ikna-10q_20210630.htm
false 0001835579 2021 Q2 --12-31 0.1397 0.1397 P3M ikna:ResearchAndDevelopmentMember ikna:ResearchAndDevelopmentMember ikna:ResearchAndDevelopmentMember ikna:ResearchAndDevelopmentMember P8Y3D P8Y7M2D P8Y7M2D P7Y2M26D P6Y29D P6Y29D 0001835579 2021-01-01 2021-06-30 xbrli:shares 0001835579 2021-07-31 iso4217:USD 0001835579 2021-06-30 0001835579 2020-12-31 iso4217:USD xbrli:shares 0001835579 2021-04-01 2021-06-30 0001835579 2020-04-01 2020-06-30 0001835579 2020-01-01 2020-06-30 0001835579 us-gaap:RedeemableConvertiblePreferredStockMember 2019-12-31 0001835579 us-gaap:CommonStockMember 2019-12-31 0001835579 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001835579 us-gaap:RetainedEarningsMember 2019-12-31 0001835579 2019-12-31 0001835579 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001835579 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0001835579 2020-01-01 2020-03-31 0001835579 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0001835579 us-gaap:RedeemableConvertiblePreferredStockMember 2020-03-31 0001835579 us-gaap:CommonStockMember 2020-03-31 0001835579 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001835579 us-gaap:RetainedEarningsMember 2020-03-31 0001835579 2020-03-31 0001835579 us-gaap:AdditionalPaidInCapitalMember 2020-04-01 2020-06-30 0001835579 us-gaap:RetainedEarningsMember 2020-04-01 2020-06-30 0001835579 us-gaap:RedeemableConvertiblePreferredStockMember 2020-06-30 0001835579 us-gaap:CommonStockMember 2020-06-30 0001835579 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0001835579 us-gaap:RetainedEarningsMember 2020-06-30 0001835579 2020-06-30 0001835579 us-gaap:RedeemableConvertiblePreferredStockMember 2020-12-31 0001835579 us-gaap:CommonStockMember 2020-12-31 0001835579 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001835579 us-gaap:RetainedEarningsMember 2020-12-31 0001835579 us-gaap:CommonStockMember 2021-01-01 2021-03-31 0001835579 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-03-31 0001835579 2021-01-01 2021-03-31 0001835579 us-gaap:RedeemableConvertiblePreferredStockMember 2021-01-01 2021-03-31 0001835579 us-gaap:RetainedEarningsMember 2021-01-01 2021-03-31 0001835579 us-gaap:CommonStockMember 2021-03-31 0001835579 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001835579 us-gaap:RetainedEarningsMember 2021-03-31 0001835579 2021-03-31 0001835579 us-gaap:AdditionalPaidInCapitalMember 2021-04-01 2021-06-30 0001835579 us-gaap:CommonStockMember 2021-04-01 2021-06-30 0001835579 us-gaap:RetainedEarningsMember 2021-04-01 2021-06-30 0001835579 us-gaap:CommonStockMember 2021-06-30 0001835579 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001835579 us-gaap:RetainedEarningsMember 2021-06-30 0001835579 us-gaap:IPOMember 2021-01-01 2021-03-31 xbrli:pure 0001835579 2021-03-22 2021-03-22 0001835579 us-gaap:IPOMember 2021-03-30 2021-03-30 0001835579 us-gaap:OverAllotmentOptionMember 2021-03-30 2021-03-30 0001835579 2021-03-30 0001835579 2021-03-30 2021-03-30 ikna:FinancialInstitution 0001835579 us-gaap:IPOMember 2020-12-31 0001835579 us-gaap:MoneyMarketFundsMember us-gaap:FairValueMeasurementsRecurringMember 2021-06-30 0001835579 us-gaap:MoneyMarketFundsMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2021-06-30 0001835579 us-gaap:FairValueMeasurementsRecurringMember 2021-06-30 0001835579 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2021-06-30 0001835579 us-gaap:MoneyMarketFundsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001835579 us-gaap:MoneyMarketFundsMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2020-12-31 0001835579 us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001835579 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2020-12-31 0001835579 ikna:LabEquipmentMember 2021-06-30 0001835579 ikna:LabEquipmentMember 2020-12-31 0001835579 us-gaap:LeaseholdImprovementsMember 2021-06-30 0001835579 us-gaap:LeaseholdImprovementsMember 2020-12-31 0001835579 ikna:ElectronicEquipmentAndSoftwareMember 2021-06-30 0001835579 ikna:ElectronicEquipmentAndSoftwareMember 