10-Q
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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 March 31, 2023

OR

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

For the transition period from _________ to _________

Commission File Number: 001-39247

 

ENLIVEN THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

81-1523849

(State or other jurisdiction of incorporation or organization)

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

6200 Lookout Road

Boulder, CO

80301

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (720) 647-8519

 

Not applicable

(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

 

ELVN

 

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.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

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

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

As of May 1, 2023, the registrant had 41,114,795 shares of common stock, $0.001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

3

Condensed Consolidated Balance Sheets

3

Condensed Consolidated Statements of Operations and Comprehensive Loss

4

 

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

5

Condensed Consolidated Statements of Cash Flows

6

Notes to Unaudited Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

31

 

 

 

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

33

Item 1A.

Risk Factors

33

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

93

Item 3.

Defaults Upon Senior Securities

93

Item 4.

Mine Safety Disclosures

93

Item 5.

Other Information

93

Item 6.

Exhibits

94

SIGNATURES

96

 

i


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this quarterly report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy, development plans, planned preclinical studies and clinical trials, future results of clinical trials, expected research and development costs, regulatory strategy, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this quarterly report on Form 10-Q include, but are not limited to, statements about:

 

the ability of our clinical trials to demonstrate safety and efficacy of our product candidates, and other positive results;
our ability to utilize our proprietary drug discovery platform to develop a pipeline of product candidates to address unmet needs in cancer;
the timing, progress and results of clinical trials for ELVN-001 from our BCR-ABL (as defined below) program and ELVN-002 from our HER2 (as defined below) program, and other product candidates we may develop, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the studies or trials will become available, and research and development programs;
the timing, scope and likelihood of regulatory filings and approvals, including timing of INDs (as defined below) and final U.S. Food and Drug Administration (“FDA”) approval of ELVN-001 from our BCR-ABL program and ELVN-002 from our HER2 program and any other future product candidates;
the timing, scope or likelihood of foreign regulatory filings and approvals;
our ability to develop and advance current product candidates and programs into, and successfully complete, clinical studies;
our manufacturing, commercialization, and marketing capabilities and strategy;
plans relating to commercializing our product candidates, if approved, including the geographic areas of focus and sales strategy;
the need to hire additional personnel and our ability to attract and retain such personnel;
the size of the market opportunity for our product candidates, including estimates of the number of patients who suffer from the diseases we are targeting;
expectations regarding the approval and use of our product candidates in combination with other drugs;
our ability to secure drug product for combination studies;
expectations regarding potential for accelerated approval or other expedited regulatory designation;
our competitive position and the success of competing therapies that are or may become available;
estimates of the number of patients that we will enroll in our clinical trials;
the beneficial characteristics, and the potential safety, efficacy and therapeutic effects of our product candidates;
our ability to obtain and maintain regulatory approval of our product candidates and our expectations regarding particular lines of therapy;
plans relating to the further development of our product candidates, including additional indications we may pursue;
existing regulations and regulatory developments in the United States, Europe and other jurisdictions;
expectations regarding the impact of the COVID-19 pandemic on our business;
our expectations regarding the impact of instability in the banking and financial services sector and other macroeconomic trends;

1


 

our intellectual property position, including the scope of protection we are able to establish and maintain for intellectual property rights covering ELVN-001 from our BCR-ABL program and ELVN-002 from our HER2 program, and other product candidates we may develop, including the extensions of existing patent terms where available, the validity of intellectual property rights held by third parties, and our ability not to infringe, misappropriate or otherwise violate any third-party intellectual property rights;
our continued reliance on third parties to conduct additional clinical trials of our product candidates, and for the manufacture of our product candidates for clinical trials;
our relationships with patient advocacy groups, key opinion leaders, regulators, the research community and payors;
our ability to obtain, and negotiate favorable terms of, any collaboration, licensing or other arrangements that may be necessary or desirable to develop, manufacture or commercialize our product candidates;
the pricing and reimbursement of ELVN-001 in our BCR-ABL program and ELVN-002 from our HER2 program, and other product candidates we may develop, if approved;
the rate and degree of market acceptance and clinical utility of ELVN-001 from our BCR-ABL program and ELVN-002 from our HER2 program, and other product candidates we may develop;
our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
our financial performance;
the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our planned operating expenses and capital expenditure requirements;
the expected benefits of the Merger (as defined below);
the impact of laws and regulations; and
expectations regarding the period during which we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012 and a smaller reporting company under the Exchange Act (as defined below).

