Quarterly Report (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM

(Mark One)

For the quarterly period ended March 31, 2022

OR

For the transition period from to

Commission File Number:

Acumen Pharmaceuticals, Inc.

(Exact Name of Registrant as Specified in its Charter)

Registrant's telephone number, including area code: (434)

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

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 (§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 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 of the Exchange Act.

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 of the Exchange Act). Yes ☐ No ☒

As of May 13, 2022, the registrant had 40,501,258 shares of common stock, $0.0001 par value per share, outstanding.

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PART I.		FINANCIAL INFORMATION			1
Item 1.		Financial Statements (Unaudited)			1
		Condensed Balance Sheets			1
		Condensed Statements of Operations and Comprehensive Loss			2
		Condensed Statements of Changes in Convertible Preferred Stock and Stockholders' Equity (Deficit)			3
		Condensed Statements of Cash Flows			4
		Notes to Condensed Financial Statements			5
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations			14
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			20
Item 4.		Controls and Procedures			21
PART II.		OTHER INFORMATION			22
Item 1.		Legal Proceedings			22
Item 1A.		Risk Factors			22
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			22
Item 3.		Defaults Upon Senior Securities			22
Item 4.		Mine Safety Disclosures			23
Item 5.		Other Information			23
Item 6.		Exhibits			23
Signatures			25

•

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

•

our ability to obtain funding for our operations, including funding necessary to develop and commercialize ACU193, subject to necessary regulatory approvals;

•

the ability of our clinical trials to demonstrate the safety and efficacy of ACU193, and other positive results;

•

the therapeutic potential of ACU193, including its potential for improved safety and efficacy, as compared to other monoclonal antibodies approved and or in development, as well as the expectations concerning the INTERCEPT-AD trial;

•

the success, cost and timing of our development activities, nonclinical studies and clinical trials;

•

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

•

our plans relating to commercializing ACU193, subject to obtaining necessary regulatory approvals;

•

our ability to attract and retain key scientific and clinical personnel;

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•

our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;

•

our reliance on third parties to conduct clinical trials of ACU193, and for the manufacture of ACU193 for nonclinical studies and clinical trials;

•

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

•

our plans and ability to obtain or protect our intellectual property rights, including extensions of existing patent terms where available or the use of data market exclusivity to provide protection from generic or biosimilar versions of our product;

•

the scope of protection we are able to establish and maintain for intellectual property rights covering ACU193 and technology;

•

potential claims relating to our intellectual property;

•

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

•

unfavorable conditions in our industry, the global economy, including inflation and financial and credit market fluctuations, or the global supply chain, including as a result of geopolitical events such as the ongoing military conflict between Russia and Ukraine and related sanctions against Russia;

•

our ability to obtain and maintain regulatory approval of ACU193, and any related restrictions, limitations and/or warnings in the label of any approved product candidate;

•

our plans relating to the further development and manufacturing of ACU193, including additional therapeutic indications which we may pursue;

•

our ability to develop and maintain our corporate infrastructure, including our ability to design and maintain an effective system of internal controls;

•

our financial performance;

•

the effects of the ongoing COVID-19 pandemic, geopolitical events such as the pending conflict with Russia and Ukraine; and

•

our expectations regarding the time during which we will be an emerging growth company under the JOBS Act.

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		March 31, 2022			December 31, 2021
		(unaudited)
ASSETS
Current assets
Cash and cash equivalents		$	108,764			$	122,162
Marketable securities, short-term			80,326				72,075
Prepaid expenses and other current assets			3,008				4,424
Total current assets			192,098				198,661
Marketable securities, long-term			27,658				31,619
Property and equipment, net			51				36
Right-of-use asset			201				-
Other assets			79				14
Total assets		$	220,087			$	230,330
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable		$	1,219			$	1,088
Accrued expenses and other current liabilities			2,578				4,059
Operating lease liability, current portion			139				-
Total current liabilities			3,936				5,147
Operating lease liability, net of current portion			62				-
Total liabilities			3,998				5,147
Commitments and contingencies (Note 9 )
Stockholders' equity
Preferred stock, $0.0001 par value; 10,000,000 shares authorized and no shares issued and outstanding as of March 31, 2022 and December 31, 202 1			-				-
Common stock, $0.0001 par value; 300,000,000 shares authorized and 40,473,270 shares issued and outstanding as of March 31, 2022 and December 31, 2021			4				4
Additional paid-in capital			353,599				352,981
Accumulated deficit			(136,700	)			(127,571	)
Accumulated other comprehensive loss			(814	)			(231	)
Total stockholders' equity			216,089				225,183
Total liabilities and stockholders' equity		$	220,087			$	230,330

