COGNITION THERAPEUTICS INC [CGTX] Filings

10-Q 1 cgtx-20240930x10q.htm 10-Q

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 September 30, 2024

☐	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: 001-40886

Cognition Therapeutics, Inc.

(Exact name of registrant as specified in its charter)


Delaware	13-4365359
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)


2500 Westchester Ave. Purchase, NY 10577	10577
(Address of Principal Executive Offices)	(Zip Code)

(412) 481-2210

(Registrant’s telephone number, including area code)

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


Title of Each Class	Trading symbol	Name of Exchange on which registered
Common Stock, par value $0.001 per share	CGTX	The Nasdaq Stock Market LLC

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, a 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 November 8, 2024, there were 41,547,995 shares of the registrant’s common stock issued and outstanding.

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TABLE OF CONTENTS

		Page


Cautionary Note on Forward-Looking Statements		3

Part I.	Financial Information	5

Item 1.	Financial Statements (unaudited)	5

	Consolidated Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023	5

	Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2024 and 2023 (unaudited)	6

	Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023 (unaudited)	7

	Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 (unaudited)	9

	Notes to Consolidated Financial Statements (unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34

Item 4.	Controls and Procedures	34

Part II.	Other Information	35

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 3.	Defaults Upon Senior Securities	36

Item 4.	Mine Safety Disclosures	36

Item 5.	Other Information	36

Item 6.	Exhibits	37

Signatures		38

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Cautionary Note on Forward-Looking Statements

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements concerning our business, operations and financial performance, as well as our plans, objectives and expectations for our business operations and financial performance and condition. All statements other than statements of historical or current facts included in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. In addition, statements that “we believe” or similar statements reflect our beliefs and opinions on the relevant subject. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed in, or implied by these, forward-looking statements and therefore, you should not unduly rely on such statements, including, but not limited to:

●

our ability to raise additional capital to fund our operations and continue the development of our current and future product candidates;

●

our ability to continue as a going concern for the next twelve months;

●

our ability to maintain the listing of our common stock on the Nasdaq Global Market;

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our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

●

the clinical nature of our business and our ability to successfully and in a timely manner advance our current and future product candidates through our ongoing and future clinical trials, preclinical studies and development activities;

●

our ability to generate revenue from future product sales and our ability to achieve and maintain profitability;

●

the accuracy of our projections and estimates regarding our expenses, capital requirements, cash utilization, and need for additional financing;

●

the expected uses of our existing cash and cash equivalents and the sufficiency of such resources to fund our planned operations;

●

our dependence on the FDA approval of CT1812, our lead product candidate;

●

the approach to targeting the σ-2 (sigma-2) receptor (“S2R”) complex to treat age-related degenerative diseases and disorders, and the challenges we will face due to this approach;

●

the success of competing therapies that are, or become, available;

●

the initiation, progress, success, cost, and timing of our ongoing and future clinical trials, preclinical studies and development activities;

●

our ability to obtain and maintain regulatory clearance of CT1812 for clinical trials under investigational new drug (“IND”) applications and any future IND applications for any of our other product candidates;

●

the timing, scope and likelihood of regulatory filings and approvals, including final regulatory approval of our product candidates;

●

the performance of third parties in connection with the development of our product candidates, including third parties conducting our future clinical trials as well as third-party suppliers and manufacturers;

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our ability to attract and retain strategic collaborators with development, regulatory, and commercialization expertise;

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our ability to successfully commercialize our product candidates and develop sales and marketing capabilities, if our product candidates are approved;

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the size and growth of the potential markets for our product candidates and our ability to serve those markets;

●

regulatory developments and approval pathways in the United States and foreign countries for our product candidates;

●

the potential scope and value of our intellectual property and proprietary rights;

●

our ability, and the ability of any future licensors, to obtain, maintain, defend, and enforce intellectual property and proprietary rights protecting our product candidates, and our ability to develop and commercialize our product candidates without infringing, misappropriating, or otherwise violating the intellectual property or proprietary rights of third parties;

●

economic uncertainty resulting from actual or perceived inflation or banking stability;

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developments relating to our competitors and our industry;

●

the extent to which health epidemics and other outbreaks of communicable diseases, including the COVID-19 pandemic or other pandemics, global and regional political turmoil conflicts or increased trade restrictions between the United States, Russia, China, and other relevant markets, political instability, terrorism, or other acts of war could ultimately impact our business, including our current and furture research and our our ongoing and future clinical trials; and

●

other risk and uncertainties, including those described in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K (“Annual Report”) filed with the SEC on March 26, 2024.

