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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, 2024

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: 001-39247

 

ENLIVEN THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

81-1523849

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

6200 Lookout Road

Boulder, CO

80301

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (720) 647-8519

 

Not applicable

(Former name, former address, and former fiscal year, if changed since last report)

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, $0.001 par value per share

 

ELVN

 

The 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, a 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

As of May 1, 2024, the registrant had 47,036,698 shares of common stock, $0.001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

3

Condensed Consolidated Balance Sheets

3

Condensed Consolidated Statements of Operations and Comprehensive Loss

4

 

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

5

Condensed Consolidated Statements of Cash Flows

6

Notes to Unaudited Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

32

 

 

 

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

33

Item 1A.

Risk Factors

33

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

92

Item 3.

Defaults Upon Senior Securities

92

Item 4.

Mine Safety Disclosures

92

Item 5.

Other Information

92

Item 6.

Exhibits

93

SIGNATURES

95

 

i


 

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 future results of operations and financial position, business strategy, development plans, planned preclinical studies and clinical trials, future results of clinical trials, expected research and development costs, regulatory strategy, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this quarterly report on Form 10-Q include, but are not limited to, statements about:

 

the ability of our clinical trials to demonstrate safety and efficacy of our product candidates, and other positive results;
the timing, progress and results of clinical trials for ELVN-001 from our BCR-ABL (as defined below) program and ELVN-002 from our HER2 (as defined below) program, and other product candidates we have and may in the future develop, 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 studies or trials will become available, and research and development programs;
the timing, scope and likelihood of regulatory filings and approvals, including timing of investigational new drug applications ("INDs") and final U.S. Food and Drug Administration (“FDA”) approval of ELVN-001 from our BCR-ABL program and ELVN-002 from our HER2 program and any other future product candidates;
the timing, scope or likelihood of foreign regulatory filings and approvals;
our ability to develop and advance current product candidates and programs into, and successfully complete, clinical trials;
our manufacturing, commercialization, and marketing capabilities and strategy;
plans relating to commercializing our product candidates, if approved, including the geographic areas of focus and sales strategy;
the need to hire additional personnel and our ability to attract and retain such personnel;
the size of the market opportunity for our product candidates, including estimates of the number of patients who suffer from the diseases we are targeting;
expectations regarding the approval and use of our product candidates in combination with other drugs;
our ability to secure drug product for combination studies;
expectations regarding potential for accelerated approval or other expedited regulatory designation;
our competitive position and the success of competing therapies that are or may become available;
estimates of the number of patients that we will enroll in our clinical trials;
the beneficial characteristics, and the potential safety, efficacy and therapeutic effects of our product candidates;
our ability to obtain and maintain regulatory approval of our product candidates and our expectations regarding particular lines of therapy;
plans relating to the further development of our product candidates, including additional indications we may pursue;
existing regulations and regulatory developments in the United States, Europe and other jurisdictions;
expectations regarding the impact of health epidemics or other outbreaks, including the COVID-19 pandemic, on our business;
our expectations regarding the impact of instability in the banking and financial services sector and other macroeconomic trends;
our intellectual property position, including the scope of protection we are able to establish and maintain for intellectual property rights covering ELVN-001 from our BCR-ABL program and ELVN-002 from our HER2 program, and other product candidates we may develop, including the extensions of existing patent terms where available, the validity of intellectual

1


 

property rights held by third parties, and our ability not to infringe, misappropriate or otherwise violate any third-party intellectual property rights;
our continued reliance on third parties to conduct additional clinical trials of our product candidates, and for the manufacture of our product candidates for clinical trials;
our relationships with patient advocacy groups, key opinion leaders, regulators, the research community and payors;
our ability to obtain, and negotiate favorable terms of, any collaboration, licensing or other arrangements that may be necessary or desirable to develop, manufacture or commercialize our product candidates;
the pricing and reimbursement of ELVN-001 in our BCR-ABL program and ELVN-002 from our HER2 program, and other product candidates we may develop, if approved;
the rate and degree of market acceptance and clinical utility of ELVN-001 from our BCR-ABL program and ELVN-002 from our HER2 program, and other product candidates we may develop;
our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
our expectations regarding sales of our common stock made pursuant to the Sales Agreement (as defined below);
our financial performance;
the period over which we estimate our existing cash, cash equivalents and marketable securities will be sufficient to fund our planned operating expenses and capital expenditure requirements;
our ability to utilize our net operating loss carryforwards ("NOLs") and tax credit carryforwards;
the impact of laws and regulations; and
expectations regarding the period during which we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012 and a smaller reporting company under the Exchange Act (as defined below).

 

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this quarterly report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this quarterly report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

 

In addition, statements such as “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this quarterly report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

2


 

Part I – FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Statements (Unaudited)

 

ENLIVEN THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share amounts)

 

 

 

As of

 

 

As of

 

 

March 31, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

      Cash and cash equivalents

 

$

149,165

 

 

$

100,141

 

      Marketable securities

 

 

171,339

 

 

 

153,007

 

      Restricted cash

 

 

54

 

 

 

54

 

      Prepaid expenses and other current assets

 

 

6,641

 

 

 

2,949

 

      Contingent value right asset

 

 

10,000

 

 

 

10,000

 

Total current assets

 

 

337,199

 

 

 

266,151

 

Property and equipment, net

 

 

683

 

 

 

742

 

Operating lease right-of-use assets

 

 

241

 

 

 

320

 

Deferred offering costs

 

 

563

 

 

 

563

 

Other long-term assets

 

 

4,091

 

 

 

4,091

 

Total assets

 

$

342,777

 

 

$

271,867

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

      Accounts payable

 

$

2,727

 

 

$

532

 

      Accrued expenses and other current liabilities

 

 

12,304

 

 

 

15,362

 

      Contingent value right liability

 

 

10,000

 

 

 

10,000

 

Total current liabilities

 

 

25,031

 

 

 

25,894

 

Long-term liabilities

 

 

34

 

 

 