 

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this quarterly report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk factors” and elsewhere in this quarterly report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

 

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this quarterly report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

2


 

Part I – FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Statements (Unaudited)

 

ENLIVEN THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share amounts)

 

 

 

As of
March 31, 2023

 

 

As of
December 31, 2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

      Cash and cash equivalents

 

$

292,102

 

 

$

75,536

 

      Prepaid expenses and other current assets

 

 

5,901

 

 

 

2,217

 

Total current assets

 

 

298,003

 

 

 

77,753

 

Property and equipment, net

 

 

853

 

 

 

890

 

Right-of-use asset

 

 

551

 

 

 

626

 

Deferred offering costs

 

 

 

 

 

3,975

 

Restricted cash

 

 

54

 

 

 

54

 

Other long-term assets

 

 

3,405

 

 

 

 

Total assets

 

$

302,866

 

 

$

83,298

 

Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

      Accounts payable

 

$

5,860

 

 

$

3,438

 

      Accrued expenses and other current liabilities

 

 

5,082

 

 

 

6,277

 

Total current liabilities

 

 

10,942

 

 

 

9,715

 

Long-term liabilities

 

 

508

 

 

 

659

 

Total liabilities

 

 

11,450

 

 

 

10,374

 

Commitments and contingencies (Note 8):

 

 

 

 

 

 

Convertible preferred stock, par value $0.0001; authorized shares - none and 61,730,064 at March 31, 2023 and December 31, 2022, respectively; issued and outstanding shares - none and 61,730,064 at March 31, 2023 and December 31, 2022, respectively; liquidation preference - $0 and $140,520 at March 31, 2023 and December 31, 2022, respectively

 

 

 

 

 

149,749

 

Stockholders' equity (deficit):

 

 

 

 

 

 

Preferred stock, par value $0.001; authorized shares - 10,000,000 and none at March 31, 2023 and December 31, 2022, respectively; issued and outstanding shares - none

 

 

 

 

 

 

Common stock, par value $0.001 and $0.0001 at March 31, 2023 and December 31, 2022, respectively; authorized shares - 100,000,000 and 26,264,364 at March 31, 2023 and December 31, 2022, respectively; issued and outstanding shares - 41,106,277 and 3,570,019 at March 31, 2023 and December 31, 2022, respectively

 

 

41

 

 

 

1

 

      Additional paid-in capital

 

 

388,963

 

 

 

6,038

 

      Accumulated deficit

 

 

(97,588

)

 

 

(82,864

)

Total stockholders’ equity (deficit)

 

 

291,416

 

 

 

(76,825

)

Total liabilities, convertible preferred stock and stockholders' equity (deficit)

 

$

302,866

 

 

$

83,298

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

3


 

ENLIVEN THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(in thousands, except share and per share amounts)

 

 

 

Three Months Ended
March 31,

 

 

 

2023

 

 

2022

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

$

11,880

 

 

$

7,059

 

General and administrative

 

 

4,538

 

 

 

1,619

 

Total operating expenses

 

 

16,418

 

 

 

8,678

 

Loss from operations

 

 

(16,418

)

 

 

(8,678

)

Other income (expense), net

 

 

 

 

 

 

Interest income

 

 

1,694

 

 

 

9

 

Total other income (expense), net

 

 

1,694

 

 

 

9

 

Net loss and comprehensive loss

 

$

(14,724

)

 

$

(8,669

)

Net loss per share, basic and diluted

 

$

(0.80

)

 

$

(3.01

)

Weighted-average shares outstanding, basic and diluted

 

 

18,514,644

 

 

 

2,876,779

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

4


 

ENLIVEN THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

(in thousands, except share amounts)

 

 

 

Convertible
Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

Balance - January 1, 2022

 

 

61,730,064

 

 

$

149,749

 

 

 

 

3,435,014

 

 

$

1

 

 

$

2,314

 

 

$

(45,202

)

 

$

(42,887

)

Exercise of common stock options

 

 

 

 

 

 