2020-12-31 0001835579 us-gaap:FurnitureAndFixturesMember 2021-06-30 0001835579 ikna:SeriesA1PreferredStockMember ikna:StockPurchaseAgreementWithBMSMember 2019-01-31 0001835579 ikna:BMSCollaborationAgreementAndStockPurchaseAgreementMember ikna:BristolMyersSquibbMember 2019-01-31 2019-01-31 0001835579 ikna:BMSCollaborationAgreementAndStockPurchaseAgreementMember ikna:BristolMyersSquibbMember ikna:IKOneSevenFiveMember 2019-01-31 0001835579 ikna:BMSCollaborationAgreementAndStockPurchaseAgreementMember ikna:BristolMyersSquibbMember ikna:IKFourOneTwoMember 2019-01-31 0001835579 ikna:BMSCollaborationAgreementAndStockPurchaseAgreementMember ikna:BristolMyersSquibbMember 2019-01-31 0001835579 ikna:BMSCollaborationAgreementMember 2019-01-31 2019-01-31 0001835579 ikna:BMSCollaborationAgreementMember 2019-01-31 0001835579 ikna:BMSCollaborationAgreementMember ikna:IKOneSevenFiveMember 2019-01-31 0001835579 ikna:BMSCollaborationAgreementMember ikna:IKFourOneTwoMember 2019-01-31 0001835579 ikna:BMSCollaborationAgreementMember 2021-04-01 2021-06-30 0001835579 ikna:BMSCollaborationAgreementMember 2020-04-01 2020-06-30 0001835579 ikna:BMSCollaborationAgreementMember 2021-01-01 2021-06-30 0001835579 ikna:BMSCollaborationAgreementMember 2020-01-01 2020-06-30 0001835579 ikna:BMSCollaborationAgreementMember 2021-06-30 0001835579 us-gaap:RedeemableConvertiblePreferredStockMember us-gaap:IPOMember 2021-03-30 0001835579 us-gaap:RedeemableConvertiblePreferredStockMember us-gaap:IPOMember 2021-06-30 0001835579 us-gaap:RedeemableConvertiblePreferredStockMember us-gaap:IPOMember 2021-03-30 2021-03-30 0001835579 ikna:TwoThousandAndTwentyOneStockIncentivePlanMember 2021-03-20 2021-03-20 0001835579 ikna:TwoThousandAndTwentyOneStockIncentivePlanMember 2021-03-30 0001835579 ikna:TwoThousandAndTwentyOneStockIncentivePlanMember 2021-03-30 2021-03-30 0001835579 ikna:TwoThousandAndTwentyOneStockIncentivePlanMember 2021-06-30 0001835579 ikna:TwoThousandAndTwentyOneStockIncentivePlanMember 2021-01-01 2021-06-30 0001835579 us-gaap:ResearchAndDevelopmentExpenseMember 2021-04-01 2021-06-30 0001835579 us-gaap:ResearchAndDevelopmentExpenseMember 2020-04-01 2020-06-30 0001835579 us-gaap:ResearchAndDevelopmentExpenseMember 2021-01-01 2021-06-30 0001835579 us-gaap:ResearchAndDevelopmentExpenseMember 2020-01-01 2020-06-30 0001835579 us-gaap:GeneralAndAdministrativeExpenseMember 2021-04-01 2021-06-30 0001835579 us-gaap:GeneralAndAdministrativeExpenseMember 2020-04-01 2020-06-30 0001835579 us-gaap:GeneralAndAdministrativeExpenseMember 2021-01-01 2021-06-30 0001835579 us-gaap:GeneralAndAdministrativeExpenseMember 2020-01-01 2020-06-30 0001835579 2020-01-01 2020-12-31 0001835579 ikna:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember 2021-03-30 2021-03-30 0001835579 ikna:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember us-gaap:CommonStockMember 2021-01-01 2021-06-30 0001835579 ikna:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember 2021-01-01 2021-06-30 0001835579 ikna:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember 2021-06-30 0001835579 us-gaap:LicenseAgreementTermsMember ikna:UniversityOfTexasAtAustinMember 2015-01-01 2015-12-31 0001835579 us-gaap:LicenseAgreementTermsMember ikna:UniversityOfTexasAtAustinMember 2015-12-31 0001835579 us-gaap:LicenseAgreementTermsMember ikna:UniversityOfTexasAtAustinMember 2021-01-01 2021-06-30 0001835579 ikna:AskAtLicenseMember 2018-01-01 2018-12-31 0001835579 ikna:AskAtLicenseMember 2018-12-31 0001835579 ikna:AskAtLicenseMember srt:MinimumMember 2018-12-31 0001835579 ikna:AskAtLicenseMember srt:MaximumMember 2018-12-31 0001835579 ikna:AskAtLicenseMember 2021-01-01 2021-06-30 utr:sqft 0001835579 ikna:BostonMassachusettsMember 2020-07-21 0001835579 ikna:BostonMassachusettsMember 2020-07-20 2020-07-21 0001835579 us-gaap:RedeemableConvertiblePreferredStockMember 2020-01-01 2020-06-30 0001835579 ikna:OptionsToPurchaseCommonStockMember 2021-01-01 2021-06-30 0001835579 ikna:OptionsToPurchaseCommonStockMember 2020-01-01 2020-06-30

 

 

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

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: 001-40287

 

IKENA ONCOLOGY, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

81-1697316

(State or other jurisdiction of

incorporation or organization)

 

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

645 Summer Street, Suite 101

Boston, MA

 

02210

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (857) 273-8343

 

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 $0.001 per share

 

IKNA

 

The Nasdaq Global 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, 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 July 31, 2021, the registrant had 35,859,119 shares of common stock, $0.001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

 

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholder's Equity (Deficit)

3

 

Condensed Consolidated Statements of Cash Flows

4

 

Notes to Unaudited Condensed Consolidated 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

21

Item 4.

Controls and Procedures

21

PART II.

OTHER INFORMATION

22

Item 1.

Legal Proceedings

22

Item 1A.

Risk Factors

22

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

 

i


 

SUMMARY OF THE MATERIAL AND OTHER RISKS ASSOCIATED WITH OUR BUSINESS

Our business is subject to numerous material and other risks and uncertainties that you should be aware of in evaluating our business. These risks include, but are not limited to, the following:

 

 

We are a targeted oncology company with a limited operating history.

 

We have incurred significant net losses since our inception and anticipate that we will continue to incur losses for the foreseeable future.

 

We have no products approved for commercial sale and have not generated any revenue from product sales.

 

We will require additional capital to finance our operations, which may not be available on acceptable terms, or at all. If we are unable to raise capital when needed or on terms acceptable to us, we would be forced to delay, reduce or eliminate some of our product development programs or commercialization efforts.

 

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

 

The COVID-19 pandemic, or a similar pandemic, epidemic, or outbreak of an infectious disease, may materially and adversely affect our business and our financial results and could cause a disruption to the development of our product candidates.

 

We have never successfully completed any clinical trials for our oncology programs, and we may be unable to do so for any product candidates we develop. Certain of our oncology programs are still in preclinical development and may never advance to clinical development.

 

Our programs are focused on the development of oncology therapeutics for patients with genetically defined or biomarker-driven cancers, which is a rapidly evolving area of science, and the approach we are taking to discover and develop drugs is novel and may never lead to approved or marketable products.

 

Clinical product development involves a lengthy and expensive process, with an uncertain outcome.

 

We face substantial competition, which may result in other companies discovering, developing or commercializing products before or more successfully than we do.

 

If the market opportunities for our programs and product candidates are smaller than we estimate or if any regulatory approval that we obtain is based on a narrower definition of the patient population, our revenue and ability to achieve profitability will be adversely affected, possibly materially.

 

We rely on third parties to conduct our Phase 1 clinical trial of IK-175 and Phase 1b clinical trial of IK-007 and expect to rely on third parties to conduct clinical trials for our targeted oncology and other tumor microenvironment programs, as well as investigator-sponsored clinical trials of our product candidates. If these third parties do not successfully carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.

 

We have entered into collaborations and may enter into additional collaborations in the future, and we might not realize the anticipated benefits of such collaborations.

 

If we are unable to obtain and maintain patent and other intellectual property protection for our technology and product candidates or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and drugs similar or identical to ours, and our ability to successfully commercialize our technology and drugs may be impaired.

 

Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions.

 

Our future success depends on our ability to retain key executives and experienced scientists and to attract, retain and motivate qualified personnel.

 

The dual class structure of our common stock may limit your ability to influence corporate matters and may limit your visibility with respect to certain transactions.

 

The material and other risks summarized above should be read together with the text of the full risk factors below and with the other information set forth in this Quarterly Report, including our condensed consolidated financial statements and the related notes, as well as with other documents that we file with the SEC. If any such material and other risks and uncertainties actually occur, our business, prospects, financial condition and results of operations could be materially and adversely affected. The risks summarized above, or described in full below, are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial may also materially adversely affect our business, prospects, financial condition and results of operations.

ii


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains express or implied forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements involve risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management and expected market growth are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

 

Forward-looking statements in this prospectus include, but are not limited to, statements about:

 

the initiation, timing, progress, results, and cost of our research and development programs and our current and future preclinical studies and clinical trials, 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 trials will become available, and our research and development programs;

 

our ability to efficiently discover and develop product candidates;

 

our ability and the potential to successfully manufacture our drug substances and product candidates for preclinical use, for clinical trials, and on a larger scale, for commercial use, if approved;

 

the ability and willingness of our third-party strategic collaborators to continue research and development activities relating to our development candidates and product candidates;

 

our ability to obtain funding for our operations necessary to complete further development and commercialization of our product candidates;

 

our ability to obtain and maintain regulatory approval of our product candidates;

 

our ability to commercialize our products, if approved;

 

the pricing and reimbursement of our product candidates, if approved;

 

the implementation of our business model, and strategic plans for our business and product candidates;

 

the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates;

 

estimates of our future expenses, revenue, capital requirements, and our needs for additional financing;

 

the potential benefits of strategic collaboration agreements, our ability to enter into strategic collaborations or arrangements, and our ability to attract collaborators with development, regulatory and commercialization expertise;

 

future agreements with third parties in connection with the commercialization of product candidates and any other approved product;

 

the size and growth potential of the markets for our product candidates, and our ability to serve those markets;

 

our financial performance;

 

the rate and degree of market acceptance of our product candidates;

 

regulatory developments in the United States and relevant foreign countries;

 

our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;

 

our ability to produce our products or product candidates with advantages in turnaround times or manufacturing cost;

 

the success of competing therapies that are or may become available;

 

our ability to attract and retain key scientific or management personnel;

 

the impact of laws and regulations;

 

our use of proceeds from our initial public offering;

 

developments relating to our competitors and our industry;

 

the effect of the COVID-19 pandemic, including mitigation efforts and economic effects, on any of the foregoing or other aspects of our business operations, including but not limited to our preclinical studies and clinical trials and any future studies or trials; and

 

other risks and uncertainties, including those under the caption “Risk Factors.”

 

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments that we may make or into which we may enter.

You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed or incorporated by reference as exhibits hereto completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

iii


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

IKENA ONCOLOGY, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

June 30,

2021

 

 

December 31,

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

264,004

 

 

$

162,491

 

Prepaid expenses and other current assets

 

 

4,706

 

 

 

3,478

 

Total current assets

 

 

268,710

 

 

 

165,969

 

Property and equipment, net

 

 

2,102

 

 

 

1,393

 

Right-of-use asset

 

 

7,143

 

 

 

170

 

Other assets

 

 

872

 

 

 

872

 

Total assets

 

$

278,827

 

 

$

168,404

 

Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity

   (Deficit)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,474

 

 

$

2,122

 

Accrued expenses and other current liabilities

 

 

3,771

 

 

 

5,402

 

Operating lease liability

 

 

1,826

 

 

 

186

 

Deferred revenue

 

 

22,472

 

 

 

20,622

 

Total current liabilities

 

 

30,543

 

 

 

28,332

 

Long-term portion of lease liabilities

 

 

5,756

 

 

 

 

Deferred revenue, net of current portion

 

 

26,268

 

 

 

35,141

 

Total liabilities

 

 

62,567

 

 

 

63,473

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

 

 

Redeemable convertible preferred stock (Series A, A-1 and B), $0.001 par value,

   No shares authorized, issued and outstanding as of June 30, 2021; 169,396,576

   shares authorized, issued and outstanding as of December 31, 2020 (liquidation

   preference of $0 as of June 30, 2021 and $202.2 million as of December 31, 2020)

 

 

 

 

 

205,979

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

 

 

Preferred Stock, $0.001 par value - 10,000,000 shares authorized at June 30, 2021

   and no shares authorized at December 31, 2020; No shares issued and outstanding

   at June 30, 2021 or December 31, 2020

 

 

 

 

 

 

Common stock, $0.001 par value, 150,000,000 shares authorized, 35,859,119

   issued and outstanding as of June 30, 2021; 230,000,000 shares authorized,

   3,096,903 issued and outstanding as of December 31, 2020

 

 

36

 

 

 

3

 

Additional paid-in capital

 

 

349,960

 

 

 

10,288

 

Accumulated deficit

 

 

(133,736

)

 

 

(111,339

)

Total stockholders’ equity (deficit)

 

 

216,260

 

 

 

(101,048

)

Total liabilities, redeemable convertible preferred stock and stockholders’ equity

   (deficit)

 

$

278,827

 

 

$

168,404

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

1


 

IKENA ONCOLOGY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Research and development revenue under collaboration agreement

 

$

3,549

 

 

$

3,073

 

 

$

7,023

 

 

$

6,300

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

11,374

 

 

 

6,334

 

 

 

21,396

 

 

 

14,226

 

General and administrative

 

 

4,862

 

 

 

1,798

 

 

 

8,035

 

 

 

4,308

 

Total operating expenses

 

 

16,236

 

 

 

8,132

 

 

 

29,431

 

 

 

18,534

 

Loss from operations

 

 

(12,687

)

 

 

(5,059

)

 

 

(22,408

)

 

 

(12,234

)

Other income (expense), net

 

 

6

 

 

 

21

 

 

 

11

 

 

 

251

 

Net loss and comprehensive loss

 

$

(12,681

)

 

$

(5,038

)

 

$

(22,397

)

 

$

(11,983

)

Net loss per share attributable to common stockholders basic and

   diluted

 

$

(0.35

)

 

$

(1.89

)

 

$

(1.12

)

 

$

(4.51

)

Weighted-average common stocks outstanding, basic and diluted

 

 

35,853,341

 

 

 

2,658,800

 

 

 

19,940,204

 

 

 

2,657,283

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

2


IKENA ONCOLOGY, INC.

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

(in thousands, except share amounts)

(Unaudited)

 

 

 

Redeemable

Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Total

Stockholders’

Equity

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

(Deficit)

 

Balance at December 31, 2019

 

 

75,727,268

 

 

$

78,867

 

 

 

 

2,651,333

 

 

$

3

 

 

$

5,617

 

 

$

(67,083

)

 

$

(61,463

)

Exercise of stock options

 

 

 

 

 

 

 

 

 

7,461

 

 

 

 

 

 

21

 

 

 

 

 

 

21

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

375

 

 

 

 

 

 

375

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,945

)

 

 

(6,945

)

Balance at March 31, 2020

 

 

75,727,268

 

 

 

78,867

 

 

 

 

2,658,794

 

 

 

3

 

 

 

6,013

 

 

 

(74,028

)

 

$

(68,012

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

354

 

 

 

 

 

 

354

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,038

)

 

 

(5,038

)

Balance at June 30, 2020

 

 

75,727,268

 

 

$

78,867

 

 

 

 

2,658,794

 

 

$

3

 

 

$

6,367

 

 

$

(79,066

)

 

$

(72,696

)

 

 

 

Redeemable

Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Total

Stockholders’

Equity

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

(Deficit)

 

Balance at December 31, 2020

 

 

169,396,576

 

 

$

205,979

 

 

 

 

3,096,903

 

 

$

3

 

 

$

10,288

 

 

$

(111,339

)

 

$

(101,048

)

Initial public offering, net of

   issuance costs of $2.4 million

 

 

 

 

 

 

 

 

 

8,984,375

 

 

 

9

 

 

 

131,293

 

 

 

 

 

 

131,302

 

Conversion of convertible

   preferred stock into common

   stock

 

 

(169,396,576

)

 

 

(205,979

)

 

 

 

23,678,568

 

 

 

24

 

 

 

205,955

 

 

 

 

 

 

205,979

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

885

 

 

 

 

 

 

885

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

91,395

 

 

 

 

 

 

242

 

 

 

 

 

 

242

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,716

)

 

 

(9,716

)

Balance at March 31, 2021

 

 

 

 

 

 

 

 

 

35,851,241

 

 

 

36

 

 

 

348,663

 

 

 

(121,055

)

 

 

227,644

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,262

 

 

 

 

 

 

1,262

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

7,878

 

 

 

 

 

 

35

 

 

 

 

 

 

35

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,681

)

 

 

(12,681

)

Balance at June 30, 2021

 

 

 

 

$

 

 

 

 

35,859,119

 

 

$

36

 

 

$

349,960

 

 

$

(133,736

)

 

$

216,260

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


IKENA ONCOLOGY, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(22,397

)

 

$

(11,983

)

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

 

 

 

 

 

 

 

 

Depreciation

 

 

234

 

 

 

150

 

Stock-based compensation

 

 

2,147

 

 

 

729

 

Right-of-Use Amortization

 

 

568

 

 

 

467

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(1,859

)

 

 

467

 

Accounts payable

 

 

452

 

 

 

(138

)

Accrued expenses and other current liabilities

 

 

(872

)

 

 

(543

)

Lease liability

 

 

(144

)

 

 

(435

)

Deferred revenue

 

 

(7,023

)

 

 

(6,300

)

Net cash flows used in operating activities

 

 

(28,894

)

 

 

(17,586

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(1,026

)

 

 

(116

)

Net cash flows used in investing activities

 

 

(1,026

)

 

 

(116

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from initial public offering, net of offering costs

 

 

131,302

 

 

 

 

Payment of preferred issuance costs

 

 

(146

)

 

 

 

Proceeds from exercise of stock options

 

 

277

 

 

 

21

 

Net cash flows provided by financing activities

 

 

131,433

 

 

 

21

 

Net increase (decrease) in cash and cash equivalents and restricted cash

 

 

101,513

 

 

 

(17,681

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

163,363

 

 

 

82,083

 

Cash, cash equivalents and restricted cash, end of period

 

$

264,876

 

 

$

64,402

 

Cash and cash equivalents

 

$

264,004

 

 

$

63,530

 

Restricted cash included in other assets

 

 

872

 

 

 

872

 

Cash, cash equivalents and restricted cash, end of period

 

$

264,876

 

 

$

64,402

 

Supplemental disclosure of non-cash activities

 

 

 

 

 

 

 

 

Purchases of property and equipment in accrued expense

 

$

100

 

 

$

 

Right-of-use assets recognized upon adoption of ASC 842

 

$

 

 

$

956

 

Right-of-use assets and lease liabilities recognized upon lease inception

 

$

7,541

 

 

$

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


IKENA ONCOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Organization and Basis of Presentation

The Company is a targeted oncology company developing novel therapies targeting key cancer signaling pathways. By leveraging the Company’s deep understanding of discovery chemistry, translational science, and patient-centric drug development, the Company has built a deep pipeline of programs, both wholly owned and partnered, focused on genetically defined or biomarker-driven cancers, which enables it to target specific patient populations that are in need of new treatment options and the Company believes are most likely to respond to treatment with its product candidates. Since the Company commenced operations in 2016, it has discovered or developed five oncology programs that include four product candidates in either IND-enabling studies or clinical development.

On March 22, 2021, ahead of the initial public offering, the Company effected a one-for-7.154 reverse stock split of the Company’s common stock. All share and per share amounts in the condensed consolidated financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to this reverse stock split, including reclassifying an amount equal to the reduction in par value of common stock to additional paid-in capital. Shares of common stock underlying outstanding stock options and other equity instruments were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with the terms of the appropriate securities agreements. Shares of common stock reserved for issuance upon the conversion of the Company’s convertible preferred stock were proportionately reduced and the respective conversion prices were proportionately increased. Stockholders entitled to fractional shares as a result of the reverse stock split received a cash payment in lieu of receiving fractional shares.

On March 25, 2021, the Company’s registration statement on Form S-1 relating to its initial public offering of its common stock was declared effective by the Securities and Exchange Commission (“SEC”). In the IPO, which closed on March 30, 2021, the Company issued and sold 8,984,375 shares of common stock, including full exercise of the underwriters’ over-allotment option to purchase an additional 1,171,875 shares, at a public offering price of $16.00 per share and the aggregate gross proceeds before deducting underwriting discounts and commissions, and other estimated offering expenses payable by the Company, were approximately $143.8 million.

Basis of Presentation: The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the ASC and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The accompanying condensed consolidated financial statements and footnotes to the financial statements have been prepared on the same basis as the most recently audited annual financial statements and, in the opinion of management, reflect all normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of June 30, 2021 and the results of its operations and its cash flows for the three and six months ended June 30, 2021. The results for the three and six months ended June 30, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods, or any future year or period. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2020 included in the Company’s final prospectus for its IPO filed pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the “Securities Act”), with the Securities and Exchange Commission (the “SEC”) on March 25, 2021.

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation: The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Arrys Therapeutics, Inc. (“Arrys”), Ikena Oncology Securities Corporation and Amplify Medicines, Inc, (“Amplify”). All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates: The preparation of the Company’s financial statements 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 revenue and expenses during the reporting period. Estimates and judgments are based on historical information and other market-specific or various relevant assumptions, including in certain circumstances, future projections, that management believes to be reasonable under the circumstances. Actual results could differ materially from estimates. Significant estimates and assumptions are used for, but not limited to the accruals for research and development expenses, research and development revenue under a collaboration agreement, the determination of fair value of equity instruments and intangible assets acquired in an asset acquisition and, for periods prior to the completion of the IPO, stock based compensation expense.

5


Summary of Significant Accounting Policies: The significant accounting policies and estimates used in the preparation of the accompanying consolidated financial statements are described in the Company’s audited consolidated financial statements for the year ended December 31, 2020 included in the Company’s final Prospectus for its IPO filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on March 25, 2021. There have been no material changes in the Company’s significant accounting policies during the six months ended June 30, 2021.

Concentration of Credit Risk and of Significant Suppliers: Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. At June 30, 2021 substantially all of the Company’s cash and cash equivalents were deposited at two highly rated financial institutions. The Company maintains balances in operating accounts above federally insured limits. The Company has not experienced any losses on such accounts and does not believe it is exposed to any significant credit risk on cash and cash equivalents.

The Company is dependent on third-party manufacturers and clinical research organizations to supply products and provide services for research and development activities in its programs. In particular, the Company relies and expects to continue to rely on a small number of manufacturers to supply it with its requirements for the active pharmaceutical ingredients and formulated drugs related to these programs. These programs could be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients and formulated drugs. In the second quarter 2021, we were notified that a key component required in the manufacturing of IK-412, our novel kynurenine-degrading enzyme, is similarly essential to the manufacturing of COVID-19 vaccines and therapies. As such, the availability of the component has been delayed as resources have been allocated towards vaccine production in the near-term. Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations for further analysis.

Research and Development Expense: Research and development costs are expensed as incurred. Research and development expenses are comprised of costs incurred in performing research and development activities, including salaries, stock-based compensation, and benefits for research and development full time employees facilities costs, depreciation, third-party license fees, acquisition of technology, overhead costs and external costs of outside vendors engaged to conduct preclinical development activities and trials. Research and development expense also includes the write-off of acquired in-process research and development (“IPR&D”) assets with no alternative future use.

Comprehensive Loss: Comprehensive loss includes net loss as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with stockholders. For the three and six months ended June 30, 2021 and 2020, there were no differences between net loss and comprehensive loss.

Deferred Issuance Costs: Deferred issuance costs consist of legal, accounting and other third-party fees that are directly associated with in-process equity financings and remain deferred issuance costs until such financings are consummated. After consummation of the equity financing, these costs are recorded as a reduction to the proceeds generated as a result of the offering. Should the planned equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the condensed consolidated statements of operations and comprehensive loss. On March 30, 2021, the Company completed its IPO. Accordingly, the Company recognized offering costs of approximately $2.4 million as a reduction from the gross proceeds associated with the closing of the IPO through additional paid-in capital in the accompanying condensed consolidated balance sheet. The Company incurred deferred offering costs of $0.5 million as of December 31, 2020.

Recent Accounting Pronouncements:

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements and disclosures.

Note 3. Fair Value Measurements

The following table presents information about the Company’s financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

 

 

 

As of June 30,

2021

 

 

Quoted Prices in Active Markets

(Level 1)

 

 

Significant Observable Inputs

(Level 2)

 

 

Significant Unobservable Inputs

(Level 3)

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (included in cash equivalents)

 

$

263,804

 

 

$

263,804

 

 

$

 

 

$

 

Total

 

$

263,804

 

 

$

263,804

 

 

$

 

 

$

 

6


 

 

 

 

As of December 31,

2020

 

 

Quoted Prices in Active Markets

(Level 1)

 

 

Significant Observable Inputs

(Level 2)

 

 

Significant Unobservable Inputs

(Level 3)

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (included in cash equivalents)

 

$

162,290

 

 

$

162,290

 

 

$

 

 

$

 

Total

 

$

162,290

 

 

$

162,290

 

 

$

 

 

$

 

 

During the six months ended June 30, 2021 and year ended December 31, 2020, there were no transfers between Level 1, Level 2 and Level 3.

Note 4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

 

 

 

June 30,

2021

 

 

December 31,

2020

 

Clinical, manufacturing and scientific development

 

$

1,727

 

 

$

1,917

 

Prepaid Insurance

 

 

2,488

 

 

 

23

 

Other

 

 

491

 

 

 

1,538

 

Total

 

$

4,706

 

 

$

3,478

 

 

The Company did not capitalize any deferred issuance costs at June 30, 2021 in prepaid expenses and other current assets. As of December 31, 2020, the Company capitalized $0.5 million of deferred issuance costs related to the initial public offering recorded in prepaid expenses and other current assets.

Note 5. Property and Equipment, net

Property and equipment, net consist of the following (in thousands):

 

 

 

June 30,

2021

 

 

December 31,

2020

 

Property and equipment:

 

 

 

 

 

 

 

 

Lab equipment

 

$

1,221

 

 

$

1,071

 

Leasehold improvements

 

 

860

 

 

 

939

 

Electronic equipment and software

 

 

400

 

 

 

71

 

Furniture and fixtures

 

 

384

 

 

 

 

Total property and equipment

 

 

2,865

 

 

 

2,081

 

Less: accumulated depreciation

 

 

(763

)

 

 

(688

)

Property and equipment, net

 

$

2,102

 

 

$

1,393

 

 

Depreciation expense for the three months ended June 30, 2021 and 2020 was $0.1 million and $0.1 million, respectively. Depreciation expense for the six months ended June 30, 2021 and 2020 was $0.2 million and $0.2 million, respectively.  There were no impairments for the six months ended June 30, 2021 and 2020.

Note 6. Accrued Expenses and Other Current Liabilities

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

 

 

 

June 30,

2021

 

 

December 31,

2020

 

Employee compensation

 

$

1,278

 

 

$

1,816

 

Research and development expenses

 

 

1,908

 

 

 

2,251

 

Professional fees

 

 

574

 

 

 

955

 

Other current liabilities

 

 

11

 

 

 

380

 

Total

 

$

3,771

 

 

$

5,402

 

 

7


 

Note 7. Collaboration Agreement and Stock Purchase Agreement with BMS

In January 2019, the Company entered into the BMS Collaboration Agreement with Celgene Corporation, which was acquired by BMS in November 2019, whereby the Company will carry out initial research and development activities with the goal of identifying and developing drug candidates for certain cancer types. Concurrent with execution of the BMS Collaboration Agreement, the Company entered into a stock purchase agreement with BMS, which resulted in the issuance of 14,545,450 shares of Series A-1 Preferred Stock (the “Stock Purchase Agreement”).

Agreement Structure

Under the BMS Collaboration Agreement, the Company will conduct exploratory and discovery activities, with the goal of identifying product candidates for certain targets, which are in the kynurenine pathway, which the Company is developing as IK-412, and the aryl hydrocarbon receptor (“AHR”), which the Company is developing as IK-175. The Company is obligated to complete research and development activities through completion of a Phase 1b clinical trial for each program. BMS has the option to receive a global-development, manufacture and commercialization license for the product candidate, which expires in January 2024. Subsequent to the delivery of a license, BMS is responsible for the worldwide development, manufacturing and commercialization of these product candidates.

BMS paid the Company a total of $95.0 million in aggregate upfront consideration related to the BMS Collaboration Agreement and Stock Purchase Agreement. The Company is eligible to receive $50.0 million, in case of an exercise of its option with respect to IK-175, and $40.0 million, in case of an exercise of its option with respect to IK-412. If the Company does not complete a Phase 1b clinical trial by the end of the research term, the Company may provide a data package to BMS to support the decision to exercise the option for an additional $0.25 million. Upon the exercise of the delivery of each license, the Company becomes eligible to receive up to $450 million in milestone payments as well as a tiered royalty on worldwide sales from the high single to low teen digits.

Accounting Considerations of the Agreement

The BMS Collaboration Agreement and the Stock Purchase Agreement were executed concurrently and in contemplation of each other. The issuance of Series A-1 Preferred Stock was initially accounted for at fair value. The purchase price for the Series A-1 Preferred Stock was considered to be at a discount from fair value, and therefore $1.8 million of the upfront from the BMS Collaboration Agreement was allocated to the equity arrangement.

The Company determined that the BMS Collaboration Agreement represented a contract with a customer and should be accounted for in accordance with ASC 606. The Company identified the two performance obligations, which are research and development services for IK-175 and IK-412. The options to receive worldwide development and commercialization licenses for the two targets and the option to receive manufacturing services in the future were determined to not provide any material rights to the customer and are therefore not considered to be performance obligations. The arrangement also contains certain di minimis items, including participation on joint oversight committees.

The Company identified $78.7 million of total transaction price which represents the upfront consideration allocated to the revenue arrangement. Additional consideration to be paid to the Company upon exercise of a right to receive a license or potential milestone and royalty payments are excluded from the transaction price as they relate to amounts that can only be achieved subsequent to the exercise of an options and are outside of the initial contact term.

Based on the distinct performance obligations identified above, the Company allocated the $78.7 million transaction price based on relative estimated standalone selling prices of each of its performance obligations as follows:

 

$41.2 million for research and development services for IK-175; and

 

$37.5 million for research and development services for IK-412.

The Company determined the estimated standalone selling price for the research and development services based on internal estimates of the costs to perform the services, including expected internal expenses and expenses with third parties, marked up to include a reasonable profit margin. Significant inputs used to determine the total expense of the research and development activities include the length of time required and the number and cost of various studies that will be performed to complete the applicable development plan.

The Company is recognizing revenue related to each of its performance obligations as the research and development services are performed through January 2024. The Company recognizes revenue related to research and development services performed using an input method by calculating costs incurred at each period end relative to total costs expected to be incurred.

8


The Company recognized revenue of $3.5 million and $3.1 million in the three months ended June 30, 2021 and 2020, respectively, and revenue of $7.0 million and $6.3 million during the six months ended June 30, 2021 and 2020, respectively, from the BMS Collaboration Agreement, that in each case was previously included in deferred revenue at the beginning of the respective period. The condensed consolidated balance sheet at June 30, 2021 includes deferred revenue of $48.8 million related this agreement, of which $22.5 million and $26.3 million were classified as current and non-current, respectively. This amount is expected to be recognized as performance obligations are satisfied through the completion of the research and development services for IK-175 and IK-412.

Note 8. Redeemable Convertible Preferred Stock

In connection with the closing of the Company’s IPO on March 30, 2021, all issued and outstanding Redeemable Convertible Preferred Stock of 169,396,576 were converted to 23,678,568 shares of the Company’s common stock and are no longer issued.

Note 9. Stock-Based Compensation

In March 2016, the Company’s board of directors and stockholders adopted the 2016 Stock Incentive Plan which was amended and restated in December 2020, (as so amended and restated, the “2016 Plan”) which permits the granting of (1) options to purchase common stock intended to qualify as incentive stock options under Section 422 of the Code, and (2) options that do not so qualify.     

On March 19, 2021, the Company’s board of directors approved, and on March 20, 2021, the Company’s stockholders approved the 2021 Stock Incentive Plan (the “2021 Plan”), which became effective on March 30, 2021.  The 2021 Plan replaced the 2016 Plan as the board of directors had determined it would not to make additional awards under the 2016 Plan following the closing of the initial public offering. However, the 2016 Plan will continue to govern outstanding equity awards granted thereunder. The 2021 Plan allows the Company to make equity-based and cash-based incentive awards to officers, employees, directors and consultants.

As of the effective date of the 2021 Plan, no further awards will be made under the 2016 Plan. Any options or awards outstanding under the 2016 Plan remain outstanding and effective and are governed by their existing terms. The shares of the Company’s common stock subject to outstanding awards under the 2016 Plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right will be added back to the shares of common stock available for issuance under the 2021 Plan.  No more than 3,263,664 shares of the Company’s common stock may be granted subject to incentive stock options under the 2021 Plan. In addition, the 2021 Plan contains an “evergreen” provision, which allows for an annual increase in the number of shares of common stock available for issuance under the 2021 Plan on the first day of each fiscal year during the period beginning in fiscal year 2022. The annual increase in the number of shares shall be equal to 4% of the number of shares of common stock outstanding on the immediately preceding December 31; and such lesser number of shares as determined by the Administrator as provided in the 2021 Plan.

As of June 30, 2021, 3,084,975 shares of common stock remain available for future issuance under the 2021 Plan. The Plan provides that equity awards may be granted to employees and nonemployees. The vesting periods for equity awards, which generally is four years, are determined by the Board of Directors. The contractual term for stock option awards is ten years.

The total compensation expense recognized in the statements of operations associated with all the stock-based compensation awards granted by the Company is as follows (in thousands):

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Research and development

 

$

535

 

 

$

143

 

 

$