cere-424b3.htm

 

Filed Pursuant to Rule 424(b)(3)

Registration No. 333-250964

PROSPECTUS SUPPLEMENT NO. 3

(to prospectus dated March 25, 2021)

 

Up to 42,437,330 Shares of Common Stock

166,333 Warrants to Purchase Common Stock

This prospectus supplement no. 3 (this “prospectus supplement”) amends and supplements the prospectus dated March 25, 2021 (as supplemented or amended from time to time, the “Prospectus”) which forms a part of our Registration Statement on Form S-1 (Registration Statement No. 333-250964). This prospectus supplement is being filed to update and supplement the information included or incorporated by reference in the Prospectus with the information contained in our Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission (the “SEC”) on May 17, 2021 (the “Form 10-Q”). Accordingly, we have attached the Form 10-Q to this prospectus supplement.

This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.

Our common stock and warrants are listed on The Nasdaq Capital Market under the symbols “CERE” and “CEREW”, respectively. On May 14, 2021, the closing price of our common stock was $13.60 per share and the closing price of our warrants was $4.45 per share.

 

Investing in our securities involves risks that are described in the “Risk Factors” section beginning on page 10 of the Prospectus.

Neither the SEC nor any state securities commission has approved or disapproved of the securities to be issued under the Prospectus or determined if the Prospectus or this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus supplement is May 17, 2021.

 

 


 

 

 

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, 2021

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: 001-39311

 

CEREVEL THERAPEUTICS HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

85-3911080

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

222 Jacobs Street, Suite 200

Cambridge, MA

02141

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (844) 304-2048

 

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, par value $0.0001 per share

Warrants to purchase one share of common stock

at an exercise price of $11.50

 

CERE

CEREW

 

 

The Nasdaq Capital Market

The Nasdaq Capital 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 12, 2021, the registrant had 127,459,087 shares of common stock, par value $0.0001 per share, outstanding.

 

 

 

 


 

 

 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

4

Item 1.

Financial Statements (Unaudited)

4

 

Condensed Consolidated Balance Sheets

4

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

5

 

Condensed Consolidated Statements of Stockholders' Equity

6

 

Condensed Consolidated Statements of Cash Flows

7

 

Notes to Unaudited Condensed Consolidated Financial Statements

8

Item 2.

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

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.

Controls and Procedures

33

PART II.

OTHER INFORMATION

34

Item 1.

Legal Proceedings

34

Item 1A.

Risk Factors

34

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

83

Item 3.

Defaults Upon Senior Securities

83

Item 4.

Mine Safety Disclosures

83

Item 5.

Other Information

83

Item 6.

Exhibits

84

Signatures

85

 

 

i


 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q, or this Quarterly Report, may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report may include, for example, statements about:

 

the success, cost and timing of our product development activities and clinical trials, including statements regarding our plans for clinical development of our product candidates, the initiation and completion of clinical trials and related preparatory work and the expected timing of the availability of results of clinical trials;

 

our ability to recruit and enroll suitable patients in our clinical trials;

 

the potential attributes and benefits of our product candidates;

 

our ability to obtain and maintain regulatory approval for our product candidates, and any related restrictions, limitations or warnings in the label of an approved product candidate;

 

our ability to obtain funding for our operations, including funding necessary to complete further development, approval and, if approved, commercialization of our product candidates;

 

the period over which we anticipate our existing cash and cash equivalents will be sufficient to fund our operating expense and capital expenditure requirements;

 

the potential for our business development efforts to maximize the potential value of our portfolio;

 

our ability to identify, in-license or acquire additional product candidates;

 

our ability to maintain the Pfizer License Agreement underlying our product candidates;

 

our ability to compete with other companies currently marketing or engaged in the development of treatments for the indications that we are pursuing for our product candidates;

 

our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates and the duration of such protection;

 

our ability to contract with and rely on third parties to assist in conducting its clinical trials and manufacture our product candidates;

 

the size and growth potential of the markets for our product candidates, and our ability to serve those markets, either alone or in partnership with others;

 

the rate and degree of market acceptance of our product candidates, if approved;

 

the pricing and reimbursement of our product candidates, if approved;

 

regulatory developments in the United States and foreign countries;

 

the impact of laws, regulations, accounting standards, regulatory requirements, judicial decisions and guidance issued by authoritative bodies;

 

our ability to attract and retain key scientific, medical, commercial or management personnel;

 

our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

 

our financial performance;

 

the ability to recognize the anticipated benefits of the Business Combination and the tavapadon financing transaction; and

 

the effect of COVID-19 on the foregoing.

