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vor-10q_20210331.htm

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

☐	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: 001-39979

VOR BIOPHARMA INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	81-1591163
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
100 Cambridgepark Drive, Suite 400 Cambridge, Massachusetts	02140
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (617) 655-6580

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

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

VOR

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.

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 ☒

Number of shares of the registrant’s Common Stock as of April 30, 2021 was 37,131,633.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18
Item 4.	Controls and Procedures	18

PART II.	OTHER INFORMATION	20

Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	70
Item 6.	Exhibits	72
Signatures		74

Note Regarding Company References

Throughout this Quarterly Report on Form 10-Q, the “Company,” “Vor,” “Vor Biopharma Inc.,” “we,” “us,” and “our,” except where the context requires otherwise, refer to Vor Biopharma Inc. and its consolidated subsidiary, and “our board of directors” refers to the board of directors of Vor Biopharma Inc.

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, and objectives of management, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “estimate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions intended to identify statements about the future. These statements speak only as of the date of this Quarterly Report on Form 10-Q and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements include, without limitation, statements about:

•

the timing, progress and results of our preclinical studies and clinical trials of our product candidates, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available and our research and development programs;

•

the timing of clinical trials and timing of expected clinical results for our current and future product candidates;

•

the timing of any submission of filings for regulatory approval of, and our ability to obtain and maintain regulatory approvals for our product candidates for any indication;

•

the COVID-19 pandemic, which could adversely impact our business, including our preclinical studies and clinical trials;

•

our ability to identify patients with the diseases treated by our product candidates, and to enroll patients in trials;

•

our expectations regarding the market acceptance and opportunity for and clinical utility of our product candidates, if approved for commercial use;

•

our expectations regarding the scope of any approved indication for any product candidate;

•

our ability to successfully commercialize our product candidates;

•

our estimates of our expenses, ongoing losses, future revenue, capital requirements and our need for or ability to obtain additional funding before we can expect to generate any revenue from product sales;

•

our ability to establish or maintain collaborations or strategic relationships;

•

our ability to identify, recruit and retain key personnel;

•

our reliance upon intellectual property licensed from third parties and our ability to obtain such licenses on commercially reasonable terms or at all;

•

our ability to protect and enforce our intellectual property position for our product candidates, and the scope of such protection;

•

our financial performance;

•

the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements;

•

our competitive position and the development of and projections relating to our competitors or our industry;

•

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

•

the impact of laws and regulations; and

•

our expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we

expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. We have included important factors in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2020, particularly in the "Summary Risk Factors" and “Risk Factors” sections, that could cause actual results or events to differ materially from the forward-looking statements that we make.

Summary Risk Factors

Our business is subject to a number of risks that if realized could materially affect our business, financial condition, results of operations, cash flows and access to liquidity. These risks are discussed more fully in the “Risk Factors” section of this Quarterly Report on Form 10-Q. Our principal risks include the following:

•

We have incurred significant net losses since inception. We expect to incur net losses for the foreseeable future and may never achieve or maintain profitability.

•

We will need substantial additional funding. If we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate our research and product development programs or future commercialization efforts.

•

We have a limited operating history, have not yet completed any clinical trials and have no history of commercializing products, which may make it difficult to evaluate the success of our business to date and to assess our future viability.

•

Engineered hematopoietic stem cells (“eHSCs”) are a novel technology that is not yet clinically validated for human use. The approaches we are taking to create eHSCs are unproven and may never lead to marketable products.

•

We are substantially dependent on the success of our two most advanced product candidates, VOR33 and VCAR33. If we are unable to complete development of, obtain approval for and commercialize VOR33 or VCAR33 in a timely manner, our business will be harmed.

•

We may not be successful in our efforts to identify, develop or commercialize additional product candidates. If these efforts are unsuccessful, we may never become a commercial stage company or generate any revenues.

•

We have not successfully tested our product candidates in clinical trials and any favorable preclinical results are not predictive of results that may be observed in clinical trials.

•

Development of a product candidate such as VOR33, which is intended for use in combination or in sequence with an already approved therapy, will present increased complexity and more or different challenges than development of a product candidate for use as a single agent.

•

If VOR33, VCAR33, the VOR33/VCAR33 Treatment System or any of the other product candidates we may develop, or the delivery modes we rely on to administer them, cause serious adverse events, undesirable side effects or unexpected characteristics, such events, side effects or characteristics could delay or prevent regulatory approval of the product candidates, limit their commercial potential or result in significant negative consequences following any potential marketing approval.