67

 

Total liabilities

 

 

25,065

 

 

 

25,961

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, par value $0.001; authorized shares - 10,000,000; issued and outstanding shares - none

 

 

 

 

 

 

Common stock, par value $0.001; authorized shares - 100,000,000; issued and outstanding shares - 46,782,639 and 41,292,027 at March 31, 2024 and December 31, 2023, respectively

 

 

47

 

 

 

41

 

      Additional paid-in capital

 

 

494,904

 

 

 

400,172

 

      Accumulated other comprehensive (loss) income

 

 

(53

)

 

 

141

 

      Accumulated deficit

 

 

(177,186

)

 

 

(154,448

)

Total stockholders’ equity

 

 

317,712

 

 

 

245,906

 

Total liabilities and stockholders' equity

 

$

342,777

 

 

$

271,867

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

3


 

ENLIVEN THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(in thousands, except share and per share amounts)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

$

19,970

 

 

$

11,880

 

General and administrative

 

 

6,017

 

 

 

4,538

 

Total operating expenses

 

 

25,987

 

 

 

16,418

 

Loss from operations

 

 

(25,987

)

 

 

(16,418

)

Other income (expense), net

 

 

 

 

 

 

Interest income

 

 

3,250

 

 

 

1,694

 

Other expense

 

 

(1

)

 

 

 

Total other income (expense), net

 

 

3,249

 

 

 

1,694

 

Net loss

 

 

(22,738

)

 

 

(14,724

)

Other comprehensive income (loss):

 

 

 

 

 

 

Net unrealized losses on marketable securities

 

 

(194

)

 

 

 

Comprehensive loss

 

$

(22,932

)

 

$

(14,724

)

Net loss per share, basic and diluted

 

$

(0.54

)

 

$

(0.80

)

Weighted-average shares outstanding, basic and diluted

 

 

42,045,608

 

 

 

18,514,644

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

4


 

ENLIVEN THERAPEUTICS, INC.

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

(Unaudited)

(in thousands, except share amounts)

 

 

 

Convertible
Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity (Deficit)

 

Balance - January 1, 2023

 

 

61,730,064

 

 

$

149,749

 

 

 

 

3,570,019

 

 

$

1

 

 

$

6,038

 

 

$

 

 

$

(82,864

)

 

$

(76,825

)

Exercise of common stock options

 

 

 

 

 

 

 

 

 

55,599

 

 

 

 

 

 

140

 

 

 

 

 

 

 

 

 

140

 

Vesting of restricted stock awards and stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

73

 

 

 

 

 

 

 

 

 

73

 

Conversion of convertible preferred stock to common
   stock in connection with the Merger

 

 

(61,730,064

)

 

 

(149,749

)

 

 

 

18,216,847

 

 

 

18

 

 

 

149,731

 

 

 

 

 

 

 

 

 

149,749

 

Issuance of common stock in the Financing Transaction,
   net of issuance costs of $
4,955

 

 

 

 

 

 

 

 

 

12,638,636

 

 

 

13

 

 

 

159,531

 

 

 

 

 

 

 

 

 

159,544

 

Issuance of common stock to former stockholders of
   Imara Inc. in connection with the Merger

 

 

 

 

 

 

 

 

 

6,625,176

 

 

 

7

 

 

 

80,234

 

 

 

 

 

 

 

 

 

80,241

 

Adjustment for change in common stock par value in
   connection with the Merger

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

Reverse recapitalization transaction costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,044

)

 

 

 

 

 

 

 

 

(9,044

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,262

 

 

 

 

 

 

 

 

 

2,262

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,724

)

 

 

(14,724

)

Balance - March 31, 2023

 

 

 

 

$

 

 

 

 

41,106,277

 

 

$

41

 

 

$

388,963

 

 

$

 

 

$

(97,588

)

 

$

291,416

 

 

 

 

Convertible
Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance - January 1, 2024

 

 

 

 

$

 

 

 

 

41,292,027

 

 

$

41

 

 

$

400,172

 

 

$

141

 

 

$

(154,448

)

 

$

245,906

 

Exercise of common stock options

 

 

 

 

 

 

 

 

 

130,780

 

 

 

 

 

 

320

 

 

 

 

 

 

 

 

 

320

 

Vesting of restricted stock units

 

 

 

 

 

 

 

 

 

2,688

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock awards and stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

73

 

 

 

 

 

 

 

 

 

73

 

Issuance of common stock and Pre-Funded Warrants in
   the Private Placement, net of issuance costs of $
170

 

 

 

 

 

 

 

 

 

5,357,144

 

 

 

6

 

 

 

89,824

 

 

 

 

 

 

 

 

 

89,830

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,515

 

 

 

 

 

 

 

 

 

4,515

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,738

)

 

 

(22,738

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(194

)

 

 

 

 

 

(194

)

Balance - March 31, 2024

 

 

 

 

$

 

 

 

 

46,782,639

 

 

$

47

 

 

$

494,904

 

 

$

(53

)

 

$

(177,186

)

 

$

317,712

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

5


 

ENLIVEN THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(22,738

)

 

$

(14,724

)

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

 

 

 

 

 

 

     Depreciation

 

 

79

 

 

 

67

 

     Stock-based compensation

 

 

4,515

 

 

 

2,262

 

     Non-cash lease expense

 

 

79

 

 

 

 

     Amortization of premiums and discounts on marketable securities, net

 

 

(661

)

 

 

 

     Changes in operating assets and liabilities:

 

 

 

 

 

 

          Prepaid expenses, other current and long-term assets

 

 

(3,642

)

 

 

(6,088

)

          Operating lease liabilities

 

 

(83

)

 

 

(1

)

          Accounts payable

 

 

2,155

 

 

 

492

 

          Accrued expenses and other liabilities

 

 

(3,065

)

 

 

(2,852

)

Net cash used in operating activities

 

 

(23,361

)

 

 

(20,844

)

Cash flows from investing activities:

 

 

 

 

 

 