The forward-looking statements contained in this Quarterly Report are based on current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section titled “Risk Factors” of this Quarterly Report. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some of these risks and uncertainties may in the future be amplified by the COVID-19 pandemic and there may be additional risks that we consider immaterial or which are unknown. It is not possible to predict or identify all such risks. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

You should read this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.


ii


 

 

SUMMARY OF MATERIAL RISKS ASSOCIATED WITH OUR BUSINESS

Our business is subject to numerous risks and uncertainties that you should be aware of before making an investment decision, including those highlighted in the section entitled “Risk Factors.” These risks include, but are not limited to, the following:

 

The successful development of pharmaceutical products is highly uncertain.

 

We are a clinical-stage biopharmaceutical company with a limited operating history. We have incurred significant financial losses since our inception and anticipate that we will continue to incur significant financial losses for the foreseeable future.

 

We will need substantial additional funding, and if we are unable to raise capital when needed, we could be forced to delay, reduce or terminate our product discovery and development programs or commercialization efforts.

 

Due to the significant resources required for the development of our pipeline, and depending on our ability to access capital, we must prioritize the development of certain product candidates over others. Moreover, we may fail to expend our limited resources on product candidates or indications that may have been more profitable or for which there is a greater likelihood of success.

 

Our business is highly dependent on the success of our product candidates. If we are unable to successfully complete clinical development, obtain regulatory approval for or commercialize one or more of our product candidates, or if we experience delays in doing so, our business will be materially harmed.

 

The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time-consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed.

 

Business interruptions resulting from the COVID-19 outbreak or similar public health crises could cause a disruption of the development of our product candidates and adversely impact our business.

 

If our clinical trials fail to replicate positive results from earlier preclinical studies or clinical trials conducted by us or third parties, we may be unable to successfully develop, obtain regulatory approval for or commercialize our product candidates.

 

We may incur unexpected costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

 

Even if any of our product candidates receives regulatory approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success, in which case we may not generate significant revenues or become profitable.

 

Competitive products may reduce or eliminate the commercial opportunity for our product candidates, if approved. If our competitors develop technologies or product candidates more rapidly than we do, or their technologies or product candidates are more effective or safer than ours, our ability to develop and successfully commercialize our product candidates may be adversely affected.

 

We depend heavily on our executive officers, third-party consultants and others and our ability to compete in the biotechnology and pharmaceutical industries depends upon our ability to attract and retain highly qualified managerial, scientific and medical personnel. The loss of their services or our inability to hire and retain such personnel would materially harm our business.

 

Bain Investor and Pfizer have significant influence over us.

 

We rely on third parties to assist in conducting our clinical trials. If they do not perform satisfactorily, we may not be able to obtain regulatory approval or commercialize our product candidates, or such approval or commercialization may be delayed, and our business could be substantially harmed.

 

We depend and expect in the future to continue to depend on in-licensed intellectual property. Such licenses impose obligations on our business, and if we fail to comply with those obligations, we could lose license rights, which would substantially harm our business.

The risks described above should be read together with the text of the full risk factors described below in the section entitled “Risk Factors” and the other information set forth in this Quarterly Report, including our consolidated financial statements and the related notes, as well as in other documents that we file with the Securities Exchange Commission, or the SEC. The risks summarized above or described in full below are not the only risks that we face. Additional risks and uncertainties not precisely known to us, or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, results of operations and future growth prospects.

 

iii


 

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CEREVEL THERAPEUTICS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts and per share data)

(Unaudited)

 

 

 

As of

 

 

 

March 31,

2021

 

 

December 31,

2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

343,287

 

 

$

383,623

 

Prepaid expenses and other current assets

 

 

6,524

 

 

 

6,937

 

Total current assets

 

 

349,811

 

 

 

390,560

 

Property and equipment, net

 

 

27,597

 

 

 

24,165

 

Operating lease assets

 

 

24,187

 

 

 

24,459

 

Restricted cash

 

 

4,200

 

 

 

4,200

 

Other long-term assets

 

 

2,309

 

 

 

1,889

 

Total assets

 

$

408,104

 

 

$

445,273

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

7,755

 

 

$

4,993

 

Accrued expenses and other current liabilities

 

 

24,257

 

 

 

22,519

 

Operating lease liabilities, current portion

 

 

2,139

 

 

 

2,036

 

Total current liabilities

 

 

34,151

 

 

 

29,548

 

Operating lease liabilities, net of current portion

 

 

32,952

 

 

 

30,969

 

Other long-term liabilities

 

 

965

 

 

 

236

 

Total liabilities

 

 

68,068

 

 

 

60,753

 

Commitments and contingencies (Notes 11 and 12)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value: 10,000,000 shares authorized;

    no shares issued and outstanding as of March 31, 2021 and

    December 31, 2020

 

 

 

 

 

 

Common stock, $0.0001 par value: 500,000,000 shares authorized;

  127,325,116 and 127,123,954 shares issued and outstanding

    as of March 31, 2021 and December 31, 2020, respectively

 

 

13

 

 

 

13

 

Additional paid-in capital

 

 

781,914

 

 

 

775,417

 

Accumulated deficit

 

 

(441,891

)

 

 

(390,910

)

Total stockholders’ equity

 

 

340,036

 

 

 

384,520

 

Total liabilities and stockholders’ equity

 

$

408,104

 

 

$

445,273

 

 

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

4


 

CEREVEL THERAPEUTICS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share amounts and per share data)

(Unaudited)

 

 

 

For the Three Months Ended

March 31,

 

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

$

36,561

 

 

$

26,959

 

General and administrative

 

 

14,010

 

 

 

10,743

 

Total operating expenses

 

 

50,571

 

 

 

37,702

 

Loss from operations

 

 

(50,571

)

 

 

(37,702

)

Interest income, net

 

 

15

 

 

 

204

 

Other income (expense), net

 

 

(425

)

 

 

(15,710

)

Loss before income taxes

 

 

(50,981

)

 

 

(53,208

)

Income tax benefit (provision), net

 

 

 

 

 

 

Net loss and comprehensive loss

 

$

(50,981

)

 

$

(53,208

)

Net loss per share, basic and diluted

 

$

(0.40

)

 

$

(0.87

)

Weighted-average shares used in calculating net loss per share, basic and diluted

 

 

127,225,535

 

 

 

60,944,732

 

 

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

 

5


 

 

 

CEREVEL THERAPEUTICS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(1)

(In thousands, except share amounts)

(Unaudited)

 

 

 

Common

stock

 

 

Additional

paid-in

capital

 

 

Accumulated

deficit

 

 

Total

stockholders’

equity

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

127,123,954

 

 

$

13

 

 

$

775,417

 

 

$

(390,910

)

 

$

384,520

 

Issuance of common stock under equity incentive plans related to

   vesting of RSUs

 

 

14,270

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under equity incentive plans related to

   exercise of options

 

 

186,892

 

 

 

 

 

 

 

742

 

 

 

 

 

 

 

742

 

Reclassification of private placement warrants from equity to other

   long-term liabilities

 

 

 

 

 

 

 

 

(305

)

 

 

 

 

 

(305

)

Equity-based compensation expense

 

 

 

 

 

 

 

 

6,060

 

 

 

 

 

 

6,060

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(50,981

)

 

 

(50,981

)

Balance at March 31, 2021

 

 

127,325,116

 

 

$

13

 

 

$

781,914

 

 

$

(441,891

)

 

$

340,036

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common

stock

 

 

Additional

paid-in

capital

 

 

Accumulated

deficit

 

 

Total

stockholders’

equity

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2019

 

 

60,930,932

 

 

$

6

 

 

$

322,115

 

 

$

(244,298

)

 

$

77,823

 

Issuance of common stock under equity incentive plans related to

   vesting of RSUs

 

 

14,270

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity-based compensation expense

 

 

 

 

 

 

 

 

2,970

 

 

 

 

 

 

2,970

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(53,208

)

 

 

(53,208

)

Balance at March 31, 2020

 

 

60,945,202

 

 

$

6

 

 

$

325,085

 

 

$

(297,506

)

 

$

27,585

 

 

 

(1)

Historical share and capital amounts were retroactively restated for reverse recapitalization as described in Note 1, Nature of Operations.

 

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

 

6


 

 

 

CEREVEL THERAPEUTICS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

For the Three Months Ended

March 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(50,981

)

 

$

(53,208

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

63

 

 

 

95

 

Non-cash rent expense under operating leases

 

 

(184

)

 

 

508

 

Equity-based compensation

 

 

6,137

 

 

 

2,970

 

Change in fair value of Equity Commitment and Share Purchase Option

 

 

 

 

 

15,710

 

Change in fair value of private placement warrants

 

 

424

 

 

 

 

Changes in operating assets and liabilities, net:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

426

 

 

 

940

 

Operating lease asset

 

 

(14

)

 

 

(459

)

Other assets

 

 

3

 

 

 

(1,167

)

Accounts payable

 

 

3,176

 

 

 

4,806

 

Accrued expenses and other liabilities

 

 

1,975

 

 

 

351

 

Operating lease liability

 

 

2,557

 

 

 

 

Net cash flows used in operating activities

 

 

(36,418

)

 

 

(29,454

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(4,660

)

 

 

(2,556

)

Net cash flows used in investing activities

 

 

(4,660

)

 

 

(2,556

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from the exercise of stock options

 

 

742

 

 

 

 

Net cash flows provided by financing activities

 

 

742

 

 

 

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(40,336

)

 

 

(32,010

)

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

 

 

387,823

 

 

 

83,682

 

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

 

$

347,487

 

 

$

51,672

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

343,287

 

 

$

47,541

 

Restricted cash

 

 

4,200

 

 

 

4,131

 

Total cash, cash equivalents and restricted cash

 

$

347,487

 

 

$

51,672

 

Supplemental cash flow disclosures from non-cash operating, investing, and financing activities:

 

 

 

 

 

 

 

 

Fixed asset additions included in accounts payable and other current liabilities

 

$

3,252

 

 

$

3,357

 

Deferred unpaid transaction costs related to financing activities

 

$

461

 

 

$

1,047

 

 

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

7


 

CEREVEL THERAPEUTICS HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of Operations

Unless the context otherwise requires, references in these notes to “Cerevel,” “the company,” “we,” “us” and “our” and any related terms are intended to mean Cerevel Therapeutics Holdings, Inc. and its consolidated subsidiaries.

We are a clinical-stage biopharmaceutical company pursuing a targeted approach to neuroscience that combines a deep understanding of disease-related biology and neurocircuitry of the brain with advanced chemistry and central nervous system, or CNS, target receptor selective pharmacology to discover and design new therapies. We seek to transform the lives of patients through the development of new therapies for neuroscience diseases, including schizophrenia, epilepsy and Parkinson’s disease.

On October 27, 2020, ARYA Sciences Acquisition Corp II (ARYA) completed the acquisition of Cerevel Therapeutics, Inc. (Old Cerevel), a private company and our predecessor, pursuant to the Business Combination Agreement dated July 29, 2020, as amended on October 2, 2020 (Business Combination Agreement). ARYA was incorporated as a Cayman Islands exempted company on February 20, 2020, and was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. Cerevel Therapeutics, Inc. was incorporated in Delaware on July 23, 2018, under the name Perception Holdco, Inc., which was subsequently changed to Cerevel Therapeutics, Inc. on October 23, 2018.