You should refer to the “Risk Factors” section of our Annual Report for the year ended December 31, 2023 and in this Quarterly Report on Form 10-Q for a discussion of material factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. We intend the forward-looking statements contained in this Quarterly Report to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Exchange Act, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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PART I – FINANCIAL INFORMATION

Item 1.Financial Statements

COGNITION THERAPEUTICS, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except share and per share amounts)


	As of
	September 30, 2024		December 31, 2023
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	22,011	$	29,922
Grant receivables		3,369		1,281
Prepaid expenses and other current assets		1,450		3,019
Total current assets		26,830		34,222
Property and equipment, net		207		284
Right-of-use assets, operating leases		542		657
Total assets	$	27,579	$	35,163
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,895	$	3,695
Accrued expenses		9,505		4,055
Deferred grant income, current		1,117		1,701
Operating lease liabilities, current		188		174
Other current liabilities		—		544
Total current liabilities		12,705		10,169
Operating lease liabilities, non-current		392		520
Total liabilities		13,097		10,689
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding at September 30, 2024 and December 31, 2023		—		—
Common stock, $0.001 par value, 250,000,000 shares authorized; 40,806,092 and 32,165,478 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		41		32
Additional paid-in capital		181,759		165,826
Accumulated deficit		(167,318)		(141,189)
Accumulated other comprehensive loss		—		(195)
Total stockholders’ equity		14,482		24,474
Total liabilities and stockholders’ equity	$	27,579	$	35,163

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

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COGNITION THERAPEUTICS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

(in thousands, except share and per share amounts)



	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Operating Expenses:
Research and development	$	11,392	$	11,669	$	33,522	$	25,596
General and administrative		3,071		3,076		9,721		9,939
Total operating expenses		14,463		14,745		43,243		35,535
Loss from operations		(14,463)		(14,745)		(43,243)		(35,535)
Other income (expense):
Grant income		4,293		7,684		16,516		18,035
Other income (expense), net		236		314		813		(129)
Interest expense		(3)		(2)		(20)		(18)
Loss on currency translation from liquidation of subsidiary		—		—		(195)		—
Total other income, net		4,526		7,996		17,114		17,888
Net loss	$	(9,937)	$	(6,749)	$	(26,129)	$	(17,647)
Foreign currency translation adjustment, including reclassifications		—		—		195		3
Total comprehensive loss	$	(9,937)	$	(6,749)	$	(25,934)	$	(17,644)
Net loss per share:
Basic	$	(0.25)	$	(0.22)	$	(0.69)		(0.59)
Diluted	$	(0.25)	$	(0.22)	$	(0.69)		(0.59)
Weighted-average common shares outstanding:
Basic		40,418,065		30,365,506		38,080,658		29,696,296
Diluted		40,418,065		30,365,506		38,080,658		29,696,296

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

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COGNITION THERAPEUTICS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands, except share amounts)


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		(Loss) Gain		Equity
Balances as of December 31, 2023	32,165,478	$	32	$	165,826	$	(141,189)	$	(195)	$	24,474
Issuance of common stock in follow-on public offering, net of discounts and issuance costs of $1,329	7,557,142		8		11,888		—		—		11,896
Issuance of common stock under the at-the-market (ATM) sales agreement, net	191,273		—		381		—		—		381
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes	71,973		—		(106)		—		—		(106)
Equity-based compensation	—		—		1,171		—		—		1,171
Reclassification adjustment of foreign currency translation included in net loss for liquidation of subsidiary	—		—		—		—		195		195
Net loss	—		—		—		(9,151)		—		(9,151)
Balances as of March 31, 2024	39,985,866	$	40	$	179,160	$	(150,340)	$	—	$	28,860
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes	53,052		—		(22)		—		—		(22)
Exercise of stock options	73,350		—		65		—		—		65
Equity-based compensation	—		—		1,147		—		—		1,147
Net loss	—		—		—		(7,041)		—		(7,041)
Balances as of June 30, 2024	40,112,268	$	40	$	180,350	$	(157,381)	$	—	$	23,009
Issuance of common stock under the at-the-market (ATM) sales agreement, net of commissions and allocated fees	673,131		1		496		—		—		497
Exercise of stock options	20,000		—		17		—		—		17
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes	693		—		—		—		—		—
Equity-based compensation	—		—		896		—		—		896
Net loss	—		—		—		(9,937)		—		(9,937)
Balances as of September 30, 2024	40,806,092	$	41	$	181,759	$	(167,318)	$	—	$	14,482

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COGNITION THERAPEUTICS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)

(unaudited)

(in thousands, except share amounts)


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		(Loss) Gain		Equity
Balances as of December 31, 2022	28,991,548	$	29	$	155,820	$	(115,401)	$	(199)	$	40,249
Issuance of common stock under the at-the-market (ATM) sales agreement, net of commissions and allocated fees	95,823		—		197		—		—		197
Issuance of common stock as commitment shares for equity line financing (see Note 7)	189,856		—		318		—		—		318
Equity-based compensation	—		—		1,187		—		—		1,187
Other comprehensive gain	—		—		—		—		4		4
Net loss	—		—		—		(6,172)		—		(6,172)
Balances as of March 31, 2023	29,277,227	$	29	$	157,522	$	(121,573)	$	(195)	$	35,783
Issuance of common stock under the at-the-market (ATM) sales agreement, net of commissions and allocated fees	1,009,355		1		2,304		—		—		2,305
Equity-based compensation	—		—		1,025		—		—		1,025
Other comprehensive gain	—		—		—		—		(1)		(1)
Net loss	—		—		—		(4,726)		—		(4,726)
Balances as of June 30, 2023	30,286,582	$	30	$	160,851	$	(126,299)	$	(196)	$	34,386
Issuance of common stock under the at-the-market (ATM) sales agreement, net of commissions and allocated fees	5,500		—		8		—		—		8
Issuance of common stock related to the equity line financing	125,000		—		210		—		—		210
Equity-based compensation	—		—		1,071		—		—		1,071
Net loss	—		—		—		(6,749)		—		(6,749)
Balances as of September 30, 2023	30,417,082	$	30	$	162,140	$	(133,048)	$	(196)	$	28,926

