SEC Filing - Prelude Therapeutics

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prld-10q_20210630.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2021

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

For the transition period from to

Commission File Number: 001-39527

PRELUDE THERAPEUTICS INCORPORATED

(Exact Name of Registrant as Specified in its Charter)

Delaware	81-1384762
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
200 Powder Mill Road Wilmington, Delaware	19803
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (302) 467-1280

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, par value $0.0001 per share

PRLD

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of August 9, 2021, the registrant had 47,093,531 shares of voting and non-voting common stock, $0.0001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Balance Sheets (Unaudited)	1
	Statements of Operations (Unaudited)	2
	Statements of Changes in Convertible Preferred Stock and Stockholder’s Equity (Deficit) (Unaudited)	3
	Statements of Cash Flows (Unaudited)	4
	Notes to Unaudited Interim Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3.	Defaults Upon Senior Securities	68
Item 4.	Mine Safety Disclosures	68
Item 5.	Other Information	68
Item 6.	Exhibits	69
Signatures		70

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PRELUDE THERAPEUTICS INCORPORATED

BALANCE SHEETS

(UNAUDITED)

(in thousands, except share data)	June 30, 2021			December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	343,119		$	218,309
Prepaid expenses and other current assets		1,456			2,500
Total current assets		344,575			220,809
Property and equipment, net		3,109			2,480
Right-of-use asset		1,897			—
Deferred offering costs		—			301
Total assets	$	349,581		$	223,590
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	6,844		$	3,920
Accrued expenses and other current liabilities		6,430			7,455
Operating lease liability		1,403			—
Total current liabilities		14,677			11,375
Other liabilities		—			32
Operating lease liability		543			—
Total liabilities		15,220			11,407
Commitments (Note 7)
Stockholders’ equity:
Voting common stock, $0.0001 par value: 487,149,741 shares authorized; 35,636,695 and 32,595,301 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		4			3
Non-voting common stock, $0.0001 par value; 12,850,259 shares authorized; 11,402,037 and 11,110,371 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		1			1
Additional paid-in capital		489,947			319,605
Accumulated deficit		(155,591	)		(107,426	)
Total stockholders’ equity		334,361			212,183
Total liabilities and stockholders’ equity	$	349,581		$	223,590

See accompanying notes to unaudited interim financial statements.

PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except share and per share data)	2021			2020			2021			2020
Operating expenses:
Research and development	$	22,409		$	9,776		$	38,879		$	18,312
General and administrative		5,513			1,660			11,010			2,861
Total operating expenses		27,922			11,436			49,889			21,173
Loss from operations		(27,922	)		(11,436	)		(49,889	)		(21,173	)
Other income, net		1,057			28			1,724			254
Net loss	$	(26,865	)	$	(11,408	)	$	(48,165	)	$	(20,919	)
Per share information:
Net loss per share of common stock, basic and diluted	$	(0.58	)	$	(5.50	)	$	(1.06	)	$	(10.65	)
Weighted average common shares outstanding, basic and diluted		46,057,112			2,074,108			45,592,117			1,964,403

See accompanying notes to unaudited interim financial statements.

PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)

	Stockholders’ equity
	Voting common stock				Non-voting common stock				Additional paid-in		Accumulated
(in thousands, except shares)	Shares		Amount		Shares		Amount		capital		deficit			Total
Balance at January 1, 2021		32,595,301	$	3		11,110,371	$	1	$	319,605	$	(107,426	)	$	212,183
Exercise of stock options		210,274		—		—		—		386		—			386
Sale of common stock, net of offering costs of $739		2,583,334		1		291,666		—		161,411		—			161,412
Stock-based compensation expense		—		—		—		—		3,886		—			3,886
Net loss		—		—		—		—		—		(21,300	)		(21,300	)
Balance at March 31, 2021		35,388,909	$	4		11,402,037	$	1	$	485,288	$	(128,726	)	$	356,567
Exercise of stock options		247,786		—		—		—		422		—			422
Stock-based compensation expense		—		—		—		—		4,237		—			4,237
Net loss		—		—		—		—		—		(26,865	)		(26,865	)
Balance at June 30, 2021		35,636,695	$	4		11,402,037	$	1	$	489,947	$	(155,591	)	$	334,361

	Convertible preferred stock								Stockholders’ deficit
	Series A				Series B				Common stock				Additional paid-in		Accumulated
(in thousands, except shares)	Shares		Amount		Shares		Amount		Shares		Amount		capital		deficit			Total
Balance at January 1, 2020		11,736,119	$	36,595		7,628,846	$	29,848		3,161,653	$	—	$	1,085	$	(50,497	)	$	(49,412	)
Sale of Series B convertible preferred stock, net of offering costs of $152		—		—		7,628,846		29,942		—		—		—		—			—
Stock-based compensation expense, including issuance of RSAs		—		—		—		—		432,301		—		362		—			362
Net loss		—		—		—		—		—		—		—		(9,511	)		(9,511	)
Balance at March 31, 2020		11,736,119	$	36,595		15,257,692	$	59,790		3,593,954	$	—	$	1,447	$	(60,008	)	$	(58,561	)
Exercise of stock options		—		—		—		—		36,745		—		31		—			31
Stock-based compensation expense		—		—		—		—		—		—		627		—			627
Net loss		—		—		—		—		—		—		—		(11,408	)		(11,408	)
Balance at June 30, 2020		11,736,119	$	36,595		15,257,692	$	59,790		3,630,699	$	—	$	2,105	$	(71,416	)	$	(69,311	)

See accompanying notes to unaudited interim financial statements.

PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six months ended June 30,
(in thousands)	2021			2020
Cash flows used in operating activities:
Net loss	$	(48,165	)	$	(20,919	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		359			267
Noncash lease expense		572			—
Stock-based compensation		8,123			989
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		1,044			364
Accounts payable		3,327			1,134
Accrued expenses and other liabilities		(856	)		(658	)
Operating lease liabilities		(459	)		—
Net cash used in operating activities		(36,055	)		(18,823	)
Cash flows used in investing activities:
Purchases of property and equipment		(1,367	)		(122	)
Net cash used in investing activities		(1,367	)		(122	)
Cash flows provided by financing activities:
Proceeds from the sale of common stock, net of offering costs		161,424			—
Proceeds from the sale of Series B convertible preferred stock, net of offering costs		—			29,942
Payment of capital lease obligation		—			(191	)
Proceeds from the exercise of stock options		808			31
Net cash provided by financing activities		162,232			29,782
Net increase in cash and cash equivalents		124,810			10,837
Cash and cash equivalents at beginning of period		218,309			18,879
Cash and cash equivalents at end of period	$	343,119		$	29,716
Supplemental disclosures:
Property and equipment in accounts payable	$	386		$	73
Offering costs in accounts payable	$	—		$	290
Offering costs in accrued expenses and other current liabilities	$	—		$	185

See accompanying notes to unaudited interim financial statements.

PRELUDE THERAPEUTICS INCORPORATED

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

1. Background

Prelude Therapeutics Incorporated (the “Company”) was incorporated in Delaware on February 5, 2016 and is a clinical-stage precision oncology company focused on discovering and developing small molecule therapies optimized to target the key driver mechanisms in cancers with high unmet need. Since beginning operations, the Company has devoted substantially all its efforts to research and development, conducting preclinical and clinical studies, recruiting management and technical staff, administration, and raising capital.

2. Risks and liquidity

The Company is subject to a number of risks common to early-stage companies in the biotechnology industry. Principal among these risks are the uncertainties in the development process, development of the same or similar technological innovations by competitors, protection of proprietary technology, dependence on key personnel, compliance with government regulations and approval requirements, and the need to obtain additional financing to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive pre-clinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure, and extensive compliance-reporting capabilities. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s technology will be obtained, that any products developed will obtain necessary government regulatory approval, or that any approved products will be commercially viable. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees, consultants and contractors.

Since its inception, the Company has incurred operating losses and has an accumulated deficit of $155.6 million at June 30, 2021. The Company has no revenue to date and devotes its efforts to research and development. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product candidates currently in development.

