.

These factors raise substantial doubt about the Company’s ability to continue as a going concern.

To continue to fund the operations of the Company, management has developed plans, which primarily consist of raising additional capital through one or more of the following:

equity or debt financings;

collaborations, partnerships or licensing transactions;

or other sources.

However, there can be no assurance that the Company will be able to complete any such transaction on acceptable terms or otherwise, and the Company may be unable to obtain additional capital.

As a result, the Company may need to implement cost reduction strategies, which could include delaying, limiting, reducing or eliminating certain costs related to its operations and research and development programs.

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Summary of Significant Accounting Policies

5 unchanged sentences

GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations.

Accordingly, these financial

statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2022 and notes thereto, included in the Company’s Annual Report on Form 10-K filed with the U.S.

Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2022 and notes thereto, included in the Company’s Annual Report on Form 10-K filed with the U.S.

Securities and Exchange Commission (“SEC”) on March 2, 2023.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements.

In the opinion of the Company’s management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments which are necessary to present fairly the Company’s financial position as of March 31, 2023 and the results of its operations and cash flows for the three months ended March 31, 2023 and March 31, 2022.

The unaudited interim condensed

consolidated financial statements have been prepared on the same basis as the audited financial statements.

In the opinion of the Company’s management, the unaudited interim condensed consolidated financial statements contain all adjustments which are necessary to present fairly the Company’s financial position as of June 30, 2023 and the results of its operations for the three and six months ended June 30, 2023 and June 30, 2022 and cash flows for the six months ended June 30, 2023 and June 30, 2022.

Such adjustments are of a normal and recurring nature.

The results for the three months ended March 31, 2023 are not necessarily indicative of the results for the year ending December 31, 2023 or for any future period.

The results for the three and six months ended June 30, 2023 are not necessarily indicative of the results for the year ending December 31, 2023 or for any future period.

Principles of Consolidation

12 unchanged sentences

Property and Equipment, Net

Property and equipment, net consists of the following as of March 31, 2023 and December 31, 2022:

Property and equipment, net consists of the following as of June 30, 2023 and December 31, 2022:

Laboratory equipment

6 unchanged sentences

Property and equipment, net

The Company incurred depreciation and amortization expense related to property and equipment of $ 0.5 million and $ 0.4 million for the three months ended March 31, 2023 and 2022, respectively.

The Company incurred depreciation and amortization expense related to property and equipment of $ 0.9 million and $ 0.8 million for the six months ended June 30, 2023 and 2022, respectively.

Accrued Expenses

Accrued expenses consist of the following as of March 31, 2023 and December 31, 2022:

Accrued expenses consist of the following as of June 30, 2023 and December 31, 2022:

External research and development

6 unchanged sentences

Under the Loan Agreement, in November 2019, the Borrower borrowed $ 10.0 million under a term loan.

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 of March 31, 2023, the interest rate on the term loan was 8.25 %.

Interest on amounts outstanding under the Loan Agreement accrues at a variable annual rate equal to the greater of (i) the prime rate plus 0.25 % or (ii) 4.75 %.

As of June 30, 2023, the interest rate on the term loan was 8.50 %.

The Borrower was required to make interest-only payments on any outstanding balances through December 31, 2022.

2 unchanged sentences

As security for its obligations under the Loan Agreement, the Borrower granted PacWest a first priority security interest on substantially all of the Borrower’s assets, excluding 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, 2023, the Company and Borrower were in compliance with all covenants under the Loan Agreement.

The Borrower has the following minimum aggregate future loan principal payments under the Loan Agreement as of March 31, 2023:

2023 (remaining nine months)

As of June 30, 2023, the Company and Borrower were in compliance with all covenants under the Loan Agreement.

The Borrower has the following minimum aggregate future loan principal payments under the Loan Agreement as of June 30, 2023:

2023 (remaining six months)

Total future principal payments

1 unchanged sentence

Total note payable

The Company recognized $ 0.2 million of interest expense related to the Loan Agreement for each of the three months ended March 31, 2023 and 2022, which is reflected in other income (expense), net on the condensed consolidated statements of operations and comprehensive loss.

The Company recognized $ 0.4 million and $ 0.3 million of interest expense related to the Loan Agreement for the six months ended June 30, 2023 and 2022, respectively, which is reflected in other income (expense), net on the condensed consolidated statements of operations and comprehensive loss.

Commitments and Contingencies

4 unchanged sentences

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, 2023 and December 31, 2022, the Company had a letter of credit for the benefit of its landlord in the amount of $ 1.6 million, collateralized by a money market account, which is recorded as restricted cash on the condensed consolidated balance sheets.

As of June 30, 2023 and December 31, 2022, the Company had a letter of credit for the benefit of its landlord in the amount of $ 1.6 million, collateralized by a money market account, which is recorded as restricted cash on the condensed consolidated balance sheets.

Preferred Stock and Common Stock

Undesignated Preferred Stock

As of March 31, 2023 and December 31, 2022, 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.

As of March 31, 2023 and December 31, 2022, there were no shares of preferred stock issued or outstanding.

As of March 31, 2023 and December 31, 2022, the Company is authorized to issue up to 200,000,000 shares of common stock, $ 0.0001 par value per share under its certificate of incorporation, as amended.

As of June 30, 2023 and December 31, 2022, 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.

As of June 30, 2023 and December 31, 2022, there were no shares of preferred stock issued or outstanding.

