On May 9, 2024, the Company closed an underwritten public offering of 3,450,000 shares of its common stock at a public offering price of $46.00 per share, which included the exercise in full by the underwriters of their option to purchase additional shares. The gross proceeds of the public offering were $158.7 million, before deducting the underwriter discount and other offering expenses, totaling approximately $9.7 million.

Public Offering of Common Stock and Concurrent Private Placement of Common Stock and Pre-Funded Warrants

On October 2, 2023, the Company closed an underwritten public offering of 3,450,000 shares of its common stock at a public offering of $20.00 per share, which included the exercise in full by the underwriters of their option to purchase additional shares. The gross proceeds of the public offering were $69.0 million, before deducting the underwriting discount and other offering expenses. Concurrently, the Company also completed the closing of 1,825,000 shares of its common stock and 1,175,000 pre-funded warrants in a private offering pursuant to a securities purchase agreement with certain investors, including entities affiliated with existing stockholders, at a price per share of common stock equal to the public offering price of $20.00 and a price per pre-funded warrant of $19.99, for total gross proceeds of approximately $60.0 million. In aggregate, the Company received $129.0 million of gross proceeds less offering costs of $8.2 million. The Company is not required under any circumstance to settle any of the pre-funded warrants for cash, and therefore classified the pre-funded warrants as permanent equity.

On December 16, 2022, the Company entered into a Securities Purchase Agreement for a private placement (Private Placement) with certain entities and members of management (collectively, Purchasers). Pursuant to the Securities Purchase Agreement, the Company agreed to sell to the Purchasers warrants to purchase up to an aggregate of 22,598,870 shares of the Company’s common stock, at a purchase price of $0.4425 per warrant. The closing of the Private Placement occurred on May 8, 2023 (the Issue Date), following the satisfaction of certain closing conditions, including the completion of enrollment in the randomized withdrawal period of Study C602. The Company received gross proceeds of $10.0 million for the sale and issuance of warrants to purchase common stock.

The warrants were separated into two tranches with 8,598,870 Tranche A Warrants with an exercise price of $1.75 per share and aggregate proceeds of up to approximately $15.0 million, and 14,000,000 Tranche B Warrants with an exercise price of $2.50 per share and aggregate proceeds of up to $35.0 million. The Tranche A warrants were immediately exercisable and were required to be exercised within 30 days of announcement of positive top-line data from the randomized withdrawal period of Study C602. On September 26, 2023, the Company announced positive top-line data and subsequently received $15.0 million from the exercise of the Tranche A warrants. The Tranche B warrants are also immediately exercisable and expire upon the earlier of 3.5 years from the date of issuance or 30 days following receipt of FDA approval of DCCR for the treatment of PWS. Through September 30, 2024, certain investors had exercised their Tranche B warrants and the Company has received $22.7 million. The receipt of the aggregate exercise price of up to $12.3 million for the remaining Tranche B warrants is contingent upon the exercise of such warrants.

On March 31, 2022, the Company sold 2,666,667 shares of its common stock at a public offering price of $3.75 per share, and for certain investors, in lieu of common stock, pre-funded warrants (the 2022 pre-funded warrants) to purchase 1,333,333 shares of its common stock at a public offering price $3.60 per pre-funded warrant, which represents the per share public offering price for the common stock less the $0.15 per share exercise price for each 2022 pre-funded warrant. The March 2022 pre-funded warrants are immediately exercisable and may be exercised at any time until all of the March 2022 pre-funded warrants are exercised in full. Each share of common stock or March 2022 pre-funded warrant was sold together with one, immediately exercisable, common warrant (the 2022 common warrants) with a five-year term to purchase one share of common stock at an exercise price of $4.50 per share. The net proceeds of the offering were $13.8 million, after deducting the underwriting discount and other offering expenses. The Company is not required under any circumstance to settle any of the 2022 pre-funded warrants or the 2022 common warrants for cash, and therefore classified both types of warrants as permanent equity.

Through September 30, 2024, 2,145,073 of the March 2022 common warrants had been exercised for gross proceeds of $9.7 million and 581,850 warrants were exercised using the cashless exercise option with no proceeds to the Company. As of September

30, 2024, 1,273,077 of the March 2022 common warrants remain outstanding. All 1,333,333 of the March 2022 pre-funded warrants were exercised in 2023 using the cashless exercise option with no additional proceeds received by the Company.

In July 2021, the Company entered into a Controlled Equity Offering Sales Agreement under which the Company was able to sell shares of its common stock having an aggregate offering price of up to $25.0 million from time to time in any method permitted by law deemed to be an "at-the-market" Rule 415 under the Securities Act of 1933, as amended. The Controlled Equity Offering Sales Agreement was terminated in connection with the October 2, 2023 financing. While active, the Company sold 1,877,170 shares of common stock through the at the market program, totaling $7.4 million in net proceeds.

On July 19, 2024, the Company entered into the Sales Agreement with Jefferies, pursuant to which the Company may offer and sell up to $150.0 million of shares of its common stock, from time to time, through Jefferies.

The Company will pay Jefferies a commission of 3.0% of the aggregate gross proceeds from the sale of shares and has agreed to provide Jefferies with customary indemnification and contribution rights. The Company has also agreed to reimburse Jefferies for certain specified expenses. The Company is not obligated to sell any shares under the Sales Agreement. The offering of the shares pursuant to the Sales Agreement will terminate upon the termination of the Sales Agreement by Jefferies or the Company, as permitted therein.

As of September 30, 2024 and December 31, 2023, the following table summarizes the Company's outstanding common stock warrants:


	As of September 30, 2024				As of December 31, 2023
	Number of Common Warrant Shares		Weighted Average Exercise Price per Share		Number of Common Warrant Shares		Weighted Average Exercise Price per Share		Expiration Date
Common stock warrants		7,904	$	388.94		7,904	$	388.94	November 2024
March 2022 Common warrants		1,273,077	$	4.50		1,929,066	$	4.50	March 2027
May 2023 Tranche A pre-funded warrants		1,250,647	$	0.01		2,758,281	$	0.01	November 2026
May 2023 Tranche B warrants		4,935,305	$	2.50		6,750,000	$	2.50	November 2026 (1)
May 2023 Tranche B pre-funded warrants		451,632	$	0.01		451,632	$	0.01	November 2026
October 2023 pre-funded warrants		250,000	$	0.01		1,175,000	$	0.01	N/A
Total		8,168,565				13,071,883

(1) Subject to earlier expiration as described above.

The Company maintains the 2014 Equity Incentive Plan (the 2014 Plan). Under the 2014 Plan the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance units or performance shares to employees, directors, advisors, and consultants. Options granted under the 2014 Plan may be incentive stock options (ISOs) or nonqualified stock options (NSOs). ISOs may be granted only to Company employees, including officers and directors.

The Board has the authority to determine to whom stock options will be granted, the number of options, the term, and the exercise price. Options are to be granted at an exercise price not less than fair value. For individuals holding more than 10% of the voting rights of all classes of stock, the exercise price of an option will not be less than 110% of fair value. Performance-based grants have vesting contingent upon the achievement of certain performance criteria related to the Company’s commercialization of its therapeutics. The contractual term of an option is no longer than five years for ISOs for which the grantee owns greater than 10% of the voting power of all classes of stock and no longer than ten years for all other options. The terms and conditions governing restricted stock units is at the sole discretion of the Board.

On January 17, 2024, the Company filed a Registration Statement on Form S-8 which registered an additional 1,000,000 shares automatically available for issuance under the 2014 Plan as of December 31, 2023. On June 6, 2024, the stockholders approved the Amended and Restated 2014 Plan which included an increase of 2,000,000 shares, which became immediately available for grant and issuance. As of September 30, 2024, a total of 609,179 shares are available for future grant under the 2014 Plan.

The Company maintains the 2020 Inducement Equity Incentive Plan (the Inducement Plan). The Inducement Plan provides for the grant of equity-based awards, including non-statutory stock options, restricted stock units, restricted stock, stock appreciation rights, performance shares and performance units, and its terms are substantially similar to the 2014 Plan.

In accordance with Rule 5635(c)(4) and Rule 5635(c)(3) of the Nasdaq Listing Rules, awards under the Inducement Plan may only be made to individuals not previously employees or non-employee directors of the Company (or following such individuals’ bona fide period of non-employment with the Company), as an inducement material to the individuals’ entry into employment with the Company, or, to the extent permitted by Rule 5635(c)(3) of the Nasdaq Listing Rules, in connection with a merger or acquisition. On January 31, 2024, the Company filed a Registration Statement on Form S-8 which registered 500,000 shares available for issuance under the Inducement Plan, which became available for issuance following approval of the Board of Directors on January 24, 2024.

As of September 30, 2024, a total of 5,318 shares are available for future grant under the Inducement Plan.