     Maturities of marketable securities

 

 

38,913

 

 

 

 

     Purchases of marketable securities

 

 

(56,778

)

 

 

 

     Purchases of property and equipment

 

 

(20

)

 

 

(31

)

Net cash used in investing activities

 

 

(17,885

)

 

 

(31

)

Cash flows from financing activities:

 

 

 

 

 

 

     Proceeds from exercise of stock options

 

 

270

 

 

 

140

 

     Proceeds from issuance of common stock and Pre-Funded Warrants in
        the Private Placement, net of issuance costs

 

 

90,000

 

 

 

 

     Proceeds from the Financing Transaction, net of issuance costs

 

 

 

 

 

162,900

 

     Cash acquired in connection with the reverse recapitalization

 

 

 

 

 

81,821

 

     Payment of reverse recapitalization transaction costs

 

 

 

 

 

(7,420

)

Net cash provided by financing activities

 

 

90,270

 

 

 

237,441

 

Net increase in cash, cash equivalents and restricted cash

 

 

49,024

 

 

 

216,566

 

Cash, cash equivalents and restricted cash at the beginning of the period

 

 

100,195

 

 

 

75,590

 

Cash, cash equivalents and restricted cash at the end of the period

 

$

149,219

 

 

$

292,156

 

 

 

 

 

 

 

Components of cash, cash equivalents and restricted cash:

 

 

 

 

 

 

Cash and cash equivalents

 

$

149,165

 

 

$

292,102

 

Restricted cash

 

 

54

 

 

 

54

 

Total cash, cash equivalents and restricted cash

 

$

149,219

 

 

$

292,156

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Conversion of convertible preferred stock to common stock

 

$

 

 

$

149,749

 

Issuance costs related to the Private Placement included in accounts payable
   and accrued expenses and other current liabilities

 

$

170

 

 

$

 

Issuance costs related to the Financing Transaction included in accounts
   payable

 

$

 

 

$

1,534

 

Transaction costs related to the reverse recapitalization included in accounts
   payable and accrued expenses and other current liabilities

 

$

 

 

$

1,316

 

Receivables from stock option exercises included in prepaid expenses and
   other current assets

 

$

50

 

 

$

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

6


 

ENLIVEN THERAPEUTICS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Description of Business and Liquidity

Business

Enliven Inc. (formerly, Enliven Therapeutics, Inc.) (“Former Enliven”) was incorporated in the State of Delaware on June 12, 2019. Enliven Therapeutics, Inc. (formerly, Imara Inc.) (the “Company”) is headquartered in Boulder, Colorado. The Company is a clinical-stage biopharmaceutical company focused on the discovery and development of small molecule inhibitors to help people with cancer not only live longer, but live better. The Company aims to address existing and emerging unmet needs with a precision oncology approach that improves survival and enhances overall well-being. Its discovery process combines deep insights in clinically validated biological targets and differentiated chemistry with the goal of designing therapies for unmet needs.

 

Since its inception, the Company has devoted substantially all of its efforts to research and development activities, business planning, establishing and maintaining its intellectual property portfolio, hiring personnel, raising capital, and providing general and administrative support for these activities. To date, the Company has funded its operations primarily through private placements of its common and convertible preferred stock.

 

The Merger, Exchange Ratio and Financing Transaction

On October 13, 2022, the Company entered into an agreement and plan of merger (“Merger Agreement” and such transactions considered by the Merger Agreement, the “Merger”) with Former Enliven.

 

On February 23, 2023, the Company completed the Merger with Former Enliven in accordance with the Merger Agreement. Prior to the effective time of the Merger, the Company effected a 1-for-4 reverse stock split (the “Reverse Stock Split”), and right after the Merger, the Company changed its name to Enliven Therapeutics, Inc. Subject to the terms and conditions of the Merger Agreement, at the closing of the Merger, (a) each outstanding share of Former Enliven common stock (including common stock issued upon the conversion of its preferred stock) was converted into the right to receive a number of shares of the Company’s common stock (“Company Common Stock”) (after giving effect to the Reverse Stock Split) equal to the exchange ratio per the Merger Agreement; and (b) each then outstanding Former Enliven stock option that had not previously been exercised prior to the closing of the Merger was assumed by the Company. At closing of the Merger, the Company issued an aggregate of 34,426,351 shares of Company Common Stock to Former Enliven’s stockholders, based on an exchange ratio of approximately 0.2951 shares of Company Common Stock for each share of Former Enliven common stock outstanding immediately prior to the Merger, including those shares of common stock issued upon conversion of the Former Enliven preferred stock, resulting in 41,011,501 shares of Company Common Stock being issued and outstanding immediately following the effective time of the Merger. The Company also assumed all of the outstanding and unexercised stock options to purchase shares of Former Enliven common stock. The assumed options continue to be governed by the terms of the 2019 Equity Incentive Plan (as further discussed in Note 12) under which the options were originally granted, with such options hence forth representing the right to purchase a number of shares of Company Common Stock equal to approximately 0.2951 multiplied by the number of shares of Former Enliven common stock previously represented by such options.

 

The Merger was accounted for as a reverse recapitalization in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). Under this method of accounting, Former Enliven was deemed to be the accounting acquirer for financial reporting purposes. This determination was primarily based on the expectation that, immediately following the Merger: (i) Former Enliven stockholders will own a substantial majority of the voting rights; (ii) Former Enliven will designate a majority (eight of nine) of the initial members of the board of directors of the combined company; (iii) Former Enliven’s executive management team will become the management team of the combined company; and (iv) the combined company will be named Enliven Therapeutics, Inc. and be headquartered in Boulder, Colorado. Accordingly, for accounting purposes, the Merger was treated as the equivalent of Former Enliven issuing stock to acquire the net assets of the Company. As a result of the Merger, the net assets of the Company were recorded at their acquisition-date fair value in the financial statements of Former Enliven and the reported operating results prior to the Merger will be those of Former Enliven. Historical common share figures of Former Enliven have been retroactively restated based on the exchange ratio of approximately 0.2951.