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		Three Months Ended March 31,
		2022			2021
Operating expenses
Research and development		$	5,985			$	2,578
General and administrative			3,221				1,215
Total operating expenses			9,206				3,793
Loss from operations			(9,206	)			(3,793	)
Other income (expense)
Interest income, net			76				4
Change in fair value of preferred stock tranche rights liability and preferred stock warrant liability			-				(23,217	)
Other income, net			1				9
Total other income (expense)			77				(23,204	)
Net loss			(9,129	)			(26,997	)
Other comprehensive loss
Unrealized loss on marketable securities			(583	)			-
Comprehensive loss		$	(9,712	)		$	(26,997	)
Net loss per common share, basic and diluted		$	(0.23	)		$	(64.41	)
Weighted-average shares outstanding, basic and diluted			40,473,270				419,124

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		Common Stock			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
		Shares			Amount
Balance as of December 31, 2021			40,473,270			$	4			$	352,981			$	(127,571	)		$	(231	)		$	225,183
Unrealized loss on marketable securities			-				-				-				-				(583	)			(583	)
Share-based compensation			-				-				618				-				-				618
Net loss			-				-				-				(9,129	)			-				(9,129	)
Balance as of March 31, 2022			40,473,270			$	4			$	353,599			$	(136,700	)		$	(814	)		$	216,089

		Series A			Series A-1			Series B												Additional Paid-in Capital			Accumulated Deficit			Total Stockholders' Deficit
		Convertible Preferred Stock			Convertible Preferred Stock			Convertible Preferred Stock						Common Stock
		Shares			Amount			Shares			Amount			Shares			Amount						Shares			Amount
Balance as of December 31, 2020			477,297			$	1,067				7,537,879			$	16,333				11,862,043			$	39,253								419,124			$	-			$	8,374			$	(26,965	)		$	(18,591	)
Share-based compensation			-				-				-				-				-				-								-				-				126				-				126
Net loss			-				-				-				-				-				-								-				-				-				(26,997	)			(26,997	)
Balance as of March 31, 2021			477,297			$	1,067				7,537,879			$	16,333				11,862,043			$	39,253								419,124			$	-			$	8,500			$	(53,962	)		$	(45,462	)

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		Three Months Ended March 31,
		2022			2021
Cash flows from operating activities
Net loss		$	(9,129	)		$	(26,997	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation			4				-
Change in fair value of preferred stock tranche rights liability and preferred stock warrant liability			-				23,217
Stock-based compensation expense			618				126
Amortization of premiums and accretion of discounts on marketable securities, net			216				-
Amortization of right-of-use asset			33				-
Changes in operating assets and liabilities:
Prepaid expenses and other current assets			1,416				(44	)
Other assets			(65	)			(13	)
Accounts payable			121				387
Operating lease liability			(32	)			-
Accrued expenses and other current liabilities			(1,481	)			954
Net cash used in operating activities			(8,299	)			(2,370	)
Cash flows from investing activities
Purchases of marketable securities			(9,090	)			-
Proceeds from maturities and sales of marketable securities			4,000				-
Purchases of property and equipment			(9	)			-
Net cash used in investing activities			(5,099	)			-
Net change in cash and cash equivalents			(13,398	)			(2,370	)
Cash and cash equivalents at the beginning of the period			122,162				43,777
Cash and cash equivalents at the end of the period		$	108,764			$	41,407
Supplemental disclosure of cash flow information
Cash paid for income taxes		$	-			$	-
Cash paid for interest		$	-			$	-
Supplemental disclosure of noncash investing and financing activities
Purchases of property and equipment in accounts payable		$	10			$	-
Deferred offering costs in accrued expenses and other current liabilities		$	-			$	257