•

We face significant competition in an environment of rapid technological change, and there is a possibility that our competitors may achieve regulatory approval before us or develop therapies that are safer or more advanced or effective than ours, which may harm our financial condition and our ability to successfully market or commercialize VOR33, VCAR33, the VOR33/VCAR33 Treatment System or any other product candidates we may develop.

•

Adverse public perception of genetic medicines, and of genome engineering in particular, may negatively impact regulatory approval of, and/or demand for, our potential products.

•

Gene engineering technology is subject to a number of challenges and risks. Because genome engineering technology is novel and the regulatory landscape that will govern VOR33, VCAR33, the VOR33/VCAR33 Treatment System and any future product candidates we may develop is uncertain and may change, we cannot predict the time and cost of obtaining regulatory approval, if we receive it at all, for our product candidates.

•

Because we are developing product candidates using new technologies, as well as potential mechanisms of action for which there are few precedents, there is increased risk that the U.S. Food and Drug Administration, the European Medicines Agency or other regulatory authorities may not consider the endpoints of our clinical trials to provide clinically meaningful results and that these results may be difficult to analyze.

•

We contract with third parties for the manufacture and supply of materials for development of our product candidates and advancement of our current clinical trial, as well as our research programs and preclinical studies, and we expect to

iii

continue to do so for future clinical trials and for commercialization of VOR33, VCAR33, the VOR33/VCAR33 Treatment System and any other product candidates we may develop. This reliance on third parties increases the risk that we will not have sufficient quantities of such materials, product candidates or any products that we may develop and commercialize, or that such supply will not be available to us at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.

•

We are highly dependent on intellectual property licensed from third parties and termination of any of these licenses could result in the loss of significant rights, which would harm our business.

•

We may not be successful in acquiring or in-licensing necessary rights to key technologies underlying VOR33, VCAR33, the VOR33/VCAR33 Treatment System or any future product candidates we may develop.

•

Third-party claims of intellectual property infringement, misappropriation or other violations may prevent or delay our product discovery and development efforts and have a material adverse effect on our business.

•

The COVID-19 pandemic has caused, and could continue to cause, severe disruptions in the United States, regional and global economies and could seriously harm our development efforts, increase our costs and expenses and have a material adverse effect on our business, financial condition and results of operations.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

VOR BIOPHARMA INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	March 31,			December 31,
(in thousands, except share and per share amounts)	2021			2020
Assets
Current assets:
Cash and cash equivalents	$	262,567		$	48,539
Prepaid expenses		3,606			467
Other current assets		92			100
Total current assets		266,265			49,106
Restricted cash		1,559			1,559
Property and equipment, net		5,737			4,728
Operating lease right-of-use assets		16,796			17,117
Other assets		2,582			3,398
Total assets	$	292,939		$	75,908
Liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	2,406		$	2,361
Accrued expenses		4,395			6,260
Operating lease liability		1,155			863
Other current liabilities		675			723
Total current liabilities		8,631			10,207
Long-term liabilities:
Operating lease liabilities—non-current		17,121			17,430
Total liabilities		25,752			27,637
Series A-1 redeemable convertible preferred stock, $0.0001 par value; 0 shares and 20,000,000 shares authorized, issued, and outstanding as of March 31, 2021 and December 31, 2020, respectively (liquidation preference of $4,000 as of December 31, 2020)		—			2
Series A-2 redeemable convertible preferred stock, $0.0001 par value; 0 and 107,194,866 shares authorized, issued, and outstanding as of March 31, 2021 and December 31, 2020, respectively (liquidation preference of $42,878 as of December 31, 2020)		—			42,786
Series B redeemable convertible preferred stock, $0.0001 par value; 0 shares and 211,778,825 shares authorized as of March 31, 2021 and December 31, 2020, respectively; 0 shares and 124,519,220 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively (liquidation preference of $64,750 as of December 31, 2020)		—			64,548
Stockholders’ equity (deficit):
Preferred stock, $0.0001 par value; 10,000,000 and 0 shares authorized as of March 31, 2021 and December 31, 2020, respectively; 0 shares issued and outstanding as of March 31, 2021 and December 31, 2020		—			—
Common stock, $0.0001 par value; 400,000,000 and 420,000,000 shares authorized as of March 31, 2021 and December 31, 2020 respectively; 37,129,729 and 893,231 shares issued and 36,770,010 and 505,074 outstanding as of March 31, 2021 and December 31, 2020, respectively		4			1
Additional paid-in capital		342,130			2,158
Accumulated deficit		(74,947	)		(61,224	)
Total stockholders’ equity (deficit)		267,187			(59,065	)
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)	$	292,939		$	75,908