 

 

 

122,475

 

 

 

 

 

 

228

 

 

 

 

 

 

228

 

Vesting of restricted stock and stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

64

 

 

 

 

 

 

64

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

654

 

 

 

 

 

 

654

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,669

)

 

 

(8,669

)

Balance - March 31, 2022

 

 

61,730,064

 

 

$

149,749

 

 

 

 

3,557,489

 

 

$

1

 

 

$

3,260

 

 

$

(53,871

)

 

$

(50,610

)

 

 

 

Convertible
Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity (Deficit)

 

Balance - January 1, 2023

 

 

61,730,064

 

 

$

149,749

 

 

 

 

3,570,019

 

 

$

1

 

 

$

6,038

 

 

$

(82,864

)

 

$

(76,825

)

Exercise of common stock options

 

 

 

 

 

 

 

 

 

55,599

 

 

 

 

 

 

140

 

 

 

 

 

 

140

 

Vesting of restricted stock and stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

73

 

 

 

 

 

 

73

 

Conversion of convertible preferred stock to common stock
   in connection with the Merger

 

 

(61,730,064

)

 

 

(149,749

)

 

 

 

18,216,847

 

 

 

18

 

 

 

149,731

 

 

 

 

 

 

149,749

 

Issuance of common stock in the Financing Transaction,
   net of issuance costs of $
4,955

 

 

 

 

 

 

 

 

 

12,638,636

 

 

 

13

 

 

 

159,531

 

 

 

 

 

 

159,544

 

Issuance of common stock to former stockholders of
   Imara Inc. in connection with the Merger

 

 

 

 

 

 

 

 

 

6,625,176

 

 

 

7

 

 

 

80,234

 

 

 

 

 

 

80,241

 

Adjustment for change in common stock par value in
   connection with the Merger

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

(2

)

 

 

 

 

 

 

Reverse recapitalization transaction costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,044

)

 

 

 

 

 

(9,044

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,262

 

 

 

 

 

 

2,262

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,724

)

 

 

(14,724

)

Balance - March 31, 2023

 

 

 

 

$

 

 

 

 

41,106,277

 

 

$

41

 

 

$

388,963

 

 

$

(97,588

)

 

$

291,416

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

5


 

ENLIVEN THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

 

 

Three Months Ended
March 31,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

 Net loss

 

$

(14,724

)

 

$

(8,669

)

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

 

 

 

 

 

 

     Depreciation

 

 

67

 

 

 

39

 

     Stock-based compensation

 

 

2,262

 

 

 

654

 

     Changes in operating assets and liabilities:

 

 

 

 

 

 

          Prepaid expenses, other current and long-term assets

 

 

(6,088

)

 

 

(542

)

          Right-of-use asset

 

 

(1

)

 

 

 

          Accounts payable

 

 

492

 

 

 

(1,557

)

          Accrued expenses and other liabilities

 

 

(2,852

)

 

 

(286

)

Net cash used in operating activities

 

 

(20,844

)

 

 

(10,361

)

Cash flows from investing activities:

 

 

 

 

 

 

     Purchases of property and equipment

 

 

(31

)

 

 

(194

)

Net cash used in investing activities

 

 

(31

)

 

 

(194

)

Cash flows from financing activities:

 

 

 

 

 

 

     Proceeds from exercise of stock options

 

 

140

 

 

 

573

 

     Deferred offering costs related to initial public offering

 

 

 

 

 

(164

)

  Proceeds from the Financing Transaction, net of issuance costs

 

 

162,900

 

 

 

 

     Cash acquired in connection with the reverse recapitalization

 

 

81,821

 

 

 

 

     Payment of reverse recapitalization transaction costs

 

 

(7,420

)

 

 

 

Net cash provided by financing activities

 

 

237,441

 

 

 

409

 

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

 

 

216,566

 

 

 

(10,146

)

Cash, cash equivalents and restricted cash at the beginning of the period

 

 

75,590

 

 

 

110,078

 

Cash, cash equivalents and restricted cash at the end of the period

 

$

292,156

 

 

$

99,932

 

 

 

 

 

 

 

Components of cash, cash equivalents and restricted cash:

 

 

 

 

 

 

Cash and cash equivalents

 