As of June 30, 2023 and December 31, 2022, the Company is authorized to issue up to 200,000,000 shares of common stock, $ 0.0001 par value per share under its certificate of incorporation, as amended.

Shares Reserved for Future Issuance

As of March 31, 2023 and December 31, 2022, the Company had reserved shares of common stock for future issuance under the 2020 Stock Incentive Plan (as amended, the “2020 Plan”), the 2021 Stock Incentive Plan (the “2021 Plan”), the 2022 Inducement Stock Incentive Plan (the “2022 Inducement Plan”) and the 2021 Employee Stock Purchase Plan (the “2021 ESPP”) as follows:

As of June 30, 2023 and December 31, 2022, the Company had reserved shares of common stock for future issuance under the 2020 Stock Incentive Plan (as amended, the “2020 Plan”), the 2021 Stock Incentive Plan (the “2021 Plan”), the 2022 Inducement Stock Incentive Plan (the “2022 Inducement Plan”) and the 2021 Employee Stock Purchase Plan (the “2021 ESPP”) as follows:

Shares of common stock reserved for exercise of a warrant

Shares of common stock reserved for exercise of outstanding stock options under the 2021 Plan and 2020 Plan

Shares of common stock reserved for exercise of outstanding stock options under the 2020 Plan, 2021 Plan and 2022 Inducement Plan

Shares of common stock reserved for future awards under the 2021 Plan

5 unchanged sentences

2020 Stock Incentive Plan

In 2020, the Company adopted 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.

7 unchanged sentences

On January 1, 2023, the number of shares reserved for issuance under the 2021 Plan automatically increased by 1,373,580 shares.

As of March 31, 2023, there were 3,096,174 shares available for future issuance under the 2021 Plan.

As of June 30, 2023, there were 3,263,377 shares available for future issuance under the 2021 Plan.

2022 Inducement Plan

4 unchanged sentences

Other terms of awards, including vesting requirements, are determined by the Company’s board of directors and are subject to the provisions of the 2022 Inducement Plan.

As of March 31, 2023, no shares have been granted under the 2022 Inducement Plan.

As of June 30, 2023, there were 220,000 shares available for future issuance under the 2022 Inducement Plan.

2021 Employee Stock Purchase Plan

3 unchanged sentences

On January 1, 2023, the number of shares reserved for issuance under the 2021 ESPP was increased by 274,716 shares.

The first offering period under the 2021 ESPP commenced on December 1, 2022 and ends May 31, 2023.

As of March 31, 2023, no shares have been issued under the 2021 ESPP.

As of March 31, 2023, there were 841,436 shares available for future issuance under the 2021 ESPP.

Offering periods under the 2021

ESPP commence on each June 1 and December 1, and end on the following November 30 and May 31, respectively.

During the six months ended June 30, 2023, 68,929 shares were purchased under the 2021 ESPP.

During the six months ended June 30, 2022, no shares were purchased under the 2021 ESPP.

As of June 30, 2023, there were 772,507 shares available for future issuance under the 2021 ESPP.

Stock-Based Compensation Expense

During the three months ended March 31, 2023 and 2022, 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,

During the three and six months ended June 30, 2023 and 2022, the Company recorded compensation expense related to stock options, restricted common stock and ESPP share purchases for employees and non-employees, which was allocated as follows in the condensed consolidated statements of operations and comprehensive loss:

Three Months Ended June 30,

Six Months Ended June 30,

Research and development expense

8 unchanged sentences

Cancelled/forfeited

Outstanding as of March 31, 2023

Exercisable as of March 31, 2023

Outstanding as of June 30, 2023

Exercisable as of June 30, 2023

(1) The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock as of the end of the period.

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, 2023 and 2022 was $ 1.95 and $ 8.83 , respectively.

The following assumptions were used in determining the fair value of options granted during the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

Using the Black-Scholes option pricing model, the weighted average fair value of options granted to employees and directors during the six months ended June 30, 2023 and 2022 was $ 1.96 and $ 6.56 , respectively.

The following assumptions were used in determining the fair value of options granted during the six months ended June 30, 2023 and 2022:

Six Months Ended June 30,

Risk-free interest rate

3 unchanged sentences

81.69 - 87.15

As of March 31, 2023, the Company had unrecognized stock-based compensation expense of $ 16.1 million related to stock options issued to employees and directors, which is expected to be recognized over a weighted-average period of 2.75 years.

80.75 – 87.42

As of June 30, 2023, the Company had unrecognized stock-based compensation expense of $ 14.4 million related to stock options issued to employees and directors, which is expected to be recognized over a weighted-average period of 2.6 years.

Restricted Stock

3 unchanged sentences

Canceled/Forfeited

Unvested as of March 31, 2023

Unvested as of June 30, 2023

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, 2023 and 2022, the aggregate fair value of the restricted stock awards that vested was less than $ 0.1 million and $ 0.2 million, respectively.

As of March 31, 2023, total unrecognized stock-based compensation expense related to unvested restricted stock awards was $ 0.2 million, which is expected to be recognized over a weighted-average period of 0.80 years.

The aggregate fair value of the restricted stock awards that vested during the six months ended June 30, 2023 and 2022 was $ 0.1 million and $ 0.2 million, respectively.

As of June 30, 2023, total unrecognized stock-based compensation expense related to unvested restricted stock awards was $ 0.2 million, which is expected to be recognized over a weighted-average period of 0.6 years.

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

Six Months Ended

Unvested restricted common stock

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements