Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 05, 2022 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2022 | |
Entity File Number | 001-40886 | |
Entity Registrant Name | Cognition Therapeutics, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 13-4365359 | |
Entity Address, Address Line One | 2500 Westchester Ave | |
Entity Address, City or Town | Purchase | |
Entity Address State Or Province | NY | |
Entity Address, Postal Zip Code | 10577 | |
City Area Code | 412 | |
Local Phone Number | 481-2210 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | CGTX | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 22,597,907 | |
Entity Central Index Key | 0001455365 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 51,509 | $ 54,721 |
Grant receivables | 2,794 | 1,799 |
Prepaid expenses and other current assets | 2,137 | 2,005 |
Other receivables | 467 | |
Total current assets | 56,440 | 58,992 |
Property and equipment, net | 261 | 145 |
Right-of-use assets, operating leases | 578 | |
Other assets | 1,417 | |
Total assets | 58,696 | 59,137 |
Current liabilities | ||
Accounts payable | 3,997 | 4,168 |
Accrued expenses | 1,383 | 1,751 |
Deferred grant income, current | 1,316 | 753 |
Operating lease liabilities, current | 150 | |
Other current liabilities | 799 | 1,192 |
Total current liabilities | 7,645 | 7,864 |
Operating lease liabilities, noncurrent | 446 | |
Deferred grant income and other liabilities, noncurrent | 1,865 | |
Total liabilities | 9,956 | 7,864 |
Commitments and contingencies (Note 6) | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding at March 31, 2022 and December 31, 2021 | ||
Common stock, $0.001 par value, 250,000,000 shares authorized; 22,578,584 and 22,230,032 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively | 22 | 22 |
Additional paid-in capital | 146,757 | 145,453 |
Accumulated deficit | (97,842) | (94,004) |
Accumulated other comprehensive loss | (197) | (198) |
Total stockholders' equity | 48,740 | 51,273 |
Total liabilities and stockholders' equity | $ 58,696 | $ 59,137 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2022 | Dec. 31, 2021 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 22,578,584 | 22,230,032 |
Common stock, shares outstanding | 22,578,584 | 22,230,032 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Operating Expenses: | ||
Research and development | $ 6,518 | $ 4,430 |
General and administrative | 2,895 | 1,153 |
Total operating expenses | 9,413 | 5,583 |
Loss from operations | (9,413) | (5,583) |
Other income (expense): | ||
Grant income | 5,904 | 4,692 |
Change in the fair value of the derivative liability | 1,063 | |
Other (expense) income, net | (195) | 145 |
Gain on debt extinguishment | 443 | |
Interest expense, net | (9) | (537) |
Total other income, net | 5,700 | 5,806 |
Loss before income tax | (3,713) | 223 |
Income tax expense | (125) | 0 |
Net (loss) income | (3,838) | 223 |
Cumulative preferred stock dividends | (1,128) | |
Net loss attributable to common stockholders | (3,838) | (905) |
Unrealized gain (loss) on foreign currency translation | 1 | (5) |
Total comprehensive (loss) income | $ (3,837) | $ 218 |
Net loss per share attributable to common stockholders, basic (in dollars per share) | $ (0.17) | $ (1.64) |
Net loss per share attributable to common stockholders, diluted (in dollars per share) | $ (0.17) | $ (1.64) |
Weighted-average common shares outstanding, basic (in shares) | 22,426,982 | 550,175 |
Weighted-average common shares outstanding, diluted (in shares) | 22,426,982 | 550,175 |
CONSOLIDATED STATEMENTS OF CONV
CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDER'S EQUITY (DEFICIT) - USD ($) $ in Thousands | Series A convertible preferred stock | Series A-1 convertible preferred stock | Series A-2 convertible preferred stock | Series B convertible preferred stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Beginning Balances at Dec. 31, 2020 | $ 1 | $ 222 | $ (68,220) | $ (187) | $ (68,184) | ||||
Beginning Balances (in shares) at Dec. 31, 2020 | 538,793 | ||||||||
Shareholders' Equity | |||||||||
Exercise of stock options | 14 | $ 14 | |||||||
Exercise of stock options (in shares) | 20,787 | 20,787 | |||||||
Equity-based compensation | 98 | $ 98 | |||||||
Other comprehensive loss | (5) | (5) | |||||||
Net (loss) income | 223 | 223 | |||||||
Ending Balances at Mar. 31, 2021 | $ 1 | 334 | (67,997) | (192) | (67,854) | ||||
Ending Balances (in shares) at Mar. 31, 2021 | 559,580 | ||||||||
Beginning Balances at Dec. 31, 2020 | $ 4,616 | $ 5,398 | $ 5,809 | $ 39,547 | |||||
Beginning Balances (in shares) at Dec. 31, 2020 | 2,819,027 | 3,730,366 | 3,565,063 | 30,409,890 | |||||
Ending Balances at Mar. 31, 2021 | $ 4,616 | $ 5,398 | $ 5,809 | $ 39,547 | |||||
Ending Balances (in shares) at Mar. 31, 2021 | 2,819,027 | 3,730,366 | 3,565,063 | 30,409,890 | |||||
Beginning Balances at Dec. 31, 2021 | $ 22 | 145,453 | (94,004) | (198) | 51,273 | ||||
Beginning Balances (in shares) at Dec. 31, 2021 | 22,230,032 | ||||||||
Shareholders' Equity | |||||||||
Exercise of stock options | 303 | $ 303 | |||||||
Exercise of stock options (in shares) | 348,552 | 348,552 | |||||||
Equity-based compensation | 1,001 | $ 1,001 | |||||||
Other comprehensive loss | 1 | 1 | |||||||
Net (loss) income | (3,838) | (3,838) | |||||||
Ending Balances at Mar. 31, 2022 | $ 22 | $ 146,757 | $ (97,842) | $ (197) | $ 48,740 | ||||
Ending Balances (in shares) at Mar. 31, 2022 | 22,578,584 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (3,838) | $ 223 |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||
Depreciation and amortization | 18 | 23 |
Equity-based compensation | 1,001 | 98 |
Amortization of right-of-use assets | 38 | |
Amortization of debt issuance costs | 22 | |
Amortization of debt discount | 260 | |
Change in the fair value of the derivative liability | (1,063) | |
Gain on debt extinguishment | (443) | |
Changes in operating assets and liabilities: | ||
Grant receivables | (995) | (1,111) |
Prepaid expenses and other current assets | (132) | 305 |
Other receivables | 467 | (63) |
Other assets | (1,417) | |
Accounts payable | (171) | 953 |
Accrued expenses | (368) | 277 |
Other current liabilities | 1 | (253) |
Deferred grant income, current | 563 | |
Other noncurrent liabilities | 1,865 | |
Operating lease liabilities | (20) | |
Net cash used in operating activities | (2,988) | (772) |
Cash flows from investing activities: | ||
Payments for property and equipment | (134) | |
Net cash used in investing activities | (134) | |
Cash flows from financing activities: | ||
Proceeds from the exercise of common stock options | 303 | 14 |
Payments on loan payable | (394) | |
Proceeds from issuance of Simple Agreements for Future Equity | 8,942 | |
Net cash (used in) provided by financing activities | (91) | 8,956 |
Effect of exchange rate changes on cash and cash equivalents | 1 | |
Net (decrease) increase in cash and cash equivalents | (3,212) | 8,184 |
Cash and cash equivalents | ||
Cash and cash equivalents-beginning of period | 54,721 | 5,189 |
Cash and cash equivalents-end of period | $ 51,509 | 13,373 |
Supplemental disclosures of non-cash financing activities: | ||
Accrued issuance costs related to Simple Agreements for Future Equity | 31 | |
Deferred offering costs included in accounts payable and accrued expenses | $ 372 |
Description of Business and Fin
Description of Business and Financial Condition | 3 Months Ended |
Mar. 31, 2022 | |
Description of Business and Financial Condition | |
Description of Business and Financial Condition | 1. Description of Business and Financial Condition Cognition Therapeutics, Inc. (the “Company”) was incorporated as a Delaware corporation on August 21, 2007. The Company is a biopharmaceutical company developing disease modifying therapies for central nervous system (“CNS”) disorders. The Company’s pipeline candidates were discovered using proprietary biology and chemistry platforms designed to identify novel drug targets and disease-modifying therapies that address dysregulated pathways specifically associated with neurodegenerative diseases. The Company was founded on the unique combination of biological expertise around these targets, including proprietary assays that emphasize functional responses, and proprietary medicinal chemistry intended to produce novel, high-quality small-molecule drug candidates. On July 14, 2015, the Company formed Cognition Therapeutics PTY LTD, as its wholly owned subsidiary (the “Subsidiary”), primarily for the purpose of conducting research and development efforts at facilities located in Australia. Assets and liabilities of the Subsidiary, which uses the Australian dollar as its local functional currency, are translated to United States (U.S.) dollars at year-end exchange rates. Income statement accounts are translated using the average exchange rates prevailing during the month in which income and expenses are generated. Translation adjustments are recorded to accumulated other comprehensive income (loss) (“AOCI”) within stockholders’ equity (deficit). Gains and losses from foreign currency transactions are included in net loss as a part of other income, net. On October 13, 2021, the Company closed its initial public offering (“IPO”) of 3,768,116 shares of the Company’s common stock at a public offering price of $12.00 per share. The gross proceeds from the IPO, excluding the over-allotment exercise, were $45,217 and the net proceeds were approximately $37,909, after deducting underwriting discounts and commissions and other offering related expenses payable by the Company. Upon completion of the IPO, all of the Company’s then outstanding preferred stock was automatically converted into an aggregate of 15,906,537 shares of common stock and an aggregate amount of $8,942 of simple agreements for future equity (“SAFEs”) was automatically converted into an aggregate of 931,485 shares of common stock. On November 10, 2021, the representative of the underwriters for the IPO provided notice to the Company that it had elected to exercise its over-allotment option in full to purchase 565,217 shares of the Company’s common stock. The representative’s exercise of the over-allotment option closed on November 12, 2021, resulting in gross proceeds of $6,783 and net proceeds to the Company of approximately $6,308, after deducting underwriting discounts and commissions and other offering related expenses. The Company held cash and cash equivalents of $51,509 at March 31, 2022. The Company expects that its cash and cash equivalents, including the net proceeds from its IPO, will enable it to fund its operating expenses and capital expenditure requirements through at least the one year period subsequent to the filing date of this Form 10-Q. However, additional funding will be necessary beyond this point to fund future preclinical and clinical activities. The Company expects to finance its future cash needs through a combination of grant awards, equity or debt financings, collaboration agreements, strategic alliances and licensing arrangements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements as of March 31, 2022, and for the three months ended March 31, 2022 and 2021, have been prepared in accordance with the rules and regulations of the Securities Exchange and Commission (“SEC”) and generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying unaudited interim consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of March 31, 2022, the statements of operations and comprehensive loss and convertible preferred stock and stockholders’ equity (deficit), and cash flows for the three months ended March 31, 2022 and 2021. Such adjustments are of a normal and recurring nature. The results for the three months ended March 31, 2022 are not necessarily indicative of the results for the year ending December 31, 2022, or for any future period. These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2021, and the notes thereto, which are included on Form 10-K filed with the SEC on March 30, 2022. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of other income and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents consist primarily of interest-bearing deposits at various financial institutions. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Receivables Grant Receivables Grant receivables relate to outstanding amounts due for reimbursable expenditures of awarded grants issued by the National Institute of Health and are carried at their estimated collectible amounts. The Company expects all receivables to be collectible, and accordingly, there is no allowance for doubtful accounts required on these grant receivables. Property and Equipment Property and equipment is recorded at cost, less accumulated depreciation. Depreciation is computed on the straight-line basis over the estimated useful life of the asset. The Company estimates the useful life to be 5 and 6 years for equipment and furniture and fixtures, respectively. The cost of repairs and maintenance is charged to expense as incurred. Property and equipment is evaluated for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. If expected cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the assets. There were no indicators of impairment of long-lived assets during the three months ended March 31, 2022 or 2021. Convertible Instruments ASC 815, Derivatives and Hedging Activities The Company also follows ASC 480-10, Distinguishing Liabilities from Equity following: (a) a fixed monetary amount known at inception; (b) variations in something other than the fair value of the issuer’s equity shares; or (c) variations inversely related to changes in the fair value of the issuer’s equity shares. Hybrid instruments meeting these criteria are not further evaluated for any embedded derivatives and are carried as a liability at fair value at each balance sheet date. Grant income For the three months ended March 31, 2022 and 2021, the Company generated grant income of $5,904 and $4,692, respectively, primarily from reimbursements from the National Institute of Aging (“NIA”), a division of the National Institutes of Health, or NIH, for aging research. The Company records grant income in other income (expense) in the period in which the reimbursable research and development services are incurred and the right to payment is realized. The grants awarded relate to agreed upon direct and indirect costs for specific studies or clinical trials, which may include personnel and consulting costs, costs paid to contract research organizations (“CROs”), research institutions and/or consortiums involved in the grant, as well as facilities and administrative costs. These grants are cost plus fixed fee arrangements in which the Company is reimbursed for its eligible direct and indirect costs over time, up to the maximum amount of each specific grant award. Only costs that are allowable under the grant award, certain government regulations and the NIH’s supplemental policy and procedure manual may be claimed for reimbursement, and the reimbursements are subject to routine audits from governmental agencies from time to time. Deferred grant income represents grant proceeds received by the Company prior to the period in which the reimbursable research and development services are incurred. As of March 31, 2022, the Company has been awarded grants with project periods that extend through May 31, 2025, subject to extension. Research and Development Costs The Company is involved in research and development aimed at the development of treatments for a variety of diseases related to the central nervous system, with a primary focus on Alzheimer’s Disease. Research and development costs are expensed as incurred. Research and development expenses consist principally of personnel costs, including salaries, stock-based compensation, and benefits for employees, third-party license fees and other operational costs related to our research and development activities, including allocated facility-related expenses and external costs of outside vendors, and other direct and indirect costs. Non-refundable research and development costs are deferred and expensed as the related goods are delivered or services are performed. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks. Costs for certain research and development activities are recognized based on the pattern of performance of the individual arrangements, which may differ from the pattern of billings incurred, and are reflected in the consolidated financial statements as prepaid expenses or as accrued research and development expenses. Leases The Company adopted Accounting Standards Update (ASU) No. 2016-02, Leases The Company determines if an arrangement is a lease at contract inception. The Company’s contracts are determined to contain a lease when all of the following criteria based on the specific circumstances of the arrangement are met: (1) there is an identified asset for which there are no substantive substitution rights; (2) the Company has the right to obtain substantially all of the economic benefits from the identified asset; and (3) the Company has the right to direct the use of the identified asset. At the commencement date, operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of future lease payments over the expected lease term. The Company’s lease agreements do not provide an implicit rate. As a result, the Company utilizes an estimated incremental borrowing rate, or IBR, to discount lease payments, which is based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or lease incentives received. Operating lease cost is recognized over the expected term on a straight-line basis. Variable lease cost is recognized as incurred. The expected lease term for those leases commencing prior to January 1, 2022 did not change with the adoption of the new leasing standards. As a result of the adoption of the new leasing standard, on January 1, 2022, the Company recorded a right-of-use asset of $616 and operating lease liabilities of $616. The adoption did not have a material impact on the condensed consolidated statement of operations or cash flows. For additional information on the adoption of the new leasing standard, refer to Note 6. The Company will continue to report financial information for fiscal years ended before December 31, 2021 under ASC 840. Impact of Adoption of ASC 842 on the Consolidated Financial Statements Prior to adoption Adjustment for adoption of new leasing of new leasing standards standards As adjusted Right-of-use assets (1) $ — $ 616 $ 616 Deferred rent (2) $ 6 $ (6) $ — Operating lease liabilities (3) $ — $ 130 $ 130 Operating lease liabilities, net of current portion (3) $ — $ 486 $ 486 (1) Represents recognition of operating lease right-of-use assets. (2) Represents reclassification of deferred rent to operating lease. (3) Represents recognition of operating lease liabilities. Equity-based Compensation Following the provisions of ASC 718, Compensation — Stock Compensation Black-Scholes requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. Due to a lack of sufficient public market data for the Company’s common stock and lack of company-specific historical and implied volatility data, the Company has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to the Company, including stage of product development and life science industry focus. The historical volatility is calculated based on a period of time commensurate with expected term assumption. The Company uses the simplified method to calculate the expected term for stock options granted to employees whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the stock options due to its lack of sufficient historical data. The risk-free interest rate is based on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. Prior to the IPO, due to the absence of an active market for the Company’s common stock, the Company utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation of its common stock. In determining the exercise prices for stock options granted, the Company has considered the estimated fair value of the common stock as of the measurement date. The estimated fair value of the common stock has been determined at each grant date based upon a variety of factors, including the illiquid nature of the common stock, arm’s-length sales of the Company’s capital stock (including convertible preferred stock), the effect of the rights and preferences of the preferred stockholders and the prospects of a liquidity event. Among other factors are the Company’s financial position and historical financial performance, the status of technological developments within the Company’s research, the composition and ability of the current research and management team, an evaluation or benchmark of the Company’s competition and the current business climate in the marketplace. Significant changes to the key assumptions underlying the factors used could result in different fair values of common stock at each valuation date. Subsequent to the IPO, the board of directors will determine the fair value of the shares of common stock underlying the stock-based awards based off of the closing price as reported on the Nasdaq Stock Market LLC on the grant date. Concentration of Credit Risk The Company’s financial instruments that are exposed to credit risks consist of cash and cash equivalents. The Company maintains its cash and cash equivalents in bank deposit accounts, which, at times, may exceed the federally insured limit. The Company has not experienced any losses in these accounts and does not believe it is exposed to any significant credit risk related to these funds. Fair Value of Financial Instruments The Company applies ASC 820, Fair Value Measurement The carrying value of the Company’s cash and cash equivalents, grants receivable, prepaid expense, other receivables, other current assets, accounts payable, accrued expenses, deferred grant income, and other current liabilities approximate fair value because of the short-term maturity of these financial instruments. In addition, the Company records its derivative liability and SAFEs at fair value. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: ● Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. ● Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. ● Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. Net Loss Per Share Attributable to Common Stockholders Basic net loss attributable to common shares is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during each period. Diluted net loss attributable to common shares includes the effect, if any, from the potential exercise or conversion of securities, such as convertible preferred stock and stock options, which would result in the issuance of incremental shares of common stock. For diluted net loss attributable to common stockholders, the weighted-average number of shares of common stock is the same for basic net loss attributable to common stockholders, due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. The Company’s convertible preferred stock entitles the holder to participate in dividends and earnings of the Company, and, if the Company were to recognize net income, it would have to use the two-class method to calculate earnings per share. The two-class method is not applicable during periods with a net loss, as the holders of the convertible preferred stock have no obligation to fund losses. Segments The Company has determined that it operates and manages one operating segment, which is the business of developing and commercializing therapeutics. The Company’s chief operating decision maker, its chief executive officer, reviews financial information on an aggregate basis for the purpose of allocating resources. Emerging Growth Company Status The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (a) no longer an emerging growth company or (b) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) all transactions in the scope of the amendments that are reflected in the financial statements at the date of initial application and new transactions entered into after the date of initial application. The Company adopted ASU 2021-10 prospectively as of the reporting period beginning January 1, 2022. The adoption of this update and the additional annual disclosure requirements are not expected to have a material effect on the Company’s financial statements. Reverse Stock Split In July 2021, the Company's board of directors approved an amendment to the Company's second amended and restated certificate of incorporation to effect a 1 Income taxes In accordance with ASC 270, Interim Reporting Income Taxes no |
Financial Instruments and Fair
Financial Instruments and Fair Value Measurements | 3 Months Ended |
Mar. 31, 2022 | |
Financial Instruments and Fair Value Measurements | |
Financial Instruments and Fair Value Measurements | 3. Financial Instruments and Fair Value Measurements Financial assets and liabilities measured at fair value are summarized below: As of March 31, 2022 Significant Quoted Priced in Significant Other Unobservable Active Markets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Total Assets: Money market funds $ 46,688 $ — $ — $ 46,688 Total assets $ 46,688 $ — $ — $ 46,688 As of December 31, 2021 Significant Quoted Priced in Significant Other Unobservable Active Markets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Total Assets: Money market funds $ 46,687 $ — $ — $ 46,687 Total assets $ 46,687 $ — $ — $ 46,687 The following table sets forth a summary of the changes in fair value of the Level 3 liabilities for the three months ended March 31, 2021: Three Months Ended March 31, 2021 Derivative SAFE Liability Total Balance at December 31, 2020 $ — $ 2,209 $ 2,209 Fair value recognized upon the issuance of SAFE 8,942 — 8,942 Change in the fair value of the derivative liability — (1,063) (1,063) Balance at March 31, 2021 $ 8,942 $ 1,146 $ 10,088 Derivative Liability The fair value of the derivative liability was determined by calculating the fair value of the notes with the conversion and redemption features as compared to the fair value of the notes without such features, with the difference representing the value of the conversion and redemption features, or the derivative liability. The conversion and redemption features are measured at fair value as of each reporting date and the change in the fair value for the period is recorded in the consolidated statements of operations as a change in the fair value of the derivative liability. The fair value of the derivative liability is based on Level 3 unobservable inputs. Changes in fair value are recognized as a gain or loss within other income (expense) on the consolidated statements of operations and comprehensive loss. The derivative liability expired unexercised upon the conversion of the convertible notes into Series B-1 Convertible Preferred Stock in May of 2021. Simple Agreements for Future Equity The fair value of the SAFEs was determined using a probability weighted expected return method (PWERM), in which the probability and timing of potential future events is considered in order to estimate the fair value of the SAFEs as of each valuation date. Management determined the fair value of the SAFEs using the following significant unobservable inputs: March 25, 2021 (Issuance) Expected term (in years) 0.35 Discount upon conversion 20.0% Discount upon implied return 18.9% Probability of initial public offering occurrence 45.0% Probability of dissolution event occurrence 15.0% Probability of equity financing occurrence 37.0% Probability of change of control occurrence 3.0% There was no change in fair value of the SAFEs from the March 25, 2021 issuance date until March 31, 2021. In addition, the Company recorded the Series B-1 convertible preferred stock within mezzanine equity at fair value on the date of issuance, May 1, 2021. This non-recurring fair value measure was based on level 3 unobservable inputs. |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2022 | |
Accrued Expenses | |
Accrued Expenses | 4. Accrued Expenses Accrued expense consists of the following as of: As of March 31, December 31, 2022 2021 Employee compensation, benefits, and related accruals $ 1,146 $ 1,285 Research and development costs — 250 Income taxes payable 125 — Professional fees 110 216 Other accrued 2 — Total $ 1,383 $ 1,751 |
Other Current Liabilities
Other Current Liabilities | 3 Months Ended |
Mar. 31, 2022 | |
Other Current Liabilities. | |
Other Current Liabilities | 5. Other Current Liabilities In October 2021, the Company entered into an insurance premium financing agreement with a lender. Under the agreement, the Company financed $1,453 of certain premiums at a 3.25% annual interest rate. Payments of approximately $134 are due monthly from October 2021 through September 2022. As of March 31, 2022 and December 31, 2021, respectively, the outstanding principal of the loan was $799 and $1,191 and is included in other current liabilities on the consolidated balance sheet. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 6. Commitments and Contingencies Operating Leases The Company’s corporate headquarters is located in Purchase, New York where we currently occupy 2,864 square feet of office space under a lease that expires in May, 2029. The Company also leases approximately 6,068 square feet of laboratory and office space located in Pittsburgh, Pennsylvania under leases that expire in June, 2023. Amounts reported in the consolidated balance sheets for leases where the Company is the lessee as of March 31, 2022 were as follows, in thousands: As of March 31, 2022 Assets Operating lease assets $ 578 Total operating lease assets $ 578 Liabilities Current Operating lease liabilities $ 150 Noncurrent Operating lease liabilities, net of current 446 Total operating lease liabilities $ 596 The following table summarizes operating lease costs for the three months ended March 31, 2022: Three Months Ended March 31, 2022 Operating lease costs $ 50 Variable lease costs — Total lease costs $ 50 Rent expense for the three months ended March 31, 2021 was $34. The maturities of the operating lease liabilities and minimum lease payments as of March 31, 2022 were as follows: For the Years Ended December 31, Operating Leases 2022 (remaining) $ 140 2023 140 2024 82 2025 84 Thereafter 298 Total undiscounted lease payments $ 744 Less: Imputed interest (148) Present value of operating lease liabilities $ 596 The following table summarizes the lease term and discount rate as of March 31, 2022: As of March 31, 2022 Weighted-average remaining lease term (years) Operating leases 5.8 Weighted-average discount rate Operating leases 8.0% The following table summarizes cash paid for amounts included in the measurement of the Company’s operating lease liabilities for the three months ended March 31, 2022: Amounts Three Months Ended March 31, 2022 (in thousands) Operating cash flows used for operating leases $ 32 Litigation and Contingencies From time to time, the Company may be involved in disputes or regulatory inquiries that arise in the ordinary course of business. When the Company determines that a loss is both probable and reasonably estimable, a liability is recorded and disclosed if the amount is material to the financial statements taken as a whole. When a material loss contingency is only reasonably possible, the Company does not record a liability but instead discloses the nature and the amount of the claim and an estimate of the loss or range of loss, if such an estimate can reasonably be made. As of March 31, 2022 and December 31, 2021, there was no litigation or contingency with at least a reasonable possibility of a material loss. |
Equity-based Compensation
Equity-based Compensation | 3 Months Ended |
Mar. 31, 2022 | |
Equity-based Compensation | |
Equity-based Compensation | 7. Equity-based Compensation 2021 Equity Incentive Plan On October 7, 2021, the date upon which the Registration Statement on Form S-1 in connection with the IPO was declared effective, the 2021 Equity Incentive Plan (the “2021 Plan”) became effective. On the same date, the Company ceased granting awards under its 2017 Equity Incentive Plan (the “2017 Plan”). The 2021 Plan authorizes the award of both equity-based and cash-based incentive awards, including: (i) stock options (both incentive stock options and nonqualified stock options), (ii) stock appreciation rights, (iii) restricted stock awards, (iv) restricted stock units, or RSUs, and (v) cash or other stock-based awards. Incentive stock options may be granted only to employees. All other types of awards may be issued to employees, directors, consultants, and other service providers. As of March 31, 2022, the aggregate number of shares of common stock of the Company that may be issued under the Plan is 3,625,897. The number of shares reserved for issuance under the 2021 Plan increased automatically on January 1, 2022 pursuant to an evergreen provision therein by 1,111,502 shares, representing 5% of total common shares outstanding at December 31, 2021. The aggregate number of shares will increase each anniversary of such date prior to the termination of the 2021 Plan, equal to the lesser of (i) 5% of our shares of common stock issued and outstanding on the last day of the immediately preceding fiscal year and (ii) such smaller number of shares as determined by the Company’s board of directors or the compensation committee. No more than 7,543,185 shares of common stock may be issued under the 2021 Plan through incentive stock options. Shares subject to the 2017 Plan or the 2007 Equity Incentive Plan (the “2007 Plan” and collectively with the 2017 Plan, the “Prior Plans”) that expire, terminate or are cancelled or forfeited for any reason after the effectiveness of the 2021 Plan will be added (or added back) to the shares available for issuance under the 2021 Plan. The total number of shares underlying the Prior Plan awards that may be recycled into the 2021 Plan will not exceed 4,334,131 shares. 2017 Equity Incentive Plan On September 15, 2017, the Company’s board of directors approved the 2017 Plan, which provides for the granting of incentive stock options, non-qualified stock options and stock awards to employees, certain consultants and directors. The Board, or its designated committee, has the sole authority to select the individuals to whom awards are granted and determine the terms of each award, including the number of shares and the schedule upon which the award becomes exercisable. Upon the effectiveness of the 2021 Plan, no further awards will be granted under the 2017 Plan. The aggregate number of shares of common stock of the Company that may be issued under the 2017 Plan is 4,334,131 (taking into account shares of common stock that may become issuable pursuant to Section 3(b) of the 2017 Plan in respect of shares of common stock reserved under the Company’s Amended and Restated 2007 Equity Incentive Plan). The 2021 Plan allows for a provision for shares granted under the Prior Plans which are cancelled, forfeited, exchanged or surrendered without having been exercised to subsequently be available for reissuance under the 2021 Plan. Employee Stock Purchase Plan The Company’s board of directors approved the Employee Stock Purchase Plan (the “ESPP”) prior to the closing of the IPO. Under the ESPP, the Company may provide employees and employees of the Subsidiary with an opportunity to purchase shares of the Company’s common stock at a discounted purchase price. As of March 31, 2022, subject to adjustment as provided in the ESPP, a total of 209,532 shares of common stock are authorized and reserved for issuance under the ESPP. Subject to prior approval by the board of directors in each instance, on or about January 1, 2022 and each anniversary of such date thereafter prior to the termination of the ESPP, the number of shares of common stock authorized and reserved for issuance under the ESPP will be increased by a number of shares of common stock equal to the least of (i) 1,000,000 shares of the Company’s common stock, (ii) 1% of the shares of common stock outstanding on the final day of the immediately preceding calendar year, and (iii) such smaller number of shares of common stock as determined by the Company’s board of directors. Such shares of common stock may be newly issued shares, treasury shares or shares acquired on the open market. In the event that any dividend or other distribution (whether in the form of cash, our common stock, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, or exchange of common stock or other securities, or other change in the structure affecting common stock occurs, then in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the ESPP, the compensation committee will, in such manner as it deems equitable, adjust the number of shares and class of common stock that may be delivered under the ESPP, the purchase price per share and the number of shares covered by each outstanding option under the ESPP, and the numerical limits described above. Equity-based Compensation The fair value of options granted was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: Three Months Ended March 31, 2022 2021 Fair value of common stock $3.05 $1.75 Expected volatility 91.29% 101.38% – 101.83% Risk-free interest rate 2.36% 0.67% – 0.84% Dividend yield 0.00% 0.00% Expected term (years) 6.08 6.07 – 6.22 Expected Term Risk-Free Interest Rate Expected Volatility Dividend Yield Fair Value of Common Stock Activity for options was as follows: Options Outstanding Weighted Weighted- Aggregate Average Average Intrinsic Remaining Number of Exercise Value Contractual Life Options Price (in 000’s) (In Years) Balance, December 31, 2021 5,640,438 $ 4.19 $ 12,002 8.0 Options granted 212,450 $ 3.05 Options exercised (348,552) $ 0.87 Options forfeited (396,362) $ 11.75 Options expired — $ — Balance, March 31, 2022 5,107,974 $ 4.28 $ 5,953 8.0 Exercisable as of March 31, 2022 3,044,481 $ 2.17 $ 4,845 6.9 Vested and expected to vest as of March 31, 2022 5,107,974 $ 4.28 $ 5,953 8.0 The weighted-average grant date fair value of stock options granted was $2.31 and $1.39 during the three months ended March 31, 2022 and 2021, respectively. There were 212,450 stock options granted at an aggregate fair value of $491 for the three months ended March 31, 2022 and 55,639 stock options granted at an aggregate fair value of $77 for the three months ended March 31, 2021. During the three months ended March 31, 2022 and 2021, there were 348,552 and 20,787 stock options exercised, respectively, with an aggregate grant date fair value of $209 and $11, respectively. The intrinsic value of stock options exercised during the three months ended March 31, 2022 was $1,084 and was $22 for the three months ended March 31, 2021. The Company recorded total equity-based compensation expense in the statement of operations and comprehensive loss related to incentive stock options and nonstatutory stock options as follows: Three Months Ended March 31, 2022 2021 Research and development $ 234 $ 21 General and administrative 767 77 Total equity-based compensation $ 1,001 $ 98 As of March 31, 2022, total future compensation expense related to unvested awards yet to be recognized by the Company was $9,621, which is expected to be recognized over a weighted-average remaining vesting period of approximately 3.1 years. |
Net Loss per Share
Net Loss per Share | 3 Months Ended |
Mar. 31, 2022 | |
Net Loss per Share | |
Net Loss per Share | 8. Net Loss per Share The following outstanding potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods presented due to their antidilutive effect: March 31, 2022 2021 Options issued and outstanding 5,107,974 4,456,375 Convertible preferred stock (as converted) — 12,528,612 Warrants for common stock — 201,131 Total 5,107,974 17,186,118 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements as of March 31, 2022, and for the three months ended March 31, 2022 and 2021, have been prepared in accordance with the rules and regulations of the Securities Exchange and Commission (“SEC”) and generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying unaudited interim consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of March 31, 2022, the statements of operations and comprehensive loss and convertible preferred stock and stockholders’ equity (deficit), and cash flows for the three months ended March 31, 2022 and 2021. Such adjustments are of a normal and recurring nature. The results for the three months ended March 31, 2022 are not necessarily indicative of the results for the year ending December 31, 2022, or for any future period. These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2021, and the notes thereto, which are included on Form 10-K filed with the SEC on March 30, 2022. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of other income and expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist primarily of interest-bearing deposits at various financial institutions. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. |
Receivables | Receivables Grant Receivables Grant receivables relate to outstanding amounts due for reimbursable expenditures of awarded grants issued by the National Institute of Health and are carried at their estimated collectible amounts. The Company expects all receivables to be collectible, and accordingly, there is no allowance for doubtful accounts required on these grant receivables. |
Property and Equipment | Property and Equipment Property and equipment is recorded at cost, less accumulated depreciation. Depreciation is computed on the straight-line basis over the estimated useful life of the asset. The Company estimates the useful life to be 5 and 6 years for equipment and furniture and fixtures, respectively. The cost of repairs and maintenance is charged to expense as incurred. Property and equipment is evaluated for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. If expected cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the assets. There were no indicators of impairment of long-lived assets during the three months ended March 31, 2022 or 2021. |
Convertible Instruments | Convertible Instruments ASC 815, Derivatives and Hedging Activities The Company also follows ASC 480-10, Distinguishing Liabilities from Equity following: (a) a fixed monetary amount known at inception; (b) variations in something other than the fair value of the issuer’s equity shares; or (c) variations inversely related to changes in the fair value of the issuer’s equity shares. Hybrid instruments meeting these criteria are not further evaluated for any embedded derivatives and are carried as a liability at fair value at each balance sheet date. |
Grant income | Grant income For the three months ended March 31, 2022 and 2021, the Company generated grant income of $5,904 and $4,692, respectively, primarily from reimbursements from the National Institute of Aging (“NIA”), a division of the National Institutes of Health, or NIH, for aging research. The Company records grant income in other income (expense) in the period in which the reimbursable research and development services are incurred and the right to payment is realized. The grants awarded relate to agreed upon direct and indirect costs for specific studies or clinical trials, which may include personnel and consulting costs, costs paid to contract research organizations (“CROs”), research institutions and/or consortiums involved in the grant, as well as facilities and administrative costs. These grants are cost plus fixed fee arrangements in which the Company is reimbursed for its eligible direct and indirect costs over time, up to the maximum amount of each specific grant award. Only costs that are allowable under the grant award, certain government regulations and the NIH’s supplemental policy and procedure manual may be claimed for reimbursement, and the reimbursements are subject to routine audits from governmental agencies from time to time. Deferred grant income represents grant proceeds received by the Company prior to the period in which the reimbursable research and development services are incurred. As of March 31, 2022, the Company has been awarded grants with project periods that extend through May 31, 2025, subject to extension. |
Research and Development Costs | Research and Development Costs The Company is involved in research and development aimed at the development of treatments for a variety of diseases related to the central nervous system, with a primary focus on Alzheimer’s Disease. Research and development costs are expensed as incurred. Research and development expenses consist principally of personnel costs, including salaries, stock-based compensation, and benefits for employees, third-party license fees and other operational costs related to our research and development activities, including allocated facility-related expenses and external costs of outside vendors, and other direct and indirect costs. Non-refundable research and development costs are deferred and expensed as the related goods are delivered or services are performed. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks. Costs for certain research and development activities are recognized based on the pattern of performance of the individual arrangements, which may differ from the pattern of billings incurred, and are reflected in the consolidated financial statements as prepaid expenses or as accrued research and development expenses. |
Leases | Leases The Company adopted Accounting Standards Update (ASU) No. 2016-02, Leases The Company determines if an arrangement is a lease at contract inception. The Company’s contracts are determined to contain a lease when all of the following criteria based on the specific circumstances of the arrangement are met: (1) there is an identified asset for which there are no substantive substitution rights; (2) the Company has the right to obtain substantially all of the economic benefits from the identified asset; and (3) the Company has the right to direct the use of the identified asset. At the commencement date, operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of future lease payments over the expected lease term. The Company’s lease agreements do not provide an implicit rate. As a result, the Company utilizes an estimated incremental borrowing rate, or IBR, to discount lease payments, which is based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or lease incentives received. Operating lease cost is recognized over the expected term on a straight-line basis. Variable lease cost is recognized as incurred. The expected lease term for those leases commencing prior to January 1, 2022 did not change with the adoption of the new leasing standards. As a result of the adoption of the new leasing standard, on January 1, 2022, the Company recorded a right-of-use asset of $616 and operating lease liabilities of $616. The adoption did not have a material impact on the condensed consolidated statement of operations or cash flows. For additional information on the adoption of the new leasing standard, refer to Note 6. The Company will continue to report financial information for fiscal years ended before December 31, 2021 under ASC 840. Impact of Adoption of ASC 842 on the Consolidated Financial Statements Prior to adoption Adjustment for adoption of new leasing of new leasing standards standards As adjusted Right-of-use assets (1) $ — $ 616 $ 616 Deferred rent (2) $ 6 $ (6) $ — Operating lease liabilities (3) $ — $ 130 $ 130 Operating lease liabilities, net of current portion (3) $ — $ 486 $ 486 (1) Represents recognition of operating lease right-of-use assets. (2) Represents reclassification of deferred rent to operating lease. (3) Represents recognition of operating lease liabilities. |
Equity-based Compensation | Equity-based Compensation Following the provisions of ASC 718, Compensation — Stock Compensation Black-Scholes requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. Due to a lack of sufficient public market data for the Company’s common stock and lack of company-specific historical and implied volatility data, the Company has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to the Company, including stage of product development and life science industry focus. The historical volatility is calculated based on a period of time commensurate with expected term assumption. The Company uses the simplified method to calculate the expected term for stock options granted to employees whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the stock options due to its lack of sufficient historical data. The risk-free interest rate is based on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. Prior to the IPO, due to the absence of an active market for the Company’s common stock, the Company utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation of its common stock. In determining the exercise prices for stock options granted, the Company has considered the estimated fair value of the common stock as of the measurement date. The estimated fair value of the common stock has been determined at each grant date based upon a variety of factors, including the illiquid nature of the common stock, arm’s-length sales of the Company’s capital stock (including convertible preferred stock), the effect of the rights and preferences of the preferred stockholders and the prospects of a liquidity event. Among other factors are the Company’s financial position and historical financial performance, the status of technological developments within the Company’s research, the composition and ability of the current research and management team, an evaluation or benchmark of the Company’s competition and the current business climate in the marketplace. Significant changes to the key assumptions underlying the factors used could result in different fair values of common stock at each valuation date. Subsequent to the IPO, the board of directors will determine the fair value of the shares of common stock underlying the stock-based awards based off of the closing price as reported on the Nasdaq Stock Market LLC on the grant date. |
Concentration of Credit Risk | Concentration of Credit Risk The Company’s financial instruments that are exposed to credit risks consist of cash and cash equivalents. The Company maintains its cash and cash equivalents in bank deposit accounts, which, at times, may exceed the federally insured limit. The Company has not experienced any losses in these accounts and does not believe it is exposed to any significant credit risk related to these funds. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company applies ASC 820, Fair Value Measurement The carrying value of the Company’s cash and cash equivalents, grants receivable, prepaid expense, other receivables, other current assets, accounts payable, accrued expenses, deferred grant income, and other current liabilities approximate fair value because of the short-term maturity of these financial instruments. In addition, the Company records its derivative liability and SAFEs at fair value. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: ● Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. ● Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. ● Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. |
Net Loss Per Share Attributable to Common Stockholders | Net Loss Per Share Attributable to Common Stockholders Basic net loss attributable to common shares is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during each period. Diluted net loss attributable to common shares includes the effect, if any, from the potential exercise or conversion of securities, such as convertible preferred stock and stock options, which would result in the issuance of incremental shares of common stock. For diluted net loss attributable to common stockholders, the weighted-average number of shares of common stock is the same for basic net loss attributable to common stockholders, due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. The Company’s convertible preferred stock entitles the holder to participate in dividends and earnings of the Company, and, if the Company were to recognize net income, it would have to use the two-class method to calculate earnings per share. The two-class method is not applicable during periods with a net loss, as the holders of the convertible preferred stock have no obligation to fund losses. |
Segments | Segments The Company has determined that it operates and manages one operating segment, which is the business of developing and commercializing therapeutics. The Company’s chief operating decision maker, its chief executive officer, reviews financial information on an aggregate basis for the purpose of allocating resources. |
Emerging Growth Company Status | Emerging Growth Company Status The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (a) no longer an emerging growth company or (b) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) all transactions in the scope of the amendments that are reflected in the financial statements at the date of initial application and new transactions entered into after the date of initial application. The Company adopted ASU 2021-10 prospectively as of the reporting period beginning January 1, 2022. The adoption of this update and the additional annual disclosure requirements are not expected to have a material effect on the Company’s financial statements. |