$

292,102

 

 

$

99,878

 

Restricted cash

 

 

54

 

 

 

54

 

Total cash, cash equivalents and restricted cash

 

$

292,156

 

 

$

99,932

 

 

 

 

 

 

 

Supplemental disclosure of non-cash operating activities:

 

 

 

 

 

 

Issuance costs related to the Financing Transaction included in accounts payable

 

$

1,534

 

 

$

 

Transaction costs related to reverse recapitalization included in accounts payable and accrued expenses and other current liabilities

 

$

1,316

 

 

$

 

Issuance costs related to the initial public offering included in accrued expenses and other current liabilities

 

$

 

 

$

98

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Conversion of convertible preferred stock to common stock

 

$

149,749

 

 

$

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

6


 

ENLIVEN THERAPEUTICS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Description of Business and Liquidity

Business

Enliven Inc. (formerly, Enliven Therapeutics, Inc.) (“Former Enliven”) was incorporated in the State of Delaware on June 12, 2019. Enliven Therapeutics, Inc. (formerly Imara Inc.) (the “Company”) is headquartered in Boulder, Colorado. The Company is a clinical-stage biopharmaceutical company focused on the discovery and development of small molecule inhibitors to help patients with cancer not only live longer, but better. The Company aims to address existing and emerging unmet needs with a precision oncology approach that improves survival and enhances overall patient well-being. Its discovery process combines deep insights in clinically validated biological targets and differentiated chemistry with the goal of designing therapies for unmet needs.

 

Since its inception, the Company has devoted substantially all of its efforts to research and development activities, business planning, establishing and maintaining its intellectual property portfolio, hiring personnel, raising capital, and providing general and administrative support for these activities. To date, the Company has funded its operations primarily through private placements of its common and convertible preferred stock.

 

The Merger and Financing Transaction

On October 13, 2022, the Company entered into an agreement and plan of merger (“Merger Agreement” and such transactions considered by the Merger Agreement, the “Merger”) with Former Enliven.

 

On February 23, 2023, the Company completed the Merger with Former Enliven in accordance with the Merger Agreement. Prior to the effective time of the Merger, the Company effected a 1-for-4 reverse stock split (the “Reverse Stock Split”), and right after the Merger, the Company changed its name to Enliven Therapeutics, Inc. Subject to the terms and conditions of the Merger Agreement, at the closing of the Merger, (a) each outstanding share of Former Enliven common stock (including common stock issued upon the conversion of its preferred stock) was converted into the right to receive a number of shares of the Company’s common stock (“Company Common Stock”) (after giving effect to the Reverse Stock Split) equal to the exchange ratio per the Merger Agreement; and (b) each then outstanding Former Enliven stock option that had not previously been exercised prior to the closing of the Merger was assumed by the Company. At closing of the Merger, the Company issued an aggregate of 34,426,351 shares of Company Common Stock to Former Enliven’s stockholders, based on an exchange ratio of approximately 0.2951 shares of Company Common Stock for each share of Former Enliven common stock outstanding immediately prior to the Merger, including those shares of common stock issued upon conversion of the Former Enliven preferred stock, resulting in 41,011,501 shares of Company Common Stock being issued and outstanding immediately following the effective time of the Merger. The Company also assumed all of the outstanding and unexercised stock options to purchase shares of Former Enliven common stock. The assumed options continue to be governed by the terms of the 2019 Equity Incentive Plan (as discussed more in Note 11) under which the options were originally granted, with such options hence forth representing the right to purchase a number of shares of Company Common Stock equal to approximately 0.2951 multiplied by the number of shares of Former Enliven common stock previously represented by such options.

 

The Merger was accounted for as a reverse recapitalization in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). Under this method of accounting, Former Enliven was deemed to be the accounting acquirer for financial reporting purposes. This determination was primarily based on the expectation that, immediately following the Merger: (i) Former Enliven stockholders will own a substantial majority of the voting rights; (ii) Former Enliven will designate a majority (eight of nine) of the initial members of the board of directors of the combined company; and (iii) Former Enliven’s executive management team will become the management team of the combined company; and (iv) the combined company will be named Enliven Therapeutics, Inc. and be headquartered in Boulder, Colorado. Accordingly, for accounting purposes, the Merger was treated as the equivalent of Former Enliven issuing stock to acquire the net assets of the Company. As a result of the Merger, the net assets of the Company were recorded at their acquisition-date fair value in the financial statements of Former Enliven and the reported operating results prior to the Merger will be those of Former Enliven. Historical common share figures of Former Enliven have been retroactively restated based on the exchange ratio of approximately 0.2951.

 

On February 23, 2023, prior to the effective time of the Merger, the Company entered into a Contingent Value Rights Agreement (the “CVR Agreement”) with a rights agent, pursuant to which the Company’s pre-Merger common stockholders received one contingent value right (each, a “CVR”) for each outstanding share of the Company’s common stock held by such stockholder as of February 22, 2023. Each CVR represents the contractual right to receive payments upon the occurrence of certain events related to

7


 

the Company’s sale of certain assets prior to the completion of the Merger, in each case subject to, and in accordance with, the terms and conditions of the CVR Agreement. As of March 31, 2023, no payments have been received under the CVR Agreement.

 

Concurrently with the execution of the Merger Agreement, and in order to provide Former Enliven with additional capital for its development programs prior to the closing of the Merger, certain new and current investors purchased an aggregate of $164.5 million of common stock of Former Enliven (the “Financing Transaction”).

 

Risks and uncertainties

The Company is subject to risks common to development-stage companies in the biotechnology industry including, but not limited to, risks of failure of preclinical studies and clinical trials, new technological innovations, protection of proprietary technology, dependence on key personnel, reliance on third-party organizations, risks of obtaining regulatory approval for any product candidate that it may develop, compliance with government regulations and the need to obtain additional financing.

 

The Company continues to closely monitor macroeconomic and geopolitical developments, including inflation, instability in the banking and financial services sector, tightening of the credit markets, the raising of the debt ceiling, the Russia-Ukraine conflict and COVID-19. The extent of the impact of these developments on the Company’s business, operations and research and development timelines and plans remains uncertain, and will depend on numerous factors, including the impact, if any, on the Company’s personnel, responses of governmental entities, and the responses of third parties such as contract research organizations, contract manufacturing organizations and other third parties with whom the Company does business. Any prolonged material disruption to the Company’s employees or suppliers could adversely impact the Company’s development activities, financial condition and results of operations, including its ability to obtain financing. The Company is monitoring the potential impact of these developments on its business and consolidated financial statements. To date, the Company has not experienced material business disruptions or incurred impairment losses in the carrying values of its assets as a result of these developments, and it is not aware of any specific related event or circumstance that would require it to revise its estimates reflected in these condensed consolidated financial statements.

 

Liquidity considerations

In order to complete the development of the Company’s product candidates and to build the sales, marketing and distribution infrastructure that the Company believes will be necessary to commercialize its product candidates, if approved, the Company will require substantial additional capital. Until the Company can generate a sufficient amount of revenue from the commercialization of its product candidates, the Company may seek to raise any necessary additional capital through equity or debt financings, loans or other capital sources, which could include income from collaborations, partnerships or other marketing, distribution, licensing or other strategic arrangements with third parties, or from grants. Because of the numerous risks and uncertainties associated with research, development and commercialization of product candidates, the Company is unable to estimate the exact amount and timing of its capital requirements. The Company does not expect to generate any meaningful revenue unless and until the Company obtains regulatory approval of and commercializes any of its product candidates, and the Company does not know when, or if, that will occur.

 

The Company has incurred significant losses and negative cash flows from operations since inception. As of March 31, 2023, the Company had an accumulated deficit of $97.6 million. The Company has incurred losses and negative cash flows from operations since inception, including net losses of $14.7 million and $8.7 million for the three months ended March 31, 2023 and 2022, respectively. The Company expects that its operating losses and negative cash flows will continue for the foreseeable future as the Company continues to develop its product candidates. The Company currently expects that its cash and cash equivalents of $292.1 million as of March 31, 2023 will be sufficient to fund operating expenses and capital requirements for at least 12 months from the date the unaudited condensed consolidated financial statements are issued.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 have been prepared in conformity with 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 consolidated financial statements have been prepared on the same basis as the Company’s audited financial statements and 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 months ended March 31, 2023 are not necessarily indicative of the results

8


 

expected for the full fiscal year or any subsequent interim period. The condensed balance sheet as of December 31, 2022 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 consolidated financial statements and the notes accompanying them should be read in conjunction with Former Enliven’s audited financial statements as of and for the year ended December 31, 2022. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification ("ASC"), and Accounting Standards Update, ("ASU"), of the Financial Accounting Standards Board ("FASB").

 

Use of estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expense during the reporting period. The most significant estimates relate to the determination of fair value of the Company’s common stock, stock-based compensation and accrued research and development expenses. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate.

 

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents are recorded at cost, which approximates fair value. As of March 31, 2023 and December 31, 2022, cash and cash equivalents consisted primarily of checking and money market funds composed of U.S. government obligations.

 

Restricted cash

The Company classifies all cash whose use is limited by contractual provisions as restricted cash. Restricted cash arises from the requirement for the Company to maintain cash of $54,000 as collateral for a sublease with the facility’s landlord. As of March 31, 2023 and December 31, 2022, $54,000 of restricted cash was reflected in restricted cash in the balance sheets.

 

Concentrations of credit risk and off-balance sheet risk

The Company maintains its cash accounts and money market funds that at times exceed insured limits. As of March 31, 2023 and December 31, 2022, the Company’s cash balances exceeded those that are federally insured. To date, the Company has not recognized any losses caused by uninsured balances.

 

Fair value measurements

Financial 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 price the Company would receive to sell an investment in a timely transaction or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market, the most advantageous market for the investment or liability. A framework is used for measuring fair value utilizing a three-tier hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

 

The three levels of the fair value hierarchy are as follows:

Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2—Quoted prices in markets that are not considered to be active or financial instrument valuations for which all significant inputs are observable, either directly or indirectly; and
Level 3—Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

 

Financial instruments are categorized in their entirety based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and considers factors specific to the investment. To the extent that the valuation is based on models or inputs that are less observable

9


 

or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3.

 

The Company monitors the availability of inputs that are significant to the measurement of fair value to assess the appropriate categorization of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the Company’s policy is to recognize significant transfers between levels at the end of the reporting period. The significance of transfers between levels is evaluated based upon the nature of the financial instrument and size of the transfer relative to total net assets available for benefits.

 

The Company’s cash and cash equivalents, prepaid expenses and other current assets, accounts payable and accrued expenses and other current liabilities approximate their fair value due to their short maturities.

 

Deferred offering costs

Deferred offering costs, consisting of legal, accounting and other fees and costs relating to the Merger were capitalized and recorded on the balance sheets. At the close of the Merger, deferred offering costs were recorded as contra equity. Deferred offering costs capitalized as of March 31, 2023 and December 31, 2022 were $0 and $4.0 million, respectively.

 

Property and equipment, net

Property and equipment are recorded at cost. Expenditures for repairs and maintenance are expensed as incurred. When assets are retired or disposed of, the assets and related accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is included in the determination of net income or loss. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the asset.

 

The Company’s property and equipment consist of laboratory equipment and employee-related computers with estimated useful lives of three to five years.

 

Impairment of long-lived assets

The Company evaluates long-lived assets, which consist of laboratory equipment and computers, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. To date, no impairments have been recognized in the Company’s financial statements.

 

Leases

The Company elected to early adopt ASU No. 2016-02, Leases ("ASC 842") and its associated amendments as of January 1, 2020. In June 2020, the Company entered into a sublease agreement under which it leased laboratory and office facilities, which the Company determined to be an operating lease. At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company records the associated lease liability and corresponding right-of-use ("ROU") asset upon commencement of the lease using the implicit rate or a discount rate based on a credit-adjusted secured borrowing rate commensurate with the term of the lease. Operating lease assets represent a right to use an underlying asset for the lease term and operating lease liabilities represent an obligation to make lease payments arising from the lease. Operating lease liabilities with a term greater than one year and their corresponding ROU assets are recognized on the balance sheet at the commencement date of the lease based on the present value of lease payments over the expected lease term. As the Company’s lease does not provide an implicit rate, the Company utilizes the appropriate incremental borrowing rate, determined as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and in a similar economic environment. Lease cost is recognized on a straight-line basis over the lease term and variable lease payments are recognized as operating expenses in the period in which the obligation for those payments is incurred. Variable lease payments primarily include common area maintenance, utilities, real

10


 

estate taxes, insurance, and other operating costs that are passed on from the lessor in proportion to the space leased by the Company. The Company has elected the practical expedient to not separate between lease and non-lease components.