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

VOR BIOPHARMA INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

	Three Months Ended March 31,
(in thousands, except share and per share amounts)	2021			2020
Operating expenses:
Research and development	$	8,941		$	6,171
General and administrative		4,789			1,707
Total operating expenses	$	13,730		$	7,878
Loss from operations	$	(13,730	)	$	(7,878	)
Other income:
Interest income		7			29
Total other income		7			29
Net loss and comprehensive loss	$	(13,723	)	$	(7,849	)
Cumulative dividends on redeemable convertible preferred stock		(1,228	)		(715	)
Net loss attributable to common stockholders	$	(14,951	)	$	(8,564	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.67	)	$	(59.06	)
Weighted-average common shares outstanding, basic and diluted		22,263,994			145,016

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

Vor Biopharma Inc.

CONDENSED CONSOLIDATED Statements of Redeemable Convertible Preferred Stock and

Stockholders’ EQUITY (Deficit)

(Unaudited)

	Series A-1 Preferred Stock						Series A-2 Preferred Stock						Series B Preferred Stock						Common Stock				Additional Paid-In		Accumulated			Total Stockholders’
(in thousands, except share amounts)	Shares			Amount			Shares			Amount			Shares			Amount			Shares		Amount		Capital		Deficit			Equity (Deficit)
Balance, December 31, 2020		20,000,000		$	2			107,194,866		$	42,786			124,519,220		$	64,548			505,074	$	1	$	2,158	$	(61,224	)	$	(59,065	)
Issuance of Series B redeemable convertible preferred stock		—			—			—			—			87,259,605			45,375			—		—		—		—			—
Conversion of redeemable convertible preferred stock into common stock upon closing of initial public offering		(20,000,000	)		(2	)		(107,194,866	)		(42,786	)		(211,778,825	)		(109,923	)		24,924,501		2		152,709		—			152,711
Issuance of common shares upon closing of initial public offering, net of offering costs and underwriter fees of $17,132		—			—			—			—			—			—			11,302,219		1		186,307		—			186,308
Issuance of common stock upon exercise of stock options		—			—			—			—			—			—			38,216		—		65		—			65
Stock-based compensation expense		—			—			—			—			—			—			—		—		891		—			891
Net loss		—			—			—			—			—			—			—		—		—		(13,723	)		(13,723	)
Balance, March 31, 2021		—		$	—			—		$	—			—		$	—			36,770,010	$	4	$	342,130	$	(74,947	)	$	267,187

	Series A-1 Preferred Stock				Series A-2 Preferred Stock				Common Stock				Additional Paid-In		Accumulated			Total Stockholders’
(in thousands, except share amounts)	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Equity (Deficit)
Balance, December 31, 2019		20,000,000	$	2		62,819,866	$	25,067		119,936	$	—	$	458	$	(17,887	)	$	(17,429	)
Issuance of Series A-2 Redeemable Convertible Preferred Stock		—		—		44,375,000		17,719		—		—		—		—			—
Issuance of common stock upon exercise of stock options		—		—		—		—		31,384		—		43					43
Stock-based compensation expense		—		—		—		—		—		—		112					112
Net loss		—		—		—		—		—		—		—		(7,849	)		(7,849	)
Balance, March 31, 2020		20,000,000	$	2		107,194,866	$	42,786		151,320	$	—	$	613	$	(25,736	)	$	(25,123	)

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

Vor Biopharma Inc.

condensed CONSOLIDATED StatementS of Cash Flows

(unaudited)

	Three Months Ended March 31,
(in thousands)	2021			2020
Cash flows from operating activities
Net loss	$	(13,723	)	$	(7,849	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation expense		311			66
Non-cash lease expense		322			—
Stock-based compensation		891			112
Changes in operating assets and liabilities:
Operating lease liability		(16	)		—
Prepaid expenses and other current assets		(3,131	)		(347	)
Accounts payable and accrued expenses		(2,444	)		1,933
Other assets		141			—
Net cash used in operating activities		(17,649	)		(6,085	)
Cash flow from investing activities
Purchases of property and equipment		(1,171	)		(545	)
Net cash used in investing activities		(1,171	)		(545	)
Cash flow from financing activities
Proceeds from issuance of redeemable convertible preferred stock		45,375			17,719
Proceeds from the issuance of common stock upon closing of initial public offering, net of underwriter fees		189,199			—
Payment of initial public offering costs		(1,744	)		—
Proceeds from stock option exercises		18			43
Net cash provided by financing activities		232,848			17,762
Net increase in cash, cash equivalents and restricted cash		214,028			11,132
Cash, cash equivalents and restricted cash, beginning of period	$	50,098		$	8,025
Cash, cash equivalents and restricted cash, end of period	$	264,126		$	19,157
Supplemental disclosure of non-cash activities
Conversion of redeemable convertible preferred stock to common stock upon closing of the initial public offering	$	152,711		$	—
Purchases of property and equipment in accounts payable	$	149		$	270
Deferred offering costs in accounts payable and accrued expenses	$	471		$	—

A reconciliation of the cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the statements of cash flows is as follows:

	Three Months Ended March 31,
(in thousands)	2021		2020
Cash and cash equivalents	$	262,567	$	17,598
Restricted cash		1,559		1,559
Total cash, cash equivalents and restricted cash as shown on the statements of cash flows	$	264,126	$	19,157

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

VOR BIOPHARMA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of the Business

Vor Biopharma Inc. (the “Company” or “Vor”) is a cell therapy company that combines a novel patient engineering approach with targeted therapies to provide a single company solution for patients suffering from hematological malignancies. The Company’s proprietary platform leverages its expertise in hematopoietic stem cell (“HSC”) biology, genome engineering and targeted therapy development to genetically modify HSCs to remove surface targets expressed by cancer cells. Vor is headquartered in Cambridge, Massachusetts. The Company was incorporated on December 30, 2015 as a wholly owned subsidiary of PureTech Health LLC.

Initial Public Offering

On February 9, 2021, the Company completed an initial public offering (“IPO”) of its common stock. At the closing of the IPO, the Company issued and sold 11,302,219 shares of its common stock, at a public offering price of $18.00 per share. The Company received net proceeds of approximately $186.3 million from the IPO, after deducting underwriters’ discounts and commissions and other offering expenses paid by the Company.

Upon closing of the IPO, all shares of the Company’s Series A-1, A-2 and B redeemable convertible preferred stock then outstanding automatically converted into an aggregate of 24,924,501 shares of common stock. Upon conversion of the redeemable convertible preferred stock, the Company reclassified the carrying value of the redeemable convertible preferred stock to common stock and additional paid-in capital.

In connection with the IPO, the Company filed an amended and restated certificate of incorporation that amended and restated the Company’s certificate of incorporation in its entirety to, among other things, authorize the Company to issue up to 400,000,000 shares of common stock, $0.0001 par value per share, and 10,000,000 shares of preferred stock, $0.0001 par value per share, all of which shares of preferred stock are undesignated. In addition, the Company’s board of directors may establish the rights and preferences of the preferred stock from time to time.

Reverse Stock Split

On January 29, 2021, the Company effected a 13.6-for-1 reverse stock split of the Company’s common stock. All shares, stock options, and per share information in the condensed consolidated financial statements were previously adjusted to reflect the reverse stock split. There was no change in the par value and authorized number of shares of the Company’s common stock.

Risks and Uncertainties

The Company is subject to a number of risks common to development stage companies in the biotechnology industry, including, but not limited to, risks of failure of preclinical studies and clinical trials, dependence on key personnel, protection of proprietary technology, reliance on third party organizations, risks of obtaining regulatory approval for any product candidate that it may develop, development by competitors of technological innovations, compliance with government regulations, the impact of the COVID-19 pandemic, and the need to obtain additional financing.

The Company anticipates that it will continue to incur significant operating losses for the next several years as it continues to develop its product candidates. The Company believes that its existing cash and cash equivalents at March 31, 2021 will be sufficient to allow the Company to fund its current operations through at least a period of one year after the date the financial statements are issued.

