UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020March 31, 2022
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. Number: 001-39635
Surrozen, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 98-1556622 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer
| |
171 Oyster Point Blvd, Suite 400, South San Francisco, California | 94080 | |
(Address of principal executive offices) | (Zip Code) |
|
Registrant’s telephone number, including area code: (650) 489-9000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| SRZN | The Nasdaq Capital Market | ||
Redeemable warrants, each whole warrant exercisable for one | SRZNW | The Nasdaq Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx ☒ No ¨☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yesx ☒ No ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):. Yes x☐ No ¨☒
As of January 4, 2021,May 9, 2022, there were 9,634,000 Class A ordinary35,125,886 shares $0.0001of common stock, par value per share, and 2,300,000 Class B ordinary shares, $0.0001 par value per share, issued and outstanding.
Table of Contents
CONSONANCE-HFW ACQUISITION CORP.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2020
TABLE OF CONTENTS
i
i
PART I- I—FINANCIAL INFORMATION
Item 1. Interim Financial Statements
SURROZEN, INC.
CONSONANCE-HFW ACQUISITION CORP.Condensed Consolidated Balance Sheets
CONDENSED BALANCE SHEET(In thousands, except per share amounts)
SEPTEMBER 30, 2020
|
| March 31, |
|
| December 31, 2021 |
| ||
|
| (Unaudited) |
|
|
|
| ||
Assets |
|
|
|
|
|
| ||
Current assets: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 14,305 |
|
| $ | 33,091 |
|
Short-term marketable securities |
|
| 78,209 |
|
|
| 68,760 |
|
Prepaid expenses and other current assets |
|
| 3,165 |
|
|
| 3,338 |
|
Total current assets |
|
| 95,679 |
|
|
| 105,189 |
|
|
|
|
|
|
|
| ||
Property and equipment, net |
|
| 4,672 |
|
|
| 4,794 |
|
Operating lease right-of-use assets |
|
| 4,215 |
|
|
| 4,582 |
|
Long-term marketable securities |
|
| 11,780 |
|
|
| 21,655 |
|
Restricted cash |
|
| 405 |
|
|
| 405 |
|
Other assets |
|
| 904 |
|
|
| 549 |
|
Total assets |
| $ | 117,655 |
|
| $ | 137,174 |
|
|
|
|
|
|
|
| ||
Liabilities and stockholders’ equity |
|
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
|
| ||
Accounts payable |
| $ | 1,045 |
|
| $ | 2,718 |
|
Accrued and other liabilities |
|
| 4,927 |
|
|
| 8,662 |
|
Lease liabilities, current portion |
|
| 2,143 |
|
|
| 2,193 |
|
Total current liabilities |
|
| 8,115 |
|
|
| 13,573 |
|
|
|
|
|
|
|
| ||
Lease liabilities, noncurrent portion |
|
| 5,074 |
|
|
| 5,600 |
|
Warrant liabilities |
|
| 1,804 |
|
|
| 8,301 |
|
Total liabilities |
|
| 14,993 |
|
|
| 27,474 |
|
|
|
|
|
|
|
| ||
Commitments and contingencies (Note 7) |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Stockholders’ equity: |
|
|
|
|
|
| ||
Preferred stock, $0.0001 par value, 10,000 shares authorized; 0 shares |
|
| 0 |
|
|
| 0 |
|
Common stock, $0.0001 par value, 500,000 shares authorized as of |
|
| 4 |
|
|
| 4 |
|
Additional paid-in capital |
|
| 253,683 |
|
|
| 252,464 |
|
Accumulated other comprehensive loss |
|
| (429 | ) |
|
| (119 | ) |
Accumulated deficit |
|
| (150,596 | ) |
|
| (142,649 | ) |
Total stockholders’ equity |
|
| 102,662 |
|
|
| 109,700 |
|
Total liabilities and stockholders’ equity |
| $ | 117,655 |
|
| $ | 137,174 |
|
(Unaudited)
| ASSETS | | |||
| Deferred offering costs | $ | 50,689 | ||
| TOTAL ASSETS | $ | 50,689 | ||
| LIABILITIES AND SHAREHOLDER’S EQUITY | | |||
| Current liabilities | | |||
| Accrued offering costs | $ | 30,000 | ||
| Promissory note – related party | 650 | |||
| Total Current Liabilities | 30,650 | |||
| Commitments | | |||
| Shareholder’s Equity | | |||
| Preferred shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | — | |||
| Class A ordinary shares, $0.0001 par value; 350,000,000 shares authorized; none issued and outstanding | — | |||
| Class B ordinary shares, $0.0001 par value; 150,000,000 shares authorized; 2,300,000 shares issued and outstanding (1)(2) | 230 | |||
| Additional paid-in capital | 24,770 | |||
| Accumulated deficit | (4,961 | ) | ||
| Total Shareholder’s Equity | 20,039 | |||
| TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY | $ | 50,689 |
The accompanying notes are an integral part of thethese unaudited condensed consolidated financial statements.
1
1
CONSONANCE-HFW ACQUISITION CORP.SURROZEN, INC.
CONDENSED STATEMENT OF OPERATIONSCondensed Consolidated Statements of Operations and Comprehensive Loss
FOR THE PERIOD FROM AUGUST 21, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020(Unaudited)
(Unaudited)(In thousands, except per share amounts)
| Formation costs | $ | 4,961 | ||
| Net Loss | (4,961 | ) | ||
| Weighted average shares outstanding, basic and diluted (1)(2) | 2,300,000 | |||
| Basic and diluted net loss per ordinary shares | $ | (0.00 | ) |
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Operating expenses: |
|
|
|
|
|
| ||
Research and development |
| $ | 9,371 |
|
| $ | 8,601 |
|
General and administrative |
|
| 5,122 |
|
|
| 4,430 |
|
Total operating expenses |
|
| 14,493 |
|
|
| 13,031 |
|
Loss from operations |
|
| (14,493 | ) |
|
| (13,031 | ) |
Interest income |
|
| 49 |
|
|
| 9 |
|
Other income |
|
| 6,497 |
|
|
| 0 |
|
Net loss |
|
| (7,947 | ) |
|
| (13,022 | ) |
Unrealized loss on marketable securities, net of tax |
|
| (310 | ) |
|
| 0 |
|
Comprehensive loss |
| $ | (8,257 | ) |
| $ | (13,022 | ) |
|
|
|
|
|
|
| ||
Net loss per share attributable to common |
| $ | (0.23 | ) |
| $ | (0.72 | ) |
|
|
|
|
|
|
| ||
Weighted-average shares used in computing net |
|
| 34,863 |
|
|
| 18,154 |
|
The accompanying notes are an integral part of thethese unaudited condensed consolidated financial statements.
CONSONANCE-HFW ACQUISITION CORP.2
CONDENSED STATEMENT OF CHANGES IN SHAREHOLDER’S EQUITYSURROZEN, INC.
FOR THE PERIOD FROM AUGUST 21, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity
(Unaudited)
Class B Ordinary Shares | Additional Paid-in | Accumulated | Total Shareholder’s | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance – August 21, 2020 (inception) | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
| Issuance of Class B ordinary shares to Sponsor (1)(2) | 2,300,000 | 230 | 24,770 | — | 25,000 | |||||||||||||||
| Net loss | — | — | — | (4,961 | ) | (4,961 | ) | |||||||||||||
| Balance – September 30, 2020 | 2,300,000 | $ | 230 | $ | 24,770 | $ | (4,961 | ) | $ | 20,039 | ||||||||||
(In thousands)
|
|
|
|
|
|
|
| Additional |
|
| Accumulated |
|
|
|
|
| Total |
| ||||||
|
| Common stock |
|
| paid-in |
|
| comprehensive |
|
| Accumulated |
|
| stockholders’ |
| |||||||||
|
| Shares |
|
| Amount |
|
| capital |
|
| loss |
|
| deficit |
|
| equity |
| ||||||
Balance at December 31, 2021 |
|
| 35,034 |
|
| $ | 4 |
|
| $ | 252,464 |
|
| $ | (119 | ) |
| $ | (142,649 | ) |
| $ | 109,700 |
|
Issuance of common stock under Equity Purchase Agreement |
|
| 100 |
|
|
| — |
|
|
| 273 |
|
|
| — |
|
|
| — |
|
|
| 273 |
|
Repurchase of early exercised stock options |
|
| (8 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Vesting of early exercised stock options |
|
| — |
|
|
| — |
|
|
| 30 |
|
|
| — |
|
|
| — |
|
|
| 30 |
|
Stock-based compensation expense |
|
| — |
|
|
| — |
|
|
| 916 |
|
|
| — |
|
|
| — |
|
|
| 916 |
|
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (310 | ) |
|
| — |
|
|
| (310 | ) |
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (7,947 | ) |
|
| (7,947 | ) |
Balance at March 31, 2022 |
|
| 35,126 |
|
| $ | 4 |
|
| $ | 253,683 |
|
| $ | (429 | ) |
| $ | (150,596 | ) |
| $ | 102,662 |
|
|
| Redeemable convertible |
|
|
|
|
|
|
|
| Additional |
|
| Accumulated |
|
|
|
|
| Total |
| |||||||||||
|
| preferred stock |
|
| Common stock |
|
| paid-in |
|
| comprehensive |
|
| Accumulated |
|
| stockholders’ |
| ||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| capital |
|
| loss |
|
| deficit |
|
| equity |
| ||||||||
Balance at December 31, 2020, as previously reported |
|
| 95,290 |
|
| $ | 133,097 |
|
|
| 8,649 |
|
| $ | 1 |
|
| $ | 2,196 |
|
| $ | 0 |
|
| $ | (88,001 | ) |
| $ | (85,804 | ) |
Retroactive application of recapitalization |
|
| (95,290 | ) |
|
| (133,097 | ) |
|
| 9,608 |
|
|
| 1 |
|
|
| 133,096 |
|
|
| — |
|
|
| — |
|
|
| 133,097 |
|
Balance at December 31, 2020, after effect of Business |
|
| — |
|
|
| — |
|
|
| 18,257 |
|
|
| 2 |
|
|
| 135,292 |
|
|
| — |
|
|
| (88,001 | ) |
|
| 47,293 |
|
Exercises of stock options |
|
| — |
|
|
| — |
|
|
| 76 |
|
|
| — |
|
|
| 196 |
|
|
| — |
|
|
| — |
|
|
| 196 |
|
Restricted stock granted |
|
| — |
|
|
| — |
|
|
| 123 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Reclassification to liability for early exercised stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (120 | ) |
|
| — |
|
|
| — |
|
|
| (120 | ) |
Vesting of early exercised stock options |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 30 |
|
|
| — |
|
|
| — |
|
|
| 30 |
|
Stock-based compensation expense |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 475 |
|
|
| — |
|
|
| — |
|
|
| 475 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (13,022 | ) |
|
| (13,022 | ) |
Balance at March 31, 2021, after effect of Business |
|
| — |
|
| $ | — |
|
|
| 18,456 |
|
| $ | 2 |
|
| $ | 135,873 |
|
| $ | 0 |
|
| $ | (101,023 | ) |
| $ | 34,852 |
|
The accompanying notes are an integral part of thethese unaudited condensed consolidated financial statements.
CONSONANCE-HFW ACQUISITION CORP.
CONDENSED STATEMENT OF CASH FLOWS3
FOR THE PERIOD FROM AUGUST 21, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020SURROZEN, INC.
