SEC Filing | Atea Pharmaceuticals, Inc.

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avir-10q_20200930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2020

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

For the transition period from _______________ to _______________

Commission File Number: 001-39661

ATEA PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	46-0574869
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
125 Summer Street Boston, MA	02110
(Address of principal executive offices)	(Zip Code)

(857) 284-8891

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

AVIR

The Nasdaq Global Select Market

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

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

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

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

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

As of December 10, 2020, the registrant had 82,616,937 shares of common stock, $0.001 par value per share, outstanding.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

•

our plans relating to clinical trials for our product candidates;

•

our plans to research, develop and commercialize our current and future product candidates;

•

the potential benefits of our collaboration with Roche or any future collaboration we may enter into with Roche or others;

•

the timing of and our ability to obtain and maintain regulatory approvals for our product candidates;

•

the rate and degree of market acceptance and clinical utility of any products for which we receive marketing approval;

•

our commercialization, marketing and manufacturing capabilities and strategy;

•

our estimates regarding future revenue, expenses and results of operations;

•

our future financial position, capital requirements and needs for additional financing;

•

our business strategy;

•

developments relating to our competitors, competing treatments and vaccines and our industry;

•

the impact of government laws and regulations; and

•

the impact of COVID-19 on our business, including our preclinical studies and clinical trials.

These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A. “Risk Factors,” and Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not rely on these forward-looking statements as predictions of future events. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

As used in this Quarterly Report on Form 10-Q, unless otherwise specified or the context otherwise requires, the terms “we,” “our,” “us,” the “Company” refer to Atea Pharmaceuticals, Inc. and its subsidiary. All brand names or trademarks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.

SUMMARY RISK FACTORS

Our business is subject to numerous risks and uncertainties, including those described in Part II Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. The principal risks and uncertainties affecting our business include the following:

•

There is significant uncertainty around our development of AT-527 as a potential treatment for COVID-19.

•

We may expend resources in anticipation of potential clinical trials and commercialization of AT-527, which we may not be able to recover if AT-527 is not approved for the treatment of COVID-19 or we are not successful at commercializing AT-527.

•

The market for therapeutics for the treatment of COVID-19 may be reduced, perhaps significantly, if vaccines are effective and widely accepted.

•

AT-527 may face significant competition from other treatments for COVID-19 that are currently marketed or are in development.

•

The COVID-19 pandemic may materially and adversely affect our other business opportunities and financial results.

•

We have a limited operating history and no history of successfully developing or commercializing any approved antiviral products, which may make it difficult to evaluate the success of our business to date and to assess the prospects for our future viability.

•

We have incurred significant losses since inception and expect to incur significant additional losses for the foreseeable future. We have no products that have generated any commercial revenue and we may never achieve or maintain profitability.

•

We will require substantial additional financing, which may not be available on acceptable terms, or at all. A failure to obtain this necessary capital when needed could force us to delay, limit, reduce or terminate our product development or commercialization efforts.

•

Our ability to use our net operating loss carryforwards and other tax attributes to offset future taxable income may be subject to certain limitations.

•

Our business is highly dependent on the success of our most advanced product candidates. If these product candidates fail in preclinical or clinical development, do not receive regulatory approval or are not successfully commercialized, or are significantly delayed in doing so, our business will be harmed.

•

The regulatory approval processes of the U.S Food and Drug Administration (“FDA”) and comparable foreign regulatory authorities are lengthy, expensive, time-consuming, and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for our product candidates, we will be unable to generate product revenue and our business will be seriously harmed. Even if we complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time-consuming and uncertain and may prevent us or any future collaboration partners from obtaining approvals for the commercialization of any product candidate we develop.

•

Clinical development is lengthy and uncertain. We may encounter substantial delays and costs in our clinical trials, or may not be able to conduct or complete our clinical trials on the timelines we expect, if at all.

•

Our product candidates may be associated with serious adverse events, undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential or result in significant negative consequences.

•

We currently conduct clinical trials, and may in the future choose to conduct additional clinical trials, of our product candidates in sites outside the United States, and the FDA may not accept data from trials conducted in foreign locations.

•

Interim, “topline” and preliminary data from our clinical trials that we announce or publish from time to time may change as more data become available and are subject to audit and verification procedures that could result in material changes in the final data.

•

We may not be successful in our efforts to identify and successfully develop additional product candidates.

•

Risks related to healthcare laws and other legal compliance matters may materially and adversely affect our business and financial results.

•

Risks related to commercialization may materially and adversely affect our business and financial results.

iii

•

Risks related to our dependence on third parties and manufacturing may materially and adversely affect our business and financial results.

•

Risks related to intellectual property may materially and adversely affect our business and financial results, including if we are unable to obtain, maintain, enforce and adequately protect our intellectual property rights with respect to our technology and product candidates, or if the scope of the patent or other intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully develop and commercialize our technology and product candidates may be adversely affected.

•

We will need to expand our organization, and we may experience difficulties in managing this growth, which could disrupt our operations.

•

We have only a limited number of employees which may be inadequate to manage and operate our business.

•

We may engage in acquisitions or strategic partnerships that could disrupt our business, cause dilution to our stockholders, reduce our financial resources, cause us to incur debt or assume contingent liabilities, and subject us to other risks.

•

We or the third parties upon whom we depend may be adversely affected by natural disasters or other unforeseen events resulting in business interruptions and our business continuity and disaster recovery plans may not adequately protect us from such business interruptions.

•

Our business and operations would suffer in the event of system failures, deficiencies or intrusions.

•

Litigation against us could be costly and time-consuming to defend and could result in additional liabilities.

•

Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price.

•

Risks related to our common stock may materially and adversely affect our stock price.

•

If we fail to maintain effective internal control over financial reporting and effective disclosure controls and procedures, we may not be able to accurately report our financial results in a timely manner or prevent fraud, which may adversely affect investor confidence in our company.

•

We could be subject to securities class action litigation.

Table of Contents

		Page
FORWARD-LOOKING STATEMENTS		ii
SUMMARY RISK FACTORS		iii

PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations and Comprehensive Loss	2
	Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit	3
	Consolidated Statements of Cash Flows	4
	Notes to Unaudited Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27

PART II.	OTHER INFORMATION	28
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	85
Item 5.	Other Information	85
Item 6.	Exhibits	86
SIGNATURES		87

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ATEA PHARMACEUTICALS, INC.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(Unaudited)

	September 30, 2020			December 31, 2019
Assets
Current assets
Cash and cash equivalents	$	105,383		$	21,661
Prepaid expenses and other current assets		3,030			249
Total current assets		108,413			21,910
Property and equipment, net		49			41
Other assets		1,644			122
Total assets	$	110,106		$	22,073
Liabilities, Convertible Preferred Stock and Stockholders’ Deficit
Current liabilities
Accounts payable	$	4,476		$	548
Accrued expenses and other current liabilities		6,340			1,887
Total current liabilities		10,816			2,435
Other liabilities		56			95
Total liabilities		10,872			2,530
Commitments and contingencies (see Note 6)
Convertible preferred stock, $0.001 par value; 57,932,090 and 33,645,447 shares authorized as of September 30, 2020 and December 31, 2019, respectively; 48,958,829 and 33,645,447 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively; liquidation preference of $178,106 and $70,606 as of September 30, 2020 and December 31, 2019, respectively		175,745			69,114
Stockholders’ equity (deficit):
Common stock, $0.001 par value; 80,529,575 and 53,070,161 shares authorized as of September 30, 2020 and December 31, 2019, respectively; 10,109,847 and 10,091,100 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		10			10
Additional paid-in capital		9,295			4,632
Accumulated deficit		(85,816	)		(54,213	)
Total stockholders’ deficit		(76,511	)		(49,571	)
Total liabilities, convertible preferred stock and stockholders’ deficit	$	110,106		$	22,073

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

ATEA PHARMACEUTICALS, INC.

Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Operating expenses
Research and development	$	13,601		$	2,411		$	24,177		$	6,681
General and administrative		4,028			1,358			7,500			3,178
Total operating expenses		17,629			3,769			31,677			9,859
Loss from operations		(17,629	)		(3,769	)		(31,677	)		(9,859	)
Interest income and other, net		7			137			74			480
Net loss and comprehensive loss	$	(17,622	)	$	(3,632	)	$	(31,603	)	$	(9,379	)
Net loss per share attributable to common stockholders—basic and diluted	$	(1.74	)	$	(0.36	)	$	(3.13	)	$	(0.93	)
Weighted-average common shares outstanding—basic and diluted		10,109,847			10,091,100			10,099,134			10,091,100

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

ATEA PHARMACEUTICALS, INC.

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit

(in thousands, except share amounts)

(Unaudited)

	Convertible Preferred Stock				Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance—December 31, 2018		33,645,447	$	69,114		10,091,100	$	10	$	4,008	$	(40,179	)	$	(36,161	)
Stock-based compensation expense		—		—		—		—		146		—			146
Net loss		—		—		—		—		—		(2,193	)		(2,193	)
Balance—March 31, 2019		33,645,447	$	69,114		10,091,100	$	10	$	4,154	$	(42,372	)	$	(38,208	)
Stock-based compensation expense		—		—		—		—		147		—			147
Net loss		—		—		—		—		—		(3,554	)		(3,554	)
Balance—June 30, 2019		33,645,447	$	69,114		10,091,100	$	10	$	4,301	$	(45,926	)	$	(41,615	)
Stock-based compensation expense		—		—		—		—		157		—			157
Net loss		—		—		—		—		—		(3,632	)		(3,632	)
Balance—September 30, 2019		33,645,447	$	69,114		10,091,100	$	10	$	4,458	$	(49,558	)	$	(45,090	)



	Convertible Preferred Stock				Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance—December 31, 2019		33,645,447	$	69,114		10,091,100	$	10	$	4,632	$	(54,213	)	$	(49,571	)
Stock-based compensation expense		—		—		—		—		189		—			189
Net loss		—		—		—		—		—		(3,988	)		(3,988	)
Balance—March 31, 2020		33,645,447	$	69,114		10,091,100	$	10	$	4,821	$	(58,201	)	$	(53,370	)
Issuance of Series D convertible preferred stock, net of issuance costs of $869		15,313,382		106,631		—		—		—		—			—
Issuance of common stock for exercise of stock options		—		—		18,747		—		27		—			27
Stock-based compensation expense		—		—		—		—		209		—			209
Net loss		—		—		—		—		—		(9,993	)		(9,993	)
Balance—June 30, 2020		48,958,829	$	175,745		10,109,847	$	10	$	5,057	$	(68,194	)	$	(63,127	)
Stock-based compensation expense		—		—		—		—		4,238		—			4,238
Net loss		—		—		—		—		—		(17,622	)		(17,622	)
Balance—September 30, 2020		48,958,829	$	175,745		10,109,847	$	10	$	9,295	$	(85,816	)	$	(76,511	)

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

ATEA PHARMACEUTICALS, INC.

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Nine Months Ended September 30,
	2020			2019
Cash flows from operating activities
Net loss	$	(31,603	)	$	(9,379	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		4,636			450
Depreciation and amortization expense		13			13
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(2,781	)		(41	)
Accounts payable		3,689			(290	)
Accrued expenses and other liabilities		4,259			361
Net cash used in operating activities		(21,787	)		(8,886	)
Cash flows from investing activities
Additions to property and equipment		(21	)		(2	)
Net cash used in investing activities		(21	)		(2	)
Cash flows from financing activities
Proceeds from issuance of convertible preferred stock, net of issuance costs		106,631			—
Proceeds from issuance of common stock for exercise of stock options		27			—
Payments of deferred offering costs		(1,128	)		—
Net cash provided by financing activities		105,530			—
Net increase (decrease) in cash, cash equivalents and restricted cash		83,722			(8,888	)
Cash, cash equivalents and restricted cash at the beginning of period		21,768			34,599
Cash, cash equivalents and restricted cash at the end of period	$	105,490		$	25,711
Cash, cash equivalents and restricted cash at the end of period
Cash and cash equivalents	$	105,383		$	25,604
Restricted cash		107			107
Total cash, cash equivalents and restricted cash	$	105,490		$	25,711
Supplemental disclosure of noncash financing activities
Equity issuance costs included in accounts payable and accrued expenses	$	394		$	—

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

ATEA PHARMACEUTICALS, INC.

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts)

(Unaudited)

1. Nature of Business

Background

Atea Pharmaceuticals, Inc., together with its subsidiary Atea Pharmaceuticals Securities Corporation, is referred to on a consolidated basis as the “Company”.

The Company is a clinical-stage biopharmaceutical company focused on discovering, developing and commercializing antiviral therapeutics to improve the lives of patients suffering from life-threatening viral infections.

The accompanying unaudited consolidated financial statements are presented as of September 30, 2020 and for the three-month and nine-month periods then ended. As discussed further in Note 13, there were several material events that occurred after September 30, 2020 which are described below:

Series D-1 Convertible Preferred Stock

In October 2020, the Company issued 8,973,261 shares of Series D-1 Convertible Preferred Stock at a purchase price of $11.98 per share for gross proceeds of $107,500 (the “Series D-1 Closing”).

Roche License Agreement

In October 2020, the Company entered into the Roche License Agreement, granting Roche an exclusive license to develop and commercialize AT-527 outside of the United States (other than for certain use in connection with the hepatitis C indication). The Company also granted Roche a global license to manufacture AT-527 and agreed that Roche would manufacture the global commercial supply of AT-527 for uses other than the hepatitis C indication. As part of the consideration, Roche agreed to pay the Company an upfront payment of $350,000 (the “Roche Upfront Payment”), which was received in November 2020.

Initial Public Offering

In November 2020, the Company completed an initial public offering of its common stock (the “IPO”). In connection with the IPO, the Company issued 14,375,000 shares of its common stock, including the exercise in full of the underwriters’ option to purchase up to 1,875,000 shares, at $24.00 per share for aggregate gross proceeds of $345,000 before deducting underwriting discounts and commissions of $24,150 and offering expenses of approximately $3,200. As a result of the IPO, all shares of Series A, B, C, D and D-1 convertible preferred stock converted into 57,932,090 shares of common stock.

Risks and Uncertainties

The Company is subject to risks and uncertainties common to clinical stage biopharmaceutical companies. These risks include, but are not limited to, potential failure of preclinical and clinical studies, uncertainties associated with research and development activities generally, competition from technical innovations of others, dependence upon key personnel, compliance with governmental regulations, the need to obtain marketing approval for any product candidate that the Company may discover and develop, the need to gain broad acceptance among patients, payers and health care providers to successfully commercialize any product for which marketing approval is obtained and the need to secure and maintain adequate intellectual property protection for the Company’s proprietary technology and products. Further, the Company is currently dependent on third-party service providers for much of its preclinical research, clinical development and manufacturing activities. Product candidates currently under development will require significant amounts of additional capital, additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercialization. Even if the Company is able to generate revenues from the sale of its product candidates, if approved, it may not become profitable. 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 be forced to reduce its operations. The Company is also subject to risks associated with the COVID-19 global pandemic,

including actual and potential delays associated with certain of its ongoing and anticipated trials, and potential negative impacts on the Company’s business operations and its ability to raise additional capital to finance its operations.

Through September 30, 2020, the Company financed its operations from the sale of convertible preferred stock. Since its inception, the Company has incurred recurring operating losses and negative cash flows from operations. As of September 30, 2020, the Company had an accumulated deficit of $85,816. The Company expects to continue to generate operating losses for the foreseeable future. The Company believes that its cash and cash equivalents of $105,383 as of September 30, 2020, together with the net proceeds from the Series D-1 Closing, the Roche Upfront Payment and the net proceeds from the IPO will be sufficient to fund its operations as currently planned through at least 2023.

The Company may seek additional capital through one or more of a combination of financing through the sale of additional equity securities, debt financing, or funding in connection with any additional collaborative relationships it may enter into or other arrangements. There can be no assurance that the Company will be able to obtain such additional funding, on terms acceptable to the Company, on a timely basis or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s existing shareholders.

2. Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The unaudited interim condensed consolidated financial statements of the Company included herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) as found in the Accounting Standards Codification (“ASC”), Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2019 included in the Company’s final prospectus for its IPO filed pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the “Securities Act”), with the SEC on October 30, 2020.

The preparation of unaudited financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and in these accompanying notes. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors and assumptions that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates, which include but are not limited to estimates of accrued research and development expenses and the valuation of common stock in connection with the issuance of stock-based awards. Changes in estimates are recorded in the period in which they become known.

Principles of Consolidation

The unaudited consolidated financial statements include the accounts of Atea Pharmaceuticals, Inc. and its wholly owned subsidiary, Atea Pharmaceuticals Securities Corporation. All intercompany amounts have been eliminated in consolidation.

Unaudited Interim Financial Information

The accompanying consolidated balance sheet as of September 30, 2020, the consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2020, the consolidated statements of convertible preferred stock and stockholders’ deficit for the three and nine months ended September 30, 2020 and 2019, and the consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2020, the results of its operations for the three and nine months ended September 30, 2020 and 2019 and its cash flows for the nine months ended September 30, 2020 and 2019. The results for the nine months ended September 30, 2020 are not necessarily indicative of results to be expected for the year ending December 31, 2020, any other interim periods, or any future year or period.

Cash and Cash Equivalents

The Company considers all highly-liquid investments purchased with maturities of 90 days or less at acquisition to be cash equivalents. Cash and cash equivalents include bank demand deposits and money market funds that invest in U.S. government and U.S. government agency obligations. Cash equivalents are reported at fair value.

Concentrations of Credit Risk and Significant Suppliers

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents. The Company maintains its cash and cash equivalents with a financial institution that management believes is creditworthy. The Company’s investment policy includes guidelines on the quality of the financial institutions and financial instruments and defines allowable investments that the Company believes minimizes the exposure to concentration of credit risk.

The Company is dependent on third-party manufacturers to supply products for its research and development activities. In particular, the Company relies and expects to continue to rely on a small number of manufacturers to supply it with its requirements for the active pharmaceutical ingredients and formulated drugs related to its research and development activities. These activities could be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients and formulated drugs.

Fair Value Measurements

Assets and liabilities recorded at fair value on a recurring basis in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2—Observable inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determination of fair value of the assets or liabilities.

Cash, cash equivalents and restricted cash are Level 1 assets which are comprised of funds held in checking and money market accounts. Cash, cash equivalents and restricted cash were recorded at fair value as disclosed in Note 3. The carrying amounts of accounts payable and accrued expenses approximate their fair values due to their short-term maturities.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the asset. The Company estimates the useful life of its assets as follows:



Asset	Estimated useful life

Laboratory equipment	Five years

Office furniture and fixtures	Five years

Computer hardware	Two years

Leasehold improvements	Shorter of useful life or remaining lease term

Maintenance and repairs that do not improve or extend the life of the respective asset are expensed to operations as incurred. Upon disposal of an asset, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations.

Other Assets

The Company capitalizes incremental legal, professional, accounting and other third-party fees that are directly associated with its financing activities as deferred financing costs included in other non-current assets until a particular financing is consummated. After consummation of a financing, the applicable costs will be recorded in stockholders’ equity as a reduction of additional paid-in-capital generated as a result of the financing. As of September 30, 2020, IPO-related equity issuance costs of $1,537 were included in Other assets in the accompanying consolidated balance sheet. Also included in Other assets is restricted cash of $107, to collateralize a letter of credit.

Impairment of Long-lived Assets

The Company reviews long-lived assets when events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Recoverability is measured by comparing the book value of the assets to the estimated undiscounted future net cash flows that the asset is expected to generate. If the estimated undiscounted future net cash flows are less than the book value, the asset is impaired, and the impairment loss to be recognized in the statement of operations is measured as the amount by which the book value of the asset exceeds its fair value, which is measured based on the estimated discounted future net cash flows that the asset is expected to generate. No impairment losses were recorded during the three and nine months ended September 30, 2020 and 2019.

Research and Development Costs

Research and development costs are expensed as incurred. Research and development expenses consist principally of costs associated with outsourced research and development activities, including preclinical and clinical development, manufacturing and research conducted by contract research organizations and academic institutions, employee compensation and consulting expenses together with related expenses, professional fees and facility and overhead costs. Facility and overhead costs primarily include the allocation of rent, utility and office-related expenses attributable to research and development personnel. In circumstances where amounts have been paid in advance or in excess of costs incurred, the Company records a prepaid expense, which is expensed as services are performed or goods are delivered.

The Company has entered into various research and development contracts with third parties. These agreements are generally cancelable, and related payments are recorded as research and development expenses as incurred. The Company records accruals for estimated ongoing research costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies, including the phase of completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. The Company’s historical accrual estimates have not been materially different from the actual costs.

Patent Costs

Costs to secure and maintain the Company’s patents are expensed as incurred and are classified as general and administrative expenses in the Company’s consolidated statements of operations.

Stock-based Compensation

Stock-based compensation expense is classified in the consolidated statement of operations in the same manner in which the award recipient’s payroll costs or service payments are classified. Stock-based awards granted to employees and non-employees are measured based on the estimated fair value of the awards using the Black-Scholes option pricing model (“Black-Scholes”). Stock-based compensation expense with respect to awards with service conditions is recognized using the straight-line method over the service period. Stock-based compensation with respect to awards with performance conditions is recognized when satisfaction of the performance conditions is probable. Stock-based compensation is based on awards ultimately expected to vest and, as such, it is reduced by forfeitures. The Company accounts for forfeitures as they occur.

Black-Scholes requires the use of subjective assumptions which determine the fair value of stock-based awards. These assumptions include:

Fair value of common stock—Through September 30, 2020, because there was no public market for the Company’s common stock, the fair value of the Company’s common stock underlying stock-based awards was estimated on each grant date by the board of directors.

Risk-free interest rate—The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of a stock-based award.

Expected term—The expected term represents the period that stock-based awards are expected to be outstanding. Given the Company’s lack of specific history, the expected term for option grants is determined using the simplified method. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the stock-based awards.

Expected volatility—Since the Company was privately held through September 30, 2020 and did not have any trading history for its common stock, the expected volatility was estimated based on the average volatility for comparable publicly traded biotechnology companies over a period equal to the expected term of the stock-based awards. The comparable companies were chosen based on their similar size, stage in the life cycle or area of specialty. 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.

Expected dividend yield —The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base. Deferred tax assets, which relate primarily to the carrying amount of the Company’s net operating loss carryforwards, are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax expense or benefit is the result of changes in the deferred tax assets and liabilities. Valuation allowances are established to reduce deferred tax assets where, based upon the available evidence, the Company concludes that it is more-likely-than-not that the deferred tax assets will not be realized. In evaluating its ability to recover deferred tax assets, the Company considers all available positive and negative evidence, including its operating results, ongoing tax planning and forecasts of future taxable income.

Reserves are provided for tax benefits for which realization is uncertain. Such benefits are only recognized when the underlying tax position is considered more-likely-than-not to be sustained on examination by a taxing authority. Interest and penalties related to uncertain tax positions are recognized in the provision of income taxes.

Comprehensive Loss

Comprehensive income (loss) includes net income (loss) as well as other changes in stockholder equity (deficit) that result from transactions and economic events other than those with equity holders. The Company did not have any items of comprehensive income or loss other than net loss for the three and nine months ended September 30, 2020 and 2019.

Net Loss Per Share Attributable to Common Stockholders

The Company calculates basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required for participating securities. The Company considers its convertible preferred stock to be participating securities as, in the event a dividend is paid on common stock, the holders of convertible preferred stock would be entitled to receive dividends on a basis consistent with the common stockholders. Under the two-class method, the net loss attributable to common stockholders is not allocated to the convertible preferred stock as the holders of the convertible preferred stock do not have a contractual obligation to share in losses.

Since inception, the Company has incurred recurring operating losses and, as such, under the two-class method, basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock. Under the two-class method,

for periods with net income, basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Net income attributable to common stockholders is computed by subtracting from net income the portion of current year earnings that the participating securities would have been entitled to receive pursuant to their dividend rights had all of the year’s earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the participating securities have no obligation to fund losses. Diluted net loss per common share is computed by using the weighted-average number of shares of common stock outstanding. Due to net losses for the three and nine months ended September 30, 2020 and 2019, basic and diluted net loss per share attributable to common stockholders were the same, as the effect of all potentially dilutive securities would have been anti-dilutive.

Segments

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the chief operating decision maker (the “CODM”), in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its chief executive officer, who manages and allocates resources to the operations on a total company basis. Accordingly, there is a single operating segment and one reportable segment.

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases, which requires a lessee to record a right-of-use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. As the Company has elected to use the extended transition period for complying with new or revised accounting standards as available under the Jobs Act, the standard is effective for the Company beginning January 1, 2021. The Company is currently evaluating the expected impact that the standard could have on its consolidated financial statements and related disclosures.

In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815) I. Accounting for Certain Financial Instruments with Down Round Features II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”). Part I applies to entities that issue financial instruments such as warrants, convertible debt or convertible preferred stock that contain down-round features. Part II replaces the indefinite deferral for certain mandatorily redeemable noncontrolling interests and mandatorily redeemable financial instruments of nonpublic entities contained within ASC Topic 480 with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. As the Company has elected to use the extended transition period for complying with new or revised accounting standards as available under the Jobs Act, the standard is effective for the Company beginning January 1, 2021, with early adoption permitted. The Company is currently evaluating the expected impact that the standard could have on its consolidated financial statements and related disclosures.

Recently Adopted Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes existing revenue recognition guidance under GAAP. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard defines a five-step process to achieve this principle and will require companies to use more judgment and make more estimates than under the current guidance. The Company expects that these judgments and estimates will include identifying performance obligations in the customer contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU 2014-09 such that the standard is effective for annual periods beginning after December 15, 2018. The FASB subsequently issued amendments to ASU 2014-09 that have the same effective date and transition date. The Company adopted ASU 2014-09 as of January 1, 2019 and the adoption did not have an impact on the Company’s consolidated financial statements as the Company did not have any revenue-generating arrangements through September 30, 2020.

In August 2018, the FASB issued ASU 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurements, which changes the fair value measurement disclosure requirements of ASC 820. The goal of the ASU is to improve the effectiveness of ASC 820’s disclosure requirements. The standard is applicable to the Company for fiscal years beginning January 1, 2020, and interim periods within those years. The Company elected to early adopt this guidance effective January 1, 2019. The adoption of this guidance did not have an effect the Company’s consolidated financial statements.

3. Fair Value Measurements

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values:

	Fair Value Measurements as of September 30, 2020
	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	96,609	$	—	$	—	$	96,609
Total cash equivalents	$	96,609	$	—	$	—	$	96,609

	Fair Value Measurements as of December 31, 2019
	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	21,038	$	—	$	—	$	21,038
Total cash equivalents	$	21,038	$	—	$	—	$	21,038

The Company’s assets with fair value categorized as Level 1 within the fair value hierarchy include money market funds. Money market funds are publicly traded mutual funds and are presented as cash equivalents on the consolidated balance sheets as of September 30, 2020 and December 31, 2019.

There were no transfers among Level 1, Level 2 or Level 3 categories in the three and nine months ended September 30, 2020 and 2019.

4. Property and Equipment, net

Property and equipment, net, consist of the following:

	September 30, 2020			December 31, 2019
Laboratory equipment	$	5		$	5
Office furniture and fixtures		13			13
Computer hardware		32			11
Leasehold improvements		125			125
Total property and equipment, at cost		175			154
Less: accumulated depreciation and amortization		(126	)		(113	)
Property and equipment, net	$	49		$	41

Depreciation and amortization expense was $5 and $4 for the three months ended September 30, 2020 and 2019, respectively. Depreciation and amortization expense was $13 and $13 for the nine months ended September 30, 2020 and 2019, respectively.

5. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:

	September 30, 2020		December 31, 2019
Research and development	$	4,892	$	1,326
License fees (Note 6)		—		200
Professional fees and other		626		361
Payroll and payroll related		822		—
Total accrued expenses and other current liabilities	$	6,340	$	1,887

6. Commitments and Contingencies

Operating Lease Agreements

The Company leases an office facility under a non-cancelable operating lease that expires July 2022. The office lease includes commitments obligating the Company to pay a pro rata share of certain building operating costs and annual rent escalations which will result in higher lease payments in future years. Rent expense is recognized on a straight-line basis over the term of the lease with the difference between expense and the payments recorded as deferred rent, which is included in accrued expenses and other current liabilities and other liabilities.

As of September 30, 2020, future minimum payments for operating leases are as follows:

2020	$	85
2021		340
2022		200
Total future minimum lease payments	$	625

Rent expense recognized under all operating leases was $70 and $70 for the three months ended September 30, 2020 and 2019, respectively. Rent expense recognized under all operating leases was $211 and $211 for the nine months ended September 30, 2020 and 2019, respectively.

The Company is required to maintain a letter of credit for the duration of the office lease. The Company maintains bank deposits of $107 to collateralize the letter of credit which are classified as restricted cash and a long-term asset in the consolidated balance sheet as of September 30, 2020.

License Agreement with NovaMedica LLC

In May 2014, the Company entered into an exclusive license agreement with NovaMedica LLC, an affiliated entity of a stockholder, pursuant to which the Company granted NovaMedica a license to certain intellectual property rights for commercialization of a potential product for the treatment of hepatitis C. In connection with the license, the Company received a license fee of $200 in partial consideration for the grant of the license. Recognition of the

license fee was deferred and recorded in other liabilities pending finalization by the Company and NovaMedica of certain other terms and conditions of the license agreement at which time the technology access fee was to have been evaluated, along with the license agreement broadly, for revenue recognition.

If the Company and NovaMedica failed to agree on the terms of an amendment to the license agreement covering certain terms and conditions, and the license agreement was thereafter terminated, such termination was to be subject to a payment by the Company of a termination fee of $400. This agreement was terminated in May 2020, and the Company paid a termination fee of $400.

Business Development Consulting Agreements

The Company is a party to a consulting agreement that provides for the payment by the Company of consideration, consisting of cash, up to a maximum of $1,750, and the vesting of equity awards, if a business development transaction that meets or exceeds certain thresholds is successfully concluded on or before December 31, 2020 (Note 9). As of September 30, 2020, the performance conditions were not yet probable of being met and, as a result, no expense has yet to be recognized in connection with the consulting agreement in the consolidated statement of operations.

In February 2020, the Company entered into an agreement with a consultant that requires payment of a success fee calculated as a percentage of certain product sales, subject to a cumulative maximum payout of $5,000.

Indemnification

The Company enters into certain types of contracts that contingently require the Company to indemnify various parties against claims from third parties. These contracts primarily relate to (i) the Company’s bylaws, under which the Company must indemnify directors and executive officers, and may indemnify other officers and employees, for liabilities arising out of their relationship, (ii) contracts under which the Company must indemnify directors and certain officers and consultants for liabilities arising out of their relationship, and (iii) procurement, service or license agreements under which the Company may be required to indemnify vendors, service providers or licensees for certain claims, including claims that may be brought against them arising from the Company’s acts or omissions with respect to the Company’s products, technology, intellectual property or services.

From time to time, the Company may receive indemnification claims under these contracts in the normal course of business. In the event that one or more of these matters were to result in a claim against the Company, an adverse outcome, including a judgment or settlement, may cause a material adverse effect on the Company’s future business, operating results or financial condition. It is not possible to determine the maximum potential amount potentially payable under these contracts since the Company has no history of prior indemnification claims and the unique facts and circumstances involved in each particular claim will be determinative.

7. Convertible Preferred Stock

In May 2020, the Company filed an amendment to its certificate of incorporation to authorize 15,313,382 shares of Series D convertible preferred stock (“Series D Preferred”) and 8,973,261 shares of Series D-1 convertible preferred stock (“Series D-1 Preferred”). The Company entered into a stock purchase agreement with certain investors and issued 15,313,382 shares of Series D Preferred for gross proceeds of approximately $107,500. The Series D investors had the option to purchase up to 8,973,261 shares of Series D-1 Preferred at a price of $11.98 per share, including 2,991,087 shares which the Series D investors had an obligation to purchase if certain milestones were achieved. The Company concluded that the tranche features were not freestanding financing instruments as the right to purchase the future tranches was not legally detachable from the shares of Series D Preferred. Additionally, the Company concluded that no beneficial conversion features were present at initial issuance. As discussed in Note 13, the Series D investors purchased all 8,973,261 shares of Series D-1 at a price of $11.98 per share for aggregate gross proceeds of $107,500 in October 2020.

As of September 30, 2020, the Company had 57,932,090 shares of convertible preferred stock (“Convertible Preferred Stock”) authorized, of which 20,000,000 shares were designated as Series A convertible preferred stock, (“Series A Preferred”); 7,592,830 shares were designated as Series B convertible preferred stock (“Series B Preferred”); 6,052,617 shares were designated as Series C convertible preferred stock (“Series C Preferred”); 15,313,382 shares were designated as Series D Preferred; and 8,973,261 shares were designated as Series D-1 Preferred. The Company’s Series A Preferred, Series B Preferred, Series C Preferred and Series D Preferred were issued at $1.00, $3.03, $4.56 and $7.02 per share, respectively.