The Company believes that its cash and cash equivalents as of June 30, 2021 will be sufficient to fund its operating expenses and capital expenditure requirements into mid-2023.

To fund its operating expenses and capital expenditure requirements after that date, the Company plans to seek additional funding through public or private equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain funding, the Company could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its business prospects.

On March 10, 2020, the World Health Organization characterized the novel COVID-19 virus as a global pandemic. There is significant uncertainty as to the likely effects of this disease which may, among other things, materially impact the Company’s planned clinical trials. This pandemic or outbreak could result in difficulty securing clinical trial site locations, CROs, and/or trial monitors and other critical vendors and consultants supporting the trial. In addition, outbreaks or the perception of an outbreak near a clinical trial site location could impact the Company’s ability to enroll patients. These situations, or others associated with COVID-19, could cause delays in the Company’s clinical trial plans and could increase expected costs, all of which could have a material adverse effect on the Company’s business and its financial condition. At the current time, the Company is unable to quantify the potential effects of this pandemic on its future financial statements.

3. Summary of significant accounting policies

The summary of significant accounting policies included in the Company’s financial statements for the year ended December 31, 2020 can be found in “Note 3. Summary of significant accounting policies” of the Company’s Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 16, 2021. Those policies have not materially changed, except as set forth below.

Basis of presentation

The accompanying unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The accompanying unaudited interim financial statements should be read in conjunction with the annual audited financial statements and related notes as of and for the year ended December 31, 2020 found in the Form 10-K filed with the SEC on March 16, 2021. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Use of estimates

The preparation of the unaudited interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the unaudited interim financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Estimates and assumptions are periodically reviewed and the effects of the revisions are reflected in the accompanying unaudited interim financial statements in the period they are determined to be necessary. The most significant estimate relates to accrued clinical trial expenses.

Income taxes

Based upon the historical and anticipated future losses, management has determined that the deferred tax assets generated by net operating losses and research and development credits do not meet the more likely than not threshold for realizability. Accordingly, a full valuation allowance has been recorded against the Company’s net deferred tax assets as of June 30, 2021 and December 31, 2020.

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. The weighted-average number of shares of common stock outstanding used in the basic net loss per share calculation does not include unvested restricted stock awards as these instruments 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 stock options and convertible preferred stock, and the effect from unvested restricted stock awards 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 securities are not included in the calculation as the impact is anti-dilutive. The Company’s convertible preferred stock and unvested restricted stock entitles the holder to participate in dividends and earnings of the Company, and, if the Company were to recognize net income, it would have to use the two-class method to calculate earnings per share. The two-class method is not applicable during periods with a net loss, as the holders of the convertible preferred stock and unvested restricted stock have no obligation to fund losses.

The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:

	June 30,
	2021		2020
Series A convertible preferred stock		—		11,736,119
Series B convertible preferred stock		—		15,257,692
Unvested restricted stock awards		841,965		1,409,250
Unvested restricted stock units		25,000		—
Stock options		6,769,438		3,578,863
		7,636,403		31,981,924

Amounts in the above table reflect the common stock equivalents.

Recently Issued Accounting Pronouncements

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 unaudited interim financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Recently Adopted Accounting Pronouncements

On January 1, 2021, the Company adopted ASC 842 issued by the FASB in February 2016, which was subsequently supplemented by clarifying guidance to improve financial reporting of leasing transactions. The new lease accounting guidance requires lessees to recognize lease liabilities and right-of-use assets on the balance sheet for all leases with initial terms longer than 12 months and provides enhanced disclosures on key information of leasing arrangements.

The Company adopted the new standard using the modified retrospective transition method utilizing the optional transition method and elected the package of practical expedients. Accordingly, prior periods were not restated to reflect the adopted standard. In accordance with the guidance in ASC 842, components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). The Company has elected the practical expedient to account for the lease and non-lease components of each of its operating leases as a single lease component and allocate all of the contract consideration to the lease component only. Upon adoption, the Company recorded a right of use asset of $2.5 million and corresponding operating lease liabilities of $2.5 million, with an offset to accrued expenses and other current liabilities of approximately $64,000 to eliminate deferred rent on the balance sheets.

At lease commencement, the Company records a lease liability based on the present value of lease payments over the expected lease term including any options to extend the lease that the Company is reasonably certain to exercise. The Company calculates the present value of lease payments using an incremental borrowing rate as the Company’s leases do not provide an implicit interest rate. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. At the lease commencement date, the Company records a corresponding right-of-use lease asset based on the lease liability, adjusted for any lease incentives received and any initial direct costs paid to the lessor prior to the lease commencement date. The Company may enter into leases with an initial term of 12 months or less (“Short-Term Leases”). For Short-Term Leases, the Company records the rent expense on a straight-line basis and does not record the leases on the balance sheet. The Company entered into a short-term lease in June 2021 and elected the short-term lease exemption that allows the Company to record the rent expense on a straight-line basis and does not require the recognition of a right-of-use asset or corresponding operating lease liability. Refer to Note 7 for the Company’s lease disclosures.

After lease commencement, the Company measures its leases as follows: (i) the lease liability based on the present value of the remaining lease payments using the discount rate determined at lease commencement and (ii) the right-of-use lease asset based on the re-measured lease liability, adjusted for any unamortized lease incentives received, any unamortized initial direct costs and the cumulative difference between rent expense and amounts paid under the lease agreement. Any lease incentives received, and any initial direct costs incurred are amortized on a straight-line basis over the expected lease term. Rent expense is recorded on a straight-line basis over the expected lease term.

The adoption of the new lease accounting standard did not have a material impact on the Company’s results of operations or cash flows for the six months ended June 30, 2021.

4. Fair Value of Financial Instruments

Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments be made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The Company follows the provisions of ASC 820, for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in one of the following three categories:

•

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 in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities.

•

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis:

	Fair value measurement at reporting date using
(in thousands)	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
June 30, 2021:
Assets:
Cash equivalents (Money Market Funds)	$	341,198	$	—	$	—
December 31, 2020:
Assets:
Cash equivalents (Money Market Funds)	$	217,072	$	—	$	—

5. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

(in thousands)	June 30, 2021		December 31, 2020
Compensation and related benefits	$	2,330	$	3,614
Research and development		4,071		3,421
Other		29		420
	$	6,430	$	7,455

6. Common Stock

Common Stock Offering

In January 2021, the Company sold 2,875,000 shares of its common stock at a public offering price of $60.00 per share. The Company received net proceeds of $161.4 million after deducting underwriting discounts, commissions, and other offering expenses paid by the Company.

The Company has two classes of common stock; “voting common stock” and “non-voting common stock.” The holders of the voting common stock are entitled to one vote for each share of voting common stock held at all meetings of stockholders. Except as otherwise required by law, the holders of non-voting common stock shall not be entitled to vote at any meetings of stockholders (or written actions in lieu of meetings) and the shares of non-voting common stock shall not be included in determining the number of shares voting or entitled to vote on any matter. Unless required by law, there shall be no cumulative voting. Any holder of non-voting common stock may elect to convert each share of non-voting common stock into one fully paid and non-assessable share of voting common stock at any time by providing written notice to the Company; provided that as a result of such conversion, such holder, together with its affiliates and any members of a Schedule 13(d) group with such holder, would not beneficially own in excess of 9.99% of the Company’s common stock immediately prior to and following such conversion, unless otherwise as expressly provided for in the Company’s restated certificate of incorporation. However, this ownership limitation may be increased (not to exceed 19.99%) or decreased to any other percentage designated by such holder of non-voting common stock upon 61 days’ notice to the Company.

7. Commitments

Leases

The Company leases office and laboratory space in Wilmington, Delaware under a noncancelable lease, which expires in December 2022. The Company has an option to renew the leases for an additional 1-year period. This option to extend was not recognized as part of the Company’s measurement of the right-of-use asset and operating lease liability as of June 30, 2021. The discount rate used to account for the Company’s operating lease under ASC 842 is the Company’s estimated incremental borrowing rate of 10.0%. In June 2021, the Company signed a 12-month noncancelable lease, which commenced on July 1, 2021 and will expire on June 30, 2022 and has remaining lease payments of approximately $0.2 million in both 2021 and 2022.

Rent expense for the three months ended June 30, 2021 and 2020 was $0.3 million and $0.2 million, respectively. Rent expense for the six months ended June 30, 2021 and 2020 was $0.7 million and $0.5 million, respectively.

Future minimum annual lease payments under the Company’s noncancelable lease at June 30, 2021 is as follows:

(in thousands)
2021 (remaining)	$	702
2022		1,403
Total undiscounted lease payments		2,105
Less imputed interest		(159	)
Current and noncurrent lease liability	$	1,946

Employment Agreements

The Company entered into employment agreements with key personnel providing for compensation and severance in certain circumstances, as defined in the respective employment agreements

401(k) Defined Contribution Plan

The Company sponsors a 401(k) defined‑contribution plan covering all employees. Participants are permitted to contribute up to 100% of their eligible annual pretax compensation up to an established federal limit on aggregate participant contributions. The Company provides a safe harbor match with a maximum amount of 3% of the participant’s compensation. During the three and six months ended June 30, 2021, the Company made matching contributions of $0.1 million and $0.3 million, respectively.

Other Research and Development Arrangements

The Company enters into agreements with contract research organizations (“CROs”) to assist in the performance of research and development activities. Expenditures to CROs will represent a significant cost in clinical development for the Company.

8. Stock-Based Compensation

The Company has two equity incentive plans: the 2016 Equity Incentive Plan, as amended, and the 2020 Equity Incentive Plan. New awards can only be granted under the 2020 Equity Incentive Plan (the “Plan”) and as of June 30, 2021, 6,282,783 shares were available for future grants. The number of shares of the Company’s common stock that may be issued pursuant to rights granted under the Plan shall automatically increase on January 1st of each year, commencing on January 1, 2021, and continuing for ten years, in an amount equal to five percent of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year, subject to the discretion of the board of directors or compensation committee to determine a lesser number of shares shall be added for such year. The Plan provides for the granting of common stock, incentive stock options, nonqualified stock options, restricted stock awards, and/or stock appreciation rights to employees, directors, and other persons, as determined by the Company’s board of directors. The Company’s stock options vest based on the terms in each award agreement, generally over four-year periods with 25% of options vesting after 1 year and then monthly thereafter, and have a term of ten years. In September 2020, the Company adopted the 2020 Employee Stock Purchase Plan (the “ESPP”), which, as of June 30, 2021, had 957,056 shares of common stock reserved for future issuance. No shares have been issued from the ESPP as of June 30, 2021.

The Company measures stock-based awards at their grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the awards. The Company recorded stock-based compensation expense in the following expense categories in its accompanying statements of operations:

	Three Months Ended June 30,				Six Months June 30,
(in thousands)	2021		2020		2021		2020
Research and development	$	2,203	$	244	$	4,043	$	417
General and administrative		2,034		383		4,080		572
	$	4,237	$	627	$	8,123	$	989

Stock Options

The following table summarizes stock option activity for the periods indicated:

	Number of shares			Weighted average exercise price per share		Weighted average remaining contractual term (years)
Outstanding at January 1, 2021		6,839,091		$	8.46		9.17
Granted		423,395		$	45.30
Exercised		(458,060	)	$	1.76
Forfeited		(34,988	)	$	43.36
Outstanding at June 30, 2021		6,769,438		$	11.04		8.79
Exercisable at June 30, 2021		1,255,060		$	2.21		8.13

At June 30, 2021, the aggregate intrinsic value of outstanding options and exercisable options was $131.1 million and $33.2 million, respectively.

The following table summarizes information about stock options outstanding at June 30, 2021 under the Plan:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$0.31 - $7.37		3,051,304		8.23	$	1.80		1,205,008	$	1.76
$7.38 - $15.93		3,116,323		9.17		12.85		48,322		12.85
$15.94 - $88.98		601,811		9.72		48.42