(Unaudited)Condensed Consolidated Statements of Cash Flows
| Cash Flows from Operating Activities: | ||||
| Net loss | $ | (4,961 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||
| Payment of formation costs through issuance of Class B ordinary shares | 4,961 | |||
| Net cash provided by operating activities | — | |||
| Cash Flows from Financing Activities: | ||||
| Proceeds from promissory note - related party | 650 | |||
| Payment of offering costs | (650 | ) | ||
| Net cash used in financing activities | — | |||
| Net Change in Cash | — | |||
| Cash – Beginning | — | |||
| Cash – Ending | $ | — | ||
| Non-cash investing and financing activities: | ||||
| Deferred offering costs paid directly by Sponsor from proceeds from issuance of Class B ordinary shares | $ | 20,039 | ||
| Deferred offering costs included in accrued offering costs | $ | 30,000 |
(Unaudited)
(In thousands)
| Three Months Ended March 31, |
| |||||
| 2022 |
|
| 2021 |
| ||
Operating activities: |
|
|
|
|
| ||
Net loss | $ | (7,947 | ) |
| $ | (13,022 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
| ||
Depreciation |
| 534 |
|
|
| 511 |
|
Stock-based compensation |
| 916 |
|
|
| 475 |
|
Non-cash operating lease expense |
| 367 |
|
|
| 309 |
|
Amortization of premium on marketable securities, net |
| 116 |
|
|
| 0 |
|
Change in fair value of warrant liabilities |
| (6,497 | ) |
|
| 0 |
|
Changes in operating assets and liabilities: |
|
|
|
|
| ||
Prepaid expenses and other current assets |
| 274 |
|
|
| (328 | ) |
Other assets |
| (24 | ) |
|
| (1 | ) |
Accounts payable |
| (1,755 | ) |
|
| 431 |
|
Accrued and other liabilities |
| (3,782 | ) |
|
| 1,800 |
|
Operating lease liabilities |
| (576 | ) |
|
| (507 | ) |
Net cash used in operating activities |
| (18,374 | ) |
|
| (10,332 | ) |
|
|
|
|
|
| ||
Investing activities: |
|
|
|
|
| ||
Purchases of property and equipment |
| (412 | ) |
|
| (343 | ) |
Purchases of marketable securities |
| 0 |
|
|
| (1,099 | ) |
Net cash used in investing activities |
| (412 | ) |
|
| (1,442 | ) |
|
|
|
|
|
| ||
Financing activities: |
|
|
|
|
| ||
Proceeds from exercise of stock options |
| 0 |
|
|
| 196 |
|
Net cash provided by financing activities |
| 0 |
|
|
| 196 |
|
|
|
|
|
|
| ||
Net decrease in cash, cash equivalents and restricted cash |
| (18,786 | ) |
|
| (11,578 | ) |
Cash, cash equivalents and restricted cash at beginning of period |
| 33,496 |
|
|
| 35,387 |
|
Cash, cash equivalents and restricted cash at end of period | $ | 14,710 |
|
| $ | 23,809 |
|
|
|
|
|
|
| ||
Supplemental disclosure of noncash investing and financing activities: |
|
|
|
|
| ||
Deferred costs related to Equity Purchase Agreement included in accounts | $ | 432 |
|
| $ | 0 |
|
Transaction costs in Business Combination included in accrued liabilities | $ | 0 |
|
| $ | 267 |
|
Purchases of property and equipment included in accounts payable | $ | 0 |
|
| $ | 37 |
|
Vesting of early exercises of stock options | $ | 30 |
|
| $ | 30 |
|
Reclassification of early exercised stock options to liability | $ | 0 |
|
| $ | 120 |
|
The following table presents a reconciliation of the Company’s cash, cash equivalents and restricted cash in the Company’s unaudited condensed consolidated balance sheets:
| March 31, |
| |||||
| 2022 |
|
| 2021 |
| ||
Cash and cash equivalents | $ | 14,305 |
|
| $ | 23,404 |
|
Restricted cash |
| 405 |
|
|
| 405 |
|
Cash, cash equivalents and restricted cash | $ | 14,710 |
|
| $ | 23,809 |
|
The accompanying notes are an integral part of thethese unaudited condensed consolidated financial statements.
4
SURROZEN, INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
4
Note 1. Organization and Business
CONSONANCE-HFW ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTSOrganization
SEPTEMBER 30, 2020
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Surrozen, Inc., or the Company, formerly known as Consonance-HFW Acquisition Corp. (the “Company”), or Consonance, is a preclinical stage biotechnology company committed to discovering and developing drug candidates to selectively modulate the Wnt pathway, a critical mediator of tissue repair, in a broad range of organs and tissues, for human diseases. The Company, a Delaware corporation, is located in South San Francisco, California.
Business Combination and Private Investment in Public Entity Financing
Consonance was a blank check company incorporated as a Cayman Islands exempted company on August 21, 2020. The CompanyIt was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (“businesses.
On August 11, 2021, Consonance consummated a business combination, or the Business Combination”).Combination, among Consonance, Perseverance Merger Sub Inc., a subsidiary of Consonance, and Surrozen, Inc., or Legacy Surrozen, a Delaware company incorporated on August 12, 2015. Upon closing of the Business Combination, Consonance became a Delaware corporation and was renamed to Surrozen, Inc., Legacy Surrozen, was renamed to Surrozen Operating, Inc., and Legacy Surrozen continued as a wholly-owned subsidiary of the Company. See Note 3, "Recapitalization" for additional details.
Liquidity
The Company is not limited to a particular industry or geographic region for purposes of completing a Business Combination. The Company is an early stagehas incurred net operating losses each period since inception. During the three months ended March 31, 2022 and emerging growth company and, as such,2021, the Company is subject to allincurred a net loss of $7.9 million and $13.0 million, respectively. During the risks associated with early stagethree months ended March 31, 2022 and emerging growth companies.
2021, the Company used $18.4 million and $10.3 million of cash in operations. As of September 30, 2020,March 31, 2022, the Company had not commenced any operations. All activity foran accumulated deficit of approximately $150.6 million. The Company expects operating losses to continue in the period from August 21, 2020 (inception) through September 30, 2020 relatesforeseeable future because of additional costs and expenses related to the research and development activities. As of March 31, 2022, the Company had cash, cash equivalents and marketable securities of $104.3 million.
In February 2022, the Company entered into a purchase agreement, or the Equity Purchase Agreement, and a registration rights agreement with Lincoln Park Capital Fund, LLC, or Lincoln Park, pursuant to which Lincoln Park is obligated to purchase up to $50.0 million of the Company’s formation and the initial public offering (“Initial Public Offering”), which is described below. The Company will not generate any operating revenues until after the completion of a Business Combination,common stock from time to time at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
The registration statement for the Company’s Initial Public Offering became effectivesole discretion over a 36-month period commencing on November 18, 2020. On November 23, 2020, the Company consummated the Initial Public Offering of 8,000,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $80,000,000 which is described in Note 3.
Simultaneously with the consummation of the Initial Public Offering, the Company consummated the sale of 410,000 units (the “Private Placement Units”) at a price of $10.00 per Private Placement Unit in a private placement to Consonance Life Sciences (the “Sponsor”), generating gross proceeds of $4,100,000, which is described in Note 4.
Transaction costs amounted to $4,998,864, consisting of $1,600,000 of underwriting fees, $2,800,000 of deferred underwriting fees and $598,864 of other offering costs. In addition, at November 23, 2020, cash of $1,507,989 was held outside of the Trust Account (as defined below) and is available for the payment of offering expenses and for working capital purposes.
Following the consummation of the Initial Public Offering on November 23, 2020, an amount of $80,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Units was placed in a trust account (the “Trust Account”) and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described below.
On December 1, 2020, the underwriters fully exercised their over-allotment option, resulting in an additional 1,200,000 Units issued for an aggregate amount of $12,000,000. In connection with the underwriters’ full exercise of their over-allotment option, the Company also consummated the sale of an additional 24,000 Private Placement Units at $10.00 per Private Placement Unit, generating total proceeds of $12,240,000. A total of $12,000,000 was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $92,000,000April 27, 2022 (see Note 8).
The Company’s management has broad discretion with respect toManagement believes that the specific application of the net proceeds of the Initial Public Offeringexisting cash, cash equivalents, and the sale of the Private Placement Units, although substantially all of the net proceedsmarketable securities are intended to be applied generally toward completing a Business Combination. The Company must complete its initial Business Combination with one or more target businesses that together have a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding any deferred underwriting commissions held in the Trust Account and taxes payable on the interest earned on the Trust Account) at the time of the agreement to enter into a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
The Company will provide its shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company. The shareholders will be entitled to redeem their shares for a pro rata portion of the amount held in the Trust Account (initially $10.00 per share), calculated as of two business days prior to the completion of a Business Combination, including any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations. There will be no redemption rights uponcontinue operating activities for at least the completion of a Business Combination with respect to the Company’s warrants.
CONSONANCE-HFW ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position and/or search for a target company, the specific impact is not readily determinable as ofnext 12 months from the date of theissuance of its unaudited condensed consolidated financial statements. The condensed financial statements do not include any adjustments that mightHowever, if the Company’s anticipated cash burn is greater than anticipated, the Company could use its capital resources sooner than expected which may result fromin the outcome of this uncertainty.need to reduce future planned expenditures and/or raise additional capital to continue to fund the operations.
Note 2. Summary of Significant Accounting Policies
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanyingCompany’s unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles generally accepted in the United States of America, (“GAAP”) for interim financial informationor GAAP, and in accordance withpursuant to the instructions to Form 10-Q and Article 8regulations of Regulation S-X of the U.S. Securities and Exchange Commission, (the “SEC”). Certainor SEC. As permitted under those rules, certain footnotes or other financial information or footnote disclosuresthat are normally included in condensed financial statements prepared in accordance withrequired by GAAP have been condensed or omitted, pursuant toand accordingly the rules and regulationscondensed consolidated balance sheet as of December 31, 2021 has been derived from the SEC for interimCompany’s audited consolidated financial reporting. Accordingly, they dostatements at that date but does not include all of the information required by GAAP for complete consolidated financial statements. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. Inin the opinion of management, the accompanying unaudited condensed financial statements includereflect all adjustments consisting(consisting of a normal recurring nature, whichadjustments) that are necessary for a fair presentation of the Company’s consolidated financial position, operatingstatements. The results and cash flowsof operations for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s prospectus for its Initial Public Offering as filed with the SEC on November 18, 2020, as well as the Company’s Current Reports on Form 8-K, as filed with the SEC on November 25, 2020 and November 30, 2020. The interim results for the period from August 21, 2020 (inception) through September 30, 2020three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year endingended December 31, 20202022 or for any other interim period or for any other future periods.year.
5
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a)unaudited condensed consolidated financial statements include the accounts of the Securities ActCompany and its subsidiary. All intercompany transactions and balances have been eliminated.
The Business Combination discussed in Note 1 was accounted for as a reverse recapitalization with Legacy Surrozen as the accounting acquirer and Consonance as the acquired company for accounting purposes. Accordingly, all historical financial information presented in the unaudited condensed consolidated financial statements represents the accounts of 1933,Legacy Surrozen at their historical cost as amended (the “Securities Act”), as modified byif Legacy Surrozen is the Jumpstart Ourpredecessor to the Company. The unaudited condensed consolidated financial statements following the closing of the Business Startups ActCombination reflect the results of 2012 (the “JOBS Act”),the combined entity’s operations. All issued and it may take advantageoutstanding common stock, redeemable convertible preferred stock and stock awards of certain exemptions from various reporting requirements that are applicableLegacy Surrozen and per share amounts contained in the unaudited condensed consolidated financial statements for the periods presented prior to other public companies that are not emerging growth companies including, but not limitedthe closing of the Business Combination have been retroactively restated to not being required to complyreflect the exchange ratio established in the Business Combination. See Note 3, “Recapitalization” for additional details.
The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxyaudited consolidated financial statements and exemptions from the requirements of holding a nonbinding advisory voterelated notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to complyForm 10-K, filed with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. 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, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s condensed financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.SEC on March 28, 2022.
Use of Estimates
The preparation of theunaudited condensed consolidated financial statements in conformity with GAAP requires requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities atas of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.
Making Significant estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
CONSONANCE-HFW ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of September 30, 2020.
Deferred Offering Costs
Offering costs consist of legal, accounting and other costs incurred through the balance sheet date that are directly related to the Initial Public Offering. Offering costs amounting to $4,998,864 were charged to shareholders’ equity upon the completion of the Initial Public Offering (see Note 1). As of September 30, 2020, there were $50,689 of deferred offering costs recordedassumptions made in the accompanying unaudited condensed balance sheet.
Income Taxes
The Company accountsconsolidated financial statements include, but are not limited to, certain accruals for research and development activities, the fair value of common stock prior to the Business Combination, stock-based compensation expense and income taxestaxes. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that are believed to be reasonable under ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognitioncircumstances, the results of deferred tax assets and liabilitieswhich form the basis for bothmaking judgments about the expected impact of differences between the condensed financial statement and tax basiscarrying value of assets and liabilities that are not readily apparent from other sources. Actual results could materially differ from those estimates.
Concentration of Credit Risk
Financial instruments, which potentially subject the Company to significant concentration of credit risk, consist of cash, cash equivalents and marketable securities. The Company's cash is held by one financial institution that management believes is creditworthy. Such deposits held with the financial institution may at times exceed federally insured limits, however, its exposure to credit risk in the event of default by the financial institution is limited to the extent of amounts recorded on the unaudited condensed consolidated balance sheets. The Company performs evaluations of the relative credit standing of these financial institutions to limit the amount of credit exposure. The Company's policy is to invest cash in institutional money market funds and marketable securities with high credit quality to limit the amount of credit exposure. The Company currently maintains a portfolio of cash equivalents and marketable securities in a variety of securities, including money market funds, U.S. government bonds, foreign bonds, commercial paper and corporate debt securities. The Company has not experienced any losses on its cash equivalents and marketable securities.
Marketable Securities
The Company invests its excess cash in marketable U.S. government bonds, foreign bonds, commercial paper and corporate debt securities. All marketable securities have been classified as available-for-sale and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. The Company does not buy or hold securities principally for the expected future tax benefitpurpose of selling them in the near future. The Company’s policy is focused on the preservation of capital, liquidity, and return. From time to be derived from taxtime, the Company may sell certain securities, but the objectives are generally not to generate profits on short-term differences in price.
Short-term marketable securities have maturities less than or equal to one year as of the balance sheet date. Long-term marketable securities have maturities greater than one year as of the balance sheet date. These marketable securities are carried at estimated fair value with unrealized holding gains and losses included in accumulated other comprehensive loss in stockholders’ equity until realized. Gains and tax credit carry forwards. ASC 740 additionally requireslosses on marketable security transactions are reported on the specific-identification method. Interest income is recognized in the unaudited condensed consolidated statements of operations and comprehensive loss when earned.
The Company periodically evaluates its available-for-sale marketable securities for impairment. When the fair value of a valuation allowancemarketable security is below its amortized cost, the amortized cost is reduced to be established whenits fair value if it is more likely than not that allthe Company is
6
required to sell the impaired security before recovery of its amortized cost basis, or a portionthe Company has the intention to sell the security. If neither of deferred tax assets willthese conditions are met, the Company determines whether the impairment is due to credit losses by comparing the present value of the expected cash flows of the security with its amortized cost basis. The amount of impairment recognized is limited to the excess of the amortized cost over the fair value of the security. An allowance for credit losses for the excess of amortized cost over the expected cash flows is recorded in other income on the unaudited condensed consolidated statements of operations. Impairment losses that are not be realized.credit-related are included in accumulated other comprehensive loss in stockholders’ equity.
Warrant Liabilities
ASC 740 also clarifiesThe Company's Public Warrants, Private Placement Warrants and PIPE Warrants were classified as liabilities (see Note 8). At the accounting for uncertaintyend of each reporting period, any changes in income taxesfair value during the period are recognized in an enterprise'sother income within the unaudited condensed financialconsolidated statements of operations and prescribes a recognition threshold and measurement process for condensed financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.comprehensive loss. The Company recognizes accrued interest and penalties relatedwill continue to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accruedadjust the warrant liabilities for interest and penalties as of September 30, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The Company is considered an exempted Cayman Islands company and is presently not subject to income taxes or income tax filing requirementschanges in the Cayman Islandsfair value until the earlier of a) the exercise or expiration of the United States. Aswarrants or b) the redemption of the warrants, at which time such warrants will be reclassified to additional paid-in capital.
Net Loss Per Share
Basic net loss per share is calculated by dividing the Company's tax provision was zeronet loss attributable to common stock by the weighted-average number of shares of common stock outstanding for the period, presented.
Net Loss per Ordinary Share
Netwithout consideration for potential dilutive securities. Since the Company was in a loss position for the periods presented, basic net loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture. Weighted average shares were reduced for the effect of an aggregate of 300,000 ordinary shares, that were subject to forfeiture if the over-allotment option was not exercised by the underwriter (see Note 5). At September 30, 2020, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the earnings of the Company. As a result, diluted loss per common share is the same as basicdiluted net loss per share as the effects of potentially dilutive securities are antidilutive. The following table presents the potential common stock outstanding that were excluded from the computation of diluted net loss per share of common stock as of the periods presented because including them would have been antidilutive (in thousands):
|
| March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Options outstanding |
|
| 3,336 |
|
|
| 1,537 |
|
Unvested restricted stock |
|
| 143 |
|
|
| 119 |
|
Unvested common stock subject to repurchase |
|
| 53 |
|
|
| 115 |
|
Warrants to purchase common stock |
|
| 1,804 |
|
|
| 0 |
|
Total |
|
| 5,336 |
|
|
| 1,771 |
|
Note 3. Recapitalization
On August 11, 2021, Consonance consummated the Business Combination (see Note 1). Immediately after the consummation of the Business Combination, certain investors subscribed for the period presented.
Concentrationand purchased an aggregate of Credit Risk
Financial instruments that potentially subject the Company to concentrations12.0 million units, each consisting of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair valueone share of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheet, primarily due to their short-term nature.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying condensed financial statements.
CONSONANCE-HFW ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
NOTE 3. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company sold 8,000,000 Units at a purchase price of $10.00 per Unit. Each Unit consists of one Class A ordinary sharecommon stock and one-third of one redeemable warrant, (“for a purchase price of $10.00 per unit through a private investment in public entity financing, or PIPE Financing. In connection with the Business Combination and PIPE Financing, Legacy Surrozen received the aggregate cash consideration of $128.8 million, after deducting the transaction fees incurred by Consonance. The cash consideration was comprised of $8.6 million in proceeds from issuance of common stock upon the closing of the Business Combination and $120.2 million in proceeds from the PIPE Financing. The Company incurred transaction costs of $6.3 million, consisting of legal, accounting and other professional services directly related to the Business Combination, $0.4 million of which were allocated to the warrant liabilities assumed and recognized as other expenses when incurred. The remaining $5.9 million were recorded as a reduction of additional paid-in capital in the unaudited condensed consolidated balance sheet. Legacy Surrozen was deemed the accounting acquirer in the Business Combination and the Business Combination was accounted for as a reverse recapitalization based on the following predominant factors:
Accordingly, for accounting purposes, the reverse recapitalization was treated as the equivalent of Legacy Surrozen issuing stock for the net assets of Consonance, accompanied by a recapitalization. The net assets of Consonance are stated at historical cost, with 0 goodwill or other intangible assets recorded.
7
Pursuant to the Business Combination Agreement, upon the closing of the Business Combination, (i) each share of redeemable convertible preferred stock of Legacy Surrozen (on an as converted to common stock basis) and each share of common stock of Legacy Surrozen, whether vested or unvested, was converted into 0.175648535 shares of the Company’s common stock and (ii) each outstanding option to purchase common stock of Legacy Surrozen was converted into an option to purchase shares of the Company’s common stock based on an exchange ratio of 0.175648535, or the Exchange Ratio, with corresponding adjustments to the exercise price. All issued and outstanding common stock, preferred stock and stock awards of Legacy Surrozen and corresponding capital amounts contained in the unaudited condensed consolidated financial statements for the periods presented prior to the closing of the Business Combination have been retroactively restated to reflect the conversion.
Note 4. Fair Value Measurement
The following tables summarize the Company’s financial assets and liabilities that are measured at fair value on a recurring basis (in thousands):
|
| March 31, 2022 |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Money market funds(1) |
| $ | 11,565 |
|
| $ | — |
|
| $ | 0 |
|
| $ | 11,565 |
|
Commercial paper |
|
| — |
|
|
| 49,161 |
|
|
| 0 |
|
|
| 49,161 |
|
Corporate bonds |
|
| 0 |
|
|
| 19,309 |
|
|
| 0 |
|
|
| 19,309 |
|
Government bonds |
|
| — |
|
|
| 17,833 |
|
|
| 0 |
|
|
| 17,833 |
|
Foreign bonds |
|
| — |
|
|
| 3,686 |
|
|
| 0 |
|
|
| 3,686 |
|
Total financial assets measured at fair value |
| $ | 11,565 |
|
| $ | 89,989 |
|
| $ | 0 |
|
| $ | 101,554 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Liabilities(2): |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Public Warrants |
| $ | 767 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 767 |
|
Private Placement Warrants |
|
| — |
|
|
| 36 |
|
|
| 0 |
|
|
| 36 |
|
PIPE Warrants |
|
| — |
|
|
| 1,001 |
|
|
| 0 |
|
|
| 1,001 |
|
Total financial liabilities measured at fair value |
| $ | 767 |
|
| $ | 1,037 |
|
| $ | 0 |
|
| $ | 1,804 |
|
|
| December 31, 2021 |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Money market funds(1) |
| $ | 32,310 |
|
| $ | — |
|
| $ | — |
|
| $ | 32,310 |
|
Commercial paper |
|
| — |
|
|
| 49,136 |
|
|
| — |
|
|
| 49,136 |
|
Corporate bonds |
|
| — |
|
|
| 19,480 |
|
|
| — |
|
|
| 19,480 |
|
Government bonds |
|
| — |
|
|
| 18,082 |
|
|
| — |
|
|
| 18,082 |
|
Foreign bonds |
|
| 0 |
|
|
| 3,717 |
|
|
| 0 |
|
|
| 3,717 |
|
Total financial assets measured at fair value |
| $ | 32,310 |
|
| $ | 90,415 |
|
| $ | 0 |
|
| $ | 122,725 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Liabilities(2): |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Public Warrants |
| $ | 3,527 |
|
| $ | — |
|
| $ | — |
|
| $ | 3,527 |
|
Private Placement Warrants |
|
| — |
|
|
| 166 |
|
|
| — |
|
|
| 166 |
|
PIPE Warrants |
|
| — |
|
|
| 4,608 |
|
|
| — |
|
|
| 4,608 |
|
Total financial liabilities measured at fair value |
| $ | 3,527 |
|
| $ | 4,774 |
|
| $ | — |
|
| $ | 8,301 |
|
There were 0 changes to the valuation methods utilized and there were no transfers of financial instruments between Level 1, Level 2, and Level 3 during the three months ended March 31, 2022.
Corporate bonds, commercial paper, foreign bonds and government bonds are classified as Level 2 as they were valued based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets.
8
The Public Warrants are classified as Level 1 due to the use of an observable market quote in an active market. The Private Placement Warrants and PIPE Warrants are classified as Level 2 due to the use of observable market data for identical or similar liabilities. The fair value of each Private Placement Warrant and PIPE Warrant was determined to be consistent with that of a Public Warrant because the Private Placement Warrants and PIPE Warrants are also subject to the make-whole redemption feature, which allows the Company to redeem both types of warrants on similar terms when the stock price is in the range of $10 to $18 per share.
The following tables provide the Company’s marketable securities by security type (in thousands):
|
| March 31, 2022 |
| |||||||||||||
|
| Amortized Cost |
|
| Gross Unrealized Gains |
|
| Gross Unrealized Losses |
|
| Fair Value |
| ||||
Commercial paper |
| $ | 49,161 |
|
| $ | 0 |
|
| $ | — |
|
| $ | 49,161 |
|
Corporate bonds |
|
| 19,422 |
|
|
| 0 |
|
|
| (113 | ) |
|
| 19,309 |
|
Government bonds |
|
| 6,135 |
|
|
| 0 |
|
|
| (82 | ) |
|
| 6,053 |
|
Foreign bonds |
|
| 3,705 |
|
|
| 0 |
|
|
| (19 | ) |
|
| 3,686 |
|
Total short-term marketable securities |
| $ | 78,423 |
|
| $ | 0 |
|
| $ | (214 | ) |
| $ | 78,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Government bonds |
| $ | 11,995 |
|
| $ | 0 |
|
| $ | (215 | ) |
| $ | 11,780 |
|
Total long-term marketable securities |
| $ | 11,995 |
|
| $ | 0 |
|
| $ | (215 | ) |
| $ | 11,780 |
|
|
| December 31, 2021 |
| |||||||||||||
|
| Amortized Cost |
|
| Gross Unrealized Gains |
|
| Gross Unrealized Losses |
|
| Fair Value |
| ||||
Commercial paper |
| $ | 49,136 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 49,136 |
|
Corporate bonds |
|
| 15,920 |
|
|
| 4 |
|
|
| (17 | ) |
|
| 15,907 |
|
Foreign bonds |
|
| 3,725 |
|
|
| 0 |
|
|
| (8 | ) |
|
| 3,717 |
|
Total short-term marketable securities |
| $ | 68,781 |
|
| $ | 4 |
|
| $ | (25 | ) |
| $ | 68,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Government bonds |
| $ | 18,165 |
|
| $ | 0 |
|
| $ | (83 | ) |
| $ | 18,082 |
|
Corporate bonds |
|
| 3,588 |
|
|
| 0 |
|
|
| (15 | ) |
|
| 3,573 |
|
Total long-term marketable securities |
| $ | 21,753 |
|
| $ | 0 |
|
| $ | (98 | ) |
| $ | 21,655 |
|
The following table indicates the length of the time that individual securities have been in a continuous unrealized loss position as of March 31, 2022 (dollars in thousands):
|
|
|
|
|
|
| Less Than 12 Months |
| ||||||
|
|
|
| Number of Investments |
|
| Fair Value |
|
| Unrealized Losses |
| |||
Corporate bonds |
|
|
|
| 7 |
|
| $ | 19,309 |
|
| $ | 113 |
|
Government bonds |
|
|
|
| 3 |
|
|
| 17,833 |
|
|
| 297 |
|
Foreign bonds |
|
|
|
| 2 |
|
|
| 3,686 |
|
|
| 19 |
|
|
|
|
|
| 12 |
|
| $ | 40,828 |
|
| $ | 429 |
|
As of March 31, 2022 and December 31, 2021, all short-term marketable securities had maturities of one year or less. All long-term marketable securities as of March 31, 2022 and December 31, 2021 had maturities of greater than one year but less than two years. There have been no significant realized gains or losses on the short-term and long-term marketable securities during the three months ended March 31, 2022 and 2021. The Company periodically reviews the available-for-sale investments for other-than-temporary impairment loss. All investments with unrealized losses have been in a loss position for less than 12 months. The Company determined that the unrealized loss was primarily attributed to changes in current market interest rates and not to credit quality. The Company does not intend to sell the marketable securities that are in an unrealized loss position, nor is it more likely than not that the Company will be required to sell the marketable securities before the recovery of the amortized cost basis, which may be at maturity. As a result, the Company did not recognize any other-than-temporary impairment losses as of March 31, 2022.
9
Note 5. Balance Sheet Components
Accrued and Other Liabilities
Accrued and other liabilities consist of the following (in thousands):
|
| March 31, |
|
| December 31, 2021 |
| ||
Accrued research and development expenses |
| $ | 1,920 |
|
| $ | 3,666 |
|
Accrued payroll and related expenses |
|
| 1,793 |
|
|
| 2,887 |
|
Accrued professional service fees |
|
| 373 |
|
|
| 1,520 |
|
Liability for early exercised stock options |
|
| 167 |
|
|
| 205 |
|
Other |
|
| 674 |
|
|
| 384 |
|
Accrued and other liabilities |
| $ | 4,927 |
|
| $ | 8,662 |
|
Note 6. License Agreements
Stanford License Agreements
In March 2016, the Company entered into a license agreement with Stanford University, or the 2016 Stanford Agreement, which was amended in July 2016, October 2016 and January 2021, pursuant to which the Company obtained from Stanford a worldwide, exclusive, sublicensable license under certain patents, rights, or licensed patents and technology related to its engineered Wnt surrogate molecules to make, use, import, offer to sell and sell products that are claimed by the licensed patents or that use or incorporate such technology, or licensed products, for the treatment, diagnosis and prevention of human and veterinary diseases. The Company agreed to pay Stanford an aggregate of up to $0.9 million for the achievement of specified development and regulatory milestones, and an aggregate of up to $5.0 million for achievement of specified sales milestones. Stanford is also entitled to receive royalties from the Company equal to a very low single digit percentage of the Company’s and its sublicensees’ net sales of licensed products that are covered by a valid claim of a licensed patent. Additionally, the Company agreed to pay Stanford a low double-digit percentage of non-royalty sublicense consideration received by the Company in connection with any sublicense granted to a third-party and, if the Company is acquired, a one-time change of control fee in the low six figures.
In June 2018, the Company entered into another license agreement with Stanford, or the 2018 Stanford Agreement, pursuant to which the Company obtained from Stanford a worldwide, exclusive, sublicensable license under certain patent rights related to its surrogate R-spondin proteins, or the licensed patents, to make, use, import, offer to sell and sell products that are claimed by the licensed patents, or licensed products, for the treatment, diagnosis and prevention of human and veterinary diseases, or the exclusive field. Additionally, Stanford granted the Company a worldwide, non-exclusive, sublicensable license under the licensed patents to make and use licensed products for research and development purposes in furtherance of the exclusive field and a worldwide, non-exclusive license to make, use and import, but not to offer to sell or sell, licensed products in any other field of use. The Company agreed to pay Stanford an aggregate of up to $0.4 million for the achievement of specified development and regulatory milestones. Stanford is also entitled to receive royalties from the Company equal to a sub-single digit percentage of the Company’s and its sublicensees’ net sales of licensed products. Additionally, the Company agreed to pay Stanford a one-time payment in the low six figures for each sublicense of the licensed patents that the Company grants to a third party and, if the Company is acquired, a one-time nominal change of control fee.
For the three months ended March 31, 2022 and 2021, the Company incurred de minimis research and development expenses under the Stanford agreements. NaN milestones have been achieved as of March 31, 2022.
UCSF License and Option Agreements
In September and October 2016, the Company entered into two separate license and option agreements with The Regents of the University of California, or the UCSF Agreements, pursuant to which the Company obtained exclusive licenses from UCSF for internal research and antibody discovery purposes and an option to negotiate with UCSF to obtain an exclusive license under UCSF’s rights in the applicable library to make, use, sell, offer for sale and import products incorporating antibodies identified or resulting from the Company’s use of such library, or licensed products.
In January 2020, the Company amended and restated the UCSF Agreements to provide non-exclusive licenses to make and use a certain human Fab naïve phage display library and to make and use a certain phage display llama VHH single domain antibody library for internal research and antibody discovery purposes and an option to negotiate with UCSF to obtain a non-exclusive commercial license under UCSF’s rights in the applicable library to make, use, sell, offer for sale and import products incorporating antibodies identified or resulting from the Company’s use of such library, or licensed products.
10
In March 2022, the Company exercised the option under the UCSF Agreements and entered into a non-exclusive commercial license agreement to make and use licensed products derived from the phage display llama VHH single domain antibody library. Under the commercial license agreement, the Company paid UCSF a nominal license issue fee and agreed to pay a nominal annual license maintenance fee, five- to six-digit payments per licensed product upon achievement of a regulatory milestone, nominal minimum annual royalties, and earned royalties equal to a sub-single digit percentage of the Company’s and the Company’s sublicensees’ net sales of licensed products.
For the three months ended March 31, 2022 and 2021, the Company incurred de minimis research and development expenses under the UCSF Agreements and the commercial license agreement. NaN milestones have been achieved as of March 31, 2022.
Distributed Bio Subscription Agreement
In September 2016, the Company entered into, and in January 2019, the Company amended, an antibody library subscription agreement with Charles River Laboratories International, Inc., formerly known as Distributed Bio, or the Distributed Bio Agreement, in which the Company obtained from Distributed Bio a non-exclusive license to use Distributed Bio’s antibody library to identify antibodies directed to an unlimited number of the Company’s proprietary targets and to make, use, sell, offer for sale, import and exploit products incorporating the antibodies that the Company identifies, or licensed products. The Company agreed to pay Distributed Bio an annual fee in the low six figures after the first three years. Additionally, the Company agreed to pay Distributed Bio an aggregate of $5.9 million for each licensed product that achieves specified development, regulatory and commercial milestones and royalties equal to a very low single digit percentage of the Company’s and its sublicensees’ net sales of licensed products. The Company’s obligation to pay royalties will end for each licensed product ten years after its first commercial sale.
For the three months ended March 31, 2022 and 2021, the Company incurred de minimis research and development expenses under the Distributed Bio Agreement. NaN milestones have been achieved during the three months ended March 31, 2022.
Note 7. Commitments and Contingencies
Lease Agreements
In August 2016, the Company entered into a lease agreement for office and lab space, which consists of approximately 32,813 square feet of rental space in South San Francisco, California. The office space lease is classified as an operating lease. The initial lease term commenced in May 2017 and ends in April 2025, with rent payments escalating each year. The Company has options to extend the lease for additional years, but the exercise of the option was not reasonably certain. In connection with the lease, the Company maintains a letter of credit for the benefit of the landlord in the amount of $0.4 million, which is recorded as restricted cash in the unaudited condensed consolidated balance sheets.
In January 2020, the Company entered into a lease agreement for a term of 18 months for approximately 6,478 square feet of office space. This office space lease, which commenced in June 2020, is classified as an operating lease and the rent payments escalate after 14 months. In September 2021, the Company amended the lease to extend the lease term until June 2022.
The operating lease expense for the three months ended March 31, 2022 and 2021 was $0.5 million, respectively.
Aggregate future minimum rental payments under the operating leases as of March 31, 2022, were as follows (in thousands):
Remaining nine months ending December 31, 2022 |
| $ | 2,014 |
|
Year ending December 31, 2023 |
|
| 2,596 |
|
Year ending December 31, 2024 |
|
| 2,670 |
|
Year ending December 31, 2025 |
|
| 891 |
|
Total lease payments |
|
| 8,171 |
|
Less: Imputed interest |
|
| (954 | ) |
Operating lease liabilities |
| $ | 7,217 |
|
11
Note 8. Stockholders’ Equity
Equity Purchase Agreement
In February 2022, the Company entered into the Equity Purchase Agreement with Lincoln Park, pursuant to which Lincoln Park is obligated to purchase up to $50.0 million of the Company’s common stock with a maximum of 7,003,383 shares from time to time at the Company’s sole discretion over a 36-month period commencing on April 27, 2022. The Company also entered into a registration rights agreement with Lincoln Park pursuant to which the Company filed with the SEC the registration statement to register for resale under the Securities Act of 1933, as amended, the shares of common stock that have been or may be issued to Lincoln Park under the Equity Purchase Agreement. The registration statement was effective on April 5, 2022.
Upon execution of the Equity Purchase Agreement, the Company issued 0.1 million shares of common stock to Lincoln Park with the fair value of $0.3 million as consideration for Lincoln Park’s commitment to purchase the Company’s common stock. The Company incurred the costs of $0.5 million, primarily consisting of the commitment shares issued and the legal fees related to the Equity Purchase Agreement, that were recorded as deferred charges included in other assets on the unaudited condensed consolidated balance sheet and will be recognized against the proceeds from the sale of common stock under the Equity Purchase Agreement. In the event that the Company sells its common stock under the Equity Purchase Agreement for an aggregate price equal to or greater than $30.0 million, the Company shall pay the additional commitment fee of $0.1 million to Lincoln Park.
As contemplated by the Equity Purchase Agreement, and so long as the closing price of the Company’s common stock exceeds $1.00 per share, the Company may direct Lincoln Park, at its sole discretion, to purchase up to 30,000 shares of its common stock, or the Regular Purchase Share Limit, on any business day at a purchase price per share equal to the lower of: (i) the lowest price of the Company’s common stock on the applicable purchase date and (ii) the average of the 3 lowest closing prices of the Company’s common stock during the 10 consecutive business days preceding such purchase date. The Regular Purchase Share Limit may be increased to up to 35,000 shares and 40,000 shares if the closing price of the Company’s common stock is not below $10.00 per share and $12.00 per share, respectively. Any single purchase of the Company’s common stock shall not exceed $3.5 million.
The Company may also direct Lincoln Park to purchase additional shares no less than the Regular Purchase Share Limit and no greater than 500,000 shares at a purchase price per share equal to 96% of the lower of (i) the closing price of the Company’s common stock on the purchase date and (ii) the weighted average price of the Company’s common stock on the purchase date.
As of March 31, 2022, the Company has 0t sold any shares of common stock under the Equity Purchase Agreement.
Note 9. Common Stock Warrants
In connection with the Business Combination, Legacy Surrozen, as the accounting acquirer, was deemed to assume warrants held by Consonance’s stockholders, or the Public Warrants, and warrants held by Consonance's sponsor, or the Private Placement Warrants. In addition, in the PIPE Financing, certain investors subscribed for and purchased an aggregate of 12.0 million units, each consisting of one share of the Company’s common stock and one-third of one redeemable warrant, or PIPE Warrants. All of these warrants were outstanding as of March 31, 2022. The following table sets forth the common stock warrants outstanding as of March 31, 2022 (in thousands, except exercise price per warrant):
Type |
| Classification |
| Expiration Date |
| Exercise Price per Warrant |
|
| Number of Warrants |
|
| Fair Value |
| |||
Public Warrants |
| Liability |
| August 12, 2026 |
| $ | 11.50 |
|
|
| 3,067 |
|
| $ | 767 |
|
Private Placement Warrants |
| Liability |
| August 12, 2026 |
|
| 11.50 |
|
|
| 145 |
|
|
| 36 |
|
PIPE Warrants |
| Liability |
| August 12, 2026 |
|
| 11.50 |
|
|
| 4,007 |
|
|
| 1,001 |
|
Total |
|
|
|
|
|
|
|
|
| 7,219 |
|
| $ | 1,804 |
| |
Public Warrants
Each whole Public Warrant entitles the holder to purchase one Class A ordinary share at an exercise price of $11.50 per share, subject to adjustment (see Note 7).
On December 1, 2020, the underwriters fully exercised their over-allotment option, resulting in an additional 1,200,000 Units issued for an aggregate amount of $12,000,000. In connection with the underwriters’ full exercise of their over-allotment option, the Company also consummated the sale of an additional 24,000 Private Placement Units at $10.00 per Private Placement Unit, generating total proceeds of $12,240,000. A total of $12,000,000 was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $92,000,000 (see Note 8).
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the consummation of the Initial Public Offering, the Sponsor purchased an aggregate of 410,000 Private Placement UnitsCompany’s common stock at a price of $10.00$11.50 per Private Placement Unit, for an aggregate purchase price of $4,100,000. On December 1, 2020, as a result of the underwriters’ election to fully exercise their over-allotment option, the Sponsor purchased an additional 24,000 Private Placement Units, at a price of $10.00 per Private Placement Unit, or $240,000 in the aggregate (see Note 8). Each Private Placement Unit consists of one Class A ordinary share (“Private Placement Share” or, collectively, “Private Placement Shares”) and one-third of one redeemable warrant (each, a “Private Placement Warrant”). Each whole Private Placement Warrant is exercisable for one Class A ordinary share, at a price of $11.50 per share, subject to adjustment (see Note 7). The proceeds from the sale of the Private Placement Units were added to the net proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Units held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Units and all underlying securities will expire worthless.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On September 4, 2020, the Sponsor paid $25,000 to cover certain offering and formation costs of the Company in consideration for 3,593,750 Class B ordinary shares. On October 8, 2020 and November 10, 2020, 718,750 and 575,000 Class B ordinary shares were contributed back to the Company for no consideration, respectively, resulting in there being 2,300,000 Class B ordinary shares (the “Founder Shares”) being issued and outstanding. The Founder Shares include an aggregate of up to 300,000 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the number of Founder Shares will collectively represent 20% of the Company’s issued and outstanding shares upon the completion of the Initial Public Offering (not including the Private Placement Shares). On December 1, 2020, the underwriters fully exercised their over-allotment option, therefore there are no Founder Shares subject to forfeiture.
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination; and (B) subsequent to a Business Combination, (x) if the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, amalgamation, share exchange, reorganization or other similar transaction that results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.
Administrative Services Agreement
The Company entered into an agreement,time commencing on November 18, 2020 through23, 2021 and terminating at the earlier of the Company’s consummation of a Business CombinationAugust 12, 2026 or upon redemption or liquidation. The exercise price and its liquidation, to pay the Sponsor a total of up to $55,000 per month for office space and administrative support services.
Promissory Note — Related Party
On September 4, 2020, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company could borrow up to an aggregate principal amount of $300,000. The Promissory Note was non-interest bearing and payable on the earlier of (i) December 31, 2021 or (i) the consummation of the Initial Public Offering. As of September 30, 2020, there was $650 outstanding under the Promissory Note. The outstanding balance under the Promissory Note of $147,753 was repaid at the closing of the Initial Public Offering on November 23, 2020.
CONSONANCE-HFW ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s directors and officers may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into Private Placement Units of the post-Business Combination entity at a price of $10 per Private Placement Unit. The Private Placement Units would be identical to the Units. As of September 30, 2020, the Company had no outstanding borrowings under the Working Capital Loans.
NOTE 6. COMMITMENTS
Registration and Shareholder Rights
Pursuant to a registration rights agreement entered into on November 18, 2020, the holders of the Founder Shares, Private Placement Units (including securities contained therein) and warrants that may be issued upon conversion of the Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Units and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. However, the registration and shareholder rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day option to purchase up to 1,200,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. On December 1, 2020, the underwriter’s elected to fully exercise the over-allotment option to purchase an additional 1,200,000 Units at a price of $10.00 per Unit (see Note 8).
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $3,220,000 in the aggregate (see Note 8). The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
NOTE 7. SHAREHOLDER’S EQUITY
Preference Shares— The Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company's board of directors. At September 30, 2020, there were no preference shares issued or outstanding.
Class A ordinary shares—The Company is authorized to issue 350,000,000 Class A ordinary shares, with a par value of $0.0001 per share. Holders of Class A ordinary shares are entitled to one vote for each share. At September 30, 2020, there were no Class A ordinary shares issued or outstanding.
Class B ordinary shares—The Company is authorized to issue 150,000,000 Class B ordinary shares, with a par value of $0.0001 per share. Holders of the Class B ordinary shares are entitled to one vote for each share. At September 30, 2020, there were 2,300,000 Class B ordinary shares issued and outstanding, of which an aggregate of up to 300,000 shares are subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part so that the number of Founder Shares will equal 20% of the Company’s issued and outstanding ordinary shares (excluding the Private Placement Shares and assuming the initial shareholders do not purchase any units in the Initial Public Offering) after the Initial Public Offering. Due to the underwriter’s full exercise of the overallotment, 300,000 shares are no longer subject to forfeiture (see Note 8).
Only holders of the Class B ordinary shares will have the right to vote on the election of directors prior to the Business Combination. Holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all other matters submitted to a vote of the Company’s shareholders except as otherwise required by law.
CONSONANCE-HFW ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
The Class B ordinary shares will automatically convert into Class A ordinary shares on the first business day following the consummation of a Business Combination at a ratio such that the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of ordinary shares issued and outstanding (excluding the Private Placement Shares underlying the Private Placement Units) upon completion of the Initial Public Offering, plus (ii) the sum of the total number of Class A ordinary shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of a Business Combination, excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, deemed issued, or to be issued, to any seller in a Business Combination and any Private Placement Warrants issued to the Sponsor, members of the Company’s founding team or any of their affiliates upon conversion of Working Capital Loans. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one to one.
Warrants—Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable onmay be adjusted in the later of (a) 30 days after the completionevent of a Business Combination and (b) one year from the closing of the Initial Public Offering. The Public Warrants will expire five years from the completion of a Business Combinationshare dividend, extraordinary dividend or earlier upon redemptionrecapitalization, reorganization, merger or liquidation.
consolidation. The Company willwould not be obligated to deliver any Class A ordinary shares of common stock pursuant to the exercise of a Public Warrant and willwould have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants is then effective and a current prospectus relating thereto is available, subject to the Company satisfying its obligations with respect to the common stock underlying the Public Warrants is then
12
effective. The registration or a valid exemption from registration is available. No warrant will be exercisablestatement on Form S-1 to register for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualifiedresale under the securities lawsSecurities Act of the state of the exercising holder, or an exemption is available.
1933, as amended, was effective in November 2021. The Company has agreed that as soon as practicable, but in no event later than 20 business days, after the closing of a Business Combination, it willshall use its commercially reasonable efforts to file with the SEC a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants, and the Company will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of a Business Combination, and to maintain the effectiveness of suchthe registration statement and a current prospectus relating to those Class A ordinary shares until the warrants expireexpiration or are redeemed, as specified inredemption of the warrant agreement; ifPublic Warrants. If the Class A ordinary shares are, at Company fails to have maintained an effective registration statement, the time of anyPublic Warrant holders have the right to exercise of a warrant, not listedthe Public Warrants on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60th day after the closing of a Business Combination, warrant holders may,cashless basis until such time as there is an effective registration statement and during any period whenstatement.
The Company may redeem the Company will have failed to maintain an effective registration statement, exercise warrants onoutstanding Public Warrants at a “cashless basis” in accordance with Section 3(a)(9)price of $0.01 per warrant if the Securities Act or another exemption, but will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemptionclosing price of warrants when the price per Class A ordinary sharecommon stock equals or exceeds $18.00—Once the warrants become exercisable,$18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and similar transaction). Additionally, the Company may redeem the outstanding Public Warrants (except with respect to the Private Placement Warrants):
If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $10.00—Once the warrants become exercisable, the Company may redeem the outstanding warrants:
CONSONANCE-HFW ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
The exercise price and number of ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of ordinary shares at a price below itsof $0.10 per warrant if the closing price of common stock equals or exceeds $10.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and similar transaction). Notice of redemption shall be mailed to the Public Warrant holders no less than 30 days prior to the redemption date, or the Redemption Period. If the closing price of common stock equals or exceeds $10.00 per share and is less than $18.00 per share, during the Redemption Period, the Public Warrant holders may elect to exercise price. Additionally, intheir Public Warrants on a cashless basis based on a make-whole table.
In no event will the Company be required to net cash settle the Public Warrants. IfThe Public Warrant holders do not have the Company is unable to complete a Business Combination within the Combination Periodrights or privileges of common stockholders and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect tovoting rights until they exercise their Public Warrants nor will theyand receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Publiccommon stock.
Private Placement Warrants may expire worthless.
In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per Class A ordinary share (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of its Class A ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $10.00 and $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 100% and 180% of the higher of the Market Value and the Newly Issued Price, respectively.
The Private Placement Warrants have terms and provisions that are identical to those of the Public Warrants, underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable, except as described above, so long as they are held by Consonance's sponsor or any of its permitted transferees, the initial purchasersPrivate Placement Warrants: (i) may be exercised for cash or their permitted transferees.on a cashless basis, (ii) may not be transferred, assigned or sold until 30 days after the completion of the Business Combination, (iii) shall not be redeemable by the Company if the closing price of common stock equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and similar transaction) and (iv) shall only be redeemable if the closing price of common stock is less than $18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and similar transaction). If the Private Placement Warrants are held by someoneholders other than the initial purchasersConsonance's sponsor or theirits permitted transferees, the Private Placement Warrants will be redeemable by the Company in all redemption scenarios and exercisable by suchthe holders on the same basis as the Public Warrants.
NOTE 8. SUBSEQUENT EVENTSPIPE Warrants
Each whole PIPE Warrant entitles the holder to purchase one share of the Company’s common stock at a price of $11.50 per share, at any time commencing on November 23, 2021 and terminating on August 12, 2026. The Company evaluated subsequent eventsPIPE Warrants are the same in all respects as the Public Warrants except that the PIPE Warrants are not redeemable before August 12, 2022.
Classification
The Public Warrants, Private Placement Warrants and transactions that occurred after the balance sheet date upPIPE Warrants are not considered indexed to the date thatCompany’s common stock as certain provisions of the condensed financial statements were issued. Based upon this review, other than as described below,warrant agreements could change the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.
On December 1, 2020, the underwriters fully exercised their over-allotment option, resulting in an additional 1,200,000 Units issued for an aggregatesettlement amount of $12,000,000. In connection with the underwriters’ full exercise of their over-allotment option, the Company also consummated the sale of an additional 24,000 Private Placement Units at $10.00 per Private Placement Unit, generating total proceeds of $240,000.
Transaction costs associated with the underwriters’ full exercise of their over-allotment option amounted to $660,000, consisting of $240,000 in cash underwriting fees and $420,000 of deferred underwriting fees. A total of $12,000,000 was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $92,000,000.
these warrants. As a result, they were classified as liabilities and recorded at fair value with subsequent change in their respective fair value recognized in the other income within the unaudited condensed consolidated statements of operations and comprehensive loss at each reporting date. See Note 4 for the discussion of warrant valuations.
Note 10. Stock-Based Compensation Plan
The Company maintains the 2021 Equity Incentive Plan, or the 2021 Plan, which provides for the granting of stock awards to employees, directors and consultants. Options granted under the 2021 Plan may be either incentive stock options, or ISOs, or nonqualified stock options, or NSOs. Options granted under the 2021 Plan expire no later than 10 years from the date of grant. Options under the 2021 Plan generally vest 25% upon one year of continued service to the Company, with the remainder in monthly increments over three additional years.As of March 31, 2022, there were 5.0 million shares of common stock available for issuance under the 2021 Plan.
13
Stock Options
A summary of stock option activity is set forth below:
|
| Options outstanding |
| |||||||||||||
|
|
|
|
|
|
|
| Weighted |
|
|
|
| ||||
|
|
|
|
| Weighted |
|
| Average |
|
| Aggregate |
| ||||
|
| Number of |
|
| Average |
|
| Remaining |
|
| Intrinsic |
| ||||
|
| Options |
|
| Exercise |
|
| Contractual Life |
|
| Value |
| ||||
|
| (In thousands) |
|
| Price |
|
| (In years) |
|
| (In thousands) |
| ||||
Outstanding – December 31, 2021 |
|
| 1,794 |
|
| $ | 6.31 |
|
|
| 8.43 |
|
|
|
| |
Granted |
|
| 1,567 |
|
|
| 3.46 |
|
|
|
|
|
|
| ||
Exercised |
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
| ||
Cancelled |
|
| (25 | ) |
|
| 5.94 |
|
|
|
|
|
|
| ||
Outstanding – March 31, 2022 |
|
| 3,336 |
|
|
| 4.98 |
|
|
| 8.97 |
|
| $ | 1,168 |
|
Exercisable – March 31, 2022 |
|
| 802 |
|
|
| 3.35 |
|
|
| 7.30 |
|
|
| 1,025 |
|
The aggregate intrinsic values of options outstanding, exercisable, vested and expected to vest is the difference between the exercise price of the underwriters’ electionoptions and the fair value of the Company’s common stock at March 31, 2022.
During the three months ended March 31, 2022, the Company granted options with a weighted-average grant-date fair value of $2.39 per share.
The fair value of options is estimated at the grant date using the Black-Scholes option-pricing model with the following weighted-average assumptions:
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Expected term (in years) |
|
| 6.03 |
|
|
| 6.00 |
|
Expected volatility |
|
| 80.15 | % |
|
| 63.43 | % |
Risk-free rate |
|
| 1.59 | % |
|
| 0.78 | % |
Dividend yield |
|
| 0 |
|
|
| 0 |
|
Restricted Stock Awards
The following table summarizes the Company’s restricted stock award activity:
|
|
|
|
| Weighted |
| ||
|
| Number of |
|
| Average |
| ||
|
| Shares |
|
| Grant Date |
| ||
|
| (In thousands) |
|
| Fair Value |
| ||
RSAs, unvested at December 31, 2021 |
|
| 161 |
|
| $ | 9.39 |
|
Granted |
|
| 0 |
|
|
| 0 |
|
Vested |
|
| (18 | ) |
|
| 7.41 |
|
Forfeited |
|
| 0 |
|
|
| 0 |
|
RSAs, unvested at March 31, 2022 |
|
| 143 |
|
|
| 9.63 |
|
The fair value of restricted stock awards vested during the three months ended March 31, 2022 was $0.1 million.
14
Stock-Based Compensation
Total stock-based compensation recorded in the unaudited condensed consolidated statements of operations and comprehensive loss related to fully exercise their over-allotment option,stock options and restricted stock awards was as follows (in thousands):
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Research and development |
| $ | 333 |
|
| $ | 175 |
|
General and administrative |
|
| 583 |
|
|
| 300 |
|
Total stock-based compensation expense |
| $ | 916 |
|
| $ | 475 |
|
As of March 31, 2022, there was approximately $10.6 million of stock-based compensation expense to be recognized over a totalweighted-average period of 300,000 Founder Shares are no longer subject to forfeiture.approximately 3.18 years.
15
ITEMItem 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSManagement’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Consonance-HFW Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Consonance Life Sciences. The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, or this Report, and our consolidated financial statements and related notes thereto for the year ended December 31, 2021 included in the Annual Report on Form 10-K filed on March 28, 2022. Unless otherwise indicated, the terms “Surrozen,” “we,” “us,” or “our” refer to Surrozen Operating, Inc., or Legacy Surrozen prior to the Business Combination with Consonance-HFW Acquisition Corp. and Surrozen, Inc., formerly known as Consonance-HFW Acquisition Corp., together with its consolidated subsidiaries after giving effect to the Business Combination.
Forward-Looking Statements
The following discussion of the Company’sour financial condition and results of operations should be read in conjunction with the condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includescontains forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act thatof 1934, as amended. Forward-looking statements are not historical facts,based on our management’s beliefs and involve risksassumptions and uncertainties that could cause actual resultson information currently available to differ materially from those expected and projected.our management. All statements other than statements of historical factfacts are “forward-looking statements” for purposes of these provisions, including those relating to future events or our future financial performance and financial guidance. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “project,” “believe,” “estimate,” “predict,” “potential,” “intend” or “continue,” the negative of terms like these or other comparable terminology, and other words or terms of similar meaning in connection with any discussion of future operating or financial performance. These statements are only predictions.
All forward-looking statements included in this Form 10-Q including, without limitation,document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Any or all of our forward-looking statements in this document may turn out to be wrong. Actual events or results may differ materially. Our forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknown risks, uncertainties and other factors. In evaluating these statements, you should specifically consider various factors, including the risks outlined under the caption “Risk Factors” set forth in Item 1A of Part II of this Report, as well as those contained from time to time in our other filings with the SEC. We caution investors that our business and financial performance are subject to substantial risks and uncertainties.
Overview
We are discovering and developing biologic drug candidates to selectively modulate the Wnt pathway, a critical mediator of tissue repair, in a broad range of organs and tissues, for human diseases. Building upon the seminal work of our founders and scientific advisors who discovered the Wnt gene and key regulators of the Wnt pathway, we have made breakthrough discoveries that we believe will overcome previous limitations in harnessing the potential of Wnt biology. These breakthroughs enable us to rapidly and flexibly design tissue-targeted therapeutics that modulate Wnt signaling. As a result of our discoveries, we are pioneering the selective activation of Wnt signaling, designing and engineering Wnt pathway mimetics, and advancing tissue-specific Wnt candidates. Our lead product candidates are multi-specific, antibody-based therapeutics that mimic the roles of naturally occurring Wnt or R-spondin proteins, which are involved in activation and enhancement of the Wnt pathway, respectively. Given Wnt signaling is essential in tissue maintenance and regeneration throughout the body, we have the potential to target a wide variety of severe diseases, including certain diseases that afflict the intestine, liver, retina, cornea, lung, kidney, cochlea, skin, pancreas and central nervous system. In each of these areas, we believe our approach has the potential to change the treatment paradigm for the disease and substantially impact patient outcomes. Our strategy is to exploit the full potential of Wnt signaling by identifying disease states responsive to Wnt modulation, design tissue-specific therapeutics, and advance candidates into clinical development in targeted indications with high unmet need. Our unique approach and platform technologies have led to the discovery and advancement of two lead product candidates. We plan to initiate a Phase 1 clinical trial in the third quarter of 2022 for SZN-1326, our candidate in development for moderate to severe inflammatory bowel disease, or IBD, with ulcerative colitis, or UC, as our first proposed indication. Furthermore, we plan to initiate a Phase 1 clinical trial in the third quarter of 2022 for SZN-043, our candidate in development for severe alcoholic hepatitis, or AH. We expect to nominate additional lead candidates and advance them into the clinic in 2023 and beyond. In January 2022, we nominated SZN-413, as a development candidate for the treatment of retinal vascular -associated diseases.
The chart below represents a summary of our wholly owned product candidates:
By leveraging our scientific capabilities and approach, we have identified more than 20 potential tissue types to explore. In our most advanced research programs, we are developing potential therapeutics for ocular diseases such as retinal vascular diseases. Genetic
16
studies in the literature have identified that the Wnt signaling pathway is critical for maintenance of healthy retinal blood vessels. We have shown that activation of Wnt-pathway signaling can potentially reverse vascular damage through a mechanism that is distinct from the mechanisms of currently approved therapeutics that target angiogenesis. We also have identified the potential for regeneration of retinal pigment epithelium, or RPE, an important cell type in the retina. RPE cells are required for maintenance and viability of photoreceptors and as such are a potential target for the treatment of dry AMD. We are also assessing the potential to drive tissue repair in conditions such as hearing loss and diseases resulting in tissue injury to organs including the cornea, lacrimal gland, lung and kidney.
The chart below represents a summary of our wholly-owned research programs:
Since our inception in 2015, we have devoted substantially all of our efforts and financial resources to organizing and staffing our company, business planning, raising capital, developing and optimizing our Wnt therapeutics platform, identifying potential product candidates, undertaking research and development activities, engaging in strategic transactions, establishing and enhancing our intellectual property portfolio, and providing general and administrative support for these operations. We have incurred net losses since inception. During the three months ended March 31, 2022 and 2021, we incurred net losses of $7.9 million and $13.0 million. As of March 31, 2022, we had an accumulated deficit of $150.6 million and cash, cash equivalents and marketable securities of $104.3 million.
We expect to continue to incur losses for the foreseeable future and expect to incur increased expenses as we expand our pipeline and advance our product candidates through clinical development and regulatory submissions. Specifically, in the near term we expect to incur substantial expenses relating to our planned Phase 1 clinical trials, the development and validation of our manufacturing processes, and other research and development activities.
Impacts of the Conflict between Russia and Ukraine and the COVID-19 Pandemic
Russia invaded Ukraine in February 2022 and is still engaged in active armed conflict against the country. The global COVID-19 pandemic continues to evolve rapidly, and we will continue to monitor developments closely. To date, our financial condition and operations have not been significantly impacted by the conflict between Russia and Ukraine and the COVID-19 pandemic. The extent of the impact on our business, operations and clinical development timelines and plans remains uncertain and will depend on certain developments, including the actions of U.S. and foreign governments to impose sanctions on Russia and to slow the spread of the COVID-19 and their impact on our preclinical development activities, regulatory agencies, clinical research organizations, or CROs, third-party manufacturers, other third parties with whom we do business, and, if we obtain regulatory approval to commence dosing in humans, trial enrollment and trial sites. We will continue to actively monitor the rapidly evolving situation and may take actions that alter our operations, including those that may be required by federal, state or local authorities or that we determine are in the best interests of our employees and other third parties with whom we do business.
UCSF Commercial License Agreement
In March 2022, we exercised the option under the amended and restated license and option agreements with The Regents of the University of California executed in January 2020 and entered into a non-exclusive commercial license agreement to make and use licensed products derived from the phage display llama VHH single domain antibody library. Under the commercial license agreement, we paid UCSF a nominal license issue fee and agreed to pay a nominal annual license maintenance fee, five- to six-digit payments per licensed product upon achievement of a regulatory milestone, nominal minimum annual royalties, and earned royalties equal to a sub-single digit percentage of our and our sublicensees’ net sales of licensed products.
17
Components of Results of Operations
Revenue
We have not generated any revenue from the sale of our products, and we do not expect to generate any revenue unless and until we obtain regulatory clearance or approval of, and commercialize, our product candidates.
Operating Expenses
We classify operating expenses into two main categories: (i) research and development expenses and (ii) general and administrative expenses.
Research and Development Expenses
Since our inception, we have focused significant resources on our research and development activities. Our research and development expenses consist of external and internal expenses incurred in connection with our research activities and development programs.
External expenses include:
Internal expenses include:
We expect our research and development expenses will increase significantly for the foreseeable future as we identify and develop product candidates, in particular as we seek to initiate clinical trials and pursue regulatory approval and commercialization for SZN-1326 and SZN-043.
The successful development of our product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing or costs required to complete the remaining development of SZN-1326 and SZN-043 or any future product candidates. This is due to the numerous risks and uncertainties associated with the development of product candidates, many of which are outside of our control, including those associated with:
18
Any changes in the outcome of any of these variables could mean a significant change in the costs and timing associated with the development of our drug candidates.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel-related costs, including salaries, bonuses, benefits and stock-based compensation expense for personnel in executive, finance, human resources, business and corporate development, legal, and other administrative functions. General and administrative expenses also include legal fees, professional fees paid for accounting, auditing, consulting, tax, investor relations services, insurance costs, and facility costs not otherwise included in research and development expenses, and costs associated with compliance with the rules and regulations of the SEC and those of the Nasdaq. We expect that our general and administrative expenses will increase significantly for the foreseeable future to support our expanding headcount and operations.
Interest Income
Interest income consists primarily of interest earned on our cash equivalents and marketable securities.
Other Income
Other income consists of the gain on the change in fair value of warrant liabilities.
Results of Operations
Comparison of the Three Months Ended March 31, 2022 and 2021
The following table summarizes results of operations for the periods presented (dollars in thousands):
|
| Three Months Ended March 31, |
|
| $ |
|
| % |
| |||||||
|
| 2022 |
|
| 2021 |
|
| Change |
|
| Change |
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Research and development |
| $ | 9,371 |
|
| $ | 8,601 |
|
| $ | 770 |
|
|
| 9 | % |
General and administrative |
|
| 5,122 |
|
|
| 4,430 |
|
|
| 692 |
|
|
| 16 | % |
Total operating expenses |
|
| 14,493 |
|
|
| 13,031 |
|
|
| 1,462 |
|
|
| 11 | % |
Loss from operations |
|
| (14,493 | ) |
|
| (13,031 | ) |
|
| (1,462 | ) |
|
| 11 | % |
Interest income |
|
| 49 |
|
|
| 9 |
|
|
| 40 |
|
|
| 444 | % |
Other income |
|
| 6,497 |
|
|
| — |
|
|
| 6,497 |
|
| * |
| |
Net loss |
| $ | (7,947 | ) |
| $ | (13,022 | ) |
| $ | 5,075 |
|
|
| -39 | % |
*Percentage is not meaningful
Research and Development Expenses
The following table summarizes research and development expenses for the periods presented (dollars in thousands):
|
| Three Months Ended March 31, |
|
| $ |
|
| % |
| |||||||
|
| 2022 |
|
| 2021 |
|
| Change |
|
| Change |
| ||||
External expenses(1) |
| $ | 3,366 |
|
| $ | 4,314 |
|
| $ | (948 | ) |
|
| -22 | % |
Internal costs: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Personnel expenses (including |
|
| 4,194 |
|
|
| 2,971 |
|
|
| 1,223 |
|
|
| 41 | % |
Facilities and other expenses |
|
| 1,811 |
|
|
| 1,316 |
|
|
| 495 |
|
|
| 38 | % |
Total research and |
| $ | 9,371 |
|
| $ | 8,601 |
|
| $ | 770 |
|
|
| 9 | % |
19
(1) In future periods when clinical trial expenses are incurred, external expenses will be broken out between our clinical programs and preclinical programs.
The increase of $0.8 million, or 9%, in research and development expenses for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, is due in part to the $1.2 million increase in personnel-related expenses as a result of a higher headcount and options granted to our employees and the increase of $0.5 million in facilities and other expenses is attributable to the increase in headcount and corporate insurance, offset by the $0.3 million decrease in external expenses primarily due to the completion of manufacturing drug substance for our SZN-1326 and SZN-043 programs.
General and Administrative Expenses
The increase of $0.7 million, or 16%, in general and administrative expenses for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, is primarily attributable to the $1.3 million increase in personnel-related expenses due to an increase in headcount and options granted to our employees and the $0.5 million increase in corporate insurance, offset by the $1.1 million decrease in professional and consulting service fees related to the potential initial public offering prior to our decision to commence the business combination with Consonance-HFW Acquisition Corp.
Interest Income
The increase of $40,000, or 444%, in interest income for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, is primarily due to the increase in investments in money market funds and marketable securities.
Other Income
The increase of $6.5 million in other income for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, is related to the gain on the change in fair value of warrant liabilities.
Liquidity and Capital Resources
Since inception, we have incurred significant net operating losses and negative cash flows from operations. Historically, we financed our operations primarily from the sale of our redeemable convertible preferred stock. As of March 31, 2022, we had cash, cash equivalents and marketable securities of $104.3 million and an accumulated deficit of $150.6 million.
In February 2022, we entered into a purchase agreement and a registration rights agreement with Lincoln Park, pursuant to which Lincoln Park is obligated to purchase up to $50.0 million of our common stock from time to time at our sole discretion over a 36-month period commencing on April 27, 2022.
We believe, based on our current operating plan, that our existing cash, cash equivalents, and marketable securities will be sufficient to fund our operations for at least the next 12 months from the date of this Report. However, if the anticipated operating results are not achieved in future periods, we could use our capital resources sooner than expected which may result in the need to reduce future planned expenditures and/or raise additional capital to continue to fund the operations.
Future Funding Requirements
To date, we have not generated any revenue. We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval and commercialize SZN-1326 and SZN-043 or any future product candidates, and we do not know when, or if, that will occur. We will continue to require substantial additional capital to develop SZN-1326 and SZN-043 and fund operations for the foreseeable future. Since our inception in 2015, we have devoted substantially all of our efforts and financial resources to organizing and staffing our company, business planning, raising capital, developing and optimizing our Wnt therapeutics platform, identifying potential product candidates, undertaking research and development activities, engaging in strategic transactions, establishing and enhancing our intellectual property portfolio, and providing general and administrative support for these operations. We expect our expenses to continue to increase in connection with our ongoing activities as we continue to advance SZN-1326 and SZN-043 into clinical development and regulatory approval. In addition, we will continue to incur additional costs associated with operating as a public company.
We expect that our cash, cash equivalents and marketable securities, will provide the capital needed to fund our operations in the short-term. We expect that in the long-term we will need to raise additional capital through public or private equity offerings, debt financings or other capital sources, including government grants, potential collaborations with other companies or other strategic transactions as we do not expect sales of common stock to Lincoln Park to be sufficient to provide all necessary financing until we are able to generate revenue on our own. There can be no assurance that sufficient funds will be available to us at all or on attractive terms when needed from these sources. If we are unable to obtain additional funding from these or other sources when needed, it may be necessary to significantly reduce expenses through reductions in staff and delaying, scaling back operations, or stopping certain research and development programs.
20
We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:
In addition, any future financing through sales of equity securities, including sales to Lincoln Park under the Equity Purchase Agreement, will cause our stockholders to experience dilution. If we raise additional capital through debt financing, we may be subject to covenants that restrict our operations including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments, and engage in certain merger, consolidation, or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. If we are unable to raise additional funds when needed, we may be required to delay, reduce, or terminate some or all of our development programs and clinical trials. We may also be required to sell or license to others our rights to SZN-1326 and SZN-043 and any future product candidates or discovery programs in certain territories or indications that we would prefer to develop and commercialize ourselves.
Summary of Cash Flows
The following table sets forth the primary sources and uses of cash, cash equivalents and restricted cash for the periods presented below (in thousands):
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Net cash used in operating activities |
| $ | (18,374 | ) |
| $ | (10,332 | ) |
Net cash used in investing activities |
|
| (412 | ) |
|
| (1,442 | ) |
Net cash provided by financing activities |
|
| — |
|
|
| 196 |
|
Net decrease in cash, cash equivalents |
| $ | (18,786 | ) |
| $ | (11,578 | ) |
Cash Used in Operating Activities
Cash used in operating activities of $18.4 million for the three months ended March 31, 2022 was primarily due to the use of funds in our operations and the resulting net loss of $7.9 million, a net change of $5.9 million in our net operating assets and liabilities and $4.6 million in non-cash charges. The net change in our operating assets and liabilities was primarily due to a net increase in prepaid expenses, accounts payable and accrued liabilities. Cash used in operating activities of $10.3 million for the three months ended March 31, 2021 was primarily due to the use of funds in our operations and the resulting net loss of $13.0 million, partially offset by $1.3 million in
21
non-cash charges and a net change of $1.4 million in our net operating assets and liabilities. The net change in our operating assets and liabilities was primarily due to a net increase in prepaid expenses, accounts payable and accrued liabilities.
Cash Used in Investing Activities
Cash used in investing activities of $0.4 million for the three months ended March 31, 2022 was for the purchase of laboratory and computer equipment. Cash used in investing activities of $1.4 million for the three months ended March 31, 2021 consisted primarily of $1.1 million of cash used for the purchase of marketable securities and $0.3 million of cash used for the purchase of lab equipment.
