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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended September 30, 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: 001-39692

 

IN8BIO, INC.

(Exact name of Registrant as specified in its Charter)

 

 

Delaware

82-5462585

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

350 5th Avenue, Suite 5330

New York, New York

10118

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (646) 600-6438

 

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

 

INAB

 

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesNo

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). YesNo

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

The number of shares of Registrant’s Common Stock outstanding as of November 3, 2021 was 18,754,553.

 

 

 


Table of Contents

 

 

 

Page

PART I

FINANCIAL INFORMATION

 

Item 1.

Condensed Financial Statements (Unaudited)

1

 

Condensed Balance Sheets

1

 

Condensed Statements of Operations

2

 

Condensed Statements of Convertible Preferred Stock, Common 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

22

Item 4.

Controls and Procedures

22

 

 

 

PART II

OTHER INFORMATION

 

Item 1.

Legal Proceedings

23

Item 1A.

Risk Factors

23

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

64

Item 3.

Defaults Upon Senior Securities

64

Item 4.

Mine Safety Disclosures

64

Item 5.

Other Information

64

Item 6.

Exhibits

65

 

Signatures

 

 

i


PART I—FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

IN8BIO, INC.

CONDENSED BALANCE SHEETS

(In thousands, except share and per share data)

 

 

 

September 30,

 

 

 

 

 

 

2021

 

 

December 31,

 

 

 

(unaudited)

 

 

2020

 

Assets

 

 

 

 

(Note 2)

 

Current assets

 

 

 

 

 

 

Cash

 

$

40,675

 

 

$

17,994

 

Prepaid expenses and other current assets

 

 

3,202

 

 

 

150

 

Total Current Assets

 

 

43,877

 

 

 

18,144

 

Non-current assets

 

 

 

 

 

 

Property and equipment, net

 

 

302

 

 

 

186

 

Deferred offering costs

 

 

 

 

 

2,439

 

Right of use assets - financing leases

 

 

849

 

 

 

 

Right of use assets - operating leases

 

 

1,697

 

 

 

 

Other non-current assets

 

 

409

 

 

 

141

 

Total Non-Current Assets

 

 

3,257

 

 

 

2,766

 

Total Assets

 

$

47,134

 

 

$

20,910

 

Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit)

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

692

 

 

$

620

 

Accrued expenses and other current liabilities

 

 

840

 

 

 

1,778

 

Short-term financing lease liability

 

 

464

 

 

 

 

Short-term operating lease liability

 

 

164

 

 

 

 

Loan payable, current

 

 

 

 

 

174

 

Total Current Liabilities

 

 

2,160

 

 

 

2,572

 

Deferred rent

 

 

 

 

 

17

 

Long-term financing lease liability

 

 

343

 

 

 

 

Long-term operating lease liability

 

 

1,593

 

 

 

 

Total Liabilities

 

 

4,096

 

 

 

2,589

 

Commitments and Contingencies

 

 

 

 

 

 

Convertible preferred stock, Series A (Note 7)

 

 

 

 

 

34,900

 

Stockholders' Equity (Deficit)

 

 

 

 

 

 

Common stock, par value $0.0001 per share; 490,000,000 and 50,700,000 shares authorized at September 30, 2021 and December 31, 2020; 18,754,553 and 3,764,488 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

 

 

3

 

 

 

1

 

Additional paid-in capital

 

 

69,877

 

 

 

1,458

 

Accumulated deficit

 

 

(26,842

)

 

 

(18,038

)

Total Stockholders' Equity (Deficit)

 

 

43,038

 

 

 

(16,579

)

Total Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit)

 

$

47,134

 

 

$

20,910

 

 

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

1


IN8BIO, INC.

CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

1,350

 

 

$

1,057

 

 

$

4,660

 

 

$

3,893

 

General and administrative

 

 

2,041

 

 

 

624

 

 

 

4,144

 

 

 

2,353

 

Total operating expenses

 

 

3,391

 

 

 

1,681

 

 

 

8,804

 

 

 

6,246

 

Loss from operations

 

 

(3,391

)

 

 

(1,681

)

 

 

(8,804

)

 

 

(6,246

)

Net loss

 

$

(3,391

)

 

$

(1,681

)

 

$

(8,804

)

 

$

(6,246

)

Net loss attributable to common stockholders (Note 10)

 

$

(3,391

)

 

$

(2,182

)

 

$

(8,804

)

 

$

(7,311

)

Net loss per share attributable to common stockholders – basic and diluted

 

$

(0.25

)

 

$

(0.60

)

 

$

(1.26

)

 

$

(2.14

)

Weighted-average number of shares used in computing net loss per common share, basic and diluted

 

 

13,377,682

 

 

 

3,614,329

 

 

 

7,004,099

 

 

 

3,410,101

 

 

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

2


IN8BIO INC.

CONDENSED STATEMENTS OF CONVERTIBLE PREFERRED STOCK, COMMON STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands, except share data)

(Unaudited)

 

 

 

Convertible
Preferred Stock
Series A

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Total
Stockholders’ Equity

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

(Deficit)

 

Balance at December 31, 2019

 

 

2,713,980

 

 

$

8,896

 

 

 

 

3,235,671

 

 

$

1

 

 

$

238

 

 

$

(9,481

)

 

$

(9,242

)

Issuance of common stock – in relation to license agreement

 

 

 

 

 

 

 

 

 

44,011

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

182,500

 

 

 

 

 

 

200

 

 

 

 

 

 

200

 

Issuance of convertible preferred stock – Series A, net of $36 issuance costs

 

 

1,533,947

 

 

 

5,461

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18

 

 

 

 

 

 

18

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,691

)

 

 

(1,691

)

Balance at March 31, 2020

 

 

4,247,927

 

 

 

14,357

 

 

 

 

3,462,182

 

 

 

1

 

 

 

456

 

 

 

(11,172

)

 

 

(10,715

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20

 

 

 

 

 

 

20

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,874

)

 

 

(2,874

)

Balance at June 30, 2020

 

 

4,247,927

 

 

 

14,357

 

 

 

 

3,462,182

 

 

 

1

 

 

 

476

 

 

 

(14,046

)

 

 

(13,569

)

Issuance of common stock – in relation to license agreement

 

 

 

 

 

 

 

 

 

45,618

 

 

 

 

 

 

103

 

 

 

 

 

 

103

 

Issuance of common stock –  in relation to legal settlement

 

 

 

 

 

 

 

 

 

200,750

 

 

 

 

 

 

248

 

 

 

 

 

 

248

 

Issuance of convertible preferred stock - Series A, net of $45 issuance costs

 

 

5,514,404

 

 

 

19,714

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16

 

 

 

 

 

 

16

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,681

)

 

 

(1,681

)

Balance at September 30, 2020

 

 

9,762,331

 

 

$

34,071

 

 

 

 

3,708,550

 

 

$

1

 

 

$

843

 

 

$

(15,727

)

 

$

(14,883

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

9,993,727

 

 

$

34,900

 

 

 

 

3,764,488

 

 

$

1

 

 

$

1,458

 

 

$

(18,038

)

 

$

(16,579

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

361

 

 

 

 

 

 

361

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,363

)

 

 

(2,363

)

Balance at March 31, 2021

 

 

9,993,727

 

 

 

34,900

 

 

 

 

3,764,488

 

 

 

1

 

 

 

1,819

 

 

 

(20,401

)

 

 

(18,581

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

392

 

 

 

 

 

 

392

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,050

)

 

 

(3,050

)

Balance at June 30, 2021

 

 

9,993,727

 

 

 

34,900

 

 

 

 

3,764,488

 

 

 

1

 

 

 

2,211

 

 

 

(23,451

)

 

 

(21,239

)

Issuance of common stock – as a result of IPO, net of issuance costs

 

 

 

 

 

 

 

 

 

4,000,000

 

 

 

1

 

 

 

32,290

 

 

 

 

 

 

32,291

 

Conversion of convertible preferred stock to common stock upon closing of IPO

 

 

(9,993,727

)

 

 

(34,900

)

 

 

 

10,990,065

 

 

 

1

 

 

 

34,899

 

 

 

 

 

 

34,900

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

477

 

 

 

 

 

 

477

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,391

)

 

 

(3,391

)

Balance at September 30, 2021

 

 

 

 

$

 

 

 

 

18,754,553

 

 

$

3

 

 

$

69,877

 

 

$

(26,842

)

 

$

43,038

 

 

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

3


 

IN8BIO, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(8,804

)

 

$

(6,246

)

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

 

 

 

 

 

 

Depreciation

 

 

67

 

 

 

66

 

Stock-based compensation

 

 

1,230

 

 

 

54

 

Stock issuance related to license agreement

 

 

 

 

 

103

 

Amortization of financing lease right-of-use assets

 

 

392

 

 

 

 

Amortization of operating lease right-of-use assets

 

 

95

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(3,117

)

 

 

6

 

Other non-current assets

 

 

(268

)

 

 

(12

)

Accounts payable

 

 

42

 

 

 

(195

)

Accrued expenses and other current liabilities

 

 

(938

)

 

 

816

 

Short-term operating lease liabilities

 

 

87

 

 

 

 

Long-term operating lease liabilities

 

 

(119

)

 

 

 

Net cash used in operating activities

 

 

(11,333

)

 

 

(5,408

)

Investing activities

 

 

 

 

 

 

Construction in progress

 

 

(153

)

 

 

 

Net cash used in investing activities

 

 

(153

)

 

 

 

Financing activities

 

 

 

 

 

 

Proceeds from the issuance of common stock

 

 

36,327

 

 

 

448

 

Proceeds from issuance of preferred stock - Series A, net of $16 of issuance costs

 

 

 

 

 

25,175

 

Principal payments on financing leases

 

 

(390

)

 

 

 

Proceeds from issuance of loan

 

 

 

 

 

174

 

Loan payable

 

 

(174

)

 

 

 

Deferred offering costs paid

 

 

(1,596

)

 

 

(331

)

Net cash provided by financing activities

 

 

34,167

 

 

 

25,466

 

Net increase in cash and restricted cash

 

 

22,681

 

 

 

20,058

 

Cash and restricted cash at beginning of period

 

 

17,994

 

 

 

610

 

Cash and restricted cash at end of period

 

$

40,675

 

 

$

20,668

 

Supplemental disclosure of non-cash operating, financing and investing information:

 

 

 

 

 

 

Deferred offering costs included in accounts payable and accrued expenses

 

$

 

 

$

1,062

 

Construction in progress included in accounts payable

 

$

30

 

 

$

 

Conversion of preferred stock - Series A into common stock

 

$

34,900

 

 

$

 

Right-of-use assets obtained in exchange for financing lease

 

$

309

 

 

$

 

Right-of-use assets obtained in exchange for operating lease

 

$

969

 

 

$

 

Initial measurement of operating lease right-of-use assets and liabilities

 

$

3,483

 

 

$

 

 

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

4


 

IN8BIO, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1. ORGANIZATION AND NATURE OF OPERATIONS

Organization and Business

IN8bio, Inc. (the “Company”) is a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of gamma-delta T cell therapies for the treatment of cancer. The Company’s lead product candidates are currently in Phase 1 clinical trials: INB-200, for the treatment of patients with newly diagnosed glioblastoma (“GBM”), and INB-100, for the treatment of patients with leukemia that are undergoing hematopoietic stem cell transplantation (“HSCT”). In addition, the Company’s DeltEx platform has yielded a broad portfolio of preclinical programs, including INB-300 and INB-400, focused on addressing other solid tumor types.

Incysus, Inc. (“Incysus”) was a corporation formed in the State of Delaware on November 23, 2015 and Incysus, Ltd. was incorporated in Bermuda on February 8, 2016. Incysus was the wholly owned United States subsidiary of Incysus, Ltd. On May 7, 2018, Incysus, Ltd. reincorporated in the United States in a domestication transaction (the “Domestication”) in which Incysus, Ltd. converted into a newly formed Delaware corporation, Incysus Therapeutics, Inc. (“Incysus Therapeutics”). On July 24, 2019, Incysus Therapeutics merged with Incysus. Incysus Therapeutics subsequently changed its name to IN8bio, Inc. in August 2020. Following the Domestication in May 2018 and the merging of Incysus Therapeutics and Incysus in July 2019, the Company did not have any subsidiaries to consolidate as of December 31, 2020. The Company is headquartered in New York, New York.