The following table summarizes the Company’s outstanding Convertible Preferred Stock as of September 30, 2020:


	Preferred Stock Authorized		Preferred Stock Issued and Outstanding		Carrying Value		Liquidation Preference		Common Stock Issuable Upon Conversion
Series A Preferred		20,000,000		20,000,000	$	19,136	$	20,000		20,000,000
Series B Preferred		7,592,830		7,592,830		22,619		23,006		7,592,830
Series C Preferred		6,052,617		6,052,617		27,359		27,600		6,052,617
Series D Preferred		15,313,382		15,313,382		106,631		107,500		15,313,382
Series D-1 Preferred		8,973,261		—		—		—		—
		57,932,090		48,958,829	$	175,745	$	178,106		48,958,829

The Company classifies Convertible Preferred Stock outside of stockholders’ deficit because the shares contain deemed liquidation rights in the event of a merger, consolidation, or reorganization involving the Company or a subsidiary or upon the sale, lease, transfer, exclusive license or other disposition by the Company or a subsidiary of all or substantially all assets of the Company that could trigger a distribution of cash or assets and therefore a contingent redemption feature not solely within the Company’s control.

Upon the closing of the Company’s IPO in November 2020, all outstanding Convertible Preferred Stock, including the Series D-1 Preferred issued in October 2020, automatically converted into 57,932,090 shares of common stock.

8. Common Stock

At September 30, 2020, the authorized capital of the Company included 80,529,575 shares of common stock, of which 10,109,847 shares of common stock were considered issued and outstanding for accounting purposes. As discussed in Note 9, restricted stock awards for an aggregate of 200,000 shares are excluded from issued and outstanding shares for accounting purposes. On all matters to be voted upon by the holders of common stock, holders of common stock are entitled to one vote per share. The holders of common stock are entitled to receive dividends, when declared by the board, and to share ratably in the Company’s assets legally available for distribution to the holders of the Company’s stock in the event of liquidation subject to the rights and preferences applicable to the outstanding shares of Convertible Preferred Stock prior to the conversion of the Convertible Preferred Stock in November 2020. The holders of common stock have no preemptive, redemption or conversion rights.

The Company had the following reserved shares of common stock:

	September 30,
	2020
Series A Preferred		20,000,000
Series B Preferred		7,592,830
Series C Preferred		6,052,617
Series D Preferred		15,313,382
Outstanding options		7,001,747
Options available for future grant		514,477
		56,475,053

9. Stock-based Compensation

As of September 30, 2020, the Atea Pharmaceuticals 2013 Equity Incentive Plan, as amended (the “2013 Plan”), provided for the grant of incentive stock options, non-qualified stock options, restricted common stock awards and other awards for up to 10,979,971 shares of common stock to employees, officers, directors and consultants of the Company.

As of September 30, 2020, options to purchase 7,095,494 shares of common stock and 3,370,000 shares of restricted common stock had been granted under the 2013 Plan, and there were 514,477 shares of common stock remaining available for future issuance.

Restricted Common Stock

Restricted stock awards generally include vesting and risk of forfeiture provisions that lapse upon satisfaction of performance conditions or over time periods commencing on the grant date and concluding on the third or fourth anniversary of the grant date. The Company has granted awards totaling 200,000 shares of restricted common stock to a consultant pursuant to the 2013 Plan for consulting and business development services. The consultant paid $1.21 per share and an aggregate of $121 for 100,000 of the shares of restricted common stock in 2016 and $1.24 per share and an aggregate of $124 for 100,000 of the shares of restricted common stock in 2018. These awards of restricted common stock will vest, and the risk of forfeiture will lapse upon satisfaction of performance conditions detailed in each award. As of September 30, 2020, the performance conditions were not yet probable of being met and, as a result, no compensation expense has yet been recognized for these performance-based awards. The unvested and forfeitable common stock as of September 30, 2020, though legally issued, are excluded from issued and outstanding shares for accounting purposes. Amounts received for the unvested and forfeitable common stock totaling $245 are included in additional paid-in capital within stockholders’ deficit in the consolidated balance sheets. At September 30, 2020, total unrecognized compensation expense related to unvested restricted common stock was $370.

Stock Options

The following summarizes stock option activity:

	Number of Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at January 1, 2020		3,911,633		$	1.50		8.5	$	3,915
Granted		3,408,861		$	6.38
Exercised		(18,747	)	$	1.43
Cancelled		(300,000	)	$	6.83
Outstanding at September 30, 2020		7,001,747		$	3.65		8.7	$	22,406
Options exercisable at September 30, 2020		2,857,918		$	1.47