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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to                

Commission File Number 001-39988

 

Bolt Biotherapeutics, Inc.

(Exact name of Registrant as specified in its Charter)

 

 

Delaware

47-2804636

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

 

 

900 Chesapeake Drive

Redwood City, CA

94063

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (650) 665-9295

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.00001 par value

 

BOLT

 

The Nasdaq Global Select Market

 

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

 

 

 

 

 

 

 

Non-accelerated filer

 

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of May 10, 2021, the registrant had 36,338,130 shares of common stock outstanding.

 

 


 

Table of Contents

 

 

 

Page

PART I FINANCIAL INFORMATION

 

Item 1.

Financial Statements (unaudited)

1

 

Condensed Balance Sheets as of March 31, 2021 and December 31, 2020

1

 

Condensed Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2021 and 2020

2

 

Condensed Statements of Convertible Preferred Stock and Stockholders’ Deficit for the Three Months Ended March 31, 2021 and 2020

3

 

Condensed Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020

4

 

Notes to the Condensed Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

23

Item 4.

Controls and Procedures

23

 

 

PART II OTHER INFORMATION

 

Item 1.

Legal Proceedings

24

Item 1A.

Risk Factors

24

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

24

Item 3.

Defaults Upon Senior Securities

25

Item 4.

Mine Safety Disclosures

25

Item 5.

Other Information

25

Item 6.

Exhibits

26

 

Signatures

27

 

 

i


 

SPECIAL Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements, including statements regarding:

 

any impact of the COVID-19 pandemic, or responses to the pandemic, on our business, collaborations, clinical trials or personnel;

 

our expectations regarding the potential benefits of our strategy and technology;

 

our expectations regarding the operation of our product candidates, collaborations and related benefits;

 

our beliefs regarding our industry;

 

our beliefs regarding the success, cost and timing of our product candidate development and collaboration activities and current and future clinical trials and studies;

 

our beliefs regarding the potential markets for our product candidates, collaborations and our and our collaborators’ ability to serve those markets;

 

our ability to attract and retain key personnel;

 

our ability to obtain funding for our operations, including funding necessary to complete further development and any commercialization of our product candidates; and

 

regulatory developments in the United States, or U.S., and foreign countries, with respect to our product candidates.

These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance and achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or the negative of these terms or other comparable terminology. These forward-looking statements are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions, including those described in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 31, 2021. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

We have common law trademark rights in the unregistered marks “Bolt Biotherapeutics, Inc.,” “Boltbody,” and the Bolt logo in certain jurisdictions. Solely for convenience, trademarks and tradenames referred to in this Quarterly Report appear without the ® and symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or that the applicable owner will not assert its rights, to these trademarks and tradenames.

 

 

ii


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

BOLT BIOTHERAPEUTICS, INC.

CONDENSED BALANCE SHEETS

(Unaudited, in thousands, except share and per share amounts)

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

95,481

 

 

$

5,542

 

Short-term investments

 

 

171,188

 

 

 

17,296

 

Prepaid expenses and other current assets

 

 

4,541

 

 

 

2,523

 

Total current assets

 

 

271,210

 

 

 

25,361

 

Property and equipment, net

 

 

3,910

 

 

 

4,083

 

Operating lease right-of-use assets

 

 

11,478

 

 

 

12,267

 

Finance lease right-of-use assets

 

 

30

 

 

 

34

 

Restricted cash

 

 

1,565

 

 

 

1,565

 

Deferred offering costs

 

 

 

 

 

2,357

 

Long-term investments

 

 

36,236

 

 

 

 

Other assets

 

 

208

 

 

 

875

 

Total assets

 

$

324,637

 

 

$

46,542

 

Liabilities, convertible preferred stock, and stockholders' equity (deficit)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,888

 

 

$

1,598

 

Accrued expenses and other current liabilities

 

 

5,994

 

 

 

6,663

 

Deferred revenue

 

 

1,502

 

 

 

1,502

 

Operating lease liabilities

 

 

1,628

 

 

 

1,501

 

Total current liabilities

 

 

12,012

 

 

 

11,264

 

Operating lease liabilities, net of current portion

 

 

9,056

 

 

 

9,376

 

Convertible preferred stock purchase right liability, non-current

 

 

 

 

 

25,224

 

Other long-term liabilities

 

 

321

 

 

 

329

 

Total liabilities

 

 

21,389

 

 

 

46,193

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

 

 

Convertible preferred stock

 

 

 

 

 

105,296

 

Stockholders' equity (deficit):

 

 

 

 

 

 

 

 

Common stock, $0.00001 par value; 200,000,000 shares and 198,000,000 shares

   authorized at March 31, 2021 and December 31, 2020; respectively;

   36,331,846 and 2,130,139 shares issued and outstanding at March 31,

   2021 and December 31, 2020, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

436,165

 

 

 

3,452

 

Accumulated other comprehensive income

 

 

(64

)

 

 

 

Accumulated deficit

 

 

(132,853

)

 

 

(108,399

)

Total stockholders' equity (deficit):

 

 

303,248

 

 

 

(104,947

)

Total liabilities, convertible preferred stock, and stockholders' equity (deficit)

 

$

324,637

 

 

$

46,542

 

 

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

1


BOLT BIOTHERAPEUTICS, INC.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited, in thousands, except share and per share amounts)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Collaboration revenue

 

$

 

 

$

164

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

14,127

 

 

 

6,787

 

General and administrative

 

 

4,299

 

 

 

2,122

 

Total operating expense

 

 

18,426

 

 

 

8,909

 

Loss from operations

 

 

(18,426

)

 

 

(8,745

)

Other income (expense), net

 

 

 

 

 

 

 

 

Interest income, net

 

 

56

 

 

 

112

 

Change in fair value of preferred stock right liability

 

 

(6,084

)

 

 

 

Total other income (expense), net

 

 

(6,028

)

 

 

112

 

Net loss

 

 

(24,454

)

 

 

(8,633

)

Net unrealized loss on marketable securities

 

 

(64

)

 

 

(10

)

Comprehensive loss

 

$

(24,518

)

 

$

(8,643

)

Net loss per share, basic and diluted

 

$

(1.14

)

 

$

(4.16

)

Weighted-average shares outstanding, basic and diluted

 

 

21,498,306

 

 

 

2,077,365

 

 

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

2


BOLT BIOTHERAPEUTICS, INC.

CONDENSED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited, in thousands, except share amounts)

 

 

 

Three Months Ended March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Convertible

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Preferred Stock

 

 

 

Common

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity (Deficit)

 

Balance at December 31, 2020

 

 

15,232,275

 

 

$

105,296

 

 

 

 

2,130,139

 

 

$

 

 

$

3,452

 

 

$

 

 

$

(108,399

)

 

$

(104,947

)

Issuance of Series C-2 convertible preferred stock, net of issuance cost of $42

 

 

5,611,059

 

 

 

51,902

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification of convertible preferred stock purchase right liability to equity upon issuance of convertible C-2 preferred stock

 

 

 

 

 

31,308

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of convertible preferred stock to common stock

 

 

(20,843,334

)

 

 

(188,506

)

 

 

 

20,843,334

 

 

 

 

 

 

188,506

 

 

 

 

 

 

 

 

 

188,506

 

Issuance of common stock upon initial public offering, net of issuance costs of $22,541

 

 

 

 

 

 

 

 

 

13,225,000

 

 

 

 

 

 

241,959

 

 

 

 

 

 

 

 

 

241,959

 

Issuance of common stock upon exercise of common stock warrants

 

 

 

 

 

 

 

 

 

82,603

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon exercise of stock options

 

 

 

 

 

 

 

 

 

50,770

 

 

 

 

 

 

129

 

 

 

 

 

 

 

 

 

129

 

Vesting of early exercised options and restricted stock awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

 

 

 

 

 

 

 

 

10

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,109

 

 

 

 

 

 

 

 

 

2,109

 

Unrealized loss on available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(64

)

 

 

 

 

 

(64

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,454

)

 

 

(24,454

)

Balance at March 31, 2021

 

 

 

 

$

 

 

 

 

36,331,846

 

 

$

 

 

$

436,165

 

 

$

(64

)

 

$

(132,853

)

 

$

303,248

 

 

 

 

Three Months Ended March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Convertible

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Preferred Stock

 

 

 

Common

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity (Deficit)

 

Balance at December 31, 2019

 

 

10,070,102

 

 

$

77,505

 

 

 

 

1,921,642

 

 

$

 

 

$

1,825

 

 

$

 

 

$

(47,671

)

 

$

(45,846

)

Issuance of common stock upon exercise of stock options

 

 

 

 

 

 

 

 

 

16,161

 

 

 

 

 

 

34

 

 

 

 

 

 

 

 

 

34

 

Vesting of early exercised options and restricted stock awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

5

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

225

 

 

 

 

 

 

 

 

 

225

 

Unrealized loss on available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10

)

 

 

 

 

 

(10

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,633

)

 

 

(8,633

)

Balance at March 31, 2020

 

 

10,070,102

 

 

$

77,505

 

 

 

 

1,937,803

 

 

$

 

 

$

2,089

 

 

$

(10

)

 

$

(56,304

)

 

$

(54,225

)

 

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

3


BOLT BIOTHERAPEUTICS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(24,454

)

 

$

(8,633

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

272

 

 

 

101

 

Stock-based compensation expense

 

 

2,109

 

 

 

225

 

Accretion of premium/discount on marketable securities

 

 

335

 

 

 

(23

)

Unrealized loss on marketable securities, net

 

 

(64

)

 

 

(10

)

Change in fair value of convertible preferred stock purchase rights liabilities

 

 

6,084

 

 

 

 

Non-cash lease expense

 

 

530

 

 

 

426

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(1,351

)

 

 

33

 

Accounts payable and accrued expenses

 

 

(88

)

 

 

(540

)

Operating lease liabilities

 

 

66

 

 

 

(1,223

)

Deferred revenue

 

 

 

 

 

(2

)

Other long-term liabilities

 

 

2

 

 

 

8

 

Net cash used in operating activities

 

 

(16,559

)

 

 

(9,638

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(58

)

 

 

(373

)

Purchases of marketable securities

 

 

(198,069

)

 

 

(13,235

)

Maturities of marketable securities

 

 

7,606

 

 

 

 

Net cash used in investing activities

 

 

(190,521

)

 

 

(13,608

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from issuance of preferred stock, net of issuance cost

 

 

51,902

 

 

 

 

Proceeds from initial public offering, net of issuance cost

 

 

244,988

 

 

 

 

Proceeds from issuance of common stock

 

 

129

 

 

 

34

 

Net cash provided by financing activities

 

 

297,019

 

 

 

34

 

Net increase (decrease) in cash

 

 

89,939

 

 

 

(23,212

)

Cash, cash equivalents and restricted cash at beginning of year

 

 

7,107

 

 

 

35,410

 

Cash, cash equivalents and restricted cash at end of period

 

$

97,046

 

 

$

12,198

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

95,481

 

 

$

11,614

 

Restricted cash

 

 

1,565

 

 

 

584

 

Total cash, cash equivalents and restricted cash

 

$

97,046

 

 

$

12,198

 

Supplemental schedule of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Vesting of early exercised options

 

$

10

 

 

$

5

 

Purchases of property and equipment included in accounts payable and accrued liabilities

 

$

37

 

 

$

17

 

Deferred offering costs in accounts payable and accrued liabilities

 

$

672

 

 

$

 

Right of use assets obtained in exchange for operating lease obligations

 

$

 

 

$

254

 

 

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

 

 

4


 

BOLT BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1. Description of the Business

Bolt Biotherapeutics, Inc. (the “Company”) is a clinical-stage biotechnology company pioneering a new class of immuno-oncology agents that combine the targeting precision of antibodies with the power of both the innate and adaptive immune systems.

Initial Public Offering and Related Transactions

On February 9, 2021, the Company completed its initial public offering (“IPO”) pursuant to a registration statement on Form S-1 (File No. 333-252136) that was declared effective by the Securities and Exchange Commission (the “SEC”) on February 4, 2021 and sold an aggregate of 13,225,000 shares of its common stock, including the full exercise of the underwriters’ option to purchase 1,725,000 shares, at a price per share of $20.00. Proceeds from the IPO, net of underwriting discounts, commissions and offering costs, were approximately $242.0 million.

In addition, each of the following occurred on February 4, 2021 in connection with the completion of the Company’s IPO:

 

the conversion of all outstanding shares of convertible preferred stock into 20,843,334 shares of the Company’s common stock; and

 

the amendment and restatement of the Company’s certificate of incorporation, authorizing 200,000,000 shares of common stock and 10,000,000 shares of undesignated preferred stock.

Liquidity

The Company has incurred operating losses and negative cash flows from operations since its inception and had an accumulated deficit of $132.9 million and $108.4 million as of March 31, 2021 and December 31, 2020, respectively. To date, none of the Company’s product candidates have been approved for sale and therefore the Company has not generated any revenue from product sales. The Company expects operating losses and negative cash flows from operations to continue for the foreseeable future. Based on the Company’s current business plan, management believes that the existing cash and cash equivalents, and marketable securities of $302.9 million as of March 31, 2021 will be sufficient to fund the Company’s obligations for at least 12 months after these financial statements are issued.

Management plans to continue to incur substantial costs in order to conduct research and development activities and the Company will be required to raise additional capital. However, there can be no assurance as to whether additional financing will be available on terms acceptable to the Company, if at all. If sufficient funds on acceptable terms are not available when needed, it would have a negative impact on the Company’s financial condition and could force the Company to delay, limit, reduce or terminate product development or future commercialization efforts or grant rights to develop and market product candidates that the Company would otherwise plan to develop and market itself. 

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements as of March 31, 2021 and for the three months ended March 31, 2021 and 2020 have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and pursuant to applicable rules and regulations of the SEC regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed financial statements include only normal and recurring adjustments and certain immaterial reclassifications, which are normal in nature, that the Company believes are necessary to fairly state the Company’s financial position and the results of its operations and cash flows. The balance sheet as of December 31, 2020 was derived from the audited financial statements as of that date. These interim financial results are not necessarily indicative of results to be expected for the full year or any other period. These unaudited condensed financial statements and the notes accompanying them should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

5


Reverse Stock Split

On January 26, 2021, the Company amended and restated its amended and restated certificate of incorporation to effect a 1-for-7 reverse stock split of the Company’s outstanding common stock and convertible preferred stock. The par value and authorized shares of the common stock were not adjusted as a result of the reverse stock split. All issued and outstanding common stock, options to purchase common stock, early exercised options and per share amounts contained in the financial statements have been retroactively adjusted to give effect to the reverse stock split for all periods presented.

Other Risks and Uncertainties

The Company is subject to a number of risks similar to other early-stage biopharmaceutical companies, including, but not limited to, changes in any of the following areas that the Company believes could have a material adverse effect on its future financial position or results of operations: risks related to the successful discovery and development of its product candidates, ability to raise additional capital, development of new technological innovations by its competitors and delay or inability to obtain chemical or biological intermediates from such suppliers required for the synthesis of the Company’s product candidates, including due to the impact of the current COVID-19 pandemic, protection of intellectual property rights, litigation or claims against the Company based on intellectual property rights, and regulatory clearance and market acceptance of the Company’s products. 

The current COVID-19 pandemic, which is impacting worldwide economic activity, poses the risk that the Company or its employees, contractors, suppliers and other partners may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities. The extent to which the COVID-19 pandemic will impact the Company’s business will depend on future developments that are highly uncertain and cannot be predicted at this time. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The extent to which the COVID-19 pandemic may directly or indirectly impact the Company’s financial statements is highly uncertain and subject to change. Management considered the potential impact of the COVID-19 pandemic on its estimates and assumptions and there was not a material impact to the Company’s condensed financial statements as of and for the three months ended March 31, 2021; however, actual results could differ from those estimates and there may be changes to management’s estimates in future periods.

The Company relies on single source manufacturers and suppliers for the supply of its product candidates. Disruption from these manufacturers or suppliers would have a negative impact on the Company’s business, financial position and results of operations.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates and assumptions, including those related to revenue recognition, the valuation of common stock, stock-based compensation, convertible preferred stock purchase right liabilities and accrued liabilities. Management bases its estimates on historical experience and on various other assumptions that are 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 that are not readily apparent from other sources. Actual results may differ materially from those estimates.

Deferred Offering Costs

The Company capitalized certain legal, accounting and other third-party fees that were directly related to the Company’s IPO. After the completion of the IPO in February 2021, the total deferred offering costs of $4.0 million were offset against the proceeds from the IPO and reclassified to additional paid-in capital in the accompanying the balance sheets. At December 31, 2020, deferred offering costs totaling $2.4 million were included as non-current assets in the accompanying balance sheet.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents and marketable securities. At March 31, 2021 and December 31, 2020, most of the Company’s funds are invested with a registered investment manager and custodied at one financial institution, with working capital kept at a separate financial institution, and account balances may at times exceed federally insured limits. Management believes that the Company is not exposed to significant credit risk due to the financial strength of the depository institutions where the funds are held.

6


Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of March 31, 2021 and December 31, 2020, cash and cash equivalents consisted primarily of bank deposits and money market funds, which were unrestricted as to withdrawal or use.

Marketable Securities

The Company classifies its marketable securities as available-for-sale and records such assets at estimated fair value in the balance sheets, with unrealized gains and losses that are determined to be temporary, if any, reported as a component of other comprehensive income (loss) within the statements of operations and comprehensive loss and as a separate component of stockholders’ equity. The Company classifies marketable securities with remaining maturities greater than three months but less than one year as short-term investments, and those with remaining maturities greater than one year are classified as long-term investments. Investments are regularly reviewed for other-than-temporary declines in fair value. The review includes the consideration of the cause of the impairment, including the creditworthiness of the security issuers, the number of investments in an unrealized loss position, the severity and duration of the unrealized losses and whether it is more likely than not that the Company will be required to sell the investments before the recovery of their amortized cost basis. A decline in the fair value of any security below cost that is deemed other than temporary results in a charge to earnings and the establishment of a new cost basis for the security. The Company invests its excess cash balances primarily in corporate debt securities with strong credit ratings. Realized gains and losses are calculated on the specific identification method and recorded as interest income and were immaterial for all periods presented.

Restricted Cash

As of March 31, 2021 and December 31, 2020, the Company had $1.6 million of long-term restricted cash deposited with a financial institution. The restricted cash is held in separate bank accounts to support letter of credit agreements related to the Company’s facility leases which expire in 2025 and 2031 (see Note 7).

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Cash and cash equivalents, restricted cash, marketable debt securities, accounts payable, accrued expenses and other current liabilities are reported at their respective fair values in our condensed balance sheets. The carrying amount of the remaining financial instruments approximate fair value due to their short-term nature. Refer to Note 3 for the methodologies and assumptions used in valuing financial instruments.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, convertible preferred stock, stock options, common stock subject to repurchase related to unvested restricted stock awards and early exercise of stock options are considered to be potentially dilutive securities. Basic and diluted net loss per share is presented in conformity with the two-class method required for participating securities as the convertible preferred stock is considered a participating security because it participates in dividends with common stock. The Company also considers the shares issued upon the early exercise of stock options subject to repurchase to be participating securities because holders of such shares have non-forfeitable dividend rights in the event a dividend is paid on common stock. The holders of all series of convertible preferred stock and the holders of early exercised shares subject to repurchase do not have a contractual obligation to share in the Company’s losses. As such, the net loss was attributed entirely to common stockholders. Because the Company has reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share for all periods presented as potentially dilutive securities were anti-dilutive.

Recent Accounting Standards

From time to time, new accounting standards are issued by the Financial Accounting Standards Board (the “FASB”), or other standard setting bodies and adopted by the Company as of the specified effective date. There have been no new accounting pronouncements issued nor adopted during the three months ended March 31, 2021 that are of significance to the Company’s financial position or results of operations.

7


3. Fair Value Measurements and Fair Value of Financial Instruments

The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

During the three months ended March 31, 2021, financial assets measured on a recurring basis consist of cash invested in money market accounts, short-term investments, and long-term investments. The fair value of short-term and long-term investments is based upon market prices quoted on the last day of the fiscal period or other observable market inputs. The Company obtains pricing information from its investment manager and generally determines the fair value of investment securities using standard observable inputs, including reported trades, broker/dealer quotes, bids and/or offers. Financial liabilities measured at fair value on a recurring basis include the convertible preferred stock purchase rights liabilities described below.

There were no transfers within the hierarchy during the three months ended March 31, 2021 and 2020.

Marketable securities, all of which are classified as available-for-sale securities, consisted of the following at March 31, 2021 and December 31, 2020 (in thousands):

 

 

 

March 31, 2021

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Asset backed securities

 

$

28,614

 

 

$

1

 

 

$

(4

)

 

$

28,611

 

Other government agency securities

 

 

5,113

 

 

 

 

 

 

(7

)

 

 

5,106

 

Commercial paper

 

 

91,976

 

 

 

 

 

 

 

 

 

91,976

 

Corporate debt securities

 

 

81,784

 

 

 

 

 

 

(53

)

 

 

81,731

 

Total

 

$

207,487

 

 

$

1

 

 

$

(64

)

 

$

207,424

 

 

 

 

December 31, 2020

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Asset backed securities

 

$

2,639

 

 

$

 

 

$

 

 

$

2,639

 

U.S. treasury securities

 

 

1,300

 

 

 

 

 

 

 

 

 

1,300

 

Commercial paper

 

 

6,795

 

 

 

 

 

 

 

 

 

6,795

 

Corporate debt securities

 

 

6,562

 

 

 

1

 

 

 

(1

)

 

 

6,562

 

Total

 

$

17,296

 

 

$

1

 

 

$

(1

)

 

$

17,296

 

 

8


 

At March 31, 2021 and December 31, 2020, the fair values of the Company’s assets and liabilities, which are measured at fair value on a recurring basis, were determined using the following inputs (in thousands):

 

 

 

March 31, 2021

 

 

 

Total

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Money market funds

 

$

93,270

 

 

$

93,270

 

 

$

 

 

$

 

Asset backed securities

 

 

28,611

 

 

 

 

 

 

28,611

 

 

 

 

Other government agency securities

 

 

5,106

 

 

 

 

 

 

5,106

 

 

 

 

Commercial paper

 

 

91,976

 

 

 

 

 

 

91,976

 

 

 

 

Corporate debt securities

 

 

81,731

 

 

 

 

 

 

81,731

 

 

 

 

Total

 

$

300,694

 

 

$

93,270

 

 

$

207,424

 

 

$

 

 

 

 

December 31, 2020

 

 

 

Total

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Money market funds

 

$

3,921

 

 

$

3,921

 

 

$

 

 

$

 

U.S. treasury securities

 

 

1,300

 

 

 

1,300

 

 

 

 

 

 

 

Asset backed securities

 

 

2,640

 

 

 

 

 

 

2,640

 

 

 

 

Commercial paper

 

 

6,795

 

 

 

 

 

 

6,795

 

 

 

 

Corporate debt securities

 

 

6,561

 

 

 

 

 

 

6,561

 

 

 

 

Total

 

$

21,217

 

 

$

5,221

 

 

$

15,996

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock purchase rights liability

 

$

25,224

 

 

$

 

 

$

 

 

$

25,224

 

 

Level 3 liabilities that are measured at fair value on a recurring basis consist of the convertible preferred stock purchase right liabilities. The following table provides a summary of changes in the estimated fair value of the financial instruments using significant Level 3 inputs (in thousands):

 

 

 

Series C

Convertible

Preferred

Stock

Purchase Right

Liability

 

Balance at December 31, 2020

 

$

25,224

 

Change in fair value

 

 

6,084

 

Reclassification to equity