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

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COGNITION THERAPEUTICS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(26,129)	$	(17,647)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		80		69
Equity-based compensation		3,214		3,283
Amortization of right-of-use assets		115		117
Loss on currency translation from liquidation of subsidiary		195		—
Issuance of common stock as commitment shares for equity line financing		—		318
Changes in operating assets and liabilities:
Grant receivables		(2,088)		2,034
Prepaid expenses and other assets		1,569		962
Accounts payable and accrued expenses		3,650		1,837
Deferred grant income and other liabilities		(584)		(1,426)
Operating lease liabilities		(114)		(109)
Net cash used in operating activities		(20,092)		(10,562)
Cash flows from investing activities:
Payments for property and equipment		(3)		(117)
Net cash used in investing activities		(3)		(117)
Cash flows from financing activities:
Proceeds from issuance of common stock in follow-on public offering, net		11,896		—
Proceeds from issuance of common stock under the ATM sales agreement, net		878		2,509
Proceeds from the exercise of common stock options		82		—
Proceeds from sale of common stock related to the equity line financing		—		205
Payment of employee withholding taxes on vested restricted stock units		(128)		—
Payments on loan payable		(544)		(632)
Net cash provided by financing activities		12,184		2,082
Effect of exchange rate changes on cash and cash equivalents		—		4
Net decrease in cash and cash equivalents		(7,911)		(8,593)
Cash and cash equivalents
Cash and cash equivalents – beginning of period		29,922		41,562
Cash and cash equivalents – end of period	$	22,011	$	32,969

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

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Cognition Therapeutics, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(in thousands, except share and per share amounts)

1. Description of Business and Financial Condition

Cognition Therapeutics, Inc. (the “Company”) was incorporated as a Delaware corporation on August 21, 2007. The Company is a biopharmaceutical company developing disease modifying therapies targeting age-related degenerative diseases and disorders of the central nervous system (“CNS”) and retina. The Company’s pipeline candidates were discovered using proprietary biology and chemistry platforms designed to identify novel drug targets and disease-modifying therapies that address dysregulated pathways specifically associated with neurodegenerative diseases. The Company was founded on the unique combination of biological expertise around these targets, including proprietary assays that emphasize functional responses, and proprietary medicinal chemistry intended to produce novel, high-quality small-molecule drug candidates.

In January 2024, the Company ceased operations at Cognition Therapeutics PTY LTD, a wholly owned subsidiary (the “Subsidiary”) and completed its liquidation of the Subsidiary (the “Liquidation”). In accordance with the Liquidation, the Company removed the AOCI balance associated with the currency translation adjustments and recorded a loss on liquidation of the Subsidiary in accumulated deficit.

On December 23, 2022, the Company filed a Registration Statement on Form S-3 (File No. 333-268992) (the “Shelf”) with the Securities and Exchange Commission (“SEC”) in relation to the registration of common stock, preferred stock, debt securities, warrants, subscription rights, and/or units of any combination thereof of up to $200,000 in aggregate. The Shelf was declared effective on January 3, 2023 by the SEC. The Company also simultaneously entered into a sales agreement with Cantor Fitzgerald & Co. and B. Riley Securities, Inc. (the “Sales Agents”) providing for the offering, issuance and sale by the Company of up to $40,000 of its common stock from time to time in “at-the-market” offerings under the Shelf (the “ATM”). During the nine months ended September 30, 2024, the Company sold 864,404 shares of its common stock pursuant to the ATM for gross proceeds of approximately $905. Please refer to Note 7 for further details.

On March 10, 2023, the Company entered into a purchase agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”) for an equity line financing (the “Purchase Agreement”). The Purchase Agreement provides that, subject to the terms and conditions set forth therein, the Company has the right, but not the obligation, to direct Lincoln Park to purchase up to $35,000 of shares of common stock in the Company’s sole discretion, over a 36-month period commencing on March 10, 2023. The Company filed a prospectus supplement to its Registration Statement on Form S-3 (File No. 333-268992) covering the resale of shares of common stock that may be issued under the Purchase Agreement. As part of the Purchase Agreement, the Company issued 189,856 shares of its common stock as consideration for Lincoln Park’s commitment to purchase shares of common stock under the Purchase Agreement. During the nine months ended September 30, 2024, the Company did not sell any shares of common stock to Lincoln Park. As of September 30, 2024, $34,795 was available to draw pursuant to the Purchase Agreement. Please refer to Note 7 for further details.

On March 14, 2024, the Company closed a follow-on public offering of 6,571,428 shares of the Company’s common stock at a public offering price of $1.75 per share (“March 2024 Offering”). As part of the March 2024 Offering, the underwriters exercised their option to purchase 985,714 shares of the Company’s common stock on March 28, 2024, at a public offering price of $1.75 per share. The gross proceeds from the March 2024 Offering were $13,225 and the net proceeds were approximately $11,896, after deducting underwriting discounts and commissions and other offering related expenses payable by the Company.

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Liquidity and Going Concern

The Company’s Consolidated Financial Statements have been prepared on a going concern basis, which contemplates the continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. The Company has incurred recurring losses since inception, including net losses of $26,129 for the nine months ended September 30, 2024 and $25,788 for the year ended December 31, 2023. As of September 30, 2024, the Company had cash and cash equivalents of $22,011 compared to $29,922 of cash and cash equivalents as of December 31, 2023. The Company has incurred losses and negative cash flows from operations and had an accumulated deficit of $167,318 as of September 30, 2024. The Company expects to continue to incur losses for the foreseeable future.

As of November 13, 2024, the date of issuance of these Consolidated Financial Statements, the Company believes that its cash and cash equivalents as of September 30, 2024 is not sufficient to fund operations for the period through one year after the date of this filing and therefore substantial doubt exists about the Company’s ability to continue as a going concern.

To execute its business plans, the Company will need substantial funding to support its continuing operations and pursue its growth strategy. Until such time that the Company can generate significant revenue from product sales, if ever, the Company expects to finance its operations through the sale of common stock in public offerings and/or private placements, debt financings or other capital sources, including collaborations with other companies or other strategic transactions. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain funding, the Company could be forced to delay, reduce or abandon its product development programs, which could have a material adverse effect on its business prospects.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements as of September 30, 2024, and for the three and nine months ended September 30, 2024 and 2023, have been prepared in accordance with the rules and regulations of the SEC and generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying unaudited interim consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of September 30, 2024, the statements of operations and comprehensive loss and stockholders’ equity for the three and nine months ended September 30, 2024 and 2023, and cash flows for the nine months ended September 30, 2024 and 2023. Such adjustments are of a normal and recurring nature. The results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results for the year ending December 31, 2024, or for any future period. These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2023, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 26, 2024.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of interest-bearing deposits at various financial institutions and money markets. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

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Receivables

Grant Receivables

Grant receivables relate to outstanding amounts due for reimbursable expenditures of awarded grants issued by the National Institute of Health (“NIH”) and are carried at their estimated collectible amounts. The Company expects all receivables to be collectible, and accordingly, there is no allowance for doubtful accounts required on these grant receivables.

Grant Income

The Company generates grant income through grants from government and other (non-government) organizations. Grant income is recognized in other income (expense) in the period in which the reimbursable research and development services are incurred and the right to payment is realized. Deferred grant income represents grant proceeds received by the Company prior to the period in which the reimbursable research and development services are incurred. For the three and nine months ended September 30, 2024, the Company generated grant income of $4,293 and $16,516, respectively, as compared to $7,684 and $18,035 for the three and nine months ended September 30, 2023, respectively, primarily from reimbursements from the National Institute of Aging (the “NIA”), a division of the NIH for aging research. The current and non-current portion of deferred grant income as of September 30, 2024 was $1,117 and $0, respectively, as compared to the current and non-current portion of deferred grant income as of December 31, 2023 of $1,701 and $0, respectively.

The grants awarded relate to agreed-upon direct and indirect costs for specific studies or clinical trials, which may include personnel and consulting costs, costs paid to contract research organizations (“CROs”), research institutions and/or consortiums involved in the grants, as well as facilities and administrative costs. These grants are cost plus fixed fee arrangements in which the Company is reimbursed for its eligible direct and indirect costs over time, up to the maximum amount of each specific grant award. Only costs that are allowable under the grant award, certain government regulations and the NIH’s supplemental policy and procedure manual may be claimed for reimbursement, and the reimbursements are subject to routine audits from governmental agencies from time to time. While these NIH grants do not contain payback provisions, the NIH or other government agency may review the Company’s performance, cost structures and compliance with applicable laws, regulations, policies and standards and the terms and conditions of the applicable NIH grant. If any of the expenditures are found to be unallowable or allocated improperly or if the Company has otherwise violated terms of such NIH grant, the expenditures may not be reimbursed and/or the Company may be required to repay funds already disbursed. To date, the Company has not been found to have breached the terms of any NIH grant. As of September 30, 2024, the Company has been awarded grants with project periods that extend through May 31, 2027, subject to extension.

