UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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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.
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).
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 |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 2, 2022, the registrant had
Table of Contents
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PART I. |
3 |
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Item 1. |
3 |
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3 |
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4 |
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5 |
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6 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
7 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16 |
Item 3. |
24 |
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Item 4. |
24 |
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PART II. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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27 |
i
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements with respect to, among other things, our operations and financial performance. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “could,” “target,” “predict,” “seek” and similar expressions are intended to identify forward-looking statements. For example, all statements we make relating to our clinical trial plans and milestones, including initiating a potentially registrational trial in 2023 for CYT-0851, our plan to complete IND-enabling studies with CYT-1853 in the first half of 2022, our plan to file an IND application with the United States Food and Drug Administration for CYT-1853 by the end of 2022, our expectation of reaching the drug candidate nomination phase for our drug discovery projects in 2023 and our plans to nominate additional targets from our DNA damage repair platform, are forward looking statements.
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those referenced in the section titled “Risk Factors,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission on March 16, 2022, which could cause actual results to differ materially. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in or implied by any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this report. You should not rely upon forward-looking statements as predictions of future events. We cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or reflect interim developments, except as required by law. Some of the key factors that could cause actual results to differ include that:
We have a limited operating history and have no products approved for commercial sale, which may make it difficult for you to evaluate our current business and predict our future success and viability.
We have incurred significant losses since inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.
We will need substantial additional funding. If we are unable to raise capital when needed, we will be forced to delay, reduce, or eliminate our research and product development programs or future commercialization efforts.
We have never successfully completed any clinical trials, and we may be unable to do so for any drug candidates we develop.
Our clinical trials may fail to demonstrate adequately the safety and efficacy of any of our drug candidates, which would delay or prevent further clinical development of those candidates, or prevent marketing approval from FDA or similar regulatory authorities.
We intend to develop CYT-0851, and potentially future drug candidates, for use in combination with other therapies, which exposes us to additional risks.
If we are unable to successfully develop and commercialize companion diagnostic tests for our drug candidates, or experience significant delays in doing so, we may not realize the full commercial potential of our drug candidates.
Synthetic lethality represents an emerging class of precision medicine targets, and negative perceptions of the efficacy, safety or tolerability of this class of targets, including any that we develop, could adversely affect our ability to conduct our business, advance our drug candidates or obtain regulatory approvals.
1
If we are unable to adequately protect and enforce our intellectual property or obtain and maintain patent protection for our technology and products or if the scope of the patent protection obtained is not sufficiently broad, our competitors or other third parties could develop and commercialize technology and products similar or identical to ours, and our ability to successfully develop and commercialize our technology and products may be impaired.
The continuing outbreak of COVID-19 in the United States and other countries may adversely affect our business and the market price of our common stock.
Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.
2
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
CYTEIR THERAPEUTICS, INC.
Condensed consolidated balance sheets
(in thousands, except share and per share amounts) |
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March 31, |
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December 31, |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Prepaid expenses and other current assets |
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Total current assets |
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$ |
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$ |
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Property and equipment, net |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Total current liabilities |
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$ |
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$ |
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Deferred rent, net of current portion |
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— |
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Other long term liabilities |
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Total liabilities |
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$ |
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$ |
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Stockholders’ equity (deficit): |
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, $ |
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— |
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— |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity (deficit) |
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Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
3
CYTEIR THERAPEUTICS, INC.
Condensed consolidated statements of operations
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Three Months Ended |
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(in thousands, except share and per share amounts) |
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2022 |
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2021 |
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Operating expenses: |
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Research and development |
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$ |
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$ |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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Other income (expense): |
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Other income (expense) |
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Total other income (expense) |
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Net loss |
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$ |
( |
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$ |
( |
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Net loss per share—basic and diluted |
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$ |
( |
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$ |
( |
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Weighted-average common stock outstanding—basic and diluted |
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See accompanying notes to condensed consolidated financial statements.
4
CYTEIR THERAPEUTICS, INC.
Condensed consolidated statements of redeemable convertible preferred stock and stockholders’ equity (deficit)
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Redeemable convertible preferred stock |
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Series A |
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Series B |
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Series C |
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Common stock |
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(in thousands, except share and per share amounts) |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Additional |
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Accumulated |
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Total |
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Balance At December 31, 2020 |
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$ |
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$ |
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— |
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$ |
— |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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Exercise of common stock options |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of Series C redeemable convertible preferred |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Vesting of early exercised options |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance At March 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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Redeemable convertible preferred stock |
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Series A |
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Series B |
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Series C |
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Common stock |
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(in thousands, except share and per share amounts) |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Additional |
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Accumulated |
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Total |
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Balance At December 31, 2021 |
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— |
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$ |
— |
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— |
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$ |
— |
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— |
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$ |
— |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Exercise of common stock options |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Vesting of early exercised options |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance At March 31, 2022 |
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— |
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$ |
— |
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— |
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$ |
— |
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— |
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$ |
— |
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$ |
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$ |
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$ |
( |
) |
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$ |
|
See accompanying notes to condensed consolidated financial statements.
5
CYTEIR THERAPEUTICS, INC.
Condensed consolidated statements of cash flows
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Three Months Ended |
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(in thousands) |
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2022 |
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2021 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
) |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization expense |
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Stock-based compensation |
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Non-cash lease expense |
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— |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets |
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( |
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Other assets |
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— |
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Accounts payable |
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Accrued expenses and other current liabilities |
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( |
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Deferred rent |
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— |
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( |
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Net cash used in operating activities |
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$ |
( |
) |
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$ |
( |
) |
Cash flows from investing activities: |
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Purchases of property and equipment |
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( |
) |
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( |
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Net cash used in investing activities |
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$ |
( |
) |
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$ |
( |
) |
Cash flows from financing activities: |
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Proceeds from issuance of preferred stock, net of issuance costs |
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— |
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Proceeds from exercise of stock options |
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Net cash provided by financing activities |
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$ |
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$ |
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Net (decrease) increase in cash, cash equivalents, and restricted cash |
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( |
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Cash, cash equivalents and restricted cash at beginning of period |
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Cash, cash equivalents and restricted cash at end of period |
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$ |
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$ |
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Supplemental disclosure of cash flows |
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Deferred financing costs in accounts payable |
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$ |
— |
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$ |
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Property and equipment purchases in accounts payable |
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$ |
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$ |
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Supplemental disclosure of noncash financing activities |
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Vesting of early exercised options |
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$ |
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$ |
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The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of each of the dates shown below:
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Three Months Ended |
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2022 |
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2021 |
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Cash and cash equivalents |
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$ |
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$ |
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Total cash, cash equivalents, and restricted cash |
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$ |
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$ |
|
See accompanying notes to condensed consolidated financial statements.
6
CYTEIR THERAPEUTICS, INC.
Notes to condensed consolidated financial statements – (unaudited)
1. Nature of the business
Cyteir Therapeutics, Inc., (the “Company”) is a clinical-stage biotechnology company focused on developing and commercializing the next-generation of precision oncology medicines that inhibit DNA damage repair and cause cancer cell death in specific subsets of cancer patients through a therapeutic strategy known as synthetic lethality. The Company’s lead program, CYT-0851, was designed to exploit a novel synthetic lethality between overexpression of a family of DNA damaging enzymes called cytidine deaminases, or CD, and functional inhibition of homologous recombination, or HR, a DNA repair pathway critical for the survival of some cancers. The Company is using its expertise in DNA Damage Response biology and a disciplined approach to select targets for other novel, differentiated programs with the aim of building a patient-centric portfolio of effective cancer therapies.
The Company was formed as a Delaware corporation on June 4, 2012, pursuant to the General Corporation Law of the State of Delaware. The Company has a principal office in Lexington, Massachusetts.
Liquidity
The Company has incurred net operating losses since inception and has funded its operations primarily with proceeds from the sale of redeemable convertible preferred stock and the issuance of common stock in the IPO. As of March 31, 2022, the Company had cash and cash equivalents of $
The Company expects that its cash and cash equivalents as of March 31, 2022 will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the date these condensed consolidated financial statements are available to be issued.
The Company will need additional funding to support its planned operating activities. There can be no assurances, however, that the current operating plan will be achieved or that additional funding will be available on terms acceptable to the Company, or at all. If the Company is unable to obtain sufficient funding, it could be required to delay its development efforts, limit activities and reduce research and development costs, which could adversely affect its business prospects.
COVID-19 considerations
The development of the Company’s product candidates could be disrupted and materially adversely affected in by a pandemic, epidemic or outbreak of an infectious disease, such as the ongoing COVID-19 pandemic. The ongoing COVID-19 pandemic and the measures taken by the governments of countries affected by it could disrupt the supply chain and the manufacture or shipment of both drug substance and finished drug product for the Company’s product candidates for preclinical testing or clinical trials, cause diversion of healthcare resources away from the conduct of preclinical and clinical trial matters to focus on pandemic concerns, limit travel in a manner that interrupts key trial activities, such as trial site initiations and monitoring, delay regulatory filings with regulatory agencies in affected areas or adversely affect the Company’s ability to obtain regulatory approvals. These disruptions could also affect other facets of the Company’s business, including, but not limited to, the Company’s ability to recruit employees from outside of the United States, the ability of the Company’s CROs to conduct clinical trials and preclinical studies in countries outside of the United States, the Company’s ability to import materials from outside of the United States, including raw materials required to manufacture its drug candidates, the Company’s ability to export materials to its CROs and other third-parties located outside of the United States, the Company’s ability to identify suitable clinical sites or open those sites for enrollment due to competing business needs, the Company’s ability to enroll patients due to their fear of coming into medical facilities and their perceived risk of becoming infected at such facilities, and the Company’s ability to monitor the clinical data generated at its clinical sites, required for completion of clinical trials.
The COVID-19 pandemic and mitigation measures also may have an adverse impact on global economic conditions, which could adversely impact the Company’s business, financial condition or results of operations. Additionally, the COVID-19 pandemic has resulted in significant financial market volatility and uncertainty. A continuation or worsening of the levels of market disruption and volatility as a result of the COVID-19 pandemic could have an adverse effect on the Company’s ability to access capital and on the market price of its common stock. The Company cannot presently predict the scope and severity of any potential business shutdowns or disruptions, but if the Company or any of the third parties on whom it relies on or with whom it conducts business, were to experience shutdowns or other business disruptions, the
7
Company’s ability to conduct business in the manner and on the timelines presently planned could be materially and adversely impacted.
2. Summary of significant accounting policies
The Company's significant accounting policies are disclosed in the audited consolidated financial statements for the years ended December 31, 2021 and 2020 ("audited financial statements"), which are included in the Company's Annual Report on Form 10-K that was filed with the SEC on March 16, 2022. Since the date of the financial statements, there have been no changes to the Company's significant accounting policies, except as noted below.
Interim Financial Information
Leases
Prior to January 1, 2022, the Company accounted for leases in accordance with Accounting Standards Codification (“ASC”) 840, Leases. At lease inception, the Company determined if an arrangement was an operating or capital lease. For operating leases, the Company recognized rent expense, inclusive of rent escalations and lease incentives, on a straight-line basis over the lease term.
Effective January 1, 2022, the Company adopted ASC 842, Leases (“ASC 842”), and elected to apply the modified retrospective transition approach using the effective date as the initial date of application. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. At the lease commencement date, when control of the underlying asset is transferred from the lessor to the Company, the Company classifies a lease as either an operating or finance lease and recognizes a right-of-use (“ROU”) asset and a current and non-current lease liability, as applicable, on the consolidated balance sheet if the lease has a term greater than one year. As permitted under ASC 842, the Company has made an accounting policy election, for all classes of underlying assets, to not recognize ROU assets and lease liabilities for leases having a term of twelve months or less. When it determines the appropriate classification and accounting for a lease arrangement, the Company typically only considers the committed lease term. Options to extend a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will either renew or not cancel, respectively.
At the lease commencement date, the operating lease liability and corresponding ROU asset are recorded at the present value of future lease payments over the expected remaining lease term using the discount rate implicit in the lease, if it is readily determinable, or the Company’s incremental borrowing rate. The Company’s incremental borrowing rate reflects the fixed rate at which the Company could borrow the amount of lease payments in the same currency on a collateralized basis, for a similar term in a similar economic environment. Lease cost for operating leases is recognized on a straight-line basis over the lease term as an operating expense. In addition, certain adjustments to the ROU asset may be required for items such as lease prepayments, incentives received, or initial direct costs.
The Company enters into contracts that contain both lease and non-lease components. Non-lease components include costs that do not provide a right-to-use a leased asset but instead provide a service, such as maintenance costs. After its adoption of ASC 842, the Company has elected to combine the lease and non-lease components together as a single lease component for all existing classes of underlying assets. Variable costs associated with the lease, such as maintenance and utilities, are not included in the measurement of right-to-use assets and lease liabilities but rather are expensed when the events determining the amount of variable consideration to be paid have occurred.
Upon its
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on the Company’s balance sheet as of January 1, 2022. The adoption of ASC 842
Recently Adopted Accounting Pronouncements
In December 2019, the FASB issued Accounting Standards Update No. 2019-12 (ASU 2019-12) Simplifying the Accounting for Income Tax. The standard contains several provisions that reduce financial statement complexity including removing the exception to the incremental approach for intra-period tax expense allocation when a company has a loss from continuing operations and income from other items not included in continuing operations. The new guidance is effective for the year beginning January 1, 2022 with optional adoption prior to the effective date. The Company
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3. Fair value measurement
The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis (in thousands):
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March 31, 2022 |
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Assets: |
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Total |
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Quoted prices in |
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Significant |
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Significant |
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Cash equivalents: |
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||||
Money market funds |
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$ |
|
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$ |
|
|
$ |
— |
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|
$ |
— |
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||
Total assets |
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$ |
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$ |
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$ |
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$ |
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|
|
|
|
December 31, 2021 |
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Assets |
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Total |
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Quoted prices in |
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Significant |
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Significant |
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Cash equivalents: |
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|
|
|
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|
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|
|
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||||
Money market funds |
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$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
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||
Total assets |
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$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
During the three months ended March 31, 2022 and the year ended December 31, 2021, there were
4. Prepaid expenses and other current assets
Prepaid expenses and other current assets consisted of the following (in thousands):
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March 31, |
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December 31, |
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Prepaid research and development expenses |
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$ |
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$ |
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||
Prepaid insurance |
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Payroll tax credit |
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Prepaid other |
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Total |
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$ |
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$ |
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5. Property and equipment, net
Property and equipment, net consisted of the following (in thousands):
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March 31, |
|
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December 31, |
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Laboratory and computer equipment |
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$ |
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$ |
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||
Leasehold improvements |
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Total property and equipment |
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||
Less: accumulated depreciation and amortization |
|
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( |
) |
|
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( |
) |
Property and equipment, net |
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$ |
|
|
$ |
|
For the three months ended March 31, 2022 and 2021, depreciation and amortization expense related to property and equipment was $
10
6. Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
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March 31, |
|
|
December 31, |
|
||
Accrued research and development expenses |
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$ |
|
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$ |
|
||
Accrued bonuses |
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Accrued other |
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Operating lease liabilities |
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|
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|
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— |
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Total accrued expenses and other current liabilities |
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$ |
|
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$ |
|
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The voting, dividend and liquidation rights of the holders of the Company’s common stock are subject to and qualified by the rights, powers and preferences of the holders of the preferred stock as set forth in our Form 10-K for the fiscal year ended December 31, 2021.
As of March 31, 2022 and December 31, 2021, the Company has reserved the following shares of common stock for the potential exercise of stock options:
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March 31, |
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December 31, |
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Options to purchase common stock |
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Remaining shares reserved for future issuance |
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Total |
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2012 Stock Incentive Plan
The Company adopted the 2012 Stock Incentive Plan (the “2012 Plan”) in February 2016 pursuant to which the Company can issue incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and other stock awards. Recipients of stock options or stock appreciate rights shall be eligible to purchase shares of the Company’s common stock at an exercise price equal to the estimated fair market value of such stock on the date of grant. The exercise price may be less than fair market value if the stock award is granted pursuant to an assumption or substitution for another stock award in the event of a merger or sale of the Company. The maximum term of options granted under the 2012 Plan is
2021 Equity Incentive Plan
In June 2021 the Company’s board of directors adopted, and in June 2021 the Company’s stockholders approved, the 2021 Plan, which became effective immediately prior to the effectiveness of the registration statement for the initial public offering. The 2021 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation
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rights, restricted stock awards, restricted stock units and other stock-based awards. Upon effectiveness of the 2021 Plan, the number of shares of common stock reserved for issuance under the 2021 Plan was
At March 31, 2022,
2021 Employee Stock Purchase Plan
In June 2021, the Company’s board of directors adopted, and the Company’s stockholders approved, the 2021 Employee Stock Purchase Plan (the “ESPP”), which became effective immediately prior to the effectiveness of the registration statement for the initial public offering. The ESPP is administered by the Company’s board of directors or by a committee appointed by the board of directors. The ESPP initially provides participating employees with the opportunity to purchase up to an aggregate of
Early exercise of unvested stock options
Shares purchased by employees pursuant to the early exercise of stock options are not deemed, for accounting purposes, to be outstanding shares until those shares vest according to their respective vesting schedules. Cash received from employee exercises of unvested options is included in long-term liabilities on the condensed consolidated balance sheets. Amounts recorded are reclassified to common stock and additional paid-in capital as the shares vest. As of March 31, 2022 and December 31, 2021, there were
Stock option valuation
The assumptions that the Company used in the Black Scholes option-pricing model to determine the grant date fair value of stock options granted were as follows:
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March 31, |
Risk-free interest rate range |
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Dividend yield |
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Expected life of options (years) |
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Volatility rate range |
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The following table summarizes the Company’s stock option activity during the three months ended March 31, 2022:
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Number of |
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Weighted average |
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Weighted average |