bmea-10q_20210331.htm
false Q1 0001840439 --12-31 P2Y P5Y P3Y P9Y9M18D P9Y9M18D P6Y 0001840439 2021-01-01 2021-03-31 xbrli:shares 0001840439 2021-04-30 iso4217:USD 0001840439 2021-03-31 0001840439 2020-12-31 0001840439 bmea:SeriesAConvertiblePreferredStockMember 2021-03-31 0001840439 bmea:SeriesAConvertiblePreferredStockMember 2020-12-31 iso4217:USD xbrli:shares 0001840439 2020-01-01 2020-03-31 0001840439 us-gaap:CommonStockMember 2020-12-31 0001840439 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001840439 us-gaap:RetainedEarningsMember 2020-12-31 0001840439 bmea:SeriesAConvertiblePreferredStockMember 2021-01-01 2021-03-31 0001840439 us-gaap:CommonStockMember 2021-01-01 2021-03-31 0001840439 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-03-31 0001840439 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-03-31 0001840439 us-gaap:RetainedEarningsMember 2021-01-01 2021-03-31 0001840439 us-gaap:CommonStockMember 2021-03-31 0001840439 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001840439 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-03-31 0001840439 us-gaap:RetainedEarningsMember 2021-03-31 0001840439 us-gaap:CommonStockMember 2019-12-31 0001840439 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001840439 us-gaap:RetainedEarningsMember 2019-12-31 0001840439 2019-12-31 0001840439 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001840439 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0001840439 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0001840439 us-gaap:CommonStockMember 2020-03-31 0001840439 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001840439 us-gaap:RetainedEarningsMember 2020-03-31 0001840439 2020-03-31 xbrli:pure 0001840439 us-gaap:SubsequentEventMember 2021-04-12 2021-04-12 0001840439 us-gaap:SubsequentEventMember us-gaap:IPOMember 2021-04-20 2021-04-20 0001840439 us-gaap:SubsequentEventMember us-gaap:IPOMember 2021-04-20 0001840439 us-gaap:SubsequentEventMember us-gaap:IPOMember 2021-04-21 2021-05-20 bmea:Segment 0001840439 us-gaap:StandbyLettersOfCreditMember 2021-03-31 0001840439 us-gaap:EquipmentMember srt:MinimumMember 2021-01-01 2021-03-31 0001840439 us-gaap:EquipmentMember srt:MaximumMember 2021-01-01 2021-03-31 0001840439 us-gaap:FurnitureAndFixturesMember 2021-01-01 2021-03-31 0001840439 us-gaap:LeaseholdImprovementsMember 2021-01-01 2021-03-31 0001840439 2020-01-01 2020-12-31 0001840439 2019-01-01 2019-12-31 0001840439 2020-01-01 0001840439 srt:MinimumMember 2021-01-01 2021-03-31 0001840439 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member 2021-03-31 0001840439 us-gaap:CorporateNoteSecuritiesMember us-gaap:FairValueInputsLevel2Member 2021-03-31 0001840439 us-gaap:CommercialPaperMember us-gaap:FairValueInputsLevel2Member 2021-03-31 0001840439 us-gaap:AssetBackedSecuritiesMember us-gaap:FairValueInputsLevel2Member 2021-03-31 0001840439 us-gaap:FurnitureAndFixturesMember 2021-03-31 0001840439 us-gaap:FurnitureAndFixturesMember 2020-12-31 0001840439 us-gaap:ConstructionInProgressMember 2021-03-31 0001840439 us-gaap:ConstructionInProgressMember 2020-12-31 0001840439 us-gaap:LeaseholdImprovementsMember 2021-03-31 0001840439 us-gaap:LeaseholdImprovementsMember 2020-12-31 0001840439 us-gaap:EquipmentMember 2021-03-31 0001840439 stpr:CA 2021-03-31 0001840439 stpr:CA bmea:LevelHomeIncMember 2021-02-01 2021-02-28 0001840439 stpr:CA 2021-01-01 2021-03-31 0001840439 us-gaap:RestrictedStockMember 2021-03-31 0001840439 us-gaap:RestrictedStockMember 2020-12-31 0001840439 bmea:SeriesAConvertiblePreferredStockMember 2020-12-01 2020-12-31 0001840439 bmea:SeriesAConvertiblePreferredStockMember 2020-11-30 0001840439 bmea:SeriesAConvertiblePreferredStockMember srt:MinimumMember 2021-01-01 2021-03-31 bmea:Director 0001840439 us-gaap:CommonStockMember 2021-01-01 2021-03-31 0001840439 bmea:TwoThousandAndTwentyEquityIncentivePlanMember bmea:EmployeesAndNonEmployeesMember 2020-12-18 0001840439 bmea:TwoThousandAndTwentyEquityIncentivePlanMember 2021-03-31 0001840439 us-gaap:ResearchAndDevelopmentExpenseMember 2021-01-01 2021-03-31 0001840439 us-gaap:GeneralAndAdministrativeExpenseMember 2021-01-01 2021-03-31 0001840439 2019-01-01 2019-03-31 0001840439 us-gaap:RestrictedStockMember bmea:EmployeesAndNonEmployeesMember 2020-10-01 2020-12-31 0001840439 us-gaap:RestrictedStockMember 2021-01-01 2021-03-31 0001840439 us-gaap:RestrictedStockMember 2020-01-01 2020-12-31 0001840439 us-gaap:SubsequentEventMember bmea:CityNationalBankMember bmea:PaycheckProtectionProgramLoanMember bmea:PromissoryNoteMember bmea:CARESActMember 2021-05-05 0001840439 us-gaap:SubsequentEventMember bmea:CityNationalBankMember bmea:PaycheckProtectionProgramLoanMember bmea:PromissoryNoteMember bmea:CARESActMember 2021-05-05 2021-05-05 0001840439 bmea:A2APharmaceuticalsAndBiomeaHealthLLCMember 2019-01-01 2019-12-31 0001840439 bmea:A2APharmaceuticalsAndBiomeaHealthLLCMember 2020-01-01 2020-03-31 0001840439 bmea:BiomeaHealthLLCMember 2019-01-01 2019-12-31 0001840439 bmea:BiomeaHealthLLCMember 2021-03-31 0001840439 bmea:BiomeaHealthLLCMember 2020-12-31 0001840439 bmea:SeriesAConvertiblePreferredStockMember 2021-01-01 2021-03-31 0001840439 us-gaap:RestrictedStockMember 2021-01-01 2021-03-31 0001840439 bmea:EmployeesAndConsultantsMember us-gaap:SubsequentEventMember 2021-04-15 2021-04-15 0001840439 bmea:BoardMembersMember us-gaap:SubsequentEventMember 2021-04-15 2021-04-15

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended March 31, 2021

OR

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

For the transition period from      to

Commission File Number: 001-40335

 

Biomea Fusion, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

82-2520134

( State or other jurisdiction of

incorporation or organization)

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

726 Main Street

Redwood City, California 94063

94063

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (650) 980-9099

 

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.0001 par value

 

BMEA

 

The Nasdaq Global Select Market

 

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

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

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

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

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

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

As of April 30, 2021, the registrant had 28,767,867 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Balance Sheets

1

 

Condensed Statements of Operations

2

 

Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

3

 

Condensed Consolidated Statements of Cash Flows

4

 

Notes to Unaudited Condensed Financial Statements

5

Item 2.

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

18

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

25

Item 4.

Controls and Procedures

25

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

26

Item 1A.

Risk Factors

26

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

78

Item 3.

Defaults Upon Senior Securities

78

Item 4.

Mine Safety Disclosures

78

Item 5.

Other Information

78

Item 6.

Exhibits

79

Signatures

80

 

i


 

Special Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our strategy, future financial condition, future operations, projected costs, prospects, plans, objectives of management and expected market growth, 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. These forward-looking statements include, but are not limited to, statements about:

our financial performance;

the sufficiency of our existing cash and cash equivalents to fund our future operating expenses and capital expenditure requirements;

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

our anticipated use of our existing cash and cash equivalents and the proceeds from the IPO;

the implementation of our strategic plans for our business and product candidates;

the size of the market opportunity for our product candidates and our ability to maximize those opportunities;

the initiation, timing, progress and results of our research and development programs, preclinical studies, any clinical trials and, INDs, and other regulatory submissions;

the beneficial characteristics, safety, efficacy and therapeutic effects of our product candidates;

our estimates of the patient populations addressable by BMF-219, if approved, and the number of participants that will enroll in our planned clinical trials;

the ability of our clinical trials to demonstrate safety and efficacy of our product candidates, and other favorable results;

our plans relating to the clinical development of our product candidates, including the disease areas to be evaluated;

the timing, progress and focus of our future clinical trials, and the reporting of data from those trials;

our ability to obtain and maintain regulatory approval of our product candidates;

our plans relating to commercializing our product candidates, if approved;

the expected benefits of potential future strategic collaborations with third parties and our ability to attract collaborators with development, regulatory and commercialization expertise;

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

the timing or likelihood of regulatory filings and approvals, including our expectation to seek special designations, such as orphan drug designation, for our product candidates;

our plans relating to the further development and manufacturing of our product candidates, including for additional indications that we may pursue;

existing regulations and regulatory developments in the United States and other jurisdictions;

our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available;

our plan to rely on third parties to conduct and support preclinical and clinical development;

our ability to retain the continued service of our key personnel and to identify, hire and then retain additional qualified personnel;

the impact of the ongoing COVID-19 pandemic or other related disruptions on our business; and

our expectations regarding the period during which we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012, as amended.

ii


We have based these forward-looking statements largely on our current expectations, estimates, forecasts and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, 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 at all. You should refer to the section titled “Risk factors” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. We qualify all of the forward-looking statements in this Quarterly Report on Form 10-Q by these cautionary statements.

 

 

 

iii


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Biomea Fusion, Inc.

Condensed Balance Sheets

(Unaudited)

(in thousands, except share and per share data)

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

18,891

 

 

$

61,695

 

Short-term investments

 

 

26,586

 

 

 

-

 

Prepaid expenses and other current assets

 

 

2,045

 

 

 

528

 

Total current assets

 

 

47,522

 

 

 

62,223

 

Property and equipment, net

 

 

165

 

 

 

81

 

Restricted cash

 

 

216

 

 

 

-

 

Prepaid and other long term assets

 

 

-

 

 

 

12

 

Long-term investments

 

 

11,843

 

 

 

-

 

Right-of-use asset

 

 

129

 

 

 

210

 

Total assets

 

$

59,875

 

 

$

62,526

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

969

 

 

$

727

 

Accrued liabilities

 

 

2,777

 

 

 

633

 

Loan payable

 

 

36

 

 

 

36

 

Lease liability

 

 

137

 

 

 

223

 

Total current liabilities

 

 

3,919

 

 

 

1,619

 

Total liabilities

 

 

3,919

 

 

 

1,619

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

Series A convertible preferred stock, $0.0001 par value; 7,064,925 shares

   authorized as of March 31, 2021 and December 31, 2020; 7,064,925 shares

   issued and outstanding as of March 31, 2021 and December 31, 2020

 

 

55,735

 

 

 

55,738

 

Stockholders' equity

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value; 25,300,080 shares authorized as of

   March 31, 2021 and December 31, 2020;12,004,633 and 11,953,107 shares issued and outstanding as of March 31, 2021 and  December 31, 2020

 

 

1

 

 

 

1

 

Additional paid-in capital

 

 

14,262

 

 

 

13,343

 

Accumulated other comprehensive loss

 

 

(15

)

 

 

-

 

Accumulated deficit

 

 

(14,027

)

 

 

(8,175

)

Total stockholders' equity

 

 

221

 

 

 

5,169

 

Total liabilities and stockholders' equity

 

$

59,875

 

 

$

62,526

 

 

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

1


Biomea Fusion, Inc.

Condensed Statements of Operations

(Unaudited)

(in thousands, except share and per share data)

 

 

Three Months Ended

 

 

March 31,

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

$

3,798

 

 

$

334

 

General and administrative

 

2,059

 

 

 

64

 

Total operating expenses

 

5,857

 

 

 

398

 

Loss from operations

 

(5,857

)

 

 

(398

)

Interest and other income, net

 

5

 

 

 

0

 

Net loss

$

(5,852

)

 

$

(398

)

Other comprehensive loss:

 

 

 

 

 

 

 

Changes in unrealized loss on short term investments, net

 

(15

)

 

 

 

Comprehensive loss

$

(5,867

)

 

$

(398

)

Net loss per common share, basic and diluted

 

(0.49

)

 

 

(0.05

)

Weighted-average number of common shares used to compute

   basic and diluted net loss per common share

 

11,964,205

 

 

 

8,758,995

 

 

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

 

 

 

2


 

Biomea Fusion, Inc.

Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(Unaudited)

(in thousands, except share amounts)

 

 

 

Series A

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated Other

 

 

 

 

 

 

Total

 

 

 

Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity (Deficit)

 

Balance at

   December 31,

   2020

 

 

7,064,925

 

 

$

55,738

 

 

 

 

11,953,107

 

 

$

1

 

 

$

13,343

 

 

$

 

 

$

(8,175

)

 

$

5,169

 

Series A financing costs

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of

   restricted stock

 

 

 

 

 

 

 

 

 

 

 

51,526

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based

   compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

919

 

 

 

 

 

 

 

 

 

 

 

919

 

Unrealized loss

   on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15

)

 

 

 

 

 

 

(15

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,852

)

 

 

(5,852

)

Balance at

   March 31, 2021

 

 

7,064,925

 

 

$

55,735

 

 

 

 

12,004,633

 

 

$

1

 

 

$

14,262

 

 

$

(15

)

 

$

(14,027

)

 

$

221

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

   December 31,

   2019

 

 

 

 

$

 

 

 

 

8,703,234

 

 

$

1

 

 

$

2,829

 

 

$

 

 

$

(2,851

)

 

$

(21

)

Issuance of

   common stock

 

 

 

 

 

 

 

 

 

 

 

230,650

 

 

 

 

 

 

 

50

 

 

 

 

 

 

 

 

 

 

 

50

 

Net loss and

   comprehensive

   loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(398

)

 

 

(398

)

Balance at

   March 31, 2020

 

 

 

 

$

 

 

 

 

8,933,884

 

 

$

1

 

 

$

2,879

 

 

$

 

 

$

(3,249

)

 

$

(369

)

 

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

 

 

3


 

Biomea Fusion, Inc.

Condensed Statements of Cash Flows

(Unaudited)

(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

Operating Activities

 

 

 

 

 

 

 

 

Net loss

 

$

(5,852

)

 

$

(398

)

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

 

 

 

 

 

 

 

 

Depreciation

 

 

11

 

 

 

 

Non-cash lease expense

 

 

81

 

 

 

 

Stock-based compensation expense

 

 

919

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses & other current assets

 

 

(292

)

 

 

17

 

Other assets

 

 

12

 

 

 

 

Accounts payable

 

 

41

 

 

 

70

 

Accrued liabilities

 

 

1,091

 

 

 

59

 

Lease liabilities

 

 

(86

)

 

 

 

Net cash used in operating activities

 

 

(4,075

)

 

 

(252

)

Investing Activities

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(67

)

 

 

 

Purchase of short-term and long-term investments

 

 

(38,443

)

 

 

 

Net cash used in investing activities

 

 

(38,510

)

 

 

 

Financing Activities

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

 

 

 

50

 

Series A financing costs incurred

 

 

(3

)

 

 

 

Net cash (used in) provided by financing activities

 

 

(3

)

 

 

50

 

Net decrease in cash, cash equivalents, and restricted cash

 

 

(42,588

)

 

 

(202

)

Cash, cash equivalents, and restricted cash at the beginning of the period

 

 

61,695

 

 

 

239

 

Cash, cash equivalents, and restricted cash at the end of the period

 

$

19,107

 

 

$

37

 

Non-cash financing and investing activities:

 

 

 

 

 

 

 

 

Acquisition of fixed assets

 

$

29

 

 

 

 

Unpaid deferred offering costs

 

$

1,226

 

 

 

 

Change in unrealized gain/loss on investments

 

$

(15

)

 

 

 

Reconciliation of cash and cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

18,891

 

 

$

37

 

Restricted cash

 

$

216

 

 

$

 

Total cash and cash equivalents and restricted cash - end of period

 

$

19,107

 

 

$

37

 

 

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

 

4


 

 

 

Biomea Fusion, Inc.

Notes to Unaudited Condensed Financial Statements

Note 1. Organization

Organization

Biomea Fusion, Inc., (the “Company”), was established in the state of Delaware in August 2017 as Biomea Fusion, LLC. In December 2020, all outstanding membership interests in Biomea Fusion, LLC were converted into equity interests in the Company. The capitalization information included in these financial statements is consistently presented as if it is that of Biomea Fusion, Inc., even during the prior period when investors held their equity interests in Biomea Fusion, LLC.

The Company is a biopharmaceutical company focused on the discovery and development of irreversible small molecules to treat patients with genetically defined cancers. Since its inception in 2017, the Company has built its proprietary FUSION System platform to design and develop a pipeline of novel irreversible therapies.

Basis of presentation

The accompanying interim condensed financial statements as of March 31, 2021 and for the three months ended March 31, 2021 and 2020, and the related interim information contained within the notes to the financial statements, are unaudited. The unaudited interim condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and on the same basis as the audited financial statements included on the Company’s annual financial statements filed with the Securities and Exchange Commission (“SEC”) within the Company’s Prospectus dated April 15, 2021 (the “Prospectus”). In the opinion of management, the accompanying unaudited interim condensed financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to state fairly the Company’s financial position as of March 31, 2021, and the results of its operations and cash flows for the three months ended March 31, 2021 and 2020. All such adjustments are of a normal and recurring nature. The interim financial data as of March 31, 2021 is not necessarily indicative of the results to be expected for the year ending December 31, 2021, or for any future period.

The accompanying condensed financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2020 included in the Prospectus.

Forward stock split

In April 2021, the Company’s board of directors approved an amended and restated certificate of incorporation to effect a split of shares of the Company’s outstanding capital at a ratio of 8.84-for-1 (the “Forward Stock Split”) effective as of April 12, 2021. The number of authorized shares and the par values of the common stock and convertible preferred stock were not adjusted as a result of the Forward Stock Split. All references to common stock, options to purchase common stock, convertible preferred stock, share data, per share data and related information contained in the financial statements have been retrospectively adjusted to reflect the effect of the Forward Stock Split for all periods presented.

Initial Public Offering

On April 16, 2021, the Company’s registration statement on Form S-1 (File No. 333-254793) relating to its initial public offering (“IPO”) of common stock became effective. The IPO closed on April 20, 2021 at which time the Company issued an aggregate of 9,000,000 shares of its common stock at a price of $17.00 per share. Within 30 days following the close, 823,532 shares were issued in connection with the partial exercise by the underwriters of their option to purchase additional shares of common stock. In addition, immediately prior to the closing of the IPO, all outstanding shares of the Company’s convertible preferred stock automatically converted into 7,064,925 shares of common stock. In connection with the completion of its IPO, on April 20, 2021, the Company’s certificate of incorporation was amended and restated to provide for 300,000,000 authorized shares of common stock with a par value of $0.0001 per share and 10,000,000 authorized shares of preferred stock with a par value of $0.0001 per share. Proceeds from the IPO, net of underwriting discounts and commissions and offering costs were approximately $152.8 million.

Liquidity and capital resources

The Company has incurred net operating losses and negative cash flows from operations since its inception and had an accumulated deficit of $14.0 million at March 31, 2021. As of March 31, 2021, the Company had cash, cash equivalents, restricted cash, and investments of $57.5 million. The Company has historically financed its operations primarily through the sale of convertible preferred stock and common stock and the issuance of unsecured promissory notes. To date, none

5


 

 

of the Company’s product candidates have been approved for sale, and the Company has not generated any revenue since inception. Management expects operating losses to continue and increase for the foreseeable future, as the Company progresses into clinical development activities for its lead product candidate. The Company’s prospects are subject to risks, expenses and uncertainties frequently encountered by companies in the biotechnology industry as discussed below. While the Company has been able to raise multiple rounds of financing, there can be no assurance that in the event the Company requires additional financing, such financing will be available on terms which are favorable or at all. Failure to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending would have a material adverse effect on the Company’s ability to achieve its intended business objectives.

Note 2. Summary of Significant Accounting Policies

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to accrued research and development expenses, the fair value of common stock, stock-based compensation expense, income taxes and uncertain tax positions. The Company bases its estimates on its historical experience and also on assumptions that it believes are reasonable; however, actual results could significantly differ from those estimates.

Segments

The Company operates and manages its business as one reportable and operating segment, which is the business of developing clinical product candidates for the treatment of cancer patients. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for allocating resources and evaluating financial performance. All long-lived assets are maintained in, and all losses are attributable to, the United States.

Cash, cash equivalents, and restricted cash

The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be cash and cash equivalents. Cash equivalents consist of amounts invested in money market accounts and are stated at fair value.

Restricted cash as of March 31, 2021 included a $216,000 stand-by letter of credit issued in favor of the landlord in connection with a new lease of lab space located in San Carlos, California, which is classified in noncurrent assets. There was no restricted cash as of December 31, 2020.

Investments

The Company’s investments have been classified and accounted for as available-for-sale securities. Fixed income securities consist of U.S. Treasury securities, U.S. government agency securities, corporate debt, and commercial paper. The specific identification method is used to determine the cost basis of fixed income securities sold. These securities are recorded on the condensed balance sheets at fair value. Unrealized gains and losses on these securities are included as a separate component of accumulated other comprehensive loss. The cost of investment securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion are included in other income (expense), net. Realized gains and losses and declines in fair value judged to be other-than-temporary, if any, are also included in other income (expense), net. The Company evaluates securities for other-than-temporary impairment at the balance sheet date. Declines in fair value determined to be other-than-temporary are also included in other income (expense), net. The Company classifies its investments as short or long term primarily based on the remaining contractual maturity of the securities. Long term investments consist of asset backed securities and corporate debt.

Concentration of credit risk and other risks and uncertainties

Financial instruments that potentially subject the Company to a concentration of credit risk, consist primarily of cash and cash equivalents. The Company maintains bank deposits in federally insured financial institutions and these deposits may exceed federally insured limits. The Company is exposed to credit risk in the event of default by the financial institutions holding its cash and cash equivalents to the extent recorded in the balance sheet. The Company has not experienced any losses on its deposits of cash and cash equivalents.

6


 

 

The Company’s future results of operations involve a number of other risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s potential product candidates, uncertainty of market acceptance of the Company’s product candidates, competition from substitute products and larger companies, securing and protecting proprietary technology, strategic relationships and dependence on key individuals or sole source suppliers. The Company’s product candidates require approvals from the U.S. Food and Drug Administration and comparable foreign regulatory agencies prior to commercial sales in their respective jurisdictions. There can be no assurance that any product candidates will receive the necessary approvals. If the Company is denied approval, approval is delayed or the Company is unable to maintain approval for any product candidate, it could have a materially adverse impact on the Company.

Property and equipment, net

Property and equipment are recorded at cost net of accumulated depreciation and amortization. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets. The useful lives of property and equipment are as follows:

 

 

 

 

Laboratory equipment

  

3-5 years

Furniture and fixtures

  

5 years

Leasehold improvements

  

Shorter of remaining lease term or estimated useful life

 

 

Upon retirement or sale of the assets, the cost and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is recorded to the statements of operations. Repairs and maintenance are expensed as incurred.

Impairment of long-lived assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. There was no impairment of long-lived assets during the years ended December 31, 2020 and 2019 and the three months ended March 31, 2021 and 2020.

Convertible preferred stock

The Company records shares of convertible preferred stock at fair value on the dates of issuances, net of issuance costs. The Company classifies convertible preferred stock outside of stockholders’ equity (deficit) because the shares contain liquidation features that are not solely within the Company’s control. The Company analyzed all embedded derivatives and beneficial conversion features for its convertible preferred stock and concluded that none requires bifurcation. The Company has elected not to adjust the carrying values of the convertible preferred stock to the liquidation preferences of such shares because it is uncertain whether or when an event would occur that would obligate the Company to pay the liquidation preferences to holders of convertible preferred stock. Subsequent adjustments to the carrying values to the liquidation preferences will be made only when it becomes probable that such a liquidation event will occur.

Research and development expenses

The Company’s research and development expenses consist primarily of external and internal costs incurred in connection with the research and development of its research programs and product candidates.

External costs include:

expenses incurred under agreements with third-party contract manufacturing organizations (“CMOs”), contract research organizations (“CROs”), research and development service providers, academic research institutions and consulting costs; and

laboratory expenses, including supplies and services.

7


 

 

 

Internal costs include:

personnel-related expenses, including salaries, benefits and stock-based compensation for personnel in research and product development roles; and

facilities and other allocated expenses, including expenses for rent and facilities maintenance, and amortization.

The Company expenses research and development costs in the periods in which they are incurred. Nonrefundable advance payments for goods or services to be received in future periods for use in research and development activities are deferred and capitalized. The capitalized amounts are then expensed as the related goods are delivered and as services are performed. The Company tracks direct costs by stage of program, clinical or preclinical. However, it does not track indirect costs on a stage of program basis because these costs are deployed across multiple programs and, as such, are not separately classified.

Accrued research and development expenses

The Company records accruals for estimated costs of research, preclinical, and manufacturing development, which are significant components of research and development expenses. A substantial portion of the Company’s ongoing research and development activities is conducted by third-party service providers, CROs and CMOs. The Company’s contracts with the CROs and CMOs generally include fees such as initiation fees, reservation fees, costs related to animal studies and safety tests, verification run costs, materials and reagents expenses, taxes, etc. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to the Company under such contracts. The Company accrues the costs incurred under agreements with these third parties based on estimates of actual work completed in accordance with the respective agreements. The Company determines the estimated costs through discussions with internal personnel and external service providers as to the progress, or stage of completion and actual timeline (start- date and end-date) of the services and the agreed-upon fees to be paid for such services. Through March 31, 2021, there have been no material differences from the Company’s estimated accrued research and development expenses to actual expenses.

Patent costs

All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses in the accompanying statements of operations.

Stock-based compensation

The Company’s measures stock options and other stock-based awards granted to directors, employees and non-employees based on their fair value on the date of the grant and recognizes the corresponding compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award, and estimates the fair value of share-based awards to employees and directors using the Black-Scholes option-pricing valuation model. The Company has only issued stock options and restricted share awards with service-based vesting conditions and records the expense for these awards using the straight-line method. The Company accounts for the forfeitures as they occur.

Leases

On January 1, 2020, the Company early adopted ASC 842, Leases (“ASC 842”) and its associated amendments (ASC 842) using the modified retrospective transition approach. The Company elected to take the practical expedient to not separate the lease and non-lease components as part of the adoption. There was no cumulative-effect adjustment recorded to accumulated deficit upon adoption. The Company recorded right-of-use assets and lease liabilities of $0.3 million upon adoption.

Under ASC 842, the Company determines if an arrangement is a lease at inception. Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date. The Company’s operating leases have one single component. The lease component results in a right-of-use asset being recorded on the balance sheet and expensed as lease expense on a straight-line basis in the Company’s statements of operations.

Building improvements are paid for by the tenant and are capitalized as leasehold improvements and included in property and equipment, net in the balance sheet.

8


 

 

Income taxes

The Company began providing for income taxes under the asset and liability method in December 2020 upon conversion from a limited liability company into a corporation. Current income tax expense or benefit represents the amount of income taxes expected to be payable or refundable for the current year. Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax basis of assets and liabilities and net operating loss and credit carryforwards and are measured using the enacted tax rates and laws that will be in effect when such items are expected to reverse. Deferred income tax assets are reduced, as necessary, by a valuation allowance when management determines it is more likely than not that some or all the tax benefits will not be realized.

The Company accounts for uncertain tax positions in accordance with ASC No. 740 Income Taxes. The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available.

The Company includes any penalties and interest expense related to income taxes as a component of income tax expense, as necessary.

Comprehensive loss

Other comprehensive loss represents the changes in stockholders’ equity except those resulting from distributions to stockholders. The Company’s unrealized losses on short term available-for-sale investment securities represent components of other comprehensive loss that are excluded from the reported net loss and are presented in the consolidated statements of operations and comprehensive loss.