 

On February 23, 2023, prior to the effective time of the Merger, the Company entered into a Contingent Value Rights Agreement (the “CVR Agreement”) with a rights agent, pursuant to which the Company’s pre-Merger common stockholders received one contingent value right (each, a “CVR”) for each outstanding share of the Company’s common stock held by such stockholder as of February 22, 2023. Each CVR represents the contractual right to receive payments upon the occurrence of certain events related to

7


 

the Company’s sale of certain assets prior to the completion of the Merger, in each case subject to, and in accordance with, the terms and conditions of the CVR Agreement. Under the CVR Agreement, the Company is only liable to the CVR holders once it has received payments from the third-party that purchased the assets, which will only occur upon the third-party achieving certain development milestones related to the assets purchased. In accordance with the CVR Agreement, any distributions to the Company for these milestone payments are then subsequently remitted to the CVR holders, net of permitted deductions, if any. Pursuant to the terms of an asset purchase agreement with a third-party, the Company is eligible to receive two potential milestones, one for $10.0 million and a second for $50.0 million. The Company has no involvement, control or influence over the development of such assets.

 

Concurrently with the execution of the Merger Agreement, and in order to provide Former Enliven with additional capital for its development programs prior to the closing of the Merger, certain new and current investors purchased an aggregate of $164.5 million of common stock of Former Enliven (the “Financing Transaction”).

 

Risks and uncertainties

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

 

The Company continues to closely monitor macroeconomic and geopolitical developments, including inflation, instability in the banking and financial services sector, tightening of the credit markets, the Russia-Ukraine conflict and widening conflict in the Middle East, and COVID-19. The Company intends to establish clinical trial sites in Israel, which may face enrollment, retention, operational or other difficulties due to conflicts within the region, including, for example, difficulties importing clinical trial drug through Israeli customs, difficulties with patient enrollment, or difficulties with patients or medical personnel accessing appropriate medical facilities. The extent of the impact of these developments on the Company’s business, operations and research and development timelines and plans remains uncertain and will depend on numerous factors, including the impact, if any, on the Company’s personnel, responses of governmental entities, and the responses of third parties, such as contract research organizations, contract manufacturing organizations and other third parties with whom the Company does business. Any prolonged material disruption to the Company’s employees or suppliers could adversely impact the Company’s development activities, financial condition and results of operations, including its ability to obtain financing. The Company is monitoring the potential impact of these developments on its business and consolidated financial statements. To date, the Company has not experienced material business disruptions or incurred impairment losses in the carrying values of its assets as a result of these developments, and it is not aware of any specific related event or circumstance that would require it to revise its estimates reflected in these condensed consolidated financial statements.

 

Liquidity considerations

In order to complete the development of the Company’s product candidates and to build the sales, marketing and distribution infrastructure that the Company believes will be necessary to commercialize its product candidates, if approved, the Company will require substantial additional capital. Until the Company can generate a sufficient amount of revenue from the commercialization of its product candidates, the Company may seek to raise any necessary additional capital through equity or debt financings, loans or other capital sources, which could include income from collaborations, partnerships or other marketing, distribution, licensing or other strategic arrangements with third parties, or from grants. Because of the numerous risks and uncertainties associated with research, development and commercialization of product candidates, the Company is unable to estimate the exact amount and timing of its capital requirements. The Company does not expect to generate any meaningful revenue unless and until the Company obtains regulatory approval of and commercializes any of its product candidates, and the Company does not know when, or if, that will occur.

 

The Company has incurred significant losses and negative cash flows from operations since inception. As of March 31, 2024, the Company had an accumulated deficit of $177.2 million. The Company expects that its operating losses and negative cash flows will continue for the foreseeable future as the Company continues to develop its product candidates. The Company currently expects that its cash, cash equivalents and marketable securities of $320.5 million as of March 31, 2024 will be sufficient to fund operating expenses and capital requirements for at least 12 months from the date the unaudited condensed consolidated financial statements are issued.

 

8


 

On June 23, 2023, the Company filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission (the "SEC"), which was declared effective by the SEC on July 3, 2023, which allows the Company to undertake various equity and debt offerings up to $400.0 million. On June 23, 2023, the Company also entered into an Open Market Sale AgreementSM (the “Sales Agreement”) with Jefferies LLC (the "Sales Agent”), pursuant to which the Company may offer and sell shares of Company Common Stock, from time to time through an “at-the-market” program under the Securities Act of 1933 (the “Securities Act”), having an aggregate offering price of up to $200.0 million through the Sales Agent. Sales of Company Common Stock made pursuant to the Sales Agreement, if any, will be made under the Company’s shelf registration statement on Form S-3. On July 6, 2023, the Company filed a prospectus supplement to the shelf registration statement that covers the offering, issuance and sale of Company Common Stock under the Sales Agreement.

Refer to Note 10 for further discussion.

2. Summary of Significant Accounting Policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023 have been prepared in conformity with U.S. GAAP, for interim financial information and pursuant to Article 10 of Regulation S-X of the Securities Act. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s audited financial statements and include only normal and recurring adjustments that the Company believes are necessary to fairly state the Company’s financial position and the results of its operations and cash flows. The results for the three months ended March 31, 2024 are not necessarily indicative of the results expected for the full fiscal year or any subsequent interim period. The condensed consolidated balance sheet as of December 31, 2023 has been derived from the audited financial statements at that date but does not include all disclosures required by U.S. GAAP for complete financial statements. Because all of the disclosures required by U.S. GAAP for complete financial statements are not included herein, these unaudited condensed consolidated financial statements and the notes accompanying them should be read in conjunction with the Company’s audited financial statements as of and for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2024. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. 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 financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expense during the reporting period. The most significant estimates relate to stock-based compensation and accrued research and development expenses. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. Actual results may differ from those estimates or assumptions.

 

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents are recorded at cost, which approximates fair value. As of March 31, 2024 and December 31, 2023, cash and cash equivalents consisted primarily of checking and money market funds composed of U.S. government obligations.

 

Restricted cash

The Company classifies all cash whose use is limited by contractual provisions as restricted cash. Restricted cash arises from the requirement for the Company to maintain cash of $54,000 as collateral for a sublease with the facility’s landlord. As of March 31, 2024 and December 31, 2023, $54,000 of restricted cash was reflected as current assets in the condensed consolidated balance sheets.

 

Marketable securities

The Company’s marketable securities primarily consist of U.S. Treasury securities. The Company classifies its marketable securities as available-for-sale and records such assets at estimated fair value in the condensed consolidated balance sheets, with unrealized

9


 

gains and losses, if any, reported as a component of other comprehensive income (loss) within the condensed consolidated statements of operations and comprehensive loss and as a separate component of stockholders’ equity. The Company classifies marketable securities with remaining maturities greater than one year as current assets due to their highly liquid nature and because such marketable securities represent the investment of cash that is available to fund the Company’s current operations. Interest and dividends on marketable securities are included in interest income. The cost of marketable securities sold is based on the specific identification method, with any realized gains and losses recorded as interest income. There were no realized gains and losses during the periods presented.

 

At each balance sheet date, the Company assesses available-for-sale debt securities in an unrealized loss position to determine whether the unrealized loss or any potential credit losses should be recognized in net income (loss). For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through net income (loss). For available-for-sale securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the severity of the impairment, any changes in interest rates, underlying credit ratings and forecasted recovery, among other factors. The credit-related portion of unrealized losses, and any subsequent improvements, are recorded as an allowance in interest income. There have been no impairment or credit losses recognized during the periods presented.

 

Concentrations of credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities, as well as restricted cash. The Company maintains deposits in U.S. federally insured financial institutions in excess of federally insured limits. The Company has established guidelines regarding approved investments, credit quality, diversification, liquidity and maturities of investments, which are designed to maintain safety and liquidity. Although management currently believes that the financial institutions with whom it does business will be able to fulfill their commitments to the Company, there is no assurance that those institutions will be able to continue to do so. As of March 31, 2024, the Company has not experienced any losses in its accounts and believes it is not exposed to significant credit risk on its cash balances.

 

Fair value measurements

Financial assets and liabilities recorded at fair value on a recurring basis in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the price the Company would receive to sell an investment in a timely transaction or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market, the most advantageous market for the investment or liability. A framework is used for measuring fair value utilizing a three-tier hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

 

The three levels of the fair value hierarchy are as follows:

Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2—Quoted prices (other than quoted prices in Level 1) in markets that are not considered to be active or financial instrument valuations for which all significant inputs are observable, either directly or indirectly; and
Level 3—Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

 

Financial instruments are categorized in their entirety based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and considers factors specific to the investment. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3.

 

The Company monitors the availability of inputs that are significant to the measurement of fair value to assess the appropriate categorization of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation

10


 

techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the Company’s policy is to recognize significant transfers between levels at the end of the reporting period. The significance of transfers between levels is evaluated based upon the nature of the financial instrument and size of the transfer relative to total net assets available for benefits.

 

The Company’s cash and cash equivalents, prepaid expenses and other current assets, accounts payable and accrued expenses and other current liabilities approximate their fair value due to their short maturities.

 

Deferred offering costs

Deferred offering costs represent legal, accounting and other direct costs related to the Company’s efforts to raise capital through a public or private sale of the Company’s common stock. These costs are generally deferred until the completion of the applicable offering, at which time such costs are reclassified to additional paid-in-capital as a reduction of the proceeds. In the instance where a planned equity financing is abandoned, terminated or significantly delayed, the deferred offering costs are recorded as expense in the period of such determination.

 

Property and equipment, net

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Expenditures for repairs and maintenance are expensed as incurred. When assets are retired or disposed of, the assets and related accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is included in the determination of net income or loss. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the asset.

 

The Company’s property and equipment consist of laboratory equipment and employee-related computers with estimated useful lives of three to five years.

 

Impairment of long-lived assets

The Company evaluates long-lived assets, which consist of laboratory equipment and computers, for impairment at least annually, or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. As of March 31, 2024, no impairments have been recognized in the Company’s financial statements.

 

Leases

At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company records the associated lease liability and corresponding right-of-use ("ROU") asset upon commencement of the lease using the implicit rate or a discount rate based on a credit-adjusted secured borrowing rate commensurate with the term of the lease. Certain leases include renewal options at the lessee’s election, which are included when recording the lease if it is reasonably certain that the renewal option will be exercised. Operating lease assets represent a right to use an underlying asset for the lease term and operating lease liabilities represent an obligation to make lease payments arising from the lease. Operating lease liabilities with a term greater than one year and their corresponding ROU assets are recognized on the balance sheet at the commencement date of the lease based on the present value of lease payments over the expected lease term. Lease cost is recognized on a straight-line basis over the lease term and variable lease payments are recognized as operating expenses in the period in which the obligation for those payments is incurred. Variable lease payments primarily include common area maintenance, utilities, real estate taxes, insurance, and other operating costs that are passed on from the lessor in proportion to the space leased by the Company. The Company has elected the practical expedient not to separate between lease and non-lease components.

 

Operating ROU assets are reflected in operating lease right-of-use assets on the balance sheets. Operating lease liabilities are reflected in accrued expenses and other current liabilities and long-term liabilities on the balance sheets.

 

11


 

CVR asset and liability

The Company evaluates its contracts to determine if those contracts qualify as derivatives under ASC 815, Derivatives and Hedging. For derivative financial instruments that are accounted for as assets or liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date. Any changes in fair value are recorded as other income or expense for each reporting period. Derivative instrument assets or liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is probable within the next 12 months from the balance sheet date. The Company determined that certain contingent payments under the CVR Agreement and milestone payments related to the asset sales prior to the merger qualified as derivatives under ASC 815. Upon such time that these payments are assessed a fair value, they would be recorded as a liability and asset, respectively, on the balance sheet. These values are then remeasured for future expected payout or receipt, as well as the increase in fair value due to the time value of money. These gains or losses, if any, are recognized in the consolidated statements of operations and comprehensive loss within Other income (expense), net.