Reverse Stock Split | Reverse Stock Split In July 2021, the Company's board of directors approved an amendment to the Company's second amended and restated certificate of incorporation to effect a 1 Income taxes In accordance with ASC 270, Interim Reporting Income Taxes no |
Income Taxes | Income taxes In accordance with ASC 270, Interim Reporting Income Taxes no |
Financial Instruments and Fai_2
Financial Instruments and Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Financial Instruments and Fair Value Measurements | |
Summary of financial assets and liabilities measured at fair value | As of March 31, 2022 Significant Quoted Priced in Significant Other Unobservable Active Markets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Total Assets: Money market funds $ 46,688 $ — $ — $ 46,688 Total assets $ 46,688 $ — $ — $ 46,688 As of December 31, 2021 Significant Quoted Priced in Significant Other Unobservable Active Markets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Total Assets: Money market funds $ 46,687 $ — $ — $ 46,687 Total assets $ 46,687 $ — $ — $ 46,687 |
Summary of changes in fair value of Level 3 liabilities | Three Months Ended March 31, 2021 Derivative SAFE Liability Total Balance at December 31, 2020 $ — $ 2,209 $ 2,209 Fair value recognized upon the issuance of SAFE 8,942 — 8,942 Change in the fair value of the derivative liability — (1,063) (1,063) Balance at March 31, 2021 $ 8,942 $ 1,146 $ 10,088 |
Schedule of significant unobservable inputs for SAFE | March 25, 2021 (Issuance) Expected term (in years) 0.35 Discount upon conversion 20.0% Discount upon implied return 18.9% Probability of initial public offering occurrence 45.0% Probability of dissolution event occurrence 15.0% Probability of equity financing occurrence 37.0% Probability of change of control occurrence 3.0% |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Accrued Expenses | |
Schedule of accrued expenses | As of March 31, December 31, 2022 2021 Employee compensation, benefits, and related accruals $ 1,146 $ 1,285 Research and development costs — 250 Income taxes payable 125 — Professional fees 110 216 Other accrued 2 — Total $ 1,383 $ 1,751 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies. | |
Schedule of lease cost | Amounts reported in the consolidated balance sheets for leases where the Company is the lessee as of March 31, 2022 were as follows, in thousands: As of March 31, 2022 Assets Operating lease assets $ 578 Total operating lease assets $ 578 Liabilities Current Operating lease liabilities $ 150 Noncurrent Operating lease liabilities, net of current 446 Total operating lease liabilities $ 596 The following table summarizes operating lease costs for the three months ended March 31, 2022: Three Months Ended March 31, 2022 Operating lease costs $ 50 Variable lease costs — Total lease costs $ 50 The following table summarizes the lease term and discount rate as of March 31, 2022: As of March 31, 2022 Weighted-average remaining lease term (years) Operating leases 5.8 Weighted-average discount rate Operating leases 8.0% The following table summarizes cash paid for amounts included in the measurement of the Company’s operating lease liabilities for the three months ended March 31, 2022: Amounts Three Months Ended March 31, 2022 (in thousands) Operating cash flows used for operating leases $ 32 |
Schedule of minimum lease commitments | For the Years Ended December 31, Operating Leases 2022 (remaining) $ 140 2023 140 2024 82 2025 84 Thereafter 298 Total undiscounted lease payments $ 744 Less: Imputed interest (148) Present value of operating lease liabilities $ 596 |
Equity-based Compensation (Tabl
Equity-based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Equity-based Compensation | |
Schedule of fair value of options granted using the Black-Scholes option pricing model | Three Months Ended March 31, 2022 2021 Fair value of common stock $3.05 $1.75 Expected volatility 91.29% 101.38% – 101.83% Risk-free interest rate 2.36% 0.67% – 0.84% Dividend yield 0.00% 0.00% Expected term (years) 6.08 6.07 – 6.22 |
Summary of activity for options | Options Outstanding Weighted Weighted- Aggregate Average Average Intrinsic Remaining Number of Exercise Value Contractual Life Options Price (in 000’s) (In Years) Balance, December 31, 2021 5,640,438 $ 4.19 $ 12,002 8.0 Options granted 212,450 $ 3.05 Options exercised (348,552) $ 0.87 Options forfeited (396,362) $ 11.75 Options expired — $ — Balance, March 31, 2022 5,107,974 $ 4.28 $ 5,953 8.0 Exercisable as of March 31, 2022 3,044,481 $ 2.17 $ 4,845 6.9 Vested and expected to vest as of March 31, 2022 5,107,974 $ 4.28 $ 5,953 8.0 |
Schedule of total equity-based compensation expense | Three Months Ended March 31, 2022 2021 Research and development $ 234 $ 21 General and administrative 767 77 Total equity-based compensation $ 1,001 $ 98 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Net Loss per Share | |
Schedule of outstanding potentially dilutive common stock | March 31, 2022 2021 Options issued and outstanding 5,107,974 4,456,375 Convertible preferred stock (as converted) — 12,528,612 Warrants for common stock — 201,131 Total 5,107,974 17,186,118 |
Description of Business and F_2
Description of Business and Financial Condition (Details) - USD ($) $ / shares in Units, $ in Thousands | Nov. 10, 2021 | Oct. 13, 2021 | Mar. 31, 2022 | Dec. 31, 2021 |
Description of Business and Financial Condition | ||||
Cash and cash equivalents | $ 51,509 | $ 54,721 | ||
IPO | ||||
Description of Business and Financial Condition | ||||
Shares issued | 3,768,116 | |||
Offering price per share | $ 12 | |||
Gross proceeds | $ 45,217 | |||
Net proceeds | $ 37,909 | |||
IPO | Conversion Of Preferred Stock | ||||
Description of Business and Financial Condition | ||||
Conversion of preferred stock into common stock | 15,906,537 | |||
IPO | Conversion Of Simple Agreements For Future Equity | ||||
Description of Business and Financial Condition | ||||
Conversion of preferred stock into common stock | 931,485 | |||
Conversion of preferred stock into SAFE | $ 8,942 | |||
Over-Allotment Option | ||||
Description of Business and Financial Condition | ||||
Shares issued | 565,217 | |||
Gross proceeds | $ 6,783 | |||
Net proceeds | $ 6,308 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Jul. 31, 2021 | Mar. 31, 2022USD ($)segment | Mar. 31, 2021USD ($) | Jan. 01, 2022USD ($) | |
Summary of Significant Accounting Policies | ||||
Allowance for doubtful accounts on grants receivable | $ 0 | |||
Grant income | $ 5,904 | $ 4,692 | ||
Expected dividend yield | 0.00% | 0.00% | ||
Other comprehensive (loss) gain related to foreign currency translation | $ 1 | $ (5) | ||
Number of operating segments | segment | 1 | |||
Stock split ratio | 0.3092 | |||
Right-of-use assets | $ 578 | |||
Operating lease liabilities | 596 | |||
Income tax expense | 125 | $ 0 | ||
ASU 2016-02 | ||||
Summary of Significant Accounting Policies | ||||
Right-of-use assets | 616 | $ 616 | ||
Operating lease liabilities | $ 130 | $ 616 | ||
Minimum | ||||
Summary of Significant Accounting Policies | ||||
Useful life of property and equipment | 5 years | |||
Maximum | ||||
Summary of Significant Accounting Policies | ||||
Useful life of property and equipment | 6 years |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Impact of Adoption (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Jan. 01, 2022 |
Summary of Significant Accounting Policies | ||
Right-of-use assets | $ 578 | |
Operating lease liabilities | 596 | |
Operating lease liabilities, net of current portion | 150 | |
ASU 2016-02 | ||
Summary of Significant Accounting Policies | ||
Right-of-use assets | 616 | $ 616 |
Operating lease liabilities | 130 | $ 616 |
Operating lease liabilities, net of current portion | 486 | |
Previously Reported | ASU 2016-02 | ||
Summary of Significant Accounting Policies | ||
Deferred rent | 6 | |
Revision of Prior Period, Adjustment | ASU 2016-02 | ||
Summary of Significant Accounting Policies | ||
Right-of-use assets | 616 | |
Deferred rent | (6) | |
Operating lease liabilities | 130 | |
Operating lease liabilities, net of current portion | $ 486 |
Financial Instruments and Fai_3
Financial Instruments and Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Assets: | ||
Total assets | $ 46,688 | $ 46,687 |
Quoted Priced in Active Markets (Level 1) | ||
Assets: | ||
Total assets | 46,688 | 46,687 |
Money market funds | ||
Assets: | ||
Money market funds | 46,688 | 46,687 |
Money market funds | Quoted Priced in Active Markets (Level 1) | ||
Assets: | ||
Money market funds | $ 46,688 | $ 46,687 |
Financial Instruments and Fai_4
Financial Instruments and Fair Value Measurements - Changes in fair value of the Level 3 liabilities (Details) - USD ($) $ in Thousands | Mar. 25, 2021 | Mar. 31, 2021 |
Changes in fair value of the Level 3 liabilities | ||
Balance at beginning | $ 2,209 | |
Fair value recognized upon the issuance of SAFE | 8,942 | |
Change in the fair value of the derivative liability | (1,063) | |
Balance at the end | 10,088 | |
Proceeds from simple agreements for future equity | 8,942 | |
SAFE | ||
Changes in fair value of the Level 3 liabilities | ||
Fair value recognized upon the issuance of SAFE | 8,942 | |
Balance at the end | 8,942 | |
Proceeds from simple agreements for future equity | $ 8,942 | |
Derivative Liability. | ||
Changes in fair value of the Level 3 liabilities | ||
Balance at beginning | 2,209 | |
Change in the fair value of the derivative liability | (1,063) | |
Balance at the end | $ 1,146 |
Financial Instruments and Fai_5
Financial Instruments and Fair Value Measurements - Unobservable Inputs under SAFE (Details) - SAFE | Mar. 25, 2021Y |
Expected term (in years) | |
Financial Instruments and Fair Value Measurements | |
Measurement input | 0.35 |
Discount upon conversion | |
Financial Instruments and Fair Value Measurements | |
Measurement input | 20 |
Discount upon implied return | |
Financial Instruments and Fair Value Measurements | |
Measurement input | 18.9 |
Probability of initial public offering occurrence | |
Financial Instruments and Fair Value Measurements | |
Measurement input | 45 |
Probability of dissolution event occurrence | |
Financial Instruments and Fair Value Measurements | |
Measurement input | 15 |
Probability of equity financing occurrence | |
Financial Instruments and Fair Value Measurements | |
Measurement input | 37 |
Probability of change of control occurrence | |
Financial Instruments and Fair Value Measurements | |
Measurement input | 3 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Accrued Expenses | ||
Employee compensation, benefits, and related accruals | $ 1,146 | $ 1,285 |
Research and development costs | 250 | |
Income taxes payable | 125 | |
Professional fees | 110 | 216 |
Other accrued | 2 | |
Total | $ 1,383 | $ 1,751 |
Other Current Liabilities (Deta
Other Current Liabilities (Details) - USD ($) $ in Thousands | 1 Months Ended | ||
Oct. 31, 2021 | Mar. 31, 2022 | Dec. 31, 2021 | |
Other Current Liabilities | |||
Other Current Liabilities | |||
Short-term Debt | $ 799 | $ 1,191 | |
Insurance Premium Financing Agreement | |||
Other Current Liabilities | |||
Face Amount | $ 1,453 | ||
Interest rate (as a percent) | 3.25% | ||
Periodic Payment | $ 134 |
Commitments and Contingencies -
Commitments and Contingencies - Leases (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Assets | |
Operating lease assets | $ 578 |
Total operating lease assets | 578 |
Current liabilities | |
Operating lease liabilities, current | 150 |
Liabilities Noncurrent | |
Operating lease liabilities, net of current | 446 |
Total operating lease liabilities | $ 596 |
Commitments and Contingencies_2
Commitments and Contingencies - Operating Lease Costs (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Lease, Cost [Abstract] | |
Operating lease costs | $ 50 |
Total lease costs | $ 50 |
Commitments and Contingencies_3
Commitments and Contingencies (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021USD ($) | Mar. 31, 2022USD ($)ft² | |
Minimum lease commitments | ||
2022 (remaining) | $ 140 | |
2023 | 140 | |
2024 | 82 | |
2025 | 84 | |
Thereafter | 298 | |
Total lease commitments | 744 | |
Less: Imputed interest | (148) | |
Total operating lease liabilities | $ 596 | |
Rent expense | $ 34 | |
Office Space, New York | ||
Minimum lease commitments | ||
Area of Real Estate Property | ft² | 2,864 | |
Laboratory And Office Space, Pittsburgh, PA | ||
Minimum lease commitments | ||
Area of Real Estate Property | ft² | 6,068 |
Commitments and Contingencies_4
Commitments and Contingencies - Lease Term And Discount (Details) | Mar. 31, 2022 |
Commitments and Contingencies. | |
Weighted-average remaining lease term (years) | 5 years 9 months 18 days |
Weighted-average discount rate | 8.00% |
Commitments and Contingencies_5
Commitments and Contingencies - Operating Lease Liabilities (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Commitments and Contingencies. | |
Operating cash flows used for operating leases | $ 32 |
Equity-based Compensation (Deta
Equity-based Compensation (Details) - shares | 3 Months Ended | |
Mar. 31, 2022 | Sep. 15, 2017 | |
Employee Stock Option | ||
Equity-based Compensation | ||
Common stock shares reserved for conversion | 7,543,185 | |
Amended and Restated 2017 Equity Incentive Plan | ||
Equity-based Compensation | ||
Number of shares authorized | 4,334,131 | |
Shares available for future issuance under 2021 Plan | ||
Equity-based Compensation | ||
Number of shares authorized | 3,625,897 | |
Maximum percentage of common shares issued and outstanding | 5.00% | |
Common stock shares reserved for conversion | 1,111,502 | |
Number of shares that may be recycled | 4,334,131 | |
Shares available for future issuance under ESPP | ||
Equity-based Compensation | ||
Number of shares authorized | 209,532 | |
Maximum percentage of common shares issued and outstanding | 1.00% | |
Number of additional shares authorized | 1,000,000 |
Equity-based Compensation - Fai
Equity-based Compensation - Fair value of options (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Fair value of common stock (in dollars per share) | $ 3.05 | $ 1.75 |
Expected volatility | 91.29% | |
Expected volatility, maximum | 101.83% | |
Risk-free interest rate | 2.36% | |
Risk-free interest rate, minimum | 0.67% | |
Risk-free interest rate, maximum | 0.84% | |
Dividend yield | 0.00% | 0.00% |
Expected term (years) | 6 years 29 days | |
Minimum | ||
Expected term (years) | 6 years 25 days | |
Maximum | ||
Expected term (years) | 6 years 2 months 19 days |
Equity-based Compensation - Act
Equity-based Compensation - Activity for options (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Number of Options | |||
Beginning Balance (in shares) | 5,640,438 | ||
Options granted (in shares) | 212,450 | 55,639 | |
Options exercised (in shares) | (348,552) | (20,787) | |
Options forfeited (in shares) | (396,362) | ||
Ending Balance (in shares) | 5,107,974 | 5,640,438 | |
Exercisable (in shares) | 3,044,481 | ||
Vested and expected to vest as of December 31, 2020 | 5,107,974 | ||
Weighted Average Exercise Price | |||
Beginning Balance (in dollars per share) | $ 4.19 | ||
Options granted (in dollars per share) | 3.05 | ||
Options exercised (in dollars per share) | 0.87 | ||
Options forfeited (in dollars per share) | 11.75 | ||
Ending Balance (in dollars per share) | 4.28 | $ 4.19 | |
Exercisable (in dollars per share) | 2.17 | ||
Vested and expected to vest (in dollars per share) | $ 4.28 | ||
Aggregate Intrinsic Value | |||
Aggregate Intrinsic Value | $ 5,953 | $ 12,002 | |
Aggregate Intrinsic Value - Exercisable | 4,845 | ||
Aggregate Intrinsic Value - Vested and expected to vest | $ 5,953 | ||
Weighted Average Remaining Contractual Life | 8 years | 8 years | |
Weighted Average Remaining Contractual Life -Exercisable | 6 years 10 months 24 days | ||
Weighted Average Remaining Contractual Life - Vested and expected to vest | 8 years |
Equity-based Compensation - Add
Equity-based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Equity-based Compensation | ||
Weighted-average grant date fair value (in dollars per share) | $ 2.31 | $ 1.39 |
Options granted (in shares) | 212,450 | 55,639 |
Fair value of options granted | $ 491 | $ 77 |
Options exercised (in shares) | 348,552 | 20,787 |
Fair value of options exercised | $ 209 | $ 11 |
Intrinsic value of stock options exercised | 1,084 | $ 22 |
Unrecognized compensation expense | $ 9,621 |
Equity-based Compensation - Com
Equity-based Compensation - Compensation expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Equity-based Compensation | ||
Total equity-based compensation | $ 1,001 | $ 98 |
Total unrecognized compensation cost related to options | $ 9,621 | |
Weighted average period over which the unrecognized compensation cost is expected to be recognized | 3 years 1 month 6 days | |
Research and development | ||
Equity-based Compensation | ||
Total equity-based compensation | $ 234 | 21 |
General and administrative | ||
Equity-based Compensation | ||
Total equity-based compensation | $ 767 | $ 77 |
Net Loss per Share - Antidiluti
Net Loss per Share - Antidilutive effect (Details) - shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Net Loss per Share | ||
Potentially dilutive common stock equivalents outstanding | 5,107,974 | 17,186,118 |
Options issued and outstanding | ||
Net Loss per Share | ||
Potentially dilutive common stock equivalents outstanding | 5,107,974 | 4,456,375 |
Convertible preferred stock (as converted) | ||
Net Loss per Share | ||
Potentially dilutive common stock equivalents outstanding | 12,528,612 | |
Warrants for common stock | ||
Net Loss per Share | ||
Potentially dilutive common stock equivalents outstanding | 201,131 |