Net loss per share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the periods, without consideration for common stock equivalents. Diluted net loss per share is the same as basic net loss per share, since the effects of potentially dilutive securities are antidilutive given the net loss for the periods presented.

Deferred offering costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in stockholders’ deficit as a reduction of additional paid-in capital generated as a result of the equity financing. There were $1.6 million and $0 of deferred offering costs recorded on the balance sheet as of March 31, 2021 and December 31, 2020, respectively.

Recent accounting pronouncements

The Company is an emerging growth company (“EGC”), as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and may take advantage of reduced reporting requirements that are otherwise applicable to public companies. Section 107 of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with those standards. The Company has elected to use the extended transition period for complying with new or revised accounting standards; and as a result of this election, its financial statements may not be comparable to companies that comply with public company effective dates. The JOBS Act also exempts the Company from having to provide an auditor attestation of internal controls over financial reporting under Sarbanes-Oxley Act Section 404(b). The Company will remain an EGC until the earliest of (i) the last day of the fiscal year in which it has total annual gross revenues of $1.07 billion or more, (ii) the last day of the fiscal year following the fifth anniversary of the completion of its IPO, (iii) the date on which it has issued more than $1.0 billion in nonconvertible debt during the previous three years or (iv) the date on which it is deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission (“SEC”), which generally is when it has more than $700 million in market value of its stock held by non-affiliates, has been a public company for at least 12 months and has filed one annual report on Form 10-K.

9


 

 

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB), or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The measurement of expected credit losses is based on historical experience, current conditions, and reasonable and supportable forecasts that affect collectability. This ASU also eliminates the concept of “other-than-temporary” impairment when evaluating available-for-sale debt securities and instead focuses on determining whether any impairment is a result of a credit loss or other factors. An entity will recognize an allowance for credit losses on available-for-sale debt securities rather than an other-than-temporary impairment that reduces the cost basis of the investment. This ASU is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of this standard on its financial statements and related disclosures.

The Company did not adopt any new standards during the three months ended March 31, 2021.

Note 3. Fair Value Measurement

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

Level 1—Observable inputs, such as quoted prices in active markets for identical assets or liabilities at the measurement date.

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

Level 3—Unobservable inputs which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

The Company’s cash equivalents includes investments in money market funds that are classified as Level 1 of the fair value hierarchy.  The Company values the funds at $1 stable net asset value, which is the quoted price in active markets for identical assets that the Company has the ability to access.  The Company’s cash equivalents and short-term investments also include commercial paper, asset backed securities, and corporate notes, which have been classified within Level 2 of the fair value of the hierarchy because of the sufficient observable inputs for revaluation.

 

Financial instruments classified within Level 2 of the fair value hierarchy are valued based on other observable inputs, including broker or dealer quotations or alternative pricing sources. When quoted prices in active markets for identical assets or liabilities are not available, the Company relies on non-binding quotes from its investment managers, which are based on proprietary valuation models of independent pricing services. These models generally use inputs such as observable market data, quoted market prices for similar instruments, or historical pricing trends of a security relative to its peers. To validate the fair value determination provided by its investment managers, the Company reviews the pricing movement in the context of overall market trends and trading information from its investment managers. In addition, the Company assesses the inputs and methods used in determining the fair value in order to determine the classification of securities in the fair value hierarchy.

10


 

 

The fair value of the Company’s cash equivalents and short-term investments approximates their respective carrying amounts due to their short-term maturity. The following tables set forth the fair value of the Company’s financial assets, which consist of investments measured and recognized at fair value (in thousands):

 

 

 

 

 

March 31, 2021

 

 

 

Fair Value

Hierarchy

Level

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

 

Fair Value

 

Money market funds(1)

 

Level 1

 

$

 

16,428

 

 

$

 

 

 

$

 

 

 

$

 

16,428

 

Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate notes

 

Level 2

 

 

 

22,335

 

 

 

 

 

 

 

 

(13

)

 

 

 

22,322

 

Commercial paper

 

Level 2

 

 

 

10,486

 

 

 

 

 

 

 

 

 

 

 

 

10,486

 

Asset backed securities

 

Level 2

 

 

 

5,622

 

 

 

 

 

 

 

 

(2

)

 

 

 

5,620

 

Total

 

 

 

$

 

54,871

 

 

$

 

 

 

$

 

(15

)

 

$

 

54,856

 

 

(1)

Included in cash and cash equivalents on the balance sheets.

The Company did not have any investments as of December 31, 2020.

 

Realized gains or losses from the sale of investments and other-than-temporary impairments, if any, on available-for-sale securities are reported in other income (expense), net as incurred.  The cost of securities sold was determined based on the specific identification method.  The amount of realized gains and realized losses on investments for the periods presented have not been material.

 

Note 4. Property and Equipment

Property and equipment, net consisted of the following:

 

(in thousands)

 

March 31,

2021

 

 

December 31,

2020

 

Furniture and fixtures

 

$

27

 

 

$

7

 

Construction in progress

 

 

39

 

 

 

58

 

Leasehold improvements

 

 

32

 

 

 

24

 

Lab equipment

 

 

87

 

 

 

 

Total property and equipment, gross

 

 

185

 

 

 

89

 

Less: accumulated depreciation

 

 

(20

)

 

 

(8

)

Total property and equipment, net

 

$

165

 

 

$

81

 

 

Depreciation expense for the three months ended March 31, 2021 and 2020 was $11,328 and $0 respectively.

Note 5. Leases

The Company early adopted Accounting Standards Update ASU 842 on January 1, 2020. There was no cumulative-effect adjustment recorded to accumulated deficit upon adoption.

Under ASC 842, the Company determines if an arrangement is a lease at inception. In addition, the Company determines whether leases meet the classification criteria of a finance or operating lease at the lease commencement date. As of December 31, 2020, the Company’s lease population consisted of real estate. As of the date of adoption of ASC 842 and December 31, 2020, the Company did not have finance leases.

Operating leases are included in operating lease right-of-use (ROU) assets, lease liabilities, current, and lease liabilities, non-current in the Company’s balance sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date if the rate implicit in the lease is not readily determinable. The Company determines the incremental borrowing rate base on an analysis of corporate bond yields with a credit rating similar to the Company. The determination of the Company’s incremental borrowing rate requires management judgment including the development of a synthetic credit rating and cost of debt as

11


 

 

the Company currently does not carry any debt. The Company believes that the estimates used in determining the incremental borrowing rate are reasonable based upon current facts and circumstances. Applying different judgments to the same facts and circumstances could result in the estimated amounts to vary. The operating lease ROU assets also include adjustments for prepayments and accrued lease payments and exclude lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Operating lease cost is recognized on a straight-line basis over the expected lease term. Lease agreements entered into after the adoption of ASC 842 that include lease and non-lease components are accounted for as a single lease component. Lease agreements with a noncancelable term of less than 12 months are not recorded on the Company’s balance sheet.

Operating leases

The Company leases its office and lab space in Redwood City, California and San Carlos, California respectively. Both of the 12.5 month leases were entered into in August 2020. Future lease payments under the two leases are $137,000 for the remaining nine months in 2021.

In February 2021, the Company entered into an 8-month sublease agreement with Level Home, Inc. for additional office space located in Redwood City, California. Rent is $38,766 per month with an abatement of base rent for the first month. This lease will be treated as a short-term lease in accordance with ASC 842 and therefore, is excluded from the right of use asset and liability.

In March of 2021, the Company signed a 5-year lease for new lab space located in San Carlos, California. The lease is expected to begin on May 1, 2021 with monthly lease payments of $57,638 with annual increases of 3%. This lease will be accounted for under ASC 842 due to the long-term nature of the lease. Due to the commencement of this lease in May 2021, there was no right of use asset or liability recorded as of March 31, 2021.

Lease expense for three months ended March 31, 2021 and 2020 was $141,161 and $21,661, respectively.

The undiscounted future non-cancellable lease payments under the Company’s operating leases as of March 31, 2021  is as follows:

 

(In thousands)

 

 

 

 

Years ending December 31,

 

 

 

 

2021 (remaining nine months)

 

$

137

 

2022

 

 

 

 

2023

 

 

 

 

2024

 

 

 

 

2025

 

 

 

 

Thereafter

 

 

 

 

Total undiscounted lease payments

 

137

 

Less: present value adjustments

 

 

-

 

Present value of lease payments

 

$

137

 

 

Note 6. Balance Sheet Components

Prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following:

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Accounts receivable

 

$

36

 

 

$

16

 

Prepaid expenses

 

 

205

 

 

 

447

 

Deferred IPO costs

 

 

1,595

 

 

 

29

 

Accrued interest

 

 

134

 

 

 

-

 

Security deposits

 

 

75

 

 

 

36

 

Total prepaid expenses and other current assets

 

$

2,045

 

 

$

528

 

 

12


 

 

 

Accrued liabilities

Accrued liabilities consisted of the following:

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Accrued research and development materials and services

 

$

1,286

 

 

$

519

 

Accrued professional services

 

 

1,139

 

 

 

67

 

Accrued personnel expenses

 

 

321

 

 

 

47

 

Deferred rent

 

 

31

 

 

 

-

 

Total accrued liabilities

 

$

2,777

 

 

$

633

 

 

Note 7. Capital Structure

In December 2020, all of the outstanding membership interests in Biomea Fusion LLC were exchanged for equity interests in Biomea Fusion, Inc. in a statutory conversion under Delaware law. All of the share information referenced throughout the financial statements and notes to the financial statements have been retroactively adjusted to reflect the change in capital structure.

As of March 31, 2021 and December 31, 2020, the Company was authorized to issue 32,365,005 shares of stock with a par value of $0.0001 per share, of which 25,300,080 shares were designated as common stock and 7,064,925 were designated as Series A convertible preferred stock.

Common stock

The Company is authorized to issue 25,300,080 shares of common stock, par value $0.0001 per share. As of December 31, 2020, there were 12,702,942 shares of common stock outstanding, including 749,835 unvested restricted shares of common stock subject to repurchase. There were no options to purchase common stock outstanding as of December 31, 2020. As of March 31, 2021, there were 12,702,942 shares of common stock outstanding, including 698,309 unvested restricted shares of common stock subject to repurchase. There were zero and 2,068,111 options to purchase common stock outstanding as of December 31, 2020 and March 31, 2021, respectively.

Common stockholders are entitled to dividends when and if declared by the Company’s Board of Directors and after any convertible preferred share dividends are fully paid. The holder of each share of common stock is entitled to one vote.

The Company has reserved 7,064,925 shares of common stock for future issuance related to the potential conversion of preferred stock as of March 31, 2021.

Series A convertible preferred stock

In December 2020, the Company issued 7,064,925 shares of its Series A convertible preferred stock, par value $0.0001, in exchange for $55.7 million in net proceeds. Prior to the December 2020 Series A convertible preferred stock financing, there were no shares of Series A convertible preferred stock outstanding.

Preferred stock consisted of the following as of March 31, 2021 (in thousands, except share numbers):

 

 

 

Shares

authorized

 

 

Shares

issued and

outstanding

 

 

Original

issue

price

 

 

Carrying

value

 

 

Liquidation

preference

 

Series A convertible preferred stock

 

 

7,064,925

 

 

 

7,064,925

 

 

$

7.93

 

 

$

55,735

 

 

$

56,000

 

 

The Series A convertible preferred stock has the following rights and privileges:

Conversion rights

Each share of Series A convertible preferred stock is convertible at an option of the holder into one share of common stock (subject to adjustment for certain events, including dilutive issuances, stock splits, and reclassifications). The Series A convertible preferred stock will also be converted automatically into shares of common stock (1) immediately prior to an initial public offering with aggregate proceeds of at least $75.0 million at a per share price equal to or greater than the original issuance price or (2) upon the date specified by written consent of holders of a majority of the outstanding preferred shares on an as-converted basis.

13


 

 

Dividends

Each holder is entitled to dividends per share, if and when declared by the board of directors. Dividends are to be paid in advance of any distributions to common stockholders. No dividends have been declared as of March 31, 2021.

Liquidation preference

In the event of any liquidation, dissolution, or winding-up of the Company, including a merger, acquisition, or sale of assets, as defined, each Series A convertible preferred stock holder is entitled to receive the greater of i) an amount of $7.93 per share for each share of Series A convertible preferred stock held (as adjusted for recapitalizations, stock combinations, stock dividends, stock splits, and reclassifications), plus any declared but unpaid dividends prior to and in preference to any distribution to the holders of common stock or ii) an amount of cash, securities or other property per share on an as-converted to common stock basis. If the assets of the Company are insufficient to make payment in full to all Series A convertible preferred stockholders then the assets or consideration will be distributed ratably among such holders. Any remaining assets would then be distributed among the holders of the common stock on a pro rata basis based on the number of shares of common stock held by them.

Voting

Each holder of shares of Series A convertible preferred stock is entitled to the number of votes equal to the number of shares of common stock into which such shares could be converted and has voting rights and powers equal to the voting rights and powers of the common stock, and except as provided by law or by other provisions of the Company’s Certificate of Incorporation shall vote together with the common stock as a single class on an as-converted basis on all matters as to which holders of common stock have the right to vote.

The holders of Series A convertible preferred stock, voting separately as a single class, are entitled to elect two members of the Company’s board of directors. The holders of shares of common stock, voting separately as a single class, are entitled to elect three members of the Company’s board of directors. All remaining members of the Company’s board of directors are elected by the holders of the common stock and preferred stock voting together as a single class.

Redemption

The convertible preferred stock is not redeemable.

Note 8. Stock-Based Compensation

The Company adopted the 2020 Equity Incentive Plan (the “2020 Plan”) on December 18, 2020. The 2020 Plan reserved 4,327,799 shares of common stock to grant stock-based compensation awards, including stock options and restricted stock awards, to employees and non-employees. As March 31, 2021, a total of 2,259,688 shares are available for future grant under the 2020 Plan.

Stock options

The Company’s measures stock options and other stock-based awards granted to directors, employees and non-employees based on their fair value on the date of the grant and recognizes the corresponding compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award. The Company has only issued stock options and restricted share awards with service-based vesting conditions and records the expense for these awards using the straight-line method. Forfeitures are accounted for as they occur.

The Company granted its first restricted stock awards in the fourth quarter of 2020. The Company has determined the fair value of restricted stock awards granted based on the fair value of its common stock.

There were no stock options outstanding as of December 31, 2020. The Company issued its first stock options in the first quarter of 2021. The Company estimates the fair value of each stock option grant using the Black-Scholes option pricing model, which uses as inputs the following assumptions:

Expected term—The expected term represents the period that the stock-based awards are expected to be outstanding. The Company uses the simplified method to determine the expected term, which is based on the average of the time-to-vesting and the contractual life of the options.

Expected volatility—Because the Company has been privately held and does not have any trading history for its common stock, the expected volatility was estimated based on the average volatility for comparable publicly traded biotechnology companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on the similar size, stage in life cycle or area of specialty. The Company will continue to take this approach until a sufficient amount of historical information regarding the volatility of its own stock price becomes available.

14


 

 

Risk-free interest rate—The risk-free interest rate is based on the yield of the U.S. Treasury notes as of the grant date with terms commensurate with the expected term of the awards.

Dividend yield—The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero.

Total stock-based compensation expense recorded in the condensed statements of operations and allocated as follows (in thousands):

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

Research and development

 

$

313

 

 

$

-

 

General and administrative

 

 

606

 

 

 

-

 

Total stock-based compensation expense

 

$

919

 

 

$

-

 

 

Accrued stock-based compensation expense for awards where the service inception date precedes grant date was $0.1 million and $0, for the three months ended March 31, 2020 and 2019, respectively.

Stock Options

The following table summarizes stock option activity:

 

 

 

 

 

 

 

Outstanding Options

 

 

 

 

 

 

 

Shares

Available

for Grant

 

 

Shares

 

 

Weighted-

Average

Exercise

 

 

Weighted-

Average

Remaining

Contractual

Term

(Years)

 

Balance—December 31, 2020

 

 

4,327,799

 

 

 

 

 

$

 

 

 

 

 

Granted

 

 

(2,068,111

)

 

 

2,068,111

 

 

$

6.47

 

 

 

 

 

Balance—March 31, 2021

 

 

2,259,688

 

 

 

2,068,111

 

 

$

6.47

 

 

 

9.8

 

Exercisable – March 31, 2021

 

 

 

 

 

 

125,685

 

 

$

6.47

 

 

 

9.8

 

 

The fair value of employee stock options was estimated using the following weighted-average assumptions:

 

 

 

Three Months

Ended

 

 

 

March 31, 2021

 

Expected term in years

 

 

6.0

 

Expected volatility

 

 

91

%

Risk-free interest rate

 

 

0.8

%

Dividend yield

 

 

 

Weighted average fair value of share-based awards granted

 

$

4.79

 

 

Restricted stock

The Company has granted 824,429 restricted stock awards to employees and non-employees during the fourth quarter of 2020 that vest quarterly over four years. Restricted stock awards are share awards that entitle the holder to receive freely tradeable shares of the Company’s common stock. The underlying shares are outstanding as of the issuance date. Any unvested shares are subject to forfeiture in the case tha