Black Diamond Therapeutics(BDTX) - 2021 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations and comprehensive loss, statements of cash flows, and statements of stockholders' equity, along with detailed notes explaining the company's business, accounting policies, and specific financial line items Condensed Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and stockholders' equity at specific points in time Condensed Consolidated Balance Sheets (Unaudited) (in thousands) | Item | September 30, 2021 | December 31, 2020 | | :-------------------------------- | :------------------- | :------------------ | | Cash and cash equivalents | $46,603 | $34,605 | | Investments | $188,405 | $280,462 | | Total current assets | $241,546 | $319,554 | | Total assets | $274,126 | $329,670 | | Total current liabilities | $26,361 | $14,218 | | Total liabilities | $55,178 | $21,912 | | Total stockholders' equity | $218,948 | $307,758 | | Accumulated deficit | $(217,953) | $(118,224) | Condensed Consolidated Statements of Operations and Comprehensive Loss This section details the company's revenues, expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (in thousands, except per share data) | Item | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Research and development | $27,626 | $12,929 | $77,165 | $30,453 | | General and administrative | $7,738 | $5,551 | $23,627 | $15,934 | | Total operating expenses | $35,364 | $18,480 | $100,792 | $46,387 | | Net loss | $(35,077) | $(17,912) | $(99,729) | $(44,628) | | Net loss per share, basic and diluted | $(0.97) | $(0.50) | $(2.76) | $(1.42) | | Comprehensive loss | $(35,145) | $(18,049) | $(100,200) | $(43,753) | Condensed Consolidated Statements of Cash Flows This section outlines the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) | Item | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(76,102) | $(36,372) | | Net cash provided by (used in) investing activities | $87,371 | $(275,043) | | Net cash provided by financing activities | $729 | $214,114 | | Net decrease in cash and cash equivalents | $11,998 | $(97,301) | | Cash, cash equivalents and restricted cash, end of period | $47,826 | $57,420 | Condensed Consolidated Statements of Stockholders' Equity This section presents changes in the company's equity accounts, including common stock and accumulated deficit Total Stockholders' Equity (in thousands) | Date | Total Stockholders' Equity | | :------------------- | :------------------------- | | December 31, 2020 | $307,758 | | September 30, 2021 | $218,948 | Notes to Unaudited Condensed Consolidated Financial Statements These notes provide essential context and detail for the condensed consolidated financial statements, covering the company's business, significant accounting policies, fair value measurements, investment breakdown, property and equipment, accrued liabilities, stockholders' equity, stock-based compensation, net loss per share, lease obligations, commitments, benefit plans, and related-party transactions 1. Nature of Business and Basis of Presentation This note describes the company's core business as a precision oncology firm and the foundational principles for its financial statement preparation - Black Diamond Therapeutics, Inc. is a precision oncology medicine company focused on discovering and developing MasterKey therapies for undrugged oncogenic driver mutations in genetically defined cancers[22] - The company completed an IPO on February 3, 2020, raising $212 million in net proceeds, and its shares trade on Nasdaq under 'BDTX'[25] - As of November 8, 2021, the company expects its cash, cash equivalents, and investments to fund operations into the second half of 2023[27] - The ongoing COVID-19 pandemic continues to impact business operations, clinical trials, and research programs, leading to precautionary measures and potential delays[29][30][31] 2. Summary of Significant Accounting Policies This note outlines the key accounting principles and estimates used in preparing the condensed consolidated financial statements - The condensed consolidated financial statements are prepared in accordance with GAAP and include wholly-owned subsidiaries[34] - Management makes estimates and assumptions, particularly for research and development expenses and stock-based awards, which are subject to change based on circumstances and the ongoing COVID-19 pandemic[36][37] - The company adopted ASU 2019-12 (Income Taxes) effective January 1, 2021, with no material impact, and is evaluating ASU 2021-04 (Earnings Per Share, etc.) effective after December 15, 2021[39][40] 3. Fair Value Measurements This note details the valuation methodologies and inputs used to measure the fair value of the company's financial assets Fair Value Measurements of Assets (in thousands) | Asset Type | September 30, 2021 (Total) | December 31, 2020 (Total) | | :----------------------- | :------------------------- | :-------------------------- | | Money market funds | $46,603 | $32,501 | | Commercial paper | $15,995 | $35,559 | | Corporate bonds | $119,756 | $192,573 | | U.S. Government agencies | $52,654 | $52,330 | | Total | $235,008 | $312,963 | - The company uses a market approach for fair value measurement, prioritizing observable inputs (Level 1 and Level 2 assets) and reported no transfers in or out of Level 3 categories[42][43] 4. Investments This note provides a breakdown of the company's investment portfolio, including amortized cost and fair value Investments Breakdown (in thousands) | Investment Type | Amortized Cost (Sep 30, 2021) | Fair Value (Sep 30, 2021) | Amortized Cost (Dec 31, 2020) | Fair Value (Dec 31, 2020) | | :----------------------- | :---------------------------- | :------------------------ | :---------------------------- | :------------------------ | | Commercial paper | $15,993 | $15,995 | $35,543 | $35,559 | | Corporate bonds | $119,625 | $119,756 | $191,977 | $192,573 | | U.S. Government agencies | $52,644 | $52,654 | $52,328 | $52,330 | | Total | $188,262 | $188,405 | $279,848 | $280,462 | - As of September 30, 2021, all marketable securities had remaining contractual maturities of three years or less, and there were no impairments during the nine months ended September 30, 2021[45][46] 5. Property and Equipment This note presents the company's property and equipment, net of accumulated depreciation, and related expenses Property and Equipment, Net (in thousands) | Item | September 30, 2021 | December 31, 2020 | | :-------------------------- | :------------------- | :------------------ | | Laboratory equipment | $751 | $253 | | Leasehold improvements | $1,707 | $66 | | Construction in process | $551 | $147 | | Total Property and Equipment, net | $2,893 | $385 | | Depreciation expense (9 months) | $82 (2021) | $37 (2020) | 6. Accrued Expenses and Other Current Liabilities This note details the company's short-term financial obligations, including contracted services and payroll Accrued Expenses and Other Current Liabilities (in thousands) | Item | September 30, 2021 | December 31, 2020 | | :-------------------------------- | :------------------- | :------------------ | | Contracted research services | $14,175 | $5,102 | | Payroll and related expenses | $4,864 | $3,729 | | Professional and consulting fees | $2,233 | $1,603 | | Total accrued expenses and other current liabilities | $21,502 | $11,680 | 7. Stockholders' Equity This note describes the components of stockholders' equity, including common stock, preferred stock conversion, and authorized capital - Each share of common stock grants one vote, and common stockholders are not entitled to dividends unless declared by the board[49] - Upon the IPO closing on February 3, 2020, all preferred stock converted into 21,499,770 shares of common stock[49] - The company's authorized capital stock was restated to 510,000,000 shares, comprising 500,000,000 common stock and 10,000,000 undesignated preferred stock[50] 8. Stock-Based Compensation This note outlines the company's stock-based compensation plans and the related expense recognized - The 2020 Stock Option and Incentive Plan (2020 Plan) and 2020 Employee Stock Purchase Plan (2020 ESPP) were approved in late 2019/early 2020, with annual share increases[51][52] Stock-Based Compensation Expense (in thousands) | Award Type | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Stock options | $2,783 | $1,889 | $9,793 | $5,185 | | Restricted stock units | $134 | $110 | $694 | $110 | | Employee Stock Purchase Plan and Other | $92 | $0 | $174 | $0 | | Total | $3,009 | $1,999 | $10,661 | $5,295 | Stock Option Activity (as of Sep 30, 2021) | Item | Options | Weighted Average Exercise Price | | :------------------------------------------ | :-------- | :------------------------------ | | Outstanding December 31, 2020 | 3,752,744 | $15.71 | | Granted | 1,677,044 | $24.32 | | Exercised | (110,621) | $6.02 | | Cancelled or forfeited | (392,691) | $23.98 | | Outstanding September 30, 2021 | 4,926,476 | $18.22 | | Unrecognized compensation cost | $36,946 (expected over 2.8 years) | | Restricted Stock Unit Activity | Item | Number of shares (Sep 30, 2021) | Weighted average grant date fair value | | :------------------------------------------ | :------------------------------ | :------------------------------------- | | Unvested restricted common stock as of Dec 31, 2020 | 54,336 | $29.68 | | Granted (9 months ended Sep 30, 2021) | 10,000 | $28.69 | | Vested (9 months ended Sep 30, 2021) | (27,002) | $26.46 | | Unvested restricted common stock as of Sep 30, 2021 | 30,667 | $29.53 | | Total fair value vested (9 months ended Sep 30, 2021) | $693 | | 9. Net Loss Per Share This note presents the calculation of basic and diluted net loss per share, including the impact of potentially dilutive securities Net Loss Per Share (Unaudited) | Item | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss | $(35,077) | $(17,912) | $(99,729) | $(44,628) | | Weighted average common shares outstanding | 36,219,137 | 35,927,485 | 36,175,249 | 31,860,716 | | Net loss per share, basic and diluted | $(0.97) | $(0.50) | $(2.76) | $(1.42) | - Potentially dilutive securities (options, unvested restricted stock, warrants) were excluded from diluted net loss per share calculation as their effect would be anti-dilutive[61][62] 10. Leases This note details the company's operating lease arrangements, associated costs, and future minimum lease payments - The company has two operating leases for its principal office in Cambridge, MA (commenced Aug 2020/Mar 2021) and office/laboratory space in New York, NY (commenced Aug 2021)[64][65][67] - A previous office lease in Cambridge, MA was terminated effective June 15, 2021, resulting in a $5 thousand gain[66] Operating Lease Costs (in thousands) | Lease Cost Type | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | | :------------------ | :------------------------------ | :----------------------------- | | Operating lease cost | $900 | $1,975 | | Short-term lease cost | $287 | $862 | | Variable lease cost | $136 | $212 | | Total lease cost | $1,323 | $3,049 | Future Minimum Lease Payments (as of Sep 30, 2021, in thousands) | Period | Amount | | :---------------- | :------- | | Less than 1 Year | $2,390 | | 1 to 3 Years | $6,675 | | 3 to 5 Years | $6,976 | | More than 5 Years | $22,053 | | Total lease payments | $38,094 | | Less: interest | $(8,416) | | Total lease liability | $29,676 | 11. Commitments and Contingencies This note describes the company's contractual commitments, potential milestone payments, and indemnification obligations - The company enters into cancelable contracts with CROs, CMOs, and other third parties for research, clinical trials, and manufacturing services[70] - License agreements include contingent payments for development, regulatory, and commercial milestones, which are uncertain and not reasonably estimable as of September 30, 2021[71] - The company provides indemnification to vendors, lessors, business partners, and its directors/officers, with maximum potential amounts often unlimited, but no material costs incurred to date[72] - The company is not currently party to any material legal proceedings[73] 12. Benefit Plans This note outlines the company's employee benefit plans, including its 401(k) and SEP plans, and employer contributions - In 2021, the company transitioned from a SEP plan to a tax-qualified 401(k) and Profit Sharing defined contribution plan[74] Employer Contributions to Benefit Plans (in thousands) | Plan | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2020 | | :--------- | :------------------------------ | :----------------------------- | :------------------------------ | :----------------------------- | | 401(k) Plan | $207 | $772 | N/A | N/A | | SEP Plan | N/A | N/A | $161 | $428 | 13. Related-Party Transactions This note discloses transactions with related parties, specifically the services agreement with Ridgeline - The services agreement with Ridgeline, an entity owned by one of the company's investors, expired on December 31, 2020, and no fees were incurred in 2021[75][76] Service Fees Incurred with Ridgeline (in thousands) | Period | Amount | | :------------------------------ | :------- | | Three Months Ended Sep 30, 2020 | $190 | | Nine Months Ended Sep 30, 2020 | $2,293 | | Three Months Ended Sep 30, 2021 | $0 | | Nine Months Ended Sep 30, 2021 | $0 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, highlighting its business overview, the impact of COVID-19, components of revenue and expenses, detailed comparison of financial results for the three and nine months ended September 30, 2021 and 2020, and an analysis of liquidity and capital resources Overview This section introduces Black Diamond Therapeutics as a precision oncology company and highlights its financial performance and future capital needs - Black Diamond Therapeutics is a precision oncology company developing MasterKey therapies for undrugged oncogenic driver mutations using its proprietary Mutation-Allostery-Pharmacology (MAP) platform[78] - The lead product candidate, BDTX-189, is designed to selectively inhibit non-canonical mutations in EGFR and HER2, aiming for improved toxicity profiles[79] - The company has incurred significant operating losses since inception, with net losses of $99.7 million and $44.6 million for the nine months ended September 30, 2021 and 2020, respectively, and an accumulated deficit of $218.0 million as of September 30, 2021[82] - Expenses and capital requirements are expected to increase substantially due to ongoing preclinical and clinical trials, platform expansion, intellectual property, and public company operations[82][83] COVID-19 Considerations This section discusses the ongoing impact of the COVID-19 pandemic on the company's operations, clinical trials, and supply chain - The COVID-19 pandemic continues to pose substantial public health and economic challenges, impacting the company's operations, suppliers, vendors, and business partners[87][89] - Potential risks include delays in patient recruitment, clinical trial site disruptions for the MasterKey-01 trial, and impacts on the drug product supply chain and early-stage R&D programs[89] - The full extent of the pandemic's impact remains highly uncertain, depending on factors like virus strains, vaccination efforts, and new preventative actions[90] Components of our Results of Operations This section details the various components contributing to the company's financial results, including the absence of product revenue, the nature and expected increase of operating expenses (research and development, general and administrative), and other income/expense items Revenue This section states that the company has not generated product revenue and does not anticipate doing so in the near future - The company has not generated any revenue from product sales or other sources to date and does not expect to in the foreseeable future[91] Operating Expenses Operating expenses are primarily driven by research and development activities, which are expensed as incurred and expected to increase significantly with advancing clinical trials. General and administrative expenses are also anticipated to rise due to increased headcount and public company operational costs Research and Development Expenses This section details the components of R&D expenses and anticipates significant increases due to advancing clinical programs - R&D expenses include costs for preclinical studies, clinical trials, CROs/CMOs, materials, licensing payments, employee-related expenses, and regulatory compliance[92][93] - Direct external R&D costs are tracked by program, while internal costs (employee, discovery, facilities) are not allocated to specific programs[95] - R&D expenses are expected to increase substantially in the coming years as BDTX-189 advances through clinical trials and other product candidates (e.g., BDTX-1535) progress[96][97] - The successful development and commercialization of product candidates are highly uncertain, with numerous risks impacting costs and timing[98][99] General and Administrative Expenses This section outlines G&A expenses, primarily personnel and public company costs, and projects future increases - G&A expenses primarily cover salaries, benefits, stock-based compensation for executive, business development, finance, HR, legal, IT, pre-commercial, and support personnel[100] - G&A expenses are anticipated to increase due to headcount growth, public company operating costs (accounting, legal, investor relations), and preparation for potential commercialization[101] Other Income (Expense) This section describes the primary components of other income and expense, mainly interest income and foreign currency fluctuations - Other income (expense) primarily consists of interest income from cash equivalents and investments, and realized/unrealized foreign currency transaction gains and losses[102] Results of Operations The company experienced a significant increase in net loss for both the three and nine months ended September 30, 2021, primarily driven by substantial increases in research and development expenses across all programs and higher general and administrative costs associated with increased headcount and public company operations. Other income decreased due to changes in interest income and investment premium amortization Comparison of Q3 2021 and Q3 2020 This section provides a detailed financial comparison of the company's operating results for the third quarters of 2021 and 2020 Results of Operations (Three Months Ended Sep 30, in thousands) | Item | 2021 | 2020 | Change | | :--------------------------- | :------- | :------- | :------- | | Research and development | $27,626 | $12,929 | $14,697 | | General and administrative | $7,738 | $5,551 | $2,187 | | Total operating expenses | $35,364 | $18,480 | $16,884 | | Loss from operations | $(35,364) | $(18,480) | $(16,884) | | Total other income (expense), net | $287 | $568 | $(281) | | Net loss | $(35,077) | $(17,912) | $(17,165) | Research and Development (Q3) This section analyzes the significant increase in R&D expenses for the third quarter of 2021, driven by program and personnel costs - R&D expenses increased by $14.7 million (113.7%) for Q3 2021 compared to Q3 2020, primarily due to an $8.0 million increase in other research programs and platform development, a $2.3 million increase for BDTX-189, a $2.4 million increase in personnel expenses, and a $0.8 million increase in facility costs[104] General and Administrative (Q3) This section explains the increase in G&A expenses for the third quarter of 2021, primarily due to higher personnel and professional fees - G&A expenses increased by $2.2 million (39.6%) for Q3 2021 compared to Q3 2020, mainly due to higher personnel-related costs from additional headcount and increased legal and professional fees as a public company[105] Other Income (Expense) (Q3) This section details the decrease in other income for the third quarter of 2021, mainly due to investment premium amortization - Other income decreased by $0.3 million (49.5%) for Q3 2021 compared to Q3 2020, primarily because interest income increased at a slower rate than the amortization of premium on investments[106] Comparison of YTD Q3 2021 and YTD Q3 2020 This section provides a detailed financial comparison of the company's operating results for the nine months ended September 30, 2021 and 2020 Results of Operations (Nine Months Ended Sep 30, in thousands) | Item | 2021 | 2020 | Change | | :--------------------------- | :------- | :------- | :------- | | Research and development | $77,165 | $30,453 | $46,712 | | General and administrative | $23,627 | $15,934 | $7,693 | | Total operating expenses | $100,792 | $46,387 | $54,405 | | Loss from operations | $(100,792) | $(46,387) | $(54,405) | | Total other income (expense), net | $1,063 | $1,759 | $(696) | | Net loss | $(99,729) | $(44,628) | $(55,101) | Research and Development (YTD Q3) This section analyzes the substantial increase in R&D expenses for the nine months ended September 30, 2021, across programs and personnel - R&D expenses increased by $46.7 million (153.4%) for the nine months ended Sep 30, 2021, compared to the same period in 2020, driven by a $22.2 million increase in other research programs and platform development, an $11.1 million increase for BDTX-189, a $10.5 million increase in personnel expenses, and a $2.0 million increase in facility costs[108] General and Administrative (YTD Q3) This section explains the increase in G&A expenses for the nine months ended September 30, 2021, driven by headcount and public company costs - G&A expenses increased by $7.7 million (48.3%) for the nine months ended Sep 30, 2021, compared to the same period in 2020, primarily due to higher personnel-related costs from additional headcount and increased legal and professional fees as a public company[110] Other Income (Expense) (YTD Q3) This section details the decrease in other income for the nine months ended September 30, 2021, primarily due to investment premium amortization - Other income decreased by $0.7 million (39.6%) for the nine months ended Sep 30, 2021, compared to the same period in 2020, mainly due to amortization of premium on investments increasing at a higher rate while interest income remained relatively flat[111] Liquidity and Capital Resources The company's liquidity is primarily supported by IPO proceeds and existing cash and investments, which are projected to fund operations into the second half of 2023. However, significant future funding will be required to support increasing R&D and commercialization efforts, with potential reliance on equity, debt, or collaborations Sources of Liquidity This section identifies the company's primary funding sources, including IPO proceeds and existing cash and investments - The company has funded operations primarily through preferred stock sales and an IPO in February 2020, which generated $212.1 million in net proceeds[112] - As of September 30, 2021, the company had $235.0 million in cash, cash equivalents, and investments[112] Cash Flows Cash flows reflect significant usage in operating activities due to net losses, partially offset by non-cash charges. Investing activities shifted from net usage to net provision of cash, while financing activities decreased significantly after the IPO Summary of Cash Flows (Nine Months Ended Sep 30, in thousands) | Item | 2021 | 2020 | | :------------------------------------------ | :--------- | :---------- | | Cash used in operating activities | $(76,102) | $(36,372) | | Cash provided by (used in) investing activities | $87,371 | $(275,043) | | Cash provided by financing activities | $729 | $214,114 | | Net increase (decrease) in cash and cash equivalents | $11,998 | $(97,301) | Operating Activities This section explains the cash used in operating activities, primarily driven by net losses and changes in working capital - Cash used in operating activities increased to $76.1 million for the nine months ended September 30, 2021, from $36.4 million in the prior year, primarily due to higher net losses[113][115] Investing Activities This section details the cash flows from investing activities, including investment purchases, sales, and maturities - Cash provided by investing activities was $87.4 million for the nine months ended September 30, 2021, primarily from sales and maturities of investments, a significant shift from $275.0 million used in the prior year for investment purchases[116] Financing Activities This section outlines the cash flows from financing activities, primarily from stock option exercises and IPO proceeds - Cash provided by financing activities was $0.7 million for the nine months ended September 30, 2021, from stock option exercises, a decrease from $214.1 million in the prior year primarily from IPO proceeds[117] Funding Requirements This section discusses the company's anticipated capital needs for advancing its product candidates and operating as a public entity - The company expects expenses to increase substantially as it advances preclinical and clinical trials for product candidates, including BDTX-189 and BDTX-1535, and incurs costs associated with operating as a public company[118] - Current cash, cash equivalents, and investments of $235.0 million are expected to fund operations into the second half of 2023, but additional capital will be required thereafter[119] - Future funding may come from public/private equity offerings, debt financings, collaborations, or strategic partnerships, which could lead to ownership dilution or restrictive covenants[121][122] Contractual Obligations and Commitments This section presents the company's future contractual obligations, primarily related to property leases Contractual Obligations as of September 30, 2021 (in thousands) | Type | Less than 1 Year | 1 to 3 Years | 3 to 5 Years | More than 5 Years | Total | | :------------------------ | :--------------- | :----------- | :----------- | :---------------- | :------ | | Property leases - commenced | $2,390 | $6,675 | $6,976 | $22,053 | $38,094 | - The table does not include potential future milestone or royalty payments under license agreements due to the uncertainty of their occurrence[124] Off-Balance Sheet Arrangements This section confirms the absence of any off-balance sheet arrangements during the reported periods - The company did not have any off-balance sheet arrangements during the periods presented[125] Critical Accounting Policies and Significant Judgments and Use of Estimates This section highlights the key accounting policies and management's estimates used in financial reporting - The condensed consolidated financial statements are prepared in accordance with GAAP, requiring management to make estimates and judgments[126] - There were no material changes to critical accounting policies from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020[127] Recently Issued Accounting Pronouncements This section refers to the notes for details on recently adopted and evaluated accounting standards - A description of recently issued accounting pronouncements is provided in Note 2 to the condensed consolidated financial statements[128] Emerging Growth Company Status This section states the company's election to use the extended transition period for new accounting standards as an emerging growth company - The company has elected to use the extended transition period for complying with new or revised financial accounting standards as an 'emerging growth company' under the JOBS Act[129] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk exposures are to interest rate fluctuations, given its significant cash and investment balances, and foreign currency exchange rates due to international vendor contracts and a Canadian subsidiary. Inflation is also noted as a factor affecting labor and clinical trial costs - As of September 30, 2021, the company had $235.0 million in cash, cash equivalents, and investments, with primary market risk exposure to interest rate fluctuations[131] - Given the short-term nature of its investments, a sudden change in market interest rates is not expected to have a material impact on financial condition or results of operations[131] - The company has immaterial exposure to foreign currency exchange rate fluctuations from foreign vendor contracts and a Canadian subsidiary, and does not hedge against this exposure[132] - Inflation affects labor and clinical trial costs, but is not believed to have had a material effect on results of operations during the nine months ended September 30, 2021 and 2020[134] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2021. There were no material changes in internal control over financial reporting during the period - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of September 30, 2021[135] - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the period[136] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings and does not anticipate any such proceedings would have a material adverse effect on its business, financial condition, or results of operations - The company is not currently party to and is not aware of any material legal proceedings[73][138] Item 1A. Risk Factors The company's business faces significant risks and uncertainties, and readers are encouraged to review the comprehensive discussion of risk factors in the Annual Report on Form 10-K for the year ended December 31, 2020, as well as other public filings - The business faces significant risks and uncertainties, which are detailed in the Annual Report on Form 10-K for the year ended December 31, 2020[139] - Readers should consider these risk factors, along with other information in this Quarterly Report and other SEC filings, as additional risks not currently known or deemed immaterial may also impact the business[139] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the issuance of unregistered equity securities, specifically stock options to employees and advisors, and confirms the use of proceeds from the February 2020 IPO remains consistent with prior disclosures - During the three months ended September 30, 2021, the company issued options to purchase 53,950 shares of common stock to employees and advisors, exempt from registration under Rule 701 of the Securities Act[142] - The company completed its IPO on February 3, 2020, issuing 12,174,263 shares of common stock for aggregate net proceeds of $212.1 million[143][145] - There has been no material change in the planned use of the net proceeds from the IPO as previously described[146] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[146] Item 4. Mine Safety Disclosures The company stated that mine safety disclosures are not applicable to its operations - Not applicable[146] Item 5. Other Information The company reported no other information - Not applicable[146] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report, including certifications from the Principal Executive Officer and Principal Financial Officer, and various Inline XBRL documents - Exhibits include certifications (31.1, 31.2, 32.1) and Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.LAB, 101.PRE, 101.DEF, 104)[150]