The Company recognizes stock-based compensation expense related to options and restricted stock units granted to employees, directors and consultants. The compensation expense is allocated on a departmental basis, based on the classification of the award holder. No income tax benefits have been recognized in the condensed consolidated statements of operations and comprehensive loss for stock-based compensation arrangements during any of the periods presented.

Stock-based compensation expense was recognized in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Research and development	$	18,516	$	935	$	23,682	$	1,587
General and administrative		38,082		1,266		46,521		2,449
Total	$	56,598	$	2,201	$	70,203	$	4,036

The Company granted options to purchase 288,850 and 77,000 shares of the Company’s common stock to employees during the three months ended September 30, 2024 and 2023, respectively. During the nine months ended September 30, 2024, the Company granted options to purchase 1,369,230 of the Company's common stock to employees and a consultant, and during the nine months ended September 30, 2023, the Company granted 1,663,454 of the Company's common stock to employees. There were no performance-based options granted during the three and nine months ended September 30, 2024 and 2023, respectively. The fair value of each award granted was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Expected life (years)	6.1	5.3-6.0	5.8-6.1	5.3-6.0
Risk-free interest rate	3.7%-3.8%	4.0%-4.4%	3.7%-4.6%	3.5%-4.4%
Volatility	121%	98%-100%	121%-124%	98%-100%
Dividend rate	— %	— %	— %	— %

The Black-Scholes option-pricing model requires the use of highly subjective assumptions to estimate the fair value of stock-based awards. These assumptions include the following estimates:

The following table summarizes stock option transactions for the nine months ended September 30, 2024 which were for awards issued under the 2014 Plan and the Inducement Plan:


	Number of Options			Weighted- Average Exercise Price per		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
	Outstanding			Share		(in years)		(in thousands)
Balance at January 1, 2024		2,369,665		$	11.56		8.72	$	70,834
Options granted		1,369,230			42.91
Options exercised		(171,520	)		7.59
Options canceled/forfeited		(44,124	)		42.30
Balance at September 30, 2024		3,523,251		$	23.55		8.55	$	97,143
Options exercisable at September 30, 2024		1,116,184		$	15.67		7.40	$	41,095
Options vested and expected to vest at September 30, 2024		3,523,251		$	23.55		8.55	$	97,143

The weighted-average grant date fair value of options granted was $37.84 and $3.80 per share for the nine months ended September 30, 2024 and 2023, respectively. At September 30, 2024, total unrecognized employee stock-based compensation related to stock options that are likely to vest was $50.1 million, which is expected to be recognized over the weighted-average remaining vesting period of 2.7 years.

There were 1,239,375 performance-based restricted stock units and 366,625 restricted stock units granted to employees and a director during the three months ended September 30, 2024 and zero granted during the three months ended September 30, 2023. During the nine months ended September 30, 2024, there were 1,249,375 performance-based restricted stock units and 758,155 restricted stock units granted to employees and directors. During the nine months ended September 30, 2023, 414,710 restricted stock units were granted to employees. The shares were valued based on the Company’s common stock price on the grant date.

The following table summarizes restricted stock unit transactions for the nine months ended September 30, 2024 as issued under the 2014 Plan:


	Number of Restricted Stock Units			Weighted- Average Grant-Date Fair Value per Share
Outstanding at January 1, 2024		15,534		$	43.92
Restricted stock units granted		2,007,530		$	46.47
Restricted stock units vested		(950,534	)	$	45.81
Restricted stock units canceled/forfeited		-		$	0.00
Outstanding at September 30, 2024		1,072,530		$	47.02

The weighted-average grant-date fair value of all restricted stock units granted during the nine months ended September 30, 2024 and 2023 was $46.47 and $5.25, respectively. The fair value of all restricted stock units vested during the nine months ended September 30, 2024 and 2023 was $44.67 million and $23,000, respectively. At September 30, 2024, total unrecognized employee stock-based compensation related to restricted stock units was $34.5 million, which is expected to be recognized over the weighted-average remaining vesting period of 0.4 years. 74,250 restricted stock units vested on September 30, 2024 and are included in the Restricted stock units vested line item above. The shares of common stock were subsequently issued after September 30, 2024 and therefore are not included in the outstanding common stock as of September 30, 2024.

The Company’s board of directors and stockholders have adopted the 2014 Employee Stock Purchase Plan (ESPP). The ESPP has become effective, and the board of directors will implement commencement of offers thereunder in its discretion. A total of 1,864 shares of the Company’s common stock has been made available for sale under the ESPP. In addition, the ESPP provides for annual

increases in the number of shares available for issuance under the plan on the first day of each year beginning in the year following the initial date that the board of directors authorizes commencement, equal to the least of: