Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
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Dec. 31, 2022 |
Mar. 24, 2023 |
Jun. 30, 2022 |
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Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
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 Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Shell Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
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 Annual Report | true | ||
Document Transition Report | false | ||
Entity Public Float | $ 17.5 | ||
Entity Common Stock, Shares Outstanding | 21,007,069 | ||
Auditor Name | Mayer Hoffman McCann P.C. | ||
Auditor Firm ID | 199 | ||
Auditor Location | San Diego, California | ||
Documents Incorporated by Reference | Portions of the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission, or SEC, subsequent to the date hereof pursuant to Regulation 14A in connection with the registrant’s 2023 Annual Meeting of Stockholders will be incorporated by reference into Part III of this Annual Report on Form 10-K assuming such proxy statement is filed with the SEC not later than 120 days after the conclusion of the registrant’s fiscal year ended December 31, 2022. If such proxy statement is not filed on or before such date, the information called for by Part III will be filed as part of an amendment to this Annual Report on Form 10-K on or before such date. |
Consolidated Balance Sheets - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
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Current assets: | ||
Cash and cash equivalents | $ 41,100 | $ 42,044 |
Prepaid expenses and other current assets | 411 | 476 |
Total current assets | 41,511 | 42,520 |
Other assets | 486 | 786 |
Total assets | 41,997 | 43,306 |
Current liabilities: | ||
Accounts payable | 1,153 | 946 |
Accrued liabilities | 2,026 | 812 |
Total current liabilities | 3,179 | 1,758 |
Commitments and contingencies (Note 5) | ||
Stockholders’ equity | ||
Common stock, $0.001 par value: 200,000,000 shares authorized as of December 31, 2022 and December 31, 2021; 21,000,069 and 14,754,447 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively | 21 | 15 |
Additional paid-in capital | 125,841 | 114,698 |
Accumulated deficit | (87,044) | (73,165) |
Total stockholders’ equity | 38,818 | 41,548 |
Total liabilities and stockholders' equity | $ 41,997 | $ 43,306 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2022 |
Dec. 31, 2021 |
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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 |
Consolidated Statements of Operations - USD ($) $ in Thousands |
12 Months Ended | |
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Dec. 31, 2022 |
Dec. 31, 2021 |
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Operating expenses: | ||
Research and development | $ 5,594 | $ 13,853 |
General and administrative | 8,302 | 7,633 |
Total operating expenses | 13,896 | 21,486 |
Loss from operations | (13,896) | (21,486) |
Other income (expenses), net | 17 | (222) |
Net loss | $ (13,879) | $ (21,708) |
Net loss per share - basic | $ (0.80) | $ (1.55) |
Net loss per share - diluted | $ (0.80) | $ (1.55) |
Weighted average shares outstanding, basic | 17,383,531 | 13,967,818 |
Weighted average shares outstanding, diluted | 17,383,531 | 13,967,818 |
Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Parenthetical) $ in Thousands |
12 Months Ended |
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Dec. 31, 2022
USD ($)
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Statement of Stockholders' Equity [Abstract] | |
Offering costs | $ 595 |
Consolidated Statements of Cash Flows - USD ($) $ in Thousands |
12 Months Ended | |
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Dec. 31, 2022 |
Dec. 31, 2021 |
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Cash flows from operating activities: | ||
Net loss | $ (13,879) | $ (21,708) |
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 | 4,015 | 4,214 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other assets | 258 | 1,221 |
Accounts payable | 207 | (294) |
Accrued liabilities | 1,214 | (207) |
Net cash used in operating activities | (8,185) | (16,677) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock, net of issuance costs | 7,229 | |
Proceeds from exercise of employee stock options and ESPP | 12 | 62 |
Prepaid financing costs | (106) | |
Net cash provided by financing activities | 7,241 | (44) |
Net decrease in cash | (944) | (16,721) |
Cash and cash equivalents — beginning of period | 42,044 | 58,765 |
Cash and cash equivalents — end of period | $ 41,100 | $ 42,044 |
Organization and Description of Business |
12 Months Ended |
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Dec. 31, 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 merged with Tocagen, Inc. ("Merger"), a publicly traded biotechnology company, on June 15, 2020. Prior to the Merger, Forte was a privately held company incorporated in Delaware on May 3, 2017. 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 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 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 December 31, 2022, the Company had an accumulated deficit of $87.0 million. The Company used $8.2 million of cash in operating activities during the year ended December 31, 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 $41.1 million as of December 31, 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-K. 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. |
Summary of Significant Accounting Policies |