Cash Provided by Financing Activities
Cash provided by financing activities of $0.2 million for the three months ended March 31, 2021 consisted primarily of the proceeds from the exercise of options.
Contractual Obligations and Commitments
Our contractual obligations as of March 31, 2022 have not materially changed from what we presented in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, basedincluded in our Annual Report on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its Initial Public Offering filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated in the Cayman Islands on August 21, 2020 formedForm 10-K for the purposeyear ended December 31, 2021.
Critical Accounting Policies, Significant Judgments and Use of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar Business Combination with one or more businesses. We intend to effectuate our Business Combination using cash derived from the proceeds of the Initial Public Offering and the sale of the Private Placement Units, our shares, debt or a combination of cash, shares and debt.Estimates
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues to date. Our only activities from inception through September 30, 2020 were organizational activities and those necessary to prepare for the Initial Public Offering, described below. We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We expect to generate non-operating income in the form of interest income on marketable securities held after the Initial Public Offering. We expect that we will incur increased expenses as a result of being a public company (for legal,unaudited condensed consolidated financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, a Business Combination.
For the period from August 21, 2020 (inception) through September 30, 2020, we had a net loss of $4,961, which consisted of formation and operating costs.
Liquidity and Capital Resources
As of September 30, 2020, we had no cash. Until the consummation of the Initial Public Offering, our only source of liquidity was an initial purchase of ordinary shares by the Sponsor and loans from our Sponsor.
Subsequent to the end of the quarterly period covered by this Quarterly Report, on November 23, 2020, we consummated the Initial Public Offering of 8,000,000 Units, at a price of $10.00 per Unit, generating gross proceeds of $80,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 410,000 Private Placement Units to the Sponsor at a price of $10.00 per Private Placement Unit generating gross proceeds of $4,100,000. Additionally, on December 1, 2020, the underwriters fully exercised their over-allotment option, resulting in an additional 1,200,000 Units issued for an aggregate amount of $12,000,000. In connection with the underwriters’ full exercise of their over-allotment option, the Company also consummated the sale of an additional 24,000 Private Placement Units at $10.00 per Private Placement Unit, generating total proceeds of $12,240,000. A total of $12,000,000 was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $92,000,000.
Following the Initial Public Offering, the sale of the Private Placement Units, and the full exercise of the underwriter’s over-allotment option, a total of $92,000,000 was placed in the Trust Account, and on November 30, 2020, we had $1,507,989 of cash held outside of the Trust Account. We incurred $5,658,864 in transaction costs, including $1,840,000 of underwriting fees, $3,220,000 of deferred underwriting fees and $598,864 of other costs.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account, which interest shall be net of taxes payable and excluding deferred underwriting commissions, to complete our Business Combination. We may withdraw interest from the Trust Account to pay taxes, if any. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete a Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into units, at a price of $10.00 per unit, at the option of the lender. The units would be identical to the Private Placement Units.
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our public shares upon completion of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2020. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which wouldstatements have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the Sponsor a monthly fee of $55,000 for office space and administrative support services provided to the Company. We began incurring these fees on November 18, 2020 and will continue to incur these fees monthly until the earlier of the completion of a Business Combination and the Company’s liquidation.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $2,800,000prepared in the aggregate (or $3,220,000 if the underwriters’ over-allotment is exercised in full). The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
Pursuant to a registration rights agreement entered into on November 18, 2020, the holders of the Founder Shares, Private Placement Units (including securities contained therein) and warrants that may be issued upon conversion of the Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Units and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rightsaccordance with respect to registration statements filed subsequent to the completion of a Business Combination. However, the registration and shareholder rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering our securities. We will bear the expenses incurred in connection with the filing of any such registration statements.
Critical Accounting Policies
U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires managementus to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, and income andas well as the reported expenses incurred during the periods reported.reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results couldmay differ materially differfrom these estimates.
During the three months ended March 31, 2022, there were no material changes to our critical accounting policies or in the methodology used for estimates from those estimates.described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021.
Emerging Growth Company Status
We are an emerging growth company, or EGC, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. The JOBS Act permits companies with EGC status to take advantage of an extended transition period to comply with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies. We have not identified any critical accounting policies.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,elected to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date the Company (i) is no longer an EGC or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our unaudited condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting standards as of public company effective dates.
In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, currently adopted, would have a material effectas an EGC, we intend to rely on such exemptions, we are not required to, among other things: (i) provide an auditor’s attestation report on our condensedsystem of internal controls over financial statements.reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board; and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.
We will remain an EGC under the JOBS Act until the earliest of (i) the last day of the fiscal year (a) of 2025, (b) the year in which we have total annual gross revenue of at least $1.07 billion, or (c) the year in which we are deemed to be a large accelerated filer; or (ii) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
AsWe are a smaller reporting company as defined by Rule 12b-2 of September 30, 2020, we werethe Securities Exchange Act of 1934, as amended, or the Exchange Act, and are not subjectrequired to any market or interest rate risk. Followingprovide the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been invested in certain U.S. government obligations with a maturity of 185 days or less or in certain money market funds that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.information otherwise required under this item.
Item 4. Controls and Procedures.
ITEM 4. CONTROLS AND PROCEDURESManagement’s Evaluation of Disclosure Controls and Procedures
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Disclosure controlsOur management is responsible for establishing and procedures are controls and other procedures that are designed to ensure that information required to be disclosedmaintaining adequate internal control over financial reporting, as defined in our reports filed or submittedExchange Act Rule 13a-15(f). Our management, under the Exchange Act is recorded, processed, summarizedsupervision and reported withinwith the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, includingparticipation of our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15f and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation ofhas evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2020.the end of the period covered by this Report. Based upon theiron the evaluation of our disclosure controls and procedures as required by Rule 13a-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Report, our disclosure controls and procedures (as definedwere not effective at the reasonable assurance level as a result of the material weakness described below.
Material Weakness
As previously reported, in Rules 13a-15 (e)connection with the audit of our financial statements for the years ended December 31, 2020, we and 15d-15 (e)our independent registered public accounting firm identified one material weakness in our internal control over financial reporting. This material weakness continued to exist as of March 31, 2022. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness that we identified relates to a lack of sufficient accounting and financial reporting personnel with requisite knowledge and experience in application of U.S. GAAP and SEC rules.
To respond to the material weakness, we have devoted, and plan to continue to devote, significant effort and resources to the remediation and improvement of our internal control over financial reporting. We are in the process of implementing measures designed to improve our internal control over financial reporting and remediate the control deficiencies that led to the material weakness, including hiring additional accounting personnel, obtaining advisory services from professional consultants with U.S. GAAP and SEC reporting experience in their industry, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications and expanding the capabilities of the existing accounting and financial personnel through continuous training and education in the accounting and reporting requirements under U.S. GAAP and the Exchange Act) were effective.SEC rules and regulations. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company.
Changes in Internal Control Over Financial Reporting
There werehas been no changeschange in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that occurred during the period covered by this report that havehas materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
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PART II - II—OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be subject to legal proceedings. We are not currently a party to or aware of any proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
None.
ITEMItem 1A. RISK FACTORS.Risk Factors.
Except as set forth below, asAs a smaller reporting company (as defined in Rule 12b-2 of the dateExchange Act), we are not required to provide the information called for by this Item 1A. Risk factors describing the major risks to our business can be found under Item 1A, “Risk Factors”, in our Annual Report on Form 10-K for the year ended December 31, 2021.
Item 2. Unregistered Sales of this Quarterly Report, there have been no material changes with respect to those risk factorsEquity Securities and Use of Proceeds.
All unregistered sales of our securities during the three months ended March 31, 2022, were previously disclosed in our Registration Statement filed with the SEC. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
The securities in which we invest the funds held in the Trust Account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the per-share redemption amount received by public shareholders may be less than $10.00 per share.
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The proceeds held in the Trust Account are invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations. While short-term U.S. government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States. In the event that we are unable to complete our initial business combination or make certain amendments to our Amended and Restated Certificate of Incorporation, our public shareholders are entitled to receive their pro-rata share of the proceeds held in the Trust Account, plus any interest income not released to us, net of taxes payable. Negative interest rates could impact the per-share redemption amount that may be received by public shareholders.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS FROM REGISTERED SECURITIES.
On September 4, 2020, the Sponsor paid $25,000 to cover certain offering and formation costs of the Company in consideration for 2,875,000 Class B ordinary shares. On October 8, 2020 and November 10, 2020, 718,750 and 575,000 Class B ordinary shares were contributed back to the Company for no consideration, respectively, resulting in there being 2,300,000 Class B ordinary shares (the “Founder Shares”) being issued and outstanding. On November 18, 2020, our sponsor transferred 30,000 founder shares to each of our non-employee directors. As a result of the underwriters’ election to fully exercise their over-allotment option, the Founder Shares are no longer subject to forfeiture. The foregoing issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
On November 23, 2020, we consummated our Initial Public Offering of 8,000,000 Units, at a price of $10.00 per Unit, generating total gross proceeds of $80,000,000. The securities sold in the offering were registered under the Securities Act on registration statementsCurrent Report on Form S-1 (No. 333-249394). The registration statements became effective on November 18, 2020.8-K.
Simultaneously with the consummation of the Initial Public Offering, we consummated a private placement of 410,000 Private Placement Units to our Sponsor at a price of $10.00 per Private Placement Unit, generating total proceeds of $4,100,000. Such securities were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
On December 1, 2020, the underwriters fully exercised their over-allotment option, resulting in an additional 1,200,000 Units issued for an aggregate amount of $12,000,000. In connection with the underwriters’ full exercise of their over-allotment option, the Company also consummated the sale of an additional 24,000 Private Placement Units at $10.00 per Private Placement Unit, generating total proceeds of $12,240,000.
The Private Placement Units are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Units are not transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions.
Of the gross proceeds received from the Initial Public Offering and the sale of the Private Placement Units, $92,000,000 was placed in the Trust Account.
We paid a total of $1,840,000 in underwriting discounts and commissions and $598,864 for other costs and expenses related to the Initial Public Offering. In addition, the underwriter agreed to defer $3,220,000 in underwriting discounts and commissions.
For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Form 10-Q.
Item 3. Defaults Upon Senior Securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.None.
None.
Item 4. Mine Safety Disclosures.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
Item 5. Other Information.
ITEM 5. OTHER INFORMATION.None.
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None.
ITEMItem 6. EXHIBITS.Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
Exhibit Number | Description | |
2.1† | ||
3.1 | ||
3.2 | ||
4.1 | ||
4.2 | ||
4.3 | ||
4.4 | ||
4.5 | ||
10.1† | ||
10.2 | ||
10.3* | ||
31.1* | ||
| Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act | ||
31.2* | ||
32.1* | ||
32.2* | ||
101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | ||
Inline XBRL Taxonomy Extension Definition Linkbase Document | ||
101.LAB | Inline XBRL Taxonomy Extension | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
* Filed herewith.
+ Indicates management contract or compensatory plan or arrangement.
† Schedules and exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.
†† The Company has redacted provisions or terms of this Exhibit pursuant to Regulation S-K Item 601(b)(10). The Company agrees to furnish an unredacted copy of the Exhibit to the SEC upon its request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SURROZEN, INC. | |||
Date: May 11, 2022 | By: | /s/ Craig Parker | |
Craig Parker | |||
President and Chief Executive Officer | |||
| and Director (Principal Executive Officer) | |||
Date: | By: | /s/ | |
Charles Williams | |||
Chief Financial Officer | |||
(Principal Financial Officer and Principal Accounting Officer) | |||
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