2. Summary of Significant Accounting Policies

Basis of Presentation

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

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amount of expenses during the reporting period. Actual results could differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies in developing the estimates and assumptions that are used in the preparation of the consolidated financial statements. Management must apply significant judgment in this process. Management’s estimation process often may yield a range of potentially reasonable estimates and management must select an amount that falls within that range of reasonable estimates. Estimates are used in the following areas, among others: estimating the fair value of the Company’s common stock (prior to the IPO); accrued expenses and research and development expenses.

Unaudited Interim Financial Information

The consolidated financial statements of the Company included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, the information furnished reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the results for the reported interim periods. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period.

The accompanying condensed consolidated balance sheet as of December 31, 2020 has been derived from the Company’s audited consolidated financial statements for the year ended December 31, 2020. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Annual Report”).

During the three months ended March 31, 2021, there have been no changes to the Company’s significant accounting policies as described in the 2020 Annual Report.

Recent Accounting Pronouncements

In 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which introduces a number of amendments that are designed to simplify the application of accounting for income taxes. Such amendments include removing certain exceptions for intraperiod tax allocation, interim reporting when a year-to-date loss exceeds the anticipated loss, reflecting the effect of an enacted change in tax laws or rates in the annual effective tax rate and recognition of deferred taxes related to outside basis differences for ownership changes in investments. ASU 2019-12 also provides clarification related to when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction. In addition, ASU 2019-12 provides guidance on the recognition of a franchise tax (or similar tax) that is partially based on income as an income-based tax and accounting for any incremental amount incurred as a non-income-based tax. For public entities, ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company adopted ASU 2019-12 effective January 1, 2021, and the adoption did not have a material impact on its interim condensed consolidated financial statements.

3. Fair Value Measurements

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis:

	March 31, 2021
(in thousands)	Level 1		Level 2		Level 3		Total
Money market fund	$	41,043	$	—	$	—	$	41,043
Total	$	41,043	$	—	$	—	$	41,043

	December 31, 2020
(in thousands)	Level 1		Level 2		Level 3		Total
Money market fund	$	41,036	$	—	$	—	$	41,036
Total	$	41,036	$	—	$	—	$	41,036

During the three months ended March 31, 2021 and year ended December 31, 2020, there were no transfers between levels. The fair value of the Company’s cash equivalents, consisting of a money market fund, is based on quoted market prices in active markets with no valuation adjustment.

4. Property and Equipment, Net

Property and equipment, net consisted of the following:

	March 31,			December 31,
(in thousands)	2021			2020
Furniture and equipment	$	40		$	40
Laboratory equipment		6,558			5,247
Computer equipment		176			167
Property and equipment, gross		6,774			5,454
Accumulated depreciation		(1,037	)		(726	)
Property and equipment, net	$	5,737		$	4,728

Depreciation expense for the three months ended March 31, 2021 and 2020 was approximately $0.3 million and $0.1 million, respectively.

5. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	March 31,		December 31,
(in thousands)	2021		2020
Accrued employee-related and other expenses	$	1,598	$	2,727
Accrued research and development		1,669		1,924
Accrued professional fees		997		1,097
Accrued license and milestone fees		80		450
Accrued other		51		62
Total accrued expenses	$	4,395	$	6,260

6. Equity

Redeemable Convertible Preferred Stock

Prior to the IPO, the Company had issued Series A-1 redeemable convertible preferred stock (“Series A-1”), Series A-2 redeemable convertible preferred stock (“Series A-2”) and Series B redeemable convertible preferred stock (“Series B” and collectively with the Series A-1 and Series A-2, “Redeemable Convertible Preferred Stock”).

Series A-2 Redeemable Convertible Preferred Stock Closing

In February 2019 and 2020, the Company issued and sold 88,750,000 and 44,375,000 shares of Series A-2, respectively, at a purchase price of $0.40 per share for total gross cash proceeds of $35.6 million.

Series B Redeemable Convertible Preferred Stock Closing

In June 2020 and January 2021, the Company issued and sold 124,519,220 and 87,259,605 shares of Series B, respectively, at a purchase price of $0.52 per share for total gross cash proceeds of $110.1 million.

As of December 31, 2020, redeemable convertible preferred stock consisted of the following:

(in thousands, except share amounts)	Preferred Stock Authorized		Preferred Stock Issued and Outstanding		Carrying Value		Liquidation Value		Cumulative Undeclared Dividends		Common Stock Issuable Upon Conversion
Series A-1 redeemable convertible preferred stock		20,000,000		20,000,000	$	2	$	4,000	$	—		1,470,588
Series A-2 redeemable convertible preferred stock		107,194,866		107,194,866		42,786		42,878		5,073		7,881,965
Series B redeemable convertible preferred stock		211,778,825		124,519,220		64,548		64,750		2,625		9,155,810
Total		338,973,691		251,714,086	$	107,336	$	111,628	$	7,698		18,508,363

7. Stock-Based Compensation

Stock Incentive Plan

In December 2015, the Company’s board of directors adopted and approved the 2015 Stock Incentive Plan (the “2015 Plan”). The 2015 Plan provided for the granting of incentive stock options, non-statutory stock options, restricted stock awards and other stock-based awards to eligible employees, officers, directors, consultants and advisors as determined by the Company’s board of directors.

In February 2021, the Company’s board of directors adopted and the stockholders approved the 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan became effective on February 5, 2021, following which no further grants were or will be made under the 2015 Plan. The 2021 Plan provides for the grant of stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards and other forms of stock compensation to our employees, consultants and directors. As of March 31, 2021, the Company had 2,693,301 shares available for future issuance under the 2021 Plan.

Stock Options

The Company’s stock options generally vest over 48 months with 25% vesting after one year followed by ratable monthly vesting over the remaining three years and have a contractual term of 10 years. The weighted-average assumptions used principally in determining the fair value of options granted were as follows:

	Three Months Ended March 31,
	2021			2020
Fair value of common stock	$	22.51		$	2.18
Expected term (in years)		6.0			5.9
Expected volatility		79.7	%		75.9	%
Risk-free interest rate		0.7	%		0.7	%
Dividend yield		—			—

The following table summarizes the Company’s stock option activity for three months ended March 31, 2021:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2021		5,084,679		$	3.79		9.42	$	32,086
Granted		394,934		$	22.51
Exercised		(38,216	)	$	1.31
Outstanding at March 31, 2021		5,441,397		$	5.16		9.24	$	206,544
Exercisable at March 31, 2021		989,860		$	1.80		8.85	$	40,772

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the common stock as of the end of the period.

The weighted-average grant-date fair value of stock options granted during the three months ended March 31, 2021 and 2020 was $15.27 and $1.42 per share, respectively. As March 31, 2021, total unrecognized compensation expense related to stock options was $13.9 million which is expected to be recognized over a weighted-average period of 3.11 years.

As of March 31, 2021, options for 359,719 shares with a weighted average exercise price of $1.35 were exercised and unvested. The underlying proceeds from the unvested exercises of $0.7 million is recorded in other current liabilities on the consolidated balance sheet.

Stock-Based Compensation

Stock-based compensation expense was allocated as follows:

	Three Months Ended March 31,
(in thousands)	2021		2020
Research and development	$	449	$	47
General and administrative		442		65
Total stock-based compensation expense	$	891	$	112

8. Leases

Since December 31, 2020, there have been no material changes to the key terms of the Company’s lease agreements. For further information on terms and conditions of the Company’s existing leases, please see Note 10. Leases to the consolidated financial statements included in the 2020 Annual Report.

The elements of lease expense were as follows:

	Three Months Ended March 31,
(in thousands except weighted-average amounts)	2021			2020
Operating lease cost	$	747		$	—
Short-term lease cost		52			153
Variable lease cost		122			48
Total lease cost	$	921		$	201
Other Information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	442		$	—
Weighted-average remaining lease term (years)		9.33			—
Weighted-average discount rate		9.36	%		—

Right-of-use lease assets and lease liabilities are reported in the Company’s consolidated balance sheets as follows:

(in thousands)	March 31, 2021		December 31, 2020
Assets
Operating right-of-use assets	$	16,796	$	17,117
Liabilities
Operating lease liabilities, current	$	1,155	$	863
Operating lease liabilities, non-current	$	17,121	$	17,430
Total lease liabilities	$	18,276	$	18,293

9. Significant Agreements

Since December 31, 2020, there have been no material changes to the key terms of the Company’s license agreements. For further information on terms and conditions of the Company’s existing license agreements, please see Note 11. Significant Agreements to the consolidated financial statements included in the 2020 Annual Report.

10. Net Loss Per Share

The following table sets forth the computation of the Company’s basic and diluted net loss per share for the three months ended March 31, 2021 and 2020:

		Three Months Ended March 31,
(in thousands, except share and per share amounts)		2021				2020