Research and Development Costs

The Company is involved in research and development of treatments for a variety of diseases related to the central nervous system, with a focus on Alzheimer’s disease, dementia with Lewy bodies, and geographic atrophy (“GA”) secondary to dry age-related macular degeneration. Research and development costs are expensed as incurred. Research and development expenses consist principally of personnel costs, including salaries, stock-based compensation, and benefits for employees, third-party license fees and other operational costs related to its research and development activities, including allocated facility-related expenses and external costs of outside vendors, including CROs, and other direct and indirect costs. Non-refundable research and development costs are deferred and expensed as the related goods are delivered or services are performed. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks. Costs for certain research and development activities are recognized based on the pattern of performance of the individual arrangements, which may differ from the pattern of billings incurred, and are reflected in the consolidated financial statements as prepaid expenses or as accrued research and development expenses.

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Equity-based Compensation

Following the provisions of ASC 718, Compensation — Stock Compensation, the Company recognizes compensation expense for equity-based grants using the straight-line attribution method, in which the expense is recognized ratably over the requisite service period within operating expenses based on the grant date fair value. The Company also has granted awards subject to performance-based vesting. The Company recognizes compensation expense for these awards commencing in the period in which the vesting condition becomes probable of achievement. The grant date fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model. Forfeitures are recognized in the period in which they occur.

Black-Scholes requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. Due to a lack of sufficient public market data for the Company’s common stock and lack of company-specific historical and implied volatility data, the Company has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to the Company, including stage of product development and life science industry focus. The historical volatility is calculated based on a period of time commensurate with expected term assumption. The Company uses the simplified method to calculate the expected term for stock options granted to employees whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the stock options due to its lack of sufficient historical data. The risk-free interest rate is based on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock.

Prior to the IPO, due to the absence of an active market for the Company’s common stock, the Company utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation, to estimate the fair value of its common stock. In determining the exercise prices for stock options granted, the Company has considered the estimated fair value of the common stock as of the measurement date. The estimated fair value of the common stock has been determined at each grant date based upon a variety of factors, including the illiquid nature of the common stock, arm’s-length sales of the Company’s capital stock (including convertible preferred stock), the effect of the rights and preferences of the preferred stockholders and the prospects of a liquidity event. Among other factors are the Company’s financial position and historical financial performance, the status of technological developments within the Company’s research, the composition and ability of the current research and management team, an evaluation or benchmark of the Company’s competition and the current business climate in the marketplace. Significant changes to the key assumptions underlying the factors used could result in different fair values of common stock at each valuation date. Subsequent to the IPO, the board of directors determines the fair value of the shares of common stock underlying the stock-based awards based off of the closing price as reported on the Nasdaq Stock Market LLC on the grant date.

Concentration of Credit Risk

The Company’s financial instruments that are exposed to credit risks consist of cash and cash equivalents. The Company maintains its cash and cash equivalents in bank deposit accounts which, at times, may exceed the federally insured limit. The Company has not experienced any losses in these accounts and does not believe it is exposed to any significant credit risk related to these funds.

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Fair Value of Financial Instruments

The Company applies ASC 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances.

The carrying value of the Company’s cash and cash equivalents, grants receivable, prepaid expense, other receivables, other assets, accounts payable, accrued expenses and other liabilities approximate fair value because of the short-term maturity of these financial instruments.

The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below:

●

Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities.

●

Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.

●

Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss per share by the weighted-average number of shares of common stock outstanding during each period. Diluted net loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as convertible preferred stock and stock options, which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive.

Segments

The Company has determined that it operates and manages one operating segment, which is the business of developing and commercializing therapeutics. The Company’s chief operating decision maker, its chief executive officer, reviews financial information on an aggregate basis for the purpose of allocating resources.

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Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (a) no longer an emerging growth company or (b) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Recent Accounting Pronouncements

Not Yet Adopted

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements (“ASU 2023-06”), to clarify or improve disclosure and presentation requirements of a variety of topics and align the requirements in the FASB ASC with the SEC's regulations. The Company is currently evaluating ASU 2023-06 to determine its impact on the Company's consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). The standard enhances transparency in income tax disclosures by requiring, on an annual basis, certain disaggregated information about a reporting entity’s effective tax rate reconciliation and income taxes paid. The ASU also requires disaggregated disclosure related to pre-tax income (or loss) and income tax expense (or benefit) and eliminates certain disclosures related to the balance of an entity’s unrecognized tax benefit and the cumulative amount of certain temporary differences. The ASU is effective for the Company beginning on January 1, 2025. The Company is currently evaluating ASU 2023-09 to determine its impact on the Company's disclosures.

Income Taxes

In accordance with ASC 270, Interim Reporting, and ASC 740, Income Taxes, the Company is required at the end of each interim period to determine the best estimate of its annual effective tax rate, apply that rate in providing for income taxes on a current year-to-date (interim period) basis, and include the tax impact for discrete items within the interim period. The Company maintains a full valuation allowance against all deferred tax assets as of September 30, 2024 and December 31, 2023, as management has determined that it is not more likely than not that the Company will realize these future tax benefits. As of September 30, 2024 and December 31, 2023, the Company had no uncertain tax positions.

3. Financial Instruments and Fair Value Measurements

Financial assets and liabilities measured at fair value are summarized below:


	As of September 30, 2024
					Significant
	Quoted Priced in		Significant Other		Unobservable
	Active Markets		Observable Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Money market funds	$	21,766	$	—	$	—	$	21,766
Total assets	$	21,766	$	—	$	—	$	21,766

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	As of December 31, 2023
					Significant
	Quoted Priced in		Significant Other		Unobservable
	Active Markets		Observable Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Money market funds	$	29,391	$	—	$	—	$	29,391
Total assets	$	29,391	$	—	$	—	$	29,391

4. Accrued Expenses

Accrued expense consists of the following:


	As of
	September 30, 2024		December 31, 2023
Employee compensation, benefits, and related accruals	$	1,480	$	1,165
Research and development costs		7,795		2,520
Professional fees and other accruals		230		370
Total	$	9,505	$	4,055

5. Other Current Liabilities

In October 2023, the Company entered into an insurance premium financing agreement with a lender. Under the agreement, the Company financed $721 of certain premiums at a 8.65% annual interest rate. Total payments of approximately $62, including interest and principal, are due monthly from November 2023 through September 2024. As of September 30, 2024 and December 31, 2023, the outstanding principal of the loan was $0 and $544, respectively, and is included in other current liabilities on the consolidated balance sheet.

6. Commitments and Contingencies

Operating Leases

Amounts reported in the consolidated balance sheets for leases where the Company is the lessee as of September 30, 2024 were as follows:


	As of
	September 30, 2024		December 31, 2023
Assets
Operating lease assets	$	542	$	657
Total operating lease assets	$	542	$	657
Liabilities
Current
Operating lease liabilities	$	188	$	174
Non-current
Operating lease liabilities, non-current		392		520
Total operating lease liabilities	$	580	$	694

Operating lease costs for the three and nine months ended September 30, 2024 was $55 and $164, respectively, as compared to operating lease costs for the three and nine months ended September 30, 2023 of $53 and $161, respectively.

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The maturities of the operating lease liabilities and minimum lease payments as of September 30, 2024 were as follows:


For the Years Ended December 31,	Operating Leases
2024 (remaining)	$	56
2025		226
2026		158
2027		91
2028		92
Thereafter		39
Total undiscounted lease payments	$	662
Less: Imputed interest		(82)
Present value of operating lease liabilities	$	580

The following table summarizes the lease term and discount rate as of September 30, 2024 and December 31, 2023, respectively:


	As of
	September 30, 2024	December 31, 2023
Weighted-average remaining lease term (years)
Operating leases	3.5	4.1
Weighted-average discount rate
Operating leases	8.1%	8.1%

Operating cash flows used for operating leases for the nine months ended September 30, 2024 and 2023 was $168 and $154, respectively.

Litigation and Contingencies

From time to time, the Company may be involved in disputes or regulatory inquiries that arise in the ordinary course of business. When the Company determines that a loss is both probable and reasonably estimable, a liability is recorded and disclosed if the amount is material to the financial statements taken as a whole. When a material loss contingency is only reasonably possible, the Company does not record a liability but instead discloses the nature and the amount of the claim and an estimate of the loss or range of loss, if such an estimate can reasonably be made.

As of September 30, 2024 and December 31, 2023, there was no litigation or contingency with at least a reasonable possibility of a material loss.

7. Stockholders’ Equity

Common and Preferred Stock

The Company is authorized to issue up to 250,000,000 shares of common stock with a par value of $0.001 per share, and 10,000,000 shares of preferred stock with a par value of $0.001 per share.

Common stockholders are entitled to dividends if and when declared by the Company’s board of directors subject to the rights of the preferred stockholders. As of September 30, 2024, no dividends on common stock had been declared by the Company.

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ATM

On December 23, 2022, the Company filed a shelf registration statement on Form S-3 with the SEC in relation to the registration of common stock, preferred stock, debt securities, warrants, subscription rights, and/or units of any combination thereof of up to $200,000 in aggregate (the “Shelf”). The Shelf was declared effective on January 3, 2023 by the SEC. The Company also simultaneously entered into a sales agreement with the Sales Agents providing for the offering, issuance and sale by the Company of up to $40,000 of its common stock from time to time in ATM offerings under the Shelf. The Company sold 864,404 shares of common stock pursuant to the ATM during the nine months ended September 30, 2024 for gross proceeds of approximately $905. As of September 30, 2024, there was $33,809 remaining of common stock available for sale under the ATM.

Lincoln Park Purchase Agreement

On March 10, 2023, the Company entered into a purchase agreement with Lincoln Park for an equity line financing. The Purchase Agreement provides that, subject to the terms and conditions set forth therein, the Company has the right, but not the obligation, to direct Lincoln Park to purchase up to $35,000 of shares of common stock in the Company’s sole discretion, over a 36-month period commencing on March 10, 2023. As part of the Purchase Agreement, the Company issued 189,856 shares of its common stock as consideration for Lincoln Park’s commitment to purchase shares of common stock under the Purchase Agreement (the “Commitment Shares”). The Company recorded $318 to other expense, net in connection with the issuance of the Commitment Shares. During the nine months ended September 30, 2024, the Company did not sell any shares of common stock to Lincoln Park. As of September 30, 2024, $34,795 was available to draw pursuant to the Purchase Agreement.

March 2024 Offering

In March 2024, the Company entered into an underwriting agreement with Titan Partners Group LLC, a division of American Capital Partners, LLC, relating to the issuance and sale by the Company of 7,557,142 shares of its common stock, which included the exercise of the underwriters’ option to purchase 985,714 additional shares of common stock, at a public offering price of $1.75 per share. The Company closed this offering on March 14, 2024 and the full exercise of the underwriters’ option to purchase 985,714 additional shares of common stock was closed on March 28, 2024. The Company received net proceeds of approximately $11,896, after deducting $1,329 of underwriting discounts and commissions and other offering related expenses payable by the Company.

8. Equity-based Compensation

2021 Equity Incentive Plan

On October 7, 2021, the date upon which the Company’s Registration Statement on Form S-1 in connection with the IPO was declared effective, the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) became effective. On the same date, the Company ceased granting awards under its 2017 Equity Incentive Plan (the “2017 Plan”). The 2021 Plan authorizes the award of both equity-based and cash-based incentive awards, including: (i) stock options (both incentive stock options and nonqualified stock options), (ii) stock appreciation rights, (iii) restricted stock awards, (iv) restricted stock units (“RSUs”), and (v) cash or other stock-based awards. Incentive stock options may be granted only to employees. All other types of awards may be issued to employees, directors, consultants, and other service providers.

As of September 30, 2024, the aggregate number of shares of common stock of the Company that may be issued under the 2021 Plan is 2,547,943. The number of shares reserved for issuance under the 2021 Plan increased automatically on January 1, 2024 pursuant to an evergreen provision therein by 643,309 shares, representing 2% of total common shares outstanding at December 31, 2023. The aggregate number of shares will increase each anniversary of such date prior to the termination of the 2021 Plan, equal to the lesser of (i) 5% of the Company’s shares of common stock issued and outstanding on the last day of the immediately preceding fiscal year and (ii) such smaller number of shares as determined by the Company’s board of directors or the compensation committee. No more than 7,543,185 shares of common stock may be issued under the 2021 Plan through incentive stock options. Shares subject to the 2021 Plan, the 2017 Plan or the 2007 Equity Incentive Plan (the “2007 Plan” and collectively with the 2017 Plan, the “Prior Plans”) that expire, terminate

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or are cancelled or forfeited for any reason after the effectiveness of the 2021 Plan will be added (or added back) to the shares available for issuance under the 2021 Plan. The total number of shares underlying the Prior Plan awards that may be recycled into the 2021 Plan will not exceed 4,334,131 shares.

2017 Equity Incentive Plan

On September 15, 2017, the Company’s board of directors approved the 2017 Plan, which provides for the granting of incentive stock options, non-qualified stock options and stock awards to employees, certain consultants and directors. The board of directors, or its designated committee, has the sole authority to select the individuals to whom awards are granted and determine the terms of each award, including the number of shares and the schedule upon which the award becomes exercisable. Upon the effectiveness of the 2021 Plan, no further awards will be granted under the 2017 Plan.

The aggregate number of shares of common stock of the Company that may be issued under the 2017 Plan is 4,334,131 (taking into account shares of common stock that may become issuable pursuant to Section 3(b) of the 2017 Plan in respect of shares of common stock reserved under the Company’s Amended and Restated 2007 Equity Incentive Plan). The 2021 Plan provides for shares granted under the Prior Plans which are cancelled, forfeited, exchanged or surrendered without having been exercised shall subsequently be available for reissuance under the 2021 Plan.

Employee Stock Purchase Plan

The Company’s board of directors approved the Employee Stock Purchase Plan (the “ESPP”) prior to the closing of the IPO. Under the ESPP, the Company may provide employees and employees of the Subsidiary with an opportunity to purchase shares of the Company’s common stock at a discounted purchase price. As of September 30, 2024, subject to adjustment as provided in the ESPP, a total of 209,532 shares of common stock are authorized and reserved for issuance under the ESPP.

Subject to prior approval by the board of directors in each instance, on or about January 1, 2022 and each anniversary of such date thereafter prior to the termination of the ESPP, the number of shares of common stock authorized and reserved for issuance under the ESPP will be increased by a number of shares of common stock equal to the least of (i) 1,000,000 shares of common stock, (ii) 1% of the shares of common stock outstanding on the final day of the immediately preceding calendar year, and (iii) such smaller number of shares of common stock as determined by the board of directors. Such shares of common stock may be newly issued shares, treasury shares or shares acquired on the open market. In the event that any dividend or other distribution (whether in the form of cash, our common stock, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, or exchange of common stock or other securities, or other change in the structure affecting common stock occurs, then in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the ESPP, the compensation committee will, in such manner as it deems equitable, adjust the number of shares and class of common stock that may be delivered under the ESPP, the purchase price per share and the number of shares covered by each outstanding option under the ESPP, and the numerical limits described above.

