Evelo Biosciences (EVLO) 10-Q 15 May 23 2023 Q1 Quarterly report Financial data

Cover Page

Cover Page - shares	3 Months Ended
	Mar. 31, 2023	May 08, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	001-38473
Entity Registrant Name	Evelo Biosciences, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	46-5594527
Entity Address, Address Line One	620 Memorial Drive
Entity Address, City or Town	Cambridge
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02139
City Area Code	(617)
Local Phone Number	577-0300
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	EVLO
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
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		111,993,605
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Central Index Key	0001694665

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 27,472	$ 47,940
Prepaid expenses and other current assets	2,609	3,633
Total current assets	30,081	51,573
Property and equipment, net	4,409	4,842
Right of use asset - operating lease	6,324	6,868
Other assets	1,156	1,158
Total assets	41,970	64,441
Current liabilities:
Debt, current portion	43,774	0
Accounts payable	1,514	1,764
Accrued expenses	9,506	7,945
Operating lease liability, current portion	2,343	2,259
Other current liabilities	110	427
Total current liabilities	57,247	12,395
Noncurrent liabilities:
Debt, net of current portion	0	43,614
Operating lease liability, net of current portion	4,579	5,265
Deferred revenue	7,500	7,500
Other noncurrent liabilities	32	659
Total liabilities	69,358	69,433
Commitments and contingencies (Note 9)
Stockholder’s deficit:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	0	0
Common stock, $0.001 par value; 200,000,000 shares authorized; 110,930,084 and 110,852,741 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	111	111
Additional paid-in capital	527,064	524,119
Accumulated deficit	(554,563)	(529,222)
Total stockholders’ deficit	(27,388)	(4,992)
Total liabilities and stockholders’ deficit	$ 41,970	$ 64,441

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, authorized (in shares)	10,000,000	10,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock shares issued (in shares)	110,930,084	110,852,741
Common stock, shares outstanding (in shares)	110,852,741	110,852,741

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Operating expenses:
Research and development	$ 17,857	$ 19,321
General and administrative	7,043	9,417
Total operating expenses	24,900	28,738
Loss from operations	(24,900)	(28,738)
Other income (expense):
Interest expense, net	(1,111)	(1,027)
Change in fair value of warrants	627	0
Other miscellaneous income, net	188	20
Total other expenses, net	(296)	(1,007)
Loss before income taxes	(25,196)	(29,745)
Income tax expense	(145)	(116)
Net loss	$ (25,341)	$ (29,861)
Net loss per share attributable to common stockholders, basic (in dollars per share)	$ (0.23)	$ (0.56)
Net loss per share attributable to common stockholders, diluted (in dollars per share)	$ (0.23)	$ (0.56)
Weighted average number of common shares outstanding, basic (in shares)	110,905,822	53,619,635
Weighted average number of common shares outstanding, diluted (in shares)	110,905,822	53,619,635

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Stockholders’ Deficit - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2021		53,576,454
Beginning balance at Dec. 31, 2021	$ 8,667	$ 54	$ 423,308	$ (414,695)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under Employee Stock Purchase Plan (in shares)		36,329
Issuance of common stock under Employee Stock Purchase Plan	129		129
Vesting of restricted common stock (in shares)		35,406
Vesting of restricted common stock	0
Stock-based compensation expense	4,275		4,275
Fees associated with public offering of common stock	(12)		(12)
Net loss	(29,861)			(29,861)
Ending balance (in shares) at Mar. 31, 2022		53,648,189
Ending balance at Mar. 31, 2022	$ (16,802)	$ 54	427,700	(444,556)
Beginning balance (in shares) at Dec. 31, 2022	110,852,741	110,852,741
Beginning balance at Dec. 31, 2022	$ (4,992)	$ 111	524,119	(529,222)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under Employee Stock Purchase Plan (in shares)		40,886
Issuance of common stock under Employee Stock Purchase Plan	36		36
Vesting of restricted common stock (in shares)		36,457
Vesting of restricted common stock	0
Stock-based compensation expense	2,909		2,909
Net loss	$ (25,341)			(25,341)
Ending balance (in shares) at Mar. 31, 2023	110,852,741	110,930,084
Ending balance at Mar. 31, 2023	$ (27,388)	$ 111	$ 527,064	$ (554,563)

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Operating activities
Net loss	$ (25,341)	$ (29,861)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	2,909	4,275
Depreciation expense	445	517
Non-cash interest expense	160	59
Non-cash lease expense	725	491
Decrease in fair value of warrants	(627)	0
Loss on disposal of property and equipment	0	232
Net foreign currency losses	(2)	0
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	1,024	(1,011)
Accounts payable	(256)	159
Accrued expenses and other current liabilities	1,470	(3,267)
Operating lease liabilities	(783)	(526)
Net cash used in operating activities	(20,276)	(28,932)
Investing activities
Purchases of property and equipment	(12)	(153)
Net cash used in investing activities	(12)	(153)
Financing activities
Proceeds from the issuance of common stock under employee stock purchase plan and the exercise of stock options	36	129
Fees associated with debt issuance and public offering of common stock	(235)	(12)
Net cash (used in) provided by financing activities	(199)	117
Effect of exchange rate changes on cash and cash equivalents	17	0
Net decrease in cash, cash equivalents and restricted cash	(20,470)	(28,968)
Cash, cash equivalents and restricted cash – beginning of period	49,098	69,754
Cash, cash equivalents and restricted cash – end of period	28,628	40,786
Supplemental disclosure of cash flow information
Cash paid for interest	1,343	973
Cash paid for taxes	0	393
Noncash investing and financing activities
Property and equipment additions in accounts payable and accrued expenses	$ 0	$ 27