The Company applies a scenario-based method and weighs them based on the possible achievement of certain milestones for both the asset and liability recognized. The fair value measurements are based on significant inputs not observable in the market and thus represent a Level 3 measurement as defined in ASC 820, Fair Value Measurement. The estimated value of the CVR and milestone consideration are based upon available information and certain assumptions, which the Company's management believes are reasonable under the circumstances.

 

Convertible preferred stock

The Company classifies convertible preferred stock outside of stockholders’ equity on its balance sheet as the requirements of triggering a deemed liquidation event are not within the Company’s control. In the event of a deemed liquidation event, the proceeds from the event are distributed in accordance with liquidation preferences. The Company records the issuance of convertible preferred stock at the issuance price less related issuance costs and less any discount arising on allocation of proceeds to one or more derivative features. Immediately prior to the effective time of the Merger, all outstanding shares of Former Enliven's convertible preferred stock were converted into shares of Former Enliven's common stock, which were subsequently converted into Company Common Stock upon the closing of the Merger (see Note 11).

 

Research and development expenses

The Company expenses research and development costs as incurred. Research and development expenses consist primarily of costs incurred for the discovery and development of its product candidates and include consultants and supplies to conduct clinical, preclinical, and non-clinical studies, costs to acquire, develop and manufacture supplies for preclinical and clinical testing and other studies, expenses incurred under agreements with contract research organizations, and salaries and related costs, including stock-based compensation, as well as depreciation and other allocated facility-related and overhead expenses. Advance payments for goods or services for future research and development activities are deferred and expensed as the goods are delivered or the related services are performed.

 

The Company estimates clinical and preclinical study expenses based on the services performed pursuant to contracts with research institutions and clinical research organizations that conduct and manage preclinical studies and clinical trials on the Company’s behalf. In addition, clinical, preclinical, and non-clinical study materials are manufactured by contract manufacturing organizations. In accruing for these services, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. These estimates are based on communications with the third-party service providers and the Company’s estimates of accrued expenses and on information available at each balance sheet date. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly.

 

Stock-based compensation

The Company measures and records the expense related to stock-based payment awards based on the estimated grant date fair value of those awards. The Company recognizes stock-based compensation expense over the requisite service period on a straight-line basis for all stock-based awards to employees, non-employees and directors, including grants of stock options and other stock-based awards. The Company uses the Black-Scholes option pricing model to determine the fair value of the stock awards. The Black-Scholes option pricing model requires the Company to make assumptions and judgments about the variables used in the calculations, including the expected term, expected volatility of its common stock, risk-free interest rate and expected dividend yield. As the stock-based compensation is based on awards ultimately expected to vest, it is reduced by forfeitures, which the Company accounts for as they occur.

 

12


 

The Company classifies equity-based compensation expense in the statement of operations and comprehensive loss in the same manner in which the award recipients’ payroll costs are classified or in which the award recipients’ service payments are classified.

 

Black-Scholes requires the use of subjective assumptions, which determine the fair value of stock-based awards. These assumptions include:

Expected Term—The expected term represents the period that the Company’s options are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term). The Company has very limited historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants.
Expected Volatility—The expected stock price volatilities are estimated based on the historical and implied volatilities of comparable publicly traded companies as the Company does not have sufficient history of trading its common stock.
Risk-Free Interest Rate—The risk-free interest rates are based on U.S. Treasury yields in effect at the grant date for notes with comparable terms as the awards.
Expected Dividend Yield—The Company has never paid dividends on its common stock and has no plans to do so in the future. Therefore, the Company used an expected dividend of zero.

 

The assumptions underlying these valuations represented the Company’s board of directors' and management’s best estimates, which involved inherent uncertainties and the application of management’s judgment. As a result, if the Company had used significantly different assumptions or estimates, the fair value of its stock-based compensation expense could be materially different.

 

Income taxes

Income taxes are accounted for using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or the Company’s tax return. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of enactment. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company has generated significant net losses since its inception and accordingly has not recorded a provision for income taxes.

The Company evaluates its uncertain tax positions using the provisions of ASC Topic 740, Income taxes, which prescribes a recognition threshold that a tax position is required to meet before being recognized in the consolidated financial statements by using a "more-likely-than-not" criteria for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes a tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained upon examination by the tax authorities, based on the merits of the position. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, which are considered appropriate as well as the related net interest and penalties. As of March 31, 2024, there have been no interest or penalties charged in relation to the unrecognized tax benefits.

 

Net loss per share

Basic net loss per share of common stock is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during each period, including pre-funded warrants to purchase shares of common stock. The weighted-average number of shares of common stock outstanding used in the basic net loss per share calculation does not include unvested restricted common stock as these shares are considered contingently issuable shares until they vest.

 

Diluted net loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as convertible preferred stock, stock options, unvested early exercised common stock and unvested restricted common stock, which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive

13


 

securities are not included in the calculation as the impact is anti-dilutive. For all periods presented, basic and diluted net loss per share were the same, as any additional share equivalents would be anti-dilutive.

 

Segments

The Company operates in one segment and, accordingly, no segment disclosures have been presented herein. The Company's long-lived assets are primarily located in the United States. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for allocating and evaluating financial performance.

 

Comprehensive income (loss)

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources, which includes net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on marketable securities, other than losses attributable to a credit loss, which are included in other income and expense. The Company's only component of other comprehensive income (loss) is related to unrealized gains and losses on marketable securities.

 

Emerging growth company status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

 

Accounting pronouncements not yet adopted

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Updated and Simplification Initiative, which amends the disclosure or presentation requirements related to various subtopics in the FASB ASC. ASU 2023-06 was issued in response to the SEC's August 2018 final rule that updated and simplified disclosure requirements and is intended to align U.S. GAAP requirements with those of the SEC and to facilitate the application of U.S. GAAP for all entities. For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective for any entity. The Company is currently evaluating the impact of this guidance, but does not expect the adoption of this guidance to have a material impact on its consolidated financial statements and disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which are intended to improve reportable segment disclosure requirements. ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 improves the transparency and decision usefulness of income tax disclosures by requiring consistent categorization and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid, disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance will be effective for the annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements and disclosures.

14


 

3. The Merger

As described in Note 1, Former Enliven merged with the Company on February 23, 2023. The Merger was accounted for as a reverse recapitalization with Former Enliven as the accounting acquirer. The primary pre-combination assets of the Company were cash and cash equivalents. Under reverse recapitalization accounting, the assets and liabilities of the Company were recorded at their fair value, which approximated book value due to the short-term nature of the instruments. No goodwill or intangible assets were recognized. Consequently, the unaudited condensed consolidated financial statements of the Company reflect the operations of Former Enliven for accounting purposes together with a deemed issuance of shares, equivalent to the shares held by the former stockholders of the legal acquirer and a recapitalization of the equity of the accounting acquirer.

 

The following table summarizes the fair value of identifiable assets acquired and liabilities assumed as part of the recapitalization (in thousands):

 

Cash and cash equivalents

 

$

81,821

 

Other current assets

 

 

1,044

 

Accrued liabilities

 

 

(2,624

)

Net assets acquired

 

$

80,241

 

 

In connection with the Merger and concurrent Financing Transaction, the Company incurred reverse recapitalization transaction costs of $9.0 million and issuance costs of $5.0 million, which were capitalized and recorded on the condensed consolidated balance sheets as deferred offering costs. On February 23, 2023, at the close of the Merger, the deferred offering costs were recorded as contra equity.

 

In addition, the Company incurred $1.3 million in stock-based compensation expense as a result of the acceleration of vesting of stock options at the time of the Merger. This amount was recorded in general and administrative expense on the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2023 and year ended December 31, 2023.

4. Fair Value Measurements

The following tables set forth the fair value of the Company’s financial assets measured at fair value on a recurring basis and indicates the level within the fair value hierarchy utilized to determine such values (in thousands):

 

As of March 31, 2024

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

     U.S. Treasury backed money market funds

 

$

143,427

 

 

$

143,427

 

 

$

 

 

$

 

     U.S. Treasury securities

 

 

4,977

 

 

 

4,977

 

 

 

 

 

 

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

     U.S. Treasury securities

 

 

171,339

 

 

 

171,339

 

 

 

 

 

 

 

Total

 

$

319,743

 

 

$

319,743

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2023

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

     U.S. Treasury backed money market funds

 

$

99,388

 

 

$

99,388

 

 

$

 

 

$

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

     U.S. Treasury securities

 

 

153,007

 

 

 

153,007

 

 

 

 

 

 

 

Total

 

$

252,395

 

 

$

252,395

 

 

$

 

 

$

 

 

CVR asset and liability

Upon the completion of the Merger in February 2023, the Company assessed the fair value of the payments to be made under the CVR Agreement to be zero as the Company had determined the payments were not probable. During the fourth quarter of 2023, the Company assessed the fair value of the first milestone under the asset purchase agreement at 100% based upon certain information received from the third-party indicating that the milestone was likely to be achieved in early 2024. As such, the Company estimated the fair value of the CVR asset and liability for this first milestone and recorded a $10.0 million CVR asset and $10.0 million CVR liability on its consolidated balance sheet as of December 31, 2023. In March 2024, the Company received formal notification from the third-party that the first milestone event as set forth in the asset purchase agreement had been achieved, and the Company

15


 

received the $10.0 million milestone payment in April 2024. As the second milestone event under this asset purchase agreement relates to the future potential commercialization of the assets, no value was attributed to this milestone as of March 31, 2024 and December 31, 2023. As of March 31, 2024 and December 31, 2023, the Company's condensed consolidated balance sheets reflected a $10.0 million CVR asset and $10.0 million CVR liability, and no CVR payments have been made under the CVR Agreement. Pursuant to the terms of the CVR Agreement, the Company has 45 days from the end of the calendar quarter in which funds are received to deliver the milestone proceeds, net of permitted deductions, if any, to the rights agent for distribution to the CVR holders.

5. Marketable Securities

The Company’s marketable securities are classified as available-for-sale and are stated at fair value. Marketable securities consisted of the following (in thousands):

 

As of March 31, 2024

 

Maturity
(in years)

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Estimated
Fair Value

 

U.S. Treasury securities

 

1 or less

 

$

171,392

 

 

$

7

 

 

$

(60

)

 

$

171,339

 

Total

 

 

 

$

171,392

 

 

$

7

 

 

$

(60

)

 

$

171,339

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2023

 

Maturity
(in years)

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Estimated
Fair Value

 

U.S. Treasury securities

 

1 or less

 

$

152,866

 

 

$

147

 

 

$

(6

)

 

$

153,007

 

Total

 

 

 

$

152,866

 

 

$

147

 

 

$

(6

)

 

$

153,007

 

 

6. Leases

Facility lease

In June 2020, the Company executed a sublease agreement for 6,782 square feet of office and laboratory space, which was set to expire on December 30, 2021. In March 2021, the Company amended its sublease agreement, increasing the leased space by 2,495 square feet to 9,277 square feet and monthly rent to $12,000. In April 2022, the lease term was extended to December 30, 2024. In addition, the Company’s leased space was increased to 18,170 square feet commencing in July 2022, and the rental payments were increased by an equally proportionate amount to reflect the increase in floor space. The monthly rent is subject to annual increases through the lease term. The Company is required to pay base rent expense as well as its proportionate share of the facilities operating expenses. The non-lease components, consisting primarily of common area maintenance, are paid separately based on actual costs incurred. Therefore, the variable non-lease components were not included in the ROU assets and lease liabilities and are reflected as expense in the period incurred. The incremental borrowing rate used to calculate the Company’s ROU assets and lease liabilities is 4%. The incremental borrowing rate was estimated based on the Company's estimated borrowing rate on a collateralized loan. As of March 31, 2024, the remaining ROU assets and lease liabilities were $0.2 million and $0.3 million, respectively. As of December 31, 2023, the remaining ROU assets and lease liabilities were $0.3 million and $0.3 million, respectively.

 

Under the facility sublease, the Company recognized rent expense of $81,000 and $81,000 for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the future minimum lease payments under the facilities operating sublease were as follows (in thousands):

 

 

 

As of

 

 

 

March 31, 2024

 

Year ending December 31,

 

 

 

2024 (remaining nine months)

 

$

256

 

Thereafter

 

 

 

Total future minimum lease payments

 

 

256

 

Less: amount representing interest

 

 

(4

)

Present value of lease liabilities

 

 

252

 

Less: current portion of lease liabilities

 

 

(252

)

Lease liabilities, non-current

 

$

 

 

No impairment losses were recognized during the three months ended March 31, 2024 and 2023.

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7. Property and Equipment, Net

Property and equipment, net consisted of the following (dollar amounts in thousands):

 

 

 

Estimated Useful

 

As of

 

 

As of

 

 

 

Life in Years

 

March 31, 2024

 

 

December 31, 2023

 

Laboratory equipment

 

5

 

$

1,191

 

 

$

1,191

 

Computer equipment

 

3

 

 

242

 

 

 

222

 

Property and equipment, gross

 

 

 

 

1,433

 

 

 

1,413

 

Less: accumulated depreciation

 

 

 

 

(750

)

 

 

(671

)

Property and equipment, net

 

 

 

$

683

 

 

$

742

 

 

Depreciation expense was $79,000 and $67,000 for the three months ended March 31, 2024 and 2023, respectively.

8. Accrued Expenses and Other Current Liabilities

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

 

 

 

As of

 

 

As of

 

 

 

March 31, 2024

 

 

December 31, 2023

 

Accrued employee compensation costs

 

$

1,808

 

 

$

3,328

 

Accrued research and development costs

 

 

8,835

 

 

 

10,433

 

Lease liability

 

 

252

 

 

 

335

 

Accrued legal and professional fees

 

 

963

 

 

 

902

 

Other

 

 

446

 

 

 

364

 

Accrued expenses and other current liabilities

 

$

12,304

 

 

$

15,362

 

 

9. Commitments and Contingencies

Litigation

From time to time, the Company may be involved in legal proceedings or be subject to claims arising in the ordinary course of its business. The Company is not currently a party to any legal proceedings. Regardless of outcome, any proceedings or claims can have an adverse impact on the Company because of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained.

 

Indemnification agreements

In the ordinary course of business, the Company has provided and may provide indemnification of varying scope and terms to vendors, consultants, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not aware of any claims under indemnification arrangements, and it has not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of March 31, 2024 and December 31, 2023.

10. Common Stock

As of March 31, 2024, the Company’s Amended and Restated Certificate of Incorporation authorized the Company to issue 100,000,000 shares of $0.001 par value common stock, of which 46,782,639 shares were issued and outstanding. As of March 31, 2024 and December 31, 2023, there were 60,830 and 86,153 shares subject to repurchase, respectively. The liability related to shares subject to repurchase totaled $0.3 million and $0.4 million as of March 31, 2024 and December 31, 2023, respectively, of which $0.1 million and $0.1 million were recorded as long-term liabilities as of March 31, 2024 and December 31, 2023, respectively.

 

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 receive dividends, as may be declared by the Company’s board of directors, if any. No dividends have been declared or paid by the Company through March 31, 2024.

17


 

 

Upon completion of the Merger on February 23, 2023, the Company issued an aggregate of 34,426,351 shares of its common stock to Former Enliven stockholders, based on an exchange ratio of approximately 0.2951 share of the Company’s common stock for each share of Former Enliven common stock outstanding immediately prior to the Merger, including those shares of common stock issued upon conversion of the Former Enliven preferred stock (18,216,847 common shares) and those shares issued with its pre-merger financing of $164.5 million (12,638,636 common shares).

 

On June 23, 2023, the Company entered into the Sales Agreement with the Sales Agent, pursuant to which the Company may offer and sell shares of its common stock, from time to time, having an aggregate offering price of up to $200.0 million through the Sales Agent. Sales of the Company’s common stock made pursuant to the Sales Agreement, if any, will be made under the Company’s shelf registration statement on Form S-3, which was declared effective by the SEC on July 3, 2023. As of March 31, 2024, there have been no sales of common stock pursuant to the Sales Agreement.

 

On March 21, 2024, the Company sold in a private placement (the "Private Placement") 5,357,144 shares of its common stock at $14.00 per share and pre-funded warrants (the "Pre-Funded Warrants") to purchase 1,071,505 shares of its common stock at a price of $13.999 per Pre-Funded Warrant, resulting in aggregate gross proceeds of $90.0 million, before estimated issuance costs of $0.2 million. The Pre-Funded Warrants have an exercise price of $0.001 per share, subject to proportional adjustments in the event of stock splits or combinations or similar events, are immediately exercisable on the date of issuance and remain exercisable until exercised in full. As of March 31, 2024, all of the Pre-Funded Warrants related to the Private Placement remain unexercised and outstanding.

 

The Pre-Funded Warrants met the permanent equity criteria classification and, therefore, were classified as a component of permanent stockholders’ equity within additional paid-in capital. The Pre-Funded Warrants are equity classified because they (i) are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, (ii) are immediately exercisable, (iii) do not embody an obligation for the Company to repurchase its shares, (iv) permit the holders to receive a fixed number of shares of common stock upon exercise, (v) are indexed to the Company’s common stock and (vi) meet the equity classification criteria. In addition, the Pre-Funded Warrants do not provide any guarantee of value or return.

 

The Company had the following shares of common stock reserved for future issuance: