10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 September 30, 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: 001-38958

 

Karuna Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

27-0605902

(State or other jurisdiction of

incorporation or organization)

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

99 High Street, 26th Floor

Boston, Massachusetts

02110

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (857) 449-2244

 

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, $0.0001 par value per share

 

KRTX

 

Nasdaq Global 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 October 31, 2021, the registrant had 29,623,555 shares of common stock, $0.0001 par value per share, outstanding.

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Consolidated Financial Statements (Unaudited)

1

 

Consolidated Balance Sheets

1

 

Consolidated Statements of Operations

2

 

Consolidated Statements of Comprehensive Loss

3

 

Consolidated Statements of Stockholders’ Equity

4

 

Consolidated Statements of Cash Flows

5

 

Notes to Consolidated Financial Statements (Unaudited)

6

Item 2.

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

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

Item 4.

Controls and Procedures

29

PART II.

OTHER INFORMATION

30

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

30

Item 3.

Defaults Upon Senior Securities

30

Item 4.

Mine Safety Disclosures

30

Item 5.

Other Information

30

Item 6.

Exhibits

31

Signatures

32

 

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

KARUNA THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

 

 

 

September 30,
2021

 

 

December 31,
2020

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

252,221

 

 

$

53,048

 

Investment securities, available-for-sale

 

 

246,682

 

 

 

269,282

 

Prepaid expenses and other current assets

 

 

30,134

 

 

 

21,864

 

Deferred offering costs

 

 

405

 

 

 

405

 

Total current assets

 

 

529,442

 

 

 

344,599

 

Restricted cash

 

 

261

 

 

 

157

 

Right-of-use lease assets - operating, net

 

 

6,906

 

 

 

2,420

 

Property and equipment, net

 

 

2,981

 

 

 

449

 

Other non-current assets

 

 

508

 

 

 

 

Total assets

 

$

540,098

 

 

$

347,625

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,989

 

 

$

865

 

Accrued expenses

 

 

11,658

 

 

 

5,144

 

Current portion of operating lease liability

 

 

2,132

 

 

 

844

 

Total current liabilities

 

 

15,779

 

 

 

6,853

 

Operating lease liability, net of current portion

 

 

5,887

 

 

 

1,841

 

Other non-current liabilities

 

 

104

 

 

 

 

Total liabilities

 

 

21,770

 

 

 

8,694

 

Commitments and Contingencies (Note 8)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 10,000,000 shares authorized and 0 shares
   outstanding as of September 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common stock, $0.0001 par value; 150,000,000 shares authorized at
   September 30, 2021 and December 31, 2020;
29,606,005 and 26,988,458 
   shares issued and outstanding at September 30, 2021 and December 31,
   2020, respectively

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

778,271

 

 

 

482,955

 

Accumulated deficit

 

 

(259,911

)

 

 

(144,066

)

Accumulated other comprehensive income (loss)

 

 

(35

)

 

 

39

 

Total stockholders’ equity

 

 

518,328

 

 

 

338,931

 

Total liabilities and stockholders’ equity

 

$

540,098

 

 

$

347,625

 

 

The accompanying notes are an integral part of these consolidated financial statements

1


 

Karuna Therapeutics, Inc.

CONSOLIDATED Statements of Operations

(In thousands, except share and per share data)

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

38,775

 

 

$

12,585

 

 

$

83,108

 

 

$

27,824

 

General and administrative

 

 

12,393

 

 

 

6,944

 

 

 

32,554

 

 

 

19,585

 

Total operating expenses

 

 

51,168

 

 

 

19,529

 

 

 

115,662

 

 

 

47,409

 

Loss from operations

 

 

(51,168

)

 

 

(19,529

)

 

 

(115,662

)

 

 

(47,409

)

Other income (loss), net:

 

 

 

 

 

 

 

 

 

 

 

 

Impairment loss on right-of-use assets

 

 

 

 

 

 

 

 

(677

)

 

 

 

Interest income

 

 

114

 

 

 

688

 

 

 

363

 

 

 

2,864

 

Sublease income

 

 

122

 

 

 

 

 

 

131

 

 

 

 

Total other income (loss), net

 

 

236

 

 

 

688

 

 

 

(183

)

 

 

2,864

 

Net loss before income taxes

 

 

(50,932

)

 

 

(18,841

)

 

 

(115,845

)

 

 

(44,545

)

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to common stockholders

 

$

(50,932

)

 

$

(18,841

)

 

$

(115,845

)

 

$

(44,545

)

Net loss per share, basic and diluted (Note 5)

 

$

(1.72

)

 

$

(0.71

)

 

$

(4.00

)

 

$

(1.69

)

Weighted average common shares outstanding used in
   computing net loss per share, basic and diluted

 

 

29,572,289

 

 

 

26,663,968

 

 

 

28,953,654

 

 

 

26,298,969

 

 

The accompanying notes are an integral part of these consolidated financial statements

2


 

Karuna Therapeutics, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

 

$

(50,932

)

 

$

(18,841

)

 

$

(115,845

)

 

$

(44,545

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on available-for-sale
   investments

 

 

(30

)

 

 

(527

)

 

 

(74

)

 

 

365

 

Comprehensive loss

 

$

(50,962

)

 

$

(19,368

)

 

$

(115,919

)

 

$

(44,180

)

 

The accompanying notes are an integral part of these consolidated financial statements

3


 

Karuna Therapeutics, Inc.

CONSOLIDATED Statements of Stockholders’ Equity

(In thousands, except share data)

(Unaudited)

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Value

 

 

Capital

 

 

Deficit

 

 

Income (loss)

 

 

Equity

 

Balance, December 31, 2020

 

 

26,988,458

 

 

$

3

 

 

$

482,955

 

 

$

(144,066

)

 

$

39

 

 

$

338,931

 

Issuance of common stock upon public
   offering, net of $
17,250 in under-writing
   discounts and commissions and $
233 in
   offering costs

 

 

2,395,834

 

 

 

 

 

 

270,017

 

 

 

 

 

 

 

 

 

270,017

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

13,288

 

 

 

 

 

 

 

 

 

13,288

 

Exercise of common options

 

 

159,518

 

 

 

 

 

 

3,059

 

 

 

 

 

 

 

 

 

3,059

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(44

)

 

 

(44

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(64,913

)

 

 

 

 

 

(64,913

)

Balance, June 30, 2021

 

 

29,543,810

 

 

$

3

 

 

$

769,319

 

 

$

(208,979

)

 

$

(5

)

 

$

560,338

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

8,203

 

 

 

 

 

 

 

 

 

8,203

 

Exercise of common options

 

 

62,195

 

 

 

 

 

 

749

 

 

 

 

 

 

 

 

 

749

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30

)

 

 

(30

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(50,932

)

 

 

 

 

 

(50,932

)

Balance, September 30, 2021

 

 

29,606,005

 

 

$

3

 

 

$

778,271

 

 

$

(259,911

)

 

$

(35

)

 

$

518,328

 

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Value

 

 

Capital

 

 

Deficit

 

 

Income

 

 

 Equity

 

Balance, December 31, 2019

 

 

26,012,754

 

 

$

3

 

 

$

465,420

 

 

$

(75,512

)

 

$

5

 

 

$

389,916

 

Follow-on offering costs

 

 

 

 

 

 

 

 

(34

)

 

 

 

 

 

 

 

 

(34

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,860

 

 

 

 

 

 

 

 

 

4,860

 

Exercise of common options

 

 

567,779

 

 

 

 

 

 

1,873

 

 

 

 

 

 

 

 

 

1,873

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

892

 

 

 

892

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(25,704

)

 

 

 

 

 

(25,704

)

Balance, June 30, 2020

 

 

26,580,533

 

 

$

3

 

 

$

472,119

 

 

$

(101,216

)

 

$

897

 

 

$

371,803

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,144

 

 

 

 

 

 

 

 

 

4,144

 

Exercise of common options

 

 

207,283

 

 

 

 

 

 

680

 

 

 

 

 

 

 

 

 

680

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(527

)

 

 

(527

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(18,841

)

 

 

 

 

 

(18,841

)

Balance, September 30, 2020

 

 

26,787,816

 

 

$

3

 

 

$

476,943

 

 

$

(120,057

)

 

$

370

 

 

$

357,259

 

 

The accompanying notes are an integral part of these consolidated financial statements

4


 

Karuna Therapeutics, Inc.