Stock Options

The fair value of options granted was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:


	Nine Months Ended September 30,
	2024	2023
Expected volatility	91.78% – 92.29%	91.53% – 92.68%
Risk-free interest rate	4.23% – 4.45%	3.46% – 4.26%
Dividend yield	0%	0%
Expected term (years)	6.10 – 6.20	6.18 – 6.36

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Expected Term — The expected term represents the period that the stock-based awards are expected to be outstanding. As the Company does not have sufficient historical experience for determining the expected term of the stock option awards granted, expected term has been calculated using the simplified method.

Risk-Free Interest Rate — The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant for zero-coupon U.S. Treasury constant maturity notes with terms approximately equal to the stock-based awards’ expected term.

Expected Volatility — Up until October 13, 2021, the Company was privately held and did not have a trading history of common stock. As such, the expected volatility was derived from the average historical stock volatilities of the common stock of several public companies within the industry that the Company considers to be comparable to our business over a period equivalent to the expected term of the stock-based awards. The Company will continue to derive expected volatility from average historical stock volatilities of industry peers until the Company has compiled a trading history of its own for a sufficient period of time.

Dividend Yield — The expected dividend yield is zero as the Company has not paid and does not anticipate paying any dividends in the foreseeable future.

Fair Value of Common Stock — Prior to the IPO, the fair value of the shares of common stock underlying the stock-based awards had historically been determined by the board of directors with input from management. Because there was no public market for the common stock, the board of directors had determined the fair value of the common stock at the time of grant of the stock-based award by considering a number of objective and subjective factors, including having contemporaneous valuations of the common stock performed by a third-party valuation specialist. Subsequent to the IPO, the board of directors determined the fair value of the shares of common stock underlying the stock-based awards based off of the closing price as reported on the Nasdaq Stock Market LLC on the grant date.

Activity for options was as follows:


	Options Outstanding
						Weighted-Average
				Aggregate		Remaining
	Number of	Weighted-Average		Intrinsic Value		Contractual Life
	Options	Exercise Price		(in 000’s)		(In Years)
Balance, December 31, 2023	4,213,405	$	4.73	$	1,579	6.5
Options granted	247,500	$	1.97
Options exercised	(93,350)	$	0.88
Options forfeited	(4,225)	$	2.49
Options expired	(1,250)	$	2.66
Balance, September 30, 2024	4,362,080	$	4.66	$	—	6.1
Exercisable as of September 30, 2024	3,599,654	$	5.09	$	—	5.5

The weighted-average grant date fair value of stock options granted was $0 and $1.56 during the three and nine months ended September 30, 2024, respectively. The weighted-average grant date fair value of stock options granted was $1.25 and $1.59 during the three and nine months ended September 30, 2023, respectively. There were 0 and 247,500 stock options granted at an aggregate fair value of $0 and $385 for the three and nine months ended September 30, 2024, respectively. There were 19,500 and 595,769 stock options granted at an aggregate fair value of $24 and $950 for the three and nine months ended September 30, 2023, respectively. During the three and nine months ended September 30, 2024, there were 20,000 and 93,350 stock options exercised, with an aggregate grant date fair value of $12 and $58, respectively. During the three and nine months ended September 30, 2023, there were no stock options exercised. The intrinsic value of stock options exercised during the three and nine months ended September 30, 2024 was $29 and $121, respectively.

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Restricted Stock Units

The fair values of RSUs are based on the fair market value of the Company’s common stock on the date of grant. Each RSU represents a contingent right to receive one share of the Company’s common stock upon vesting. RSUs with time base vesting conditions for employees vest annually over three or four years on each anniversary of the Grant Date and RSUs for non-employee directors vest on the one-year anniversary of the Grant Date. RSUs with performance conditions for employees vest on the one-year anniversary of the performance achievement date. During the three and nine months ended September 30, 2024, the Company granted 35,100 and 873,800 RSU awards containing performance and time based vesting conditions to employees, respectively.

During the three months ended September 30, 2024, one of the two performance target tranches for performance-based RSU awards was achieved. As of September 30, 2024, the Company determined that the achievement of the second tranche’s performance target was probable and therefore recognized expense during the three and nine months ended September 30, 2024 related to the outstanding performance condition.

The following table summarizes the Company’s RSU activity for the nine months ended September 30, 2024:


	Number of	Weighted-Average
	Restricted Stock Units	Grant Date Fair Value
Outstanding at December 31, 2023	522,155	$	2.07
Granted	873,800	$	1.97
Vested	(183,482)	$	2.17
Forfeited	(8,125)	$	2.25
Outstanding at September 30, 2024	1,204,348	$	1.98

Equity-based Compensation Expense

The Company recorded total equity-based compensation expense in the statement of operations and comprehensive loss related to stock options and restricted stock units as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Research and development	$	291	$	176	$	804	$	489
General and administrative