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The Company prepares its consolidated financial statements in accordance 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”). Principles of Consolidation The 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 consolidated financial statements. Use of Estimates The preparation of the Company’s 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 consolidated financial statements and accompanying notes. Significant management estimates that affect the reported amounts of assets, liabilities and expenses include stock-based compensation expense and accruals for clinical trials and drug manufacturing. 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. Segment Information The Company operates as a single operating segment. The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s operations on a consolidated basis for the purposes of allocating resources, making operating decisions and evaluating financial performance. 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 liabilities included in the Company’s financial statements are reasonable estimates of fair value, primarily due to their short maturities. The Company had $5.0 million in money market funds as of December 31, 2022 and 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 consolidated balance sheets at December 31, 2022 and 2021. 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 and clinical trial 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. Patent Costs Costs to secure, defend and maintain patents are expensed as incurred, and are classified as general and administrative expenses due to the uncertainty of future benefits. 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, restricted stock units and warrants, which are common stock equivalents, have been excluded from the diluted net loss calculation as their effect would have been anti-dilutive for the periods presented:
Stock-Based Compensation The Company issues stock-based awards to employees, directors and non-employees, generally in the form of stock options, restricted stock units or rights granted to employees under the Employee Stock Purchase Plan (“ESPP”). The Company accounts for stock-based compensation awards in accordance with ASC Topic 718, Compensation—Stock Compensation. The Company measures compensation cost for all equity awards for employees, directors and non-employees at their grant-date fair value and recognizes compensation expense for service-based awards on a straight-line basis over the requisite service period, which is generally the vesting period. The grant-date fair value of stock options is estimated using the Black-Scholes option pricing model. The grant-date fair value of restricted stock units is determined using the Company’s closing stock price on the date of grant. Forfeitures are recognized as they occur. Stock-based compensation expense for an award with a performance condition is recognized when the achievement of the performance condition has been determined to be probable. If the outcome of such performance condition has not been determined to be probable, or has not been met, no compensation expense is recognized and any previously recognized compensation expense is reversed. For rights granted under the ESPP, the fair value of each purchase is estimated at the beginning of the offering period using the Black-Scholes option pricing model. The Company classifies stock-based compensation expense in its statement of operations in the same manner in which the award recipient’s salary and related costs are classified in the case of employees, or in which the award recipient’s service payments are classified in the case of directors and non-employees. Foreign Currency Transactions The Company is subject to foreign currency risk with respect to contracts denominated in currencies other than the U.S. dollar. Payments for contracts denominated in foreign currencies are made at the spot rate on the day of payment. Changes in the exchange rate between billing dates and payment dates are recorded to other expenses, net in the consolidated statements of operations. Income Taxes The Company uses an asset and liability approach to account for income taxes. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. These differences are measured using the enacted statutory tax rates that are expected to be in effect for the years in which differences are expected to reverse. Valuation allowances are provided when the expected realization of deferred tax assets does not meet a “more likely than not” criterion. The Company makes estimates and judgments about its future taxable income that are based on assumptions that are consistent with its plans and estimates. Should the actual amounts differ from those estimates, the amount of the valuation allowance could be materially impacted. Changes in these estimates may result in significant increases or decreases to the Company’s tax provision in a period in which such estimates are changed, which in turn would affect net income or loss. The Company recognizes tax benefits from uncertain tax positions if it believes the position is more likely than not to be sustained on examination by the taxing authorities based on the technical merits of the position. The Company makes adjustments to these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. The provision for income taxes includes the effects of any reserves for tax positions that are not more likely than not to be sustained, as well as the related net interest and penalties. Impairment of Property and Equipment The Company reviews its property and equipment for impairment when events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Recoverability is measured by comparing the book values of the assets to future net undiscounted cash flows that the assets or the asset groups are expected to generate. If such assets are considered impaired, the impairment to be recognized is measured by the amount the book value of the assets exceed their fair value, which is measured based on the estimated discounted future net cash flows arising from the assets or asset groups. No impairment losses on property and equipment have been recorded for the year ended December 31, 2022. Impairment losses on property and equipment of $61,000 have been recorded for the year ended December 31, 2021. Comprehensive Loss Comprehensive loss includes net loss and other comprehensive loss for the periods presented. The Company did not have other comprehensive loss items such as unrealized gains and losses and so for the years ended December 31, 2022 and 2021, comprehensive loss was equal to the net loss. 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 are adopted by the Company 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 consolidated financial statements and does not expect the adoption of this amended guidance to have a material impact on the Company’s consolidated financial statements. |
Balance Sheet Components |
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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 December 31, 2022 and 2021 consist of the following (in thousands):
Other Assets Other assets as of December 31, 2022 and 2021 consist of the following (in thousands).
Accrued Liabilities Accrued liabilities as of December 31, 2022 and 2021 consist of the following (in thousands):
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Commitments and Contingencies |
12 Months Ended |
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Dec. 31, 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, employee 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 $25,000 and 100,000 in minimum royalty expenses for the years ended December 31, 2022 and 2021, respectively. Lease Agreement In April 2019, the Company entered into a lease agreement for certain office and laboratory space in Torrance, California. The lease in Torrance was terminated in December 2021 and replaced with a new lease for office and laboratory space in Dallas, Texas in December 2021. The lease in Dallas is cancellable by the Company at any time with a 30-day notice. In June 2021, the Company entered into a lease agreement for additional office space at a separate location for an initial lease of 6 months after which the lease term will be month-to-month. Total rent expense was $19,000 for the year ended December 31, 2022. Total rent expense for all locations for the year ended December 31, 2021 was $5,000, which included a credit of $9,000 from a refund for operating expenses from a previous Tocagen facility.
Preclinical Services
The Company has entered into various agreements with third party vendors for preclinical services. The estimated remaining commitments as of December 31, 2022 under these agreements were approximately $2.3 million.
Legal Proceedings
In November 2022, a stockholder of the Company filed a complaint in the Delaware Court of Chancery to access certain books and records of the Company pursuant to Section 220 of the Delaware General Corporation Law, as well as to seek attorney fees (the “Books and Records Action”). The Books and Records Action remains pending. The Company believes that it has meritorious defenses to the claims asserted in the Books and Records Action and intends to vigorously defend against it and may be entitled to attorney fees should the stockholder not determine to dismiss the action. |
Equity |
12 Months Ended |
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Dec. 31, 2022 | |
Equity [Abstract] | |
Equity | 5. Equity Preferred Stock The Company has 10 million authorized shares of Series A Preferred Stock, par value $0.001, with no shares oustanding as of December 31, 2022 and 2021. Common Stock 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 December 31, 2022 and incurred $595,000 in issuance costs related to the ATM Facility and shelf registration statement. In connection with the Merger in June 2020, the Company issued warrants to purchase 2,752,546 shares (“Concurrent Financing Warrants”) of the Company’s common stock at an exercise price of $10.56 per share. All Concurrent Financing Warrants were subsequently exercised on a cashless basis in 2021 resulting in 1,889,274 additional shares of common stock being issued. As of December 31, 2022, no Concurrent Financing Warrants were outstanding. 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, survived the Merger and remained outstanding as of December 31, 2022 and 2021. These warrants have an expiration date of October 30, 2025.
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 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. |
Stock-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | 6. Stock-Based Compensation Equity Plans The Company inherited the 2017 Equity Incentive Plan (the "2017 Plan") as part of its merger with Tocagen, Inc. in June 2020. The 2017 Plan was terminated in May 2021 and replaced by the 2021 Equity Incentive Plan (the “2021 Plan”). The 2017 Plan will continue to govern outstanding awards issued under the 2017 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. 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 December 31, 2022, there were 1,337,277 shares available for issuance under the 2021 Plan. On July 26, 2020, the Company adopted the 2020 Inducement Equity Incentive Plan (the “2020 Inducement Plan”) and reserved 500,000 shares for future grant under the 2020 Inducement Plan. As of December 31, 2022, there were 115,000 shares available for issuance under the 2020 Inducement Plan. Stock Options The risk-free interest rate assumption for stock 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 market capitalization. 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 sufficient amount of historical information regarding the volatility of its own stock price become available. The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future. The fair value per share of common stock is the closing stock price on the option grant date. The weighted average grant-date fair value of stock options granted to employees and non-employees for the years ended December 31, 2022 and 2021 was $0.91 and $21.89, respectively. The weighted-average assumptions used to value these stock options using the Black-Scholes option-pricing model were as follows.
The table below summarizes the stock option activity during the year ended December 31, 2022:
The aggregate intrinsic value of stock options as of December 31, 2022 is based on the Company’s closing stock price of $1.00 per share.
Restricted Stock Unit Awards
The restricted stock units granted during the year ended December 31, 2021 have performance-based vesting. The Company concluded that as of December 31, 2021, it was probable the performance criteria would be met and $252,000 in expense was recorded in the Consolidated Statement of Operations for the year ended December 31, 2021.
There were no restricted stock units granted during the year ended December 31, 2022. The Company made a change in accounting estimate during the year ended December 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 during the year ended December 31, 2022. Restricted stock unit award transactions during the year ended December 31, 2022 were as follows:
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 December 31, 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 year ended December 31, 2022. The ESPP is considered a compensatory plan. The Company recorded stock-based compensation expense related to its ESPP of $3 thousand and $25 thousand for the years ended December 31, 2022 and 2021, respectively.
The fair value of the rights granted to employees under the ESPP was estimated using a Black-Scholes option-pricing model with the following weighted-average valuation assumptions:
Stock-Based Compensation Expense Stock-based compensation expenses included in the Company’s consolidated statements of operations for the years ended December 31, 2022 and 2021 are as follows (in thousands):
As of December 31, 2022, there was unrecognized stock-based compensation expense of $6.2 million related to stock options with service conditions, which is expected to be recognized over a weighted-average period of 2.15 years. Total unrecognized stock-based compensation as of December 31, 2022 was approximately $233 thousand related to stock options and restricted stock units with performance based vesting. |
Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | 7. Income Taxes
For the years ended December 31, 2022 and 2021, the Company did not record a current or deferred income tax expense or benefit due to a valuation allowance position. The benefit for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax income as a result of the following differences (in thousands):
The primary components of temporary differences which give rise to the Company’s net deferred tax assets and liabilities as of December 31, 2022 and 2021 are as follows:
Beginning January 1, 2022, the Tax Cuts and Jobs Act (the "Tax Act”) eliminated the option to deduct research and development expenditures in the current year and requires taxpayers to capitalize such expenses pursuant to Internal Revenue Code (“IRC”) Section 174. The capitalized expenses are amortized over a 5-year period for domestic expenses and a 15-year period for foreign expenses. As a result of this provision of the Tax Act, deferred tax assets related to capitalized research expenses increased by $978 thousand.
The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Based upon the Company’s history of operating losses, the Company has concluded that it is more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance for deferred tax assets as of December 31, 2022 and 2021. During 2022 and 2021, the valuation allowance increased by $2.6 million and $3.8 million, respectively.
The Company has federal and California net operating loss carryforwards which may be available to offset future income tax liabilities. As of December 31, 2022, the Company has federal net operating losses of $24.9 million some of which begin to expire in 2037 unless utilized. The Company has state net operating carryforwards of $11.6 million that begin to expire in 2037 unless previously utilized.
As of December 31, 2022, the Company has federal and California research and development tax credit carryforwards of approximately $268 thousand and $254 thousand, respectively. The federal research and development tax credits begin to expire in 2041 unless previously utilized. The California credits do not expire.
The Company is subject to taxation in the U.S. and California. As of December 31, 2022, Tocagen’s tax years beginning 2007 to date are subject to examination by federal and California taxing authorities due to the carry forward of unutilized net operating losses and research and development tax credits. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a future period.
Pursuant to Internal Revenue Code (IRC) Sections 382 and 383, annual use of a company’s net operating loss and tax credit carryforwards may be limited if there is a cumulative change in ownership of greater than 50% (by value) within a three-year period. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed several equity offerings since its inception which may have resulted in a change in control as defined by Sections 382 and 383 of the IRC, or could result in a change in control in the future. The Company has not completed an IRC Section 382 and 383 analysis regarding the limitation of net operating loss and research and development credit carryforwards. Until such an analysis has been completed, the Company has removed the deferred tax assets for net operating losses of $74.2 million and federal and California research and development credits of approximately $36.3 million from its deferred tax asset schedule and has recorded a corresponding decrease to its valuation allowance. When this analysis is finalized, the Company plans to update its unrecognized tax benefits accordingly. The Company does not expect this analysis to be completed within the next 12 months and, as a result, the Company does not expect that the unrecognized tax benefits will change within 12 months of this reporting date. Due to the existence of the valuation allowance, future changes in the Company’s unrecognized tax benefits will not impact the Company’s effective tax rate.
The Company’s policy is to record interest and penalties relating to uncertain tax positions as a component of income tax expense should the Company believe there is an uncertain tax position liability. As of December 31, 2022, and 2021, there was no accrued interest or penalties for uncertain positions. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |
Related Party Transactions | 8. Related Party Transactions Two members of the Company’s board of directors received cash payments of $9 thousand and $7 thousand for scientific consulting services during the year ended December 31, 2022. The Company had no outstanding accounts payable to either of these directors as of December 31, 2022. One member of the Company’s board of directors received a cash payment of $1,000 for scientific consulting services during the year ended December 31, 2021. The Company had no outstanding accounts payable to this director as of December 31, 2021. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The Company prepares its consolidated financial statements in accordance 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”). |
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Principles of Consolidation | Principles of Consolidation The 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 consolidated financial statements. |
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Use of Estimates | Use of Estimates The preparation of the Company’s 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 consolidated financial statements and accompanying notes. Significant management estimates that affect the reported amounts of assets, liabilities and expenses include stock-based compensation expense and accruals for clinical trials and drug manufacturing. 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. |
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Segment Information | Segment Information The Company operates as a single operating segment. The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s operations on a consolidated basis for the purposes of allocating resources, making operating decisions and evaluating financial performance. |
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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. |
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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 liabilities included in the Company’s financial statements are reasonable estimates of fair value, primarily due to their short maturities. The Company had $5.0 million in money market funds as of December 31, 2022 and 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 consolidated balance sheets at December 31, 2022 and 2021. |
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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 and clinical trial 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. |
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Patent Costs | Patent Costs Costs to secure, defend and maintain patents are expensed as incurred, and are classified as general and administrative expenses due to the uncertainty of future benefits. |
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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, restricted stock units and warrants, which are common stock equivalents, have been excluded from the diluted net loss calculation as their effect would have been anti-dilutive for the periods presented:
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Stock-Based Compensation | Stock-Based Compensation The Company issues stock-based awards to employees, directors and non-employees, generally in the form of stock options, restricted stock units or rights granted to employees under the Employee Stock Purchase Plan (“ESPP”). The Company accounts for stock-based compensation awards in accordance with ASC Topic 718, Compensation—Stock Compensation. The Company measures compensation cost for all equity awards for employees, directors and non-employees at their grant-date fair value and recognizes compensation expense for service-based awards on a straight-line basis over the requisite service period, which is generally the vesting period. The grant-date fair value of stock options is estimated using the Black-Scholes option pricing model. The grant-date fair value of restricted stock units is determined using the Company’s closing stock price on the date of grant. Forfeitures are recognized as they occur. Stock-based compensation expense for an award with a performance condition is recognized when the achievement of the performance condition has been determined to be probable. If the outcome of such performance condition has not been determined to be probable, or has not been met, no compensation expense is recognized and any previously recognized compensation expense is reversed. For rights granted under the ESPP, the fair value of each purchase is estimated at the beginning of the offering period using the Black-Scholes option pricing model. The Company classifies stock-based compensation expense in its statement of operations in the same manner in which the award recipient’s salary and related costs are classified in the case of employees, or in which the award recipient’s service payments are classified in the case of directors and non-employees. |
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Foreign Currency Transactions | Foreign Currency Transactions The Company is subject to foreign currency risk with respect to contracts denominated in currencies other than the U.S. dollar. Payments for contracts denominated in foreign currencies are made at the spot rate on the day of payment. Changes in the exchange rate between billing dates and payment dates are recorded to other expenses, net in the consolidated statements of operations. |
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Income Taxes | Income Taxes The Company uses an asset and liability approach to account for income taxes. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. These differences are measured using the enacted statutory tax rates that are expected to be in effect for the years in which differences are expected to reverse. Valuation allowances are provided when the expected realization of deferred tax assets does not meet a “more likely than not” criterion. The Company makes estimates and judgments about its future taxable income that are based on assumptions that are consistent with its plans and estimates. Should the actual amounts differ from those estimates, the amount of the valuation allowance could be materially impacted. Changes in these estimates may result in significant increases or decreases to the Company’s tax provision in a period in which such estimates are changed, which in turn would affect net income or loss. The Company recognizes tax benefits from uncertain tax positions if it believes the position is more likely than not to be sustained on examination by the taxing authorities based on the technical merits of the position. The Company makes adjustments to these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. The provision for income taxes includes the effects of any reserves for tax positions that are not more likely than not to be sustained, as well as the related net interest and penalties. |
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Impairment of Property and Equipment | Impairment of Property and Equipment The Company reviews its property and equipment for impairment when events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Recoverability is measured by comparing the book values of the assets to future net undiscounted cash flows that the assets or the asset groups are expected to generate. If such assets are considered impaired, the impairment to be recognized is measured by the amount the book value of the assets exceed their fair value, which is measured based on the estimated discounted future net cash flows arising from the assets or asset groups. No impairment losses on property and equipment have been recorded for the year ended December 31, 2022. Impairment losses on property and equipment of $61,000 have been recorded for the year ended December 31, 2021. |
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Comprehensive Loss | Comprehensive Loss Comprehensive loss includes net loss and other comprehensive loss for the periods presented. The Company did not have other comprehensive loss items such as unrealized gains and losses and so for the years ended December 31, 2022 and 2021, comprehensive loss was equal to the net loss. |
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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 are adopted by the Company 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 consolidated financial statements and does not expect the adoption of this amended guidance to have a material impact on the Company’s consolidated financial statements. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Common Stock Equivalents Excluded from Diluted Net Loss Calculation | The following number of unexercised stock options, restricted stock units and warrants, which are common stock equivalents, have been excluded from the diluted net loss calculation as their effect would have been anti-dilutive for the periods presented:
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Balance Sheet Components (Tables) |
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Related Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets as of December 31, 2022 and 2021 consist of the following (in thousands):
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Schedule of Other Assets | Other assets as of December 31, 2022 and 2021 consist of the following (in thousands).
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Components of Accrued Liabilities | Accrued liabilities as of December 31, 2022 and 2021 consist of the following (in thousands):
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Stock-Based Compensation (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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.
