Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2022 | |
Document and Entity Information [Abstract] | |
Document Type | S-1 |
Entity Registrant Name | PAXMEDICA, INC. |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Central Index Key | 0001811623 |
Amendment Flag | false |
Balance Sheets
Balance Sheets | Dec. 31, 2020 USD ($) |
Current assets | |
Cash | $ 1,123,625 |
Total current assets | 1,123,625 |
Total assets | 1,123,625 |
Current liabilities | |
Accounts payable | 346,094 |
Accounts payable - related party | 102,803 |
Accrued expenses | 578,524 |
Accrued interest | 55,175 |
Notes payable, net of discount of $0 and $2,550,780 | 611,641 |
Warrant liability | 4,057,927 |
Total current liabilities | 5,752,164 |
Total liabilities | 5,752,164 |
Commitments and contingencies | |
Stockholders' deficit | |
Preferred stock | 270 |
Common stock, par value $0.0001; 20,000,000 shares authorized at December 31, 2021 and 2020; 6,913,492 and 5,775,898 shares issued and outstanding at December 31, 2021 and 2020, respectively | 578 |
Additional paid-in capital | 4,079,891 |
Accumulated deficit | (8,709,278) |
Total stockholders' equity (deficit) | (4,628,539) |
Total liabilities, and stockholders' equity (deficit) | $ 1,123,625 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
CONDENSED BALANCE SHEETS | ||
Notes payable, Discount | $ 0 | $ 2,550,780 |
Preferred shares, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred shares, shares authorized (in shares) | 2,696,439 | 2,696,439 |
Preferred shares, shares issued (in shares) | 2,696,439 | 2,696,439 |
Preferred shares, shares outstanding (in shares) | 2,696,439 | 2,696,439 |
Preferred shares, aggregate liquidation preference | $ 2,808,148 | $ 2,808,148 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 6,913,492 | 5,775,898 |
Common stock, shares outstanding (in shares) | 6,913,492 | 5,775,898 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating expenses | ||
General and administrative | $ 4,973,245 | $ 4,629,070 |
Research and development | 2,224,555 | 936,776 |
Total operating expenses | 7,197,800 | 5,565,846 |
Loss from operations | (7,197,800) | (5,565,846) |
Other income (expense): | ||
Interest expense | (2,805,856) | (609,458) |
Loss on issuance of debt | (53,541) | |
Loss on extinguishment of debt | (23,284) | |
Gain on conversion of notes | 59,890 | |
Change in fair value of SAFE | 175,783 | |
Change in fair value warrant liability | (458,558) | (1,569,383) |
Change in fair value of derivative | (4,496) | |
Other income | 2,665 | |
Other expense | (5,095) | |
Total other expense | (3,031,171) | (2,260,162) |
Net loss | (10,228,971) | (7,826,008) |
Less: Accrued preferred unit and stock dividend | (19,442) | |
Less: Deemed dividend - beneficial conversion feature on preferred stock | (1,452,422) | |
Net loss attributable to common stockholders | $ (10,228,971) | $ (9,297,872) |
Basic weighted average number of shares outstanding | 6,666,005 | 5,775,898 |
Diluted weighted average number of shares outstanding | 6,666,005 | 5,775,898 |
Basic net loss per share attributable to common stockholders | $ (1.53) | $ (1.61) |
Diluted net loss per share attributable to common stockholders | $ (1.53) | $ (1.61) |
Statements of Stockholders' Def
Statements of Stockholders' Deficit - USD ($) | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Preferred Units | Common Units | Total |
Beginning balance at Dec. 31, 2019 | $ (863,828) | $ (863,828) | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Stock-based compensation | $ 2,262,093 | $ 2,262,093 | |||||
Accrued preferred unit and stock dividend | $ 19,442 | ||||||
Accrued preferred unit and stock dividend (in Units) | (19,442) | 38,884 | (19,442) | ||||
Beneficial conversion feature in connection with notes payable | 462,920 | $ 462,920 | |||||
Conversion of preferred units to preferred stock | $ 267 | 1,340,916 | 1,341,183 | ||||
Conversion of preferred units to preferred stock (in shares) | 2,667,353 | ||||||
Conversion of common units to common stock | $ 578 | (578) | |||||
Conversion of common units to common stock (in shares) | 5,775,898 | ||||||
Net income (loss) | $ (7,826,008) | (7,826,008) | |||||
Ending balance at Dec. 31, 2020 | $ 270 | $ 578 | 4,079,891 | (8,709,278) | (4,628,539) | ||
Ending balance (in shares) at Dec. 31, 2020 | 2,696,439 | 5,775,898 | |||||
Beginning balance at Dec. 31, 2019 | $ 765,527 | ||||||
Beginning balance (in Units) at Dec. 31, 2019 | 1,516,041 | 5,775,898 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Contribution from TardiMed | $ 470,000 | ||||||
Contribution from TardiMed (in Units) | 940,000 | ||||||
Investor contributions | $ 50,000 | ||||||
Investor contributions (in Units) | 100,000 | ||||||
Non-cash contribution from TardiMed | $ 3 | 14,540 | $ 36,214 | 14,543 | |||
Non-cash contribution from TardiMed (in Units) | 29,086 | 72,428 | |||||
Conversion of preferred units to preferred stock | $ (1,341,183) | ||||||
Conversion of preferred units to preferred stock (in units) | (2,667,353) | ||||||
Conversion of common units to common stock (in units) | (5,775,898) | ||||||
Common stock issued in connection with conversion of notes payable | $ 113 | 3,412,669 | 3,412,782 | ||||
Issuance of common stock in connection with conversion of notes payable (in shares) | 1,137,594 | ||||||
Stock-based compensation | 1,110,874 | 1,110,874 | |||||
Net income (loss) | (16,462,227) | (16,462,227) | |||||
Ending balance at Sep. 30, 2021 | $ 691 | 8,603,434 | (25,171,505) | (16,567,110) | |||
Ending balance (in shares) at Sep. 30, 2021 | 6,913,492 | ||||||
Beginning balance at Dec. 31, 2020 | $ 270 | $ 578 | 4,079,891 | (8,709,278) | (4,628,539) | ||
Beginning balance (in shares) at Dec. 31, 2020 | 2,696,439 | 5,775,898 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Common stock issued in connection with conversion of notes payable | $ 113 | 3,412,669 | $ 3,412,782 | ||||
Issuance of common stock in connection with conversion of notes payable (in shares) | 1,137,594 | 1,137,594 | |||||
Stock-based compensation | 1,335,865 | $ 1,335,865 | |||||
Net income (loss) | (10,228,971) | (10,228,971) | |||||
Ending balance at Dec. 31, 2021 | $ 270 | $ 691 | 8,828,425 | (18,938,249) | (10,108,863) | ||
Ending balance (in shares) at Dec. 31, 2021 | 2,696,439 | 6,913,492 | |||||
Beginning balance at Jun. 30, 2021 | $ 691 | 8,331,310 | (22,060,863) | (13,728,592) | |||
Beginning balance (in shares) at Jun. 30, 2021 | 6,913,492 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Stock-based compensation | 272,124 | 272,124 | |||||
Net income (loss) | (3,110,642) | (3,110,642) | |||||
Ending balance at Sep. 30, 2021 | $ 691 | 8,603,434 | (25,171,505) | (16,567,110) | |||
Ending balance (in shares) at Sep. 30, 2021 | 6,913,492 | ||||||
Beginning balance at Dec. 31, 2021 | $ 270 | $ 691 | 8,828,425 | (18,938,249) | (10,108,863) | ||
Beginning balance (in shares) at Dec. 31, 2021 | 2,696,439 | 6,913,492 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Common stock issued in connection with conversion of notes payable | $ 24 | 1,159,476 | 1,159,500 | ||||
Issuance of common stock in connection with conversion of notes payable (in shares) | 238,094 | ||||||
Stock-based compensation | 1,377,165 | 1,377,165 | |||||
Net income (loss) | (9,581,119) | (9,581,119) | |||||
Ending balance at Sep. 30, 2022 | $ 1,178 | 30,906,477 | (28,519,368) | 2,388,302 | |||
Ending balance (in shares) at Sep. 30, 2022 | 11,779,475 | ||||||
Beginning balance at Jun. 30, 2022 | $ 691 | 9,158,437 | (17,055,755) | (7,896,357) | |||
Beginning balance (in shares) at Jun. 30, 2022 | 6,913,492 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Common stock issued in connection with conversion of notes payable | $ 24 | 1,159,476 | 1,159,500 | ||||
Issuance of common stock in connection with conversion of notes payable (in shares) | 238,094 | ||||||
Stock-based compensation | 1,047,153 | 1,047,153 | |||||
Net income (loss) | (11,463,613) | (11,463,613) | |||||
Ending balance at Sep. 30, 2022 | $ 1,178 | $ 30,906,477 | $ (28,519,368) | $ 2,388,302 | |||
Ending balance (in shares) at Sep. 30, 2022 | 11,779,475 |
Statements of Cash Flows
Statements of Cash Flows | 12 Months Ended |
Dec. 31, 2020 USD ($) | |
Cash flows from operating activities | |
Net loss | $ (7,826,008) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
Stock-based compensation | 2,262,093 |
Amortization of debt discount | 551,752 |
Loss on issuance of debt | 53,541 |
Loss on extinguishment of debt | 23,284 |
Change in fair value warrant liability | 1,569,383 |
Change in fair value of derivative | 4,496 |
Non-cash contribution from TardiMed | 50,757 |
Changes in assets and liabilities: | |
Accounts payable | 305,071 |
Accounts payable - related party | 87,478 |
Accrued expenses | 511,624 |
Accrued interest | 57,707 |
Net cash used in operating activities | (2,348,822) |
Cash flows from financing activities | |
Contribution from TardiMed | 470,000 |
Proceeds from notes payable | 2,927,500 |
Third party investor contributions | 50,000 |
Net cash provided by financing activities | 3,447,500 |
Net increase in cash | 1,098,678 |
Cash, beginning of period | 24,947 |
Cash, end of period | 1,123,625 |
Non-cash financing activities: | |
Deemed dividend - beneficial conversion feature on preferred stock | 1,452,422 |
Conversion of preferred units to preferred stock | 1,341,183 |
Beneficial conversion feature in connection with notes payable | 462,920 |
Accrued preferred unit and stock dividend | $ 19,442 |
Organization and description of
Organization and description of business operations | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Organization and description of business operations | ||
Organization and description of business operations | Note 1. Organization and description of business operations PaxMedica, Inc. (the “Company”) is a clinical stage biopharmaceutical company organized as a Delaware limited liability company on April 5, 2018 (“Inception”) to focus on the development of drug candidates for the treatment of autism spectrum disorder (ASD), Fragile X syndrome tremor-ataxia (FXTAS) and Human African Trypanosomiasis (HAT). Initial Public Offering On August 9, 2022, the Company entered into an underwriting agreement relating to the public offering of its common stock, par value $0.0001 per share. The Company agreed to sell 1,545,454 shares of its common stock to the underwriters, at a purchase price per share of $4.83 (the offering price to the public of $5.25 per share minus the underwriters’ discount), pursuant to the Company’s registration statement on Form S-1 (File No. 333-239676), as amended, under the Securities Act of 1933, that was filed by the Company under Rule 462(b) under the Securities Act. The Company also granted the underwriters a 45 - day option to purchase up to 231,818 additional shares of common stock to cover over-allotments. On August 30, 2022, the Company received net proceeds from its public offering of approximately $6.0 million, net of underwriter fees and commissions of approximately $0.8 million, and offering costs of approximately $1.4 million. In connection with its public offering the Company issued 108,181 warrants to purchase shares of the Company’s common stock with an exercise price of $6.5625 per share. Going concern, liquidity and capital resources The Company has no product revenues, incurred operating losses since inception, and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. The Company had an accumulated deficit of approximately $28.5 million at September 30, 2022, a net loss of approximately $9.6 million, and approximately $3.0 million of net cash used in operating activities for the nine months ended September 30, 2022. 2022 Notes During the second and third quarters of 2022, the Company entered into senior secured convertible promissory notes (the “2022 Notes”) with a principal balance totaling approximately $1.5 million. The 2022 Notes contain an original issue discount totaling $0.3 million and the Company received net proceeds of approximately $1.2 million (See Note 6). Series X Preferred Stock On August 2, 2022, the Company issued 3,200 shares of Series X preferred stock, par value $0.0001 per share at a purchase price of $100 per share. The Company received net proceeds of approximately $0.3 million, net of fees. (See Note 8). Going Concern The accompanying condensed financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern. The Company’s future liquidity and capital funding requirements will depend on numerous factors, including: ● its ability to raise additional funds to finance its operations; ● the outcome, costs and timing of clinical trial results for the Company’s current or future product candidates; ● the emergence and effect of competing or complementary products; ● its ability to maintain, expand and defend the scope of its intellectual property portfolio, including the amount and timing of any payments the Company may be required to make, or that it may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights; ● its ability to retain its current employees and the need and ability to hire additional management and scientific and medical personnel; and ● the terms and timing of any collaborative, licensing or other arrangements that it has or may establish. The Company will likely need to raise substantial additional funds through one or more of the following: issuance of additional debt or equity, or the completion of a licensing transaction for one or more of the Company’s pipeline assets. If the Company is unable to maintain sufficient financial resources, its business, financial condition and results of operations will be materially and adversely affected. This could affect future development and business activities and potential future clinical studies and/or other future ventures. Failure to obtain additional equity or debt financing will have a material, adverse impact on the Company’s business operations. There can be no assurance that the Company will be able to obtain the needed financing on acceptable terms or at all. Additionally, equity or debt financings will likely have a dilutive effect on the holdings of the Company’s existing stockholders. Accordingly, there are material risks and uncertainties that raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the issuance of these condensed financial statements. The accompanying condensed financial statements do not include any adjustments that result from the outcome of these uncertainties. The COVID-19 global pandemic has been unprecedented and unpredictable, is likely to continue to result in significant national and global economic disruption, which may adversely affect our business. Based on the Company’s current assessment, the Company does not expect any material impact on its long-term development timeline and its liquidity due to the worldwide spread of the COVID-19 virus. However, the Company is continuing to assess the effect on its operations by monitoring the spread of COVID-19 and the resulting global pandemic and the actions implemented to combat the virus throughout the world. | Note 1. Organization and description of business operations PaxMedica, Inc. (Formerly Purinix Pharmaceuticals LLC) (the “Company”) is a clinical stage biopharmaceutical company organized as a Delaware limited liability company on April 5, 2018 (“Inception”) to focus on the development of drug candidates for the treatment of autism spectrum disorder (ASD), Fragile X syndrome tremor-ataxia (FXTAS) and Human African Trypanosomiasis (HAT). On April 15, 2020, Purinix Pharmaceuticals LLC converted from a limited liability company (“ LLC”) to a Delaware corporation and changed its name to PaxMedica, Inc., resulting in a new capital structure consisting of two classes of stock: common and preferred, each having a par value of $0.0001 . The Company has authorized 20,000,000 shares of common stock and 2,696,439 shares of preferred stock. This conversion resulted in conversion of the current members’ LLC interests into an aggregate of 2,696,439 shares of preferred stock, which are convertible into 1,557,435 shares of common stock, and 5,775,898 shares of common stock of the Company. On July 22, 2020, the Company filed with the state of Delaware a certificate of amendment for its certificate of incorporation and effected a 1-for- 0.5775898 reverse stock split of its common stock. All share and per share information in the accompanying financial statements and footnotes has been retroactively adjusted for the effects of the reverse split for all periods presented. Going concern, liquidity and capital resources The Company has no product revenues, incurred operating losses since inception, and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. The Company had an accumulated deficit of approximately $18.9 million at December 31, 2021, a net loss of approximately $10.2 million, and approximately $5.5 million of net cash used in operating activities for the year ended December 31, 2021. On March 19, 2021, the Company entered into a Simple Agreement for Future Equity (“SAFE”) with an investor and received proceeds of $5.0 million. Under the terms of the SAFE, the investor has rights to certain shares of the Company’s common and preferred stock at a discount to the price at which those securities might be issued (See Note 6). The accompanying financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern. The Company’s future liquidity and capital funding requirements will depend on numerous factors, including: ● its ability to raise additional funds to finance its operations; ● the outcome, costs and timing of clinical trial results for the Company’s current or future product candidates; ● the emergence and effect of competing or complementary products; ● its ability to maintain, expand and defend the scope of its intellectual property portfolio, including the amount and timing of any payments the Company may be required to make, or that it may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights; ● its ability to retain its current employees and the need and ability to hire additional management and scientific and medical personnel; and ● the terms and timing of any collaborative, licensing or other arrangements that it has or may establish. The Company will likely need to raise substantial additional funds through one or more of the following: issuance of additional debt or equity, or the completion of a licensing transaction for one or more of the Company’s pipeline assets. If the Company is unable to maintain sufficient financial resources, its business, financial condition and results of operations will be materially and adversely affected. This could affect future development and business activities and potential future clinical studies and/or other future ventures. Failure to obtain additional equity or debt financing will have a material, adverse impact on the Company’s business operations. There can be no assurance that the Company will be able to obtain the needed financing on acceptable terms or at all. Additionally, equity or debt financings will likely have a dilutive effect on the holdings of the Company’s existing stockholders. Accordingly, there are material risks and uncertainties that raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the issuance of these financial statements. The accompanying financial statements do not include any adjustments that result from the outcome of these uncertainties. The COVID-19 global pandemic has been unprecedented and unpredictable, is likely to continue to result in significant national and global economic disruption, which may adversely affect our business. Based on the Company’s current assessment, the Company does not expect any material impact on its long-term development timeline and its liquidity due to the worldwide spread of the COVID-19 virus. However, the Company is continuing to assess the effect on its operations by monitoring the spread of COVID-19 and the resulting global pandemic and the actions implemented to combat the virus throughout the world. |
Significant accounting policies
Significant accounting policies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Significant accounting policies | ||
Significant accounting policies | Note 2. Significant accounting policies Basis of presentation The accompanying unaudited condensed financial statements are presented in U.S. dollars and in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected through December 31, 2022. The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the registration statement on Form S-1/A filed by the Company with the SEC on August 8, 2022. Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s condensed financial statements relate to the valuation of convertible notes, valuation of warrants, valuation of the Simple Agreement For Equity (“SAFE”) liability and valuation of equity-based awards. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected. Cash, cash equivalents and short-term investments The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of September 30, 2022 and December 31, 2021, the Company had no cash equivalents or short-term investments. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash. The Company maintains its cash high credit quality financial institutions, which may at times, be in excess of federal insured limits. The Company believes it is not exposed to any significant losses due to credit risk on cash. Fair value of financial instruments The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820 (“ASC 820”), Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 - assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. During the nine months ended September 30, 2022, the Company issued certain of the 2022 Notes and warrants in connection with the 2022 Notes. The 2022 Notes and warrants were classified as liabilities and measured at fair value on the issuance date, with changes in fair value recognized as other expense on the statements of operations and disclosed in the condensed financial statements During the year ended December 31, 2021, the Company entered into its SAFE agreement and classified the SAFE as a liability measured at cost on the issuance date, with changes in fair value recognized as other income on the statement of operations. The carrying amounts of the Company’s financial assets and liabilities, such as accounts payable, approximate fair value due to the short-term nature of these instruments. Convertible Notes In accordance with Accounting Standards Codification 825, Financial Instruments (“ASC 825”), the Company has elected the fair value option for recognition of its 2022 Notes. In accordance with ASC 825, the Company recognizes these 2022 Notes at fair value with changes in fair value recognized in the condensed statements of operations. The fair value option may be applied instrument by instrument, but it is irrevocable. As a result of applying the fair value option, direct costs and fees related to the convertible notes were recognized in general and administrative expense. Accrued interest for the 2022 Notes has been included in the change in fair value of convertible notes in the condensed statements of operations. Warrant Liability The Company accounts for certain common stock warrants outstanding as a liability at fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the warrants issued by the Company have been estimated using the Monte Carlo simulation. As of September 30, 2022, there are no warrant liabilities (See Note 3). Simple Agreement for Future Equity The Company accounts for a SAFE as a liability at fair value and adjusts the instrument to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until a triggering event, equity financing or a liquidity/dissolution occurs, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the SAFE has been estimated using the Backsolve method which utilizes the Option Pricing Method. As of September 30, 2022, the SAFE liability has been converted to 100,000 shares of Series X preferred stock (See Note 8). Research and development Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Accrued Outsourcing Costs Substantial portions of the Company’s preclinical studies and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors (collectively “CROs”). These CROs generally bill monthly or quarterly for services performed, or bill based upon milestone achievement. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. The Company outsources a substantial portion of its clinical trial activities, utilizing external entities such as CROs, independent clinical investigators, and other third-party service providers to assist the Company with the execution of its clinical studies. For each clinical trial that the Company conducts, certain clinical trial costs are expensed immediately, while others are expensed over time based on the number of patients in the trial, the attrition rate at which patients leave the trial, and/or the period over which clinical investigators or CROs are expected to provide services. The Company’s estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives. Stock-Based Compensation The Company expenses stock-based compensation to employees, non-employees and board members over the requisite service period based on the estimated grant-date fair value of the awards and actual forfeitures. The Company accounts for forfeitures as they occur. Stock-based awards with graded vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in general and administrative costs in the statements of operations. Loss Per Share Basic net loss per share (“EPS”) of common stock is computed by dividing net loss allocated to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. The Company’s common stock equivalents have been excluded from the computation of diluted loss per share for the three and nine months ended September 30, 2022 and 2021, as the effect would be to reduce the loss per share. Therefore, the weighted average common stock outstanding used to calculate both basic and diluted loss per share is the same for the three and nine months ended September 30, 2022 and 2021. The following securities were excluded from the computation of diluted net loss per share attributable to common shareholders for the nine months ended September 30, 2022 and 2021, because including them would have been anti-dilutive: September 30, 2022 2021 Preferred stock — 1,557,435 Series X preferred stock 863,162 — Unvested restricted stock units 1,582,220 1,377,999 Common stock warrants 587,497 1,034,176 SAFE investment — 414,808 Convertible notes 37,259 — Total 3,070,138 4,384,418 Income taxes ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s condensed financial statements. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position. Recent accounting pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company adopted this standard on January 1, 2022, and the adoption did not have a material impact on the Company’s condensed financial statements or disclosures. 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). This ASU reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. This ASU will be effective for all entities for fiscal years beginning after December 15, 2021. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The Company adopted this standard on January 1, 2022, and the adoption did not have a material impact on the Company’s condensed financial statements or disclosures. | Note 2. Significant accounting policies Basis of presentation The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and include all adjustments necessary for the fair presentation of its balance sheets, results of operations and cash flows for the period presented. Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s financial statements relate to the valuation of warrants, valuation of the SAFE liability and valuation of equity-based awards. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected. Cash, cash equivalents and short-term investments The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of December 31, 2021 and 2020, the Company had no cash equivalents or short-term investments . Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash. The Company maintains its cash high credit quality financial institutions, which may at times, be in excess of federal insured limits. The Company believes it is not exposed to any significant losses due to credit risk on cash. Risks and Uncertainties The Company operates in a dynamic and highly competitive industry and is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, contract manufacturer and contract research organizations, compliance with government regulations and the need to obtain additional financing to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical studies and clinical trials and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting. The Company believes that changes in any of the following areas could have a material adverse effect on the Company’s future financial position, results of operations, or cash flows; ability to obtain future financing; advances and trends in new technologies and industry standards; results of clinical trials; regulatory approval and market acceptance of the Company’s products; development of sales channels; certain strategic relationships; litigation or claims against the Company based on intellectual property, patent, product, regulatory, or other factors; and the Company’s ability to attract and retain employees necessary to support its growth. Fair value of financial instruments The Company accounts for financial instruments under FASB Accounting Standards Codification 820 (“ASC 820”), Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. During the year ended December 31, 2021, the Company entered into its SAFE agreement and classified the SAFE as a liability measured at cost on the issuance date, with changes in fair value recognized as other income on the statement of operations. During the year ended December 31, 2020, the Company issued convertible notes and warrants in connection with the notes. The notes and warrants were classified as liabilities and measured at fair value on the issuance date, with changes in fair value recognized as other expense on the statements of operations and disclosed in the financial statements. The carrying amounts of the Company’s financial assets and liabilities, such as accounts payable, approximate fair value due to the short-term nature of these instruments. Warrant Liability The Company accounts for certain common stock warrants outstanding as a liability at fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the warrants issued by the Company has been estimated using the Monte Carlo simulation. Simple Agreement for Future Equity The Company accounts for a SAFE as a liability at fair value and adjusts the instrument to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until a triggering event, equity financing or a liquidity/dissolution occurs, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the SAFE has been estimated using the Backsolve method which utilizes the Option Pricing Method. Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to interest rate, market, or foreign currency risks. The Company evaluates all of its financial instruments, including notes payable, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the statement of operations each period. Bifurcated embedded derivatives are classified with the related host contract in the Company’s balance sheet. During the year ended December 31, 2020, the Company entered into note agreements that were determined to have embedded derivative instruments in the form of contingent interest. The notes are recognized at the value of proceeds received after allocating issuance proceeds to the separable instruments issued with the notes and to the bifurcated contingent interest. The notes are subsequently measured at amortized cost using the effective interest method to accrete interest over their term to bring the notes’ initial carrying value to their principal balance at maturity. The bifurcated contingent interest is initially measured at fair value which is included in the notes payable balance on the accompanying balance sheets and subsequently measured at fair value with changes in fair value recognized as a component of other income (expense) in the statements of operations. The notes were converted during the year ended December 31, 2021 (See Note 5). Research and development Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Accrued Outsourcing Costs Substantial portions of the Company’s preclinical studies and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors (collectively “CROs”). These CROs generally bill monthly or quarterly for services performed, or bill based upon milestone achievement. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. The Company outsources a substantial portion of its clinical trial activities, utilizing external entities such as CROs, independent clinical investigators, and other third-party service providers to assist the Company with the execution of its clinical studies. For each clinical trial that the Company conducts, certain clinical trial costs are expensed immediately, while others are expensed over time based on the number of patients in the trial, the attrition rate at which patients leave the trial, and/or the period over which clinical investigators or CROs are expected to provide services. The Company’s estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives. Convertible Financial Instruments The Company bifurcates conversion options from their host instruments and accounts for them as free standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable GAAP. When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, discounts are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument. Stock-Based Compensation The Company expenses stock-based compensation to employees, non-employees and board members over the requisite service period based on the estimated grant-date fair value of the awards and actual forfeitures. The Company accounts for forfeitures as they occur. Stock-based awards with graded vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in general and administrative costs in the statements of operations. Loss Per Share Basic net loss per share (“EPS”) of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Since the Company has net losses, basic and diluted net loss per share is the same. Securities that could potentially dilute loss per share in the future were not included in the computation of diluted loss per share at December 31, 2021 and 2020, because their inclusion would be anti-dilutive are as follows: December 31, 2021 2020 Preferred stock 1,557,435 1,557,435 Unvested restricted stock units — 1,377,999 Common stock warrants 1,034,176 1,034,176 Convertible notes — 1,034,177 SAFE investment (1) 414,808 — Total 3,006,419 5,003,787 (1) SAFE investment As of December 31, 2021, the Company’s price per share of $12.05 was calculated by dividing the post money valuation of $150 million by 12,444,251 shares of common stock outstanding. The 12,444,251 shares of common stock outstanding was calculated in accord with the agreement and includes 6,913,492 of common shares outstanding, 2,703,776 of IPO shares, 1,377,999 of restricted stock units, 1,034,176 of common stock warrants and 414,808 of SAFE shares. The SAFE investment shares of 414,808 (included in the table above) were calculated using the SAFE investment of $5.0 million divided by $12.05 per share. Income taxes From April 5, 2018 (Inception) through April 14, 2020, the Company was organized as an LLC and subject to the provisions of Subchapter K of the Internal Revenue Code. As such, the Company was not viewed as a taxpaying entity in any jurisdiction and did not require a provision for income taxes for this period. Each member was responsible for the tax liability, if any, related to its proportionate share of the Company’s taxable losses for this period. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position. The Company converted to a C-Corporation on April 15, 2020 and therefore the Company is subject to examination starting in 2020. The Company’s tax year, 2021 and 2020 federal tax returns remain subject to examination by the Internal Revenue Service. Given the Company’s historical losses, the conversion to a C-Corporation did not have a material impact on the Company financial statements. Recent accounting pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company adopted this standard on January 1, 2022, and the adoption did not have a material impact on the Company’s financial statements or disclosures. 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). This ASU reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: (1) how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. This ASU will be effective for all entities for fiscal years beginning after December 15, 2021. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The Company adopted this standard on January 1, 2022, and the adoption did not have a material impact on the Company’s financial statements or disclosures. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Fair Value Measurements | ||
Fair Value Measurements | Note 3. Fair Value Measurements Convertible Notes During the second and third quarters of 2022, the Company issued the 2022 Notes. The fair value of the 2022 Notes on the issuance dates and as of September 30, 2022 were estimated using a Monte Carlo simulation to capture the path dependencies intrinsic to their terms. The significant unobservable inputs used in the fair value measurement of the Company’s convertible notes are the common stock price, volatility, and risk-free interest rates. Significant changes in these inputs may result in significantly lower or higher fair value measurement. The Company elected the fair value option when recording its 2022 Notes (See Note 2) and the notes were classified as liabilities and measured at fair value on the issuance date, with changes in fair value recognized as other income (expense) on the statements of operations and disclosed in the condensed financial statements. On August 26, 2022, two holders of the 2022 Notes converted their notes to 238,094 shares of the Company’s common stock and one holder of the 2022 Notes converted its note to 2,555 shares of Series X preferred stock. A summary of significant unobservable inputs (Level 3 inputs) used in measuring the 2022 Notes upon the issuance dates, conversion dates and during three and nine months ended September 30, 2022 is as follows: Three months August 3, 2022 - ended September Nine months ended July 8, 2022 August 5, 2022 30, 2022 September 30, 2022 Dividend yield 0 % 0 % 0 % 0 % Expected price volatility 57.0 % 57.0 % 57.0 % 57.0% - 57.2 % Risk free interest rate 2.96 % 3.14 %- 3.29 % 2.8 %- 4.05 % 2.8 %- 4.05 % Expected term (in years) 1.0 1.0 0.7 - 0.9 0.7 - 0.9 Simple Agreement for Future Equity On March 19, 2021, the Company entered into a SAFE agreement with an investor. At issuance date, the Company classified the cash received of $5.0 million as a liability, with changes in fair value recognized as other income (expense) on the statements of operations and disclosed in the condensed financial statements (See Note 5). On August 2, 2022 the SAFE was converted to 100,000 shares of Series X preferred stock (See Note 8). A summary of significant unobservable inputs (Level 3 inputs) used in measuring the SAFE on the conversion date of August 2, 2022, and the period January 1, 2022 through August 2, 2022 is as follows: January 1, August 2, 2022 - August 2022 2, 2022 Dividend yield 0 % 0 % Expected price volatility 50.0 % 50.0 % Risk free interest rate 3.08 % 1.35% - 3.08 % Expected term (in years) 1.5 0.8 - 1.5 Warrants During the nine months ended September 30, 2022, the Company issued 195,140 common stock warrants in connection with its 2022 Notes (See Note 6). During the year ended December 31, 2020, the Company issued 1,034,176 common stock warrants in association with its 2020 convertible notes (the “2020 Notes”) issued during 2020. The warrants were classified as liabilities and measured at fair value on the grant date, with changes in fair value recognized as other income (expense) on the statements of operations and disclosed in the condensed financial statements. On August 26, 2022, 750,000 warrants issued in connection with the 2020 Notes were exchanged for 350,000 shares of common stock and 1,250 shares of Series X preferred stock (see below). On August 26, 2022, 479,316 liability classified warrants were reclassified to equity. As of September 30, 2022, there are no liability classified warrants. Warrant Exchange On August 3, 2022, the Company entered into a warrant exchange agreement (the “Warrant Exchange Agreement”) with a holder of certain warrants to purchase the Company’s common stock. The warrants were issued in connection with the Company’s 2020 Notes. Pursuant to the Warrant Exchange Agreement, the Company exchanged 750,000 warrants for 350,000 shares of common stock and 1,250 shares of Series X preferred stock at the consummation of the Company’s initial public offering (See Note 8). A summary of significant unobservable inputs (Level 3 inputs) used in measuring warrants on issuance date, August 26, 2022, and during the period January 1, 2022 through August 26, 2022, is as follows: January 1 2022 - July 2022 August 26, 2022 August 26, 2022 Dividend yield 0 % 0 % 0 % Expected price volatility 57.0 % 57.0 % 57.0% - 105.0 % Risk free interest rate 2.70 % - 2.82 % 2.39% - 3.40 % 0.17% - 3.40 % Expected term (in years) 5.0 0.1 - 4.9 0.1 - 4.0 Significant changes in the expected price volatility and expected term would result in significantly lower or higher fair value measurement of the warrants, respectively. The following tables classify the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of September 30, 2022 and December 31, 2021: Fair value measured at September 30, 2022 Quoted prices in active Significant other Significant Total carrying value at markets observable inputs unobservable inputs September 30, 2022 (Level 1) (Level 2) (Level 3) Liabilities: Convertible notes $ 156,486 $ — $ — $ 156,486 Fair value measured at December 31, 2021 Quoted prices in active Significant other Significant Total carrying value at markets observable inputs unobservable inputs December 31, 2021 (Level 1) (Level 2) (Level 3) Liabilities: SAFE liability $ 4,824,217 $ — $ — $ 4,824,217 Warrant liability $ 4,516,485 $ — $ — $ 4,516,485 For the three and nine months ended September 30, 2022, there was a change of approximately $3.3 million and $1.8 million in Level 3 liabilities measured at fair value, respectively. The fair value of the convertible notes may change significantly as additional data is obtained, impacting the Company’s assumptions used to estimate the fair value of the liabilities. In evaluating this information, considerable judgment is required to interpret the data used to develop the assumptions and estimates. The estimates of fair value may not be indicative of the amounts that could be realized in a current market exchange. Accordingly, the use of different market assumptions and/or different valuation techniques may have a material effect on the estimated fair value amounts, and such changes could materially impact the Company’s results of operations in future periods. The following table presents changes in Level 3 liabilities measured at fair value for the nine months ended September 30, 2022. Unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to unobservable (e.g., changes in unobservable long-dated volatilities) inputs. Convertible Notes SAFE Liability Warrant Liability Balance at December 31, 2021 $ — $ 4,824,217 $ 4,516,485 Issuance of convertible notes and warrants 1,353,720 — 278,494 Conversion of SAFE liability to Series X preferred stock — (10,000,000) — Issuance of common stock in connection with conversion of notes payable (1,159,500) — — Issuance of Series X preferred stock in connection with conversion of notes payable (296,819) — — Warrants exchanged for shares of common stock and Series X preferred stock — — (2,009,207) Loss on extinguishment of debt 3,940 — — Change in fair value 255,145 (163,025) (1,873,192) Reclassification of warrants to equity — — (912,580) Loss on conversion of SAFE — 5,338,808 — Balance at September 30, 2022 $ 156,486 $ — $ — | Note 3. Fair Value Measurements Simple Agreement for Future Equity On March 19, 2021, the Company entered into a SAFE agreement with an investor. At issuance date, the Company classified the cash received of $5.0 million as a liability, with changes in fair value recognized as other expense on the statements of operations and disclosed in the financial statements. (See Note 6). A summary of significant unobservable inputs (Level 3 inputs) used in measuring the SAFE during the year ended December 31, 2021, is as follows: Year Ended December 31, 2021 Dividend yield — Expected price volatility 50.0 % Risk free interest rate 0.06 % – 0.07 % Expected term (in years) 1.0 – 5.0 Warrants During the year ended December 31, 2020, the Company issued 1,034,176 common stock warrants in association with its convertible notes. As of December 31, 2021, 1,034,176 warrants were outstanding. The warrants were classified as liabilities and measured at fair value on the grant date, with changes in fair value recognized as other expense on the statements of operations and disclosed in the financial statements. A summary of significant unobservable inputs (Level 3 inputs) used in measuring warrants during the years ended December 31, 2021 and 2020, is as follows: Years Ended December 31, 2021 2020 Dividend yield — — Expected price volatility 76.8 % – 112.1 % 108.7 % – 114.4 % Risk free interest rate 0.05 % – 1.09 % 0.10 % – 0.38 % Expected term (in years) 1.0 – 5.0 1.0 – 5.0 Significant changes in the expected price volatility and expected term would result in significantly lower or higher fair value measurement of the warrants, respectively. Contingent Interest During the year ended December 31, 2020, the Company recorded a derivative liability resulting from the contingent interest feature within its convertible notes. The Company recorded contingent interest on its convertible notes due to the interest rate increasing from 10% to 15% per annum, if the Company has not consummated a Qualified Offering on or before the date that is 9 months from the note issuance dates (See Note 5). The fair value of the contingent interest was estimated using the Monte Carlo simulation model on the dates the notes were issued and was subsequently revalued. During the year ended December 31, 2021, all of the Company’s notes were converted into 1,137,594 shares of the Company’s common stock, and the Company recognized a gain on the derivative liability of approximately $60,000 . As of December 31, 2021, there is no derivative liability. The following table reflects the assumptions used in the Monte Carlo simulation model at the notes issuance dates and during the year ended December 31, 2020: Year Ended December 31, 2020 Contingent interest rate 15.0 % Interest rate 10.0 % Expected term 0.8 – 1.0 Significant changes in the expected term and contingent interest rate would result in significantly lower or higher fair value measurement of the contingent interest derivative, respectively. The following tables classify the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of December 31, 2021 and 2020: Fair value measured at December 31, 2021 Total carrying Quoted prices in Significant other Significant value at active markets observable inputs unobservable inputs December 31, 2021 (Level 1) (Level 2) (Level 3) Liabilities: SAFE liability $ 4,824,217 $ — $ — $ 4,824,217 Warrant liability $ 4,516,485 $ — $ — $ 4,516,485 Fair value measured at December 31, 2020 Total carrying Quoted prices in Significant other Significant value at active markets observable inputs unobservable inputs December 31, 2020 (Level 1) (Level 2) (Level 3) Liabilities: Warrant liability $ 4,057,927 $ — $ — $ 4,057,927 Contingent Interest $ 59,890 $ — $ — $ 59,890 For the years ended December 31, 2021 and 2020, there was a change of approximately $0.3 million and $1.6 million, respectively, in Level 3 liabilities measured at fair value. The fair value of the warrant liability and SAFE liability may change significantly as additional data is obtained, impacting the Company’s assumptions used to estimate the fair value of the liabilities. In evaluating this information, considerable judgment is required to interpret the data used to develop the assumptions and estimates. The estimates of fair value may not be indicative of the amounts that could be realized in a current market exchange. Accordingly, the use of different market assumptions and/or different valuation techniques may have a material effect on the estimated fair value amounts, and such changes could materially impact the Company’s results of operations in future periods. The following table presents changes in Level 3 liabilities measured at fair value for the years ended December 31, 2021 and 2020. Unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to unobservable (e.g., changes in unobservable long-dated volatilities) inputs. SAFE Liability Warrant Liability Contingent Interest Balance at December 31, 2019 $ — $ — $ — Issuance of warrants in connection with convertible notes — 2,488,544 — Contingent interest in connection with notes payable — — 55,394 Change in fair value — 1,569,383 4,496 Balance at December 31, 2020 $ — $ 4,057,927 $ 59,890 Gain on conversion of notes — — (59,890) Issuance of SAFE 5,000,000 — — Change in fair value (175,783) 458,558 — Balance at December 31, 2021 $ 4,824,217 $ 4,516,485 $ — |
Accrued Expenses
Accrued Expenses | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Accrued Expenses | ||
Accrued Expenses | Note 4. Accrued Expenses The Company’s accrued expenses as of September 30, 2022 and December 31, 2021 consisted of the following: September 30, December 31, 2022 2021 (Unaudited) Employee and related expenses $ 50,335 $ 680,026 Directors and officers insurance 385,362 — Professional fees 153,995 — Research and development 24,758 — Total accrued expenses $ 614,450 $ 680,026 | Note 4. Accrued Expenses The Company’s accrued expenses as of December 31, 2021 and 2020 consisted of the following: December 31, 2021 2020 Accrued expenses: Employee and related expenses $ 680,026 $ 499,752 Research and development — 4,000 Professional fees — 74,772 Total accrued expenses $ 680,026 $ 578,524 |
Notes Payable
Notes Payable | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Convertible promissory notes | ||
Notes Payable | Note 6. Convertible promissory notes During the second and third quarters of 2022, the Company entered into its 2022 Notes with a principal balance totaling approximately $1.5 million. The 2022 Notes contain an original issue discount totaling $0.2 million and the Company received net proceeds of approximately $1.2 million (net of financing fees of approximately $0.1 million). The 2022 Notes bear interest at 10% per annum and mature 12 months from the issuance date. The notes are secured by all assets and personal property of the Company. The note holders have the right to convert all or any portion of the outstanding principal balance and accrued interest into shares of the Company’s common stock, up to a beneficial ownership limitation of 9.99% of the number of shares of common stock outstanding at the time of conversion. The per share conversion price is equal to the lessor of (i) $7.00 or (ii) 80% of the qualified offering price of the Company’s common stock resulting from the listing for trading of its common stock on a qualified exchange. In connection with the notes, the Company issued common stock warrants to purchase 195,140 shares of the Company’s common stock. The warrants have an exercise price of the lessor of (i) $7.00 or (ii) 80% of the qualified offering price and expire five years from the issuance date. As a result of the issuance of the common stock warrants, the exercise price of the Company’s existing warrants was adjusted to an exercise of $3.00 per share. On August 26, 2022, upon the consummation of the Company’s initial public offering, the conversion price of the 2022 Notes and the exercise price of the warrants is calculated at 80% of $5.25 per share (the offering price) or $4.20 per share. On August 3, 2022, the Company entered into a conversion agreement with certain holders of the 2022 Notes, pursuant to which the holders agreed to convert $1.0 million of the principal balance at the consummation of the Company’s initial public offering at the conversion price of $4.20 per share. On August 26, 2022, the holders of the 2022 Notes converted the notes fair value of approximately $1.2 million to 238,094 shares of the Company’s common stock. On August 3, 2022, the Company entered into a conversion agreement with an additional holder of the 2022 Notes, pursuant to which the holder agreed to convert $255,555 of the principal balance at the consummation of the Company’s initial public offering into 2,555 shares of Series X preferred stock. On August 26, 2022, the note holder converted the notes fair value of $0.3 million to 2,555 shares of Series X preferred stock (See Note 8). As of September 30, 2022, the outstanding principal balance of the 2022 Notes was approximately $0.2 million. For the nine months ended September 30, 2022, the Company recorded a loss on issuance of debt of $0.4 million, and a fair value loss of $0.25 million that is included in the change in fair value of notes, in the accompanying condensed statements of operations. The Company recognized interest expense as a component of the change in fair value of the notes during the nine months ended September 30, 2022 (See Note 2). | Note 5. Notes Payable Notes payable at December 31, 2020 consisted of the following: Unamortized Notes Principal Contingent Debt Payable as of Issuance date Balance Interest Discount December 31, 2020 October 26, 2020 $ 2,250,000 $ 43,445 $ (1,843,151) $ 450,295 October 29, 2020 750,000 14,470 (620,548) 143,922 November 6, 2020 102,532 1,974 (87,082) 17,424 $ 3,102,532 $ 59,890 $ (2,550,780) $ 611,641 Unsecured Convertible Promissory Notes In July, 2020, the Company issued unsecured convertible promissory notes in an aggregate principal amount of $100,000 with an interest rate of 8% per annum. The notes mature 12 months from the date of issuance and provide for conversion into shares of the Company’s common stock on the earlier of a Qualified Financing or if the Company engages in a Change of Control. Upon a Qualified Offering, the notes will convert into shares of the Company’s common stock at a conversion price equal to 75% of the per share purchase price in such Qualified Financing. The principal amount and accrued but unpaid interest under each note will automatically convert into shares of the Company’s common stock at the stated conversion price per share. If the Company engages in a Change of Control, the principal amount and all accrued but unpaid interest on the notes will automatically be converted into shares of the Company’s common stock at a conversion price equal to 75% of the price per share of the common stock set forth in the definitive agreements related to the Change of Control. Further, in the event that the Change of Control is a transaction wholly for cash, all principal and accrued but unpaid interest will convert into shares of the Company’s common stock at a price per share equal to 75% of the Company’s Enterprise Value as set forth and agreed to in the definitive agreements related to the Change of Control. During the year ended December 31, 2020, the unsecured convertible promissory notes were converted into senior secured convertible promissory notes (see below). Senior Secured Convertible Promissory Notes and Warrants On October 26, 2020, the Company issued a senior secured convertible promissory note with a principal balance of $2,250,000 . The Company recorded an original issue discount of $172,500 and received net proceeds totaling $2,077,500 . The note accrues interest at a rate of 10% per annum (which increases to 15% per annum if the Company has not consummated a Qualified Offering on or before July 26, 2021), and matures on October 26, 2021. The note holder has the right to convert all or any portion of the outstanding principal and interest into shares of the Company’s common stock at a conversion price equal to the lesser of (i) $3.00 or (ii) 90% of the stock price in a Qualified Offering. On October 29, 2020, the Company issued a senior secured convertible promissory note with a principal balance of $750,000 . The note accrues interest at a rate of 10% per annum (which increases to 15% per annum if the Company has not consummated a Qualified Offering on or before July 29, 2021), and matures on October 29, 2021. The note holder has the right to convert all or any portion of the outstanding principal and interest into shares of the Company’s common stock at a conversion price equal to the lesser of (i) $3.00 or (ii) 90% of the stock price in a Qualified Offering. On November 6, 2020, the Company entered into note exchange agreements with the holders of the unsecured convertible promissory notes. The note holders surrendered the July 2020 notes and entered into senior secured convertible promissory notes dated November 6, 2020. The senior secured convertible promissory notes have a principal balance of approximately $102,500 , accrue interest at a rate of 10% per annum (which increases to 15% per annum if the Company has not consummated a Qualified Offering on or before August 6, 2021), and mature on November 6, 2021. The note holders have the right to convert all or any portion of the outstanding principal and interest into shares of the Company’s common stock at a conversion price equal to the lesser of (i) $3.00 or (ii) 90% of the stock price in a Qualified Offering. In connection with the issuance of the senior secured convertible promissory notes, the Company issued the note holders common stock purchase warrants, providing the holders with the right to purchase 1,034,176 shares of the Company’s common stock at December 31, 2020. The purchase price of one share of common stock under the warrant shall be the same as the conversion price of the senior secured convertible promissory notes, and 517,088 of the common stock purchase warrants expire five years from the issuance date, and 517,088 of the common stock warrants expire thirty calendar days after the consummation of a Qualified Offering. As of December 31, 2020, the carrying value of the senior secured convertible notes was comprised of the following: Principal value of convertible notes $ 3,102,532 Original issue discount (172,500) Discount resulting from allocation of proceeds to warrant liability (2,488,544) Discount resulting from beneficial conversion feature (462,920) Amortization of discount 551,752 Loss on issuance of debt 53,541 Loss on extinguishment of debt 23,284 Change in fair value of derivative 4,496 Net carrying value of senior secured convertible notes $ 611,641 During the year ended December 31, 2021, the Company converted all of its senior secured promissory notes into 1,137,594 shares of its common stock. In connection with the note conversions, the Company recorded interest expense totaling $2.6 million, and recognized a gain of approximately $60,000 related to the contingent interest feature (see Note 3). As of December 31, 2021, there were no convertible notes outstanding. |
Simple Agreement for Future Equ
Simple Agreement for Future Equity ("SAFE") | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Simple Agreement for Future Equity ("SAFE"). | ||
Simple Agreement for Future Equity ("SAFE") | Note 5. Simple Agreement for Future Equity (“SAFE”) During the year ended December 31, 2021, the Company entered into a SAFE with an investor, and received proceeds of $5.0 million. Under the terms of the SAFE, the investor has the right to participate in future equity financings of the Company. The number of shares to be received by the SAFE investor was based on a 50% discount of the pricing in the triggering equity financing and includes a post money valuation cap of $150.0 million. In a liquidity or dissolution event, the investors right to receive cash out was junior to payment of outstanding indebtedness and creditor claims, on par for other SAFE agreements and/or preferred stock, and senior to payments for common stock. The SAFE had no interest rate or maturity date, the SAFE investor had no voting rights prior to conversion, and if the Company paid a dividend on outstanding shares of common stock while the SAFE was outstanding, the SAFE investor would have received the same dividend. On August 2, 2022, the fair value of the SAFE was approximately $ 4.7 million and the SAFE was converted into 100,000 shares of Series X preferred stock. During the three and nine months ended September 30, 2022, the Company recognized a $5.3 million loss on conversion of the SAFE (See Note 8). | Note 6. Simple Agreement for Future Equity (“SAFE”) During the year ended December 31, 2021, the Company entered into a SAFE with an investor, and received proceeds of $5.0 million. Under the terms of the SAFE, the investor has the right to participate in future equity financings of the Company. The number of shares to be received by the SAFE investor is based on a 50% discount of the pricing in the triggering equity financing and includes a post money valuation cap of $150.0 million. In a liquidity or dissolution event, the investors right to receive cash out is junior to payment of outstanding indebtedness and creditor claims, on par for other SAFE agreements and/or preferred stock, and senior to payments for common stock. The SAFE has no interest rate or maturity date, the SAFE investor has no voting rights prior to conversion, and if the Company pays a dividend on outstanding shares of common stock while the SAFE is outstanding, the SAFE investor will receive the same dividend. As of December 31, 2021, the SAFE had not yet converted as a qualifying financing had not yet occurred. Pursuant to the guidance under ASC 480, Distinguishing Liabilities from Equity , the Company determined that the value of the SAFE should be recorded as a liability in the accompanying balance sheets (See Note 3). |
Stockholders' Deficit
Stockholders' Deficit | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Preferred and common stock | ||
Stockholders' Deficit | Note 8. Preferred and common stock Amendment to Certificate of Incorporation On August 30, 2022, the Company filed an amendment (the “Amendment”) to its certificate of incorporation (the “Certificate”) with the Secretary of State of the State of Delaware in connection with the completion of the Company’s initial public offering. The Amendment amends the Company’s Certificate to, among other things: (i) authorize 200,000,000 shares of common stock and (ii) authorize 10,000,000 shares of preferred stock, 500,000 of which are designated as Series X Preferred Stock. In connection with the initial public offering, the Board waived any lock-up restrictions contained in the Series X Certificate of Designations. Series X Preferred Stock On August 1, 2022, the Company authorized 500,000 shares of Series X preferred stock, par value 0.0001 per share. The stated value of the Series X preferred stock is $100 per share. The holders of the Series X preferred stock have no voting rights and are not entitled to dividends. The Series X preferred stock is convertible into shares of the Company’s common stock and is subject to a beneficial ownership limitation of 9.99% of the number of shares of common stock outstanding at the time of conversion. On August 2, 2022, the Company issued 3,200 shares of Series X preferred stock in a private placement, at a purchase price of $100 per share, and received net proceeds of approximately $0.3 million, after deducting expenses (the “Series X Private Placement”). The Series X Private Placement constituted a qualified offering under the terms of the SAFE and the $5.0 million outstanding under the SAFE automatically converted into 100,000 shares of Series X preferred stock (See Note 5). On August 26, 2022, the Company issued 2,555 shares of its Series X preferred stock in connection with the conversion of certain 2022 Notes (See Note 6). The 2,555 shares of Series X preferred stock are convertible into shares of common stock at the initial offering price of $5.25 per share, subject to the beneficial ownership limitation. On the August 26, 2022, in connection with its Warrant Exchange Agreement (See Note 3), the Company exchanged 750,000 warrants for 350,000 shares of its common stock and 1,250 shares of its Series X preferred stock. On August 26, 2022, upon the consummation of the Company’s initial public offering, 61,689 shares of the Series X preferred stock were converted into 1,175,000 shares of the Company’s common stock. As of September 30, 2022, 45,316 shares of Series X preferred stock remain outstanding. Series Seed Preferred Stock On August 5, 2022, the Company entered into exchange agreements with the holders of the Company’s Series Seed preferred stock, par value $0.0001 per share. The Company and the holders exchanged all shares of outstanding Series Seed preferred stock into 1,557,435 shares of common stock immediately prior to the effectiveness of its registration statement filed in connection with the Company’s initial public offering. | Note 7. Stockholders’ Deficit Preferred Units During the year ended December 31, 2020, TardiMed contributed approximately $470,000 in exchange for 940,000 preferred units, which are convertible into 542,934 shares of the Company’s common stock. During the year ended December 31, 2021, there were no contributions from TardiMed. On March 2, 2020, a third-party investor contributed $50,000 in exchange for 100,000 preferred units. Certain expenses have been allocated by TardiMed and included in its statements of operations and statements of members’ and stockholders’ deficit as a contribution by TardiMed. These expenses are primarily comprised of TardiMed personnel and related expenses, rent and other office expenses which were paid by TardiMed on behalf of the Company. The Company allocated these expenses contributed on a 50% / 50% basis to research and development and selling, general and administrative. For the year ended December 31, 2020, approximately $51,000 was allocated to the Company as non-cash contribution from TardiMed in exchange of 101,514 preferred units and preferred shares, respectively. Cumulative Dividends and Distributions rights Preferred units are entitled to an eight percent cumulative annual return on the sum of such Preferred units outstanding, which shall accrue and compound annually, whether or not declared, and whether or not there are funds legally available for the payment thereof. Such preferred unit return is in preference to any distributions to common stockholders. On the date of issuance determined to be the commitment date the Company evaluated the fair value of the common stock into which the Preferred Units may be converted and the effective conversion price. This evaluation resulted in a beneficial conversion feature of approximately $1.5 million, and accordingly, the Company recorded a deemed dividend for the year ended December 31, 2020. For the year ended December 31, 2020, the Company accrued preferred dividends of $19,000 . Cumulative preferred dividends as of December 31, 2021 and 2020 were $62,000 . For the years ended December 31, 2021 and 2020, no dividends have been declared. Pursuant to the Amended and Restated Limited Liability Company Agreement (“LLC Agreement”) between TardiMed Sciences LLC (“TardiMed”) and Purinix, dated February 19, 2020, TardiMed agreed to commit $0.6 million of capital of the Company in exchange for Preferred units, at a purchase price of $0.87 per Preferred unit and are convertible in unregistered shares. On April 15, 2020, all of the outstanding Preferred units were converted into 2,696,439 shares of preferred stock. Liquidation The Company is intended to have perpetual existence. An event of withdrawal shall not cause a dissolution of the Company and the Company shall continue in existence subject to the terms and conditions of the LLC Agreement. “Event of Withdrawal” means the death, retirement, resignation, expulsion, bankruptcy or dissolution of a Member or the occurrence of any other event that terminates the continued membership of a Member in the Company. As promptly as practicable after dissolution, the liquidators shall (i) determine the Fair Market Value (the “of the Company’s remaining assets, (ii) determine the amounts to be distributed to each Unitholder in accordance and all preferred stockholders shall instead be given 1x Liquidation Preference including dividends. Preferred Stock On April 15, 2020, the Company authorized 2,696,439 shares of $.0001 par value preferred stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, or any deemed liquidation event, the holders of preferred stock shall be paid out of the funds of the assets available for distribution to stockholders before any payment is made to common stockholders. A deemed liquidation event includes a merger or consolidation, the sale lease, transfer, exclusive license or other disposition by the Company. The preferred stockholders would be paid at an amount equal to the greater of (i) the applicable original issue price plus any dividends declared but unpaid or (ii) the amount per share of preferred stock that would have been payable had all shares of preferred stock been converted to common stock prior to such liquidation, dissolution or winding up, or deemed liquidation event. Each holder of preferred stock has voting rights equal to the number of whole shares of common stock into which their preferred shares are convertible as of the record date. Each share of preferred stock is convertible at the option of the holder, at any time, into shares of the Company’s common stock, the number of which is determined by dividing the original issue price by the conversion price for that series of preferred stock in effect at the time of conversion. As of December 31, 2021, the Company had 2,696,439 shares of preferred stock issued and outstanding , and the preferred shares are convertible into 1,557,435 shares of common stock. Common stock Under the terms of the LLC Agreement 10,000,000 common units were issued to the founder, TardiMed, and are outstanding. These common units were issued for no consideration. As of April 15, 2020, these common units were converted to shares of common stock on a 1 :1 basis. On July 22, 2020, the Company effected a 1 - for-0.5775898 reverse stock split of its common stock. All share and per share information in the accompanying financial statements and footnotes has been retroactively adjusted for the effects of the reverse split for all periods presented. During the year ended December 31, 2021, in accordance with the original terms, the Company issued 1,137,594 shares of its common stock in connection with the conversion of $3.4 million of notes payable. |
Stock-based compensation
Stock-based compensation | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Stock-based compensation. | ||
Stock-based compensation | Note 7. Stock-based compensation Stock-based Compensation The following is a summary of stock-based compensation during the three and nine months ended September 30, 2022 and 2021: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Canceled stock options $ 119,829 $ 272,124 $ 449,840 $ 1,110,874 Restricted stock units 927,324 — 927,325 — Total $ 1,047,153 $ 272,124 $ 1,377,165 $ 1,110,874 Restricted Stock Units The following is a summary of the restricted stock units during the nine months ended September 30, 2022: Weighted Average Grant-Date Number of Shares Fair Value Unvested as of December 31, 2021 — $ — Granted 1,885,500 $ 5.25 Forfeited (291,500) $ 5.25 Vested (11,780) $ 5.26 Unvested as of September 30, 2022 1,582,220 $ 5.25 On May 15 , 2022 , the Company granted 35,333 restricted stock units (RSUs) with a fair value of approximately $0.2 million to a member of its board of directors. The RSUs are subject to service conditions (vesting of 33.34% on August 26, 2022 , the consummation date of the Company’s initial public offering, with the remaining units vesting 66.66% over the next two calendar years on each three-month anniversary thereafter). On January 1, 2022 , the Company granted 1,342,667 RSUs with a fair value of approximately $14.6 million to employees, officers and directors of the Company. The RSUs are subject to service conditions (vesting of 33.34% on May 1, 2022 , with the remaining units vesting on each three -month anniversary thereafter) and performance conditions in the form of a liquidity event. Vesting of the RSUs is subject to all grantees continuous service with the Company, and no vesting shall occur if the Company has not completed a Qualified Offering or a Change of Control on or before the vesting date. In the event that neither a Qualified Offering nor a Change of Control has occurred prior to December 31, 2022 , then all RSUs shall be forfeited for no consideration. Because a Qualified Offering or Change of Control is not considered probable of achievement until consummation, compensation cost measured at the grant date is not recognized until such event occurs. During the nine months ended September 30, 2022, 291,500 RSU’s (granted on January 1, 2022) were forfeited due to terminations of two of the Company’s employees and two of its board members. In August 2022, the Company modified the remaining 1,051,167 RSUs granted on January 1, 2022 to provide that 33.34% of each of those RSUs would vest on May 1, 2022 , with an additional 8.3325% of each grant vesting each quarter thereafter, provided that if neither (i) the expiration of the 6-month period following an initial public offering nor (ii) a change in control has occurred prior to the applicable vesting date, any RSUs that would have vested thereunder shall not vest until such expiration of the 6-month period following an initial public offering or change in control occurs (provided further that if neither an initial public offering nor a change in control occurs on or prior to December 31, 2022 , then all of the related RSUs will be forfeited). Vesting in all cases generally is subject to the grantee’s continued employment with the Company or a subsidiary thereof on the applicable vesting date. This improbable to improbable modification resulted in a new measurement of compensation cost based on the underlying fair value of the Company’s common stock on the date of the modification of approximately $5.5 million. On August 26, 2022 , the Company consummated its initial public offering and based on the modification above, 33.34% of each of the remaining 1,051,167 RSU’s would vest on February 26, 2023 , with an additional 8.3325% of each grant vesting each quarter thereafter. On July 16, 2022 , the Company granted 15,000 RSUs to its Chief Financial Officer with a fair value of approximately $0.1 million, all of which vest December 31, 2022. In August 2022, the Company granted 492,500 RSUs with a fair value of approximately $2.6 million to certain officers, directors and employees, one -third of which vest on the one-year anniversary of the Company’s initial public offering, with the remaining restricted stock units vesting on a quarterly basis over the following two years . On December 22, 2020, the Company granted 896,583 RSUs with a fair value of approximately $6.3 million to its officers and directors, in exchange for 787,499 vested and unvested stock options. The RSUs are subject to service conditions (vesting of 33.34% on May 1, 2021 , with the remaining units vesting on each three-month anniversary, thereafter, fully vesting on May 1, 2023 ) and performance conditions in the form of a liquidity event. Vesting of the RSUs is subject to all grantees continuous service with the Company, and no vesting shall occur if the Company has not completed a Qualified Offering or a Change of Control on or before the vesting date. In the event that neither an IPO no r change in control has occurred prior to December 31, 2021 , then all RSUs shall be forfeited for no consideration. Pursuant to the guidance of ASC 718- “Compensation - Stock Compensation”, the exchange of the options for the RSUs was accounted for as a probable (service only vesting) to improbable (performance and service with the performance criteria considered improbable since contingent upon a Qualified Offering or Change of Control) modification. As such, compensation cost for the original awards would be recognized if the awards would have vested pursuant to the original terms. In addition, since the original awards were modified, the incremental cost would be measured as the result of the most recent modification; that is, the fair value of the options after the modification to increase the exercise price to $8.98 . This fair value would be compared to the fair value of the RSUs to determine the incremental compensation cost. Incremental compensation cost related to the replacement awards would be recognized only if the modified vesting criteria are achieved. During the three and nine months ended September 30, 2022, the Company recorded stock-based compensation expense related to the RSUs of approximately $0.9 million, respectively. No stock-based compensation expense related to the RSUs was recognized during the three and nine months ended September 30, 2021. The unamortized stock-based compensation expense related to RSUs as of September 30, 2022 is approximately $7.4 million, which is expected to be recognized over a remaining weighted average vesting period of 1.3 years. Canceled Stock Options The Company previously granted options to purchase shares of the Company’s common stock and during the year ended December 31, 2020 these options were canceled. No stock options were outstanding as of September 30, 2022 and December 31, 2021. Compensation cost related to the canceled stock options of $4.3 million will continue to be recognized over the original vesting criteria. During the three months ended September 30, 2022 and 2021, the Company recorded stock-based compensation expense related to the canceled stock options of approximately $0.1 million and $0.3 million, respectively. During the nine months ended September 30, 2022 and 2021, the Company recorded stock-based compensation expense related to the canceled stock options of approximately $0.45 million and $1.1 million, respectively. The unamortized stock-based compensation expense related to canceled stock options as of September 30, 2022 is approximately $0.3 million. | Note 8. Stock-based compensation Stock Options On May 1, 2020, the Company granted 787,499 options to purchase shares of the Company’s common stock. The options had a fair value of approximately $ 4.3 million and vest over a period of 3 years . On August 22, 2020, the Company modified the option exercise price from $0.19 to $5.57 per share, which reduced the fair value of the options to $3.7 million. Pursuant to the guidance of ASC 718 — “Compensation — Stock Compensation”, total recognized compensation cost for an equity award that has been modified and for which the original service conditions are expected to be met shall at least equal the fair value of the award at the grant date. The original vesting conditions of the stock options were expected to be satisfied on the modification date, and therefore the compensation cost to be recognized for awards that ultimately vest cannot be less than the original grant-date fair value of the options of $4.3 million. On December 22, 2020, the Company canceled 787,499 vested and unvested stock options in exchange for 896,583 restricted stock units (see Restricted Stock Units). No stock options were granted during the year ended December 31, 2021, and as of December 31, 2021, there were no stock options outstanding. Restricted Stock Units The following is a summary of the restricted stock units during the years ended December 31, 2021 and 2020: Weighted Average Grant-Date Number of Shares Fair Value Unvested as of January 1, 2020 — $ — Granted 1,377,999 $ 8.98 Unvested as of December 31, 2020 1,377,999 $ 8.98 Forfeited (1,377,999) $ 8.98 Unvested as of December 31, 2021 — $ — On December 22, 2020, the Company granted 481,416 restricted stock units (“RSUs) with a fair value of approximately $4.3 million to employees, officers and directors of the Company. The RSUs are subject to service conditions (vesting of 33.34% on May 1, 2021, with the remaining units vesting on each three-month anniversary thereafter) and performance conditions in the form of a liquidity event. Vesting of the RSUs is subject to all grantees continuous service with the Company, and no vesting shall occur if the Company has not completed a Qualified Offering or a Change of Control on or before the vesting date. In the event that neither a Qualified Offering nor a Change of Control has occurred prior to December 31, 2021, then all RSUs shall be forfeited for no consideration. Because a Qualified Offering or Change of Control is not considered probable of achievement until consummation, compensation cost measured at the grant date is not recognized until such event occurs. On December 22, 2020, the Company granted 896,583 RSU’s with a fair value of approximately $ 6.3 million to its officers and directors, in exchange for 787,499 vested and unvested stock options. The RSUs are subject to service conditions (vesting of 33.34 % on May 1, 2021, with the remaining units vesting on each three-month anniversary, thereafter, fully vesting on May 1, 2023) and performance conditions in the form of a liquidity event. Vesting of the RSUs is subject to all grantees continuous service with the Company, and no vesting shall occur if the Company has not completed a Qualified Offering or a Change of Control on or before the vesting date. In the event that neither an IPO nor change in control has occurred prior to December 31, 2021, then all RSUs shall be forfeited for no consideration. Pursuant to the guidance of ASC 718- “Compensation — Stock Compensation”, the exchange of the options for the RSUs was accounted for as a probable (service only vesting) to improbable (performance and service with the performance criteria considered improbable since contingent upon a Qualified Offering or Change of Control) modification. As such, compensation cost for the original awards would be recognized if the awards would have vested pursuant to the original terms. In addition, since the original awards were modified, the incremental cost would be measured as the result of the most recent modification; that is, the fair value of the options after the modification to increase the exercise price to $ 8.98 . This fair value would be compared to the fair value of the RSUs to determine the incremental compensation cost. Incremental compensation cost related to the replacement awards would be recognized only if the modified vesting criteria are achieved. Compensation cost related to the canceled stock options of $ 4.3 million will continue to be recognized over the original vesting criteria. Because a Qualified Offering or Change of Control is not considered probable of achievement until consummation, the incremental compensation cost measured at the grant date of $1.9 million is not recognized until such event occurs. Since the Company failed to complete a Qualified Offering or a Change of Control prior to December 31, 2021, the RSU’s were forfeited as of December 31, 2021. During the years ended December 31, 2021 and 2020, the Company recorded stock-based compensation expense of approximately $ 1.3 million and $ 2.3 million, respectively. The unamortized stock-based compensation expense related to canceled stock options (as noted above), as of December 31, 2021 is approximately $ 0.7 million. |
Income taxes
Income taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income taxes | |
Income taxes | Note 9. Income taxes The provision for income taxes for the years ended December 31, 2021 and 2020 are as follows: Current Deferred Total Federal $ — $ — $ — State — — — Foreign — — — Total $ — $ — $ — As of December 31, 2021, the Company has approximately $8.8 million of federal and state tax net operating loss carryforwards that may be available to offset future taxable income, if any. Under the Tax Cuts and Jobs Act, all federal NOLs incurred after December 31, 2017 are carried forward indefinitely. The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) signed in to law on March 27, 2020, provided that NOLs generated in a taxable year beginning in 2018, 2019, or 2020, may now be carried back five years and forward indefinitely. In addition, the limitation of NOL utilization up to 80% of taxable income limitation was temporarily removed, allowing NOLs to fully offset taxable income. The state net operating loss carryforwards will begin to expire in 2041. Under the Internal Revenue Code (“IRC”) Section 382, annual use of the Company’s net operating loss carryforwards to offset taxable income may be limited based on cumulative changes in ownership. The Company has not completed an analysis to determine whether any such limitations have been triggered as of December 31, 2021. Any such limitation would have no net impact on the financial statements due to the recognition of a full valuation allowance on the recorded tax benefits related to loss carry forwards based on uncertainty surrounding realization of such assets. As required by ASC 740, management of the Company has evaluated the evidence bearing upon the realizability of its deferred tax assets. Based on the weight of available evidence, both positive and negative, management has determined that it is more likely than not that the Company will not realize the benefits of these assets. Accordingly, the Company recorded a valuation allowance of $2.7 million at December 31, 2021. The valuation allowance increased by $1.0 million during the year ended December 31, 2021, primarily as a result of the increase in net operating loss carryforwards generated in the current year. The tax effects of the temporary differences and carry forwards that give rise to deferred tax assets consist of the following (in thousands): As of December 31, 2021 2020 Net operating loss carryforwards $ 2,030 $ 797 Research & development credits 11 11 Accrued expenses 166 144 Equity based compensation — 591 Other temporary differences — 20 Gross deferred tax assets 2,207 1,563 Valuation allowance (2,207) (1,563) Net deferred tax asset $ — $ — A reconciliation of the statutory income tax rates and the Company’s effective tax rate is as follows: For the years ended December 31, 2021 2020 Tax provision at statutory rate 21.0 % 21.0 % State taxes, net of federal benefit 3.7 % 3.9 % Share based compensation (9.2) % — % Debt conversion (6.7) % — % Permanent items 0.4 % — % Other — % (0.7) % Warrant liability (0.9) % (4.2) % Change in valuation reserve (8.3) % (20.0) % Income taxes provision (benefit) — % — % The Company has not identified any uncertain tax positions requiring a reserve as of December 31, 2021 and 2020. The Company’s policy is to recognize interest and penalties that would be assessed in relation to the settlement value of unrecognized tax benefits as a component of income tax expense. The Company did not accrue either interest or penalties for the years ended December 31, 2021 and 2020. The Company has not been under tax examination in any jurisdiction for the years ended December 31, 2021 and 2020. |
Commitments and contingencies
Commitments and contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and contingencies | |
Commitments and contingencies | Note 9. Commitments and contingencies Litigation As of September 30, 2022 and 2021, there was no litigation against the Company. The Company may be involved in legal proceedings, claims and assessments arising from the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. |
Related party transactions
Related party transactions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Related party transactions | ||
Related party transactions | Note 10. Related party transactions Accounts payable - As of September 30, 2022, related party payables totaled approximately $132,000 and consisted of $80,000 owed to Tardimed for management fees, $27,000 owed to members of our board of directors and $25,000 owed to the Company’s Chief Financial Officer for consulting services. During the three months ended September 30, 2022 the Company expensed management fees of $60,000 , board of director fees of $20,000 and related party consulting services of $25,000 . During the nine months ended September 30, 2022 the Company expensed management fees of $180,000 , board of director fees of $74,000 and related party consulting services of $25,000 . Accrued expenses - As of September 30, 2022, there was approximately $50,000 accrued for payroll expenses owed to two terminated employees. During the nine months ended September 30, 2022, the Company reversed $155,000 of bonus expenses in connection with the termination of two of its executives. | Note 11. Related party transactions TardiMed Capital Contributions — TardiMed Sciences is a startup venture investment and operating firm in the life sciences space. The Chairman of the Board of the Company is also a Managing Member of TardiMed. The Chief Operating Officer is an employee of TardiMed. On April 5, 2018, the Company issued 5,775,898 founder common units to TardiMed. As of December 31, 2020 and 2021, TardiMed holds 5,775,898 shares of common stock which represents 100% of the total voting units outstanding. During the year ended December 31, 2020, TardiMed contributed approximately $0.5 million in exchange for approximately 0.9 million shares of preferred stock. Allocated Expenses — Certain expenses, allocated by TardiMed, have been incurred on behalf of the Company and included in its statements of operations and statements of members’ and stockholders’ deficit as a contribution by TardiMed. These expenses are primarily comprised of TardiMed personnel and related expenses, rent and other office expenses. The Company allocated these expenses contributed on a 50 %/ 50 % basis to research and development and selling, general and administrative. Management considers the allocation methodologies used to allocate expenses as reasonable and appropriate based on historical TardiMed expenses attributable to the Company and the Company’s operations. The expenses reflected in the financial statements may not be indicative of expenses that the Company will incur as an independent, publicly traded company and should not be relied upon as an indicator of its future results. No expenses were allocated during the year ended December 31, 2021. During the year ended December 31, 2020, approximately $25,000 was allocated to research and development expenses and approximately $25,000 was allocated to selling, general and administrative expenses. During the year ended December 31, 2021 the Company paid Tardimed $240,000 for management fees. Accounts payable — The related party payables as of December 31, 2021 were nominal. As of December 31, 2020, related party payables totaled approximately $ 100,000 and primarily consisted of $ 70,000 owed to TardiMed, and $ 30,000 owed to members of our board of directors and company executives. Accrued expenses — As of December 31, 2021, accrued expenses included bonus accruals of approximately $ 0.6 million owed to executives of the Company. As of December 31, 2020, accrued expenses included bonus, salary and payroll tax accruals of approximately $ 0.5 million owed to executives of the Company. |
Subsequent events
Subsequent events | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Subsequent events | ||
Subsequent events | Note 11. Subsequent events The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements. Time-Based Restricted Stock Units Subsequent to September 30, 2022, the Company granted 51,583 time-based RSUs with a fair value of approximately $124,000 to a member of its board of directors. The RSUs are subject to service conditions and vest 33.34% on the one year anniversary of the grant date, with the remaining units vesting on each three-month anniversary thereafter. Subsequent to September 30, 2022, the Company granted 12,000 time-based RSUs with a fair value of approximately $29,000 for consulting services. The RSUs will vest 100% on January 31, 2023. Performance-Based Restricted Stock Units Subsequent to September 30, 2022, the Company granted 25,000 performance-based RSUs with a fair value of approximately $60,000 for consulting services. The RSUs are subject to a performance condition, and will vest upon the Company signing a definitive agreement with a strategic partner. | Note 12. Subsequent events The Company has completed an evaluation of all subsequent events through June 10, 2022, the date the financial statements were available to be issued, to ensure that these financial statements include appropriate disclosure of events both recognized in the financial statements and events which occurred but were not recognized in the financial statements. Except as described below, the Company has concluded that no subsequent event has occurred that require disclosure within these financial statements. Convertible Promissory Notes In April 2022, the Company entered into senior secured convertible promissory notes with a principal balance totaling approximately $ 1.2 million. The notes contain an original issue discount totaling $ 0.1 million and the Company received net proceeds of approximately $ 1.1 million. The notes bear interest at 10 % per annum and mature 12 months from the issuance date. The notes are secured by all assets and personal property of the Company. The note holders have the right to convert all or any portion of the outstanding principal balance and accrued interest into shares of the Company’s common stock, up to a beneficial ownership limitation of 9.99 % of the number of shares of common stock outstanding at the time of conversion. The per share conversion price shall be equal to the lessor of (i) $ 7.00 or (ii) 80 % of the qualified offering price of the Company’s common stock resulting from the listing for trading of its common stock on a qualified exchange. In connection with the notes, the Company issued common stock warrants to purchase 164,284 shares of the Company’s common stock. The warrants have an exercise price of the lessor of (i) $ 7.00 or (ii) 80 % of the qualified offering price, and expire five years from the issuance date. |
Significant accounting polici_2
Significant accounting policies (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Significant accounting policies | ||
Basis of presentation | Basis of presentation The accompanying unaudited condensed financial statements are presented in U.S. dollars and in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected through December 31, 2022. The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the registration statement on Form S-1/A filed by the Company with the SEC on August 8, 2022. | Basis of presentation The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and include all adjustments necessary for the fair presentation of its balance sheets, results of operations and cash flows for the period presented. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s condensed financial statements relate to the valuation of convertible notes, valuation of warrants, valuation of the Simple Agreement For Equity (“SAFE”) liability and valuation of equity-based awards. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected. | Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s financial statements relate to the valuation of warrants, valuation of the SAFE liability and valuation of equity-based awards. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected. |
Cash, cash equivalents and short-term investments | Cash, cash equivalents and short-term investments The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of September 30, 2022 and December 31, 2021, the Company had no cash equivalents or short-term investments. | Cash, cash equivalents and short-term investments The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of December 31, 2021 and 2020, the Company had no cash equivalents or short-term investments . |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash. The Company maintains its cash high credit quality financial institutions, which may at times, be in excess of federal insured limits. The Company believes it is not exposed to any significant losses due to credit risk on cash. | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash. The Company maintains its cash high credit quality financial institutions, which may at times, be in excess of federal insured limits. The Company believes it is not exposed to any significant losses due to credit risk on cash. |
Risks and Uncertainties | Risks and Uncertainties The Company operates in a dynamic and highly competitive industry and is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, contract manufacturer and contract research organizations, compliance with government regulations and the need to obtain additional financing to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical studies and clinical trials and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting. The Company believes that changes in any of the following areas could have a material adverse effect on the Company’s future financial position, results of operations, or cash flows; ability to obtain future financing; advances and trends in new technologies and industry standards; results of clinical trials; regulatory approval and market acceptance of the Company’s products; development of sales channels; certain strategic relationships; litigation or claims against the Company based on intellectual property, patent, product, regulatory, or other factors; and the Company’s ability to attract and retain employees necessary to support its growth. | |
Fair value of financial instruments | Fair value of financial instruments The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820 (“ASC 820”), Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 - assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. During the nine months ended September 30, 2022, the Company issued certain of the 2022 Notes and warrants in connection with the 2022 Notes. The 2022 Notes and warrants were classified as liabilities and measured at fair value on the issuance date, with changes in fair value recognized as other expense on the statements of operations and disclosed in the condensed financial statements During the year ended December 31, 2021, the Company entered into its SAFE agreement and classified the SAFE as a liability measured at cost on the issuance date, with changes in fair value recognized as other income on the statement of operations. The carrying amounts of the Company’s financial assets and liabilities, such as accounts payable, approximate fair value due to the short-term nature of these instruments. | Fair value of financial instruments The Company accounts for financial instruments under FASB Accounting Standards Codification 820 (“ASC 820”), Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. During the year ended December 31, 2021, the Company entered into its SAFE agreement and classified the SAFE as a liability measured at cost on the issuance date, with changes in fair value recognized as other income on the statement of operations. During the year ended December 31, 2020, the Company issued convertible notes and warrants in connection with the notes. The notes and warrants were classified as liabilities and measured at fair value on the issuance date, with changes in fair value recognized as other expense on the statements of operations and disclosed in the financial statements. The carrying amounts of the Company’s financial assets and liabilities, such as accounts payable, approximate fair value due to the short-term nature of these instruments. |
Convertible Notes | Convertible Notes In accordance with Accounting Standards Codification 825, Financial Instruments (“ASC 825”), the Company has elected the fair value option for recognition of its 2022 Notes. In accordance with ASC 825, the Company recognizes these 2022 Notes at fair value with changes in fair value recognized in the condensed statements of operations. The fair value option may be applied instrument by instrument, but it is irrevocable. As a result of applying the fair value option, direct costs and fees related to the convertible notes were recognized in general and administrative expense. Accrued interest for the 2022 Notes has been included in the change in fair value of convertible notes in the condensed statements of operations. | |
Warrant Liability | Warrant Liability The Company accounts for certain common stock warrants outstanding as a liability at fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the warrants issued by the Company have been estimated using the Monte Carlo simulation. As of September 30, 2022, there are no warrant liabilities (See Note 3). | Warrant Liability The Company accounts for certain common stock warrants outstanding as a liability at fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the warrants issued by the Company has been estimated using the Monte Carlo simulation. |
Simple Agreement for Future Equity | Simple Agreement for Future Equity The Company accounts for a SAFE as a liability at fair value and adjusts the instrument to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until a triggering event, equity financing or a liquidity/dissolution occurs, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the SAFE has been estimated using the Backsolve method which utilizes the Option Pricing Method. As of September 30, 2022, the SAFE liability has been converted to 100,000 shares of Series X preferred stock (See Note 8). | Simple Agreement for Future Equity The Company accounts for a SAFE as a liability at fair value and adjusts the instrument to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until a triggering event, equity financing or a liquidity/dissolution occurs, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the SAFE has been estimated using the Backsolve method which utilizes the Option Pricing Method. |
Derivative Financial Instruments | Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to interest rate, market, or foreign currency risks. The Company evaluates all of its financial instruments, including notes payable, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the statement of operations each period. Bifurcated embedded derivatives are classified with the related host contract in the Company’s balance sheet. During the year ended December 31, 2020, the Company entered into note agreements that were determined to have embedded derivative instruments in the form of contingent interest. The notes are recognized at the value of proceeds received after allocating issuance proceeds to the separable instruments issued with the notes and to the bifurcated contingent interest. The notes are subsequently measured at amortized cost using the effective interest method to accrete interest over their term to bring the notes’ initial carrying value to their principal balance at maturity. The bifurcated contingent interest is initially measured at fair value which is included in the notes payable balance on the accompanying balance sheets and subsequently measured at fair value with changes in fair value recognized as a component of other income (expense) in the statements of operations. The notes were converted during the year ended December 31, 2021 (See Note 5). | |
Research and development | Research and development Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. | Research and development Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. |
Accrued Outsourcing Costs | Accrued Outsourcing Costs Substantial portions of the Company’s preclinical studies and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors (collectively “CROs”). These CROs generally bill monthly or quarterly for services performed, or bill based upon milestone achievement. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. The Company outsources a substantial portion of its clinical trial activities, utilizing external entities such as CROs, independent clinical investigators, and other third-party service providers to assist the Company with the execution of its clinical studies. For each clinical trial that the Company conducts, certain clinical trial costs are expensed immediately, while others are expensed over time based on the number of patients in the trial, the attrition rate at which patients leave the trial, and/or the period over which clinical investigators or CROs are expected to provide services. The Company’s estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives. | Accrued Outsourcing Costs Substantial portions of the Company’s preclinical studies and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors (collectively “CROs”). These CROs generally bill monthly or quarterly for services performed, or bill based upon milestone achievement. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. The Company outsources a substantial portion of its clinical trial activities, utilizing external entities such as CROs, independent clinical investigators, and other third-party service providers to assist the Company with the execution of its clinical studies. For each clinical trial that the Company conducts, certain clinical trial costs are expensed immediately, while others are expensed over time based on the number of patients in the trial, the attrition rate at which patients leave the trial, and/or the period over which clinical investigators or CROs are expected to provide services. The Company’s estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives. |
Convertible Financial Instruments | Convertible Financial Instruments The Company bifurcates conversion options from their host instruments and accounts for them as free standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable GAAP. When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, discounts are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument. | |
Stock-Based Compensation | Stock-Based Compensation The Company expenses stock-based compensation to employees, non-employees and board members over the requisite service period based on the estimated grant-date fair value of the awards and actual forfeitures. The Company accounts for forfeitures as they occur. Stock-based awards with graded vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in general and administrative costs in the statements of operations. | Stock-Based Compensation The Company expenses stock-based compensation to employees, non-employees and board members over the requisite service period based on the estimated grant-date fair value of the awards and actual forfeitures. The Company accounts for forfeitures as they occur. Stock-based awards with graded vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in general and administrative costs in the statements of operations. |
Loss Per Share | Loss Per Share Basic net loss per share (“EPS”) of common stock is computed by dividing net loss allocated to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. The Company’s common stock equivalents have been excluded from the computation of diluted loss per share for the three and nine months ended September 30, 2022 and 2021, as the effect would be to reduce the loss per share. Therefore, the weighted average common stock outstanding used to calculate both basic and diluted loss per share is the same for the three and nine months ended September 30, 2022 and 2021. The following securities were excluded from the computation of diluted net loss per share attributable to common shareholders for the nine months ended September 30, 2022 and 2021, because including them would have been anti-dilutive: September 30, 2022 2021 Preferred stock — 1,557,435 Series X preferred stock 863,162 — Unvested restricted stock units 1,582,220 1,377,999 Common stock warrants 587,497 1,034,176 SAFE investment — 414,808 Convertible notes 37,259 — Total 3,070,138 4,384,418 | Loss Per Share Basic net loss per share (“EPS”) of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Since the Company has net losses, basic and diluted net loss per share is the same. Securities that could potentially dilute loss per share in the future were not included in the computation of diluted loss per share at December 31, 2021 and 2020, because their inclusion would be anti-dilutive are as follows: December 31, 2021 2020 Preferred stock 1,557,435 1,557,435 Unvested restricted stock units — 1,377,999 Common stock warrants 1,034,176 1,034,176 Convertible notes — 1,034,177 SAFE investment (1) 414,808 — Total 3,006,419 5,003,787 (1) SAFE investment As of December 31, 2021, the Company’s price per share of $12.05 was calculated by dividing the post money valuation of $150 million by 12,444,251 shares of common stock outstanding. The 12,444,251 shares of common stock outstanding was calculated in accord with the agreement and includes 6,913,492 of common shares outstanding, 2,703,776 of IPO shares, 1,377,999 of restricted stock units, 1,034,176 of common stock warrants and 414,808 of SAFE shares. The SAFE investment shares of 414,808 (included in the table above) were calculated using the SAFE investment of $5.0 million divided by $12.05 per share. |
Income taxes | Income taxes ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s condensed financial statements. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position. | Income taxes From April 5, 2018 (Inception) through April 14, 2020, the Company was organized as an LLC and subject to the provisions of Subchapter K of the Internal Revenue Code. As such, the Company was not viewed as a taxpaying entity in any jurisdiction and did not require a provision for income taxes for this period. Each member was responsible for the tax liability, if any, related to its proportionate share of the Company’s taxable losses for this period. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position. The Company converted to a C-Corporation on April 15, 2020 and therefore the Company is subject to examination starting in 2020. The Company’s tax year, 2021 and 2020 federal tax returns remain subject to examination by the Internal Revenue Service. Given the Company’s historical losses, the conversion to a C-Corporation did not have a material impact on the Company financial statements. |
Recent accounting pronouncements | Recent accounting pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company adopted this standard on January 1, 2022, and the adoption did not have a material impact on the Company’s condensed financial statements or disclosures. 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). This ASU reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. This ASU will be effective for all entities for fiscal years beginning after December 15, 2021. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The Company adopted this standard on January 1, 2022, and the adoption did not have a material impact on the Company’s condensed financial statements or disclosures. | Recent accounting pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company adopted this standard on January 1, 2022, and the adoption did not have a material impact on the Company’s financial statements or disclosures. 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). This ASU reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: (1) how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. This ASU will be effective for all entities for fiscal years beginning after December 15, 2021. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The Company adopted this standard on January 1, 2022, and the adoption did not have a material impact on the Company’s financial statements or disclosures. |
Significant accounting polici_3
Significant accounting policies (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Significant accounting policies | ||
Schedule of securities excluded from the computation of diluted loss per share | The following securities were excluded from the computation of diluted net loss per share attributable to common shareholders for the nine months ended September 30, 2022 and 2021, because including them would have been anti-dilutive: September 30, 2022 2021 Preferred stock — 1,557,435 Series X preferred stock 863,162 — Unvested restricted stock units 1,582,220 1,377,999 Common stock warrants 587,497 1,034,176 SAFE investment — 414,808 Convertible notes 37,259 — Total 3,070,138 4,384,418 | December 31, 2021 2020 Preferred stock 1,557,435 1,557,435 Unvested restricted stock units — 1,377,999 Common stock warrants 1,034,176 1,034,176 Convertible notes — 1,034,177 SAFE investment (1) 414,808 — Total 3,006,419 5,003,787 (1) SAFE investment |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Summary of significant unobservable inputs (Level 3 inputs) used in measurement upon issuance dates | Year Ended December 31, 2020 Contingent interest rate 15.0 % Interest rate 10.0 % Expected term 0.8 – 1.0 | |
Summary of Company's liabilities measured at fair value on a recurring basis into fair value hierarchy | The following tables classify the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of September 30, 2022 and December 31, 2021: Fair value measured at September 30, 2022 Quoted prices in active Significant other Significant Total carrying value at markets observable inputs unobservable inputs September 30, 2022 (Level 1) (Level 2) (Level 3) Liabilities: Convertible notes $ 156,486 $ — $ — $ 156,486 Fair value measured at December 31, 2021 Quoted prices in active Significant other Significant Total carrying value at markets observable inputs unobservable inputs December 31, 2021 (Level 1) (Level 2) (Level 3) Liabilities: SAFE liability $ 4,824,217 $ — $ — $ 4,824,217 Warrant liability $ 4,516,485 $ — $ — $ 4,516,485 | Fair value measured at December 31, 2021 Total carrying Quoted prices in Significant other Significant value at active markets observable inputs unobservable inputs December 31, 2021 (Level 1) (Level 2) (Level 3) Liabilities: SAFE liability $ 4,824,217 $ — $ — $ 4,824,217 Warrant liability $ 4,516,485 $ — $ — $ 4,516,485 Fair value measured at December 31, 2020 Total carrying Quoted prices in Significant other Significant value at active markets observable inputs unobservable inputs December 31, 2020 (Level 1) (Level 2) (Level 3) Liabilities: Warrant liability $ 4,057,927 $ — $ — $ 4,057,927 Contingent Interest $ 59,890 $ — $ — $ 59,890 |
Summary of changes in Level 3 liabilities measured at fair value | The following table presents changes in Level 3 liabilities measured at fair value for the nine months ended September 30, 2022. Unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to unobservable (e.g., changes in unobservable long-dated volatilities) inputs. Convertible Notes SAFE Liability Warrant Liability Balance at December 31, 2021 $ — $ 4,824,217 $ 4,516,485 Issuance of convertible notes and warrants 1,353,720 — 278,494 Conversion of SAFE liability to Series X preferred stock — (10,000,000) — Issuance of common stock in connection with conversion of notes payable (1,159,500) — — Issuance of Series X preferred stock in connection with conversion of notes payable (296,819) — — Warrants exchanged for shares of common stock and Series X preferred stock — — (2,009,207) Loss on extinguishment of debt 3,940 — — Change in fair value 255,145 (163,025) (1,873,192) Reclassification of warrants to equity — — (912,580) Loss on conversion of SAFE — 5,338,808 — Balance at September 30, 2022 $ 156,486 $ — $ — | SAFE Liability Warrant Liability Contingent Interest Balance at December 31, 2019 $ — $ — $ — Issuance of warrants in connection with convertible notes — 2,488,544 — Contingent interest in connection with notes payable — — 55,394 Change in fair value — 1,569,383 4,496 Balance at December 31, 2020 $ — $ 4,057,927 $ 59,890 Gain on conversion of notes — — (59,890) Issuance of SAFE 5,000,000 — — Change in fair value (175,783) 458,558 — Balance at December 31, 2021 $ 4,824,217 $ 4,516,485 $ — |
SAFE Agreement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Summary of significant unobservable inputs (Level 3 inputs) used in measurement upon issuance dates | A summary of significant unobservable inputs (Level 3 inputs) used in measuring the SAFE on the conversion date of August 2, 2022, and the period January 1, 2022 through August 2, 2022 is as follows: January 1, August 2, 2022 - August 2022 2, 2022 Dividend yield 0 % 0 % Expected price volatility 50.0 % 50.0 % Risk free interest rate 3.08 % 1.35% - 3.08 % Expected term (in years) 1.5 0.8 - 1.5 | Year Ended December 31, 2021 Dividend yield — Expected price volatility 50.0 % Risk free interest rate 0.06 % – 0.07 % Expected term (in years) 1.0 – 5.0 |
Warrant Exchange Agreement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Summary of significant unobservable inputs (Level 3 inputs) used in measurement upon issuance dates | A summary of significant unobservable inputs (Level 3 inputs) used in measuring warrants on issuance date, August 26, 2022, and during the period January 1, 2022 through August 26, 2022, is as follows: January 1 2022 - July 2022 August 26, 2022 August 26, 2022 Dividend yield 0 % 0 % 0 % Expected price volatility 57.0 % 57.0 % 57.0% - 105.0 % Risk free interest rate 2.70 % - 2.82 % 2.39% - 3.40 % 0.17% - 3.40 % Expected term (in years) 5.0 0.1 - 4.9 0.1 - 4.0 | Years Ended December 31, 2021 2020 Dividend yield — — Expected price volatility 76.8 % – 112.1 % 108.7 % – 114.4 % Risk free interest rate 0.05 % – 1.09 % 0.10 % – 0.38 % Expected term (in years) 1.0 – 5.0 1.0 – 5.0 |
2022 Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Summary of significant unobservable inputs (Level 3 inputs) used in measurement upon issuance dates | A summary of significant unobservable inputs (Level 3 inputs) used in measuring the 2022 Notes upon the issuance dates, conversion dates and during three and nine months ended September 30, 2022 is as follows: Three months August 3, 2022 - ended September Nine months ended July 8, 2022 August 5, 2022 30, 2022 September 30, 2022 Dividend yield 0 % 0 % 0 % 0 % Expected price volatility 57.0 % 57.0 % 57.0 % 57.0% - 57.2 % Risk free interest rate 2.96 % 3.14 %- 3.29 % 2.8 %- 4.05 % 2.8 %- 4.05 % Expected term (in years) 1.0 1.0 0.7 - 0.9 0.7 - 0.9 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Accrued Expenses | ||
Schedule of Company's accrued expenses | The Company’s accrued expenses as of September 30, 2022 and December 31, 2021 consisted of the following: September 30, December 31, 2022 2021 (Unaudited) Employee and related expenses $ 50,335 $ 680,026 Directors and officers insurance 385,362 — Professional fees 153,995 — Research and development 24,758 — Total accrued expenses $ 614,450 $ 680,026 | December 31, 2021 2020 Accrued expenses: Employee and related expenses $ 680,026 $ 499,752 Research and development — 4,000 Professional fees — 74,772 Total accrued expenses $ 680,026 $ 578,524 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Convertible promissory notes | |
Schedule of notes payable | Notes payable at December 31, 2020 consisted of the following: Unamortized Notes Principal Contingent Debt Payable as of Issuance date Balance Interest Discount December 31, 2020 October 26, 2020 $ 2,250,000 $ 43,445 $ (1,843,151) $ 450,295 October 29, 2020 750,000 14,470 (620,548) 143,922 November 6, 2020 102,532 1,974 (87,082) 17,424 $ 3,102,532 $ 59,890 $ (2,550,780) $ 611,641 |
Schedule of carrying value of the senior secured convertible notes | As of December 31, 2020, the carrying value of the senior secured convertible notes was comprised of the following: Principal value of convertible notes $ 3,102,532 Original issue discount (172,500) Discount resulting from allocation of proceeds to warrant liability (2,488,544) Discount resulting from beneficial conversion feature (462,920) Amortization of discount 551,752 Loss on issuance of debt 53,541 Loss on extinguishment of debt 23,284 Change in fair value of derivative 4,496 Net carrying value of senior secured convertible notes $ 611,641 |
Stock-based compensation (Table
Stock-based compensation (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Stock-based compensation. | ||
Summary of stock based compensation | Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Canceled stock options $ 119,829 $ 272,124 $ 449,840 $ 1,110,874 Restricted stock units 927,324 — 927,325 — Total $ 1,047,153 $ 272,124 $ 1,377,165 $ 1,110,874 | |
Summary of the restricted stock units | The following is a summary of the restricted stock units during the nine months ended September 30, 2022: Weighted Average Grant-Date Number of Shares Fair Value Unvested as of December 31, 2021 — $ — Granted 1,885,500 $ 5.25 Forfeited (291,500) $ 5.25 Vested (11,780) $ 5.26 Unvested as of September 30, 2022 1,582,220 $ 5.25 | The following is a summary of the restricted stock units during the years ended December 31, 2021 and 2020: Weighted Average Grant-Date Number of Shares Fair Value Unvested as of January 1, 2020 — $ — Granted 1,377,999 $ 8.98 Unvested as of December 31, 2020 1,377,999 $ 8.98 Forfeited (1,377,999) $ 8.98 Unvested as of December 31, 2021 — $ — |
Income taxes (Tables)
Income taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income taxes | |
Summary of provision for income taxes | The provision for income taxes for the years ended December 31, 2021 and 2020 are as follows: Current Deferred Total Federal $ — $ — $ — State — — — Foreign — — — Total $ — $ — $ — |
Summary tax effects of temporary differences and carry forwards that give rise to deferred tax assets consist | The tax effects of the temporary differences and carry forwards that give rise to deferred tax assets consist of the following (in thousands): As of December 31, 2021 2020 Net operating loss carryforwards $ 2,030 $ 797 Research & development credits 11 11 Accrued expenses 166 144 Equity based compensation — 591 Other temporary differences — 20 Gross deferred tax assets 2,207 1,563 Valuation allowance (2,207) (1,563) Net deferred tax asset $ — $ — |
Summary of reconciliation of statutory income tax rates and Company's effective tax rate | For the years ended December 31, 2021 2020 Tax provision at statutory rate 21.0 % 21.0 % State taxes, net of federal benefit 3.7 % 3.9 % Share based compensation (9.2) % — % Debt conversion (6.7) % — % Permanent items 0.4 % — % Other — % (0.7) % Warrant liability (0.9) % (4.2) % Change in valuation reserve (8.3) % (20.0) % Income taxes provision (benefit) — % — % |
Organization and description _2
Organization and description of business operations (Details) | Jul. 22, 2020 | Apr. 15, 2020 item $ / shares shares | Sep. 30, 2022 $ / shares shares | Dec. 31, 2021 $ / shares shares | Dec. 31, 2020 $ / shares shares |
Organization and description of business operations | |||||
Number of classes of stock | item | 2 | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Preferred shares, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Common stock, shares authorized (in shares) | 20,000,000 | 200,000,000 | 20,000,000 | 20,000,000 | |
Preferred shares, shares authorized (in shares) | 2,696,439 | 10,000,000 | 2,696,439 | 2,696,439 | |
Conversion of preferred units to preferred stock | 2,696,439 | ||||
Common stock shares issuable upon conversion of preferred stock | 1,557,435 | ||||
Conversion of common units to common stock | 5,775,898 | ||||
Reverse stock split ratio | 0.5775898 |
Organization and description _3
Organization and description of business operations - Going concern, liquidity and capital resources (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
May 19, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Organization and description of business operations | |||||||
Revenue | $ 0 | $ 0 | |||||
Accumulated deficit | $ (28,519,368) | (28,519,368) | (18,938,249) | $ (8,709,278) | |||
Net income (loss) | $ (11,463,613) | $ (3,110,642) | (9,581,119) | $ (16,462,227) | (10,228,971) | (7,826,008) | |
Net cash used in operating activities | $ (3,004,175) | (4,264,250) | (5,512,639) | $ (2,348,822) | |||
Proceeds from SAFE investment | $ 5,000,000 | $ 5,000,000 | $ 5,000,000 |
Significant accounting polici_4
Significant accounting policies - Cash, cash equivalents and short-term investments (Details) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Significant accounting policies | ||
Cash equivalents | $ 0 | $ 0 |
Short-term investments | $ 0 | $ 0 |
Significant accounting polici_5
Significant accounting policies - Anti-dilutive securities (Details) - shares | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders | 3,070,138 | 4,384,418 | 3,006,419 | 5,003,787 |
Preferred stock | ||||
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders | 1,557,435 | 1,557,435 | 1,557,435 | |
Series X preferred stock | ||||
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders | 863,162 | |||
Unvested restricted stock units | ||||
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders | 1,582,220 | 1,377,999 | 1,377,999 | |
Common stock warrants | ||||
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders | 587,497 | 1,034,176 | 1,034,176 | 1,034,176 |
SAFE investment | ||||
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders | 414,808 | 414,808 | ||
Convertible notes | ||||
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders | 37,259 | 1,034,177 |
Significant accounting polici_6
Significant accounting policies - SAFE Investment (Details) - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | |||
Aug. 02, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Accounting Policies | ||||
Price per share (in dollars per share) | $ 12.05 | |||
Post money valuation | $ 150 | |||
Common stock, shares outstanding considered for determination of post money valuation | 12,444,251 | |||
Common stock, shares outstanding (in shares) | 6,913,492 | 6,913,492 | 5,775,898 | |
IPO shares | 2,703,776 | |||
Restricted stock units | 1,377,999 | |||
Common stock warrants | 1,034,176 | |||
SAFE shares | 414,808 | |||
SAFE investment | $ 5 | |||
Series X preferred stock | ||||
Accounting Policies | ||||
Conversion of SAFE liability to Series X preferred stock (in shares) | 100,000 | 100,000 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 Inputs (Details) | Sep. 30, 2022 item | Aug. 26, 2022 item | Aug. 05, 2022 item | Aug. 02, 2022 item | Jul. 08, 2022 item | Jul. 02, 2022 item | Dec. 31, 2021 Y | Dec. 31, 2020 Y |
SAFE Liability | Dividend yield | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0 | |||||||
SAFE Liability | Expected price volatility | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.500 | 0.500 | ||||||
SAFE Liability | Risk free interest rate | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.0308 | |||||||
SAFE Liability | Risk free interest rate | Minimum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.0135 | 0.0006 | ||||||
SAFE Liability | Risk free interest rate | Maximum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.0308 | 0.0007 | ||||||
SAFE Liability | Expected term (in years) | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 1.5 | |||||||
SAFE Liability | Expected term (in years) | Minimum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.8 | 1 | ||||||
SAFE Liability | Expected term (in years) | Maximum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 1.5 | 5 | ||||||
Warrant Liability | Dividend yield | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0 | 0 | ||||||
Warrant Liability | Expected price volatility | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.570 | 0.570 | ||||||
Warrant Liability | Expected price volatility | Minimum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.570 | 0.768 | 1.087 | |||||
Warrant Liability | Expected price volatility | Maximum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 1.050 | 1.121 | 1.144 | |||||
Warrant Liability | Risk free interest rate | Minimum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.0017 | 0.0239 | 0.0270 | 0.0005 | 0.0010 | |||
Warrant Liability | Risk free interest rate | Maximum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.0340 | 0.0340 | 0.0282 | 0.0109 | 0.0038 | |||
Warrant Liability | Expected term (in years) | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 5 | |||||||
Warrant Liability | Expected term (in years) | Minimum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.1 | 1 | 1 | |||||
Warrant Liability | Expected term (in years) | Maximum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 4 | 4.9 | 5 | 5 | ||||
Convertible Notes | Dividend yield | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0 | 0 | 0 | |||||
Convertible Notes | Expected price volatility | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.570 | 0.570 | 0.570 | |||||
Convertible Notes | Expected price volatility | Minimum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.570 | |||||||
Convertible Notes | Expected price volatility | Maximum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.572 | |||||||
Convertible Notes | Risk free interest rate | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 2.96 | |||||||
Convertible Notes | Risk free interest rate | Minimum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.028 | 0.0314 | ||||||
Convertible Notes | Risk free interest rate | Maximum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.0405 | 0.0329 | ||||||
Convertible Notes | Expected term (in years) | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 1 | 1 | ||||||
Convertible Notes | Expected term (in years) | Minimum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.007 | |||||||
Convertible Notes | Expected term (in years) | Maximum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.9 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Aug. 26, 2022 | Aug. 03, 2022 | Aug. 02, 2022 | Mar. 19, 2022 | Mar. 19, 2021 | Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Number of shares issued on conversion | 1,137,594 | ||||||||
Cash received | $ 5,000,000 | ||||||||
Common stock warrants issued | 1,034,176 | 1,034,176 | |||||||
Change in Level 3 liabilities measured at fair value | $ 300,000 | $ 1,600,000 | |||||||
Reclassification of warrants to equity, shares | 479,316 | ||||||||
Warrant liability | $ 0 | $ 0 | 4,516,485 | $ 4,057,927 | |||||
Contingent interest, consummation period of Qualified Offering from note issuance dates | 9 months | ||||||||
Gain on derivative liability | 60,000 | ||||||||
Derivative liability | $ 0 | ||||||||
Series X Preferred Stock | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Conversion of SAFE liability to Series X preferred stock (in shares) | 100,000 | 100,000 | |||||||
Warrants exchanged for shares of common stock | 1,250 | ||||||||
Common Stock | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Number of shares issued on conversion | 1,175,000 | ||||||||
Warrants exchanged for shares of common stock | 350,000 | ||||||||
Minimum | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Percentage of contingent interest rate per annum | 10% | ||||||||
Maximum | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Percentage of contingent interest rate per annum | 15% | ||||||||
2020 Notes | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Warrants exchanged for shares of common stock | 750,000 | ||||||||
Convertible notes 2022 | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Number of shares issued on conversion | 238,094 | 1,137,594 | |||||||
Convertible notes 2022 | Series X Preferred Stock | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Issuance of Series X preferred stock in connection with conversion of notes payable (in shares) | 2,555 | ||||||||
SAFE Agreement | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Change in Level 3 liabilities measured at fair value | $ (163,025) | $ (175,783) | |||||||
SAFE Agreement | 2020 Notes | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Cash received | $ 5,000,000 | ||||||||
Common stock warrants issued | 195,140 | 1,034,176 | |||||||
Number of warrants exchanged | 750,000 | ||||||||
Change in Level 3 liabilities measured at fair value | $ 3,300,000 | $ 1,800,000 | |||||||
Warrants exchanged for shares of common stock | 350,000 |
Fair Value Measurements - Assum
Fair Value Measurements - Assumptions used in the Monte Carlo simulation model (Details) - Convertible Debt [Member] | Dec. 31, 2020 Y |
Contingent interest rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.150 |
Interest rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.100 |
Expected term (in years) | Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.8 |
Expected term (in years) | Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 1 |
Fair Value Measurements - Liabi
Fair Value Measurements - Liabilities Measured at fair value (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Notes payable, net of discount of $0 and $2,550,780 | $ 156,486 | $ 611,641 | |
Warrant liability | 0 | $ 4,516,485 | 4,057,927 |
SAFE Agreement | Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | 4,824,217 | ||
SAFE Agreement | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | 4,824,217 | ||
Warrant Exchange Agreement | Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | 4,516,485 | ||
Warrant Exchange Agreement | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | 4,516,485 | ||
2022 Notes | Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Notes payable, net of discount of $0 and $2,550,780 | 156,486 | ||
2022 Notes | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Notes payable, net of discount of $0 and $2,550,780 | $ 156,486 | ||
2022 Notes | SAFE Agreement | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | 4,824,217 | ||
2022 Notes | SAFE Agreement | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | 4,824,217 | ||
2022 Notes | Warrant Exchange Agreement | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | 4,516,485 | 4,057,927 | |
2022 Notes | Warrant Exchange Agreement | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | $ 4,516,485 | 4,057,927 | |
2022 Notes | Contingent Interest | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | 59,890 | ||
2022 Notes | Contingent Interest | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | $ 59,890 |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in Level 3 Liabilities (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | |||||
Conversion of SAFE liability to Series X preferred stock | $ 10,000,000 | $ 10,000,000 | |||
Common stock issued in connection with conversion of notes payable | 1,159,500 | 1,159,500 | $ 3,412,782 | $ 3,412,782 | |
Issuance of Series X preferred stock in connection with conversion of notes payable | 296,819 | 296,819 | |||
Warrants exchanged for shares of common stock and Series X preferred stock | 2,009,207 | 2,009,207 | |||
Loss on extinguishment of debt | 3,940 | 3,940 | $ 23,284 | ||
Change in fair value | 300,000 | 1,600,000 | |||
Reclassification of warrants to equity | (912,580) | (912,580) | |||
Loss on conversion of SAFE | 5,338,808 | 5,338,808 | |||
SAFE Liability | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | |||||
Beginning Balance | 4,824,217 | ||||
Issuance of SAFE | 5,000,000 | ||||
Conversion of SAFE liability to Series X preferred stock | (10,000,000) | ||||
Change in fair value | (163,025) | (175,783) | |||
Loss on conversion of SAFE | 5,338,808 | ||||
Ending Balance | 4,824,217 | ||||
Warrant Liability | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | |||||
Beginning Balance | 4,516,485 | 4,057,927 | 4,057,927 | ||
Issuance of convertible notes and warrants | 278,494 | ||||
Warrants exchanged for shares of common stock and Series X preferred stock | (2,009,207) | ||||
Change in fair value | (1,873,192) | 458,558 | |||
Reclassification of warrants to equity | (912,580) | ||||
Ending Balance | 4,516,485 | 4,057,927 | |||
Contingent Interest | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | |||||
Beginning Balance | $ 59,890 | 59,890 | |||
Gain on conversion of notes | (59,890) | ||||
Contingent interest in connection with notes payable | 55,394 | ||||
Ending Balance | 59,890 | ||||
Convertible Notes | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | |||||
Issuance of convertible notes and warrants | 1,353,720 | ||||
Contingent interest in connection with notes payable | $ 60,000 | ||||
Common stock issued in connection with conversion of notes payable | (1,159,500) | ||||
Issuance of Series X preferred stock in connection with conversion of notes payable | (296,819) | ||||
Loss on extinguishment of debt | 3,940 | ||||
Change in fair value | 255,145 | ||||
Ending Balance | $ 156,486 | $ 156,486 | |||
Convertible Notes | Warrant Liability | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | |||||
Issuance of convertible notes and warrants | 2,488,544 | ||||
Change in fair value | 1,569,383 | ||||
Convertible Notes | Contingent Interest | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | |||||
Change in fair value | $ 4,496 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Accrued Expenses | |||
Employee and related expenses | $ 50,335 | $ 680,026 | $ 499,752 |
Directors and officers insurance | 385,362 | ||
Research and development | 24,758 | 4,000 | |
Professional fees | 153,995 | 74,772 | |
Total accrued expenses | $ 614,450 | $ 680,026 | $ 578,524 |
Notes Payable (Details)
Notes Payable (Details) | Dec. 31, 2020 USD ($) |
Notes Payable | |
Principal Balance | $ 3,102,532 |
Contingent Interest | 59,890 |
Unamortized Debt Discount | (2,550,780) |
Notes Payable as of December 31, 2020 | 611,641 |
2022 Notes | |
Notes Payable | |
Principal Balance | 3,102,532 |
Unamortized Debt Discount | (172,500) |
Notes Payable as of December 31, 2020 | 611,641 |
October 26,2020 | |
Notes Payable | |
Principal Balance | 2,250,000 |
Contingent Interest | 43,445 |
Unamortized Debt Discount | (1,843,151) |
Notes Payable as of December 31, 2020 | 450,295 |
October 29, 2020 | |
Notes Payable | |
Principal Balance | 750,000 |
Contingent Interest | 14,470 |
Unamortized Debt Discount | (620,548) |
Notes Payable as of December 31, 2020 | 143,922 |
November 6, 2020 | |
Notes Payable | |
Principal Balance | 102,532 |
Contingent Interest | 1,974 |
Unamortized Debt Discount | (87,082) |
Notes Payable as of December 31, 2020 | $ 17,424 |
Notes Payable - Unsecured Conve
Notes Payable - Unsecured Convertible Promissory Notes (Details) - Unsecured Convertible Promissory Notes | 1 Months Ended |
Jul. 31, 2020 USD ($) | |
Notes Payable | |
2022 Notes, principal balance | $ 100,000 |
Interest rate per annum | 8% |
Maturity period | 12 months |
Percent of offering price | 75% |
Conversion price of per share purchase price in the event of Change in Control (in percent) | 75% |
Conversion price of per share purchase price in the event of Change in Control transaction wholly in cash (in percent) | 75% |
Notes Payable - Senior Secured
Notes Payable - Senior Secured Convertible Promissory Notes and Warrants (Details) - USD ($) | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Aug. 26, 2022 | Nov. 06, 2020 | Oct. 29, 2020 | Oct. 26, 2020 | Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Notes Payable | ||||||||
Proceeds from issuance of convertible promissory notes, net of fees | $ 1,240,970 | |||||||
Carrying value of the senior secured convertible notes | ||||||||
Principal value of convertible notes | $ 3,102,532 | |||||||
Original issue discount | (2,550,780) | |||||||
Notes Payable as of December 31, 2020 | $ 611,641 | |||||||
Common stock purchase warrants | ||||||||
Notes Payable | ||||||||
Number of warrants issued | 1,034,176 | |||||||
Warrants outstanding | 517,088 | |||||||
Warrants term | 5 years | |||||||
Common stock warrants | ||||||||
Notes Payable | ||||||||
Warrants outstanding | 517,088 | |||||||
2022 Notes | ||||||||
Notes Payable | ||||||||
Principal balance | $ 1,500,000 | 1,500,000 | ||||||
Original issue discount | 200,000 | $ 200,000 | ||||||
Proceeds from issuance of convertible promissory notes, net of fees | $ 1,200,000 | |||||||
Interest rate per annum | 10% | 10% | ||||||
Conversion price (per share) | $ 4.20 | $ 7 | $ 7 | |||||
Percent of offering price | 80% | 80% | ||||||
Number of warrants issued | 195,140 | 195,140 | ||||||
Warrants outstanding | 0 | |||||||
Warrants term | 5 years | 5 years | ||||||
Carrying value of the senior secured convertible notes | ||||||||
Principal value of convertible notes | $ 3,102,532 | |||||||
Original issue discount | (172,500) | |||||||
Discount resulting from allocation of proceeds to warrant liability | (2,488,544) | |||||||
Discount resulting from beneficial conversion feature | (462,920) | |||||||
Amortization of discount | 551,752 | |||||||
Loss on issuance of debt | 53,541 | |||||||
Loss on extinguishment of debt | 23,284 | |||||||
Change in fair value of derivative | 4,496 | |||||||
Notes Payable as of December 31, 2020 | 611,641 | |||||||
Shares converted | 1,137,594 | |||||||
Interest expense | $ 2,600,000 | |||||||
Gain related to contingent interest feature | $ 60,000 | |||||||
October 26,2020 | ||||||||
Notes Payable | ||||||||
Principal balance | $ 2,250,000 | |||||||
Original issue discount | 172,500 | |||||||
Proceeds from issuance of convertible promissory notes, net of fees | $ 2,077,500 | |||||||
Interest rate per annum | 10% | |||||||
Interest if not consummated a Qualified Offering (in percent) | 15% | |||||||
Conversion price (per share) | $ 3 | |||||||
Percent of offering price | 90% | |||||||
Carrying value of the senior secured convertible notes | ||||||||
Principal value of convertible notes | 2,250,000 | |||||||
Original issue discount | (1,843,151) | |||||||
Notes Payable as of December 31, 2020 | 450,295 | |||||||
October 29, 2020 | ||||||||
Notes Payable | ||||||||
Principal balance | $ 750,000 | |||||||
Interest rate per annum | 10% | |||||||
Interest if not consummated a Qualified Offering (in percent) | 15% | |||||||
Conversion price (per share) | $ 3 | |||||||
Percent of offering price | 90% | |||||||
Carrying value of the senior secured convertible notes | ||||||||
Principal value of convertible notes | 750,000 | |||||||
Original issue discount | (620,548) | |||||||
Notes Payable as of December 31, 2020 | 143,922 | |||||||
November 6, 2020 | ||||||||
Notes Payable | ||||||||
Principal balance | $ 102,500 | |||||||
Interest rate per annum | 10% | |||||||
Interest if not consummated a Qualified Offering (in percent) | 15% | |||||||
Conversion price (per share) | $ 3 | |||||||
Percent of offering price | 90% | |||||||
Carrying value of the senior secured convertible notes | ||||||||
Principal value of convertible notes | 102,532 | |||||||
Original issue discount | (87,082) | |||||||
Notes Payable as of December 31, 2020 | $ 17,424 |
Simple Agreement for Future E_2
Simple Agreement for Future Equity ("SAFE") (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
May 19, 2021 | Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Aug. 02, 2022 | |
Simple Agreement for Future Equity ("SAFE") | ||||||
Proceeds from SAFE investment | $ 5,000,000 | $ 5,000,000 | $ 5,000,000 | |||
Percentage of discount of pricing in the triggering equity financing (as a percent) | 50% | |||||
Post money valuation | $ 150,000,000 | |||||
Interest rate (as a percent) | 0% | |||||
Loss recognized on conversion | $ 5,300,000 | $ 5,300,000 | ||||
Series X Preferred Stock | ||||||
Simple Agreement for Future Equity ("SAFE") | ||||||
SAFE, Outstanding amount converted | $ 4,700,000 | |||||
Number of shares issued upon conversion | 100,000 |
Stockholders' Deficit (Details)
Stockholders' Deficit (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Jul. 22, 2020 | Apr. 15, 2020 $ / shares shares | Mar. 02, 2020 USD ($) shares | Feb. 19, 2020 USD ($) $ / shares | Apr. 05, 2018 shares | Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2020 USD ($) $ / shares shares | |
Preferred and common stock | ||||||||||
Amount of contributions received | $ | $ 470,000 | |||||||||
Percentage of annual cumulative return | 8% | |||||||||
Amount of beneficial conversion feature | $ | 1,500,000 | |||||||||
Accrued preferred dividends | $ | 19,000 | |||||||||
Cumulative dividends | $ | $ 62,000 | 62,000 | ||||||||
Amount of dividends declared | $ | $ 0 | $ 0 | ||||||||
Price per share (in dollars per share) | $ / shares | $ 12.05 | |||||||||
Preferred shares, shares authorized (in shares) | 2,696,439 | 10,000,000 | 10,000,000 | 2,696,439 | 2,696,439 | |||||
Preferred shares, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Preferred shares, shares issued (in shares) | 2,696,439 | 2,696,439 | ||||||||
Preferred shares, shares outstanding (in shares) | 2,696,439 | 2,696,439 | ||||||||
Number of preferred stock convertible into common stock | 1,557,435 | |||||||||
Common stock, shares issued (in shares) | 11,779,475 | 11,779,475 | 6,913,492 | 5,775,898 | ||||||
Common stock, shares outstanding (in shares) | 6,913,492 | 6,913,492 | 6,913,492 | 5,775,898 | ||||||
Consideration for shares issued | $ | $ 300,000 | $ 300,000 | ||||||||
Conversion ratio for common units were converted to shares of common stock | 1 | |||||||||
Reverse stock split ratio | 0.5775898 | |||||||||
Number of shares issued on conversion | 1,137,594 | |||||||||
Common stock issued in connection with conversion of notes payable | $ | $ 1,159,500 | $ 1,159,500 | $ 3,412,782 | $ 3,412,782 | ||||||
Third-party investor | ||||||||||
Preferred and common stock | ||||||||||
Amount of contributions received | $ | $ 50,000 | |||||||||
Preferred Units | ||||||||||
Preferred and common stock | ||||||||||
Number of shares issued (in shares) | 940,000 | |||||||||
Common Units [Member] | ||||||||||
Preferred and common stock | ||||||||||
Conversion ratio for common units were converted to shares of common stock | 1 | |||||||||
Tardimed | ||||||||||
Preferred and common stock | ||||||||||
Amount of contributions received | $ | $ 600,000 | $ 0 | $ 470,000 | |||||||
Number of shares issued (in shares) | 5,775,898 | |||||||||
Percentage of allocation of research and development | 50% | |||||||||
Percentage of allocation of general and administrative | 50% | |||||||||
Amount of non-cash contributions received | $ | $ 51,000 | |||||||||
Number of preferred units and preferred shares exchanged for non-cash contributions | 101,514 | |||||||||
Common stock, shares issued (in shares) | 10,000,000 | |||||||||
Common stock, shares outstanding (in shares) | 5,775,898 | 5,775,898 | ||||||||
Tardimed | Preferred Units | ||||||||||
Preferred and common stock | ||||||||||
Number of preferred units converted into common stock | 542,934 | |||||||||
Price per share (in dollars per share) | $ / shares | $ 0.87 | |||||||||
Number of preferred units converted into preferred stock | 2,696,439 | |||||||||
Tardimed | Common Units [Member] | ||||||||||
Preferred and common stock | ||||||||||
Number of shares issued (in shares) | 100,000 | |||||||||
Consideration for shares issued | $ | $ 0 |
Stock-based compensation - Rest
Stock-based compensation - Restricted Stock Units (Details) - $ / shares | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||
Aug. 26, 2022 | Aug. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of units outstanding | |||||
Beginning balance (shares) | 1,377,999 | ||||
Granted (shares) | 1,051,167 | 1,377,999 | |||
Forfeited (shares) | (1,377,999) | ||||
Ending balance (shares) | 1,377,999 | ||||
Weighted Average Fair Value Per unit | |||||
Beginning balance (usd per share) | $ 8.98 | ||||
Granted (usd per share) | 8.98 | ||||
Forfeited (usd per share) | $ 8.98 | ||||
Ending balance (usd per share) | $ 8.98 | ||||
Restricted stock units | |||||
Number of units outstanding | |||||
Granted (shares) | 1,051,167 | 1,885,500 | |||
Forfeited (shares) | (291,500) | ||||
Vested (shares) | (11,780) | ||||
Ending balance (shares) | 1,582,220 | ||||
Weighted Average Fair Value Per unit | |||||
Beginning balance (usd per share) | $ 5.25 | ||||
Granted (usd per share) | 5.25 | ||||
Forfeited (usd per share) | 5.25 | ||||
Vested (usd per share) | 5.26 | ||||
Ending balance (usd per share) | $ 5.25 |
Stock-based compensation - Addi
Stock-based compensation - Additional information (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||||||
Dec. 22, 2022 USD ($) shares | Aug. 26, 2022 shares | Jul. 16, 2022 USD ($) shares | May 15, 2022 USD ($) shares | May 01, 2022 | Jan. 01, 2022 USD ($) shares | May 01, 2021 $ / shares | Dec. 22, 2020 USD ($) shares | Aug. 22, 2020 USD ($) $ / shares | May 01, 2020 USD ($) shares | Aug. 31, 2022 USD ($) shares | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) employee director shares | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) shares | Dec. 31, 2020 USD ($) shares | Jun. 30, 2022 shares | |
Stock-based compensation | ||||||||||||||||||
Number of units granted | 1,051,167 | 1,377,999 | ||||||||||||||||
Number of units forfeited | 1,377,999 | |||||||||||||||||
Compensation cost | $ | $ 5,500,000 | |||||||||||||||||
Stock options outstanding | 0 | |||||||||||||||||
Stock-based compensation expense | $ | $ 1,047,153 | $ 272,124 | $ 1,377,165 | $ 1,110,874 | ||||||||||||||
Stoct option granted | 0 | |||||||||||||||||
Member of its board of directors | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Number of board members terminated | director | 2 | |||||||||||||||||
Employees, officers and directors | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Number of employees terminated | employee | 2 | |||||||||||||||||
Restricted stock units | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Number of units granted | 1,051,167 | 1,885,500 | ||||||||||||||||
Fair value of units granted | $ | $ 3,700,000 | |||||||||||||||||
Vesting percentage | 33.34% | 33.34% | ||||||||||||||||
Vesting period | 3 months | 3 months | ||||||||||||||||
Number of units forfeited | 291,500 | |||||||||||||||||
Number of stock options exchanged for units | 896,583 | |||||||||||||||||
Stock-based compensation expense | $ | 927,324 | 0 | $ 927,325 | 0 | $ 1,300,000 | $ 2,300,000 | ||||||||||||
Unamortized stock-based compensation expense | $ | 7,400,000 | $ 7,400,000 | $ 700,000 | |||||||||||||||
Unamortized stock-based compensation period recognition | 1 year 3 months 18 days | |||||||||||||||||
Stock options vested canceled | 787,499 | |||||||||||||||||
Restricted stock units | Minimum | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Exercise price | $ / shares | $ 0.19 | |||||||||||||||||
Restricted stock units | Maximum | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Exercise price | $ / shares | $ 5.57 | |||||||||||||||||
Restricted stock units | First three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | ||||||||||||||||
Restricted stock units | Second three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | ||||||||||||||||
Restricted stock units | Third three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | ||||||||||||||||
Restricted stock units | Fourth three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | ||||||||||||||||
Restricted stock units | Fifth three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | ||||||||||||||||
Restricted stock units | Sixth three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | ||||||||||||||||
Restricted stock units | Seventh three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | ||||||||||||||||
Restricted stock units | Eighth three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | ||||||||||||||||
Restricted stock units | Member of its board of directors | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Number of units granted | 35,333 | |||||||||||||||||
Fair value of units granted | $ | $ 200,000 | $ 4,300,000 | ||||||||||||||||
Vesting percentage | 33.34% | |||||||||||||||||
Vesting period | 2 years | 3 years | ||||||||||||||||
Restricted stock units | Member of its board of directors | First three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | |||||||||||||||||
Restricted stock units | Member of its board of directors | Second three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | |||||||||||||||||
Restricted stock units | Member of its board of directors | Third three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | |||||||||||||||||
Restricted stock units | Member of its board of directors | Fourth three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | |||||||||||||||||
Restricted stock units | Member of its board of directors | Fifth three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | |||||||||||||||||
Restricted stock units | Member of its board of directors | Sixth three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | |||||||||||||||||
Restricted stock units | Member of its board of directors | Seventh three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | |||||||||||||||||
Restricted stock units | Member of its board of directors | Eighth three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | |||||||||||||||||
Restricted stock units | Employees, officers and directors | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Number of units granted | 1,342,667 | 896,583 | 787,499 | 492,500 | ||||||||||||||
Fair value of units granted | $ | $ 14,600,000 | $ 6,300,000 | $ 2,600,000 | |||||||||||||||
Vesting percentage | 33.34% | 33.34% | 33.34% | 0.33% | ||||||||||||||
Vesting period | 3 months | 2 years | ||||||||||||||||
Number of stock options exchanged for units | 787,499 | |||||||||||||||||
Exercise price | $ / shares | $ 8.98 | |||||||||||||||||
Restricted stock units | Employees, officers and directors | First three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | 8.3325% | |||||||||||||||
Restricted stock units | Employees, officers and directors | Second three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | 8.3325% | |||||||||||||||
Restricted stock units | Employees, officers and directors | Third three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | 8.3325% | |||||||||||||||
Restricted stock units | Employees, officers and directors | Fourth three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | 8.3325% | |||||||||||||||
Restricted stock units | Employees, officers and directors | Fifth three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | 8.3325% | |||||||||||||||
Restricted stock units | Employees, officers and directors | Sixth three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | 8.3325% | |||||||||||||||
Restricted stock units | Employees, officers and directors | Seventh three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | 8.3325% | |||||||||||||||
Restricted stock units | Employees, officers and directors | Eighth three-month anniversary from Start Date | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | 8.3325% | |||||||||||||||
Restricted stock units | Officers and Directors | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Number of units granted | 896,583 | |||||||||||||||||
Fair value of units granted | $ | $ 6,300,000 | |||||||||||||||||
Vesting percentage | 33.34% | |||||||||||||||||
Number of stock options exchanged for units | 787,499 | |||||||||||||||||
Exercise price | $ / shares | $ 8.98 | |||||||||||||||||
Restricted stock units | Chief Financial Officer [Member] | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Number of units granted | 15,000 | |||||||||||||||||
Fair value of units granted | $ | $ 100,000 | |||||||||||||||||
Cancelled stock options | ||||||||||||||||||
Stock-based compensation | ||||||||||||||||||
Stock options outstanding | 0 | 0 | ||||||||||||||||
Canceled stock options and the related stock compensation | $ | $ 4,300,000 | 4,300,000 | $ 4,300,000 | $ 4,300,000 | ||||||||||||||
Stock-based compensation expense | $ | 119,829 | $ 272,124 | 449,840 | $ 1,110,874 | ||||||||||||||
Unamortized stock-based compensation expense | $ | $ 300,000 | $ 300,000 | ||||||||||||||||
Incremental compensation cost measured | $ | $ 1,900,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - Domestic Tax Authority [Member] $ in Millions | 12 Months Ended |
Dec. 31, 2021 USD ($) | |
Income taxes | |
Tax net operating loss carryforwards | $ 8.8 |
Valuation allowance of operating loss carryforwards | 2.7 |
Increase in net operating loss carryforwards | $ 1 |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax assets (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Income taxes | ||
Net operating loss carryforwards | $ 2,030 | $ 797 |
Research & development credits | 11 | 11 |
Accrued expenses | 166 | 144 |
Equity based compensation | 591 | |
Other temporary differences | 20 | |
Gross deferred tax assets | 2,207 | 1,563 |
Valuation allowance | $ (2,207) | $ (1,563) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of statutory income tax rates and Company's effective tax rate (Details) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income taxes | ||
Tax provision at statutory rate | 21% | 21% |
State taxes, net of federal benefit | 3.70% | 3.90% |
Share based compensation | (9.20%) | |
Debt conversion | (6.70%) | |
Permanent items | 0.40% | |
Other | (0.70%) | |
Warrant liability | (0.90%) | (4.20%) |
Change in valuation reserve | (8.30%) | (20.00%) |
Commitments and contingencies (
Commitments and contingencies (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Commitments and contingencies | ||||
Litigation against the Company | $ 0 | $ 0 | $ 0 | $ 0 |
Related party transactions (Det
Related party transactions (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Apr. 05, 2018 shares | Sep. 30, 2022 USD ($) shares | Sep. 30, 2022 USD ($) employee shares | Dec. 31, 2021 USD ($) shares | Dec. 31, 2020 USD ($) shares | |
Related party transactions | |||||
Common stock, shares outstanding (in shares) | shares | 6,913,492 | 6,913,492 | 6,913,492 | 5,775,898 | |
Capital contributed value | $ 500,000 | ||||
Capital contributed shares | shares | 900,000 | ||||
TardiMed Sciences is a startup venture investment | |||||
Related party transactions | |||||
Total voting units outstanding, percentage | 100% | 100% | |||
Research and development expenses | |||||
Related party transactions | |||||
Expensed amount | $ 25,000 | ||||
Selling, general and administrative expenses | |||||
Related party transactions | |||||
Expensed amount | 25,000 | ||||
Accounts payable | |||||
Related party transactions | |||||
Due to related party | $ 132,000 | $ 132,000 | 100,000 | ||
Management fees | Accounts payable | |||||
Related party transactions | |||||
Expensed amount | 60,000 | 180,000 | |||
Board of directors fees | Accounts payable | |||||
Related party transactions | |||||
Expensed amount | 20,000 | 74,000 | |||
Bonus, salary and payroll tax accruals | Accrued expenses | |||||
Related party transactions | |||||
Due to related party | $ 500,000 | ||||
Consulting services | Accounts payable | |||||
Related party transactions | |||||
Expensed amount | 25,000 | 25,000 | |||
Accrued bonus | Accrued expenses | |||||
Related party transactions | |||||
Due to related party | $ 600,000 | ||||
Expensed amount | 155,000 | ||||
Payroll expenses | Accrued expenses | |||||
Related party transactions | |||||
Due to related party | 50,000 | 50,000 | |||
Tardimed | |||||
Related party transactions | |||||
Issuance of Series X preferred stock, net of fees (in shares) | shares | 5,775,898 | ||||
Common stock, shares outstanding (in shares) | shares | 5,775,898 | 5,775,898 | |||
Management fees | $ 240,000 | ||||
Tardimed | Research and development expenses | |||||
Related party transactions | |||||
Related party allocated expenses contributed basis of percentage. | 50% | ||||
Tardimed | Selling, general and administrative expenses | |||||
Related party transactions | |||||
Related party allocated expenses contributed basis of percentage. | 50% | ||||
Tardimed | Accounts payable | |||||
Related party transactions | |||||
Due to related party | $ 70,000 | ||||
Tardimed | Management fees | Accounts payable | |||||
Related party transactions | |||||
Due to related party | 80,000 | 80,000 | |||
Members of board of directors | Accounts payable | |||||
Related party transactions | |||||
Due to related party | 27,000 | 27,000 | |||
Members of board of directors | Management fees | Accounts payable | |||||
Related party transactions | |||||
Due to related party | $ 30,000 | ||||
Chief Financial Officer | Accounts payable | |||||
Related party transactions | |||||
Due to related party | $ 25,000 | $ 25,000 | |||
Executives | Accrued expenses | |||||
Related party transactions | |||||
Number of executives terminated | employee | 2 |
Subsequent events - Additional
Subsequent events - Additional Information (Details) - USD ($) | 6 Months Ended | 9 Months Ended | ||
Aug. 26, 2022 | Apr. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2022 | |
Subsequent events | ||||
2022 Notes, net proceeds received | $ 1,240,970 | |||
2022 Notes | ||||
Subsequent events | ||||
2022 Notes, principal balance | $ 1,500,000 | 1,500,000 | ||
2022 Notes, original issue discount | 300,000 | $ 300,000 | ||
2022 Notes, net proceeds received | $ 1,200,000 | |||
Interest rate per annum | 10% | 10% | ||
Maturity period | 12 months | |||
Percent of beneficial ownership limitation | 9.99% | 9.99% | ||
Conversion price (per share) | $ 4.20 | $ 7 | $ 7 | |
Percent of offering price | 80% | 80% | ||
Number of warrants exchanged | 195,140 | 195,140 | ||
Exercise price of warrants (in dollars per share) | $ 7 | $ 7 | ||
Percent of qualified offering price | 80% | |||
Warrants expiry term | 5 years | 5 years | ||
Subsequent event | 2022 Notes | ||||
Subsequent events | ||||
2022 Notes, principal balance | $ 1,200,000 | |||
2022 Notes, original issue discount | 100,000 | |||
2022 Notes, net proceeds received | $ 1,100,000 | |||
Interest rate per annum | 10% | |||
Maturity period | 12 months | |||
Percent of beneficial ownership limitation | 9.99% | |||
Conversion price (per share) | $ 7 | |||
Percent of offering price | 80% | |||
Number of warrants exchanged | 164,284 | |||
Exercise price of warrants (in dollars per share) | $ 7 | |||
Percent of qualified offering price | 80% | |||
Warrants expiry term | 5 years |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash | $ 5,563,332 | $ 444,087 |
Prepaid and other current assets | 416,439 | |
Total current assets | 5,979,771 | 444,087 |
Deferred offering costs | 204,779 | |
Total assets | 5,979,771 | 648,866 |
Current liabilities | ||
Accounts payable | 2,688,533 | 736,251 |
Accounts payable - related party | 132,000 | 750 |
Accrued expenses | 614,450 | 680,026 |
Notes payable - fair value | 156,486 | |
SAFE liability | 4,824,217 | |
Warrant liability | 0 | 4,516,485 |
Total current liabilities | 3,591,469 | 10,757,729 |
Total liabilities | 3,591,469 | 10,757,729 |
Commitments and contingencies | ||
Stockholders' Equity (Deficit) | ||
Preferred stock | 270 | |
Common stock, par value $0.0001; 200,000,000 shares authorized at September 30, 2022 and 20,000,000 shares authorized at December 31, 2021; 11,779,475 and 6,913,492 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 1,178 | 691 |
Additional paid-in capital | 30,906,477 | 8,828,425 |
Accumulated deficit | (28,519,368) | (18,938,249) |
Total stockholders' equity (deficit) | 2,388,302 | (10,108,863) |
Total liabilities, and stockholders' equity (deficit) | 5,979,771 | 648,866 |
Series Seed | ||
Stockholders' Equity (Deficit) | ||
Preferred stock | 270 | |
Series X Preferred Stock | ||
Stockholders' Equity (Deficit) | ||
Preferred stock | $ 15 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) | Dec. 31, 2021 USD ($) $ / shares shares |
Preferred shares, par value (in dollars per share) | $ / shares | $ 0.0001 |
Preferred shares, shares authorized (in shares) | 2,696,439 |
Preferred shares, shares issued (in shares) | 2,696,439 |
Preferred shares, shares outstanding (in shares) | 2,696,439 |
Preferred shares, aggregate liquidation preference | $ | $ 2,808,148 |
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 |
Common stock, shares authorized (in shares) | 20,000,000 |
Common stock, shares issued (in shares) | 6,913,492 |
Common stock, shares outstanding (in shares) | 6,913,492 |
Series Seed Preferred Stock [member] | |
Preferred shares, shares authorized (in shares) | 2,696,439 |
Preferred shares, shares issued (in shares) | 2,696,439 |
Preferred shares, shares outstanding (in shares) | 2,696,439 |
Preferred shares, aggregate liquidation preference | $ | $ 2,808,148 |
Series X Preferred Stock | |
Preferred shares, shares authorized (in shares) | 0 |
Preferred shares, shares issued (in shares) | 0 |
Preferred shares, shares outstanding (in shares) | 0 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2021 | Sep. 30, 2021 | |
Operating expenses | ||
General and administrative | $ 1,277,287 | $ 3,651,218 |
Research and development | 437,559 | 1,755,428 |
Total operating expenses | 1,714,846 | 5,406,646 |
Loss from operations | (1,714,846) | (5,406,646) |
Other income (expense): | ||
Interest expense | (2,805,856) | |
Gain on conversion of notes | 59,890 | |
Change in fair value of SAFE | (622,212) | (3,806,374) |
Change in fair value warrant liability | (789,419) | (4,498,146) |
Other income (expense) | 15,835 | (5,095) |
Total other expense | (1,395,796) | (11,055,581) |
Net loss | $ (3,110,642) | $ (16,462,227) |
Basic weighted average number of shares outstanding | 6,913,492 | 6,582,602 |
Diluted weighted average number of shares outstanding | 6,913,492 | 6,582,602 |
Basic net income (loss) per share | $ (0.45) | $ (2.50) |
Diluted net income (loss) per share | $ (0.45) | $ (2.50) |
CONDENSED STATEMENTS OF CHANGES
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT - USD ($) | Preferred Stock Series Seed Preferred Stock [member] | Preferred Stock Series X Preferred Stock | Preferred Stock | Common Stock Series Seed Preferred Stock [member] | Common Stock Series X Preferred Stock | Common Stock | Additional Paid-in Capital Series Seed Preferred Stock [member] | Additional Paid-in Capital Series X Preferred Stock | Additional Paid-in Capital | Accumulated Deficit | Series X Preferred Stock | Total |
Beginning balance at Dec. 31, 2019 | $ (863,828) | $ (863,828) | ||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Net income (loss) | (7,826,008) | (7,826,008) | ||||||||||
Stock-based compensation | $ 2,262,093 | 2,262,093 | ||||||||||
Ending balance at Dec. 31, 2020 | $ 270 | $ 270 | $ 578 | 4,079,891 | (8,709,278) | (4,628,539) | ||||||
Ending balance (in shares) at Dec. 31, 2020 | 2,696,439 | 2,696,439 | 5,775,898 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Issuance of common stock in connection with conversion of notes payable | $ 113 | 3,412,669 | 3,412,782 | |||||||||
Issuance of common stock in connection with conversion of notes payable (in shares) | 1,137,594 | |||||||||||
Net income (loss) | (16,462,227) | (16,462,227) | ||||||||||
Stock-based compensation | 1,110,874 | 1,110,874 | ||||||||||
Ending balance at Sep. 30, 2021 | $ 270 | $ 691 | 8,603,434 | (25,171,505) | (16,567,110) | |||||||
Ending balance (in shares) at Sep. 30, 2021 | 2,696,439 | 6,913,492 | ||||||||||
Beginning balance at Dec. 31, 2020 | $ 270 | $ 270 | $ 578 | 4,079,891 | (8,709,278) | (4,628,539) | ||||||
Beginning balance (in shares) at Dec. 31, 2020 | 2,696,439 | 2,696,439 | 5,775,898 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Issuance of common stock in connection with conversion of notes payable | $ 113 | 3,412,669 | $ 3,412,782 | |||||||||
Issuance of common stock in connection with conversion of notes payable (in shares) | 1,137,594 | 1,137,594 | ||||||||||
Net income (loss) | (10,228,971) | $ (10,228,971) | ||||||||||
Stock-based compensation | 1,335,865 | 1,335,865 | ||||||||||
Ending balance at Dec. 31, 2021 | $ 270 | $ 270 | $ 691 | 8,828,425 | (18,938,249) | (10,108,863) | ||||||
Ending balance (in shares) at Dec. 31, 2021 | 2,696,439 | 2,696,439 | 6,913,492 | |||||||||
Beginning balance at Jun. 30, 2021 | $ 270 | $ 691 | 8,331,310 | (22,060,863) | (13,728,592) | |||||||
Beginning balance (in shares) at Jun. 30, 2021 | 2,696,439 | 6,913,492 | ||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Net income (loss) | (3,110,642) | (3,110,642) | ||||||||||
Stock-based compensation | 272,124 | 272,124 | ||||||||||
Ending balance at Sep. 30, 2021 | $ 270 | $ 691 | 8,603,434 | (25,171,505) | (16,567,110) | |||||||
Ending balance (in shares) at Sep. 30, 2021 | 2,696,439 | 6,913,492 | ||||||||||
Beginning balance at Dec. 31, 2021 | $ 270 | $ 270 | $ 691 | 8,828,425 | (18,938,249) | (10,108,863) | ||||||
Beginning balance (in shares) at Dec. 31, 2021 | 2,696,439 | 2,696,439 | 6,913,492 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Issuance of Series X preferred stock, net of fees | $ 1 | 299,999 | 300,000 | |||||||||
Issuance of Series X preferred stock, net of fees (in shares) | 3,200 | |||||||||||
Conversion of SAFE liability to Series X preferred stock | $ 20 | 9,999,980 | 10,000,000 | |||||||||
Conversion of SAFE liability to Series X preferred stock (in shares) | 100,000 | 100,000 | ||||||||||
Issuance of common stock and warrants, net of fees | $ 154 | 6,022,859 | 6,023,013 | |||||||||
Issuance of common stock and warrants, net of fees (in shares) | 1,545,454 | |||||||||||
Issuance of common stock in connection with conversion of notes payable | $ 24 | 1,159,476 | 1,159,500 | |||||||||
Issuance of common stock in connection with conversion of notes payable (in shares) | 238,094 | |||||||||||
Issuance of Series X preferred stock in connection with conversion of notes payable | 296,819 | 296,819 | ||||||||||
Issuance of Series X preferred stock in connection with conversion of notes payable (in shares) | 2,555 | |||||||||||
Conversion of preferred stock to common stock | $ (270) | $ (6) | $ 156 | $ 118 | $ 114 | $ (112) | ||||||
Conversion of preferred stock to common stock (in shares) | (2,696,439) | (61,689) | 1,557,435 | 1,175,000 | ||||||||
Warrants exchanged for shares of common stock and Series X preferred stock | $ 35 | 2,009,172 | 2,009,207 | |||||||||
Warrants exchanged for shares of common stock and Series X preferred stock (in shares) | 1,250 | 350,000 | ||||||||||
Reclassification of warrants to equity | 912,580 | 912,580 | ||||||||||
Net income (loss) | (9,581,119) | (9,581,119) | ||||||||||
Stock-based compensation | 1,377,165 | 1,377,165 | ||||||||||
Ending balance at Sep. 30, 2022 | $ 15 | $ 1,178 | 30,906,477 | (28,519,368) | 2,388,302 | |||||||
Ending balance (in shares) at Sep. 30, 2022 | 45,316 | 11,779,475 | ||||||||||
Beginning balance at Jun. 30, 2022 | $ 270 | $ 691 | 9,158,437 | (17,055,755) | (7,896,357) | |||||||
Beginning balance (in shares) at Jun. 30, 2022 | 2,696,439 | 6,913,492 | ||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Issuance of Series X preferred stock, net of fees | $ 1 | 299,999 | 300,000 | |||||||||
Issuance of Series X preferred stock, net of fees (in shares) | 3,200 | |||||||||||
Conversion of SAFE liability to Series X preferred stock | $ 20 | 9,999,980 | 10,000,000 | |||||||||
Conversion of SAFE liability to Series X preferred stock (in shares) | 100,000 | |||||||||||
Issuance of common stock and warrants, net of fees | $ 154 | 6,022,859 | 6,023,013 | |||||||||
Issuance of common stock and warrants, net of fees (in shares) | 1,545,454 | |||||||||||
Issuance of common stock in connection with conversion of notes payable | $ 24 | 1,159,476 | 1,159,500 | |||||||||
Issuance of common stock in connection with conversion of notes payable (in shares) | 238,094 | |||||||||||
Issuance of Series X preferred stock in connection with conversion of notes payable | 296,819 | 296,819 | ||||||||||
Issuance of Series X preferred stock in connection with conversion of notes payable (in shares) | 2,555 | |||||||||||
Conversion of preferred stock to common stock | $ (270) | $ (6) | $ 156 | $ 118 | $ 114 | $ (112) | ||||||
Conversion of preferred stock to common stock (in shares) | (2,696,439) | (61,689) | 1,557,435 | 1,175,000 | ||||||||
Warrants exchanged for shares of common stock and Series X preferred stock | $ 35 | 2,009,172 | 2,009,207 | |||||||||
Warrants exchanged for shares of common stock and Series X preferred stock (in shares) | 1,250 | 350,000 | ||||||||||
Reclassification of warrants to equity | 912,580 | 912,580 | ||||||||||
Net income (loss) | (11,463,613) | (11,463,613) | ||||||||||
Stock-based compensation | 1,047,153 | 1,047,153 | ||||||||||
Ending balance at Sep. 30, 2022 | $ 15 | $ 1,178 | $ 30,906,477 | $ (28,519,368) | $ 2,388,302 | |||||||
Ending balance (in shares) at Sep. 30, 2022 | 45,316 | 11,779,475 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Cash flows from operating activities | |||
Net loss | $ (9,581,119) | $ (16,462,227) | $ (10,228,971) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Stock-based compensation | 1,377,165 | 1,110,874 | 1,335,865 |
Amortization of debt discount | 2,550,780 | 2,550,780 | |
Change in fair value of notes | 255,145 | ||
Change in fair value of SAFE | (163,025) | 3,806,374 | (175,783) |
Loss on conversion of SAFE | 5,338,808 | ||
Loss on issuance of debt | 391,246 | ||
Loss on extinguishment of debt | 3,940 | ||
Gain on conversion of notes | (59,890) | (59,890) | |
Change in fair value warrant liability | (1,873,192) | 4,498,145 | 458,558 |
Non-cash interest expense | 255,076 | 255,076 | |
Changes in assets and liabilities: | |||
Other current assets | (416,439) | ||
Deferred offering costs | 204,779 | ||
Accounts payable | (65,578) | 140,935 | 352,277 |
Accounts payable - related party | 131,250 | (100,138) | (102,053) |
Accrued expenses | 1,392,845 | (4,179) | 101,502 |
Net cash used in operating activities | (3,004,175) | (4,264,250) | (5,512,639) |
Cash flows from financing activities | |||
Proceeds from issuance of common stock and warrants, net of fees | 6,582,450 | ||
Proceeds from issuance of convertible promissory notes, net of fees | 1,240,970 | ||
Proceeds from issuance of Series X preferred stock, net of fees | 300,000 | ||
Proceeds from SAFE investment | 5,000,000 | 5,000,000 | |
Payment of deferred offering costs | (60,779) | (166,899) | |
Net cash provided by financing activities | 8,123,420 | 4,939,221 | 4,833,101 |
Net increase in cash | 5,119,245 | 674,971 | (679,538) |
Cash, beginning of period | 444,087 | 1,123,625 | 1,123,625 |
Cash, end of period | 5,563,332 | 1,798,596 | 444,087 |
Non-cash financing activities: | |||
Series X preferred stock issued in connection with conversion of notes payable | 296,819 | ||
Common stock issued in connection with conversion of notes payable | 1,159,500 | $ 3,412,782 | 3,412,782 |
Conversion of SAFE liability to Series X preferred stock | 10,000,000 | ||
Warrants exchanged for shares of common stock and Series X preferred stock | 2,009,207 | ||
Reclassification of warrants to equity | 912,580 | ||
Unpaid offering costs | $ 559,437 | $ 37,880 |
Organization and description _4
Organization and description of business operations | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Organization and description of business operations | ||
Organization and description of business operations | Note 1. Organization and description of business operations PaxMedica, Inc. (the “Company”) is a clinical stage biopharmaceutical company organized as a Delaware limited liability company on April 5, 2018 (“Inception”) to focus on the development of drug candidates for the treatment of autism spectrum disorder (ASD), Fragile X syndrome tremor-ataxia (FXTAS) and Human African Trypanosomiasis (HAT). Initial Public Offering On August 9, 2022, the Company entered into an underwriting agreement relating to the public offering of its common stock, par value $0.0001 per share. The Company agreed to sell 1,545,454 shares of its common stock to the underwriters, at a purchase price per share of $4.83 (the offering price to the public of $5.25 per share minus the underwriters’ discount), pursuant to the Company’s registration statement on Form S-1 (File No. 333-239676), as amended, under the Securities Act of 1933, that was filed by the Company under Rule 462(b) under the Securities Act. The Company also granted the underwriters a 45 - day option to purchase up to 231,818 additional shares of common stock to cover over-allotments. On August 30, 2022, the Company received net proceeds from its public offering of approximately $6.0 million, net of underwriter fees and commissions of approximately $0.8 million, and offering costs of approximately $1.4 million. In connection with its public offering the Company issued 108,181 warrants to purchase shares of the Company’s common stock with an exercise price of $6.5625 per share. Going concern, liquidity and capital resources The Company has no product revenues, incurred operating losses since inception, and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. The Company had an accumulated deficit of approximately $28.5 million at September 30, 2022, a net loss of approximately $9.6 million, and approximately $3.0 million of net cash used in operating activities for the nine months ended September 30, 2022. 2022 Notes During the second and third quarters of 2022, the Company entered into senior secured convertible promissory notes (the “2022 Notes”) with a principal balance totaling approximately $1.5 million. The 2022 Notes contain an original issue discount totaling $0.3 million and the Company received net proceeds of approximately $1.2 million (See Note 6). Series X Preferred Stock On August 2, 2022, the Company issued 3,200 shares of Series X preferred stock, par value $0.0001 per share at a purchase price of $100 per share. The Company received net proceeds of approximately $0.3 million, net of fees. (See Note 8). Going Concern The accompanying condensed financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern. The Company’s future liquidity and capital funding requirements will depend on numerous factors, including: ● its ability to raise additional funds to finance its operations; ● the outcome, costs and timing of clinical trial results for the Company’s current or future product candidates; ● the emergence and effect of competing or complementary products; ● its ability to maintain, expand and defend the scope of its intellectual property portfolio, including the amount and timing of any payments the Company may be required to make, or that it may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights; ● its ability to retain its current employees and the need and ability to hire additional management and scientific and medical personnel; and ● the terms and timing of any collaborative, licensing or other arrangements that it has or may establish. The Company will likely need to raise substantial additional funds through one or more of the following: issuance of additional debt or equity, or the completion of a licensing transaction for one or more of the Company’s pipeline assets. If the Company is unable to maintain sufficient financial resources, its business, financial condition and results of operations will be materially and adversely affected. This could affect future development and business activities and potential future clinical studies and/or other future ventures. Failure to obtain additional equity or debt financing will have a material, adverse impact on the Company’s business operations. There can be no assurance that the Company will be able to obtain the needed financing on acceptable terms or at all. Additionally, equity or debt financings will likely have a dilutive effect on the holdings of the Company’s existing stockholders. Accordingly, there are material risks and uncertainties that raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the issuance of these condensed financial statements. The accompanying condensed financial statements do not include any adjustments that result from the outcome of these uncertainties. The COVID-19 global pandemic has been unprecedented and unpredictable, is likely to continue to result in significant national and global economic disruption, which may adversely affect our business. Based on the Company’s current assessment, the Company does not expect any material impact on its long-term development timeline and its liquidity due to the worldwide spread of the COVID-19 virus. However, the Company is continuing to assess the effect on its operations by monitoring the spread of COVID-19 and the resulting global pandemic and the actions implemented to combat the virus throughout the world. | Note 1. Organization and description of business operations PaxMedica, Inc. (Formerly Purinix Pharmaceuticals LLC) (the “Company”) is a clinical stage biopharmaceutical company organized as a Delaware limited liability company on April 5, 2018 (“Inception”) to focus on the development of drug candidates for the treatment of autism spectrum disorder (ASD), Fragile X syndrome tremor-ataxia (FXTAS) and Human African Trypanosomiasis (HAT). On April 15, 2020, Purinix Pharmaceuticals LLC converted from a limited liability company (“ LLC”) to a Delaware corporation and changed its name to PaxMedica, Inc., resulting in a new capital structure consisting of two classes of stock: common and preferred, each having a par value of $0.0001 . The Company has authorized 20,000,000 shares of common stock and 2,696,439 shares of preferred stock. This conversion resulted in conversion of the current members’ LLC interests into an aggregate of 2,696,439 shares of preferred stock, which are convertible into 1,557,435 shares of common stock, and 5,775,898 shares of common stock of the Company. On July 22, 2020, the Company filed with the state of Delaware a certificate of amendment for its certificate of incorporation and effected a 1-for- 0.5775898 reverse stock split of its common stock. All share and per share information in the accompanying financial statements and footnotes has been retroactively adjusted for the effects of the reverse split for all periods presented. Going concern, liquidity and capital resources The Company has no product revenues, incurred operating losses since inception, and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. The Company had an accumulated deficit of approximately $18.9 million at December 31, 2021, a net loss of approximately $10.2 million, and approximately $5.5 million of net cash used in operating activities for the year ended December 31, 2021. On March 19, 2021, the Company entered into a Simple Agreement for Future Equity (“SAFE”) with an investor and received proceeds of $5.0 million. Under the terms of the SAFE, the investor has rights to certain shares of the Company’s common and preferred stock at a discount to the price at which those securities might be issued (See Note 6). The accompanying financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern. The Company’s future liquidity and capital funding requirements will depend on numerous factors, including: ● its ability to raise additional funds to finance its operations; ● the outcome, costs and timing of clinical trial results for the Company’s current or future product candidates; ● the emergence and effect of competing or complementary products; ● its ability to maintain, expand and defend the scope of its intellectual property portfolio, including the amount and timing of any payments the Company may be required to make, or that it may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights; ● its ability to retain its current employees and the need and ability to hire additional management and scientific and medical personnel; and ● the terms and timing of any collaborative, licensing or other arrangements that it has or may establish. The Company will likely need to raise substantial additional funds through one or more of the following: issuance of additional debt or equity, or the completion of a licensing transaction for one or more of the Company’s pipeline assets. If the Company is unable to maintain sufficient financial resources, its business, financial condition and results of operations will be materially and adversely affected. This could affect future development and business activities and potential future clinical studies and/or other future ventures. Failure to obtain additional equity or debt financing will have a material, adverse impact on the Company’s business operations. There can be no assurance that the Company will be able to obtain the needed financing on acceptable terms or at all. Additionally, equity or debt financings will likely have a dilutive effect on the holdings of the Company’s existing stockholders. Accordingly, there are material risks and uncertainties that raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the issuance of these financial statements. The accompanying financial statements do not include any adjustments that result from the outcome of these uncertainties. The COVID-19 global pandemic has been unprecedented and unpredictable, is likely to continue to result in significant national and global economic disruption, which may adversely affect our business. Based on the Company’s current assessment, the Company does not expect any material impact on its long-term development timeline and its liquidity due to the worldwide spread of the COVID-19 virus. However, the Company is continuing to assess the effect on its operations by monitoring the spread of COVID-19 and the resulting global pandemic and the actions implemented to combat the virus throughout the world. |
Significant accounting polici_7
Significant accounting policies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Significant accounting policies | ||
Significant accounting policies | Note 2. Significant accounting policies Basis of presentation The accompanying unaudited condensed financial statements are presented in U.S. dollars and in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected through December 31, 2022. The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the registration statement on Form S-1/A filed by the Company with the SEC on August 8, 2022. Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s condensed financial statements relate to the valuation of convertible notes, valuation of warrants, valuation of the Simple Agreement For Equity (“SAFE”) liability and valuation of equity-based awards. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected. Cash, cash equivalents and short-term investments The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of September 30, 2022 and December 31, 2021, the Company had no cash equivalents or short-term investments. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash. The Company maintains its cash high credit quality financial institutions, which may at times, be in excess of federal insured limits. The Company believes it is not exposed to any significant losses due to credit risk on cash. Fair value of financial instruments The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820 (“ASC 820”), Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 - assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. During the nine months ended September 30, 2022, the Company issued certain of the 2022 Notes and warrants in connection with the 2022 Notes. The 2022 Notes and warrants were classified as liabilities and measured at fair value on the issuance date, with changes in fair value recognized as other expense on the statements of operations and disclosed in the condensed financial statements During the year ended December 31, 2021, the Company entered into its SAFE agreement and classified the SAFE as a liability measured at cost on the issuance date, with changes in fair value recognized as other income on the statement of operations. The carrying amounts of the Company’s financial assets and liabilities, such as accounts payable, approximate fair value due to the short-term nature of these instruments. Convertible Notes In accordance with Accounting Standards Codification 825, Financial Instruments (“ASC 825”), the Company has elected the fair value option for recognition of its 2022 Notes. In accordance with ASC 825, the Company recognizes these 2022 Notes at fair value with changes in fair value recognized in the condensed statements of operations. The fair value option may be applied instrument by instrument, but it is irrevocable. As a result of applying the fair value option, direct costs and fees related to the convertible notes were recognized in general and administrative expense. Accrued interest for the 2022 Notes has been included in the change in fair value of convertible notes in the condensed statements of operations. Warrant Liability The Company accounts for certain common stock warrants outstanding as a liability at fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the warrants issued by the Company have been estimated using the Monte Carlo simulation. As of September 30, 2022, there are no warrant liabilities (See Note 3). Simple Agreement for Future Equity The Company accounts for a SAFE as a liability at fair value and adjusts the instrument to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until a triggering event, equity financing or a liquidity/dissolution occurs, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the SAFE has been estimated using the Backsolve method which utilizes the Option Pricing Method. As of September 30, 2022, the SAFE liability has been converted to 100,000 shares of Series X preferred stock (See Note 8). Research and development Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Accrued Outsourcing Costs Substantial portions of the Company’s preclinical studies and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors (collectively “CROs”). These CROs generally bill monthly or quarterly for services performed, or bill based upon milestone achievement. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. The Company outsources a substantial portion of its clinical trial activities, utilizing external entities such as CROs, independent clinical investigators, and other third-party service providers to assist the Company with the execution of its clinical studies. For each clinical trial that the Company conducts, certain clinical trial costs are expensed immediately, while others are expensed over time based on the number of patients in the trial, the attrition rate at which patients leave the trial, and/or the period over which clinical investigators or CROs are expected to provide services. The Company’s estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives. Stock-Based Compensation The Company expenses stock-based compensation to employees, non-employees and board members over the requisite service period based on the estimated grant-date fair value of the awards and actual forfeitures. The Company accounts for forfeitures as they occur. Stock-based awards with graded vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in general and administrative costs in the statements of operations. Loss Per Share Basic net loss per share (“EPS”) of common stock is computed by dividing net loss allocated to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. The Company’s common stock equivalents have been excluded from the computation of diluted loss per share for the three and nine months ended September 30, 2022 and 2021, as the effect would be to reduce the loss per share. Therefore, the weighted average common stock outstanding used to calculate both basic and diluted loss per share is the same for the three and nine months ended September 30, 2022 and 2021. The following securities were excluded from the computation of diluted net loss per share attributable to common shareholders for the nine months ended September 30, 2022 and 2021, because including them would have been anti-dilutive: September 30, 2022 2021 Preferred stock — 1,557,435 Series X preferred stock 863,162 — Unvested restricted stock units 1,582,220 1,377,999 Common stock warrants 587,497 1,034,176 SAFE investment — 414,808 Convertible notes 37,259 — Total 3,070,138 4,384,418 Income taxes ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s condensed financial statements. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position. Recent accounting pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company adopted this standard on January 1, 2022, and the adoption did not have a material impact on the Company’s condensed financial statements or disclosures. 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). This ASU reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. This ASU will be effective for all entities for fiscal years beginning after December 15, 2021. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The Company adopted this standard on January 1, 2022, and the adoption did not have a material impact on the Company’s condensed financial statements or disclosures. | Note 2. Significant accounting policies Basis of presentation The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and include all adjustments necessary for the fair presentation of its balance sheets, results of operations and cash flows for the period presented. Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s financial statements relate to the valuation of warrants, valuation of the SAFE liability and valuation of equity-based awards. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected. Cash, cash equivalents and short-term investments The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of December 31, 2021 and 2020, the Company had no cash equivalents or short-term investments . Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash. The Company maintains its cash high credit quality financial institutions, which may at times, be in excess of federal insured limits. The Company believes it is not exposed to any significant losses due to credit risk on cash. Risks and Uncertainties The Company operates in a dynamic and highly competitive industry and is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, contract manufacturer and contract research organizations, compliance with government regulations and the need to obtain additional financing to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical studies and clinical trials and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting. The Company believes that changes in any of the following areas could have a material adverse effect on the Company’s future financial position, results of operations, or cash flows; ability to obtain future financing; advances and trends in new technologies and industry standards; results of clinical trials; regulatory approval and market acceptance of the Company’s products; development of sales channels; certain strategic relationships; litigation or claims against the Company based on intellectual property, patent, product, regulatory, or other factors; and the Company’s ability to attract and retain employees necessary to support its growth. Fair value of financial instruments The Company accounts for financial instruments under FASB Accounting Standards Codification 820 (“ASC 820”), Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. During the year ended December 31, 2021, the Company entered into its SAFE agreement and classified the SAFE as a liability measured at cost on the issuance date, with changes in fair value recognized as other income on the statement of operations. During the year ended December 31, 2020, the Company issued convertible notes and warrants in connection with the notes. The notes and warrants were classified as liabilities and measured at fair value on the issuance date, with changes in fair value recognized as other expense on the statements of operations and disclosed in the financial statements. The carrying amounts of the Company’s financial assets and liabilities, such as accounts payable, approximate fair value due to the short-term nature of these instruments. Warrant Liability The Company accounts for certain common stock warrants outstanding as a liability at fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the warrants issued by the Company has been estimated using the Monte Carlo simulation. Simple Agreement for Future Equity The Company accounts for a SAFE as a liability at fair value and adjusts the instrument to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until a triggering event, equity financing or a liquidity/dissolution occurs, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the SAFE has been estimated using the Backsolve method which utilizes the Option Pricing Method. Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to interest rate, market, or foreign currency risks. The Company evaluates all of its financial instruments, including notes payable, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the statement of operations each period. Bifurcated embedded derivatives are classified with the related host contract in the Company’s balance sheet. During the year ended December 31, 2020, the Company entered into note agreements that were determined to have embedded derivative instruments in the form of contingent interest. The notes are recognized at the value of proceeds received after allocating issuance proceeds to the separable instruments issued with the notes and to the bifurcated contingent interest. The notes are subsequently measured at amortized cost using the effective interest method to accrete interest over their term to bring the notes’ initial carrying value to their principal balance at maturity. The bifurcated contingent interest is initially measured at fair value which is included in the notes payable balance on the accompanying balance sheets and subsequently measured at fair value with changes in fair value recognized as a component of other income (expense) in the statements of operations. The notes were converted during the year ended December 31, 2021 (See Note 5). Research and development Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Accrued Outsourcing Costs Substantial portions of the Company’s preclinical studies and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors (collectively “CROs”). These CROs generally bill monthly or quarterly for services performed, or bill based upon milestone achievement. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. The Company outsources a substantial portion of its clinical trial activities, utilizing external entities such as CROs, independent clinical investigators, and other third-party service providers to assist the Company with the execution of its clinical studies. For each clinical trial that the Company conducts, certain clinical trial costs are expensed immediately, while others are expensed over time based on the number of patients in the trial, the attrition rate at which patients leave the trial, and/or the period over which clinical investigators or CROs are expected to provide services. The Company’s estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives. Convertible Financial Instruments The Company bifurcates conversion options from their host instruments and accounts for them as free standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable GAAP. When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, discounts are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument. Stock-Based Compensation The Company expenses stock-based compensation to employees, non-employees and board members over the requisite service period based on the estimated grant-date fair value of the awards and actual forfeitures. The Company accounts for forfeitures as they occur. Stock-based awards with graded vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in general and administrative costs in the statements of operations. Loss Per Share Basic net loss per share (“EPS”) of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Since the Company has net losses, basic and diluted net loss per share is the same. Securities that could potentially dilute loss per share in the future were not included in the computation of diluted loss per share at December 31, 2021 and 2020, because their inclusion would be anti-dilutive are as follows: December 31, 2021 2020 Preferred stock 1,557,435 1,557,435 Unvested restricted stock units — 1,377,999 Common stock warrants 1,034,176 1,034,176 Convertible notes — 1,034,177 SAFE investment (1) 414,808 — Total 3,006,419 5,003,787 (1) SAFE investment As of December 31, 2021, the Company’s price per share of $12.05 was calculated by dividing the post money valuation of $150 million by 12,444,251 shares of common stock outstanding. The 12,444,251 shares of common stock outstanding was calculated in accord with the agreement and includes 6,913,492 of common shares outstanding, 2,703,776 of IPO shares, 1,377,999 of restricted stock units, 1,034,176 of common stock warrants and 414,808 of SAFE shares. The SAFE investment shares of 414,808 (included in the table above) were calculated using the SAFE investment of $5.0 million divided by $12.05 per share. Income taxes From April 5, 2018 (Inception) through April 14, 2020, the Company was organized as an LLC and subject to the provisions of Subchapter K of the Internal Revenue Code. As such, the Company was not viewed as a taxpaying entity in any jurisdiction and did not require a provision for income taxes for this period. Each member was responsible for the tax liability, if any, related to its proportionate share of the Company’s taxable losses for this period. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position. The Company converted to a C-Corporation on April 15, 2020 and therefore the Company is subject to examination starting in 2020. The Company’s tax year, 2021 and 2020 federal tax returns remain subject to examination by the Internal Revenue Service. Given the Company’s historical losses, the conversion to a C-Corporation did not have a material impact on the Company financial statements. Recent accounting pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company adopted this standard on January 1, 2022, and the adoption did not have a material impact on the Company’s financial statements or disclosures. 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). This ASU reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: (1) how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. This ASU will be effective for all entities for fiscal years beginning after December 15, 2021. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The Company adopted this standard on January 1, 2022, and the adoption did not have a material impact on the Company’s financial statements or disclosures. |
Fair Value Measurements_2
Fair Value Measurements | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Fair Value Measurements | ||
Fair Value Measurements | Note 3. Fair Value Measurements Convertible Notes During the second and third quarters of 2022, the Company issued the 2022 Notes. The fair value of the 2022 Notes on the issuance dates and as of September 30, 2022 were estimated using a Monte Carlo simulation to capture the path dependencies intrinsic to their terms. The significant unobservable inputs used in the fair value measurement of the Company’s convertible notes are the common stock price, volatility, and risk-free interest rates. Significant changes in these inputs may result in significantly lower or higher fair value measurement. The Company elected the fair value option when recording its 2022 Notes (See Note 2) and the notes were classified as liabilities and measured at fair value on the issuance date, with changes in fair value recognized as other income (expense) on the statements of operations and disclosed in the condensed financial statements. On August 26, 2022, two holders of the 2022 Notes converted their notes to 238,094 shares of the Company’s common stock and one holder of the 2022 Notes converted its note to 2,555 shares of Series X preferred stock. A summary of significant unobservable inputs (Level 3 inputs) used in measuring the 2022 Notes upon the issuance dates, conversion dates and during three and nine months ended September 30, 2022 is as follows: Three months August 3, 2022 - ended September Nine months ended July 8, 2022 August 5, 2022 30, 2022 September 30, 2022 Dividend yield 0 % 0 % 0 % 0 % Expected price volatility 57.0 % 57.0 % 57.0 % 57.0% - 57.2 % Risk free interest rate 2.96 % 3.14 %- 3.29 % 2.8 %- 4.05 % 2.8 %- 4.05 % Expected term (in years) 1.0 1.0 0.7 - 0.9 0.7 - 0.9 Simple Agreement for Future Equity On March 19, 2021, the Company entered into a SAFE agreement with an investor. At issuance date, the Company classified the cash received of $5.0 million as a liability, with changes in fair value recognized as other income (expense) on the statements of operations and disclosed in the condensed financial statements (See Note 5). On August 2, 2022 the SAFE was converted to 100,000 shares of Series X preferred stock (See Note 8). A summary of significant unobservable inputs (Level 3 inputs) used in measuring the SAFE on the conversion date of August 2, 2022, and the period January 1, 2022 through August 2, 2022 is as follows: January 1, August 2, 2022 - August 2022 2, 2022 Dividend yield 0 % 0 % Expected price volatility 50.0 % 50.0 % Risk free interest rate 3.08 % 1.35% - 3.08 % Expected term (in years) 1.5 0.8 - 1.5 Warrants During the nine months ended September 30, 2022, the Company issued 195,140 common stock warrants in connection with its 2022 Notes (See Note 6). During the year ended December 31, 2020, the Company issued 1,034,176 common stock warrants in association with its 2020 convertible notes (the “2020 Notes”) issued during 2020. The warrants were classified as liabilities and measured at fair value on the grant date, with changes in fair value recognized as other income (expense) on the statements of operations and disclosed in the condensed financial statements. On August 26, 2022, 750,000 warrants issued in connection with the 2020 Notes were exchanged for 350,000 shares of common stock and 1,250 shares of Series X preferred stock (see below). On August 26, 2022, 479,316 liability classified warrants were reclassified to equity. As of September 30, 2022, there are no liability classified warrants. Warrant Exchange On August 3, 2022, the Company entered into a warrant exchange agreement (the “Warrant Exchange Agreement”) with a holder of certain warrants to purchase the Company’s common stock. The warrants were issued in connection with the Company’s 2020 Notes. Pursuant to the Warrant Exchange Agreement, the Company exchanged 750,000 warrants for 350,000 shares of common stock and 1,250 shares of Series X preferred stock at the consummation of the Company’s initial public offering (See Note 8). A summary of significant unobservable inputs (Level 3 inputs) used in measuring warrants on issuance date, August 26, 2022, and during the period January 1, 2022 through August 26, 2022, is as follows: January 1 2022 - July 2022 August 26, 2022 August 26, 2022 Dividend yield 0 % 0 % 0 % Expected price volatility 57.0 % 57.0 % 57.0% - 105.0 % Risk free interest rate 2.70 % - 2.82 % 2.39% - 3.40 % 0.17% - 3.40 % Expected term (in years) 5.0 0.1 - 4.9 0.1 - 4.0 Significant changes in the expected price volatility and expected term would result in significantly lower or higher fair value measurement of the warrants, respectively. The following tables classify the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of September 30, 2022 and December 31, 2021: Fair value measured at September 30, 2022 Quoted prices in active Significant other Significant Total carrying value at markets observable inputs unobservable inputs September 30, 2022 (Level 1) (Level 2) (Level 3) Liabilities: Convertible notes $ 156,486 $ — $ — $ 156,486 Fair value measured at December 31, 2021 Quoted prices in active Significant other Significant Total carrying value at markets observable inputs unobservable inputs December 31, 2021 (Level 1) (Level 2) (Level 3) Liabilities: SAFE liability $ 4,824,217 $ — $ — $ 4,824,217 Warrant liability $ 4,516,485 $ — $ — $ 4,516,485 For the three and nine months ended September 30, 2022, there was a change of approximately $3.3 million and $1.8 million in Level 3 liabilities measured at fair value, respectively. The fair value of the convertible notes may change significantly as additional data is obtained, impacting the Company’s assumptions used to estimate the fair value of the liabilities. In evaluating this information, considerable judgment is required to interpret the data used to develop the assumptions and estimates. The estimates of fair value may not be indicative of the amounts that could be realized in a current market exchange. Accordingly, the use of different market assumptions and/or different valuation techniques may have a material effect on the estimated fair value amounts, and such changes could materially impact the Company’s results of operations in future periods. The following table presents changes in Level 3 liabilities measured at fair value for the nine months ended September 30, 2022. Unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to unobservable (e.g., changes in unobservable long-dated volatilities) inputs. Convertible Notes SAFE Liability Warrant Liability Balance at December 31, 2021 $ — $ 4,824,217 $ 4,516,485 Issuance of convertible notes and warrants 1,353,720 — 278,494 Conversion of SAFE liability to Series X preferred stock — (10,000,000) — Issuance of common stock in connection with conversion of notes payable (1,159,500) — — Issuance of Series X preferred stock in connection with conversion of notes payable (296,819) — — Warrants exchanged for shares of common stock and Series X preferred stock — — (2,009,207) Loss on extinguishment of debt 3,940 — — Change in fair value 255,145 (163,025) (1,873,192) Reclassification of warrants to equity — — (912,580) Loss on conversion of SAFE — 5,338,808 — Balance at September 30, 2022 $ 156,486 $ — $ — | Note 3. Fair Value Measurements Simple Agreement for Future Equity On March 19, 2021, the Company entered into a SAFE agreement with an investor. At issuance date, the Company classified the cash received of $5.0 million as a liability, with changes in fair value recognized as other expense on the statements of operations and disclosed in the financial statements. (See Note 6). A summary of significant unobservable inputs (Level 3 inputs) used in measuring the SAFE during the year ended December 31, 2021, is as follows: Year Ended December 31, 2021 Dividend yield — Expected price volatility 50.0 % Risk free interest rate 0.06 % – 0.07 % Expected term (in years) 1.0 – 5.0 Warrants During the year ended December 31, 2020, the Company issued 1,034,176 common stock warrants in association with its convertible notes. As of December 31, 2021, 1,034,176 warrants were outstanding. The warrants were classified as liabilities and measured at fair value on the grant date, with changes in fair value recognized as other expense on the statements of operations and disclosed in the financial statements. A summary of significant unobservable inputs (Level 3 inputs) used in measuring warrants during the years ended December 31, 2021 and 2020, is as follows: Years Ended December 31, 2021 2020 Dividend yield — — Expected price volatility 76.8 % – 112.1 % 108.7 % – 114.4 % Risk free interest rate 0.05 % – 1.09 % 0.10 % – 0.38 % Expected term (in years) 1.0 – 5.0 1.0 – 5.0 Significant changes in the expected price volatility and expected term would result in significantly lower or higher fair value measurement of the warrants, respectively. Contingent Interest During the year ended December 31, 2020, the Company recorded a derivative liability resulting from the contingent interest feature within its convertible notes. The Company recorded contingent interest on its convertible notes due to the interest rate increasing from 10% to 15% per annum, if the Company has not consummated a Qualified Offering on or before the date that is 9 months from the note issuance dates (See Note 5). The fair value of the contingent interest was estimated using the Monte Carlo simulation model on the dates the notes were issued and was subsequently revalued. During the year ended December 31, 2021, all of the Company’s notes were converted into 1,137,594 shares of the Company’s common stock, and the Company recognized a gain on the derivative liability of approximately $60,000 . As of December 31, 2021, there is no derivative liability. The following table reflects the assumptions used in the Monte Carlo simulation model at the notes issuance dates and during the year ended December 31, 2020: Year Ended December 31, 2020 Contingent interest rate 15.0 % Interest rate 10.0 % Expected term 0.8 – 1.0 Significant changes in the expected term and contingent interest rate would result in significantly lower or higher fair value measurement of the contingent interest derivative, respectively. The following tables classify the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of December 31, 2021 and 2020: Fair value measured at December 31, 2021 Total carrying Quoted prices in Significant other Significant value at active markets observable inputs unobservable inputs December 31, 2021 (Level 1) (Level 2) (Level 3) Liabilities: SAFE liability $ 4,824,217 $ — $ — $ 4,824,217 Warrant liability $ 4,516,485 $ — $ — $ 4,516,485 Fair value measured at December 31, 2020 Total carrying Quoted prices in Significant other Significant value at active markets observable inputs unobservable inputs December 31, 2020 (Level 1) (Level 2) (Level 3) Liabilities: Warrant liability $ 4,057,927 $ — $ — $ 4,057,927 Contingent Interest $ 59,890 $ — $ — $ 59,890 For the years ended December 31, 2021 and 2020, there was a change of approximately $0.3 million and $1.6 million, respectively, in Level 3 liabilities measured at fair value. The fair value of the warrant liability and SAFE liability may change significantly as additional data is obtained, impacting the Company’s assumptions used to estimate the fair value of the liabilities. In evaluating this information, considerable judgment is required to interpret the data used to develop the assumptions and estimates. The estimates of fair value may not be indicative of the amounts that could be realized in a current market exchange. Accordingly, the use of different market assumptions and/or different valuation techniques may have a material effect on the estimated fair value amounts, and such changes could materially impact the Company’s results of operations in future periods. The following table presents changes in Level 3 liabilities measured at fair value for the years ended December 31, 2021 and 2020. Unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to unobservable (e.g., changes in unobservable long-dated volatilities) inputs. SAFE Liability Warrant Liability Contingent Interest Balance at December 31, 2019 $ — $ — $ — Issuance of warrants in connection with convertible notes — 2,488,544 — Contingent interest in connection with notes payable — — 55,394 Change in fair value — 1,569,383 4,496 Balance at December 31, 2020 $ — $ 4,057,927 $ 59,890 Gain on conversion of notes — — (59,890) Issuance of SAFE 5,000,000 — — Change in fair value (175,783) 458,558 — Balance at December 31, 2021 $ 4,824,217 $ 4,516,485 $ — |
Accrued Expenses_2
Accrued Expenses | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Accrued Expenses | ||
Accrued Expenses | Note 4. Accrued Expenses The Company’s accrued expenses as of September 30, 2022 and December 31, 2021 consisted of the following: September 30, December 31, 2022 2021 (Unaudited) Employee and related expenses $ 50,335 $ 680,026 Directors and officers insurance 385,362 — Professional fees 153,995 — Research and development 24,758 — Total accrued expenses $ 614,450 $ 680,026 | Note 4. Accrued Expenses The Company’s accrued expenses as of December 31, 2021 and 2020 consisted of the following: December 31, 2021 2020 Accrued expenses: Employee and related expenses $ 680,026 $ 499,752 Research and development — 4,000 Professional fees — 74,772 Total accrued expenses $ 680,026 $ 578,524 |
Simple Agreement for Future E_3
Simple Agreement for Future Equity ("SAFE") | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Simple Agreement for Future Equity ("SAFE"). | ||
Simple Agreement for Future Equity ("SAFE") | Note 5. Simple Agreement for Future Equity (“SAFE”) During the year ended December 31, 2021, the Company entered into a SAFE with an investor, and received proceeds of $5.0 million. Under the terms of the SAFE, the investor has the right to participate in future equity financings of the Company. The number of shares to be received by the SAFE investor was based on a 50% discount of the pricing in the triggering equity financing and includes a post money valuation cap of $150.0 million. In a liquidity or dissolution event, the investors right to receive cash out was junior to payment of outstanding indebtedness and creditor claims, on par for other SAFE agreements and/or preferred stock, and senior to payments for common stock. The SAFE had no interest rate or maturity date, the SAFE investor had no voting rights prior to conversion, and if the Company paid a dividend on outstanding shares of common stock while the SAFE was outstanding, the SAFE investor would have received the same dividend. On August 2, 2022, the fair value of the SAFE was approximately $ 4.7 million and the SAFE was converted into 100,000 shares of Series X preferred stock. During the three and nine months ended September 30, 2022, the Company recognized a $5.3 million loss on conversion of the SAFE (See Note 8). | Note 6. Simple Agreement for Future Equity (“SAFE”) During the year ended December 31, 2021, the Company entered into a SAFE with an investor, and received proceeds of $5.0 million. Under the terms of the SAFE, the investor has the right to participate in future equity financings of the Company. The number of shares to be received by the SAFE investor is based on a 50% discount of the pricing in the triggering equity financing and includes a post money valuation cap of $150.0 million. In a liquidity or dissolution event, the investors right to receive cash out is junior to payment of outstanding indebtedness and creditor claims, on par for other SAFE agreements and/or preferred stock, and senior to payments for common stock. The SAFE has no interest rate or maturity date, the SAFE investor has no voting rights prior to conversion, and if the Company pays a dividend on outstanding shares of common stock while the SAFE is outstanding, the SAFE investor will receive the same dividend. As of December 31, 2021, the SAFE had not yet converted as a qualifying financing had not yet occurred. Pursuant to the guidance under ASC 480, Distinguishing Liabilities from Equity , the Company determined that the value of the SAFE should be recorded as a liability in the accompanying balance sheets (See Note 3). |
Convertible promissory notes
Convertible promissory notes | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Convertible promissory notes | ||
Convertible promissory notes | Note 6. Convertible promissory notes During the second and third quarters of 2022, the Company entered into its 2022 Notes with a principal balance totaling approximately $1.5 million. The 2022 Notes contain an original issue discount totaling $0.2 million and the Company received net proceeds of approximately $1.2 million (net of financing fees of approximately $0.1 million). The 2022 Notes bear interest at 10% per annum and mature 12 months from the issuance date. The notes are secured by all assets and personal property of the Company. The note holders have the right to convert all or any portion of the outstanding principal balance and accrued interest into shares of the Company’s common stock, up to a beneficial ownership limitation of 9.99% of the number of shares of common stock outstanding at the time of conversion. The per share conversion price is equal to the lessor of (i) $7.00 or (ii) 80% of the qualified offering price of the Company’s common stock resulting from the listing for trading of its common stock on a qualified exchange. In connection with the notes, the Company issued common stock warrants to purchase 195,140 shares of the Company’s common stock. The warrants have an exercise price of the lessor of (i) $7.00 or (ii) 80% of the qualified offering price and expire five years from the issuance date. As a result of the issuance of the common stock warrants, the exercise price of the Company’s existing warrants was adjusted to an exercise of $3.00 per share. On August 26, 2022, upon the consummation of the Company’s initial public offering, the conversion price of the 2022 Notes and the exercise price of the warrants is calculated at 80% of $5.25 per share (the offering price) or $4.20 per share. On August 3, 2022, the Company entered into a conversion agreement with certain holders of the 2022 Notes, pursuant to which the holders agreed to convert $1.0 million of the principal balance at the consummation of the Company’s initial public offering at the conversion price of $4.20 per share. On August 26, 2022, the holders of the 2022 Notes converted the notes fair value of approximately $1.2 million to 238,094 shares of the Company’s common stock. On August 3, 2022, the Company entered into a conversion agreement with an additional holder of the 2022 Notes, pursuant to which the holder agreed to convert $255,555 of the principal balance at the consummation of the Company’s initial public offering into 2,555 shares of Series X preferred stock. On August 26, 2022, the note holder converted the notes fair value of $0.3 million to 2,555 shares of Series X preferred stock (See Note 8). As of September 30, 2022, the outstanding principal balance of the 2022 Notes was approximately $0.2 million. For the nine months ended September 30, 2022, the Company recorded a loss on issuance of debt of $0.4 million, and a fair value loss of $0.25 million that is included in the change in fair value of notes, in the accompanying condensed statements of operations. The Company recognized interest expense as a component of the change in fair value of the notes during the nine months ended September 30, 2022 (See Note 2). | Note 5. Notes Payable Notes payable at December 31, 2020 consisted of the following: Unamortized Notes Principal Contingent Debt Payable as of Issuance date Balance Interest Discount December 31, 2020 October 26, 2020 $ 2,250,000 $ 43,445 $ (1,843,151) $ 450,295 October 29, 2020 750,000 14,470 (620,548) 143,922 November 6, 2020 102,532 1,974 (87,082) 17,424 $ 3,102,532 $ 59,890 $ (2,550,780) $ 611,641 Unsecured Convertible Promissory Notes In July, 2020, the Company issued unsecured convertible promissory notes in an aggregate principal amount of $100,000 with an interest rate of 8% per annum. The notes mature 12 months from the date of issuance and provide for conversion into shares of the Company’s common stock on the earlier of a Qualified Financing or if the Company engages in a Change of Control. Upon a Qualified Offering, the notes will convert into shares of the Company’s common stock at a conversion price equal to 75% of the per share purchase price in such Qualified Financing. The principal amount and accrued but unpaid interest under each note will automatically convert into shares of the Company’s common stock at the stated conversion price per share. If the Company engages in a Change of Control, the principal amount and all accrued but unpaid interest on the notes will automatically be converted into shares of the Company’s common stock at a conversion price equal to 75% of the price per share of the common stock set forth in the definitive agreements related to the Change of Control. Further, in the event that the Change of Control is a transaction wholly for cash, all principal and accrued but unpaid interest will convert into shares of the Company’s common stock at a price per share equal to 75% of the Company’s Enterprise Value as set forth and agreed to in the definitive agreements related to the Change of Control. During the year ended December 31, 2020, the unsecured convertible promissory notes were converted into senior secured convertible promissory notes (see below). Senior Secured Convertible Promissory Notes and Warrants On October 26, 2020, the Company issued a senior secured convertible promissory note with a principal balance of $2,250,000 . The Company recorded an original issue discount of $172,500 and received net proceeds totaling $2,077,500 . The note accrues interest at a rate of 10% per annum (which increases to 15% per annum if the Company has not consummated a Qualified Offering on or before July 26, 2021), and matures on October 26, 2021. The note holder has the right to convert all or any portion of the outstanding principal and interest into shares of the Company’s common stock at a conversion price equal to the lesser of (i) $3.00 or (ii) 90% of the stock price in a Qualified Offering. On October 29, 2020, the Company issued a senior secured convertible promissory note with a principal balance of $750,000 . The note accrues interest at a rate of 10% per annum (which increases to 15% per annum if the Company has not consummated a Qualified Offering on or before July 29, 2021), and matures on October 29, 2021. The note holder has the right to convert all or any portion of the outstanding principal and interest into shares of the Company’s common stock at a conversion price equal to the lesser of (i) $3.00 or (ii) 90% of the stock price in a Qualified Offering. On November 6, 2020, the Company entered into note exchange agreements with the holders of the unsecured convertible promissory notes. The note holders surrendered the July 2020 notes and entered into senior secured convertible promissory notes dated November 6, 2020. The senior secured convertible promissory notes have a principal balance of approximately $102,500 , accrue interest at a rate of 10% per annum (which increases to 15% per annum if the Company has not consummated a Qualified Offering on or before August 6, 2021), and mature on November 6, 2021. The note holders have the right to convert all or any portion of the outstanding principal and interest into shares of the Company’s common stock at a conversion price equal to the lesser of (i) $3.00 or (ii) 90% of the stock price in a Qualified Offering. In connection with the issuance of the senior secured convertible promissory notes, the Company issued the note holders common stock purchase warrants, providing the holders with the right to purchase 1,034,176 shares of the Company’s common stock at December 31, 2020. The purchase price of one share of common stock under the warrant shall be the same as the conversion price of the senior secured convertible promissory notes, and 517,088 of the common stock purchase warrants expire five years from the issuance date, and 517,088 of the common stock warrants expire thirty calendar days after the consummation of a Qualified Offering. As of December 31, 2020, the carrying value of the senior secured convertible notes was comprised of the following: Principal value of convertible notes $ 3,102,532 Original issue discount (172,500) Discount resulting from allocation of proceeds to warrant liability (2,488,544) Discount resulting from beneficial conversion feature (462,920) Amortization of discount 551,752 Loss on issuance of debt 53,541 Loss on extinguishment of debt 23,284 Change in fair value of derivative 4,496 Net carrying value of senior secured convertible notes $ 611,641 During the year ended December 31, 2021, the Company converted all of its senior secured promissory notes into 1,137,594 shares of its common stock. In connection with the note conversions, the Company recorded interest expense totaling $2.6 million, and recognized a gain of approximately $60,000 related to the contingent interest feature (see Note 3). As of December 31, 2021, there were no convertible notes outstanding. |
Stock-based compensation_2
Stock-based compensation | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Stock-based compensation. | ||
Stock-based compensation | Note 7. Stock-based compensation Stock-based Compensation The following is a summary of stock-based compensation during the three and nine months ended September 30, 2022 and 2021: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Canceled stock options $ 119,829 $ 272,124 $ 449,840 $ 1,110,874 Restricted stock units 927,324 — 927,325 — Total $ 1,047,153 $ 272,124 $ 1,377,165 $ 1,110,874 Restricted Stock Units The following is a summary of the restricted stock units during the nine months ended September 30, 2022: Weighted Average Grant-Date Number of Shares Fair Value Unvested as of December 31, 2021 — $ — Granted 1,885,500 $ 5.25 Forfeited (291,500) $ 5.25 Vested (11,780) $ 5.26 Unvested as of September 30, 2022 1,582,220 $ 5.25 On May 15 , 2022 , the Company granted 35,333 restricted stock units (RSUs) with a fair value of approximately $0.2 million to a member of its board of directors. The RSUs are subject to service conditions (vesting of 33.34% on August 26, 2022 , the consummation date of the Company’s initial public offering, with the remaining units vesting 66.66% over the next two calendar years on each three-month anniversary thereafter). On January 1, 2022 , the Company granted 1,342,667 RSUs with a fair value of approximately $14.6 million to employees, officers and directors of the Company. The RSUs are subject to service conditions (vesting of 33.34% on May 1, 2022 , with the remaining units vesting on each three -month anniversary thereafter) and performance conditions in the form of a liquidity event. Vesting of the RSUs is subject to all grantees continuous service with the Company, and no vesting shall occur if the Company has not completed a Qualified Offering or a Change of Control on or before the vesting date. In the event that neither a Qualified Offering nor a Change of Control has occurred prior to December 31, 2022 , then all RSUs shall be forfeited for no consideration. Because a Qualified Offering or Change of Control is not considered probable of achievement until consummation, compensation cost measured at the grant date is not recognized until such event occurs. During the nine months ended September 30, 2022, 291,500 RSU’s (granted on January 1, 2022) were forfeited due to terminations of two of the Company’s employees and two of its board members. In August 2022, the Company modified the remaining 1,051,167 RSUs granted on January 1, 2022 to provide that 33.34% of each of those RSUs would vest on May 1, 2022 , with an additional 8.3325% of each grant vesting each quarter thereafter, provided that if neither (i) the expiration of the 6-month period following an initial public offering nor (ii) a change in control has occurred prior to the applicable vesting date, any RSUs that would have vested thereunder shall not vest until such expiration of the 6-month period following an initial public offering or change in control occurs (provided further that if neither an initial public offering nor a change in control occurs on or prior to December 31, 2022 , then all of the related RSUs will be forfeited). Vesting in all cases generally is subject to the grantee’s continued employment with the Company or a subsidiary thereof on the applicable vesting date. This improbable to improbable modification resulted in a new measurement of compensation cost based on the underlying fair value of the Company’s common stock on the date of the modification of approximately $5.5 million. On August 26, 2022 , the Company consummated its initial public offering and based on the modification above, 33.34% of each of the remaining 1,051,167 RSU’s would vest on February 26, 2023 , with an additional 8.3325% of each grant vesting each quarter thereafter. On July 16, 2022 , the Company granted 15,000 RSUs to its Chief Financial Officer with a fair value of approximately $0.1 million, all of which vest December 31, 2022. In August 2022, the Company granted 492,500 RSUs with a fair value of approximately $2.6 million to certain officers, directors and employees, one -third of which vest on the one-year anniversary of the Company’s initial public offering, with the remaining restricted stock units vesting on a quarterly basis over the following two years . On December 22, 2020, the Company granted 896,583 RSUs with a fair value of approximately $6.3 million to its officers and directors, in exchange for 787,499 vested and unvested stock options. The RSUs are subject to service conditions (vesting of 33.34% on May 1, 2021 , with the remaining units vesting on each three-month anniversary, thereafter, fully vesting on May 1, 2023 ) and performance conditions in the form of a liquidity event. Vesting of the RSUs is subject to all grantees continuous service with the Company, and no vesting shall occur if the Company has not completed a Qualified Offering or a Change of Control on or before the vesting date. In the event that neither an IPO no r change in control has occurred prior to December 31, 2021 , then all RSUs shall be forfeited for no consideration. Pursuant to the guidance of ASC 718- “Compensation - Stock Compensation”, the exchange of the options for the RSUs was accounted for as a probable (service only vesting) to improbable (performance and service with the performance criteria considered improbable since contingent upon a Qualified Offering or Change of Control) modification. As such, compensation cost for the original awards would be recognized if the awards would have vested pursuant to the original terms. In addition, since the original awards were modified, the incremental cost would be measured as the result of the most recent modification; that is, the fair value of the options after the modification to increase the exercise price to $8.98 . This fair value would be compared to the fair value of the RSUs to determine the incremental compensation cost. Incremental compensation cost related to the replacement awards would be recognized only if the modified vesting criteria are achieved. During the three and nine months ended September 30, 2022, the Company recorded stock-based compensation expense related to the RSUs of approximately $0.9 million, respectively. No stock-based compensation expense related to the RSUs was recognized during the three and nine months ended September 30, 2021. The unamortized stock-based compensation expense related to RSUs as of September 30, 2022 is approximately $7.4 million, which is expected to be recognized over a remaining weighted average vesting period of 1.3 years. Canceled Stock Options The Company previously granted options to purchase shares of the Company’s common stock and during the year ended December 31, 2020 these options were canceled. No stock options were outstanding as of September 30, 2022 and December 31, 2021. Compensation cost related to the canceled stock options of $4.3 million will continue to be recognized over the original vesting criteria. During the three months ended September 30, 2022 and 2021, the Company recorded stock-based compensation expense related to the canceled stock options of approximately $0.1 million and $0.3 million, respectively. During the nine months ended September 30, 2022 and 2021, the Company recorded stock-based compensation expense related to the canceled stock options of approximately $0.45 million and $1.1 million, respectively. The unamortized stock-based compensation expense related to canceled stock options as of September 30, 2022 is approximately $0.3 million. | Note 8. Stock-based compensation Stock Options On May 1, 2020, the Company granted 787,499 options to purchase shares of the Company’s common stock. The options had a fair value of approximately $ 4.3 million and vest over a period of 3 years . On August 22, 2020, the Company modified the option exercise price from $0.19 to $5.57 per share, which reduced the fair value of the options to $3.7 million. Pursuant to the guidance of ASC 718 — “Compensation — Stock Compensation”, total recognized compensation cost for an equity award that has been modified and for which the original service conditions are expected to be met shall at least equal the fair value of the award at the grant date. The original vesting conditions of the stock options were expected to be satisfied on the modification date, and therefore the compensation cost to be recognized for awards that ultimately vest cannot be less than the original grant-date fair value of the options of $4.3 million. On December 22, 2020, the Company canceled 787,499 vested and unvested stock options in exchange for 896,583 restricted stock units (see Restricted Stock Units). No stock options were granted during the year ended December 31, 2021, and as of December 31, 2021, there were no stock options outstanding. Restricted Stock Units The following is a summary of the restricted stock units during the years ended December 31, 2021 and 2020: Weighted Average Grant-Date Number of Shares Fair Value Unvested as of January 1, 2020 — $ — Granted 1,377,999 $ 8.98 Unvested as of December 31, 2020 1,377,999 $ 8.98 Forfeited (1,377,999) $ 8.98 Unvested as of December 31, 2021 — $ — On December 22, 2020, the Company granted 481,416 restricted stock units (“RSUs) with a fair value of approximately $4.3 million to employees, officers and directors of the Company. The RSUs are subject to service conditions (vesting of 33.34% on May 1, 2021, with the remaining units vesting on each three-month anniversary thereafter) and performance conditions in the form of a liquidity event. Vesting of the RSUs is subject to all grantees continuous service with the Company, and no vesting shall occur if the Company has not completed a Qualified Offering or a Change of Control on or before the vesting date. In the event that neither a Qualified Offering nor a Change of Control has occurred prior to December 31, 2021, then all RSUs shall be forfeited for no consideration. Because a Qualified Offering or Change of Control is not considered probable of achievement until consummation, compensation cost measured at the grant date is not recognized until such event occurs. On December 22, 2020, the Company granted 896,583 RSU’s with a fair value of approximately $ 6.3 million to its officers and directors, in exchange for 787,499 vested and unvested stock options. The RSUs are subject to service conditions (vesting of 33.34 % on May 1, 2021, with the remaining units vesting on each three-month anniversary, thereafter, fully vesting on May 1, 2023) and performance conditions in the form of a liquidity event. Vesting of the RSUs is subject to all grantees continuous service with the Company, and no vesting shall occur if the Company has not completed a Qualified Offering or a Change of Control on or before the vesting date. In the event that neither an IPO nor change in control has occurred prior to December 31, 2021, then all RSUs shall be forfeited for no consideration. Pursuant to the guidance of ASC 718- “Compensation — Stock Compensation”, the exchange of the options for the RSUs was accounted for as a probable (service only vesting) to improbable (performance and service with the performance criteria considered improbable since contingent upon a Qualified Offering or Change of Control) modification. As such, compensation cost for the original awards would be recognized if the awards would have vested pursuant to the original terms. In addition, since the original awards were modified, the incremental cost would be measured as the result of the most recent modification; that is, the fair value of the options after the modification to increase the exercise price to $ 8.98 . This fair value would be compared to the fair value of the RSUs to determine the incremental compensation cost. Incremental compensation cost related to the replacement awards would be recognized only if the modified vesting criteria are achieved. Compensation cost related to the canceled stock options of $ 4.3 million will continue to be recognized over the original vesting criteria. Because a Qualified Offering or Change of Control is not considered probable of achievement until consummation, the incremental compensation cost measured at the grant date of $1.9 million is not recognized until such event occurs. Since the Company failed to complete a Qualified Offering or a Change of Control prior to December 31, 2021, the RSU’s were forfeited as of December 31, 2021. During the years ended December 31, 2021 and 2020, the Company recorded stock-based compensation expense of approximately $ 1.3 million and $ 2.3 million, respectively. The unamortized stock-based compensation expense related to canceled stock options (as noted above), as of December 31, 2021 is approximately $ 0.7 million. |
Preferred and common stock
Preferred and common stock | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Preferred and common stock | ||
Preferred and common stock | Note 8. Preferred and common stock Amendment to Certificate of Incorporation On August 30, 2022, the Company filed an amendment (the “Amendment”) to its certificate of incorporation (the “Certificate”) with the Secretary of State of the State of Delaware in connection with the completion of the Company’s initial public offering. The Amendment amends the Company’s Certificate to, among other things: (i) authorize 200,000,000 shares of common stock and (ii) authorize 10,000,000 shares of preferred stock, 500,000 of which are designated as Series X Preferred Stock. In connection with the initial public offering, the Board waived any lock-up restrictions contained in the Series X Certificate of Designations. Series X Preferred Stock On August 1, 2022, the Company authorized 500,000 shares of Series X preferred stock, par value 0.0001 per share. The stated value of the Series X preferred stock is $100 per share. The holders of the Series X preferred stock have no voting rights and are not entitled to dividends. The Series X preferred stock is convertible into shares of the Company’s common stock and is subject to a beneficial ownership limitation of 9.99% of the number of shares of common stock outstanding at the time of conversion. On August 2, 2022, the Company issued 3,200 shares of Series X preferred stock in a private placement, at a purchase price of $100 per share, and received net proceeds of approximately $0.3 million, after deducting expenses (the “Series X Private Placement”). The Series X Private Placement constituted a qualified offering under the terms of the SAFE and the $5.0 million outstanding under the SAFE automatically converted into 100,000 shares of Series X preferred stock (See Note 5). On August 26, 2022, the Company issued 2,555 shares of its Series X preferred stock in connection with the conversion of certain 2022 Notes (See Note 6). The 2,555 shares of Series X preferred stock are convertible into shares of common stock at the initial offering price of $5.25 per share, subject to the beneficial ownership limitation. On the August 26, 2022, in connection with its Warrant Exchange Agreement (See Note 3), the Company exchanged 750,000 warrants for 350,000 shares of its common stock and 1,250 shares of its Series X preferred stock. On August 26, 2022, upon the consummation of the Company’s initial public offering, 61,689 shares of the Series X preferred stock were converted into 1,175,000 shares of the Company’s common stock. As of September 30, 2022, 45,316 shares of Series X preferred stock remain outstanding. Series Seed Preferred Stock On August 5, 2022, the Company entered into exchange agreements with the holders of the Company’s Series Seed preferred stock, par value $0.0001 per share. The Company and the holders exchanged all shares of outstanding Series Seed preferred stock into 1,557,435 shares of common stock immediately prior to the effectiveness of its registration statement filed in connection with the Company’s initial public offering. | Note 7. Stockholders’ Deficit Preferred Units During the year ended December 31, 2020, TardiMed contributed approximately $470,000 in exchange for 940,000 preferred units, which are convertible into 542,934 shares of the Company’s common stock. During the year ended December 31, 2021, there were no contributions from TardiMed. On March 2, 2020, a third-party investor contributed $50,000 in exchange for 100,000 preferred units. Certain expenses have been allocated by TardiMed and included in its statements of operations and statements of members’ and stockholders’ deficit as a contribution by TardiMed. These expenses are primarily comprised of TardiMed personnel and related expenses, rent and other office expenses which were paid by TardiMed on behalf of the Company. The Company allocated these expenses contributed on a 50% / 50% basis to research and development and selling, general and administrative. For the year ended December 31, 2020, approximately $51,000 was allocated to the Company as non-cash contribution from TardiMed in exchange of 101,514 preferred units and preferred shares, respectively. Cumulative Dividends and Distributions rights Preferred units are entitled to an eight percent cumulative annual return on the sum of such Preferred units outstanding, which shall accrue and compound annually, whether or not declared, and whether or not there are funds legally available for the payment thereof. Such preferred unit return is in preference to any distributions to common stockholders. On the date of issuance determined to be the commitment date the Company evaluated the fair value of the common stock into which the Preferred Units may be converted and the effective conversion price. This evaluation resulted in a beneficial conversion feature of approximately $1.5 million, and accordingly, the Company recorded a deemed dividend for the year ended December 31, 2020. For the year ended December 31, 2020, the Company accrued preferred dividends of $19,000 . Cumulative preferred dividends as of December 31, 2021 and 2020 were $62,000 . For the years ended December 31, 2021 and 2020, no dividends have been declared. Pursuant to the Amended and Restated Limited Liability Company Agreement (“LLC Agreement”) between TardiMed Sciences LLC (“TardiMed”) and Purinix, dated February 19, 2020, TardiMed agreed to commit $0.6 million of capital of the Company in exchange for Preferred units, at a purchase price of $0.87 per Preferred unit and are convertible in unregistered shares. On April 15, 2020, all of the outstanding Preferred units were converted into 2,696,439 shares of preferred stock. Liquidation The Company is intended to have perpetual existence. An event of withdrawal shall not cause a dissolution of the Company and the Company shall continue in existence subject to the terms and conditions of the LLC Agreement. “Event of Withdrawal” means the death, retirement, resignation, expulsion, bankruptcy or dissolution of a Member or the occurrence of any other event that terminates the continued membership of a Member in the Company. As promptly as practicable after dissolution, the liquidators shall (i) determine the Fair Market Value (the “of the Company’s remaining assets, (ii) determine the amounts to be distributed to each Unitholder in accordance and all preferred stockholders shall instead be given 1x Liquidation Preference including dividends. Preferred Stock On April 15, 2020, the Company authorized 2,696,439 shares of $.0001 par value preferred stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, or any deemed liquidation event, the holders of preferred stock shall be paid out of the funds of the assets available for distribution to stockholders before any payment is made to common stockholders. A deemed liquidation event includes a merger or consolidation, the sale lease, transfer, exclusive license or other disposition by the Company. The preferred stockholders would be paid at an amount equal to the greater of (i) the applicable original issue price plus any dividends declared but unpaid or (ii) the amount per share of preferred stock that would have been payable had all shares of preferred stock been converted to common stock prior to such liquidation, dissolution or winding up, or deemed liquidation event. Each holder of preferred stock has voting rights equal to the number of whole shares of common stock into which their preferred shares are convertible as of the record date. Each share of preferred stock is convertible at the option of the holder, at any time, into shares of the Company’s common stock, the number of which is determined by dividing the original issue price by the conversion price for that series of preferred stock in effect at the time of conversion. As of December 31, 2021, the Company had 2,696,439 shares of preferred stock issued and outstanding , and the preferred shares are convertible into 1,557,435 shares of common stock. Common stock Under the terms of the LLC Agreement 10,000,000 common units were issued to the founder, TardiMed, and are outstanding. These common units were issued for no consideration. As of April 15, 2020, these common units were converted to shares of common stock on a 1 :1 basis. On July 22, 2020, the Company effected a 1 - for-0.5775898 reverse stock split of its common stock. All share and per share information in the accompanying financial statements and footnotes has been retroactively adjusted for the effects of the reverse split for all periods presented. During the year ended December 31, 2021, in accordance with the original terms, the Company issued 1,137,594 shares of its common stock in connection with the conversion of $3.4 million of notes payable. |
Commitments and contingencies_2
Commitments and contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and contingencies | |
Commitments and contingencies | Note 9. Commitments and contingencies Litigation As of September 30, 2022 and 2021, there was no litigation against the Company. The Company may be involved in legal proceedings, claims and assessments arising from the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. |
Related party transactions_2
Related party transactions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Related party transactions | ||
Related party transactions | Note 10. Related party transactions Accounts payable - As of September 30, 2022, related party payables totaled approximately $132,000 and consisted of $80,000 owed to Tardimed for management fees, $27,000 owed to members of our board of directors and $25,000 owed to the Company’s Chief Financial Officer for consulting services. During the three months ended September 30, 2022 the Company expensed management fees of $60,000 , board of director fees of $20,000 and related party consulting services of $25,000 . During the nine months ended September 30, 2022 the Company expensed management fees of $180,000 , board of director fees of $74,000 and related party consulting services of $25,000 . Accrued expenses - As of September 30, 2022, there was approximately $50,000 accrued for payroll expenses owed to two terminated employees. During the nine months ended September 30, 2022, the Company reversed $155,000 of bonus expenses in connection with the termination of two of its executives. | Note 11. Related party transactions TardiMed Capital Contributions — TardiMed Sciences is a startup venture investment and operating firm in the life sciences space. The Chairman of the Board of the Company is also a Managing Member of TardiMed. The Chief Operating Officer is an employee of TardiMed. On April 5, 2018, the Company issued 5,775,898 founder common units to TardiMed. As of December 31, 2020 and 2021, TardiMed holds 5,775,898 shares of common stock which represents 100% of the total voting units outstanding. During the year ended December 31, 2020, TardiMed contributed approximately $0.5 million in exchange for approximately 0.9 million shares of preferred stock. Allocated Expenses — Certain expenses, allocated by TardiMed, have been incurred on behalf of the Company and included in its statements of operations and statements of members’ and stockholders’ deficit as a contribution by TardiMed. These expenses are primarily comprised of TardiMed personnel and related expenses, rent and other office expenses. The Company allocated these expenses contributed on a 50 %/ 50 % basis to research and development and selling, general and administrative. Management considers the allocation methodologies used to allocate expenses as reasonable and appropriate based on historical TardiMed expenses attributable to the Company and the Company’s operations. The expenses reflected in the financial statements may not be indicative of expenses that the Company will incur as an independent, publicly traded company and should not be relied upon as an indicator of its future results. No expenses were allocated during the year ended December 31, 2021. During the year ended December 31, 2020, approximately $25,000 was allocated to research and development expenses and approximately $25,000 was allocated to selling, general and administrative expenses. During the year ended December 31, 2021 the Company paid Tardimed $240,000 for management fees. Accounts payable — The related party payables as of December 31, 2021 were nominal. As of December 31, 2020, related party payables totaled approximately $ 100,000 and primarily consisted of $ 70,000 owed to TardiMed, and $ 30,000 owed to members of our board of directors and company executives. Accrued expenses — As of December 31, 2021, accrued expenses included bonus accruals of approximately $ 0.6 million owed to executives of the Company. As of December 31, 2020, accrued expenses included bonus, salary and payroll tax accruals of approximately $ 0.5 million owed to executives of the Company. |
Subsequent events_2
Subsequent events | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Subsequent events | ||
Subsequent events | Note 11. Subsequent events The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements. Time-Based Restricted Stock Units Subsequent to September 30, 2022, the Company granted 51,583 time-based RSUs with a fair value of approximately $124,000 to a member of its board of directors. The RSUs are subject to service conditions and vest 33.34% on the one year anniversary of the grant date, with the remaining units vesting on each three-month anniversary thereafter. Subsequent to September 30, 2022, the Company granted 12,000 time-based RSUs with a fair value of approximately $29,000 for consulting services. The RSUs will vest 100% on January 31, 2023. Performance-Based Restricted Stock Units Subsequent to September 30, 2022, the Company granted 25,000 performance-based RSUs with a fair value of approximately $60,000 for consulting services. The RSUs are subject to a performance condition, and will vest upon the Company signing a definitive agreement with a strategic partner. | Note 12. Subsequent events The Company has completed an evaluation of all subsequent events through June 10, 2022, the date the financial statements were available to be issued, to ensure that these financial statements include appropriate disclosure of events both recognized in the financial statements and events which occurred but were not recognized in the financial statements. Except as described below, the Company has concluded that no subsequent event has occurred that require disclosure within these financial statements. Convertible Promissory Notes In April 2022, the Company entered into senior secured convertible promissory notes with a principal balance totaling approximately $ 1.2 million. The notes contain an original issue discount totaling $ 0.1 million and the Company received net proceeds of approximately $ 1.1 million. The notes bear interest at 10 % per annum and mature 12 months from the issuance date. The notes are secured by all assets and personal property of the Company. The note holders have the right to convert all or any portion of the outstanding principal balance and accrued interest into shares of the Company’s common stock, up to a beneficial ownership limitation of 9.99 % of the number of shares of common stock outstanding at the time of conversion. The per share conversion price shall be equal to the lessor of (i) $ 7.00 or (ii) 80 % of the qualified offering price of the Company’s common stock resulting from the listing for trading of its common stock on a qualified exchange. In connection with the notes, the Company issued common stock warrants to purchase 164,284 shares of the Company’s common stock. The warrants have an exercise price of the lessor of (i) $ 7.00 or (ii) 80 % of the qualified offering price, and expire five years from the issuance date. |
Significant accounting polici_8
Significant accounting policies (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Significant accounting policies | ||
Basis of presentation | Basis of presentation The accompanying unaudited condensed financial statements are presented in U.S. dollars and in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected through December 31, 2022. The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the registration statement on Form S-1/A filed by the Company with the SEC on August 8, 2022. | Basis of presentation The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and include all adjustments necessary for the fair presentation of its balance sheets, results of operations and cash flows for the period presented. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s condensed financial statements relate to the valuation of convertible notes, valuation of warrants, valuation of the Simple Agreement For Equity (“SAFE”) liability and valuation of equity-based awards. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected. | Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s financial statements relate to the valuation of warrants, valuation of the SAFE liability and valuation of equity-based awards. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected. |
Cash, cash equivalents and short-term investments | Cash, cash equivalents and short-term investments The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of September 30, 2022 and December 31, 2021, the Company had no cash equivalents or short-term investments. | Cash, cash equivalents and short-term investments The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of December 31, 2021 and 2020, the Company had no cash equivalents or short-term investments . |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash. The Company maintains its cash high credit quality financial institutions, which may at times, be in excess of federal insured limits. The Company believes it is not exposed to any significant losses due to credit risk on cash. | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash. The Company maintains its cash high credit quality financial institutions, which may at times, be in excess of federal insured limits. The Company believes it is not exposed to any significant losses due to credit risk on cash. |
Fair value of financial instruments | Fair value of financial instruments The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820 (“ASC 820”), Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 - assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. During the nine months ended September 30, 2022, the Company issued certain of the 2022 Notes and warrants in connection with the 2022 Notes. The 2022 Notes and warrants were classified as liabilities and measured at fair value on the issuance date, with changes in fair value recognized as other expense on the statements of operations and disclosed in the condensed financial statements During the year ended December 31, 2021, the Company entered into its SAFE agreement and classified the SAFE as a liability measured at cost on the issuance date, with changes in fair value recognized as other income on the statement of operations. The carrying amounts of the Company’s financial assets and liabilities, such as accounts payable, approximate fair value due to the short-term nature of these instruments. | Fair value of financial instruments The Company accounts for financial instruments under FASB Accounting Standards Codification 820 (“ASC 820”), Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. During the year ended December 31, 2021, the Company entered into its SAFE agreement and classified the SAFE as a liability measured at cost on the issuance date, with changes in fair value recognized as other income on the statement of operations. During the year ended December 31, 2020, the Company issued convertible notes and warrants in connection with the notes. The notes and warrants were classified as liabilities and measured at fair value on the issuance date, with changes in fair value recognized as other expense on the statements of operations and disclosed in the financial statements. The carrying amounts of the Company’s financial assets and liabilities, such as accounts payable, approximate fair value due to the short-term nature of these instruments. |
Convertible Notes | Convertible Notes In accordance with Accounting Standards Codification 825, Financial Instruments (“ASC 825”), the Company has elected the fair value option for recognition of its 2022 Notes. In accordance with ASC 825, the Company recognizes these 2022 Notes at fair value with changes in fair value recognized in the condensed statements of operations. The fair value option may be applied instrument by instrument, but it is irrevocable. As a result of applying the fair value option, direct costs and fees related to the convertible notes were recognized in general and administrative expense. Accrued interest for the 2022 Notes has been included in the change in fair value of convertible notes in the condensed statements of operations. | |
Warrant Liability | Warrant Liability The Company accounts for certain common stock warrants outstanding as a liability at fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the warrants issued by the Company have been estimated using the Monte Carlo simulation. As of September 30, 2022, there are no warrant liabilities (See Note 3). | Warrant Liability The Company accounts for certain common stock warrants outstanding as a liability at fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the warrants issued by the Company has been estimated using the Monte Carlo simulation. |
Simple Agreement for Future Equity | Simple Agreement for Future Equity The Company accounts for a SAFE as a liability at fair value and adjusts the instrument to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until a triggering event, equity financing or a liquidity/dissolution occurs, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the SAFE has been estimated using the Backsolve method which utilizes the Option Pricing Method. As of September 30, 2022, the SAFE liability has been converted to 100,000 shares of Series X preferred stock (See Note 8). | Simple Agreement for Future Equity The Company accounts for a SAFE as a liability at fair value and adjusts the instrument to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until a triggering event, equity financing or a liquidity/dissolution occurs, and any change in fair value is recognized in the Company’s statements of operations. The fair value of the SAFE has been estimated using the Backsolve method which utilizes the Option Pricing Method. |
Research and development | Research and development Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. | Research and development Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. |
Accrued Outsourcing Costs | Accrued Outsourcing Costs Substantial portions of the Company’s preclinical studies and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors (collectively “CROs”). These CROs generally bill monthly or quarterly for services performed, or bill based upon milestone achievement. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. The Company outsources a substantial portion of its clinical trial activities, utilizing external entities such as CROs, independent clinical investigators, and other third-party service providers to assist the Company with the execution of its clinical studies. For each clinical trial that the Company conducts, certain clinical trial costs are expensed immediately, while others are expensed over time based on the number of patients in the trial, the attrition rate at which patients leave the trial, and/or the period over which clinical investigators or CROs are expected to provide services. The Company’s estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives. | Accrued Outsourcing Costs Substantial portions of the Company’s preclinical studies and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors (collectively “CROs”). These CROs generally bill monthly or quarterly for services performed, or bill based upon milestone achievement. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. The Company outsources a substantial portion of its clinical trial activities, utilizing external entities such as CROs, independent clinical investigators, and other third-party service providers to assist the Company with the execution of its clinical studies. For each clinical trial that the Company conducts, certain clinical trial costs are expensed immediately, while others are expensed over time based on the number of patients in the trial, the attrition rate at which patients leave the trial, and/or the period over which clinical investigators or CROs are expected to provide services. The Company’s estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives. |
Stock-Based Compensation | Stock-Based Compensation The Company expenses stock-based compensation to employees, non-employees and board members over the requisite service period based on the estimated grant-date fair value of the awards and actual forfeitures. The Company accounts for forfeitures as they occur. Stock-based awards with graded vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in general and administrative costs in the statements of operations. | Stock-Based Compensation The Company expenses stock-based compensation to employees, non-employees and board members over the requisite service period based on the estimated grant-date fair value of the awards and actual forfeitures. The Company accounts for forfeitures as they occur. Stock-based awards with graded vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in general and administrative costs in the statements of operations. |
Income (Loss) Per Share | Loss Per Share Basic net loss per share (“EPS”) of common stock is computed by dividing net loss allocated to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. The Company’s common stock equivalents have been excluded from the computation of diluted loss per share for the three and nine months ended September 30, 2022 and 2021, as the effect would be to reduce the loss per share. Therefore, the weighted average common stock outstanding used to calculate both basic and diluted loss per share is the same for the three and nine months ended September 30, 2022 and 2021. The following securities were excluded from the computation of diluted net loss per share attributable to common shareholders for the nine months ended September 30, 2022 and 2021, because including them would have been anti-dilutive: September 30, 2022 2021 Preferred stock — 1,557,435 Series X preferred stock 863,162 — Unvested restricted stock units 1,582,220 1,377,999 Common stock warrants 587,497 1,034,176 SAFE investment — 414,808 Convertible notes 37,259 — Total 3,070,138 4,384,418 | Loss Per Share Basic net loss per share (“EPS”) of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Since the Company has net losses, basic and diluted net loss per share is the same. Securities that could potentially dilute loss per share in the future were not included in the computation of diluted loss per share at December 31, 2021 and 2020, because their inclusion would be anti-dilutive are as follows: December 31, 2021 2020 Preferred stock 1,557,435 1,557,435 Unvested restricted stock units — 1,377,999 Common stock warrants 1,034,176 1,034,176 Convertible notes — 1,034,177 SAFE investment (1) 414,808 — Total 3,006,419 5,003,787 (1) SAFE investment As of December 31, 2021, the Company’s price per share of $12.05 was calculated by dividing the post money valuation of $150 million by 12,444,251 shares of common stock outstanding. The 12,444,251 shares of common stock outstanding was calculated in accord with the agreement and includes 6,913,492 of common shares outstanding, 2,703,776 of IPO shares, 1,377,999 of restricted stock units, 1,034,176 of common stock warrants and 414,808 of SAFE shares. The SAFE investment shares of 414,808 (included in the table above) were calculated using the SAFE investment of $5.0 million divided by $12.05 per share. |
Income taxes | Income taxes ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s condensed financial statements. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position. | Income taxes From April 5, 2018 (Inception) through April 14, 2020, the Company was organized as an LLC and subject to the provisions of Subchapter K of the Internal Revenue Code. As such, the Company was not viewed as a taxpaying entity in any jurisdiction and did not require a provision for income taxes for this period. Each member was responsible for the tax liability, if any, related to its proportionate share of the Company’s taxable losses for this period. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position. The Company converted to a C-Corporation on April 15, 2020 and therefore the Company is subject to examination starting in 2020. The Company’s tax year, 2021 and 2020 federal tax returns remain subject to examination by the Internal Revenue Service. Given the Company’s historical losses, the conversion to a C-Corporation did not have a material impact on the Company financial statements. |
Recent accounting pronouncements | Recent accounting pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company adopted this standard on January 1, 2022, and the adoption did not have a material impact on the Company’s condensed financial statements or disclosures. 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). This ASU reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. This ASU will be effective for all entities for fiscal years beginning after December 15, 2021. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The Company adopted this standard on January 1, 2022, and the adoption did not have a material impact on the Company’s condensed financial statements or disclosures. | Recent accounting pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company adopted this standard on January 1, 2022, and the adoption did not have a material impact on the Company’s financial statements or disclosures. 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). This ASU reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: (1) how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. This ASU will be effective for all entities for fiscal years beginning after December 15, 2021. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The Company adopted this standard on January 1, 2022, and the adoption did not have a material impact on the Company’s financial statements or disclosures. |
Significant accounting polici_9
Significant accounting policies (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Significant accounting policies | ||
Schedule of securities excluded from the computation of diluted net loss per share attributable to common shareholders | The following securities were excluded from the computation of diluted net loss per share attributable to common shareholders for the nine months ended September 30, 2022 and 2021, because including them would have been anti-dilutive: September 30, 2022 2021 Preferred stock — 1,557,435 Series X preferred stock 863,162 — Unvested restricted stock units 1,582,220 1,377,999 Common stock warrants 587,497 1,034,176 SAFE investment — 414,808 Convertible notes 37,259 — Total 3,070,138 4,384,418 | December 31, 2021 2020 Preferred stock 1,557,435 1,557,435 Unvested restricted stock units — 1,377,999 Common stock warrants 1,034,176 1,034,176 Convertible notes — 1,034,177 SAFE investment (1) 414,808 — Total 3,006,419 5,003,787 (1) SAFE investment |
Fair Value Measurements (Tabl_2
Fair Value Measurements (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Summary of significant unobservable inputs (Level 3 inputs) used in measurement upon issuance dates | Year Ended December 31, 2020 Contingent interest rate 15.0 % Interest rate 10.0 % Expected term 0.8 – 1.0 | |
Summary of Company's liabilities measured at fair value on a recurring basis into fair value hierarchy | The following tables classify the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of September 30, 2022 and December 31, 2021: Fair value measured at September 30, 2022 Quoted prices in active Significant other Significant Total carrying value at markets observable inputs unobservable inputs September 30, 2022 (Level 1) (Level 2) (Level 3) Liabilities: Convertible notes $ 156,486 $ — $ — $ 156,486 Fair value measured at December 31, 2021 Quoted prices in active Significant other Significant Total carrying value at markets observable inputs unobservable inputs December 31, 2021 (Level 1) (Level 2) (Level 3) Liabilities: SAFE liability $ 4,824,217 $ — $ — $ 4,824,217 Warrant liability $ 4,516,485 $ — $ — $ 4,516,485 | Fair value measured at December 31, 2021 Total carrying Quoted prices in Significant other Significant value at active markets observable inputs unobservable inputs December 31, 2021 (Level 1) (Level 2) (Level 3) Liabilities: SAFE liability $ 4,824,217 $ — $ — $ 4,824,217 Warrant liability $ 4,516,485 $ — $ — $ 4,516,485 Fair value measured at December 31, 2020 Total carrying Quoted prices in Significant other Significant value at active markets observable inputs unobservable inputs December 31, 2020 (Level 1) (Level 2) (Level 3) Liabilities: Warrant liability $ 4,057,927 $ — $ — $ 4,057,927 Contingent Interest $ 59,890 $ — $ — $ 59,890 |
Summary of changes in Level 3 liabilities measured at fair value | The following table presents changes in Level 3 liabilities measured at fair value for the nine months ended September 30, 2022. Unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to unobservable (e.g., changes in unobservable long-dated volatilities) inputs. Convertible Notes SAFE Liability Warrant Liability Balance at December 31, 2021 $ — $ 4,824,217 $ 4,516,485 Issuance of convertible notes and warrants 1,353,720 — 278,494 Conversion of SAFE liability to Series X preferred stock — (10,000,000) — Issuance of common stock in connection with conversion of notes payable (1,159,500) — — Issuance of Series X preferred stock in connection with conversion of notes payable (296,819) — — Warrants exchanged for shares of common stock and Series X preferred stock — — (2,009,207) Loss on extinguishment of debt 3,940 — — Change in fair value 255,145 (163,025) (1,873,192) Reclassification of warrants to equity — — (912,580) Loss on conversion of SAFE — 5,338,808 — Balance at September 30, 2022 $ 156,486 $ — $ — | SAFE Liability Warrant Liability Contingent Interest Balance at December 31, 2019 $ — $ — $ — Issuance of warrants in connection with convertible notes — 2,488,544 — Contingent interest in connection with notes payable — — 55,394 Change in fair value — 1,569,383 4,496 Balance at December 31, 2020 $ — $ 4,057,927 $ 59,890 Gain on conversion of notes — — (59,890) Issuance of SAFE 5,000,000 — — Change in fair value (175,783) 458,558 — Balance at December 31, 2021 $ 4,824,217 $ 4,516,485 $ — |
SAFE Agreement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Summary of significant unobservable inputs (Level 3 inputs) used in measurement upon issuance dates | A summary of significant unobservable inputs (Level 3 inputs) used in measuring the SAFE on the conversion date of August 2, 2022, and the period January 1, 2022 through August 2, 2022 is as follows: January 1, August 2, 2022 - August 2022 2, 2022 Dividend yield 0 % 0 % Expected price volatility 50.0 % 50.0 % Risk free interest rate 3.08 % 1.35% - 3.08 % Expected term (in years) 1.5 0.8 - 1.5 | Year Ended December 31, 2021 Dividend yield — Expected price volatility 50.0 % Risk free interest rate 0.06 % – 0.07 % Expected term (in years) 1.0 – 5.0 |
Warrant Exchange Agreement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Summary of significant unobservable inputs (Level 3 inputs) used in measurement upon issuance dates | A summary of significant unobservable inputs (Level 3 inputs) used in measuring warrants on issuance date, August 26, 2022, and during the period January 1, 2022 through August 26, 2022, is as follows: January 1 2022 - July 2022 August 26, 2022 August 26, 2022 Dividend yield 0 % 0 % 0 % Expected price volatility 57.0 % 57.0 % 57.0% - 105.0 % Risk free interest rate 2.70 % - 2.82 % 2.39% - 3.40 % 0.17% - 3.40 % Expected term (in years) 5.0 0.1 - 4.9 0.1 - 4.0 | Years Ended December 31, 2021 2020 Dividend yield — — Expected price volatility 76.8 % – 112.1 % 108.7 % – 114.4 % Risk free interest rate 0.05 % – 1.09 % 0.10 % – 0.38 % Expected term (in years) 1.0 – 5.0 1.0 – 5.0 |
2022 Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Summary of significant unobservable inputs (Level 3 inputs) used in measurement upon issuance dates | A summary of significant unobservable inputs (Level 3 inputs) used in measuring the 2022 Notes upon the issuance dates, conversion dates and during three and nine months ended September 30, 2022 is as follows: Three months August 3, 2022 - ended September Nine months ended July 8, 2022 August 5, 2022 30, 2022 September 30, 2022 Dividend yield 0 % 0 % 0 % 0 % Expected price volatility 57.0 % 57.0 % 57.0 % 57.0% - 57.2 % Risk free interest rate 2.96 % 3.14 %- 3.29 % 2.8 %- 4.05 % 2.8 %- 4.05 % Expected term (in years) 1.0 1.0 0.7 - 0.9 0.7 - 0.9 |
Accrued Expenses (Tables)_2
Accrued Expenses (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Accrued Expenses | ||
Schedule of Company's accrued expenses | The Company’s accrued expenses as of September 30, 2022 and December 31, 2021 consisted of the following: September 30, December 31, 2022 2021 (Unaudited) Employee and related expenses $ 50,335 $ 680,026 Directors and officers insurance 385,362 — Professional fees 153,995 — Research and development 24,758 — Total accrued expenses $ 614,450 $ 680,026 | December 31, 2021 2020 Accrued expenses: Employee and related expenses $ 680,026 $ 499,752 Research and development — 4,000 Professional fees — 74,772 Total accrued expenses $ 680,026 $ 578,524 |
Stock-based compensation (Tab_2
Stock-based compensation (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Stock-based compensation. | ||
Summary of stock based compensation | Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Canceled stock options $ 119,829 $ 272,124 $ 449,840 $ 1,110,874 Restricted stock units 927,324 — 927,325 — Total $ 1,047,153 $ 272,124 $ 1,377,165 $ 1,110,874 | |
Summary of the restricted stock units | The following is a summary of the restricted stock units during the nine months ended September 30, 2022: Weighted Average Grant-Date Number of Shares Fair Value Unvested as of December 31, 2021 — $ — Granted 1,885,500 $ 5.25 Forfeited (291,500) $ 5.25 Vested (11,780) $ 5.26 Unvested as of September 30, 2022 1,582,220 $ 5.25 | The following is a summary of the restricted stock units during the years ended December 31, 2021 and 2020: Weighted Average Grant-Date Number of Shares Fair Value Unvested as of January 1, 2020 — $ — Granted 1,377,999 $ 8.98 Unvested as of December 31, 2020 1,377,999 $ 8.98 Forfeited (1,377,999) $ 8.98 Unvested as of December 31, 2021 — $ — |
Organization and description _5
Organization and description of business operations - Initial Public Offering (Details) $ / shares in Units, $ in Millions | Aug. 30, 2022 USD ($) $ / shares shares | Aug. 09, 2022 D $ / shares shares | Sep. 30, 2022 $ / shares | Dec. 31, 2021 $ / shares | Dec. 31, 2020 $ / shares | Apr. 15, 2020 $ / shares |
Initial Public Offering | ||||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Price per share | $ 12.05 | |||||
Initial public offering | ||||||
Initial Public Offering | ||||||
Common stock, par value (in dollars per share) | $ 0.0001 | |||||
Shares agreed to sell (in shares) | shares | 1,545,454 | |||||
Purchase price per share (in dollars per share) | $ 4.83 | |||||
Price per share | $ 5.25 | |||||
Net proceeds from issuance | $ | $ 6 | |||||
Underwriter fees and commissions | $ | 0.8 | |||||
Offering costs | $ | $ 1.4 | |||||
Number of warrants issued (in shares) | shares | 108,181 | |||||
Exercise price of warrants (in dollars per share) | $ 6.5625 | |||||
Overallotment option | ||||||
Initial Public Offering | ||||||
Shares agreed to sell (in shares) | shares | 231,818 | |||||
Number of days option provided | D | 45 |
Organization and description _6
Organization and description of business operations - Going concern, liquidity and capital resources (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Aug. 02, 2022 | Apr. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Aug. 01, 2022 | Apr. 15, 2020 | |
Organization And Description Of Business Operation | |||||||||||
Revenue | $ 0 | $ 0 | |||||||||
Accumulated deficit | $ (28,519,368) | $ (28,519,368) | (28,519,368) | (18,938,249) | $ (8,709,278) | ||||||
Net loss | $ (11,463,613) | $ (3,110,642) | (9,581,119) | $ (16,462,227) | (10,228,971) | (7,826,008) | |||||
Net cash used in operating activities | (3,004,175) | $ (4,264,250) | $ (5,512,639) | $ (2,348,822) | |||||||
2022 Notes, net proceeds received | $ 1,240,970 | ||||||||||
Par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Net proceeds | $ 300,000 | ||||||||||
Series X preferred stock | |||||||||||
Organization And Description Of Business Operation | |||||||||||
Number of shares issued (in shares) | 3,200 | ||||||||||
Par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 | |||||||||
Purchase price per share (in dollars per share) | $ 100 | ||||||||||
Net proceeds | $ 300,000 | ||||||||||
2022 Notes | |||||||||||
Organization And Description Of Business Operation | |||||||||||
2022 Notes, principal balance | $ 1,500,000 | $ 1,500,000 | 1,500,000 | ||||||||
2022 Notes, original issue discount | $ 300,000 | 300,000 | $ 300,000 | ||||||||
2022 Notes, net proceeds received | $ 1,200,000 | ||||||||||
Subsequent event | 2022 Notes | |||||||||||
Organization And Description Of Business Operation | |||||||||||
2022 Notes, principal balance | $ 1,200,000 | ||||||||||
2022 Notes, original issue discount | 100,000 | ||||||||||
2022 Notes, net proceeds received | $ 1,100,000 |
Significant accounting polic_10
Significant accounting policies - Cash, cash equivalents and short-term investments (Details) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Significant accounting policies | ||
Cash equivalents | $ 0 | $ 0 |
Short-term investments | $ 0 | $ 0 |
Significant accounting polic_11
Significant accounting policies - Anti-dilutive securities (Details) - shares | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders | 3,070,138 | 4,384,418 | 3,006,419 | 5,003,787 |
Preferred stock | ||||
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders | 1,557,435 | 1,557,435 | 1,557,435 | |
Series X preferred stock | ||||
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders | 863,162 | |||
Unvested restricted stock units | ||||
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders | 1,582,220 | 1,377,999 | 1,377,999 | |
Common stock warrants | ||||
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders | 587,497 | 1,034,176 | 1,034,176 | 1,034,176 |
SAFE investment | ||||
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders | 414,808 | 414,808 | ||
Convertible notes | ||||
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders | 37,259 | 1,034,177 |
Significant accounting polic_12
Significant accounting policies - SAFE Investment (Details) - shares | 9 Months Ended | |
Aug. 02, 2022 | Sep. 30, 2022 | |
Series X preferred stock | ||
Accounting Policies | ||
Conversion of SAFE liability to Series X preferred stock (in shares) | 100,000 | 100,000 |
Fair Value Measurements - Lev_2
Fair Value Measurements - Level 3 Inputs (Details) | Sep. 30, 2022 item | Aug. 26, 2022 item | Aug. 05, 2022 item | Aug. 02, 2022 item | Jul. 08, 2022 item | Jul. 02, 2022 item | Dec. 31, 2021 Y | Dec. 31, 2020 Y |
SAFE Liability | Dividend yield | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0 | |||||||
SAFE Liability | Expected price volatility | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.500 | 0.500 | ||||||
SAFE Liability | Risk free interest rate | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.0308 | |||||||
SAFE Liability | Risk free interest rate | Minimum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.0135 | 0.0006 | ||||||
SAFE Liability | Risk free interest rate | Maximum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.0308 | 0.0007 | ||||||
SAFE Liability | Expected term (in years) | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 1.5 | |||||||
SAFE Liability | Expected term (in years) | Minimum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.8 | 1 | ||||||
SAFE Liability | Expected term (in years) | Maximum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 1.5 | 5 | ||||||
Warrant Liability | Dividend yield | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0 | 0 | ||||||
Warrant Liability | Expected price volatility | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.570 | 0.570 | ||||||
Warrant Liability | Expected price volatility | Minimum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.570 | 0.768 | 1.087 | |||||
Warrant Liability | Expected price volatility | Maximum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 1.050 | 1.121 | 1.144 | |||||
Warrant Liability | Risk free interest rate | Minimum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.0017 | 0.0239 | 0.0270 | 0.0005 | 0.0010 | |||
Warrant Liability | Risk free interest rate | Maximum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.0340 | 0.0340 | 0.0282 | 0.0109 | 0.0038 | |||
Warrant Liability | Expected term (in years) | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 5 | |||||||
Warrant Liability | Expected term (in years) | Minimum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.1 | 1 | 1 | |||||
Warrant Liability | Expected term (in years) | Maximum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 4 | 4.9 | 5 | 5 | ||||
Convertible Notes | Dividend yield | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0 | 0 | 0 | |||||
Convertible Notes | Expected price volatility | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.570 | 0.570 | 0.570 | |||||
Convertible Notes | Expected price volatility | Minimum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.570 | |||||||
Convertible Notes | Expected price volatility | Maximum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.572 | |||||||
Convertible Notes | Risk free interest rate | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 2.96 | |||||||
Convertible Notes | Risk free interest rate | Minimum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.028 | 0.0314 | ||||||
Convertible Notes | Risk free interest rate | Maximum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.0405 | 0.0329 | ||||||
Convertible Notes | Expected term (in years) | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 1 | 1 | ||||||
Convertible Notes | Expected term (in years) | Minimum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.007 | |||||||
Convertible Notes | Expected term (in years) | Maximum | ||||||||
Fair Value Measurement Inputs and Valuation Techniques | ||||||||
Measurement input | 0.9 |
Fair Value Measurements - Add_2
Fair Value Measurements - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Aug. 26, 2022 | Aug. 03, 2022 | Aug. 02, 2022 | Mar. 19, 2022 | Mar. 19, 2021 | Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Number of shares issued on conversion | 1,137,594 | ||||||||
Cash received | $ 5,000,000 | ||||||||
Common stock warrants issued | 1,034,176 | 1,034,176 | |||||||
Change in Level 3 liabilities measured at fair value | $ 300,000 | $ 1,600,000 | |||||||
Reclassification of warrants to equity, shares | 479,316 | ||||||||
Warrant liability | $ 0 | $ 0 | $ 4,516,485 | $ 4,057,927 | |||||
Series X Preferred Stock | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Conversion of SAFE liability to Series X preferred stock (in shares) | 100,000 | 100,000 | |||||||
Warrants exchanged for shares of common stock | 1,250 | ||||||||
Common Stock | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Number of shares issued on conversion | 1,175,000 | ||||||||
Warrants exchanged for shares of common stock | 350,000 | ||||||||
2020 Notes | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Warrants exchanged for shares of common stock | 750,000 | ||||||||
Convertible notes 2022 | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Number of shares issued on conversion | 238,094 | 1,137,594 | |||||||
Convertible notes 2022 | Series X Preferred Stock | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Issuance of Series X preferred stock in connection with conversion of notes payable (in shares) | 2,555 | ||||||||
SAFE Agreement | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Change in Level 3 liabilities measured at fair value | $ (163,025) | $ (175,783) | |||||||
SAFE Agreement | 2020 Notes | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||||||||
Cash received | $ 5,000,000 | ||||||||
Common stock warrants issued | 195,140 | 1,034,176 | |||||||
Number of warrants exchanged | 750,000 | ||||||||
Change in Level 3 liabilities measured at fair value | $ 3,300,000 | $ 1,800,000 | |||||||
Warrants exchanged for shares of common stock | 350,000 |
Fair Value Measurements - Lia_2
Fair Value Measurements - Liabilities Measured at fair value (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Notes payable - fair value | $ 156,486 | $ 611,641 | |
Warrant liability | 0 | $ 4,516,485 | 4,057,927 |
SAFE Agreement | Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | 4,824,217 | ||
SAFE Agreement | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | 4,824,217 | ||
Warrant Exchange Agreement | Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | 4,516,485 | ||
Warrant Exchange Agreement | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | 4,516,485 | ||
2022 Notes | Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Notes payable - fair value | 156,486 | ||
2022 Notes | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Notes payable - fair value | $ 156,486 | ||
2022 Notes | SAFE Agreement | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | 4,824,217 | ||
2022 Notes | SAFE Agreement | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | 4,824,217 | ||
2022 Notes | Warrant Exchange Agreement | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | 4,516,485 | 4,057,927 | |
2022 Notes | Warrant Exchange Agreement | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Warrant liability | $ 4,516,485 | $ 4,057,927 |
Fair Value Measurements - Cha_2
Fair Value Measurements - Changes in Level 3 Liabilities (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | |||||
Conversion of SAFE liability to Series X preferred stock | $ 10,000,000 | $ 10,000,000 | |||
Issuance of common stock in connection with conversion of notes payable | 1,159,500 | 1,159,500 | $ 3,412,782 | $ 3,412,782 | |
Issuance of Series X preferred stock in connection with conversion of notes payable | 296,819 | 296,819 | |||
Warrants exchanged for shares of common stock and Series X preferred stock | 2,009,207 | 2,009,207 | |||
Loss on extinguishment of debt | 3,940 | 3,940 | $ 23,284 | ||
Change in fair value | 300,000 | 1,600,000 | |||
Reclassification of warrants to equity | (912,580) | (912,580) | |||
Loss on conversion of SAFE | 5,338,808 | 5,338,808 | |||
SAFE Liability | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | |||||
Beginning Balance | 4,824,217 | ||||
Issuance of SAFE | 5,000,000 | ||||
Conversion of SAFE liability to Series X preferred stock | (10,000,000) | ||||
Change in fair value | (163,025) | (175,783) | |||
Loss on conversion of SAFE | 5,338,808 | ||||
Ending Balance | 4,824,217 | ||||
Warrant Liability | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | |||||
Beginning Balance | 4,516,485 | $ 4,057,927 | 4,057,927 | ||
Issuance of convertible notes and warrants | 278,494 | ||||
Warrants exchanged for shares of common stock and Series X preferred stock | (2,009,207) | ||||
Change in fair value | (1,873,192) | 458,558 | |||
Reclassification of warrants to equity | (912,580) | ||||
Ending Balance | $ 4,516,485 | 4,057,927 | |||
Convertible Notes | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | |||||
Issuance of convertible notes and warrants | 1,353,720 | ||||
Issuance of common stock in connection with conversion of notes payable | (1,159,500) | ||||
Issuance of Series X preferred stock in connection with conversion of notes payable | (296,819) | ||||
Loss on extinguishment of debt | 3,940 | ||||
Change in fair value | 255,145 | ||||
Ending Balance | $ 156,486 | $ 156,486 | |||
Convertible Notes | Warrant Liability | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | |||||
Issuance of convertible notes and warrants | 2,488,544 | ||||
Change in fair value | $ 1,569,383 |
Accrued Expenses (Details)_2
Accrued Expenses (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Accrued Expenses | |||
Employee and related expenses | $ 50,335 | $ 680,026 | $ 499,752 |
Directors and officers insurance | 385,362 | ||
Professional fees | 153,995 | 74,772 | |
Research and development | 24,758 | 4,000 | |
Total accrued expenses | $ 614,450 | $ 680,026 | $ 578,524 |
Simple Agreement for Future E_4
Simple Agreement for Future Equity ("SAFE") (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
May 19, 2021 | Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Aug. 02, 2022 | |
Simple Agreement for Future Equity ("SAFE") | ||||||
Proceeds From SAFE Investment | $ 5,000,000 | $ 5,000,000 | $ 5,000,000 | |||
Percentage of discount of pricing in the triggering equity financing (as a percent) | 50% | |||||
Post money valuation | $ 150,000,000 | |||||
Interest rate (as a percent) | 0% | |||||
Loss recognized on conversion | $ 5,300,000 | $ 5,300,000 | ||||
Series X Preferred Stock | ||||||
Simple Agreement for Future Equity ("SAFE") | ||||||
SAFE, Outstanding amount converted | $ 4,700,000 | |||||
Number of shares issued upon conversion | 100,000 |
Convertible promissory notes (D
Convertible promissory notes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||
Aug. 26, 2022 | Aug. 03, 2022 | Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | |||||||
Proceeds from issuance of convertible promissory notes, net of fees | $ 1,240,970 | ||||||
Common stock warrants issued | 1,034,176 | 1,034,176 | |||||
Loss on issuance of debt | $ (88,234) | (391,246) | $ (53,541) | ||||
Fair value loss | (151,195) | (255,145) | |||||
Conversion agreement with certain holders of 2022 Notes | |||||||
Debt Instrument [Line Items] | |||||||
Principal balance | $ 1,000,000 | ||||||
Conversion price (per share) | $ 4.20 | ||||||
Convertible notes outstanding | $ 1,200,000 | ||||||
Shares converted | 238,094 | ||||||
Conversion agreement with an additional holder of 2022 Notes | |||||||
Debt Instrument [Line Items] | |||||||
Principal balance | $ 255,555 | ||||||
Convertible notes outstanding | $ 300,000 | ||||||
Conversion agreement with an additional holder of 2022 Notes | Series X Preferred Stock | |||||||
Debt Instrument [Line Items] | |||||||
Shares converted | 2,555 | 2,555 | |||||
2022 Notes | |||||||
Debt Instrument [Line Items] | |||||||
Principal balance | 1,500,000 | $ 1,500,000 | 1,500,000 | ||||
Financing fee | 100,000 | 100,000 | 100,000 | ||||
Original issue discount | $ 200,000 | 200,000 | $ 200,000 | ||||
Proceeds from issuance of convertible promissory notes, net of fees | $ 1,200,000 | ||||||
Interest rate per annum | 10% | 10% | 10% | ||||
Maturity period | 12 months | ||||||
Percent of beneficial ownership limitation | 9.99% | 9.99% | 9.99% | ||||
Conversion price (per share) | $ 4.20 | $ 7 | $ 7 | $ 7 | |||
Percent of offering price | 80% | 80% | |||||
Number of warrants exchanged | 195,140 | 195,140 | 195,140 | ||||
Exercise price of warrants (in dollars per share) | $ 7 | $ 7 | $ 7 | ||||
Percent of qualified offering price | 80% | ||||||
Warrants expiry term | 5 years | 5 years | 5 years | ||||
Adjusted exercise price per share | $ 3 | ||||||
2022 Notes, original issue discount | $ 300,000 | $ 300,000 | $ 300,000 | ||||
Offering price per share | $ 5.25 | ||||||
Convertible notes outstanding | 200,000 | ||||||
Shares converted | 1,137,594 | ||||||
Loss on issuance of debt | 400,000 | ||||||
Fair value loss | $ 250,000 |
Stock-based compensation - Summ
Stock-based compensation - Summary of Stock based Compensation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock-based compensation | ||||||
Stock-based compensation expense | $ 1,047,153 | $ 272,124 | $ 1,377,165 | $ 1,110,874 | ||
Cancelled stock options | ||||||
Stock-based compensation | ||||||
Stock-based compensation expense | 119,829 | 272,124 | 449,840 | 1,110,874 | ||
Restricted stock units | ||||||
Stock-based compensation | ||||||
Stock-based compensation expense | $ 927,324 | $ 0 | $ 927,325 | $ 0 | $ 1,300,000 | $ 2,300,000 |
Stock-based compensation - Re_2
Stock-based compensation - Restricted Stock Units (Details) - $ / shares | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||
Aug. 26, 2022 | Aug. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of units outstanding | |||||
Beginning balance (shares) | 1,377,999 | ||||
Granted (shares) | 1,051,167 | 1,377,999 | |||
Forfeited (shares) | (1,377,999) | ||||
Ending balance (shares) | 1,377,999 | ||||
Weighted Average Fair Value Per unit | |||||
Beginning balance (usd per share) | $ 8.98 | ||||
Granted (usd per share) | 8.98 | ||||
Forfeited (usd per share) | $ 8.98 | ||||
Ending balance (usd per share) | $ 8.98 | ||||
Restricted stock units | |||||
Number of units outstanding | |||||
Granted (shares) | 1,051,167 | 1,885,500 | |||
Forfeited (shares) | (291,500) | ||||
Vested (shares) | (11,780) | ||||
Ending balance (shares) | 1,582,220 | ||||
Weighted Average Fair Value Per unit | |||||
Beginning balance (usd per share) | $ 5.25 | ||||
Granted (usd per share) | 5.25 | ||||
Forfeited (usd per share) | 5.25 | ||||
Vested (usd per share) | 5.26 | ||||
Ending balance (usd per share) | $ 5.25 |
Stock-based compensation - Ad_2
Stock-based compensation - Additional information (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||
Aug. 26, 2022 shares | Jul. 16, 2022 USD ($) shares | May 15, 2022 USD ($) shares | May 01, 2022 | Jan. 01, 2022 USD ($) shares | May 01, 2021 $ / shares | Dec. 22, 2020 USD ($) shares | Aug. 22, 2020 USD ($) | May 01, 2020 USD ($) shares | Aug. 31, 2022 USD ($) shares | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) employee director shares | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) shares | Dec. 31, 2020 USD ($) shares | Jun. 30, 2022 shares | |
Stock-based compensation | |||||||||||||||||
Number of units granted | shares | 1,051,167 | 1,377,999 | |||||||||||||||
Number of units forfeited | shares | 1,377,999 | ||||||||||||||||
Compensation cost | $ | $ 5,500,000 | ||||||||||||||||
Stock options outstanding | shares | 0 | ||||||||||||||||
Stock-based compensation expense | $ | $ 1,047,153 | $ 272,124 | $ 1,377,165 | $ 1,110,874 | |||||||||||||
Member of its board of directors | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Number of board members terminated | director | 2 | ||||||||||||||||
Employees, officers and directors | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Number of employees terminated | employee | 2 | ||||||||||||||||
Restricted stock units | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Number of units granted | shares | 1,051,167 | 1,885,500 | |||||||||||||||
Fair value of units granted | $ | $ 3,700,000 | ||||||||||||||||
Vesting percentage | 33.34% | 33.34% | |||||||||||||||
Vesting period | 3 months | 3 months | |||||||||||||||
Number of units forfeited | shares | 291,500 | ||||||||||||||||
Number of stock options exchanged for units | shares | 896,583 | ||||||||||||||||
Stock-based compensation expense | $ | 927,324 | 0 | $ 927,325 | 0 | $ 1,300,000 | $ 2,300,000 | |||||||||||
Unamortized stock-based compensation expense | $ | 7,400,000 | $ 7,400,000 | $ 700,000 | ||||||||||||||
Unamortized stock-based compensation period recognition | 1 year 3 months 18 days | ||||||||||||||||
Restricted stock units | First three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | |||||||||||||||
Restricted stock units | Second three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | |||||||||||||||
Restricted stock units | Third three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | |||||||||||||||
Restricted stock units | Fourth three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | |||||||||||||||
Restricted stock units | Fifth three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | |||||||||||||||
Restricted stock units | Sixth three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | |||||||||||||||
Restricted stock units | Seventh three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | |||||||||||||||
Restricted stock units | Eighth three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | |||||||||||||||
Restricted stock units | Member of its board of directors | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Number of units granted | shares | 35,333 | ||||||||||||||||
Fair value of units granted | $ | $ 200,000 | $ 4,300,000 | |||||||||||||||
Vesting percentage | 33.34% | ||||||||||||||||
Vesting period | 2 years | 3 years | |||||||||||||||
Restricted stock units | Member of its board of directors | First three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | ||||||||||||||||
Restricted stock units | Member of its board of directors | Second three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | ||||||||||||||||
Restricted stock units | Member of its board of directors | Third three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | ||||||||||||||||
Restricted stock units | Member of its board of directors | Fourth three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | ||||||||||||||||
Restricted stock units | Member of its board of directors | Fifth three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | ||||||||||||||||
Restricted stock units | Member of its board of directors | Sixth three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | ||||||||||||||||
Restricted stock units | Member of its board of directors | Seventh three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | ||||||||||||||||
Restricted stock units | Member of its board of directors | Eighth three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | ||||||||||||||||
Restricted stock units | Employees, officers and directors | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Number of units granted | shares | 1,342,667 | 896,583 | 787,499 | 492,500 | |||||||||||||
Fair value of units granted | $ | $ 14,600,000 | $ 6,300,000 | $ 2,600,000 | ||||||||||||||
Vesting percentage | 33.34% | 33.34% | 33.34% | 0.33% | |||||||||||||
Vesting period | 3 months | 2 years | |||||||||||||||
Number of stock options exchanged for units | shares | 787,499 | ||||||||||||||||
Exercise price | $ / shares | $ 8.98 | ||||||||||||||||
Restricted stock units | Employees, officers and directors | First three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | 8.3325% | ||||||||||||||
Restricted stock units | Employees, officers and directors | Second three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | 8.3325% | ||||||||||||||
Restricted stock units | Employees, officers and directors | Third three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | 8.3325% | ||||||||||||||
Restricted stock units | Employees, officers and directors | Fourth three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | 8.3325% | ||||||||||||||
Restricted stock units | Employees, officers and directors | Fifth three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | 8.3325% | ||||||||||||||
Restricted stock units | Employees, officers and directors | Sixth three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | 8.3325% | ||||||||||||||
Restricted stock units | Employees, officers and directors | Seventh three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | 8.3325% | ||||||||||||||
Restricted stock units | Employees, officers and directors | Eighth three-month anniversary from Start Date | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Vesting percentage | 8.3325% | 8.3325% | 8.3325% | ||||||||||||||
Restricted stock units | Chief Financial Officer [Member] | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Number of units granted | shares | 15,000 | ||||||||||||||||
Fair value of units granted | $ | $ 100,000 | ||||||||||||||||
Cancelled stock options | |||||||||||||||||
Stock-based compensation | |||||||||||||||||
Stock options outstanding | shares | 0 | 0 | |||||||||||||||
Canceled stock options and the related stock compensation | $ | $ 4,300,000 | 4,300,000 | $ 4,300,000 | $ 4,300,000 | |||||||||||||
Stock-based compensation expense | $ | 119,829 | $ 272,124 | 449,840 | $ 1,110,874 | |||||||||||||
Unamortized stock-based compensation expense | $ | $ 300,000 | $ 300,000 |
Preferred and common stock (Det
Preferred and common stock (Details) - USD ($) | 12 Months Ended | ||||||||
Aug. 30, 2022 | Aug. 26, 2022 | Aug. 05, 2022 | Aug. 02, 2022 | Dec. 31, 2021 | Sep. 30, 2022 | Aug. 01, 2022 | Dec. 31, 2020 | Apr. 15, 2020 | |
Preferred and common stock | |||||||||
Preferred shares, shares authorized (in shares) | 2,696,439 | 10,000,000 | 2,696,439 | 2,696,439 | |||||
Preferred shares, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Preferred shares, shares outstanding (in shares) | 2,696,439 | 2,696,439 | |||||||
Preferred stock value outstanding | $ 270 | $ 270 | |||||||
Number of shares issued on conversion | 1,137,594 | ||||||||
Preferred stock outstanding | 2,696,439 | 2,696,439 | |||||||
Common stock, shares authorized (in shares) | 20,000,000 | 200,000,000 | 20,000,000 | 20,000,000 | |||||
Warrant Exchange Agreement | |||||||||
Preferred and common stock | |||||||||
Number of warrants exchanged | 750,000 | ||||||||
Exchange agreements with holders of Seed preferred stock | |||||||||
Preferred and common stock | |||||||||
Preferred shares, par value (in dollars per share) | $ 0.0001 | ||||||||
Private placement | SAFE | |||||||||
Preferred and common stock | |||||||||
Preferred stock value outstanding | $ 5,000,000 | ||||||||
Initial public offering | |||||||||
Preferred and common stock | |||||||||
Net proceeds from issuance | $ 6,000,000 | ||||||||
Preferred Stock | |||||||||
Preferred and common stock | |||||||||
Preferred shares, shares authorized (in shares) | 10,000,000 | ||||||||
Series X preferred stock | |||||||||
Preferred and common stock | |||||||||
Preferred shares, shares authorized (in shares) | 500,000 | 0 | 500,000 | 500,000 | |||||
Preferred shares, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |||||||
Preferred stock, stated value, (per share) | $ 100 | ||||||||
Percentage on number of shares of common stock for beneficial ownership limitation | 9.99% | ||||||||
Preferred shares, shares outstanding (in shares) | 45,316 | 0 | 45,316 | ||||||
Preferred stock value outstanding | $ 15 | ||||||||
Preferred stock outstanding | 45,316 | 0 | 45,316 | ||||||
Series X preferred stock | 2022 Notes | |||||||||
Preferred and common stock | |||||||||
Number of shares issued on conversion | 2,555 | ||||||||
Conversion price (per share) | $ 5.25 | ||||||||
Series X preferred stock | SAFE | |||||||||
Preferred and common stock | |||||||||
Number of shares on conversion of preferred stock | 100,000 | ||||||||
Series X preferred stock | Warrant Exchange Agreement | |||||||||
Preferred and common stock | |||||||||
Number of shares issued on conversion | 1,250 | ||||||||
Series X preferred stock | Private placement | |||||||||
Preferred and common stock | |||||||||
Number of shares issued | 3,200 | ||||||||
Price per share | $ 100 | ||||||||
Net proceeds from issuance | $ 300,000 | ||||||||
Series X preferred stock | Initial public offering | |||||||||
Preferred and common stock | |||||||||
Number of shares exchanged | 61,689 | ||||||||
Common Stock | |||||||||
Preferred and common stock | |||||||||
Number of shares issued on conversion | 1,175,000 | ||||||||
Common stock, shares authorized (in shares) | 200,000,000 | ||||||||
Common Stock | Warrant Exchange Agreement | |||||||||
Preferred and common stock | |||||||||
Number of shares issued on conversion | 350,000 | ||||||||
Common Stock | Exchange agreements with holders of Seed preferred stock | |||||||||
Preferred and common stock | |||||||||
Number of shares on conversion of preferred stock | 1,557,435 |
Commitments and contingencies_3
Commitments and contingencies (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Commitments and contingencies | ||||
Litigation against the Company | $ 0 | $ 0 | $ 0 | $ 0 |
Related party transactions (D_2
Related party transactions (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) employee | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Accounts payable | ||||
Related party transactions | ||||
Due to related party | $ 132,000 | $ 132,000 | $ 100,000 | |
Management fees | Accounts payable | ||||
Related party transactions | ||||
Expensed amount | 60,000 | 180,000 | ||
Board of directors fees | Accounts payable | ||||
Related party transactions | ||||
Expensed amount | 20,000 | 74,000 | ||
Consulting services | Accounts payable | ||||
Related party transactions | ||||
Expensed amount | 25,000 | 25,000 | ||
Accrued bonus | Accrued expenses | ||||
Related party transactions | ||||
Due to related party | $ 600,000 | |||
Expensed amount | 155,000 | |||
Payroll expenses | Accrued expenses | ||||
Related party transactions | ||||
Due to related party | 50,000 | 50,000 | ||
Tardimed | Accounts payable | ||||
Related party transactions | ||||
Due to related party | 70,000 | |||
Tardimed | Management fees | Accounts payable | ||||
Related party transactions | ||||
Due to related party | 80,000 | 80,000 | ||
Members of board of directors | Accounts payable | ||||
Related party transactions | ||||
Due to related party | 27,000 | 27,000 | ||
Members of board of directors | Management fees | Accounts payable | ||||
Related party transactions | ||||
Due to related party | $ 30,000 | |||
Chief Financial Officer | Accounts payable | ||||
Related party transactions | ||||
Due to related party | $ 25,000 | $ 25,000 | ||
Executives | Accrued expenses | ||||
Related party transactions | ||||
Number of executives terminated | employee | 2 |
Subsequent events - Additiona_2
Subsequent events - Additional Information (Details) - USD ($) | 1 Months Ended | 12 Months Ended |
Oct. 31, 2022 | Dec. 31, 2021 | |
Subsequent Event [Line Items] | ||
Grants (in shares) | 0 | |
Subsequent event | Time-Based Restricted Stock Units | Consulting Services [Member] | ||
Subsequent Event [Line Items] | ||
Grants (in shares) | 12,000 | |
Fai value | $ 29,000 | |
Vesting percentage | 100% | |
Subsequent event | Time-Based Restricted Stock Units | Board of Directors Chairman [Member] | ||
Subsequent Event [Line Items] | ||
Grants (in shares) | 51,583 | |
Fai value | $ 124,000 | |
Vesting percentage | 33.34% | |
Vesting period | 3 months | |
Subsequent event | Time-Based Restricted Stock Units | Board of Directors Chairman [Member] | Maximum | ||
Subsequent Event [Line Items] | ||
Vesting period | 1 year | |
Subsequent event | Performance-Based Restricted Stock Units | Consulting Services [Member] | ||
Subsequent Event [Line Items] | ||
Grants (in shares) | 25,000 | |
Fai value | $ 60,000 |