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		Fair value measurements at reporting date using
		Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Fair Value at December 31, 2021
Assets included in:
Cash and cash equivalents
Money market securities		$	121,162			$	-			$	-			$	121,162
Marketable securities
Commercial paper			-				47,939				-				47,939
Corporate debt securities			-				24,694				-				24,694
Asset-backed securities			-				19,143				-				19,143
U.S. treasury securities			-				11,918				-				11,918
Total fair value		$	121,162			$	103,694			$	-			$	224,856

		March 31, 2022			December 31, 2021
Research and development service agreements		$	1,653			$	2,591
Prepaid insurance			749				1,514
Dues and subscriptions			158				96
Prepaid raw materials			333				83
Other			115				140
Total prepaid expenses and other current assets		$	3,008			$	4,424

		March 31, 2022			December 31, 2021
Research and development		$	1,638			$	2,623
Bonuses and other employee liabilities			541				1,102
Legal			294				130
Professional fees			6				-
Other			99				204
Total accrued expenses and other current li a bilities		$	2,578			$	4,059

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and related notes included elsewhere in this Quarterly Report on Form and in the audited financial statements and notes thereto as of and for the year ended December 31, 2021 and the related Management's Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report. This discussion, particularly information with respect to our future results of operations or financial condition, business strategy, plans and objectives of management for future operations and the potential impact that the ongoing pandemic may have on our business, includes forward-looking statements that involve risks and uncertainties as described under the heading "Special Note Regarding Forward-Looking Statements" in this Quarterly Report on Form You should review the disclosure under the heading "Risk Factors" in the Annual Report for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.

Overview

We are a clinical-stage biopharmaceutical company developing a novel disease-modifying approach to target what we believe to be a key underlying cause of Alzheimer's Disease, or AD. Alzheimer's disease is a progressive neurodegenerative disease of the brain that leads to loss of memory and cognitive functions and ultimately results in death. Our scientific founders pioneered research on soluble amyloid-beta oligomers, or AβOs, which are globular assemblies of the Aß peptide that are distinct from Aß monomers and amyloid plaques. We are currently focused on advancing a targeted immunotherapy drug candidate, ACU193, through clinical proof of mechanism trials in early AD patients. We initiated a Phase 1 clinical trial of ACU193 in 2021, which we named This trial is enrolling patients with mild dementia or mild cognitive impairment due to AD, conditions referred to as "early AD." is a U.S.-based, multi-center, randomized, double-blind, placebo-controlled clinical trial with overlapping single ascending dose, or SAD, and multiple ascending dose, or MAD, cohorts involving a total of approximately 62 patients with early AD. The overall objective of the trial is to evaluate the safety and tolerability and establish clinical proof of mechanism of ACU193 administered intravenously. The primary trial endpoints are focused on safety and immunogenicity. An important safety measure will be the use of magnetic resonance imaging, or MRI, to assess the presence or absence of amyloid-related imaging abnormalities. Secondary endpoints include pharmacokinetics in plasma and cerebrospinal fluid, or CSF, and target engagement as evidenced by detection of ACU193 bound to AßOs in CSF. Clinical scales typically used in AD trials as well as computerized cognitive testing are included as exploratory measures. In October 2021, we announced the initial dosing of the first patient in the trial and the subsequent successful sentinel safety review of the first two patients. Due to delays in clinical trial site activation and patient enrollment that we believe are principally related to the effects of the pandemic, we are expanding the anticipated number of trial sites to support our enrollment objectives and anticipated timelines. Clinical trial site activation and patient recruitment and enrollment is ongoing. Based on current site activations and enrollment rates, we anticipate reporting our topline data from the trial in the first half of 2023.

We have incurred net losses and negative cash flows from operations since our inception. Our net losses were $9.1 million and $27.0 million for the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, we had an accumulated deficit of $136.7 million. Our net losses and cash flows from operations may fluctuate significantly from and depending on the timing of nonclinical studies, clinical trials and our expenditures on other research and development activities. We expect our expenses and operating losses will increase substantially for the foreseeable future as we advance ACU193 in clinical trials, seek to expand our product candidate portfolio through developing additional product candidates, grow our clinical, regulatory and quality capabilities, and incur additional costs associated with operating as a public company. It is likely that we will seek third-party collaborators for the future commercialization of ACU193 or any other product candidate that is approved for marketing. However, we may seek to commercialize our products at our own expense, which would require us to incur significant additional expenses for marketing, sales, manufacturing and distribution.

