Stockholders' (Deficit) Equity

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

Stockholders' (Deficit) Equity

15. Stockholders’ (Deficit) Equity

Common Stock

On April 8, 2021, the Company’s board of directors adopted, subject to stockholder approval, an amendment to the Company’s Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 150,000,000 to 225,000,000 (the "2021 Charter Amendment"). At the Company’s 2021 Annual Meeting of Stockholders, the stockholders of the Company approved the 2021 Charter Amendment, which was filed with the Secretary of State of the State of Delaware on June 11, 2021. The number of authorized shares of preferred stock was not affected by the 2021 Charter Amendment. On March 16, 2022, the Company’s board of directors adopted, subject to stockholder approval, a proposed amendment to the Company’s Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 225,000,000 to 450,000,000 (the "2022 Charter Amendment"). At the Company’s 2022 Annual Meeting of Stockholders, the stockholders of the Company approved the 2022 Charter Amendment, which was filed with the Secretary of State of the State of Delaware on May 17, 2022. The number of authorized shares of preferred stock was not affected by the 2022 Charter Amendment.

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to dividends when and if declared by the board of directors.

In January 2022, the Company raised approximately $79.5 million in net proceeds (after deducting underwriting discounts and commissions and estimated offering costs but excluding any expenses and other costs reimbursed by the underwriters) from the sale of 56,666,667 shares of its common stock in a public offering at a price of $1.50 per share.

2021 At-the-Market Offering Program

On May 6, 2021, the Company entered into an Open Market Sale AgreementSM (“ATM Sale Agreement”), with Jefferies LLC (“Jefferies”) to sell, from time to time, shares of the Company's common stock having an aggregate offering price of up to $200.0 million through an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended, under which Jefferies would act as sales agent (the "ATM Offering"). The shares that may be sold under the ATM Sale Agreement, if any, are issued and sold pursuant to the Company’s shelf registration statement on Form S -3 that was declared effective by the Securities and Exchange Commission on May 13, 2021. The Company agreed to compensate Jefferies at a fixed commission rate equal to 3.0% of the gross sales proceeds of such shares.

From the initiation of the ATM Offering through June 30, 2022, the Company has issued and sold 5,314,135 shares under the ATM Sale Agreement, resulting in aggregate net proceeds of $18.3 million after deducting issuance costs of $0.6 million.

During the three months ended June 30 2022, there were no sales of the Company's common stock under the ATM Sale Agreement. During the six months ended June 30, 2022, the Company sold a total of 1,473,158 shares of the Company's common stock under the ATM Sale Agreement, at a volume weighted average gross selling price of approximately $1.82 per share for net proceeds of approximately $2.4 million.

Convertible Preferred Stock

The Company had no shares of Series A Preferred Stock outstanding as of June 30, 2022. The Company had 337,800 shares of Series A Preferred Stock outstanding as of December 31, 2021.

Voting Rights

Shares of Series A Preferred Stock will generally have no voting rights except as required by law and except that the consent of the holders of a majority of the outstanding shares of Series A Preferred Stock will be required to amend the terms of the Series A Preferred Stock or take certain other actions with respect to the Series A Preferred Stock.

Dividends

Shares of Series A Preferred Stock will be entitled to receive dividends equal to (on an as-if-converted-to-common stock basis), and in the same form and manner as, dividends actually paid on shares of the Company’s common stock.

Liquidation Rights

Subject to the prior and superior rights of the holders of any senior securities of the Company, upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, each holder of shares of Series A Preferred Stock shall be entitled to receive, in preference to any distributions of any of the assets or surplus funds of the Company to the holders of common stock, an amount equal

to $0.001 per share of Series A Preferred Stock, plus an additional amount equal to any dividends declared but unpaid on such shares, before any payments shall be made or any assets distributed to holders of any class of common stock.

If, upon any such liquidation, dissolution or winding up of the Company, the assets of the Company shall be insufficient to pay the holders of shares of the Series A Preferred Stock the amount required under the preceding sentence, then all remaining assets of the Company shall be distributed ratably to holders of the shares of the Series A Preferred Stock in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

Conversion

Each share of Series A Preferred Stock shall be convertible, at any time and from time to time from and after the issuance date, at the option of the holder thereof, into a number of shares of common stock equal to 10 shares of common stock, provided that the holder will be prohibited from converting Series A Preferred Stock into shares of the Company’s common stock if, as a result of such conversion, the holder, together with its affiliates and attribution parties, would own more than 9.99% of the total number of shares of common stock then issued and outstanding. The holder can change this requirement to a higher or lower percentage, not to exceed 9.99% of the number of shares of common stock outstanding, upon 61 days’ notice to the Company.

In February 2020, 12,200 shares of Series A Preferred Stock were converted to 122,000 shares of common stock.

In May 2022, 337,800 shares of Series A Preferred Stock were converted to 3,378,000 shares of common stock.

Redemption

The Company is not obligated to redeem or repurchase any shares of Series A Preferred Stock. Shares of Series A Preferred Stock are not entitled to any redemption rights or mandatory sinking fund or analogous fund provisions.

Warrants

In November 2019, the Company issued the Common Stock Warrant for the purchase of up to 2,500,000 shares of Common Stock at an exercise price of $20.00 per share to RPI pursuant to the RPI Purchase Agreement (for additional information see Note 13, Sale of Future Royalties), which was classified as equity and recorded at its relative fair value of $8.4 million to additional paid-in capital on the Company's condensed consolidated balance sheets. The Common Stock Warrant remains outstanding as of June 30, 2022.

In August 2021, the Company issued the HutchMed Warrant to HutchMed under the HutchMed License Agreement, exercisable at any time prior to August 7, 2025, for up to 5,653,000 shares of the Company’s common stock at an exercise price of $11.50 per share. Under the HutchMed Warrant, the number of shares issuable under the warrant is reduced from 5,653,000 to 2,826,500 in the event that the HutchMed License Agreement is terminated for certain reasons as more fully described in the HutchMed License Agreement. Due to this provision in the HutchMed Warrant, the Company concluded that the warrant does not meet the exception from derivative accounting pursuant to ASC 815, Derivatives and Hedging, which requires that the warrant be accounted for as a derivative. Accordingly, the Company recorded a warrant liability in the amount of approximately $13.0 million upon issuance of the HutchMed Warrant. The fair value of the HutchMed Warrant was determined using a Black-Scholes and Monte Carlo pricing model.

The HutchMed Warrant is subject to revaluation at each balance sheet date and any changes in fair value are recorded as a non-cash gain or (loss) in the Company's condensed consolidated statement of operations and comprehensive loss as a component of other income (expense), net until the earlier of the exercise or expiration of the HutchMed Warrant or upon the completion of a liquidation event. Upon exercise, the HutchMed Warrant is subject to revaluation just prior to the date of the warrant exercise and any changes in fair value are recorded as a non-cash gain or (loss).

The Company recorded non-cash gains of approximately $1.4 million during the six months ended June 30, 2022 in its condensed consolidated statement of operations and comprehensive loss attributable to the decreases in the fair value of the warrant liability that resulted from a reduction in the Company's stock price as of June 30, 2022.

The following table rolls forward the fair value of the HutchMed Warrant liability, the fair value of which is determined by Level 3 inputs at inception on August 7, 2021, and as of June 30, 2022:

		(In thousands)
Fair value at January 1, 2022	$		1,930
Decrease in fair value			(1,350	)
Fair value at June 30, 2022	$		580

The key assumptions used to value the HutchMed Warrant were as follows:

	Inception			As of June 30, 2022
Risk-free interest rate		0.6	%		2.99	%
Expected term (in years)	4.0 years			3.11 years
Expected volatility of underlying stock		70.0	%		88.3	%
Expected dividend yield		—			—
Stock price	$	6.47		$	1.47