Coronavirus Pandemic

The ongoing COVID-19 pandemic, which continues to impact worldwide economic activity, poses risks that the Company or its employees, contractors, suppliers, clinical sites and other partners may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities. The full extent to which the pandemic may impact the Company’s operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the pandemic or the impact of the emergence of any variants of COVID-19. The pandemic may impact the timing of regulatory approval of the investigational new drug application for clinical trials, the enrollment of any clinical trials that are approved, the availability of clinical trial materials and regulatory approval and commercialization of our products. The pandemic may also impact the Company’s ability to access capital, which could negatively impact short-term and long-term liquidity.

Initial Public Offering

On August 3, 2021, the Company completed its initial public offering (“IPO”) in which it issued and sold 4,000,000 shares of its common stock at a public offering price of $10.00 per share. The Company received net proceeds from the IPO of $32.3 million, after deducting underwriters’ discounts, commissions, and offering-related costs. Upon closing of the IPO, all of the Company's outstanding shares of convertible preferred stock automatically converted into 10,990,065 shares of common stock (see Note 7).


Liquidity and Capital Resources

Through September 30, 2021, the Company funded its operations primarily with proceeds from its Series A convertible preferred stock financing (“Series A Financing”) and most recently, with proceeds from its IPO. The Company has incurred recurring losses and negative operating cash flows from operations since its inception, including net losses of $8.8 million and $6.2 million for the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021, the Company had an accumulated deficit of $26.8 million.

The Company has not yet generated product sales and as a result has experienced operating losses since inception. The Company expects to incur additional losses in the future to conduct research and development and will need to raise additional capital to fully implement management’s business plan. The Company intends to raise such capital through the issuance of additional equity, and potentially through borrowings, strategic alliances with partner companies and other licensing transactions. However, if such financing is not available at adequate levels, the Company may need to reevaluate its operating plans. Management believes that its existing cash of $40.7 million as of September 30, 2021 will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the issuance of these condensed financial statements.

5


 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company has prepared the accompanying condensed financial statements in conformity with generally accepted accounting principles in the United States (“US GAAP”).

Unaudited Interim Financial Information

The condensed financial statements of the Company included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted from these condensed financial statements, as is permitted by such rules and regulations. Accordingly, these condensed financial statements should be read in conjunction with the financial statements and notes thereto for the years ended December 31, 2020 and 2019 included in the Company’s final prospectus that forms part of the Company’s Registration Statement on Form S-1 (File No. 333-249530), filed with the SEC pursuant to Rule 424(b)(4) on July 30, 2021 (the “Prospectus”). The results for any interim period are not necessarily indicative of results for any future period. In the opinion of the Company’s management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair statement of the results for the interim periods presented have been included.

Use of Estimates

The preparation of condensed financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed financial statements, and the reported amounts of expenses during the reporting periods presented. Such estimates and assumptions are used for, but are not limited to, the accrual of research and development expenses, deferred tax assets and liabilities and related valuation allowance, fair value of common stock and stock-based compensation, and the useful lives of property and equipment. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Leases

Effective January 1, 2021, the Company adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02” or “ASC 842”), using the modified retrospective method and utilized the effective date as its date of initial application, with prior periods presented in accordance with previous guidance under Accounting Standards Codification ("ASC") 840, Leases. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and current and non-current lease liabilities, as applicable.

Operating lease liabilities and their corresponding right-of-use assets are initially recorded based on the present value of lease payments over the expected remaining lease term. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate to discount lease payments, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. Prospectively, the Company will adjust the right-of-use assets for straight-line rent expense and remeasure the lease liability at the net present value using the same incremental borrowing rate that was in effect as of the lease commencement or transition date.

The Company elected the following practical expedients, which must be elected as a package and applied consistently to all of its leases at the transition date (including those for which the entity is a lessee or a lessor): i) the Company did not reassess whether any expired or existing contracts are or contain leases; ii) the Company did not reassess the lease classification for any expired or existing leases (that is, all existing leases that were classified as operating leases in accordance with ASC 840 are classified as operating leases, and all existing leases that were classified as capital leases in accordance with ASC 840 are classified as finance leases); and iii) the Company did not reassess initial direct costs for any existing leases.

For leases that existed prior to the date of initial application of ASC 842 (which were previously classified as operating leases), a lessee may elect to use either the total lease term measured at lease inception under ASC 840 or the remaining lease term as of the date of initial application of ASC 842 in determining the period for which to measure its incremental borrowing rate. In transition to ASC 842, the Company utilized the remaining lease term of its leases in determining the appropriate incremental borrowing rates.

In accordance with ASC 842, components of a lease should be split into three categories: lease components, non-lease components, and non-components. The fixed and in-substance fixed contract consideration (including any consideration related to non-components) must be allocated based on the respective relative fair values to the lease components and non-lease components.

6


 

Entities may elect not to separate lease and non-lease components. The Company has elected to account for lease and non-lease components together as a single lease component for all underlying assets and allocate all of the contract consideration to the lease component only. On the adoption date, $1.7 million was recognized as total lease liabilities and $1.8 million was recognized as total right-of-use assets on the Company’s condensed balance sheet.

Deferred Offering Costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process preferred stock or common stock financings as deferred offering costs until such financings are consummated. As of August 3, 2021, the date of the closing of the Company's IPO, the Company had deferred offering costs related to the IPO of $4.0 million. After closing of the IPO, these costs were recorded in stockholders' equity (deficit) as a reduction of additional paid-in capital generated as a result of the offering.

Recently Issued Accounting Standards Updates

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes. ASU No. 2019-12 eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. This update is effective for entities other than public business entities, including emerging growth companies that elected to defer compliance with new or revised financial accounting standards until a company that is not an issuer is required to comply with such standards, for annual reporting periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. The Company is currently evaluating the impact, if any, that the adoption of this guidance will have on the condensed financial statements. 

3. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following (in thousands):

 

 

 

September 30,
2021

 

 

December 31,
2020

 

Machinery and equipment

 

$

443

 

 

$

443

 

Less accumulated depreciation

 

 

(324

)

 

 

(257

)

Construction in progress

 

 

183

 

 

 

 

Property and equipment, net

 

$

302

 

 

$

186

 

 

Depreciation expense was $22,000 for the three months ended September 30, 2021 and 2020 and was $0.1 million for the nine months ended September 30, 2021 and 2020.

4. prepaid expenses and other current assets

Prepaid expenses and other current assets consist of the following (in thousands):

 

 

 

September 30,
2021

 

 

December 31,
2020

 

Prepaid expenses

 

$

3,167

 

 

$

150

 

Other

 

 

35

 

 

 

 

Prepaid expenses and other current assets

 

$

3,202

 

 

$

150

 

 

7


 

5. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following (in thousands):

 

 

 

September 30,
2021

 

 

December 31,
2020

 

Accrued offering costs

 

$

 

 

$

876

 

Accrued clinical trials

 

 

164

 

 

 

376

 

Accrued compensation

 

 

474

 

 

 

400

 

Accrued other

 

 

202

 

 

 

126

 

Total accrued expenses and other current liabilities

 

$

840

 

 

$

1,778

 

 

6. Debt

In April 2020, the Company was granted a loan (the “Loan”) in an amount of $0.2 million, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted on March 27, 2020. The Loan, which was in the form of a Note dated April 16, 2020, matures on April 16, 2022 and bears interest at a rate of 1.0% per annum, payable monthly commencing on November 16, 2020. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties.

Funds from the Loan may only be used for payroll costs, costs used to continue group healthcare benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020. The Company used the entire Loan amount for qualifying expenses.

In August 2021, the Company repaid the PPP Loan of $0.2 million in full.

7. Stockholders' Equity (DEFICIT)

In August 2021, in connection with the IPO, the Company filed an Amended and Restated Certificate of Incorporation which authorized 490,000,000 shares of common stock and 10,000,000 shares of undesignated preferred stock that may be issued from time to time by the Company’s Board of Directors in one or more series.

Common Stock

There were 490,000,000 shares and 50,700,000 shares authorized for issuance at September 30, 2021 and December 31, 2020, respectively, and