We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. In addition, if we obtain regulatory approval for our product candidates and do not enter into a third-party commercialization partnership, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing and distribution activities.

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As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity offerings and debt financings or other sources, such as potential collaboration agreements, strategic alliances and licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on acceptable terms, or at all. Our failure to raise capital or enter into such agreements as, and when needed, could have a material adverse effect on our business, results of operations and financial condition.

As of March 31, 2022, we had cash, cash equivalents and marketable securities totaling $216.7 million. Based on our current operating plan, we expect that our existing cash and cash equivalents and marketable securities will be sufficient to enable us to fund our operating expenses and capital expenditure requirements at least through 2025. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See "-Liquidity and Capital Resources."

Business Update

In March 2020, the World Health Organization declared a global pandemic and the United States declared a national emergency with respect to In response to the pandemic, a number of governmental orders and other public health guidance measures have been implemented across much of the United States, including in the locations of our office, clinical trial sites and third parties on whom we rely. We implemented a work-from-home policy allowing employees and consultants who can work from home to do so.

Business travel has been limited, and online video and teleconference technology is used to meet virtually rather than in person. We have taken measures to secure our research and development activities, while work in laboratories by our partners has been organized to reduce risk of transmission.

In October 2021, we announced the initial dosing of the first patient in and the subsequent successful sentinel safety review of the first two patients. Due to delays in clinical trial site activation and patient enrollment that we believe are principally related to effects of we are expanding the anticipated number of trial sites to support our enrollment objectives and anticipated timelines. However, we cannot assure that we will not experience additional delays in site activation or enrollment. Clinical trial site activation and patient recruitment and enrollment is ongoing. Based on current site activations and enrollment rates, we anticipate reporting our topline data from this trial in the first half of 2023.

The ultimate impact of the pandemic on our business, results of operations, financial position and cash flows will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the pandemic on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, our business, results of operations, financial position and cash flows may be materially adversely affected.

Components of Results of Operations

Operating Expenses

Our operating expenses consist of research and development expenses and general and administrative expenses.

Research and Development Expenses

Research and development costs primarily consist of direct costs associated with consultants and materials, biologic storage, third party, contract research organization costs and contract development and manufacturing expenses, salaries and other personnel-related expenses. Research and development costs are expensed as incurred. More specifically, these costs include:

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As we currently only have one product candidate, ACU193, in development, we do not separately track expenses by program. We expect that our research and development expenses will increase substantially in connection with our clinical development activities for our ACU193 program.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other personnel related expenses, including stock-based compensation, as well as costs for insurance, professional fees for legal, consulting, accounting, auditing, tax and recruiting services, investor and public relations, board of directors' expenses, franchise taxes, meetings, travel and rent, among others.

We expect that our general and administrative expenses will increase as our organization and headcount needed in the future grows to support continued research and development activities and potential commercialization of our product candidates. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, attorneys and accountants, among other expenses. Additionally, we expect to incur increased expenses associated with being a public company, including costs of additional personnel, accounting, audit, legal, regulatory associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance costs, and investor and public relations costs.

Other Income (Expense)

Other income (expense) primarily includes interest income, net and other income, net. Following our initial public offering, or IPO, we made investments in marketable securities and the interest income earned, as well as the amortization and accretion of premiums and discounts are recorded in interest income, net. Other income, net generally consists of sublease income offset by fees incurred on our investments in marketable securities.

Prior to our IPO on July 6, 2021, changes in the fair values of the Series warrant liability and the Series B tranche rights were recognized as a component of other income (expense). The liability and the Series B tranche rights were initially recorded at fair value as liabilities on our balance sheet. Each was subsequently at fair value at the end of each reporting period and also upon the exercise of the warrant on June 22, 2021, and upon settlement of the tranche rights with the milestone closing for the Series B on June 17, 2021.

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Results of Operations

Comparison of the Three Months Ended March 31, 2022 and 2021

The following table summarizes our results of operations for the three months ended March 31, 2022 and 2021 (in thousands):

Research and Development Expenses

Research and development expenses were $6.0 million and $2.6 million for the three months ended March 31, 2022 and 2021, respectively. The $3.4 million increase was primarily due to increases of $1.5 million in consulting expenses, $0.8 million in contract research organization expenses, $0.6 million in personnel related expenses, $0.3 million in drug safety testing and $0.2 million in materials expenses. The net increase in research and development expenses during the three months ended March 31, 2022 from the three months ended March 31, 2021 was primarily due to our ongoing clinical trial which was initiated in 2021.

General and Administrative Expenses

General and administrative expenses were $3.2 million and $1.2 million for the three months ended March 31, 2022 and 2021, respectively. The $2.0 million increase was primarily due to increases of $0.7 million in insurance expenses, $0.7 million in personnel expenses, $0.4 million in legal expenses, $0.1 million for investor relations and $0.1 million for other office expenses, including rent.

Other Income (Expense)

Other income was $0.1 million for the three months ended March 31, 2022, which was primarily due to net interest income on the Company's portfolio of marketable securities. Other expense was $23.2 million for the three months ended March 31, 2021, due almost entirely to the changes in the fair values of the liability and the Series B tranche rights.

Liquidity and Capital Resources

On July 6, 2021, we issued 9,999,999 shares of common stock in our IPO, and on July 8, 2021, we issued an additional 1,499,999 shares of common stock that were purchased by the underwriters pursuant to the underwriters' option to purchase additional shares at the public offering price less underwriting discounts and commissions. The price to the public for each share was $16.00. The aggregate net proceeds from our IPO, after underwriting discounts and commissions and other offering expenses of $15.4 million, were $168.6 million.

As of March 31, 2022, our cash, cash equivalents and marketable securities totaled $216.7 million. Our marketable securities mature over the next one and years. We enter into contracts in the

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normal course of business with contract research organizations, or CROs, and contract manufacturing organizations, or CMOs, for clinical trials, nonclinical research studies and testing, manufacturing and other services and products for operating purposes. These contracts do not contain any minimum purchase commitments and are generally cancelable by us upon prior notice of 30 days. Payments due upon cancelation consist only of payments for services provided and expenses incurred up to the date of cancelation.

Future minimum lease payments under our Indiana lease agreement total approximately $0.2 million.

Cash Flows

The following table summarizes our sources and uses of cash (in thousands):

Operating Activities

Net cash used in operating activities was $8.3 million and $2.4 million for the three months ended March 31, 2022 and 2021, respectively. Net cash used in operating activities during the three months ended March 31, 2022 primarily consisted of our net loss of $9.1 million, which was reduced by adjustments of $0.6 million for stock-based compensation and $0.2 million for net accretion and amortization on marketable securities, plus cash used of $1.5 million in accrued expenses and other current liabilities mainly due to research and development and employee liabilities; partially offset by $1.4 million of cash provided by prepaid expenses mainly associated with research and development and insurance, and $0.1 million from an increase in accounts payable.

Net cash used in operating activities during the three months ended March 31, 2021 was primarily due to our net loss of $27.0 million, including other expenses of $23.2 million related to the change in the fair values of the Series warrant liability and the Series B tranche liability, partially offset by increases in accounts payable of $0.4 million and accrued expenses and other current liabilities of $1.0 million.

Investing Activities

Cash used in investing activities for the three months ended March 31, 2022 was $5.1 million and was predominantly related to purchases and maturities of marketable securities of $9.1 million and $4.0 million, respectively. Cash used in invested activities for the three months ended March 31, 2021 was nil.

Funding Requirements

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue our research and development, conduct clinical trials, and seek marketing approval for our current and any of our future product candidates. Furthermore, we have and expect to incur additional costs associated with operating as a public company following our July 2021 IPO. It is likely that we will seek third-party collaborators for the future commercialization of ACU193 or any other product candidate that is approved for marketing. However, we may seek to commercialize our products at our own expense, which would require us to incur significant additional expenses for marketing, sales, manufacturing and distribution, which costs we may seek to offset through entry into collaboration agreements with third parties. As a result, we expect that we will need to obtain substantial additional funding in connection with our future operations. If we are unable to raise capital when needed or on acceptable terms, we could be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

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Based on our current operating plan, we expect that our existing cash and cash equivalents and our marketable securities will be sufficient to enable us to fund our operating expenses and capital expenditure requirements at least through 2025. We have based this estimate on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Our future capital requirements will depend on many factors, including:

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our longer-term cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interests may be diluted, and the terms of these securities may include liquidation or other preferences that could adversely affect your rights as a common stockholder. Any debt financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business.