Organization and Basis of Prese

Organization and Basis of Presentation	3 Months Ended
	Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Basis of Presentation	Organization and Basis of Presentation Evelo Biosciences, Inc. ("Evelo," "we," "our," "us" or the "Company”) is a biotechnology company incorporated in Delaware on May 6, 2014. We are a clinical-stage biotechnology company focused on discovering and developing a new class of oral medicines that act on immune cells in the small intestine with systemic effects. We are advancing these investigational medicines with the aim of treating a broad range of inflammatory diseases, with an initial focus on psoriasis and atopic dermatitis. Our headquarters is located in Cambridge, Massachusetts. Since inception, we have devoted substantially all of our efforts to research and development and raising capital. We have not generated any product or license revenue related to our primary business purpose to date. We are subject to a number of risks similar to those of other development stage companies, including the inherent uncertainties in drug development, the need to develop commercially viable products, the competition from other companies, many of which are larger and better capitalized, the need to obtain adequate additional financing to fund the development of our product candidates and a dependence on key individuals. We have incurred operating losses since inception and expect such losses and negative operating cash flows to continue for the foreseeable future. As of March 31, 2023, we had cash and cash equivalents of $27.5 million and an accumulated deficit of $554.6 million. Since inception, we have financed operations primarily with the proceeds from the issuance of common stock and since-redeemed preferred stock to equity investors, and from debt financing. In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that these unaudited condensed consolidated statements are issued. The transition to profitability is dependent upon the successful development, approval and commercialization of our product candidates, and the achievement of a level of revenues adequate to support our cost structure. Based on our current operating plan, we believe that our cash and cash equivalents balance as of March 31, 2023 will not be sufficient to fund operations and capital expenditures for at least the twelve months following the filing of this Quarterly Report on Form 10-Q, and we will need to obtain additional funding. We intend to obtain additional funding through financing sources which may include additional public offerings of common stock, private financing of debt or equity, and/or the pursuit of strategic partnerships, licensing arrangements or collaborations. Management’s belief with respect to our ability to fund operations is based on estimates that are subject to risks and uncertainties. If actual results are different from management’s estimates, we may need to seek additional funding sooner than would otherwise be expected. There can be no assurance that we will be able to obtain additional funding on acceptable terms, if at all. If we are unable to obtain sufficient funding, we may be required to delay development efforts, limit activities and reduce research and development costs, which could adversely affect our business prospects. Because of the uncertainty in securing additional funding and the insufficient amount of cash and cash equivalent resources as of March 31, 2023, management concluded that substantial doubt exists with respect to our ability to continue as a going concern within one year after the date that these unaudited condensed consolidated statements are issued.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2023
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification and ASU of the FASB. Use of Estimates The preparation of unaudited condensed consolidated statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include, but are not limited to, estimates related to the application of Revenue from Contracts with Customers (Topic 606) ("ASC 606") to our collaboration agreement with Meddist Company Limited ("ALJ"), the accrual of research and development expenses, the expected future lives of property and equipment, the valuation of stock-based awards, and common stock warrants. We base our estimates on historical experience and market-specific or other relevant assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates. Unaudited Interim Financial Information Our unaudited condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). The unaudited condensed consolidated financial statements include the accounts of our business and our wholly owned and controlled subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, the information furnished reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the results for the reported interim periods. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period. The accompanying unaudited condensed consolidated balance sheet as of March 31, 2023 has been derived from our audited consolidated financial statements for the year ended December 31, 2022. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rules and regulations. However, we believe that the disclosures are adequate to make the information presented not misleading. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and related notes in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. These unaudited condensed consolidated financial statements are prepared on the same basis as the audited financial statements. In the opinion of our management, the accompanying unaudited condensed consolidated financial statements contain all adjustments which are necessary to present fairly our financial position as of March 31, 2023, and the results of operations and stockholders' deficit for the three months ended March 31, 2023 and 2022. Such adjustments are of a normal and recurring nature. The results for the three months ended March 31, 2023 are not necessarily indicative of the results to be realized for the year ending December 31, 2023, or for any future period. Subsequent Event Considerations We consider events or transactions that occur after the balance sheet date but prior to the issuance of the unaudited condensed consolidated financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Emerging Growth Company Status We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), and we may take advantage of reduced reporting requirements that are otherwise applicable to other public companies. We may take advantage of these exemptions until we no longer are an emerging growth company. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards and, as a result of this election, our unaudited condensed consolidated statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of our IPO or such earlier time that we no longer are an emerging growth company. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the initial public offering of our common stock, or December 31, 2023, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our outstanding common stock that are held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three year period. We are also a smaller reporting company, and we will remain a smaller reporting company until the fiscal year following the determination that our voting and non-voting common shares held by non-affiliates is more than $250 million measured on the last business day of our second fiscal quarter, and our annual revenues are more than $100 million during the most recently completed fiscal year and our voting and non-voting common shares held by non-affiliates is more than $700 million measured on the last business day of our second fiscal quarter. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Concentrations of Credit Risk and Off-Balance Sheet Risk Financial instruments that potentially expose us to concentrations of credit risk primarily consist of cash and cash equivalents. We placed our operating cash in demand deposit accounts at a single financial institution since February 2022, which have exceeded and are expected to continue to exceed federally insured limits. Our money market funds are held in an investment account at an affiliate institution. As of March 31, 2023 and 2022, we have no off-balance sheet risk such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Comprehensive Loss Comprehensive loss consists of net loss and changes in equity during a period arising from transactions and other equity and circumstances, of which we have none. Our comprehensive loss equals our net loss for all periods presented. Cash, Cash Equivalents and Restricted Cash Cash equivalents are highly liquid investments that are readily convertible into cash with original maturities of three months or less, which consist of cash held in banks and funds held in money market accounts. Cash equivalents are stated at cost, which approximates market value. Our restricted cash consists of the deposits held for the building lease for our office and laboratory premises and for our credit card facility. As of March 31, 2023 and 2022, we had $1.2 million and $1.2 million in restricted cash balance recorded within other assets The following reconciles cash, cash equivalents and restricted cash as of March 31, 2023 and 2022, as presented on the statements of cash flows, to the related balance sheet accounts (in thousands): March 31, 2023 March 31, 2022 Cash and cash equivalents: Cash $ 1,878 $ 5,224 Money market funds 25,594 34,407 Total cash and cash equivalents 27,472 39,631 Restricted cash 1,156 1,155 Cash, cash equivalents and restricted cash $ 28,628 $ 40,786 Research and Development Costs Research and development costs are expensed in the period incurred. Research and development expenses consist of both internal and external costs associated with the development of our product candidates, such as payroll, consulting, and manufacturing costs associated with the development of our product candidates. Costs for certain development activities, such as clinical trials and manufacturing development activities, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, and information provided to us by our vendors on their actual costs incurred or level of effort expended. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected on the unaudited condensed consolidated balance sheets as prepaid or accrued research and development expenses. Segments We have one operating segment. Our chief operating decision maker, the Chief Executive Officer, manages our operations on a consolidated basis for the purposes of allocating resources. Accounting Pronouncements Issued and Not Yet Effective as of March 31, 2023 No new accounting pronouncements issued or effective in the period had or are expected to have a material impact on our accompanying unaudited condensed consolidated statements.

ALJ Collaborative Agreement

ALJ Collaborative Agreement	3 Months Ended
	Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
ALJ Collaborative Agreement	ALJ Collaborative Agreement In March 2021, we entered into a collaborative commercialization and license agreement (“ALJ Agreement”) with ALJ. Pursuant to the ALJ Agreement, we granted to ALJ an exclusive, non-transferable, sublicensable license to our product candidate EDP1815. In consideration for the rights granted under the ALJ Agreement, ALJ was obligated to pay a one-time, non-refundable upfront fee of $7.5 million. The parties will also share the future operating profits and losses for certain products in certain territories equally (50:50) as well as certain development, regulatory and commercialization costs. We have concluded that the delivery of the license to ALJ shall be accounted for under ASC 606. The development, regulatory and commercialization activities within the territories shall be accounted for under the FASB guidance of Collaborative Arrangements (Topic 808) ("ASC 808"). We have recognized no revenue under the ALJ Agreement to date as we have yet to undertake any of our performance obligations within the agreement. The $7.5 million upfront fee is recorded as deferred revenue as a non-current liability in the accompanying unaudited condensed consolidated balance sheets because the performance obligation is not expected to be completed within the next twelve months. We anticipate payments under the cost-sharing or profit and loss sharing arrangements will be classified in the statement of operations consistent with the guidance of ASC 808. To date, we have neither received nor incurred any such payments.. Mayo Foundation for Medical Education and Research In August 2017, we and the Mayo Clinic amended the 2016 Mayo License Agreement. Under the amended agreement, the Mayo Clinic granted us (i) an exclusive, worldwide, sublicensable license under the Mayo Clinic’s rights to certain intellectual property and microbial strains and (ii) a non-exclusive, worldwide, sublicensable license to certain related know-how to develop and commercialize certain microbial strains and licensed products incorporating such strains. As consideration, we paid a nonrefundable upfront fee of $0.3 million and are obligated to pay annual license maintenance fees. The nonrefundable upfront fees were expensed to research and development expense in 2017. Annual maintenance fees are expensed as incurred over the term of the agreement. We may owe the Mayo Clinic milestone payments upon the achievement of certain milestones up to a maximum of $59.1 million in the aggregate, as well as royalties on net sales of licensed products in low single-digit percentages. As of March 31, 2023, we incurred milestone payments since inception of approximately $0.3 million and no amounts are currently due.

Leases

Leases	3 Months Ended
	Mar. 31, 2023
Leases [Abstract]
Leases	Leases In January 2018, we entered into an operating sublease arrangement for approximately 40,765 square feet for our office and research and development space at 620 Memorial Drive, Cambridge, MA 02139 from February 2018 extending through September 2025. The lease requires a security deposit, which we fulfilled with a standing letter of credit secured by restricted cash on deposit. We recorded rent expense of $0.7 million and $0.8 million for the three months ended March 31, 2023 and 2022, respectively. Operating cash flows used for operating leases were $0.8 million and $0.8 million for the three months ended March 31, 2023 and 2022, respectively. The following table presents supplemental balance sheet information related to our operating leases (in thousands): March 31, 2023 December 31, 2022 Assets: Operating lease right-of-use assets $ 6,324 $ 6,868 Liabilities: Operating lease liabilities, current 2,343 2,259 Operating lease liabilities, noncurrent 4,579 5,265 Total lease liabilities $ 6,922 $ 7,524 Other information: Weighted-average remaining lease term (in years) 2.50 years 2.75 years Weighted-average discount rate 9.5 % 9.5 %

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2023
Fair Value Disclosures [Abstract]
Fair Value Measurements	Fair Value Measurements The following tables present information about our financial assets and liabilities that have been measured at fair value as of March 31, 2023 and December 31, 2022 (in thousands): Description March 31, 2023 (Level 1) (Level 2) (Level 3) Financial Assets Cash and cash equivalents: Money market funds $ 25,594 $ 25,594 $ — $ — Other assets: Restricted cash held in money market funds 1,156 1,156 — — Total $ 26,750 $ 26,750 $ — $ — Financial Liabilities Other noncurrent liabilities: Warrant liabilities $ 32 — — $ 32 Total $ 32 $ — $ — $ 32 Description December 31, 2022 (Level 1) (Level 2) (Level 3) Financial Assets Cash and cash equivalents: Money market funds $ 46,660 $ 46,660 $ — $ — Other assets: Restricted cash held in money market funds 1,158 1,158 — — Total $ 47,818 $ 47,818 $ — $ — Financial Liabilities Other noncurrent liabilities: Warrant liabilities $ 659 — — $ 659 Total $ 659 $ — $ — $ 659 Our financial assets are reported as cash equivalents and other assets, which are held in money market funds, are classified within Level 1 of the fair value hierarchy because they are valued using quoted prices in active markets as of March 31, 2023 and 2022. The money market funds are invested in a fund comprised of U.S. government securities and instruments. Our financial liability reported as other noncurrent liabilities are common stock warrants issued in connection with the loan arrangement with Horizon Technology Finance Corporation (“Horizon”) (See Note 7). The fair value of the common stock warrants was determined based on the Black-Scholes option-pricing model and classified within Level 3 of the fair value hierarchy. As of March 31, 2023, the expected volatility input of 70% used in the model was deemed unobservable and was determined based on historical share price data of comparable companies for a term equal to the remaining contractual term of the warrants. Other required inputs used in the model were considered observable (Level 1). Significant increases (decreases) in these inputs could result in a significantly lower or higher fair value measurement . The following table shows a reconciliation of the beginning and ending balances for Level 3 financial liabilities measured at fair value on a recurring basis for the three months ended March 31, 2023: Total Level 3 financial liabilities, beginning of period 659 Change in fair value of financial liabilities (627) Level 3 financial liabilities, end of period 32

Accrued Expenses

Accrued Expenses	3 Months Ended
	Mar. 31, 2023
Payables and Accruals [Abstract]
Accrued Expenses	Accrued Expenses Accrued expenses recorded in our unaudited condensed consolidated balance sheet consist of the following (in thousands): March 31, 2023 December 31, 2022 External research and development expenses 4,704 5,389 Employee severance, compensation and benefits $ 3,574 $ 1,191 Professional and consulting fees 1,067 883 Other 161 482 Total accrued expenses $ 9,506 $ 7,945

Loan and Security Agreement

Loan and Security Agreement	3 Months Ended
	Mar. 31, 2023
Debt Disclosure [Abstract]
Loan and Security Agreement	Loan and Security Agreement Horizon Technology Finance Corporation Loan and Security Agreement In December 2022, we entered into a loan agreement with Horizon (the "Loan Agreement"), as lender and collateral agent (the “Lender”), pursuant to which the Lender agreed to make term loans in an aggregate principal amount of up to $45.0 million, available to us on the closing date and we borrowed $45.0 million. Borrowings under the Loan Agreement are collateralized by substantially all of our personal property, excluding intellectual property, and we pledged our equity interests in our subsidiaries, subject to certain limitations with respect to our foreign subsidiaries (the "Collateral"). Interest on the outstanding loan balance will accrue at a variable annual rate equal to the greater of (i) 11% and (ii) rate of interest noted in The Wall Street Journal, Money Rates section, as the “Prime Rate” plus the “Loan Rate Spread” as defined in the loan agreement. We are required to make interest-only payments on the loans on the stub period date (January 1, 2023) and for the first thirty-six monthly payment dates prior to when the loans are scheduled to begin amortizing on February 1, 2026 (the “Amortization Date”). Beginning on February 1, 2026, we must pay twenty-four equal consecutive monthly installment payments repaying $35.0 million of the principal, plus interest on all outstanding balance until the loans mature on January 1, 2028 (the “Maturity Date”). The remaining $10.0 million of principal is due and payable on the Maturity Date. At our option, we may prepay the loans in whole, subject to a prepayment fee of 3% of the amount prepaid if prepaid on or before the Amortization Date, or if the prepayment occurs after less than 12 months after Amortization Date, 2% of the amount prepaid, and if more than 12 months after the Amortization Date but before the Maturity Date, 1%. A final payment equal to 4.25% of the principal borrowed on the closing date is due on the Maturity Date (or upon repayment in full of principal, if earlier). Upon the entry into the Loan Agreement, we were required to pay Horizon a commitment fee of $0.5 million, as well as other customary fees and expenses. The Loan Agreement contains customary representations, warranties and covenants and also includes customary events of default, including payment defaults, breaches of covenants, change of control and occurrence of a material adverse effect. Upon the occurrence and continuation of an event of default, a default interest rate of an additional 5% per annum may be applied to the outstanding loan balances, and Horizon may declare all outstanding obligations immediately due and payable and exercise all of their rights and remedies as set forth in the loan agreement and under applicable law. Our subsidiary, Evelo Biosciences Security Corporation, may maintain cash or cash equivalents so long as we satisfy certain liquidity requirements. As of March 31, 2023, we believe we were in compliance with all covenants under the Loan Agreement. In connection with the entry into the Loan Agreement, we also issued to Horizon warrants to purchase up to an aggregate 463,915 shares of our common stock, with an exercise price of $1.94 per share. The warrants are exercisable immediately and expire on December 15, 2032, provided that, under certain circumstances, the warrants may terminate and expire earlier in connection with the closing of certain acquisition transactions involving us. The warrants provide that Horizon may elect to exercise the warrant on a net “cashless” basis at any time prior to the expiration thereof. The fair market value of one share of our common stock in connection with any cashless exercise shall be the closing price or last sale price per share of our common stock on a nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market on which our common stock is traded on the business day immediately prior to the date the holder elects to exercise the warrants on a cashless basis. The warrants were deemed to be a freestanding financial instrument as it is legally detachable and separately exercisable from the debt obligations. We evaluated the terms and conditions of the warrants and concluded it met the criteria to be classified as a liability. As such, we recorded the warrants as a noncurrent liability at its issuance date. We have the following minimum aggregate future loan payments as of March 31, 2023 related to the Loan Agreement (in thousands): Amount 2024 $ — 2025 — 2026 16,042 2027 17,500 Thereafter 11,458 Total minimum payments 45,000 Debt discount (1,226) Total Debt as of March 31, 2023 $ 43,774 The Loan Agreement contains a subjective acceleration clause which allows Horizon to accelerate the maturity of the principal payments under certain circumstances. Based upon our significant operating losses and going concern assessment as of March 31, 2023, we determined that we should classify our loan facility with Horizon, which would otherwise be classified as long-term debt, as a current liability on our consolidated balance sheet as of March 31, 2023. For the three months ended March 31, 2023 and 2022, interest expense was approximately $1.5 million and $1.0 million.

In-License Agreements

In-License Agreements	3 Months Ended
	Mar. 31, 2023
Research and Development [Abstract]
In-License Agreements	ALJ Collaborative Agreement In March 2021, we entered into a collaborative commercialization and license agreement (“ALJ Agreement”) with ALJ. Pursuant to the ALJ Agreement, we granted to ALJ an exclusive, non-transferable, sublicensable license to our product candidate EDP1815. In consideration for the rights granted under the ALJ Agreement, ALJ was obligated to pay a one-time, non-refundable upfront fee of $7.5 million. The parties will also share the future operating profits and losses for certain products in certain territories equally (50:50) as well as certain development, regulatory and commercialization costs. We have concluded that the delivery of the license to ALJ shall be accounted for under ASC 606. The development, regulatory and commercialization activities within the territories shall be accounted for under the FASB guidance of Collaborative Arrangements (Topic 808) ("ASC 808"). We have recognized no revenue under the ALJ Agreement to date as we have yet to undertake any of our performance obligations within the agreement. The $7.5 million upfront fee is recorded as deferred revenue as a non-current liability in the accompanying unaudited condensed consolidated balance sheets because the performance obligation is not expected to be completed within the next twelve months. We anticipate payments under the cost-sharing or profit and loss sharing arrangements will be classified in the statement of operations consistent with the guidance of ASC 808. To date, we have neither received nor incurred any such payments.. Mayo Foundation for Medical Education and Research In August 2017, we and the Mayo Clinic amended the 2016 Mayo License Agreement. Under the amended agreement, the Mayo Clinic granted us (i) an exclusive, worldwide, sublicensable license under the Mayo Clinic’s rights to certain intellectual property and microbial strains and (ii) a non-exclusive, worldwide, sublicensable license to certain related know-how to develop and commercialize certain microbial strains and licensed products incorporating such strains. As consideration, we paid a nonrefundable upfront fee of $0.3 million and are obligated to pay annual license maintenance fees. The nonrefundable upfront fees were expensed to research and development expense in 2017. Annual maintenance fees are expensed as incurred over the term of the agreement. We may owe the Mayo Clinic milestone payments upon the achievement of certain milestones up to a maximum of $59.1 million in the aggregate, as well as royalties on net sales of licensed products in low single-digit percentages. As of March 31, 2023, we incurred milestone payments since inception of approximately $0.3 million and no amounts are currently due.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Manufacture and Supply Agreement with Sacco S.r.l. In July 2019, we entered into an agreement with Sacco S.r.l. ("Sacco") pursuant to which Sacco will manufacture and supply single strain, non-genetically modified microbes intended for oral delivery or oral use in pharmaceutical products exclusively for us for a period of five years. Sacco may terminate the agreement if the provision of manufacturing services has been, or is scheduled to be, inactive for a consecutive period of six months. We agreed to pay Sacco an aggregate of €3.0 million, consisting of payments of €0.6 million annually during the exclusivity period. We have incurred annual exclusivity fees since inception of approximately €2.4 million, and no amounts are currently due. We have an additional contractual arrangement with an affiliate of Sacco for manufacturing that will require us to spend an aggregate minimum amount of €3.9 million, consisting of €1.5 million annually during each of 2023 and 2024 and €0.9 million on or before March 1, 2025. Relating to the manufacturing purchase arrangement €0.1 million is currently due. Litigation and Other Proceedings

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Stock-Based Compensation	Stock-Based Compensation Equity Plans 2021 Inducement Plan In May 2021, our board of directors adopted the Evelo Biosciences, Inc. 2021 Employment Inducement Award Plan (the “Inducement Award Plan”) without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Stock Market LLC listing rules. As of March 31, 2023, 672,500 shares of common stock are available for future grant under the Inducement Award Plan. 2018 Incentive Award Plan In April 2018, our board of directors adopted, and our stockholders approved, the 2018 Incentive Award Plan (the "2018 Plan"), effective May 2018, under which we may grant cash and equity-based incentive awards to our employees, officers, directors, consultants and advisors. As of March 31, 2023 , awards representing 705,306 shares were available for future grant under the 2018 Plan. Stock Options A summary of our stock option activity and related information is as follows: Shares Weighted- Weighted Average - Remaining Contractual Life (years) Aggregate Intrinsic Value (1) (in thousands) Options outstanding as of December 31, 2022 11,175,272 $ 7.79 6.91 $ 746 Granted 1,128,900 0.97 Exercised — — Forfeited (1,327,593) 9.77 Canceled (201,221) 10.03 Options outstanding as of March 31, 2023 10,775,358 $ 6.80 5.90 $ — Exercisable as of March 31, 2023 6,972,813 $ 7.84 4.38 $ — (1) The aggregate intrinsic value of options is calculated as the difference between the exercise price of the stock options and the fair value of our common stock for those stock options that had exercise prices lower than the fair value of the common stock as of the end of the period. We had 3,802,545 unvested stock options outstanding as of March 31, 2023. The weighted-average fair value of options granted during the three months ended March 31, 2023 and 2022 was $0.78 and $3.77, respectively. The aggregate intrinsic values of options exercised during the three months ended March 31, 2023 and 2022 were zero. The remaining unrecognized compensation expense for outstanding stock options as of March 31, 2023 was $13.0 million and the weighted-average period over which this cost is expected to be recognized is 2.6 years. Restricted Stock Units We issue restricted stock units ("RSUs") under our 2018 Plan and 2021 Inducement Plan. A summary of the RSU activity and related information is as follows: Shares Weighted-Average Unvested balance at December 31, 2022 239,448 $ 7.23 Granted 4,886,000 0.97 Vested (36,457) 8.76 Forfeited (87,021) 6.84 Unvested balance at March 31, 2023 5,001,970 $ 1.11 Stock-based compensation expense related to RSUs was $0.7 million and $0.4 million for the three months ended March 31, 2023 and 2022, respectively. The aggregate intrinsic value of vested RSUs for the three months ended March 31, 2023 and 2022 was immaterial. The remaining unrecognized compensation expense for outstanding restricted stock units as of March 31, 2023 was $4.7 million and the weighted-average period over which this cost is expected to be recognized is 1.1 years. 2018 Employee Stock Purchase Plan In April 2018, our board of directors adopted, and our stockholders approved, the 2018 Employee Stock Purchase Plan (“ESPP”), which became effective in May 2018. As of March 31, 2023, a total of 2,262,518 shares of common stock were reserved for issuance under the ESPP. The compensation expense recognized related to the ESPP for the three months ended March 31, 2023 and 2022 was immaterial. Under the ESPP plan, 40,886 and 36,329 shares were sold during the three months ended March 31, 2023 and 2022, respectively. Stock-Based Compensation Expense Stock-based compensation expense included in our unaudited condensed consolidated statements of operations is as follows (in thousands): Three Months Ended March 31, 2023 2022 Research and development $ 1,521 $ 2,036 General and administrative $ 1,388 $ 2,239 Total stock-based compensation expense $ 2,909 $ 4,275

Net Loss Per Share

Net Loss Per Share	3 Months Ended
	Mar. 31, 2023
Earnings Per Share [Abstract]
Net Loss Per Share	Net Loss Per Share Basic and diluted net loss per common share is determined by dividing the net loss by the weighted-average common shares outstanding during the period, as follows (net loss in thousands): Three Months Ended March 31, 2023 2022 Numerator Net loss $ (25,341) $ (29,861) Denominator Weighted average shares outstanding used in computing net loss per share 110,905,822 53,619,635 Net loss per share, basic and diluted $ (0.23) $ (0.56) We compute diluted net loss per common share by giving consideration to all potentially dilutive common shares, except where the effect of including such securities would be anti-dilutive. We have reported net losses since inception and, as such, have determined that all potentially dilutive common shares are anti-dilutive. Consequently, basic and diluted net loss per share of common stock were the same for all periods presented as the impact of all potentially dilutive securities outstanding was anti-dilutive. The following table presents securities excluded from the computation of diluted weighted-average shares outstanding for the periods presented, as they are anti-dilutive: Three Months Ended March 31, 2023 2022 Stock options to purchase common stock 10,775,358 11,240,002 Warrant 1,127,665 139,770 RSUs 5,001,970 366,311 Conversion option — 375,940 Common stock from the ESPP 27,563 26,588 Total 16,932,556 12,148,611

Related Party Transactions

Related Party Transactions	3 Months Ended
	Mar. 31, 2023
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions Weatherden Advisory Services Agreement We receive clinical advisory services from Weatherden Ltd. (“Weatherden”) under agreements that were entered into during 2017 and 2018. Duncan McHale, our Chief Medical Officer, is a part owner of Weatherden. During each of the three months ended March 31, 2023 and 2022, we paid Weatherden $0.1 million or less. As of March 31, 2023 and 2022, the amounts owed to Weatherden under the supply of service agreement were approximately $0.1 million or less. Epstein Consulting Services Agreement In September 2019, we entered into a consulting agreement with David Epstein ("Consulting Agreement"), our former Chairman of the Board, for strategic advisory and other consulting services. The Consulting Agreement was amended in October 2020 and again in April 2021, and terminated pursuant to its terms on June 30, 2022. In accordance with the initial terms of the Consulting Agreement, Mr. Epstein was granted an option to purchase 75,000 shares of common stock, vesting in 36 equal monthly installments and subject to his continued provision of consulting services on the applicable vesting dates. Under the Consulting Agreement as amended in October 2020, Mr. Epstein was also entitled to receive (i) an annual equity award on each anniversary of the effective date of the Consulting Agreement in the form of an option to purchase shares of common stock having a grant date fair market value of approximately $0.2 million as determined by our board of directors in its discretion based on customary option pricing methodologies, vesting in 12 equal monthly installments and subject to his continued provision of consulting services on the applicable vesting date, and (ii) an aggregate annual cash consulting fee of $0.3 million. In the event the Consulting Agreement was renewed for a term of less than one year, the equity award and the number of shares of common stock would be adjusted proportionately to the length of the renewal term. In October 2020, in connection with the commencement of his second year of service as a consultant, Mr. Epstein was granted an option to purchase 44,743 shares of common stock, vesting in nine equal monthly installments and subject to his continued provision of consulting services on the vesting dates. Under the Consulting Agreement as amended in April 2021 and effective on June 30, 2021, Mr. Epstein was entitled to receive RSUs having an aggregate grant date fair value of approximately $0.5 million, as determined by our board of directors in its discretion based on a 10-day trailing average of the closing price of our common stock, as his sole compensation for his consulting services. The RSUs vested in 12 substantially equal monthly installments such that the RSUs became fully vested on June 30, 2022, in each case subject to Mr. Epstein's continued provision of consulting services on the applicable vesting date. In June 2022, terms of Mr. Epstein's unvested option grants were modified to allow immediate vesting upon his resignation as Chairman of the Board of Directors on June 30, 2022. All of the foregoing options and restricted stock units were or are subject to accelerated vesting under change in control provisions. Securities Purchase Agreement with Related Parties In May 2022, in connection with our registered direct offering, we entered into the Purchase Agreement with a group of purchasers including certain of our executive officers, members of our board of directors and other related parties. Of the 54,246,358 total shares offered, officers and directors purchased an aggregate of 393,834 shares and other related parties purchased an aggregate of 28,253,422 shares of our common stock for $1.46 per share, a price equal to the offering price per share of, and on equal terms as, common stock sold to the public.

Workforce Reduction

Workforce Reduction	3 Months Ended
	Mar. 31, 2023
Restructuring Charges [Abstract]
Workforce Reduction	Workforce ReductionOn January 31, 2023, our Board of Directors approved a plan to reduce its workforce by 48 employees, or approximately 45% of our total headcount as of January 31, 2023, in order to preserve cash and prioritize investment in our core clinical programs. During the three months ended March 31, 2023, we recognized $2.7 million of charges in the condensed consolidated statement of operations. These charges included one-time termination benefits and contractual termination benefits for severance.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2023
Accounting Policies [Abstract]
Basis of Presentation and Principles of Consolidation	Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification and ASU of the FASB.
Use of Estimates	Use of Estimates The preparation of unaudited condensed consolidated statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include, but are not limited to, estimates related to the application of Revenue from Contracts with Customers (Topic 606) ("ASC 606") to our collaboration agreement with
Principles of Consolidation	All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, the information furnished reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the results for the reported interim periods. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period.
Subsequent Event Considerations	Subsequent Event Considerations We consider events or transactions that occur after the balance sheet date but prior to the issuance of the unaudited condensed consolidated financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure.
Emerging Growth Company Status	Emerging Growth Company Status We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), and we may take advantage of reduced reporting requirements that are otherwise applicable to other public companies. We may take advantage of these exemptions until we no longer are an emerging growth company. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards and, as a result of this election, our unaudited condensed consolidated statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of our IPO or such earlier time that we no longer are an emerging growth company. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the initial public offering of our common stock, or December 31, 2023, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our outstanding common stock that are held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three year period.
Concentrations of Credit Risk and Off-Balance Sheet Risk	Concentrations of Credit Risk and Off-Balance Sheet Risk Financial instruments that potentially expose us to concentrations of credit risk primarily consist of cash and cash equivalents. We placed our operating cash in demand deposit accounts at a single financial institution since February 2022, which have exceeded and are expected to continue to exceed federally insured limits. Our money market funds are held in an investment account at an affiliate institution. As of March 31, 2023 and 2022, we have no off-balance sheet risk such as foreign exchange contracts, option contracts, or other foreign hedging arrangements.
Comprehensive Loss	Comprehensive Loss Comprehensive loss consists of net loss and changes in equity during a period arising from transactions and other equity and circumstances, of which we have none. Our comprehensive loss equals our net loss for all periods presented.
Cash, Cash Equivalents and Restricted Cash	Cash, Cash Equivalents and Restricted CashCash equivalents are highly liquid investments that are readily convertible into cash with original maturities of three months or less, which consist of cash held in banks and funds held in money market accounts. Cash equivalents are stated at cost, which approximates market value. Our restricted cash consists of the deposits held for the building lease for our office and laboratory premises and for our credit card facility.
Research and Development Costs	Research and Development Costs Research and development costs are expensed in the period incurred. Research and development expenses consist of both internal and external costs associated with the development of our product candidates, such as payroll, consulting, and manufacturing costs associated with the development of our product candidates. Costs for certain development activities, such as clinical trials and manufacturing development activities, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, and information provided to us by our vendors on their actual costs incurred or level of effort expended. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected on the unaudited condensed consolidated balance sheets as prepaid or accrued research and development expenses.
Segments	Segments We have one operating segment. Our chief operating decision maker, the Chief Executive Officer, manages our operations on a consolidated basis for the purposes of allocating resources.
Accounting Pronouncements Issued and Not Yet Effective	Accounting Pronouncements Issued and Not Yet Effective as of March 31, 2023 No new accounting pronouncements issued or effective in the period had or are expected to have a material impact on our accompanying unaudited condensed consolidated statements.

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2023
Accounting Policies [Abstract]
Schedule of Reconciliation of Cash, Cash Equivalents and Restricted cash	The following reconciles cash, cash equivalents and restricted cash as of March 31, 2023 and 2022, as presented on the statements of cash flows, to the related balance sheet accounts (in thousands): March 31, 2023 March 31, 2022 Cash and cash equivalents: Cash $ 1,878 $ 5,224 Money market funds 25,594 34,407 Total cash and cash equivalents 27,472 39,631 Restricted cash 1,156 1,155 Cash, cash equivalents and restricted cash $ 28,628 $ 40,786
Schedule of Reconciliation of Cash, Cash Equivalents and Restricted cash	The following reconciles cash, cash equivalents and restricted cash as of March 31, 2023 and 2022, as presented on the statements of cash flows, to the related balance sheet accounts (in thousands): March 31, 2023 March 31, 2022 Cash and cash equivalents: Cash $ 1,878 $ 5,224 Money market funds 25,594 34,407 Total cash and cash equivalents 27,472 39,631 Restricted cash 1,156 1,155 Cash, cash equivalents and restricted cash $ 28,628 $ 40,786

Leases (Tables)

Leases (Tables)	3 Months Ended
	Mar. 31, 2023
Leases [Abstract]
Schedule of Consolidated Balance Sheets and Lease Term	The following table presents supplemental balance sheet information related to our operating leases (in thousands): March 31, 2023 December 31, 2022 Assets: Operating lease right-of-use assets $ 6,324 $ 6,868 Liabilities: Operating lease liabilities, current 2,343 2,259 Operating lease liabilities, noncurrent 4,579 5,265 Total lease liabilities $ 6,922 $ 7,524 Other information: Weighted-average remaining lease term (in years) 2.50 years 2.75 years Weighted-average discount rate 9.5 % 9.5 %

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	Mar. 31, 2023
Fair Value Disclosures [Abstract]
Schedule of Financial Assets and Liabilities Measured at Fair Value	The following tables present information about our financial assets and liabilities that have been measured at fair value as of March 31, 2023 and December 31, 2022 (in thousands): Description March 31, 2023 (Level 1) (Level 2) (Level 3) Financial Assets Cash and cash equivalents: Money market funds $ 25,594 $ 25,594 $ — $ — Other assets: Restricted cash held in money market funds 1,156 1,156 — — Total $ 26,750 $ 26,750 $ — $ — Financial Liabilities Other noncurrent liabilities: Warrant liabilities $ 32 — — $ 32 Total $ 32 $ — $ — $ 32 Description December 31, 2022 (Level 1) (Level 2) (Level 3) Financial Assets Cash and cash equivalents: Money market funds $ 46,660 $ 46,660 $ — $ — Other assets: Restricted cash held in money market funds 1,158 1,158 — — Total $ 47,818 $ 47,818 $ — $ — Financial Liabilities Other noncurrent liabilities: Warrant liabilities $ 659 — — $ 659 Total $ 659 $ — $ — $ 659
Schedule of Level 3 Financial Liabilities Measured at Fair Value on a Recurring Basis	The following table shows a reconciliation of the beginning and ending balances for Level 3 financial liabilities measured at fair value on a recurring basis for the three months ended March 31, 2023: Total Level 3 financial liabilities, beginning of period 659 Change in fair value of financial liabilities (627) Level 3 financial liabilities, end of period 32

Accrued Expenses (Tables)

Accrued Expenses (Tables)	3 Months Ended
	Mar. 31, 2023
Payables and Accruals [Abstract]
Schedule of Accrued Expenses	Accrued expenses recorded in our unaudited condensed consolidated balance sheet consist of the following (in thousands): March 31, 2023 December 31, 2022 External research and development expenses 4,704 5,389 Employee severance, compensation and benefits $ 3,574 $ 1,191 Professional and consulting fees 1,067 883 Other 161 482 Total accrued expenses $ 9,506 $ 7,945

Loan and Security Agreement (Ta

Loan and Security Agreement (Tables)	3 Months Ended
	Mar. 31, 2023
Debt Disclosure [Abstract]
Schedule of Minimum Aggregate Future Loan Payments	We have the following minimum aggregate future loan payments as of March 31, 2023 related to the Loan Agreement (in thousands): Amount 2024 $ — 2025 — 2026 16,042 2027 17,500 Thereafter 11,458 Total minimum payments 45,000 Debt discount (1,226) Total Debt as of March 31, 2023 $ 43,774

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Schedule of Stock Option Activity	A summary of our stock option activity and related information is as follows: Shares Weighted- Weighted Average - Remaining Contractual Life (years) Aggregate Intrinsic Value (1) (in thousands) Options outstanding as of December 31, 2022 11,175,272 $ 7.79 6.91 $ 746 Granted 1,128,900 0.97 Exercised — — Forfeited (1,327,593) 9.77 Canceled (201,221) 10.03 Options outstanding as of March 31, 2023 10,775,358 $ 6.80 5.90 $ — Exercisable as of March 31, 2023 6,972,813 $ 7.84 4.38 $ — (1) The aggregate intrinsic value of options is calculated as the difference between the exercise price of the stock options and the fair value of our common stock for those stock options that had exercise prices lower than the fair value of the common stock as of the end of the period.
Schedule of Restricted Stock Unit Activity	A summary of the RSU activity and related information is as follows: Shares Weighted-Average Unvested balance at December 31, 2022 239,448 $ 7.23 Granted 4,886,000 0.97 Vested (36,457) 8.76 Forfeited (87,021) 6.84 Unvested balance at March 31, 2023 5,001,970 $ 1.11
Schedule of Stock-based Compensation Expense	Stock-based compensation expense included in our unaudited condensed consolidated statements of operations is as follows (in thousands): Three Months Ended March 31, 2023 2022 Research and development $ 1,521 $ 2,036 General and administrative $ 1,388 $ 2,239 Total stock-based compensation expense $ 2,909 $ 4,275

Net Loss Per Share (Tables)

Net Loss Per Share (Tables)	3 Months Ended
	Mar. 31, 2023
Earnings Per Share [Abstract]
Schedule of Earnings Per Share, Basic and Diluted	Basic and diluted net loss per common share is determined by dividing the net loss by the weighted-average common shares outstanding during the period, as follows (net loss in thousands): Three Months Ended March 31, 2023 2022 Numerator Net loss $ (25,341) $ (29,861) Denominator Weighted average shares outstanding used in computing net loss per share 110,905,822 53,619,635 Net loss per share, basic and diluted $ (0.23) $ (0.56)
Schedule of Potentially Dilutive Securities Excluded from Computation of Diluted Weighted-Average Shares Outstanding	The following table presents securities excluded from the computation of diluted weighted-average shares outstanding for the periods presented, as they are anti-dilutive: Three Months Ended March 31, 2023 2022 Stock options to purchase common stock 10,775,358 11,240,002 Warrant 1,127,665 139,770 RSUs 5,001,970 366,311 Conversion option — 375,940 Common stock from the ESPP 27,563 26,588 Total 16,932,556 12,148,611

Organization and Basis of Pre_2

Organization and Basis of Presentation (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash and cash equivalents	$ 27,472	$ 47,940	$ 39,631
Accumulated Deficit	$ 554,563	$ 529,222

Summary of Significant Accoun_4

Summary of Significant Accounting Policies - Narrative (Details) $ in Millions	3 Months Ended
	Mar. 31, 2023 USD ($) segment	Dec. 31, 2022	Mar. 31, 2022 USD ($)
Accounting Policies [Abstract]
Noncurrent restricted cash | $	$ 1.2		$ 1.2
Restricted Cash, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Other assets	Other assets
Number of operating segments | segment	1

Summary of Significant Accoun_5

Summary of Significant Accounting Policies - Schedule of Reconciliation of Cash, Cash Equivalents and Restricted cash (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022	Dec. 31, 2021
Cash and cash equivalents:
Cash	$ 1,878		$ 5,224
Money market funds	25,594		34,407
Total cash and cash equivalents	27,472	$ 47,940	39,631
Restricted cash	1,156		1,155
Cash, cash equivalents and restricted cash	$ 28,628	$ 49,098	$ 40,786	$ 69,754

ALJ Collaborative Agreement (De

ALJ Collaborative Agreement (Details) - USD ($) $ in Thousands	1 Months Ended
	Mar. 31, 2021	Mar. 31, 2023	Dec. 31, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Deferred revenue recognized		$ 7,500	$ 7,500
ALJ | Transaction with party to collaborative arrangement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Deferred revenue recognized	$ 7,500	$ 7,500
Share of operating profits and losses and development, regulatory and commercialization costs (as percent)	5,000%

Leases - Narrative (Details)

Leases - Narrative (Details) $ in Millions	3 Months Ended
	Mar. 31, 2023 USD ($)	Mar. 31, 2022 USD ($)	Jan. 31, 2018 ft²
Leases [Abstract]
Area of leased office and research development space (in square feet) | ft²			40,765
Rent expense	$ 0.7	$ 0.8
Operating lease payments	$ 0.8	$ 0.8

Leases - Schedule of Consolidat

Leases - Schedule of Consolidated Balance Sheets and Lease Term (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Assets:
Operating lease right-of-use assets	$ 6,324	$ 6,868
Liabilities:
Operating lease liabilities, current	2,343	2,259
Operating lease liabilities, noncurrent	4,579	5,265
Total lease liabilities	$ 6,922	$ 7,524
Weighted-average remaining lease term (in years)	2 years 6 months	2 years 9 months
Weighted-average discount rate	9.50%	9.50%

Fair Value Measurements - Sched

Fair Value Measurements - Schedule of Financial Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Financial Assets
Total	$ 26,750	$ 47,818
Other noncurrent liabilities:
Warrant liabilities	32	659
Total	32	659
Money market funds
Financial Assets
Money market funds	25,594	46,660
Restricted cash held in money market funds	1,156	1,158
(Level 1)
Financial Assets
Total	26,750	47,818
Other noncurrent liabilities:
Warrant liabilities	0	0
Total	0	0
(Level 1) | Money market funds
Financial Assets
Money market funds	25,594	46,660
Restricted cash held in money market funds	1,156	1,158
(Level 2)
Financial Assets
Total	0	0
Other noncurrent liabilities:
Warrant liabilities	0	0
Total	0	0
(Level 2) | Money market funds
Financial Assets
Money market funds	0	0
Restricted cash held in money market funds	0	0
(Level 3)
Financial Assets
Total	0	0
Other noncurrent liabilities:
Warrant liabilities	32	659
(Level 3) | Money market funds
Financial Assets
Money market funds	0	0
Restricted cash held in money market funds	$ 0	$ 0

Fair Value Measurements - Narra

Fair Value Measurements - Narrative (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)	Mar. 31, 2022 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Depreciation expense	$ 445	$ 517
(Level 3)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Depreciation expense	$ 600
Measurement Input, Price Volatility | Horizon Technology warrants | (Level 3) | Fair Value, Recurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	0.70

Fair Value Measurements - Sch_2

Fair Value Measurements - Schedule of Level 3 Financial Liabilities Measured At Fair Value on a Recurring Basis (Details) - (Level 3) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Level 3 financial liabilities, beginning of period	$ 659
Change in fair value of financial liabilities	(627)
Level 3 financial liabilities, end of period	$ 32

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Payables and Accruals [Abstract]
External research and development expenses	$ 4,704	$ 5,389
Employee severance, compensation and benefits	3,574	1,191
Professional and consulting fees	1,067	883
Other	161	482
Total accrued expenses	$ 9,506	$ 7,945

Loan and Security Agreement - N

Loan and Security Agreement - Narrative (Details)	1 Months Ended	3 Months Ended
	Dec. 31, 2022 USD ($) payment	Mar. 31, 2023 USD ($) $ / shares shares	Mar. 31, 2022 USD ($)
Horizon Technology warrants
Line of Credit Facility [Line Items]
Number of shares called by warrants (in shares) (up to) | shares		463,915
Common stock exercise prices (in dollars per share) | $ / shares		$ 1.94
2019 Credit Facility
Line of Credit Facility [Line Items]
Interest expense		$ 1,500,000	$ 1,000,000
Secured Debt | Horizon Technology Finance Corporation Loan and Security Agreement | Line of Credit
Line of Credit Facility [Line Items]
Borrowing, face amount	$ 45,000,000	$ 45,000,000
Loan and security agreement, interest rate		11%
Interest only payment period | payment	36
Principal and interest payment period | payment	24
Periodic payment		$ 35,000,000
Final payment amount		$ 10,000,000
Final payment fee, percent		4.25%
Debt instrument, fee		$ 500,000
Debt default interest rate per annum	5%
Secured Debt | Horizon Technology Finance Corporation Loan and Security Agreement | Line of Credit | On or before Amortization Date
Line of Credit Facility [Line Items]
Early repayment fee		3%
Secured Debt | Horizon Technology Finance Corporation Loan and Security Agreement | Line of Credit | After less than 12 months after Amortization Date
Line of Credit Facility [Line Items]
Early repayment fee		2%
Secured Debt | Horizon Technology Finance Corporation Loan and Security Agreement | Line of Credit | More than 12 months after the Amortization Date
Line of Credit Facility [Line Items]
Early repayment fee		1%

Loan and Security Agreement - S

Loan and Security Agreement - Schedule of Minimum Aggregate Future Loan Payments (Details) - Line of Credit $ in Thousands	Mar. 31, 2023 USD ($)
Line of Credit Facility [Line Items]
2024	$ 0
2025	0
2026	16,042
2027	17,500
Thereafter	11,458
Total minimum payments	45,000
Debt discount	(1,226)
Total Debt as of March 31, 2023	$ 43,774

In-License Agreements (Details)

In-License Agreements (Details) - USD ($)	1 Months Ended	68 Months Ended
	Aug. 31, 2017	Mar. 31, 2023
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Amount due under license agreement		$ 0
Mayo Clinic
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Non-refundable upfront fee	$ 300,000
Milestone payments upon achievement of certain development, regulatory, and commercial events (up to)		$ 300,000
Mayo Clinic | Maximum
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Milestone payments upon achievement of certain development, regulatory, and commercial events (up to)	$ 59,100,000

Commitments and Contingencies (

Commitments and Contingencies (Details) - Collaborative Arrangement - EUR (€) € in Millions	1 Months Ended	3 Months Ended		12 Months Ended		45 Months Ended
	Jul. 31, 2019	Mar. 31, 2025	Mar. 31, 2023	Dec. 31, 2024	Dec. 31, 2023	Mar. 31, 2023
Sacco
Commitment And Contingencies [Line Items]
Term of collaboration arrangement	5 years
Period of inactive manufacturing services causing termination under collaborative agreement	6 months
Aggregate amount due under collaborative arrangement	€ 3
Annual amount due under collaborative arrangement	0.6
Fee incurred under collaborative arrangement						€ 2.4
Affiliate Of Sacco
Commitment And Contingencies [Line Items]
Aggregate amount due under collaborative arrangement	€ 3.9
Manufacturing purchase arrangement			€ 0.1
Affiliate Of Sacco | Forecast
Commitment And Contingencies [Line Items]
Aggregate minimum amount		€ 0.9		€ 1.5	€ 1.5

Stock-Based Compensation - Narr

Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unvested stock options outstanding (in shares)	3,802,545
Weighted average fair value of options granted (in dollars per share)	$ 0.78	$ 3.77
Aggregate intrinsic value of options exercised	$ 0	$ 0
Unrecognized stock based compensation expense, stock options	$ 13,000
Compensation cost not yet recognized, period for recognition	2 years 7 months 6 days
Stock-based compensation expense	$ 2,909	4,275
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate intrinsic value of options exercised	$ 0	0
Compensation cost not yet recognized, period for recognition	1 year 1 month 6 days
Stock-based compensation expense	$ 700	$ 400
Unrecognized stock based compensation expense, stock options	$ 4,700
2021 Stock Inducement Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common stock available for future grant (in shares)	672,500
2018 Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common stock available for future grant (in shares)	705,306
2018 Employee Stock Purchase Plan | Employee stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Additional shares authorized for issuance (in shares)	2,262,518
Number of shares issued for purchase (in shares)	40,886	36,329

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Shares
Options outstanding, beginning balance (in shares)	11,175,272
Granted (in shares)	1,128,900
Exercised (in shares)	0
Forfeited (in shares)	(1,327,593)
Canceled (in shares)	(201,221)
Options outstanding, ending balance (in shares)	10,775,358	11,175,272
Exercisable as of period end (in shares)	6,972,813
Weighted- Average Exercise Price
Options outstanding, beginning balance (in dollars per share)	$ 7.79
Granted (in dollars per share)	0.97
Exercised (in dollars per share)	0
Forfeited (in dollars per share)	9.77
Canceled (in dollars per share)	10.03
Options outstanding, ending balance (in dollars per share)	6.80	$ 7.79
Weighted - Average Exercise Price, Exercisable at end of period (in dollars per share)	$ 7.84
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Additional Disclosures [Abstract]
Options, outstanding, Weighted Average - Remaining Contractual Life (in years)	5 years 10 months 24 days	6 years 10 months 28 days
Options, exercisable, Weighted Average - Remaining Contractual Life (in years)	4 years 4 months 17 days
Options, outstanding, Aggregate Intrinsic Value	$ 0	$ 746
Options, exercisable, Aggregate Intrinsic Value	$ 0

Stock-Based Compensation - Rest

Stock-Based Compensation - Restricted Stock Activity (Details)	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Shares
Unvested beginning balance (in shares) | shares	239,448
Granted (in shares) | shares	4,886,000
Vested (in shares) | shares	(36,457)
Forfeited (in shares) | shares	(87,021)
Unvested ending balance (in shares) | shares	5,001,970
Weighted-Average Grant Date Fair Value
Unvested beginning balance (in dollars per share) | $ / shares	$ 7.23
Granted (in dollars per share) | $ / shares	0.97
Vested (in dollars per share) | $ / shares	8.76
Forfeited (in dollars per share) | $ / shares	6.84
Unvested ending balance (in dollars per share) | $ / shares	$ 1.11

Stock-Based Compensation - St_2

Stock-Based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	$ 2,909	$ 4,275
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	1,521	2,036
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	$ 1,388	$ 2,239

Net Loss Per Share - Schedule o

Net Loss Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Numerator
Net loss	$ (25,341)	$ (29,861)
Denominator
Weighted average shares outstanding used in computing net loss per share, basic (in shares)	110,905,822	53,619,635
Weighted average shares outstanding used in computing net loss per share, diluted (in shares)	110,905,822	53,619,635
Net loss per share, basic ( in dollars per share)	$ (0.23)	$ (0.56)
Net loss per share, diluted (in dollars per share)	$ (0.23)	$ (0.56)

Net Loss Per Share - Schedule_2

Net Loss Per Share - Schedule of Potentially Dilutive Securities Excluded from Computation of Diluted Weighted-Average Shares Outstanding (Details) - shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from computation of diluted weighted-average shares outstanding (in shares)	16,932,556	12,148,611
Stock options to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from computation of diluted weighted-average shares outstanding (in shares)	10,775,358	11,240,002
Warrant
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from computation of diluted weighted-average shares outstanding (in shares)	1,127,665	139,770
RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from computation of diluted weighted-average shares outstanding (in shares)	5,001,970	366,311
Conversion option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from computation of diluted weighted-average shares outstanding (in shares)	0	375,940
Common stock from the ESPP
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from computation of diluted weighted-average shares outstanding (in shares)	27,563	26,588

Related Party Transactions (Det

Related Party Transactions (Details) $ / shares in Units, $ in Millions	1 Months Ended			3 Months Ended
	May 31, 2022 $ / shares shares	Oct. 31, 2020 USD ($) installment shares	Sep. 30, 2019 installment shares	Mar. 31, 2023 USD ($) shares	Mar. 31, 2022 USD ($)	Jun. 30, 2021 USD ($)
Related Party Transaction [Line Items]
Number of options granted (in shares)				1,128,900
Number of shares sold in public offering (in shares)	54,246,358
Offering price per share (in dollars per share) | $ / shares	$ 1.46
Other Related Parties | Purchase Agreement
Related Party Transaction [Line Items]
Number of shares sold in public offering (in shares)	28,253,422
Weatherden Ltd
Related Party Transaction [Line Items]
Payment to related party | $				$ 0.1	$ 0.1
Amounts due to related party | $				$ 0.1	$ 0.1
Mr. Epstein | RSUs
Related Party Transaction [Line Items]
Aggregate grant date fair value for restricted stock units | $						$ 0.5
Mr. Epstein | Consulting Agreement
Related Party Transaction [Line Items]
Number of options granted (in shares)			75,000
Option to purchase shares, vesting period, number of equal monthly installments | installment			36
Aggregate grant date fair value | $		$ 0.2
Annual equity award, vesting period, number of equal monthly installments | installment		12
Aggregate annual cash consulting fee | $		$ 0.3
Renewal term		1 year
Mr. Epstein | Consulting Agreement | Second Year Of Service
Related Party Transaction [Line Items]
Number of options granted (in shares)		44,743
Annual equity award, vesting period, number of equal monthly installments | installment		9
Mr. Epstein | Consulting Agreement | RSUs
Related Party Transaction [Line Items]
Option to purchase shares, vesting period, number of equal monthly installments | installment		12
Period for trailing average closing common stock price		10 days
Affiliated Entity | Officers and Directors | Purchase Agreement
Related Party Transaction [Line Items]
Number of shares sold in public offering (in shares)	393,834

Workforce Reduction (Details)

Workforce Reduction (Details) $ in Millions	1 Months Ended	3 Months Ended
	Jan. 31, 2023 employee	Mar. 31, 2023 USD ($)
Restructuring Charges [Abstract]
Number of employees reduced | employee	48
Percentage of employees reduced	45%
Restructuring charges | $		$ 2.7