CONSOLIDATED Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(115,845

)

 

$

(44,545

)

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

 

 

 

 

 

 

Stock-based compensation expense

 

 

21,491

 

 

 

9,004

 

Impairment loss on right-of-use assets

 

 

677

 

 

 

 

Amortization of premiums and accretion of discounts on
   investment securities

 

 

735

 

 

 

266

 

Depreciation and amortization expense

 

 

270

 

 

 

97

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accrued interest on investment securities

 

 

156

 

 

 

(569

)

Prepaid expenses and other current assets

 

 

(8,397

)

 

 

(12,609

)

Right-of-use assets

 

 

1,004

 

 

 

447

 

Other non-current assets

 

 

(508

)

 

 

 

Accounts payable

 

 

1,005

 

 

 

578

 

Accrued expenses

 

 

6,134

 

 

 

794

 

Operating lease liability

 

 

(706

)

 

 

(374

)

Other non-current liabilities

 

 

104

 

 

 

 

Net cash used in operating activities

 

 

(93,880

)

 

 

(46,911

)

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Purchases of investment securities

 

 

(289,504

)

 

 

(263,974

)

Maturities of investment securities

 

 

302,149

 

 

 

145,000

 

Sales of investment securities

 

 

8,990

 

 

 

 

Acquisition of property and equipment

 

 

(2,303

)

 

 

(337

)

Net cash provided by (used in) investing activities

 

 

19,332

 

 

 

(119,311

)

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from public offering, net of underwriting discounts
   and commissions

 

 

270,250

 

 

 

 

Payment of offering costs

 

 

(233

)

 

 

(439

)

Proceeds from exercise of stock options

 

 

3,808

 

 

 

2,553

 

Net cash provided by financing activities

 

 

273,825

 

 

 

2,114

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

199,277

 

 

 

(164,108

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

53,205

 

 

 

209,052

 

Cash, cash equivalents and restricted cash at end of period

 

$

252,482

 

 

$

44,944

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flows information

 

 

 

 

 

 

Lease liabilities arising from obtaining right-of-use assets

 

$

6,040

 

 

$

3,259

 

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

 

$

499

 

 

$

20

 

 

The accompanying notes are an integral part of these consolidated financial statements

5


 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Nature of the Business and Basis of Presentation

Description of the Business

Karuna Therapeutics, Inc. (the “Company”) was incorporated under the laws of the State of Delaware in July 2009 as Karuna Pharmaceuticals, Inc. and is headquartered in Boston, Massachusetts. In March 2019, the Company changed its name to Karuna Therapeutics, Inc. The Company is an innovative clinical-stage biopharmaceutical company driven to create and deliver transformative medicines for people living with psychiatric and neurological conditions.

Since the Company’s inception, it has focused substantially all of its efforts and financial resources on organizing and staffing the Company, acquiring and developing its technology, raising capital, building its intellectual property portfolio, undertaking preclinical studies and clinical trials and providing general and administrative support for these activities. The Company has not generated any product revenue related to its primary business purpose to date and is subject to a number of risks similar to those of other early stage companies, including dependence on key individuals, regulatory approval of products, uncertainty of market acceptance of products, competition from substitute products and larger companies, compliance with government regulations, protection of proprietary technology, dependence on third parties, product liability, the impact of the ongoing and evolving COVID-19 coronavirus pandemic, and the need to obtain adequate additional financing to fund the development of its product candidates.

On June 27, 2019, the Company’s registration statement on Form S-1 relating to its initial public offering of its common stock (“IPO”) was declared effective by the Securities and Exchange Commission (“SEC”). In the IPO, which closed on July 2, 2019, the Company issued and sold 6,414,842 shares of common stock, including full exercise of the underwriters’ over-allotment option to purchase an additional 836,718 shares, at a public offering price of $16.00 per share. The aggregate net proceeds to the Company from the IPO, inclusive of proceeds from the over-allotment exercise, were approximately $93.0 million after deducting underwriting discounts and commissions of $7.2 million and offering expenses of $2.4 million. Upon closing of the IPO, all 12,962,045 shares of the Company’s redeemable convertible preferred stock then outstanding converted into an aggregate of 16,833,790 shares of common stock.

On November 20, 2019, the Company’s registration statement on Form S-1 relating to its follow-on public offering of its common stock was declared effective by the SEC. In this offering, which closed on November 25, 2019, the Company issued and sold 2,600,000 shares of common stock at a public offering price of $96.00 per share. The aggregate net proceeds were $234.2 million after deducting underwriting discounts and commissions of $15.0 million and offering expenses of $0.4 million.

On July 2, 2020, the Company filed an automatically effective registration statement on Form S-3 (the “Registration Statement”) with the SEC which registered the offering, issuance and sale of an unspecified amount of common stock, preferred stock, debt securities, warrants and/or units of any combination thereof. The Company simultaneously entered into an equity distribution agreement with Goldman Sachs & Co. LLC, as sales agent, to provide for the issuance and sale by the Company of up to $150.0 million of common stock from time to time in “at-the-market” offerings under the Registration Statement and related prospectus filed with the Registration Statement (the “ATM Program”). As of September 30, 2021, no sales had been made pursuant to the ATM Program.

On March 4, 2021, the Company completed a follow-on public offering under the Registration Statement and a related prospectus supplement in which it issued and sold 2,395,834 shares of common stock, including full exercise of the underwriters’ over-allotment option to purchase an additional 312,500 shares of common stock, at a public offering price of $120 per share. The aggregate net proceeds to the Company from the offering, inclusive of proceeds from the over-allotment exercise, were $270.0 million after deducting underwriting discounts and commissions of $17.3 million and offering expenses of $0.2 million.

The Company’s consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business. The Company experienced negative operating cash flows of $93.9 million for the nine months ended September 30, 2021 and had an accumulated deficit of $259.9 million as of September 30, 2021. The Company expects to continue to generate operating losses for the foreseeable future.

The Company expects that its cash, cash equivalents and available-for-sale investments of $498.9 million as of September 30, 2021 will be sufficient to fund its operating expenses and capital expenditure requirements through at least 12 months from the date of issuance of these consolidated financial statements.

6


 

If the Company is unable to obtain funding when needed, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”).

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Karuna Securities Corporation, a Massachusetts corporation. All inter-company transactions and balances have been eliminated in consolidation.

The accompanying consolidated balance sheet as of September 30, 2021, the consolidated statements of operations, comprehensive loss, and stockholders’ equity for the three and nine months ended September 30, 2021 and 2020 and the consolidated statements of cash flows for the nine months ended September 30, 2021 and 2020 are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2021 and the results of its operations for the three and nine months ended September 30, 2021 and 2020 and the results of its cash flows for the nine months ended September 30, 2021 and 2020. Certain information and footnote disclosures typically included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these unaudited consolidated interim financial statements should be read in conjunction with the Company’s consolidated financial statements as of and for the year ended December 31, 2020. The results for the three and nine months ended September 30, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods, or any future year or period. 

Note 2. Summary of Significant Accounting Policies

The significant accounting policies and estimates used in preparation of the consolidated financial statements are described in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2020, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K. During the three and nine months ended September 30, 2021, there were no material changes to the Company’s significant accounting policies, notwithstanding the following policies.

Impairment of Long-Lived Assets

The Company continually evaluates long-lived assets for potential impairment when events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Recoverability is measured by comparing the carrying values of the assets to the expected future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the book values of the assets exceed their fair value.

Leases (Lessor Accounting)

Sublease income is recognized on a straight-line basis over the term of the sublease agreement and is recorded within other income (loss) on the consolidated statements of operations.

Recently Issued Accounting Pronouncements

New pronouncements issued but not effective until after September 30, 2021 are not expected to have a material impact on the Company’s consolidated financial statements. 

7


 

Note 3. Prepaid Expenses and Other Assets and Accrued Expenses

Prepaid expenses and other current assets consisted of the following (in thousands):

 

 

 

September 30,
2021

 

 

December 31,
2020

 

Prepaid research and development expenses

 

$

25,839

 

 

$

18,660

 

Prepaid insurance

 

 

3,598

 

 

 

2,116

 

Other

 

 

697

 

 

 

1,088

 

Total prepaid expenses and other current assets

 

$

30,134

 

 

$

21,864

 

 

The Company also had other non-current assets of $0.5 million as of September 30, 2021, which consisted of a security deposit of $0.4 million and less than $0.1 million in prepaid research and development expenses, as well as less than $0.1 million in deferred rent.