 

Operating ROU assets are reflected in right-of-use asset on the balance sheets. Operating lease liabilities are reflected in accrued expenses and other current liabilities and long-term liabilities on the balance sheets.

 

Convertible preferred stock

The Company classifies convertible preferred stock outside of stockholders’ deficit on its balance sheet as the requirements of triggering a deemed liquidation event are not within the Company’s control. In the event of a deemed liquidation event, the proceeds from the event are distributed in accordance with liquidation preferences (Note 10). The Company records the issuance of convertible preferred stock at the issuance price less related issuance costs and less any discount arising on allocation of proceeds to one or more derivative features. The Company has not adjusted the carrying values of the convertible preferred stock to its liquidation preference because of the uncertainty as to whether a deemed liquidation event may occur. In February 2023, all outstanding shares of convertible preferred stock were converted into common shares upon the closing of the Merger.

 

Research and development expenses

The Company expenses research and development costs as incurred. Research and development expenses consist primarily of costs incurred for the discovery and development of its product candidates and include consultants and supplies to conduct clinical, preclinical, and non-clinical studies, costs to acquire, develop and manufacture supplies for preclinical and clinical testing and other studies, expenses incurred under agreements with contract research organizations, and salaries and related costs, including stock-based compensation, as well as depreciation and other allocated facility-related and overhead expenses. Advance payments for goods or services for future research and development activities are deferred and expensed as the goods are delivered or the related services are performed.

 

The Company estimates clinical and preclinical study expenses based on the services performed pursuant to contracts with research institutions and clinical research organizations that conduct and manage preclinical studies and clinical trials on the Company’s behalf. In addition, clinical, preclinical, and non-clinical study materials are manufactured by contract manufacturing organizations. In accruing for these services, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. These estimates are based on communications with the third-party service providers and the Company’s estimates of accrued expenses and on information available at each balance sheet date. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly.

 

Stock-based compensation

The Company measures and records the expense related to stock-based payment awards based on the estimated grant date fair value of those awards. The Company recognizes stock-based compensation expense over the requisite service period of the individual award, generally equal to the vesting period and uses the straight-line method to recognize stock-based compensation. The Company uses the Black-Scholes option pricing model to determine the fair value of the stock awards. The Black-Scholes option pricing model requires the Company to make assumptions and judgements about the variables used in the calculations, including the fair value of common stock, expected term, expected volatility of its common stock, risk-free interest rate and expected dividend yield. As the stock-based compensation is based on awards ultimately expected to vest, it is reduced by forfeitures, which the Company accounts for as they occur.

 

The Company classifies equity-based compensation expense in the statement of operations and comprehensive loss in the same manner in which the award recipients’ payroll costs are classified or in which the award recipients’ service payments are classified.

 

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—Prior to the Merger, as there had been no public market for the Company’s common stock to date, the estimated fair value of the Company’s common stock was determined by the board of directors as of the date of each option grant with input from management, considering the most recently available third-party valuation of common stock. Following the Merger, the fair value of common stock is based on the closing stock price on the date of grant as reported on the Nasdaq Global Select Market.

11


 

Expected Term—The expected term represents the period that the Company’s options are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term). The Company has very limited historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants.
Expected Volatility—The expected stock price volatilities are estimated based on the historical and implied volatilities of comparable publicly traded companies as the Company does not have sufficient history of trading its common stock.
Risk-Free Interest Rate—The risk-free interest rates are based on U.S. Treasury yields in effect at the grant date for notes with comparable terms as the awards.
Expected Dividend Yield—The Company has never paid dividends on its common stock and has no plans to do so in the future. Therefore, the Company used an expected dividend of zero.

 

The assumptions underlying these valuations represented the Company’s board of directors' and management’s best estimates, which involved inherent uncertainties and the application of management’s judgment. As a result, if the Company had used significantly different assumptions or estimates, the fair value of its stock-based compensation expense could be materially different.

 

Income taxes

Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts or existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of enactment. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

 

The Company has generated net losses since inception and accordingly has not recorded a provision for income taxes.

 

The Company recognizes a tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained upon examination by the tax authorities, based on the merits of the position. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of its provision for income taxes. To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits.

 

Net loss per share

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. Convertible preferred stock is a participating security in distributions of the Company. The net loss attributable to common stockholders is not allocated to the convertible preferred shares as the holders of convertible preferred shares do not have a contractual obligation to share in losses. Cumulative dividends on preferred shares are added to net loss to arrive at net loss available to common stockholders.

 

Under the two-class method, basic net loss per share of common stock is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during each period. The weighted-average number of shares of common stock outstanding used in the basic net loss per share calculation does not include unvested restricted common stock as these shares are considered contingently issuable shares until they vest.

 

Diluted net loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as convertible preferred stock, stock options and unvested early exercised common stock and unvested restricted common stock, which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. For all periods presented, basic and diluted net loss per share were the same, as any additional share equivalents would be anti-dilutive.

 

12


 

Segments

The Company operates in one segment and, accordingly, no segment disclosures have been presented herein. The Company's long-lived assets are primarily located in the United States. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for allocating and evaluating financial performance.

 

Comprehensive income (loss)

Other comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The Company did not have any items that required classification as other comprehensive income (loss).

 

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 financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

 

Recently adopted accounting pronouncements

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. ASU 2019-12 eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. This guidance was effective for fiscal years beginning after December 15, 2021. The Company adopted ASU 2019-12 on January 1, 2022, and the adoption did not have a material impact on the Company's financial statements.

 

There were no other significant updates not already disclosed in the Company’s audited financial statements for the years ended December 31, 2022 and 2021 to the recently issued accounting standards for the three months ended March 31, 2023.

 

3. The Merger

As described in Note 1, Former Enliven merged with the Company on February 23, 2023. The Merger was accounted for as a reverse recapitalization with Former Enliven as the accounting acquirer. The primary pre-combination assets of the Company were cash and cash equivalents. Under reverse recapitalization accounting, the assets and liabilities of the Company were recorded at their fair value, which approximated book value due to the short-term nature of the instruments. No goodwill or intangible assets were recognized. Consequently, the unaudited condensed consolidated financial statements of the Company reflect the operations of Former Enliven for accounting purposes together with a deemed issuance of shares, equivalent to the shares held by the former stockholders of the legal acquirer and a recapitalization of the equity of the accounting acquirer.

 

As part of the recapitalization, the Company obtained the assets and liabilities listed below (in thousands):

 

Cash and cash equivalents

 

$

81,821

 

Other current assets

 

 

1,044

 

Accrued liabilities

 

 

(2,624

)

Net assets acquired

 

$

80,241

 

 

The Company incurred $1.3 million in stock-based compensation expense as a result of the acceleration of vesting of stock options at the time of Merger. This amount was recorded in general and administrative expense on the accompanying condensed consolidated statements of operations for the three months ended March 31, 2023. Additionally, the Company incurred transaction costs of $9.0 million, and this amount was recorded as a reduction to additional paid-in capital in the condensed consolidated statements of convertible preferred stock and stockholders’ equity (deficit) for the three months ended March 31, 2023.

13


 

4. Fair Value of Financial Instruments

The following tables set forth the fair value of the Company’s financial assets measured at fair value on a recurring basis and indicates the level within the fair value hierarchy utilized to determine such values (in thousands):

 

 

 

As of March 31, 2023

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury backed money market funds

 

$

290,833

 

 

$

290,833

 

 

$

 

 

$

 

Total financial assets measured at fair value

 

$

290,833

 

 

$

290,833

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2022

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury backed money market funds

 

$

74,523

 

 

$

74,523

 

 

$

 

 

$

 

Total financial assets measured at fair value

 

$

74,523

 

 

$

74,523

 

 

$

 

 

$

 

 

Money market funds are highly liquid investments that are valued based on quoted market prices in active markets, which represent a Level 1 measurement within the fair value hierarchy.

5. Leases

Facility lease

In June 2020, the Company executed a sublease agreement for 6,782 square feet of office and laboratory space, which was set to expire on