QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
☒ | Smaller reporting company | |||||
Emerging growth company |
Page |
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PART I. |
1 |
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Item 1. |
1 |
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Unaudited condensed interim financial statements as of and for the three months and six months ended June 30, 2020 and June 30, 2021: |
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1 |
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2 |
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3 |
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4 |
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5 |
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Item 2. |
11 |
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Item 3. |
25 |
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Item 4. |
26 |
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PART II. |
27 |
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Item 1. |
27 |
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Item 1A. |
27 |
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Item 2. |
27 |
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Item 3. |
27 |
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Item 4. |
27 |
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Item 5. |
27 |
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Item 6. |
28 |
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29 |
December 31, |
June 30, |
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2020 |
2021 |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
Accounts receivable, net |
||||||||
Prepaid expenses |
||||||||
Deferred offering costs |
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Other current assets |
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|
|
|
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Total current assets |
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Investment |
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Property and equipment, net |
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|
|
|
|
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Total assets |
$ | $ | ||||||
|
|
|
|
|||||
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT |
||||||||
Liabilities |
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Current liabilities: |
||||||||
Accounts payable |
$ | $ | ||||||
Accrued liabilities and other current liabilities |
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|
|
|
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Total current liabilities |
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Commitments and contingencies (Note 7) |
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Redeemable preferred stock: |
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Series A, $ |
||||||||
Series B, $ |
||||||||
Series C, $ |
||||||||
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|
|
|
|||||
Total redeemable preferred stock |
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|
|
|
|
|||||
Stockholders’ deficit: |
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Common stock: |
||||||||
Class B convertible, $ |
||||||||
Class A, $ |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total stockholders’ deficit |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total liabilities, redeemable preferred stock and stockholders’ deficit |
$ | $ | ||||||
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2020 |
2021 |
2020 |
2021 |
|||||||||||||
Operating expenses: |
||||||||||||||||
Research and development |
$ | $ | $ | $ | ||||||||||||
General and administrative |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss from operations |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Interest and other income, net |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Less: cumulative preferred dividends earned in the period |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss available for distribution to common stockholders |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
|
|
|
|
|
|
|
|||||||||
Net loss per share, basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Weighted average shares outstanding, basic and diluted |
Redeemable Preferred Stock |
Stockholders’ Deficit |
|||||||||||||||||||||||||||||||||||||||||||
Series A |
Series B |
Series C |
Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Total Stockholders’ Deficit |
||||||||||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||||||||||||||||
Stock-based compensation |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||
6% cumulative dividends on redeemable preferred stock |
— |
— |
— |
— |
— |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
Accretion of issuance costs |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||
Net loss |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
( |
) | |||||||||||||||||||||||||||||||
Balance, March 31, 2020 |
( |
) |
( |
) | ||||||||||||||||||||||||||||||||||||||||
Issuance of Class A Common Stock upon exercise of stock options |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||
Stock-based compensation |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||
6% cumulative dividends on redeemable preferred stock |
— |
— |
— |
— |
— |
— |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||||||||||||||
Accreation of issuance costs |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||
Net loss |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
( |
) | |||||||||||||||||||||||||||||||
Balance, June 30, 2020 |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||||||||||||||||
Redeemable Preferred Stock |
Stockholders’ Deficit |
|||||||||||||||||||||||||||||||||||||||||||
Series A |
Series B |
Series C |
Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Total Stockholders’ Deficit |
||||||||||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||||||||||||||||
Issuance of Class A Common Stock upon exercise of stock options |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||
Stock-based compensation |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||
6% cumulative dividends on redeemable preferred stock |
— |
— |
— |
— |
— |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
Accretion of issuance costs |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||
Net loss |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
( |
) | |||||||||||||||||||||||||||||||
Balance, March 31, 2021 |
( |
) |
( |
) | ||||||||||||||||||||||||||||||||||||||||
Issuance of Class A Common Stock upon exercise of stock options |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||
Stock-based compensation |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||
6% cumulative dividends on redeemable preferred stock |
— |
— |
— |
— |
— |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
Accreation of issuance costs |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||
Net loss |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
( |
) | |||||||||||||||||||||||||||||||
Balance, June 30, 2021 |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
||||||||
2020 |
2021 |
|||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Depreciation and amortization |
||||||||
Gain on extinguishment of debt |
— | ( |
) | |||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
— | |||||||
Prepaid expenses and other assets |
( |
) | ||||||
Accounts payable and other liabilities |
||||||||
|
|
|
|
|||||
Net cash used in operating activities |
( |
) | ( |
) | ||||
Cash flows from investing activities: |
||||||||
Purchases of property and equipment |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from issuance of common stock |
||||||||
Offering costs |
— | ( |
) | |||||
|
|
|
|
|||||
Net cash provided by (used in) financing activities |
( |
) | ||||||
Net changes in cash and cash equivalents |
( |
) | ( |
) | ||||
Cash and cash equivalents at the beginning of the period |
||||||||
|
|
|
|
|||||
Cash and cash equivalents at the end of the period |
$ | $ | ||||||
|
|
|
|
|||||
Non-cash operating, investing and financing activities: |
||||||||
Purchases of property and equipment included in accounts payable and accrued liabilities |
$ | $ | — |
|||||
|
|
|
|
|||||
Cumulative dividends earned and accrued in the reporting period |
$ | $ | ||||||
|
|
|
|
|||||
PPP loan forgiveness |
$ | — | $ | |||||
|
|
|
|
|||||
Offering costs |
$ | — | $ | |||||
|
|
|
|
i. |
identify the contract(s) with a customer; |
ii. |
identify the performance obligations in the contract; |
iii. |
determine the transaction price; |
iv. |
allocate the transaction price to the performance obligations within the contract; and |
v. |
recognize revenue when (or as) the entity satisfies a performance obligation. |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2020 |
2021 |
2020 |
2021 |
|||||||||||||
Numerator: |
||||||||||||||||
Net loss |
$ | ) | $ | ) | $ |
( |
) | $ |
( |
) | ||||||
Less: cumulative preferred dividends earned in the period |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Net loss available for distribution to common stock holders |
$ | ( |
) | ( |
) | $ | ( |
) | ( |
) | ||||||
Denominator: |
||||||||||||||||
Weighted-average common shares outstanding |
||||||||||||||||
Net loss per share, basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
At June 30, |
||||||||
2020 |
2021 |
|||||||
Redeemable Preferred stock |
||||||||
Common stock options |
||||||||
Potentially diluted securities |
||||||||
5. |
Fair Value of Financial Instruments |
At December 31, 2020: |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Assets: |
||||||||||||||||
Money market funds |
$ | |
$ | — | $ | — | $ | |
||||||||
Total |
$ | $ | — | $ | — | $ | ||||||||||
At June 30, 2021: |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Assets: |
||||||||||||||||
Money market funds |
$ | |
$ | $ | $ | |
||||||||||
Total |
$ | $ | — |
$ | — |
$ | ||||||||||
2021 (remaining 6 months) |
$ | |
||
2022 |
||||
Total future minimum lease payments |
$ |
|||
• | Advance the development of our lead product candidate, HCW9218, and clinical trials for oncology, and if approved by the FDA, commercialization; |
• | Advance preclinical development of other indications for HCW9218, including fibrotic indications; |
• | Advance the preclinical development of our second lead product candidate, HCW9302, for autoimmune diseases, such as alopecia areata, and metabolic diseases, such as Type 2 Diabetes; |
• | Establish our own domestic manufacturing capability; |
• | Maintain, expand, and protect our intellectual property portfolio; |
• | Scale up our clinical and regulatory capabilities; and |
• | Expand operational and management information systems as well as investor relations, legal, accounting, and audit services required to operate as a public company. |
• | An article published online by Cancer Immunology Research describing our platform: Becker-Hapak MK, et al. A Fusion Protein Complex Combines IL-12, IL-15, and IL-18 Signaling to Induce Memory-like NK Cells for Cancer Immunotherapy. July 9, 2021. |
• | An article published online by Molecular Therapy on the characterization of our lead molecules, HCW9218: Liu B et al., Bifunctional TGF-ß Trap/IL-15 Protein Complex Elicits Potent NK Cell and CD8+ T Cell Immunity Against Solid Tumors. June 03, 2021. |
• | Employee-related expenses, including salaries, benefits, and stock-based compensation expense. |
• | Expenses related to manufacturing and materials, consisting primarily of expenses incurred primarily in connection with third-party contract manufacturing organizations (“CMO”), that produce cGMP materials for clinical trials on our behalf. |
• | Expenses associated with preclinical activities, including research and development and other IND-enabling activities. |
• | Expenses incurred in connection with clinical trials. |
• | Other expenses, such as facilities-related expenses, direct depreciation costs for capitalized scientific equipment, and allocation for overhead. |
• | Number and scope of preclinical and IND-enabling studies; |
• | Successful and timely patient enrollment in, and completion of, clinical trials; |
• | Per subject trial costs; |
• | Number of trials required for regulatory approval; |
• | Number of sites included in the trials; |
• | Number of subjects needed for each trial; |
• | Cost and timing of manufacturing of cGMP materials for clinical trials; |
• | Receipt of regulatory approvals from applicable regulatory authorities; |
• | Establishing commercial manufacturing capabilities; and |
• | Costs to maintain, defend, and enforce our intellectual property rights. |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2020 |
2021 |
2020 |
2021 |
|||||||||||||
Operating expenses: |
||||||||||||||||
Research and development |
$ | 2,068,783 | $ | 1,673,163 | $ | 3,747,207 | $ | 4,002,976 | ||||||||
General and administrative |
711,224 | 1,077,830 | 1,429,792 | 2,160,190 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
2,780,007 | 2,750,993 | 5,176,999 | 6,163,166 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss from operations |
(2,780,007 | ) | (2,750,993 | ) | (5,176,999 | ) | (6,163,166 | ) | ||||||||
Interest and other income, net |
1,522 | 631 | 23,000 | 568,808 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ | (2,778,485 |
) |
$ | (2,750,362 |
) |
$ | (5,153,999 |
) |
$ |
(5,594,358 |
) |
Three Months Ended June 30, |
||||||||||||||||
2020 |
2021 |
$ Change |
% Change |
|||||||||||||
Salaries, benefits and related expenses |
$ | 711,410 | $ | 775,782 | $ | 64,372 | 9 | % | ||||||||
Manufacturing and materials |
897,526 | 313,402 | (584,124 | ) | -65 | % | ||||||||||
Preclinical expenses |
305,553 | 318,595 | 13,042 | 4 | % | |||||||||||
Clinical trials |
23,003 | 107,587 | 84,584 | 368 | % | |||||||||||
Other expenses |
131,291 | 157,797 | 26,506 | 20 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Total research and development expenses |
$ |
2,068,783 |
$ |
1,673,163 |
$ |
(395,620 |
) |
-19 | % |
Three Months Ended June 30, |
||||||||||||||||
2020 |
2021 |
$ Change |
% Change |
|||||||||||||
Salaries, benefits and related expenses |
$ | 402,661 | $ | 611,008 | $ | 208,347 | 52 | % | ||||||||
Professional services |
138,882 | 274,875 | 135,993 | 98 | % | |||||||||||
Facilities and office expenses |
56,600 | 67,691 | 11,091 | 20 | % | |||||||||||
Depreciation |
56,672 | 61,083 | 4,411 | 8 | % | |||||||||||
Rent expense |
25,233 | 24,823 | (410 | ) | -2 | % | ||||||||||
Other expenses |
31,176 | 38,350 | 7,174 | 23 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Total general and administrative expenses |
$ |
711,224 |
$ |
1,077,830 |
$ |
366,606 |
52 | % |
Six Months Ended June 30, |
||||||||||||||||
2020 |
2021 |
$ Change |
% Change |
|||||||||||||
Salaries, benefits and related expenses |
$ | 1,441,683 | $ | 1,472,753 | $ | 31,070 | 2 | % | ||||||||
Manufacturing and materials |
1,449,798 | 1,075,454 | (374,344 | ) | -26 | % | ||||||||||
Preclinical expenses |
531,514 | 994,937 | 463,423 | 87 | % | |||||||||||
Clinical trials |
64,239 | 157,553 | 93,314 | 145 | % | |||||||||||
Other expenses |
259,973 | 302,279 | 42,306 | 16 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Total research and development expenses |
$ |
3,747,207 |
$ |
4,002,976 |
$ |
255,769 |
7 | % |
Six Months Ended June 30, |
||||||||||||||||
2020 |
2021 |
$ Change |
% Change |
|||||||||||||
Salaries, benefits and related expenses |
$ | 796,736 | $ | 1,110,230 | $ | 313,494 | 39 | % | ||||||||
Professional services |
283,836 | 668,499 | 384,663 | 136 | % | |||||||||||
Facilities and office expenses |
120,853 | 127,416 | 6,563 | 5 | % | |||||||||||
Depreciation |
116,056 | 127,725 | 11,669 | 10 | % | |||||||||||
Rent expense |
50,466 | 49,819 | (647 | ) | -1 | % | ||||||||||
Other expenses |
61,845 | 76,501 | 14,656 | 24 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Total general and administrative expenses |
$ |
1,429,792 |
$ |
2,160,190 |
$ |
730,398 |
51 | % |
• | Timing, progress, costs, and results of our ongoing preclinical studies and clinical trials of our immunotherapeutic products; |
• | Impact of COVID-19 on the timing and progress of our clinical trials and our ability to identify and enroll patients; |
• | Costs, timing, and outcome of regulatory review of our product candidates; |
• | Number of trials required for regulatory approval; |
• | Whether we enter into any collaboration or co-development agreements and the terms of such agreements; |
• | Effect of competing technology and market developments; |
• | Cost of maintaining, expanding, and enforcing our intellectual property rights; and |
• | Costs and timing of future commercialization activities, including product manufacturing, marketing, sales, and distribution, for any of our product candidates for which we receive regulatory approval. |
Six Months Ended June 30, |
||||||||
2020 |
2021 |
|||||||
Cash used in operating activities |
$ | (4,144,634 | ) | $ | (2,480,242 | ) | ||
Cash used in investing activities |
(45,076 | ) | (23,279 | ) | ||||
Cash provided by (used in) financing activities |
2,306 | (901,462 | ) | |||||
|
|
|
|
|||||
Net decrease in cash and cash equivalents |
$ |
(4,187,404 |
) |
$ |
(3,404,983 |
) |
• | Identification of the Contracts with the Customers |
• | Identification of the Performance Obligations |
• | Determination of the Transaction Price |
• | Allocation of Transaction Price |
• | Recognition of Revenue |
• | Level 1: Observable inputs such as quoted prices in active markets; |
• | Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and |
• | Level 3: Unobservable inputs in which there is little or no market data, which require a reporting entity to develop its own assumptions. |
• | Expected term |
• | Expected volatility |
• | Risk-free interest rate |
• | Dividend yield |
• | the prices at which we sold shares of redeemable preferred stock and the superior rights and preferences of the redeemable preferred stock relative to our common stock at the time of each grant; |
• | the progress of our research and development programs, including the status of preclinical and planned clinical trials for our product candidates; |
• | our stage of development and commercialization and our business strategy; |
• | external market conditions affecting the biotechnology industry, and trends within the biotechnology industry; |
• | our financial position, including cash on hand, and our historical and forecasted performance and operating results; |
• | the lack of an active public market for our common stock and our redeemable preferred stock; |
• | the likelihood of achieving a liquidity event, such as an initial public offering (“IPO”), or a sale of our company considering prevailing market conditions; and |
• | the analysis of IPOs and the market performance of similar companies in the biopharmaceutical industry. |
Exhibit Number |
Incorporated by Reference |
Filed Herewith | ||||||||||||||
Description |
Form |
Date |
Number |
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31.1* | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | X | ||||||||||||||
31.2* | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | X | ||||||||||||||
32.1* | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | X | ||||||||||||||
32.2* | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | X | ||||||||||||||
101 | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Balance Sheets as of June 30, 2020 (unaudited) and December 31, 2019; (ii) the Condensed Balance Sheets as of June 30, 2020 (unaudited) and December 31, 2019; (ii) the Condensed Statements of Operations for the three and six months ended June 30, 2020 and 2019 (unaudited); (iv) the Condensed Statements of Stockholders’ Equity as of June 30, 2020 and June 30, 2019 (unaudited); (v) the Condensed Statements of Cash Flows for the six months ended June 30, 2020 and 2019 (unaudited); and (vi) the notes to Unaudited Interim Condensed Financial Statements. |
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104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* | This certification is deemed not filed for purpose of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act |
HCW Biologics Inc. | ||||||
Date: August 13, 2021 | By: | /s/ Hing C. Wong | ||||
Hing C. Wong | ||||||
Chief Executive Officer | ||||||
(Principal Executive Officer) | ||||||
Date: August 13, 2021 | By: | /s/ Rebecca Byam | ||||
Rebecca Byam | ||||||
Chief Financial Officer | ||||||
(Principal Financial and Accounting Officer) |
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Hing C. Wong, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of HCW Biologics Inc. for the quarter ended June 30, 2021; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(c) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Hing C. Wong |
Hing C. Wong |
Chief Executive Officer |
Date: August 13, 2021
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Rebecca Byam, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of HCW Biologics Inc. for the quarter ended June 30, 2021; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(c) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Rebecca Byam |
Rebecca Byam |
Chief Financial Officer |
Date: August 13, 2021
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of HCW Biologics Inc. (the Company) on Form 10-Q for the period ending June 30, 2021as filed with the Securities and Exchange Commission on the date hereof (the Report), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
Date: August 13, 2021 | By: | /s/ Hing C. Wong | ||||
Hing C. Wong | ||||||
Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of HCW Biologics Inc. (the Company) on Form 10-Q for the period ending June 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
Date: August 13, 2021 | By: | /s/ Rebecca Byam | ||||
Rebecca Byam | ||||||
Chief Financial Officer |
Condensed Statements of Operations - USD ($) |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Operating expenses: | ||||
Research and development | $ 1,673,163 | $ 2,068,783 | $ 4,002,976 | $ 3,747,207 |
General and administrative | 1,077,830 | 711,224 | 2,160,190 | 1,429,792 |
Total operating expenses | 2,750,993 | 2,780,007 | 6,163,166 | 5,176,999 |
Loss from operations | (2,750,993) | (2,780,007) | (6,163,166) | (5,176,999) |
Interest and other income, net | 631 | 1,522 | 568,808 | 23,000 |
Net loss | (2,750,362) | (2,778,485) | (5,594,358) | (5,153,999) |
Less: cumulative preferred dividends earned in the period | (482,662) | (279,786) | (960,020) | (559,573) |
Net loss available for distribution to common stockholders | $ (3,233,024) | $ (3,058,271) | $ (6,554,378) | $ (5,713,572) |
Net loss per share, basic and diluted | $ (0.66) | $ (0.65) | $ (1.34) | $ (1.21) |
Weighted average shares outstanding, basic and diluted | 4,921,121 | 4,725,083 | 4,880,496 | 4,721,313 |
Organization and Summary of Significant Accounting Policies |
6 Months Ended | ||||||||||
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Jun. 30, 2021 | |||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||
Organization and Summary of Significant Accounting Policies | 1. Organization and Summary of Significant Accounting Policies Organization HCW Biologics Inc. (the “Company”) is a preclinical stage biopharmaceutical company focused on discovering and developing novel immunotherapies to lengthen health span by disrupting the link between chronic, low-grade inflammation and age-related diseases. The Company believes age-related low-grade chronic inflammation, or “inflammaging,” is a significant contributing factor to several chronic diseases and conditions, such as cancer, cardiovascular disease, diabetes, neurodegenerative diseases, and autoimmune diseases. The Company is located in Miramar, Florida and was incorporated in the state of Delaware in April 2018. Reverse Stock Split In June 2021, the Company’s board of directors and stockholders approved an amendment to the Company’s certificate of incorporation to effect a 3-for-7 Liquidity On December 24, 2020, the Company entered into the Exclusive Worldwide License Agreement with Wugen Inc. (“Wugen License”). As a result of this transaction, as of June 30, 2021, the Company holds a minority interest in Wugen carried at $1.6 million, the fair value on the effective date of the Wugen License. The underlying shares of common stock is not currently traded on any public market and thus has limited marketability. During the six-month period ended June 30, 2021, the Company received payments of $2.5 million due for payment under the terms of the Wugen License for performance obligations completed on the effective date. As of June 30, 2021, the Company had not generated any revenue from sales of its immunotherapeutic products. In the course of its development activities, the Company has sustained operating losses and expects to continue to incur operating losses for the foreseeable future. Since inception, substantially all the Company’s activities have consisted of research, development, establishing large-scale cGMP production for clinical trials, and raising capital. As of June 30, 2021 , the Company had cash and cash equivalents of $5.1 million. Since inception to June 30, 2021, the Company incurred cumulative net losses of $20.7 million. Management expects to incur additional losses in the future to conduct product research and development and recognizes the need to raise additional capital to fully implement its business plan. HCW Biologics intends to raise capital through the issuance of additional equity financing and/or third-party collaboration funding. However, if such financing is not available at adequate levels, the Company will need to reevaluate its operating plan and may be required to delay the development of some of its products. Summary of Significant Accounting Policies Basis of Presentation Unaudited Interim Financial Information The accompanying unaudited condensed interim financial statements as of June 30, 2021 and for the three months and six months ended June 30, 2020 and 2021 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to Article 10 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed financial statements include only normal and recurring adjustments that the Company believes are necessary to fairly state the Company’s financial position and the results of its operations and cash flows. The results for the three and six months ended June 30, 2021 are not necessarily indicative of the results expected for the full fiscal year or any subsequent interim period. The condensed balance sheet at December 31, 2020 has been derived from the audited financial statements at that date but does not include all disclosures required by U.S. GAAP for complete financial statements. Because all of the disclosures required by U.S. GAAP for complete financial statements are not included herein, these unaudited condensed financial statements and the notes accompanying them should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2020 which appear in the Company’s registration statement on Form S-1 (File No. 333-256510) for its initial public offering (“IPO”) which was declared effective on July 19, 2021. Revenue Recognition The Company recognizes revenue when its customer or collaborator obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that are within the scope of Topic 606, it performs the following five steps:
At contract inception, once the contract is determined to be within the scope of Topic 606 and it is probable of collection, the Company assesses the goods or services promised within the contract to determine whether each promised good or service is a performance obligation. The promised goods or services in the Company’s arrangements may consist of a license, or options to license, the Company’s intellectual property and research, development, and manufacturing services. The Company may provide options to additional items in such arrangements, which are accounted for as separate contracts when the customer elects to exercise such options, unless the option provides a material right to the customer. Performance obligations are promises in a contract to transfer a distinct good or service to the customer that (i) the customer can benefit from on its own or together with other readily available resources, and (ii) is separately identifiable from other promises in the contract. Goods or services that are not individually distinct performance obligations are combined with other promised goods or services until such combined group of promises meet the requirements of a performance obligation. The Company determines the transaction price based on the amount of consideration the Company expects to receive for transferring the promised goods or services in the contract. Consideration may be fixed, variable, or a combination of both. At contract inception for arrangements that include variable consideration, the Company estimates the probability and extent of consideration it expects to receive under the contract utilizing either the most likely amount method or expected amount method, whichever best estimates the amount expected to be received. The Company then considers any constraints on the variable consideration and includes in the transaction price variable consideration to the extent it is deemed probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company then allocates the transaction price to each performance obligation based on the relative standalone selling price and recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) control is transferred to the customer and the performance obligation is satisfied. For performance obligations which consist of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The Company records amounts as accounts receivable when the right to consideration is deemed unconditional. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded as deferred revenue. The Company did not recognize any revenues for the three or six months ended June 30, 2020 or June 30, 2021. Deferred Revenue Deferred revenue represents amounts billed, or in certain cases, yet to be billed to the Company’s customer for which the related revenues have not been recognized because one or more of the revenue recognition criteria have not been met. The current portion of deferred revenue represents the amount to be recognized within one year from the balance sheet date based on the estimated performance period of the underlying performance obligations. The long-term portion of deferred revenue represents amounts to be recognized after one year. As of June 30, 2021, current deferred revenue includes amounts of $696,625 allocated to the development supply agreement performance obligation under the Wugen License that is included within Accrued liabilities and other current liabilities. There was no long-term deferred revenue as of June 30, 2021. Investment The Company holds a minority interest in Wugen. The underlying shares of common stock is not traded on any public market and thus has limited marketability. The Company does not have significant influence over the operating and financial policies of Wugen. As a result, the Company has accounted for this investment using the measurement alternative whereby the investment is recorded at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same investee. No impairment was recognized as of June 30, 2021. Deferred Offering Costs The Company defers offering costs consisting of legal, accounting and other fees and costs directly attributable to its initial public offering (“IPO”). The deferred offering costs will be offset against the proceeds received upon the completion of the IPO. Deferred offering costs will be classified as current or long term, depending on whether an IPO is expected to be completed within a one-year period. If offering expenses are paid prior to the completion of an IPO, they will be recorded in prepaid assets on the balance sheets until such time an IPO is completed. If an obligation is incurred but not settled prior to the IPO, the Company will recognize deferred offering costs as an accrued liability. In the event the IPO is terminated, all of the deferred offering costs will be expensed within the Company’s statements of operations. As of June 30, 2021, there were approximately $3.2 million of current deferred offering costs, $924,312 of which are included within Prepaid expenses, $307,312 of which are included within Accounts p ayable, and $2.0 million of which are included within Accrued liabilities and other current liabilities on the accompanying condensed balance sheet. There were no long-term deferred offering costs as of June 30, 2021. Net Loss Per Share Basic net loss per share is calculated by dividing the net loss attributable to common stockholders, including both Class A and Class B common stock, by the weighted-average number of common shares outstanding for the period, without consideration of potential dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the sum of the weighted average number of common shares plus the potential dilutive effects of potential dilutive securities outstanding during the period. Potential dilutive securities are excluded from diluted earnings or loss per share if the effect of such inclusion is anti-dilutive. The Company’s potentially dilutive securities, which include convertible redeemable preferred stock and outstanding stock options under the 2019 Equity Incentive Plan (“2019 Plan”), have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU
No. 2016-02, Leases |
Accrued Liabilities and Other Current Liabilities |
6 Months Ended |
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Jun. 30, 2021 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities and Other Current Liabilities | 2. Accrued Liabilities and Other Current Liabilities In May 2020, HCW Biologics Inc. received an SBA Paycheck Protection Loan (“PPP loan”) in the principal amount of $563,590. As of December 31, 2020, the Company had $845,741 of Accrued liabilities and other current liabilities, primarily consisting of the PPP loan of $567,311, including principal and accrued but unpaid interest, and accrued liabilities of $273,907. On January 8, 2021, the Company received full loan forgiveness of $567,311 for obligations related to the PPP loan. The Company accounted for the PPP loan as debt, and the loan forgiveness was accounted for as a debt extinguishment. The amount of loan and interest forgiven is recognized as a gain upon debt extinguishment and is reported within Interest and other income, net in the accompanying condensed statement of operations for the six months ended June 30, 2021. |
Redeemable Preferred Stock |
6 Months Ended |
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Jun. 30, 2021 | |
Equity [Abstract] | |
Redeemable Preferred Stock | 3. Redeemable Preferred Stock The Company’s redeemable preferred stock is convertible into shares of Class A common stock and earns cumulative dividends at a rate of 6% per annum and compound annually. The terms of the redeemable preferred stock provide for an adjustment to the conversion price upon the occurrence of certain transactions or events, such as stock splits,
split-up, certain dividends, or distributions. Cumulative dividends accrue whether or not declared by the Board of Directors. Upon conversion, any accrued and unpaid dividends are forfeited. For the six months ended June 30, 2021, the Company accrued cumulative dividends of $960,020 which is included in the amounts reported for redeemable preferred stock in the accompanying condensed balance sheet as of June 30, 2021. No dividends have been declared or paid as of June 30, 2021. |
Net Loss Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share | 4. Net Loss Per Share The following table summarizes the computation of the basic and diluted net loss per share:
The following table summarizes the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their inclusion would be anti-dilutive:
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments |
The carrying amount of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities, approximate fair value due to their short-term maturities. Money market funds included in cash and cash equivalents that are measured at fair value based on quoted prices that are derived from observable market data are classified as Level 1 inputs. No transfers between levels occurred during the periods presented. The following table presents the Company’s assets which were measured at fair value at December 31, 2020 and June 30 , 2021:
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Income Taxes |
6 Months Ended |
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Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 6. Income Taxes The Company computes its quarterly income tax expense/(benefit) by using a forecasted annual effective tax rate and adjusts for any discrete items arising during the quarter. The Company did not have a provision for income taxes (current or deferred tax expense) as of June 30, 2021 and December 31, 2020. The Company will continue to maintain a 100% valuation allowance on total deferred tax assets. The Company believes it is more likely than not that the related deferred tax asset will not be realized. As a result, the Company’s effective tax rate will remain at 0.00% because no items that are either estimated or discrete items would impact the tax provision. |
Commitments and Contingencies |
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||
Commitments and Contingencies | 7. Commitments and Contingencies Leases The Company leases its operating facilities in Miramar, Florida under non-cancelable operating lease agreements and a short-term sublease agreement for additional office space. Rent expense is recognized for leases with increasing annual rents on a straight-line basis over the term of the lease. The amount of rent expense in excess of cash payments is classified as deferred rent. Lease incentives received are deferred and amortized over the term of the lease. The future minimum payments for the lease and sublease agreements at June 30, 2021 were as follows:
Rental expense, including common area maintenance costs, recognized by the Company was $46,182 of which $20,949 is included in research and development and $53,430 of which $28,607 is included in research and development for the three months ended June 30, 2020 and 2021, respectively, in the accompanying condensed statements of operations. Rental expense, including common area maintenance costs, recognized by the Company was $92,073 of which $41,608 is included in research and development and $101,570 of which $51,752 is included in research and development for the six months ended June 30, 2020 and 2021, respectively, in the accompanying condensed statements of operations. Manufacturing Commitment The Company entered into an agreement with a third-party global contract development and manufacturer of biologics for the manufacture of the Company’s proprietary molecules for use in its clinical trials. At June 30, 2020 and June 30, 2021, future payment obligations under statements-of-work In the three months ended June 30, 2020, the Company was winding up several manufacturing activities that were started earlier in the year, including master cell bank production and characterization reports, analytical method qualification of product, multiple cGMP production runs, and some fill and finish for vials of clinical materials. In the three months ended June 30, 2021, the manufacturing of two molecules was ongoing. As of June 30, 2021, the Company retains the payment obligation for upcoming activities yet to be performed for some molecules, including cGMP production runs of different quantities, initiation of master cell bank production, and initiation of the fill/finish process. Legal As of August 13, 2021, management has no knowledge of any pending or unasserted claims against the Company. Other In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to spread throughout the United States and the world. The spread of COVID-19 has caused significant volatility in the U.S. and international markets. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies and, as such, the Company is unable to determine if it will have a material impact to its operations. |
Subsequent Events |
6 Months Ended |
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Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | 8. Subsequent Events Subsequent events have been evaluated through the date the financial statements were available to be issued. As of such date, there were no material subsequent events identified that required recognition or disclosure other than as disclosed below or in the footnotes herein. Initial Public Offering On July 19, 2021, the Company’s registration statement on Form S-1 for its IPO was declared effective by the Securities and Exchange Commission (the “SEC”). On July 22, 2021, the Company closed its IPO with the sale of 7,000,000 shares of common stock, at a public offering price of $8.00 per share, resulting in net proceeds of approximately $49.0 million, after deducting underwriting discounts and commissions and estimated offering expenses paid by the Company. In addition, in connection with the closing of the IPO, all of the Company’s outstanding shares of redeemable preferred stock w as automatically converted into shares of common stock. As a result, there are no longer any shares of redeemable preferred stock outstanding. Accrued but unpaid cumulative dividends were forfeited upon conversion. No dividends had been paid as of July 19, 2021. 2021 Equity Incentive Plan In June 2021, the Company’s board of directors and stockholders approved the 2021 Equity Incentive Plan (the “2021 Plan”), to be effective the day prior to the effectiveness of the registration statement for an IPO. On July 18, 2021, the 2021 Plan became effective.The 2021 Plan permits the grant of incentive stock options, nonstatutory stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”) and stock bonus awards (all such awards collectively, “stock awards”). A total of 2,400,000 new shares of common stock were approved to be initially reserved for issuance under the 2021 Plan. The number of shares reserved that are remaining in the 2019 Plan as of the effective date of the 2021 Plan will be added to the shares initially reserved under the 2021 Plan upon the effective date. In addition, the number of shares of common stock available for issuance under the 2021 Plan will automatically increase on January 1 of each calendar year, starting on January 1, 2022 , in an amount equal to 2% of the outstanding shares of common stock on the last day of the prior fiscal year, or such number of shares determined by the Company’s board of directors. |
Organization and Summary of Significant Accounting Policies (Policies) |
6 Months Ended | ||||||||||
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Jun. 30, 2021 | |||||||||||
Accounting Policies [Abstract] | |||||||||||
Basis of Presentation | Basis of Presentation Unaudited Interim Financial Information The accompanying unaudited condensed interim financial statements as of June 30, 2021 and for the three months and six months ended June 30, 2020 and 2021 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to Article 10 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed financial statements include only normal and recurring adjustments that the Company believes are necessary to fairly state the Company’s financial position and the results of its operations and cash flows. The results for the three and six months ended June 30, 2021 are not necessarily indicative of the results expected for the full fiscal year or any subsequent interim period. The condensed balance sheet at December 31, 2020 has been derived from the audited financial statements at that date but does not include all disclosures required by U.S. GAAP for complete financial statements. Because all of S-1 (File No. 333-256510) for its initial public offering (“IPO”) which was declared effective on July 19, 2021.
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Revenue Recognition | Revenue Recognition The Company recognizes revenue when its customer or collaborator obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that are within the scope of Topic 606, it performs the following five steps:
At contract inception, once the contract is determined to be within the scope of Topic 606 and it is probable of collection, the Company assesses the goods or services promised within the contract to determine whether each promised good or service is a performance obligation. The promised goods or services in the Company’s arrangements may consist of a license, or options to license, the Company’s intellectual property and research, development, and manufacturing services. The Company may provide options to additional items in such arrangements, which are accounted for as separate contracts when the customer elects to exercise such options, unless the option provides a material right to the customer. Performance obligations are promises in a contract to transfer a distinct good or service to the customer that (i) the customer can benefit from on its own or together with other readily available resources, and (ii) is separately identifiable from other promises in the contract. Goods or services that are not individually distinct performance obligations are combined with other promised goods or services until such combined group of promises meet the requirements of a performance obligation. The Company determines the transaction price based on the amount of consideration the Company expects to receive for transferring the promised goods or services in the contract. Consideration may be fixed, variable, or a combination of both. At contract inception for arrangements that include variable consideration, the Company estimates the probability and extent of consideration it expects to receive under the contract utilizing either the most likely amount method or expected amount method, whichever best estimates the amount expected to be received. The Company then considers any constraints on the variable consideration and includes in the transaction price variable consideration to the extent it is deemed probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company then allocates the transaction price to each performance obligation based on the relative standalone selling price and recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) control is transferred to the customer and the performance obligation is satisfied. For performance obligations which consist of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The Company records amounts as accounts receivable when the right to consideration is deemed unconditional. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded as deferred revenue. The Company did not recognize any revenues for the three or six months ended June 30, 2020 or June 30, 2021. |
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Deferred Revenue | Deferred Revenue Deferred revenue represents amounts billed, or in certain cases, yet to be billed to the Company’s customer for which the related revenues have not been recognized because one or more of the revenue recognition criteria have not been met. The current portion of deferred revenue represents the amount to be recognized within one year from the balance sheet date based on the estimated performance period of the underlying performance obligations. The long-term portion of deferred revenue represents amounts to be recognized after one year. |
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Investment | Investment The Company holds a minority interest in Wugen. The underlying shares of common stock is not traded on any public market and thus has limited marketability. The Company does not have significant influence over the operating and financial policies of Wugen. As a result, the Company has accounted for this investment using the measurement alternative whereby the investment is recorded at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same investee. No impairment was recognized as of June 30, 2021. |
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Deferred Offering Costs | Deferred Offering Costs The Company defers offering costs consisting of legal, accounting and other fees and costs directly attributable to its initial public offering (“IPO”). The deferred offering costs will be offset against the proceeds received upon the completion of the IPO. Deferred offering costs will be classified as current or long term, depending on whether an IPO is expected to be completed within a
one-year period. If offering expenses are paid prior to the completion of an IPO, they will be recorded in prepaid assets on the balance sheets until such time an IPO is completed. If an obligation is incurred but not settled prior to the IPO, the Company will recognize deferred offering costs as an accrued liability. In the event the IPO is terminated, all of the deferred offering costs will be expensed within the Company’s statements of operations. As of June 30, 2021, there were approximately $3.2 million of current deferred offering costs, $924,312 of which are included within Prepaid expenses, $307,312 of which are included within Accounts p ayable, and $2.0 million of which are included within Accrued liabilities and other current liabilities on the accompanying condensed balance sheet. There were no long-term deferred offering costs as of June 30, 2021. |
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Net Loss Per Share | Net Loss Per Share Basic net loss per share is calculated by dividing the net loss attributable to common stockholders, including both Class A and Class B common stock, by the weighted-average number of common shares outstanding for the period, without consideration of potential dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the sum of the weighted average number of common shares plus the potential dilutive effects of potential dilutive securities outstanding during the period. Potential dilutive securities are excluded from diluted earnings or loss per share if the effect of such inclusion is anti-dilutive. The Company’s potentially dilutive securities, which include convertible redeemable preferred stock and outstanding stock options under the 2019 Equity Incentive Plan (“2019 Plan”), have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position. |
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Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU
No. 2016-02, Leases |
Net Loss Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Basic and Diluted Net Income (Loss) Per Common Share | The following table summarizes the computation of the basic and diluted net loss per share:
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Summary of Outstanding Potentially Dilutive Securities | The following table summarizes the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their inclusion would be anti-dilutive:
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Fair Value of Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of assets and liabilities that are measured at fair value on a recurring basis | The following table presents the Company’s assets which were measured at fair value at December 31, 2020 and June 30 , 2021:
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Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |||||||||||||||||||||||||||||||
Summary of the future minimum payments for the lease and sublease agreements | The future minimum payments for the lease and sublease agreements at June 30, 2021 were as follows:
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Organization and Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jun. 25, 2021 |
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
Dec. 31, 2020 |
Dec. 31, 2019 |
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Revenues | $ 0 | $ 0 | $ 0 | $ 0 | |||
Deferred offering costs | 3,189,000 | 3,189,000 | $ 0 | ||||
long-term deferred offering cost | 0 | 0 | |||||
Investment | 1,599,750 | 1,599,750 | 1,599,750 | ||||
Accounts receivable, net | 50,000 | 50,000 | 2,500,000 | ||||
Stockholders' Equity, Reverse Stock Split | a 3-for-7 reverse stock split for all issued and outstanding common stock, | ||||||
Cash and cash equivalents | 5,050,851 | $ 3,168,430 | 5,050,851 | $ 3,168,430 | $ 8,455,834 | $ 7,355,834 | |
Research and development | 20,700,000 | ||||||
Accounts Payable and Accrued Liabilities [Member] | |||||||
Deferred Revenue, Current | 696,625 | 696,625 | |||||
Deferred offering costs | 2,000,000.0 | 2,000,000.0 | |||||
Prepaid Expenses [Member] | |||||||
Deferred offering costs | 924,312 | 924,312 | |||||
Accounts Payables [Member] | |||||||
Deferred offering costs | $ 307,312 | $ 307,312 |
Accrued Liabilities and Other Current Liabilities - Additional Information (Detail) - USD ($) |
Jan. 08, 2021 |
Jun. 30, 2021 |
Dec. 31, 2020 |
May 20, 2020 |
---|---|---|---|---|
Payables And Accruals [Line Items] | ||||
Accrued liabilities and other current liabilities | $ 3,172,545 | $ 845,741 | ||
Accounts Payable and Accrued Liabilities, Current | 3,200,000 | |||
Deferred offering costs | 3,189,000 | 0 | ||
Accrued Expenses Current [Member] | ||||
Payables And Accruals [Line Items] | ||||
Accrued expenses, current | 273,907 | |||
Accounts Payable and Accrued Liabilities [Member] | ||||
Payables And Accruals [Line Items] | ||||
Deferred offering costs | 2,000,000.0 | |||
Deferred Revenue, Current | 696,625 | |||
Accrued payroll expenses | 315,855 | |||
IPO [Member] | ||||
Payables And Accruals [Line Items] | ||||
Deferred offering costs | $ 2,000,000.0 | |||
SBA Paycheck Protection Loan [Member] | ||||
Payables And Accruals [Line Items] | ||||
Short-term Debt | $ 567,311 | $ 563,590 | ||
Debt Instrument, Decrease, Forgiveness | $ 567,311 |
Redeemable Preferred Stock - Additional Information (Detail) |
6 Months Ended |
---|---|
Jun. 30, 2021
USD ($)
| |
Equity [Abstract] | |
Cumulative Dividends | $ 960,020 |
Dividends | $ 0 |
Net Loss Per Share - Summary of Basic and Diluted Net Income (Loss) Per Common Share (Detail) - USD ($) |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2021 |
Mar. 31, 2021 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
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Numerator: | ||||||
Net loss | $ (2,750,362) | $ (2,843,996) | $ (2,778,485) | $ (2,375,514) | $ (5,594,358) | $ (5,153,999) |
Less: cumulative preferred dividends earned in the period | (482,662) | $ (477,358) | (279,786) | $ (279,786) | (960,020) | (559,573) |
Net loss available for distribution to common stockholders | $ (3,233,024) | $ (3,058,271) | $ (6,554,378) | $ (5,713,572) | ||
Denominator: | ||||||
Net loss per share, basic and diluted | $ (0.66) | $ (0.65) | $ (1.34) | $ (1.21) | ||
Weighted average shares outstanding, basic and diluted | 4,921,121 | 4,725,083 | 4,880,496 | 4,721,313 |
Net Loss Per Share - Summary of Outstanding Potentially Dilutive Securities (Detail) - shares |
Jun. 30, 2021 |
Jun. 30, 2020 |
---|---|---|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially diluted securities | 24,348,278 | 18,898,708 |
Redeemable Preferred Stocks [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially diluted securities | 23,768,420 | 18,329,308 |
Common Stock Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially diluted securities | 579,858 | 569,400 |
Fair Value of Financial Instruments - Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Detail) - USD ($) |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Assets: | ||
Assets | $ 3,379,887 | $ 6,752,266 |
Level 1 [Member] | ||
Assets: | ||
Assets | 3,379,887 | 6,752,266 |
Level 1 [Member] | Money Market Funds [Member] | ||
Assets: | ||
Assets | $ 3,379,887 | $ 6,752,266 |
Income Taxes - Additional Information (Detail) - USD ($) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2021 |
Dec. 31, 2020 |
|
Income Tax Disclosure [Abstract] | ||
Provision for income taxes | $ 0 | $ 0 |
Deferred Tax Assets Valuation Allowance, Percent | 100.00% | |
Effective Income Tax Rate Reconciliation, Percent | 0.00% |
Commitments and Contingencies - Summary of the Future Minimum Payments for the Lease and Sublease Agreements (Detail) |
Jun. 30, 2021
USD ($)
|
---|---|
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2021 (remaining 6 months) | $ 106,000 |
2022 | 36,000 |
Total future minimum lease payments | $ 142,000 |
Commitments and Contingencies - Additional Information (Detail) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Operating Leased Assets [Line Items] | ||||
Operating Leases, Rent Expense | $ 53,430 | $ 46,182 | $ 101,570 | $ 92,073 |
Future payment obligations | 1.3 | 0 | 1.3 | 0 |
Research and Development Expense [Member] | ||||
Operating Leased Assets [Line Items] | ||||
Operating Leases, Rent Expense | $ 28,607 | $ 20,949 | $ 51,752 | $ 41,608 |
Subsequent Events - Additional Information (Detail) - USD ($) |
6 Months Ended | |||
---|---|---|---|---|
Jul. 22, 2021 |
Jul. 19, 2021 |
Jul. 18, 2021 |
Jun. 30, 2021 |
|
Subsequent Event [Line Items] | ||||
Dividends Paid | $ 0 | |||
IPO [Member] | ||||
Subsequent Event [Line Items] | ||||
Dividends Paid | $ 0 | |||
Subsequent Event [Member] | Two Thousand twenty One Equity Incentive Plan [Member] | ||||
Subsequent Event [Line Items] | ||||
Number of common shares reserved for future issuance. | 2,400,000 | |||
Subsequent Event [Member] | Two Thousand twenty One Equity Incentive Plan [Member] | Board Of Directors [Member] | ||||
Subsequent Event [Line Items] | ||||
Percentage of outstanding shares of common stock | 2.00% | |||
Subsequent Event [Member] | Common Stock [Member] | IPO [Member] | ||||
Subsequent Event [Line Items] | ||||
Stock Issued During Period Shares | 7,000,000 | |||
Share Price | $ 8.00 | |||
Proceeds From Issuance Of IPO | $ 49.0 |
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