 

Accrued expenses consisted of the following (in thousands):

 

 

 

September 30,
2021

 

 

December 31,
2020

 

Accrued research and development expenses

 

$

6,292

 

 

$

1,829

 

Accrued payroll and related expenses

 

 

4,041

 

 

 

2,654

 

Professional fees

 

 

663

 

 

 

458

 

Other

 

 

662

 

 

 

203

 

Total accrued expenses

 

$

11,658

 

 

$

5,144

 

 

Note 4. Stockholders’ Equity

Preferred Stock

On July 2, 2019, in connection with the closing of the Company’s IPO, the Company filed its amended and restated Certificate of Incorporation, which authorizes the Company to issue up to 10,000,000 shares of preferred stock, $0.0001 par value per share. There were no shares of preferred stock outstanding as of September 30, 2021 or December 31, 2020.

Common Stock

As of September 30, 2021, the Company’s amended and restated Certificate of Incorporation authorized the Company to issue 150,000,000 shares of common stock, $0.0001 par value per share.

Holders of the common stock are entitled to one vote for each share of common stock held at all meetings of stockholders and written actions in lieu of meetings. The holders of common stock are entitled to receive dividends out of funds legally available, as declared by the board of directors. These dividends are subject to the preferential dividend rights of the holders of the Company’s preferred stock. Through September 30, 2021, no cash dividends have been declared or paid.

Note 5. Net Loss per Share

The following table sets forth the computation of basic and diluted net loss per share of common stock for the three and nine months ended September 30, 2021 and 2020 (in thousands, except share and per share data):

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net Loss

 

$

(50,932

)

 

$

(18,841

)

 

$

(115,845

)

 

$

(44,545

)

Weighted-average shares used in computing net loss per share

 

 

29,572,289

 

 

 

26,663,968

 

 

 

28,953,654

 

 

 

26,298,969

 

Net loss per share, basic and diluted

 

$

(1.72

)

 

$

(0.71

)

 

$

(4.00

)

 

$

(1.69

)

 

8


 

 

The Company’s potentially dilutive securities, which consist of stock options, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

Common Stock Equivalents

As of September 30, 2021 and 2020, stock options outstanding to purchase common stock of 5,231,877 and 4,676,732, respectively, have been excluded from the calculation of diluted net loss per share because including them would have had an anti-dilutive impact.

 

Note 6. Stock-based Compensation

Stock Options

In September 2009, the Company’s board of directors approved the 2009 Stock Incentive Plan (the “2009 Plan”) which provided for the grant of incentive stock options to employees and non-statutory stock options to directors, consultants, and non-employees of the Company. The 2009 Plan terminated in July 2019 effective upon the completion of the Company’s IPO. No additional options will be granted under the 2009 Plan. As of September 30, 2021, there were 2,496,265 options outstanding under the 2009 Plan.

In May 2019, the Company’s board of directors approved the 2019 Stock Option and Incentive Plan (the “2019 Plan”) which became effective on June 26, 2019, the date immediately prior to the date on which the registration statement related to the IPO was declared effective by the SEC. The 2019 Plan will expire in May 2029. Under the 2019 Plan, the Company may grant incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units and other stock-based awards. There were 1,709,832 shares of the Company’s common stock initially reserved for issuance under the 2019 Plan. The number of shares of common stock that may be issued under the 2019 Plan automatically increases on January 1 of each calendar year, commencing on January 1, 2020 and each January 1 thereafter, by 4% of the number of shares of common stock outstanding on the immediately preceding December 31 or such lesser amount determined by the Company’s board of directors or the compensation committee of the board of directors. In addition, any shares of common stock underlying any awards from the 2009 Plan that are forfeited, cancelled, held back, reacquired, or otherwise terminated shall be added back to the shares of stock available for issuance under the 2019 Plan. As of September 30, 2021, there were 1,230,630 common shares available for issuance and 2,735,612 options outstanding under the 2019 Plan.

Options under the 2019 Plan generally vest based on the grantee’s continued service with the Company during a specified period following a grant as determined by the board of directors and expire ten years from the grant date. Awards typically vest in four years, but vesting conditions can vary based on the discretion of the Company’s board of directors.

A summary of the Company’s stock option activity and related information is as follows:

 

 

 

Number of
Shares