If we raise funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Critical Accounting Policies, Significant Judgments and Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of expenses during the reporting period. A description of our significant accounting policies is included in our Annual Report. You should read the unaudited condensed financial statements in conjunction with our audited financial statements and accompanying notes in our Annual Report.

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Our significant accounting policies are more fully described in Note 2 to our unaudited condensed financial statements located in "Part I - Financial Information, Item 1. Financial Statements" in this Quarterly Report on Form

Emerging Growth Company and Smaller Reporting Company Status

In April 2012, the Jumpstart Our Business Startups Act of 2012, or JOBS Act, was enacted. Section 107 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.

In addition, as an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:

We may take advantage of these provisions until we no longer qualify as an emerging growth company. We will cease to qualify as an emerging growth company on the date that is the earliest of: (i) December 31, 2025, (ii) the last day of the fiscal year in which we have more than $1.07 billion in total annual gross revenues, (iii) the date on which we are deemed to be a "large accelerated filer" under the rules of the SEC, which means the market value of our common stock that is held by exceeds $700 million as of the prior June 30th, or (iv) the date on which we have issued more than $1.0 billion of debt over the prior three-year period. We may choose to take advantage of some but not all of these reduced reporting burdens. We have taken advantage of certain reduced reporting requirements in this Quarterly Report on Form and our other filings with the SEC. Accordingly, the information contained herein may be different than you might obtain from other public companies in which you hold equity interests.

We are also a "smaller reporting company," meaning that the market value of our shares held by is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our shares held by is less than $700 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Quarterly Report on Form and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a "smaller reporting company" as defined by Item 10 of Regulation the Company is not required to provide the information required by this item.

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Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain "disclosure controls and procedures," as defined in the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules the Exchange Act as of March 31, 2022. Based on the evaluation of our disclosure controls and procedures, our management concluded that, as of March 31, 2022, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in this Quarterly Report on (a) reported within the time periods specified by SEC rules and regulations, and (b) communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding any required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting, as such term is defined in and promulgated under the Securities Exchange Act of 1934, as amended, that occurred during the fiscal quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Internal Controls

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud.

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PART II-OTHER INFORMATION

Item 1. Legal Proceedings.

We are not subject to any material legal proceedings. From time to time, we may be involved in various claims and legal proceedings relating to claims arising out of our operations. We are not currently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors.

Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and trading price of our securities. In addition to the other information set forth in this Quarterly Report on Form you should carefully consider the factors described in Part I, Item 1A. " Risk Factors" of our Annual Report on Form for the fiscal year ended December 31, 2021, filed with the Securities and Exchange Commission on March 28, 2022.

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

None.

On June 30, 2021, our Registration Statement on Form as amended (File was declared effective in connection with our initial public offering, pursuant to which we sold an aggregate of 11,499,998 shares of our common stock, including the full exercise of the underwriters' option to purchase additional shares, at a price to the public of $16.00 per share. BofA Securities, Inc, Credit Suisse Securities (USA) LLC, and Stifel, Nicolaus & Company, Incorporated acted as joint lead book-running managers and UBS Securities LLC also acted as a book-running manager for the offering.

The initial public offering closed on July 6, 2021 with respect to 9,999,999 shares of common stock. On July 8, 2021, the offering closed with respect to an additional 1,499,999 shares purchased by the underwriters pursuant to the underwriters' option to purchase additional shares. The aggregate net proceeds from our initial public offering, after underwriting discounts and commissions, and other offering expenses of $15.4 million, were $168.6 million. In connection with our initial public offering, no payments were made by us to directors, officers or persons owning ten percent or more of our common stock or to their associates or to our affiliates. There has been no material change in the planned use of proceeds from our initial public offering as described in our prospectus filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on July 2, 2021.

None.

Item 3. Defaults Upon Senior Securities.

Not applicable.

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Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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