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Summary of Stock Option Activity | The table below summarizes the stock option activity during the year ended December 31, 2022:
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Summary of Restricted Stock Unit Award Transactions | Restricted stock unit award transactions during the year ended December 31, 2022 were as follows:
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Summary of Stock-Based Compensation Expenses | Stock-based compensation expenses included in the Company’s consolidated statements of operations for the years ended December 31, 2022 and 2021 are as follows (in thousands):
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ESPP | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Weighted-Average Assumptions Used to Value Stock Options | The fair value of the rights granted to employees under the ESPP was estimated using a Black-Scholes option-pricing model with the following weighted-average valuation assumptions:
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Income Taxes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Reconciliations of Income Tax | The benefit for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax income as a result of the following differences (in thousands):
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Components of Net Deferred Tax Assets and Liabilities | The primary components of temporary differences which give rise to the Company’s net deferred tax assets and liabilities as of December 31, 2022 and 2021 are as follows:
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Organization and Description of Business - Additional Information (Details) - USD ($) $ in Thousands |
12 Months Ended | |
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Dec. 31, 2022 |
Dec. 31, 2021 |
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Organization Consolidation And Presentation Of Financial Statements [Line Items] | ||
Accumulated deficit | $ 87,044 | $ 73,165 |
Cash used in operating activities | (8,185) | (16,677) |
Cash and cash equivalents | $ 41,100 | $ 42,044 |
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) |
12 Months Ended | |
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Dec. 31, 2022 |
Dec. 31, 2021 |
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Schedule Of Significant Accounting Policies [Line Items] | ||
Transfers between fair value hierarchy levels | $ 0 | |
Impairment losses on property and equipment | $ 0 | 61,000 |
Other comprehensive income (loss) | 0 | 0 |
Level 1 | ||
Schedule Of Significant Accounting Policies [Line Items] | ||
Money market funds, at carrying value | $ 5,000,000.0 | $ 5,000,000.0 |
Summary of Significant Accounting Policies - Schedule of Common Stock Equivalents Excluded from Diluted Net Loss Calculation (Details) - shares |
12 Months Ended | |
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Dec. 31, 2022 |
Dec. 31, 2021 |
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Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from diluted net loss calculation | 2,529,830 | 1,544,681 |
Options | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from diluted net loss calculation | 2,363,195 | 1,281,396 |
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 | 258,851 |
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 |
Balance Sheet Components - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
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Balance Sheet Related Disclosures [Abstract] | ||
Prepaid insurance | $ 341 | $ 387 |
Other | 70 | 89 |
Total Prepaid Expenses and Other Current Assets | $ 411 | $ 476 |
Balance Sheet Components - Schedule of Other Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
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Balance Sheet Related Disclosures [Abstract] | ||
Prepaid insurance | $ 473 | $ 667 |
Prepaid offering costs | 106 | |
Other | 13 | 13 |
Total Other Assets | $ 486 | $ 786 |
Balance Sheet Components - Components of Accrued Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
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Balance Sheet Related Disclosures [Abstract] | ||
Accrued legal and professional fees | $ 643 | $ 75 |
Accrued compensation | 890 | 681 |
Accrued manufacturing and clinical expenses | 485 | 40 |
Accrued other expenses | 8 | 16 |
Total Accrued Liabilities | $ 2,026 | $ 812 |
Merger - Additional Information (Details) - shares |
Dec. 31, 2022 |
Dec. 31, 2021 |
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Business Acquisition [Line Items] | ||
Common stock, shares outstanding | 21,000,069 | 14,754,447 |
Vested restricted stock awards outstanding | 2,363,195 |
Commitments and Contingencies - Additional Information (Details) - USD ($) |
12 Months Ended | |
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Dec. 31, 2022 |
Dec. 31, 2021 |
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Commitments And Contingencies [Line Items] | ||
FDIC insured amount | $ 250,000 | |
Royalty expenses | 25,000 | $ 100,000 |
Rent credit due to refund for operating expense | 9,000 | |
Rent expenses | 19,000 | $ 5,000 |
Contractual obligation | $ 2,300,000 |
Stock-Based Compensation - Summary of Weighted-Average Assumptions Used to Value Stock Options (Details) - $ / shares |
12 Months Ended | |
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Dec. 31, 2022 |
Dec. 31, 2021 |
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Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Fair value of common stock and exercise price | $ 1.47 | $ 35.78 |
Risk-free interest rate | 2.31% | 0.94% |
Dividend yield | 0.00% | 0.00% |
Expected term of options (years) | 5 years 10 months 17 days | 5 years 11 months 12 days |
Volatility | 68.75% | 69.02% |
ESPP | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Fair value of common stock and exercise price | $ 1.32 | $ 34.97 |
Risk-free interest rate | 2.52% | 0.05% |
Dividend yield | 0.00% | 0.00% |
Expected term of options (years) | 6 months 3 days | 6 months 3 days |
Volatility | 76.71% | 64.08% |
Stock-Based Compensation - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |
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Dec. 31, 2022 |
Dec. 31, 2021 |
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Number of Shares Outstanding | ||
Outstanding, Beginning | 1,281,396 | |
Granted | 1,199,166 | |
Exercised | (1,098) | |
Cancelled/Forfeited | (116,269) | |
Outstanding, Ending | 2,363,195 | 1,281,396 |
Vested and expected to vest | 2,363,195 | |
Exercisable | 546,916 | |
Weighted-Average Exercise Price | ||
Outstanding, Beginning | $ 18.18 | |
Granted | 1.47 | $ 35.78 |
Exercised | 1.06 | |
Cancelled/Forfeited | 26.78 | |
Outstanding, Ending | 9.29 | $ 18.18 |
Vested and expected to vest | 9.29 | |
Exercisable | $ 19.97 | |
Weighted-Average Remaining Contractual Term (Years) | ||
Outstanding | 8 years 2 months 19 days | 7 years 11 months 8 days |
Vested and expected to vest | 8 years 2 months 19 days | |
Exercisable | 8 years 18 days | |
Aggregate Intrinsic Value | ||
Outstanding | $ 65 | $ 617 |
Vested and expected to vest | 65 | |
Exercisable | $ 6 |
Stock-Based Compensation - Summary of Restricted Stock Unit Award Transactions (Details) - Restricted Stock Unit Awards |
12 Months Ended |
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Dec. 31, 2022
$ / shares
shares
| |
Shares | |
Outstanding at December 31, 2021 | 258,851 |
Stock awards granted | 0 |
Issued as Common Stock | (96,650) |
Outstanding at December 31, 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 December 31, 2022 | $ / shares | $ 3.36 |
Stock-Based Compensation - Summary of Stock-Based Compensation Expenses (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
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Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 4,015 | $ 4,214 |
Research and Development | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock-based compensation expense | 1,270 | 1,448 |
General and Administrative | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 2,745 | $ 2,766 |
Income Taxes - Summary of Reconciliations of Income Tax (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
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Income Tax Disclosure [Abstract] | ||
Income tax expense (benefit) at federal statutory rate | $ (2,915) | $ (4,558) |
Increase/(decrease) in tax resulting from: | ||
State income taxes | (79) | 479 |
Change in valuation allowance | 2,628 | 3,807 |
Transaction adjustments | 281 | |
Stock-based compensation | 370 | 58 |
Other | $ (4) | $ (67) |
Income tax benefit at federal statutory rate | 21.00% | 21.00% |
Increase/(decrease) in tax resulting from: | ||
State income taxes | 0.60% | (2.20%) |
Change in valuation allowance | (18.90%) | (17.50%) |
Transaction adjustments | 0.00% | (1.30%) |
Stock-based compensation | (2.70%) | (0.30%) |
Other | 0.00% | 0.30% |
Total | 0.00% | 0.00% |
Income Taxes - Components of Net Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
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Deferred tax assets: | ||
Accrual to cash adjustment | $ 480 | $ 268 |
Start-up costs | 2,949 | 2,111 |
Patent costs | 40 | 40 |
Stock option expense | 1,391 | 944 |
Net operating loss | 6,039 | 5,968 |
Capitalized R&D | 978 | |
Other Deferred Taxes | 10 | 10 |
R&D Credits | 328 | 245 |
Total noncurrent deferred tax assets | 12,215 | 9,586 |
Valuation Allowance | $ (12,215) | $ (9,586) |
Related Party Transactions - Additional Information (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
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Director | ||
Related Party Transaction [Line Items] | ||
Payments for scientific consulting services | $ 9,000 | $ 1,000 |
Accounts payable | 0 | $ 0 |
Director One | ||
Related Party Transaction [Line Items] | ||
Payments for scientific consulting services | 7,000 | |
Accounts payable | $ 0 |