FORTE BIOSCIENCES, INC., 10-Q filed on 11/14/2022
Quarterly Report
v3.22.2.2
Document and Entity Information - shares
 9 Months Ended
Sep. 30, 2022
Nov. 09, 2022
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Sep. 30, 2022  
Document Fiscal Year Focus 2022  
Document Fiscal Period Focus Q3  
Entity Interactive Data Current Yes  
Trading Symbol FBRX  
Entity Current Reporting Status Yes  
Entity Registrant Name FORTE BIOSCIENCES, INC.  
Entity Central Index Key 0001419041  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Entity Shell Company false  
Entity Small Business true  
Entity Emerging Growth Company true  
Entity Ex Transition Period true  
Title of 12(b) Security Common Stock  
Security Exchange Name NASDAQ  
Entity File Number 001-38052  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 26-1243872  
Entity Address, Address Line One 3060 Pegasus Park Drive, Building 6  
Entity Address, City or Town Dallas  
Entity Address, State or Province TX  
Entity Address, Postal Zip Code 75247  
City Area Code 310  
Local Phone Number 618-6994  
Document Quarterly Report true  
Document Transition Report false  
Entity Common Stock, Shares Outstanding   21,000,069
v3.22.2.2
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Current assets:    
Cash and cash equivalents $ 44,048 $ 42,044
Prepaid expenses and other current assets 546 476
Total current assets 44,594 42,520
Other assets 534 786
Total assets 45,128 43,306
Current liabilities:    
Accounts payable 1,191 946
Accrued liabilities 1,102 812
Total current liabilities 2,293 1,758
Commitments and contingencies (Note 4)
Stockholders’ equity    
Common stock, $0.001 par value: 200,000,000 shares authorized as of September 30, 2022 (unaudited) and December 31, 2021; 21,000,069 and 14,754,447 shares issued and outstanding at September 30, 2022 (unaudited) and December 31, 2021, respectively 21 15
Additional paid-in capital 124,981 114,698
Accumulated deficit (82,167) (73,165)
Total stockholders’ equity 42,835 41,548
Total liabilities, convertible preferred stock and stockholders’ equity $ 45,128 $ 43,306
v3.22.2.2
Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 200,000,000 200,000,000
Common stock, shares issued 21,000,069 14,754,447
Common stock, shares outstanding 21,000,069 14,754,447
Series A Convertible Preferred Stock    
Convertible preferred stock, par value $ 0.001 $ 0.001
Convertible preferred stock, shares authorized 10,000,000 10,000,000
Convertible preferred stock, shares issued 0 0
Convertible preferred stock, shares outstanding 0 0
Convertible preferred stock, liquidation preference $ 0 $ 0
v3.22.2.2
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Operating expenses:        
Research and development $ 1,379 $ 5,656 $ 3,106 $ 12,501
General and administrative 2,044 2,043 5,851 5,686
Total operating expenses 3,423 7,699 8,957 18,187
Loss from operations (3,423) (7,699) (8,957) (18,187)
Other income (expense), net 23 (52) (45) (180)
Net loss $ (3,400) $ (7,751) $ (9,002) $ (18,367)
Net loss per share - basic $ (0.18) $ (0.54) $ (0.56) $ (1.34)
Net loss per share - diluted $ (0.18) $ (0.54) $ (0.56) $ (1.34)
Weighted average shares outstanding, basic 18,927,446 14,241,220 16,164,770 13,702,727
Weighted average shares outstanding, diluted 18,927,446 14,241,220 16,164,770 13,702,727
v3.22.2.2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)
$ in Thousands
Total
Common Stock
Additional Paid-in Capital
Accumulated Deficit
Beginning Balance at Dec. 31, 2020 $ 58,980 $ 13 $ 110,424 $ (51,457)
Beginning balance, shares at Dec. 31, 2020   12,830,598    
Exercise of employee stock options 27   27  
Exercise of employee stock options, shares   7,655    
Cashless exercise of warrants, shares   673,463    
Stock-based compensation 495   495  
Net loss (4,804)     (4,804)
Ending Balance at Mar. 31, 2021 54,698 $ 13 110,946 (56,261)
Ending balance, shares at Mar. 31, 2021   13,511,716    
Beginning Balance at Dec. 31, 2020 58,980 $ 13 110,424 (51,457)
Beginning balance, shares at Dec. 31, 2020   12,830,598    
Net loss (18,367)      
Ending Balance at Sep. 30, 2021 43,650 $ 15 113,459 (69,824)
Ending balance, shares at Sep. 30, 2021   14,754,447    
Beginning Balance at Mar. 31, 2021 54,698 $ 13 110,946 (56,261)
Beginning balance, shares at Mar. 31, 2021   13,511,716    
Exercise of employee stock options 15   15  
Exercise of employee stock options, shares   1,939    
Issuance of common stock upon vesting of restricted stock units, shares   5,000    
Cashless exercise of warrants   $ 1 (1)  
Cashless exercise of warrants, shares   560,402    
Stock-based compensation 1,008   1,008  
Net loss (5,812)     (5,812)
Ending Balance at Jun. 30, 2021 49,909 $ 14 111,968 (62,073)
Ending balance, shares at Jun. 30, 2021   14,079,057    
Exercise of employee stock options 19   19  
Exercise of employee stock options, shares   19,981    
Cashless exercise of warrants   $ 1 (1)  
Cashless exercise of warrants, shares   655,409    
Stock-based compensation 1,473   1,473  
Net loss (7,751)     (7,751)
Ending Balance at Sep. 30, 2021 43,650 $ 15 113,459 (69,824)
Ending balance, shares at Sep. 30, 2021   14,754,447    
Beginning Balance at Dec. 31, 2021 41,548 $ 15 114,698 (73,165)
Beginning balance, shares at Dec. 31, 2021   14,754,447    
Exercise of employee stock options 1   1  
Exercise of employee stock options, shares   1,098    
Issuance of common stock under ESPP 11   11  
Issuance of common stock under ESPP, shares   5,716    
Stock-based compensation 1,055   1,055  
Net loss (2,567)     (2,567)
Ending Balance at Mar. 31, 2022 40,048 $ 15 115,765 (75,732)
Ending balance, shares at Mar. 31, 2022   14,761,261    
Beginning Balance at Dec. 31, 2021 $ 41,548 $ 15 114,698 (73,165)
Beginning balance, shares at Dec. 31, 2021   14,754,447    
Exercise of employee stock options, shares 1,098      
Net loss $ (9,002)      
Ending Balance at Sep. 30, 2022 42,835 $ 21 124,981 (82,167)
Ending balance, shares at Sep. 30, 2022   21,000,069    
Beginning Balance at Mar. 31, 2022 40,048 $ 15 115,765 (75,732)
Beginning balance, shares at Mar. 31, 2022   14,761,261    
Stock-based compensation 1,194   1,194  
Net loss (3,035)     (3,035)
Ending Balance at Jun. 30, 2022 38,207 $ 15 116,959 (78,767)
Ending balance, shares at Jun. 30, 2022   14,761,261    
Issuance of common stock through public equity offering, net of offering costs of $595 7,122 $ 6 7,116  
Issuance of common stock through public equity offering, net of offering costs of $595, shares   6,142,158    
Issuance of common stock upon vesting of restricted stock units, shares   96,650    
Stock-based compensation 906   906  
Net loss (3,400)     (3,400)
Ending Balance at Sep. 30, 2022 $ 42,835 $ 21 $ 124,981 $ (82,167)
Ending balance, shares at Sep. 30, 2022   21,000,069    
v3.22.2.2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical)
$ in Thousands
 3 Months Ended
Sep. 30, 2022
USD ($)
Statement of Stockholders' Equity [Abstract]  
Offering costs $ 595
v3.22.2.2
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Cash flows from operating activities:    
Net loss $ (9,002) $ (18,367)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation expense   36
Impairment of property and equipment   61
Stock-based compensation expense 3,155 2,976
Changes in operating assets and liabilities:    
Prepaid expenses and other assets 76 718
Accounts payable 189 1,090
Accrued liabilities 290 391
Net cash used in operating activities (5,292) (13,095)
Cash flows from financing activities:    
Proceeds from issuance of common stock, net of issuance costs, $434 7,284  
Proceeds from exercise of stock options and ESPP 12 61
Payment of deferred financing costs   (66)
Net cash provided by (used in) by financing activities 7,296 (5)
Net increase (decrease) in cash and cash equivalents 2,004 (13,100)
Cash and cash equivalents — beginning of period 42,044 58,765
Cash and cash equivalents — end of period 44,048 45,665
Supplemental disclosure of non-cash investing and financing activities:    
Unpaid issuance costs 55 $ 40
Deferred issuance costs $ 107  
v3.22.2.2
Condensed Consolidated Statements of Cash Flows (Parenthetical)
$ in Thousands
 9 Months Ended
Sep. 30, 2022
USD ($)
Statement of Cash Flows [Abstract]  
Issuance costs $ 434
v3.22.2.2
Organization and Description of Business
 9 Months Ended
Sep. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Description of Business

1. Organization and Description of Business

 

Forte Biosciences, Inc. (www.fortebiorx.com) and its subsidiaries, referred to herein as the “Company”, is a biopharmaceutical company focused on developing its FB-102 program which the Company believes has potentially broad applications for autoimmune diseases. FB-102 is currently in preclinical development.

The Company was incorporated in Delaware on May 3, 2017 as a privately-held company. The Company merged with Tocagen, Inc. ("Merger"), a publicly traded biotechnology company, on June 15, 2020. The Company’s common stock is traded on the Nasdaq stock exchange under the ticker symbol “FBRX.”

On February 12, 2021, the Company incorporated Forte Biosciences Emerald Limited in Dublin, Ireland. This subsidiary was dissolved on April 1, 2022.

Liquidity and Risks

 

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The condensed consolidated financial statements do not reflect any adjustments relating to the recoverability and reclassification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern. Since inception, the Company has incurred losses and negative cash flows from operations. As of September 30, 2022, the Company had an accumulated deficit of $82.2 million. The Company used $5.3 million of cash in operating activities during the nine months ended September 30, 2022. Management expects to continue to incur additional losses in the foreseeable future as the Company focuses its development efforts on advancing FB-102 through preclinical trials.

The Company had cash and cash equivalents of approximately $44.0 million as of September 30, 2022. The Company’s cash and cash equivalents are held at financial institutions and exceed federally insured limits. The Company believes that its existing cash and cash equivalents will be sufficient to allow the Company to fund its operations for at least 12 months from the filing date of this Form 10-Q.

The Company will continue to need to raise additional capital or obtain financing from other sources. Management may fund future operations through the sale of equity and debt financings and may also seek additional capital through arrangements with strategic partners or other sources. There can be no assurance that additional funding will be available on terms acceptable to the Company, if at all. If the Company is unable to raise additional funding to meet its working capital needs in the future, it may be forced to delay or reduce the scope of its research and development programs and/or limit or cease its operations. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the conflicts in Eastern Europe, and otherwise.

There are numerous risks and uncertainties associated with pharmaceutical development and the Company is unable to predict the timing or amount of increased expenses on the development of future product candidates or when or if it will start to generate revenues. Even if the Company does generate revenues, it may not be able to achieve or maintain profitability. If the Company fails to become profitable or is unable to sustain profitability on a continuing basis, then it may be unable to continue its operations at planned levels and may be forced to reduce its operations.

The pandemic caused by outbreaks of new strains of coronaviruses, or COVID-19 and its variants, has resulted, and may continue to result, in significant national and global economic disruption and may adversely affect the Company’s operations. The Company is actively monitoring the impact of COVID-19 and the possible effects on its financial condition, liquidity, operations, suppliers, industry, and workforce. However, the full extent, consequences, and duration of the COVID-19 pandemic and the resulting impact on the Company cannot currently be predicted. The Company will continue to evaluate the impact that these events could have on its operations, financial position, results of operations and cash flows for the foreseeable future.
v3.22.2.2
Summary of Significant Accounting Policies
 9 Months Ended
Sep. 30, 2022
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company should be read in conjunction with its audited financial statements and accompanying notes thereto as of and for the year ended December 31, 2021 included in the Company’s Form 10-K as filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2022. The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), as found in the Accounting Standards Codification (“ASC”), the Accounting Standards Update (“ASU”), of the Financial Accounting Standards Board (“FASB”), and the rules and regulations of the US Securities and Exchange Commission (“SEC”).

In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments that are of a normal and recurring nature and that are necessary for the fair presentation of the Company’s financial position, the results of its operations and cash flows for the periods presented. Interim results are not necessarily indicative of results for the full year or any future period.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Forte Subsidiary, Inc and Forte Biosciences Emerald Limited. All intercompany accounts and transactions have been eliminated in the preparation of the condensed consolidated financial statements.

Cash and Cash Equivalents

Cash and cash equivalents include money market funds and deposits with commercial banks. Cash equivalents are defined as short-term, highly liquid investments with original maturities of 90 days or less at the date of purchase.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is a three-level hierarchy that prioritizes the inputs used in determining fair value by their reliability and preferred use as follows:

•
Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities.
•
Level 2 – Valuations based on quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data.
•
Level 3 – Valuations based on inputs that are both significant to the fair value measurements and are unobservable.

To the extent that a valuation is based on models or inputs that are less observable, or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized within Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

There have been no significant changes to the valuation methods utilized by the Company during the periods presented. There have been no transfers between Level 1, Level 2, and Level 3 in any periods presented.

The carrying amounts of financial instruments consisting of cash and cash equivalents, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities included in the Company’s financial statements, are reasonable estimates of fair value, primarily due to their short maturities.

The Company had $35.0 million in money market funds as of September 30, 2022 and December 31, 2021, which are classified within Level 1. Money market funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. Money market funds were included as cash and cash equivalents in the condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, expenses and the disclosure of contingent assets and liabilities in the Company’s condensed consolidated financial statements and accompanying notes. Significant management estimates that affect the reported amounts of assets, liabilities and expenses include stock-based compensation expense, accruals and deferred tax assets. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.

Research and Development Costs

Research and development costs are expensed as incurred. Research and development costs consist primarily of salaries and benefits of research and development personnel, costs related to research activities, preclinical studies, clinical trials and drug manufacturing. Non-refundable advance payments for goods or services that will be used in future research and development activities are deferred and capitalized and are only expensed when the goods have been received or when the service has been performed rather than when the payment is made.

Drug manufacturing, clinical and preclinical costs are a component of research and development expenses. The Company expenses costs for its drug manufacturing activities performed by Contract Manufacturing Organizations (“CMOs”), preclinical and clinical trial costs performed by Contract Research Organizations (“CROs”) and other service providers, as they are incurred, based upon estimates of the work completed over the

life of the individual study in accordance with associated agreements. The Company uses information it receives from internal personnel and outside service providers to estimate the percentage of completion and therefore the expense to be incurred.

Comprehensive Loss

Comprehensive loss includes net loss and other comprehensive income (loss) for the period. The Company did not have other comprehensive income (loss) items such as unrealized gains and losses. Comprehensive loss was equal to net loss for the three and nine months ended September 30, 2022 and 2021.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding during the period, without consideration for common stock equivalents.

Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock and common stock equivalents outstanding during the period in accordance with the treasury stock method. The following number of unexercised stock options, warrants and restricted stock units, which are common stock equivalents, have been excluded from the diluted net loss calculation as their effect would have been anti-dilutive for all periods presented:

 

 

 

 

 

 

 

Three and Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Options

 

 

2,329,918

 

 

 

1,509,256

 

Restricted stock units

 

 

162,201

 

 

 

15,000

 

Warrants

 

 

4,434

 

 

 

4,434

 

Total

 

 

2,496,553

 

 

 

1,528,690

 

 

Recently Issued Accounting Standards Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by us as of a 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 the Company’s financial position or results of operations.

In August 2020, the FASB issued ​ASU 2020-06​, ​Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in an Entity’s Own Equity (Subtopic 815-40)​ (“ASU 2020-06”). ​ASU 2020-06 eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, ASU 2020-06 modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted earnings per share computation. The amendments in ASU 2020-06 are effective for smaller reporting companies as defined by the SEC for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but not earlier than fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of ASU 2020-06 on its condensed consolidated financial statements and does not expect the adoption of this amended guidance to have a material impact on the Company’s condensed consolidated financial statements.

v3.22.2.2
Balance Sheet Components
 9 Months Ended
Sep. 30, 2022
Balance Sheet Related Disclosures [Abstract]  
Balance Sheet Components

3. Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets as of September 30, 2022 and December 31, 2021 consist of the following (in thousands):

 

 

September 30, 2022

 

 

December 31, 2021

 

Prepaid insurance

 

$

427

 

 

$

387

 

Other

 

 

119

 

 

 

89

 

Total prepaid expenses and other current assets

 

$

546

 

 

$

476

 

Other Assets

Other assets as of September 30, 2022 and December 31, 2021 consist of the following (in thousands):

 

 

September 30, 2022

 

 

December 31, 2021

 

Prepaid insurance

 

$

521

 

 

$

667

 

Prepaid offering costs

 

 

—

 

 

 

106

 

Other

 

 

13

 

 

 

13

 

Total other assets

 

$

534

 

 

$

786

 

Accrued Liabilities

Accrued liabilities as of September 30, 2022 and December 31, 2021 consist of the following (in thousands):

 

 

September 30, 2022

 

 

December 31, 2021

 

 Accrued legal and professional fees

 

$

150

 

 

$

75

 

 Accrued compensation

 

 

642

 

 

 

681

 

 Accrued manufacturing and clinical expenses

 

 

276

 

 

 

40

 

 Other

 

 

34

 

 

 

16

 

Total accrued liabilities

 

$

1,102

 

 

$

812

 
v3.22.2.2
Commitments and Contingencies
 9 Months Ended
Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

4. Commitments and Contingencies

Concentrations of Credit Risk

Bank accounts in the United States are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. The Company’s cash accounts significantly exceed FDIC limits.

Indemnifications

As permitted under Delaware law, the Company indemnifies its officers, directors, and employees for certain events and occurrences while the officer, or director is, or was, serving at the Company’s request in such capacity.

License to Patented Technology

In December 2017, the Company entered into an exclusive license agreement with the Department of Health and Human Services (“DHHS”). Under the agreement, the DHHS granted the Company an exclusive, sublicensable, worldwide license to certain patent rights under which the Company may develop and commercialize pharmaceutical and biological compositions comprising Gram-negative bacteria for the topical treatment of dermatological diseases and conditions (the “DHHS License”). The Company terminated the license agreement with DHHS effective April 2, 2022 without meeting any milestones.

The Company incurred $0 and $25,000 in minimum royalty expenses for the three months ended September 30, 2022 and 2021, and $25,000 and $75,000 for the nine months ended September 30, 2022 and 2021, respectively.

Lease Agreements

The Company has entered into month-to-month lease agreements for certain office and laboratory space. The lease agreements are cancellable by the Company at any time with a 30-day notice. Total rent expense for all

locations for the three and nine months ended September 30, 2022 was $6 thousand and $12 thousand, respectively. Total rent expense for all locations for the three and nine months ended September 30, 2021 was $9,000 and $0, respectively. Rent expense for the nine months ended September 30, 2021 included a net credit of $9,000 of a refund from operating expenses.

Preclinical Services

The Company has entered into various agreements with third party vendors for preclinical services. The estimated remaining commitments as of September 30, 2022 under these agreements were approximately $134,000.
v3.22.2.2
Equity
 9 Months Ended
Sep. 30, 2022
Equity [Abstract]  
Equity

5. Equity

Common Stock

In February 2021, warrants to purchase 978,858 shares of common stock were exercised on a cashless basis resulting in 673,463 shares being issued. In June 2021, warrants to purchase 760,572 shares of common stock were exercised on a cashless basis resulting in 560,402 shares being issued. In September 2021, warrants to purchase 1,013,116 shares of common stock were exercised on a cashless basis resulting in 655,409 shares being issued. Warrants to purchase 4,434 shares of the Company’s common stock at an exercise price of $140.25 per share which were previously issued by Tocagen, Inc. survived the merger with Tocagen and remained outstanding as of September 30, 2022.

In June 2021, the Company filed a shelf registration statement on Form S-3 that went effective in June 2021 which will allow the Company to raise up to $300 million in additional capital. On March 31, 2022, the Company entered into an “at-the-market” equity offering program (“ATM Facility”) whereby the Company may from time to time offer and sell shares of its common stock up to an aggregate offering price of $25.0 million during the term of the ATM Facility. On April 1, 2022, the Company filed a prospectus supplement to the June 2021 Form S-3 relating to the offer and sale of the shares pursuant to the ATM Facility covering sales of up to $7.0 million of shares of common stock. On August 12, 2022, the Company filed an additional prospectus supplement relating to the offer and sale of shares pursuant to the ATM Facility covering sales of up to an additional $2.7 million of shares of common stock. The Company is not obligated to sell any shares under the ATM Facility. The ATM Facility may be terminated at any time upon ten days’ prior notice, or at any time in certain circumstances, including the occurrence of a material adverse effect on the Company. The Company has agreed to pay the sales agent a commission equal to 3.0% of the gross proceeds from the sales of shares under the ATM Facility and has agreed to provide the sales agent with customary indemnification and contribution rights. The Company issued 6.1 million shares of common stock for gross proceeds of approximately $7.7 million under the ATM Facility from July 1, 2022 through September 30, 2022 and incurred $595,000 in issuance costs related to the ATM Facility and shelf registration statement.

Rights Plan

On July 11, 2022, the Company authorized and declared a dividend distribution of one right (each, a “Right”) for each outstanding share of common stock of the Company to stockholders of record as of the close of business on July 21, 2022. Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Participating Preferred Stock, par value $0.001 per share (the “Preferred Stock”), of the Company at an exercise price of $16.00 per one one-thousandth of a share of Preferred Stock, subject to adjustment. The Rights are not exercisable until the Distribution Date. The Distribution Date is the 10th business day after the public announcement that a person or group of affiliated or associated persons has acquired beneficial ownership of 10 percent or more of our common stock or the 10th business day after a person or group announces a tender or exchange offer that would result in ownership by a person or group of 10 percent or more of our common stock.

 

The Rights will be redeemable at the Company’s option for $0.001 per Right at any time on or prior to the 10th business day after the public announcement that an Acquiring Person has acquired beneficial ownership of 10 percent or more of the Common Stock.

 

The Rights expire on the earliest of July 12, 2023 or on the redemption or exchange of the Rights. There is no financial statement impact until such time as the rights become exercisable.

 
v3.22.2.2
Stock-Based Compensation
 9 Months Ended
Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation

6. Stock-Based Compensation

Equity Plans

In December 2018, Forte Subsidiary adopted the 2018 Equity Incentive Plan (the “2018 Incentive Plan”). The terms and conditions of stock-based awards were defined at the sole discretion of the Forte Subsidiary’s board of directors. Service-based awards vesting over a defined period of service and performance-based awards that vest upon the achievement of defined conditions have been issued under the 2018 Incentive Plan. Service-based awards generally vest over a four-year period, with the first 25% of such awards vesting following twelve months of continued employment or service with the remaining awards vesting monthly in equal installments over the following thirty-six months. Stock options granted under the 2018 Incentive Plan expire ten years from the date of grant and the exercise price must be at least equal to the fair market value of common stock on the grant date. In connection with the Merger, all outstanding options under the 2018 Incentive Plan were exchanged into options to purchase common stock of Tocagen, which changed its name to Forte Biosciences Inc. upon the closing of the Merger. Subsequent to the Merger, the 2018 Incentive Plan was suspended and no more stock-based awards will be granted from that plan.

In connection with the Merger, the Company assumed Tocagen’s 2017 Equity Incentive Plan, which was effective on April 12, 2017, was subsequently amended on September 30, 2018 and further amended on February 12, 2019 (the “2017 Plan”). Immediately upon closing of the Merger, 61,406 restricted stock awards and stock options to purchase 26,968 shares of common stock granted under the 2017 Plan prior to the Merger became fully vested in consideration for pre-merger services provided to Tocagen.

On July 26, 2020, the Company adopted the 2020 Inducement Equity Incentive Plan (the “2020 Inducement Plan”) and reserved 500,000 shares for future grants under the 2020 Inducement Plan. As of September 30, 2022, there were 115,000 shares available for issuance under the 2020 Inducement Plan.

In May 2021, the 2017 Plan was terminated and replaced by the 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan had an initial reserve of 1,000,000 shares available for grant. The 2021 Plan was amended in June 2022 to increase the shares available for grant by an additional 1,500,000 shares. The 2021 Plan provides for the grant of incentive stock options (“ISOs”), non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards, other forms of equity compensation and performance cash awards. ISOs may be granted only to employees. All other awards may be granted to employees, including officers, and to non-employee directors and consultants of the Company and its affiliates. Subsequent to the Merger, service-based awards generally vested over a four-year period, with the first 25% of such awards vesting following twelve months of continued employment or service with the remaining awards vesting monthly in equal installments over the following thirty-six months. For certain service-based awards to the board of directors, vesting occurs in thirty-six equal monthly installments over a three-year period for initial grants and in twelve equal monthly installments over a twelve-month period for subsequent grants. As of September 30, 2022, there were 1,370,554 shares available for issuance under the 2021 Plan.

Stock Options

The risk-free interest rate valuation assumption for options is based on the U.S. Treasury yield curve rate at the date of grant with a maturity approximating the expected term of the option.

The expected term assumption for options granted to employees is determined using the simplified method that represents the average of the contractual term of the option and the weighted average vesting period of the option. The Company uses the simplified method because it does not have sufficient historical option exercise data to provide a reasonable basis upon which to estimate expected term.

Due to the Company’s limited trading of its common stock and lack of company-specific historical or implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of similar companies in the life sciences industry whose shares are publicly traded. The Company selects the peer group based on comparable characteristics, including development stage, product pipeline, and enterprise value. The Company computes historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of the stock-based awards. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available.

The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future. Prior to the Merger, the fair value per share was determined by the Company’s Board of Directors, as of the date of each grant based on independent third-party valuations, taking into consideration various objective and subjective factors. Subsequent to the Merger, the fair value per share is the closing stock price on the option grant date.

There were no stock options granted during the three months ended September 30, 2022. The weighted average grant-date fair value of stock options granted in the nine months ended September 30, 2022 was $0.92, and $18.49 and $21.89 in the three and nine months ended September 30, 2021, respectively.

The weighted-average assumptions used to value these stock options using the Black-Scholes option-pricing model were as follows.

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

2021

 

 

2022

 

2021

 

Fair value of common stock

 

$

—

 

$

30.63

 

 

$

1.49

 

$

35.78

 

Risk-free interest rate

 

 

—

 

 

0.91

%

 

 

2.25

%

 

0.94

%

Dividend yield

 

 

—

 

 

0.00

%

 

 

0.00

%

 

0.00

%

Expected term of options (years)

 

 

—

 

 

6.08

 

 

 

5.88

 

 

5.95

 

Volatility

 

 

—

 

 

67.20

%

 

 

68.57

%

 

69.00

%

 

The table below summarizes the stock option activity during the nine months ended September 30, 2022:

 

 

 

Number of
Shares
Outstanding

 

 

Weighted-
Average
Exercise Price

 

 

Weighted-
Average
Remaining
Contractual
Term
(Years)

 

Aggregate
Intrinsic
Value (in thousands)

 

Balances at December 31, 2021

 

 

1,281,396

 

 

$

18.18

 

 

7.94

 

 

 

Granted

 

 

1,149,166

 

 

$

1.49

 

 

 

 

 

 

Exercised

 

 

(1,098

)

 

$

1.06

 

 

 

 

 

 

Cancelled/Forfeited

 

 

(99,546

)

 

$

30.10

 

 

 

 

 

 

Balances at September 30, 2022

 

 

2,329,918

 

 

$

9.45

 

 

8.37

 

$

98

 

Vested and expected to vest at September 30, 2022

 

 

2,329,918

 

 

$

9.45

 

 

8.37

 

$

98

 

Exercisable at September 30, 2022

 

 

468,581

 

 

$

20.85

 

 

7.90

 

$

9

 

 

The aggregate intrinsic value of options at September 30, 2022 is based on the Company’s fair value of its stock price on that date of $1.07 per share.

Restricted Stock Unit Awards

There were no restricted stock units granted during the nine months ended September 30, 2022. The Company made a change in accounting estimate in the three months ended March 31, 2022 related to the vesting of performance-based restricted stock units. As a result of this change in accounting estimate, $158,000 of expense that had been previously recognized in 2021 was reversed in the three months ended March 31, 2022.

Restricted stock unit awards outstanding as of September 30, 2022 were as follows:

 

 

 

 

 

 

Weighted Avg

 

 

 

 

 

 

Grant Date

 

 

 

Shares

 

 

Fair Value

 

Outstanding at December 31, 2021

 

 

258,851

 

 

$

 

3.36

 

Granted

 

 

—

 

 

 

 

—

 

Forfeited/Cancelled

 

 

—

 

 

 

 

—

 

Issued as Common Stock

 

 

(96,650

)

 

 

 

3.36

 

Outstanding at September 30, 2022

 

 

162,201

 

 

$

 

3.36

 

2017 Employee Stock Purchase Plan

In May 2021, the Company’s board of directors reactivated the Company’s 2017 Employee Stock Purchase Plan (“ESPP”) which had previously been suspended. The ESPP allows eligible employees to withhold up to 15% of their earnings to purchase shares of the Company’s common stock at a price per share equal to the lower of (i) 85% of the fair market value of a share of the Company’s common stock on the first date of an offering or (ii) 85% of the fair market value of a share of the Company’s common stock on the date of purchase. The Company had 318,522 shares available for future issuance under the ESPP as of September 30, 2022. The number of shares of common stock reserved for issuance will automatically increase on January 1 of each calendar year through January 1, 2027, by the lesser of (a) 1% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, (b) 300,000 shares, or (c) a number determined by the Company’s board of directors that is less than (a) and (b). The Company issued 5,716 shares under the ESPP during the nine months ended September 30, 2022. The ESPP is considered a compensatory plan. The Company recorded stock-based compensation expense related to its ESPP of $2 thousand for the three and nine months ended September 30, 2022. The Company recorded stock-based compensation expense related to its ESPP of $20 thousand for the three and nine months ended September 30, 2021.

Stock-Based Compensation Expense

Stock-based compensation expenses included in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021 were (in thousands):

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Research and development

 

$

327

 

 

$

522

 

 

$

993

 

 

$

1,191

 

General and administrative

 

 

579

 

 

 

951

 

 

 

2,162

 

 

 

1,785

 

Total

 

$

906

 

 

$

1,473

 

 

$

3,155

 

 

$

2,976

 

 

As of September 30, 2022, there was unrecognized stock-based compensation expense related to stock options with service conditions of $7.1 million, which is expected to be recognized over a weighted-average period of 2.35 years. Total unrecognized stock-based compensation expenses related to stock options and restricted stock units with performance conditions were approximately $233,000.

v3.22.2.2
Related Party Transactions
 9 Months Ended
Sep. 30, 2022
Related Party Transactions [Abstract]  
Related Party Transactions

7. Related Party Transactions

Two members of the Company’s board of directors received cash payments of $4 thousand and $16 thousand for scientific consulting services during the three and nine months ended September 30, 2022, respectively.

One member of the Company’s board of directors received cash payments of $1,000 for scientific consulting services for the three and nine months ended September 30, 2021.

 
v3.22.2.2
Summary of Significant Accounting Policies (Policies)
 9 Months Ended
Sep. 30, 2022
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company should be read in conjunction with its audited financial statements and accompanying notes thereto as of and for the year ended December 31, 2021 included in the Company’s Form 10-K as filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2022. The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), as found in the Accounting Standards Codification (“ASC”), the Accounting Standards Update (“ASU”), of the Financial Accounting Standards Board (“FASB”), and the rules and regulations of the US Securities and Exchange Commission (“SEC”).

In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments that are of a normal and recurring nature and that are necessary for the fair presentation of the Company’s financial position, the results of its operations and cash flows for the periods presented. Interim results are not necessarily indicative of results for the full year or any future period.
Principles of Consolidation

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Forte Subsidiary, Inc and Forte Biosciences Emerald Limited. All intercompany accounts and transactions have been eliminated in the preparation of the condensed consolidated financial statements.
Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include money market funds and deposits with commercial banks. Cash equivalents are defined as short-term, highly liquid investments with original maturities of 90 days or less at the date of purchase.
Fair Value of Financial Instruments

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is a three-level hierarchy that prioritizes the inputs used in determining fair value by their reliability and preferred use as follows:

•
Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities.
•
Level 2 – Valuations based on quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data.
•
Level 3 – Valuations based on inputs that are both significant to the fair value measurements and are unobservable.

To the extent that a valuation is based on models or inputs that are less observable, or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized within Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

There have been no significant changes to the valuation methods utilized by the Company during the periods presented. There have been no transfers between Level 1, Level 2, and Level 3 in any periods presented.

The carrying amounts of financial instruments consisting of cash and cash equivalents, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities included in the Company’s financial statements, are reasonable estimates of fair value, primarily due to their short maturities.

The Company had $35.0 million in money market funds as of September 30, 2022 and December 31, 2021, which are classified within Level 1. Money market funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. Money market funds were included as cash and cash equivalents in the condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021.
Use of Estimates

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, expenses and the disclosure of contingent assets and liabilities in the Company’s condensed consolidated financial statements and accompanying notes. Significant management estimates that affect the reported amounts of assets, liabilities and expenses include stock-based compensation expense, accruals and deferred tax assets. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.

Research and Development Costs

Research and Development Costs

Research and development costs are expensed as incurred. Research and development costs consist primarily of salaries and benefits of research and development personnel, costs related to research activities, preclinical studies, clinical trials and drug manufacturing. Non-refundable advance payments for goods or services that will be used in future research and development activities are deferred and capitalized and are only expensed when the goods have been received or when the service has been performed rather than when the payment is made.

Drug manufacturing, clinical and preclinical costs are a component of research and development expenses. The Company expenses costs for its drug manufacturing activities performed by Contract Manufacturing Organizations (“CMOs”), preclinical and clinical trial costs performed by Contract Research Organizations (“CROs”) and other service providers, as they are incurred, based upon estimates of the work completed over the

life of the individual study in accordance with associated agreements. The Company uses information it receives from internal personnel and outside service providers to estimate the percentage of completion and therefore the expense to be incurred.
Comprehensive Loss

Comprehensive Loss

Comprehensive loss includes net loss and other comprehensive income (loss) for the period. The Company did not have other comprehensive income (loss) items such as unrealized gains and losses. Comprehensive loss was equal to net loss for the three and nine months ended September 30, 2022 and 2021.
Net Loss Per Share

Net Loss Per Share

Basic net loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding during the period, without consideration for common stock equivalents.

Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock and common stock equivalents outstanding during the period in accordance with the treasury stock method. The following number of unexercised stock options, warrants and restricted stock units, which are common stock equivalents, have been excluded from the diluted net loss calculation as their effect would have been anti-dilutive for all periods presented:

 

 

 

 

 

 

 

Three and Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Options

 

 

2,329,918

 

 

 

1,509,256

 

Restricted stock units

 

 

162,201

 

 

 

15,000

 

Warrants

 

 

4,434

 

 

 

4,434

 

Total

 

 

2,496,553

 

 

 

1,528,690

 
Recently Issued Accounting Standards Not Yet Adopted

Recently Issued Accounting Standards Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by us as of a 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 the Company’s financial position or results of operations.

In August 2020, the FASB issued ​ASU 2020-06​, ​Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in an Entity’s Own Equity (Subtopic 815-40)​ (“ASU 2020-06”). ​ASU 2020-06 eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, ASU 2020-06 modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted earnings per share computation. The amendments in ASU 2020-06 are effective for smaller reporting companies as defined by the SEC for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but not earlier than fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of ASU 2020-06 on its condensed consolidated financial statements and does not expect the adoption of this amended guidance to have a material impact on the Company’s condensed consolidated financial statements.

v3.22.2.2
Summary of Significant Accounting Policies (Tables)
 9 Months Ended
Sep. 30, 2022
Accounting Policies [Abstract]  
Schedule of Common Stock Equivalents Excluded from Diluted Net Loss Calculation The following number of unexercised stock options, warrants and restricted stock units, which are common stock equivalents, have been excluded from the diluted net loss calculation as their effect would have been anti-dilutive for all periods presented:

 

 

 

 

 

 

 

Three and Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Options

 

 

2,329,918

 

 

 

1,509,256

 

Restricted stock units

 

 

162,201

 

 

 

15,000

 

Warrants

 

 

4,434

 

 

 

4,434

 

Total

 

 

2,496,553

 

 

 

1,528,690

 
v3.22.2.2
Balance Sheet Components (Tables)
 9 Months Ended
Sep. 30, 2022
Balance Sheet Related Disclosures [Abstract]  
Schedule of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets as of September 30, 2022 and December 31, 2021 consist of the following (in thousands):

 

 

September 30, 2022

 

 

December 31, 2021

 

Prepaid insurance

 

$

427

 

 

$

387

 

Other

 

 

119

 

 

 

89

 

Total prepaid expenses and other current assets

 

$

546

 

 

$

476

 
Schedule of Other Assets

Other assets as of September 30, 2022 and December 31, 2021 consist of the following (in thousands):

 

 

September 30, 2022

 

 

December 31, 2021

 

Prepaid insurance

 

$

521

 

 

$

667

 

Prepaid offering costs

 

 

—

 

 

 

106

 

Other

 

 

13

 

 

 

13

 

Total other assets

 

$

534

 

 

$

786

 
Components of Accrued Liabilities

Accrued liabilities as of September 30, 2022 and December 31, 2021 consist of the following (in thousands):

 

 

September 30, 2022

 

 

December 31, 2021

 

 Accrued legal and professional fees

 

$

150

 

 

$

75

 

 Accrued compensation

 

 

642

 

 

 

681

 

 Accrued manufacturing and clinical expenses

 

 

276

 

 

 

40

 

 Other

 

 

34

 

 

 

16

 

Total accrued liabilities

 

$

1,102

 

 

$

812

 
v3.22.2.2
Stock-Based Compensation (Tables)
 9 Months Ended
Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]  
Summary of Weighted-Average Assumptions Used to Value Stock Options

The weighted-average assumptions used to value these stock options using the Black-Scholes option-pricing model were as follows.

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

2021

 

 

2022

 

2021

 

Fair value of common stock

 

$

—

 

$

30.63

 

 

$

1.49

 

$

35.78

 

Risk-free interest rate

 

 

—

 

 

0.91

%

 

 

2.25

%

 

0.94

%

Dividend yield

 

 

—

 

 

0.00

%

 

 

0.00

%

 

0.00

%

Expected term of options (years)

 

 

—

 

 

6.08

 

 

 

5.88

 

 

5.95

 

Volatility

 

 

—

 

 

67.20

%

 

 

68.57

%

 

69.00

%
Summary of Stock Option Activity

The table below summarizes the stock option activity during the nine months ended September 30, 2022:

 

 

 

Number of
Shares
Outstanding

 

 

Weighted-
Average
Exercise Price

 

 

Weighted-
Average
Remaining
Contractual
Term
(Years)

 

Aggregate
Intrinsic
Value (in thousands)

 

Balances at December 31, 2021

 

 

1,281,396

 

 

$

18.18

 

 

7.94

 

 

 

Granted

 

 

1,149,166

 

 

$

1.49

 

 

 

 

 

 

Exercised

 

 

(1,098

)

 

$

1.06

 

 

 

 

 

 

Cancelled/Forfeited

 

 

(99,546

)

 

$

30.10

 

 

 

 

 

 

Balances at September 30, 2022

 

 

2,329,918

 

 

$

9.45

 

 

8.37

 

$

98

 

Vested and expected to vest at September 30, 2022

 

 

2,329,918

 

 

$

9.45

 

 

8.37

 

$

98

 

Exercisable at September 30, 2022

 

 

468,581

 

 

$

20.85

 

 

7.90

 

$

9

 
Summary of Restricted Stock Unit Award Transactions

Restricted stock unit awards outstanding as of September 30, 2022 were as follows:

 

 

 

 

 

 

Weighted Avg

 

 

 

 

 

 

Grant Date

 

 

 

Shares

 

 

Fair Value

 

Outstanding at December 31, 2021

 

 

258,851

 

 

$

 

3.36

 

Granted

 

 

—

 

 

 

 

—

 

Forfeited/Cancelled

 

 

—

 

 

 

 

—

 

Issued as Common Stock

 

 

(96,650

)

 

 

 

3.36

 

Outstanding at September 30, 2022

 

 

162,201

 

 

$

 

3.36

 
Summary of Stock-Based Compensation Expenses

Stock-based compensation expenses included in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021 were (in thousands):

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Research and development

 

$

327

 

 

$

522

 

 

$

993

 

 

$

1,191

 

General and administrative

 

 

579

 

 

 

951

 

 

 

2,162

 

 

 

1,785

 

Total

 

$

906

 

 

$

1,473

 

 

$

3,155

 

 

$

2,976

 
v3.22.2.2
Organization and Description of Business - Additional Information (Details)
$ in Thousands
 3 Months Ended 9 Months Ended
Mar. 31, 2022
Sep. 30, 2022
USD ($)
Sep. 30, 2021
USD ($)
Dec. 31, 2021
USD ($)
Organization Consolidation And Presentation Of Financial Statements [Line Items]        
Accumulated deficit   $ 82,167   $ 73,165
Cash used in operating activities   (5,292) $ (13,095)  
Cash and cash equivalents   $ 44,048   $ 42,044
Tocagen, Inc.        
Organization Consolidation And Presentation Of Financial Statements [Line Items]        
Reverse split ratio 0.06667      
v3.22.2.2
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Dec. 31, 2021
Schedule Of Significant Accounting Policies [Line Items]          
Transfers between fair value hierarchy levels $ 0   $ 0    
Other comprehensive income (loss) 0 $ 0 0 $ 0  
Level 1          
Schedule Of Significant Accounting Policies [Line Items]          
Money market funds, at carrying value $ 35,000,000.0   $ 35,000,000.0   $ 35,000,000.0
v3.22.2.2
Summary of Significant Accounting Policies - Schedule of Common Stock Equivalents Excluded from Diluted Net Loss Calculation (Details) - shares
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]        
Anti-dilutive securities excluded from diluted net loss calculation 2,496,553 1,528,690 2,496,553 1,528,690
Options        
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]        
Anti-dilutive securities excluded from diluted net loss calculation 2,329,918 1,509,256 2,329,918 1,509,256
Warrants        
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]        
Anti-dilutive securities excluded from diluted net loss calculation 4,434 4,434 4,434 4,434
Restricted Stock Units        
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]        
Anti-dilutive securities excluded from diluted net loss calculation 162,201 15,000 162,201 15,000
v3.22.2.2
Balance Sheet Components - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Balance Sheet Related Disclosures [Abstract]    
Prepaid insurance $ 427 $ 387
Other 119 89
Total prepaid expenses and other current assets $ 546 $ 476
v3.22.2.2
Balance Sheet Components - Schedule of Other Assets (Details) - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Balance Sheet Related Disclosures [Abstract]    
Prepaid insurance $ 521 $ 667
Prepaid offering costs   106
Other 13 13
Total other assets $ 534 $ 786
v3.22.2.2
Balance Sheet Components - Components of Accrued Liabilities (Details) - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Balance Sheet Related Disclosures [Abstract]    
Accrued legal and professional fees $ 150 $ 75
Accrued compensation 642 681
Accrued manufacturing and clinical expenses 276 40
Other 34 16
Total accrued liabilities $ 1,102 $ 812
v3.22.2.2
Commitments and Contingencies - Additional Information (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Commitments And Contingencies [Line Items]        
FDIC insured amount $ 250,000   $ 250,000  
Royalty expenses 0 $ 25,000 25,000 $ 75,000
Rent expenses 6,000   12,000  
Rent expense   $ 9,000   0
Rent credit due to refund for operating expense       $ 9,000
Contractual Obligation $ 134,000   $ 134,000  
v3.22.2.2
Equity - Additional Information (Details) - USD ($)
 1 Months Ended 3 Months Ended 9 Months Ended
Aug. 12, 2022
Apr. 01, 2022
Mar. 31, 2022
Sep. 30, 2021
Jun. 30, 2021
Feb. 28, 2021
Sep. 30, 2022
Sep. 30, 2022
Jun. 16, 2020
Class Of Stock [Line Items]                  
Gross proceeds from issuance of common stock               $ 7,284,000  
New issuance of common stock             $ 7,122,000    
Offering costs               434,000  
Shelf Registration | Maximum                  
Class Of Stock [Line Items]                  
Additional capital raised               $ 300,000,000  
At The Market Equity Offering Program                  
Class Of Stock [Line Items]                  
Gross proceeds from issuance of common stock     $ 25,000,000.0            
Percentage of sales commission     3.00%            
At The Market Equity Offering Program | Maximum                  
Class Of Stock [Line Items]                  
Gross proceeds from issuance of common stock   $ 7,000,000.0              
New issuance of common stock $ 2,700,000                
Common Stock                  
Class Of Stock [Line Items]                  
Common stock issued, shares       655,409 560,402 673,463 6,142,158    
New issuance of common stock             $ 6,000    
Warrants to purchase common stock       1,013,116 760,572 978,858     4,434
Common stock exercise price                 $ 140.25
Common Stock | At The Market Equity Offering Program                  
Class Of Stock [Line Items]                  
Common stock issued, shares             6,100,000    
Gross proceeds from issuance of common stock             $ 7,700,000    
Offering costs             $ 595,000    
v3.22.2.2
Stock-Based Compensation - Additional Information (Details) - USD ($)
 1 Months Ended 3 Months Ended 9 Months Ended
Jun. 15, 2020
May 31, 2021
Dec. 31, 2018
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Jul. 26, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]                
Stock options granted       0   1,149,166    
Weighted average grant-date fair value of stock options granted         $ 18.49 $ 0.92 $ 21.89  
Fair value of stock price           $ 1.07    
Stock-based compensation expense       $ 906,000 $ 1,473,000 $ 3,155,000 $ 2,976,000  
Unrecognized compensation expense       7,100,000   $ 7,100,000    
Weighted-average period over which unrecognized compensation expense is expected to be recognized           2 years 4 months 6 days    
Restricted Stock Units (RSUs)                
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]                
Stock awards granted           0    
Unrecognized compensation expense       158,000   $ 158,000    
Performance Stock Options                
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]                
Unrecognized compensation expense       $ 233,000   $ 233,000    
2018 Incentive Plan                
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]                
Service-based awards, vesting period     4 years          
Stock options, expiration term     10 years          
Service-based awards vesting description           vest over a four-year period, with the first 25% of such awards vesting following twelve months of continued employment or service with the remaining awards vesting monthly in equal installments over the following thirty-six months    
2018 Incentive Plan | Following Twelve Months of Service                
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]                
Service-based awards vesting percentage     25.00%          
2017 Incentive Plan                
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]                
Stock options granted 26,968              
2017 Incentive Plan | Restricted Stock Awards                
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]                
Stock awards granted 61,406              
2020 Inducement Equity Incentive Plan                
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]                
Shares reserved for future grant               500,000
Shares available for issuance       115,000   115,000    
2021 Equity Incentive Plan                
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]                
Service-based awards, vesting period   4 years            
Service-based awards vesting description           vested over a four-year period, with the first 25% of such awards vesting following twelve months of continued employment or service with the remaining awards vesting monthly in equal installments over the following thirty-six months    
Shares available for issuance   1,000,000   1,370,554   1,370,554    
Additional shares available for grant       1,500,000   1,500,000    
2021 Equity Incentive Plan | Board of Directors                
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]                
Service-based awards, vesting period   3 years       12 months    
Service-based awards vesting description           vesting occurs in thirty-six equal monthly installments over a three-year period for initial grants and in twelve equal monthly installments over a twelve-month period for subsequent grants    
2021 Equity Incentive Plan | Following Twelve Months of Service                
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]                
Service-based awards vesting percentage   25.00%            
2017 Employee Stock Purchase Plan                
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]                
Eligible employees withhold percentage of earnings to purchase shares of common stock   15.00%            
Shares available for future issuance       318,522   318,522    
Shares reserved for issuance increase percentage of total number of shares of common stock outstanding   1.00%            
Shares Issued under plan           5,716    
Stock-based compensation expense       $ 2,000 $ 20,000 $ 2,000 $ 20,000  
2017 Employee Stock Purchase Plan | Maximum                
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]                
Number of shares of common stock reserved for issuance increase on of each calendar year   300,000            
2017 Employee Stock Purchase Plan | On First Date of Offering | Maximum                
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]                
Percentage of fair market value of share of common stock to purchase   85.00%            
2017 Employee Stock Purchase Plan | On Date of Purchase | Maximum                
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]                
Percentage of fair market value of share of common stock to purchase   85.00%            
v3.22.2.2
Stock-Based Compensation - Summary of Weighted-Average Assumptions Used to Value Stock Options (Details) - $ / shares
 3 Months Ended 9 Months Ended
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Share-Based Payment Arrangement [Abstract]      
Fair value of common stock $ 30.63 $ 1.49 $ 35.78
Risk-free interest rate 0.91% 2.25% 0.94%
Dividend yield 0.00% 0.00% 0.00%
Expected term of options (years) 6 years 29 days 5 years 10 months 17 days 5 years 11 months 12 days
Volatility 67.20% 68.57% 69.00%
v3.22.2.2
Stock-Based Compensation - Summary of Stock Option Activity (Details) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2022
Sep. 30, 2022
Dec. 31, 2021
Number of Shares Outstanding      
Outstanding, Beginning   1,281,396  
Granted 0 1,149,166  
Exercised   (1,098)  
Cancelled/Forfeited   (99,546)  
Outstanding, Ending 2,329,918 2,329,918 1,281,396
Vested and expected to vest 2,329,918 2,329,918  
Exercisable 468,581 468,581  
Weighted-Average Exercise Price      
Outstanding, Beginning   $ 18.18  
Granted   1.49  
Exercised   1.06  
Cancelled/Forfeited   30.10  
Outstanding, Ending $ 9.45 9.45 $ 18.18
Vested and expected to vest 9.45 9.45  
Exercisable $ 20.85 $ 20.85  
Weighted-Average Remaining Contractual Term (Years)      
Outstanding   8 years 4 months 13 days 7 years 11 months 8 days
Vested and expected to vest   8 years 4 months 13 days  
Exercisable   7 years 10 months 24 days  
Aggregate Intrinsic Value      
Outstanding $ 98 $ 98  
Vested and expected to vest 98 98  
Exercisable $ 9 $ 9  
v3.22.2.2
Stock-Based Compensation - Summary of Restricted Stock Unit Award Transactions (Details) - Restricted Stock Units (RSUs)
 9 Months Ended
Sep. 30, 2022
$ / shares
shares
Shares  
Outstanding at December 31, 2021 258,851
Stock awards granted 0
Issued as Common Stock (96,650)
Outstanding at June 30, 2022 162,201
Weighted Avg Grant Date Fair Value  
Outstanding at December 31, 2021 | $ / shares $ 3.36
Issued as Common Stock 3.36
Outstanding at June 30, 2022 | $ / shares $ 3.36
v3.22.2.2
Stock-Based Compensation - Summary of Stock-Based Compensation Expenses (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]        
Stock-based compensation expense $ 906 $ 1,473 $ 3,155 $ 2,976
Research and Developments Expenses        
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]        
Stock-based compensation expense 327 522 993 1,191
General and Administrative        
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]        
Stock-based compensation expense $ 579 $ 951 $ 2,162 $ 1,785
v3.22.2.2
Related Party Transactions - Additional Information (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Director        
Related Party Transaction [Line Items]        
Payments for scientific consulting services $ 4,000 $ 1,000 $ 16,000 $ 1,000