Our principal operations commenced on September 24, 2018 (Formation Transaction Date), when Old Cerevel licensed technology to a portfolio of pre-commercial neuroscience assets from Pfizer Inc. (Pfizer) in exchange for the issuance of Series A-2 Preferred Stock of Old Cerevel and obtained a $350.0 million equity commitment (the Equity Commitment), from BC Perception Holdings, LP (Bain Investor), an affiliate of Bain Capital, to develop the in-licensed assets in exchange for the issuance of Series A-1 Preferred Stock and Series A Common Stock of Old Cerevel. Bain Investor also received the option to purchase up to an additional 10.0 million shares of Old Cerevel at $10.00 per share, subject to Pfizer’s participation rights (the Share Purchase Option). On the Formation Transaction Date, we received an initial investment of $115.0 million in equity funding from Bain Investor to begin operations. During 2019 we received an additional investment of $60.1 million in equity funding from Bain Investor. Bain Investor contributed an additional $25.0 million in equity funding in July 2020 (the Additional Financing Shares).

Upon the closing of the transactions contemplated by the Business Combination Agreement (the Business Combination or the Business Combination Transaction), Old Cerevel became a wholly owned subsidiary of ARYA and ARYA was renamed Cerevel Therapeutics Holdings, Inc. and the Equity Commitment and the Share Purchase Option related to Old Cerevel were terminated. Upon completion of the Business Combination Transaction, and pursuant to the terms of the Business Combination Agreement, the existing shareholders of Old Cerevel exchanged their interests for shares of common stock of Cerevel Therapeutics Holdings, Inc. (New Cerevel). Net proceeds from this transaction totaled approximately $439.5 million.

We accounted for the Business Combination Transaction as a reverse recapitalization which is the equivalent of Old Cerevel issuing stock for the net assets of ARYA, with ARYA treated as the acquired company for accounting purposes. The net assets of ARYA were stated at historical cost with no goodwill or other intangible assets recorded. Reported results from operations included herein prior to the Business Combination are those of Old Cerevel. The shares and corresponding capital amounts and loss per share related to Old Cerevel’s outstanding redeemable convertible preferred stock, redeemable convertible common stock, and common stock prior to the Business Combination Transaction have been retroactively restated to reflect the exchange ratio (the Exchange Ratio) established in the Business Combination Agreement (1.00 share of Old Cerevel for 2.854 shares of New Cerevel).

For additional information on the Business Combination Transaction and the Additional Financing Shares, please read Note 3, Business Combination, to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 (our Annual Report). For additional information on our license arrangement with Pfizer, please read Note 6, Pfizer License Agreement, to our audited consolidated financial statements included in our Annual Report. For additional information on the Equity Commitment and the Share Purchase Option, please read Note 7, Equity Commitment and Share Purchase Option, to our audited consolidated financial statements included in our Annual Report.

 

2. Risks and Liquidity

We are subject to risks and uncertainties common to clinical-stage companies in the biopharmaceutical industry. These risks include, but are not limited to, the introduction of new products, therapies, standards of care or new technological innovations, our ability to obtain and maintain adequate protection for our licensed technology, data or other intellectual property and proprietary rights and compliance with extensive government regulation and oversight. In addition, we are dependent upon the services of our employees, including key personnel, consultants, third-party contract research organizations and other third-party organizations.

8


 

Our product candidates, currently under development or that we may develop, will require significant additional research and development efforts, including extensive clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting capabilities. There can be no assurance that our research and development activities will be successfully completed, that adequate protection for our licensed or developed technology will be obtained and maintained, that products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable.

Our consolidated financial statements have been prepared on the basis of continuity of operations, the realization of assets and the satisfaction of liabilities in the ordinary course of business. Since our inception, we have incurred significant operating losses and, as of March 31, 2021, had an accumulated deficit of $441.9 million and had not yet generated revenues. In addition, we anticipate that our expenses will increase significantly in connection with our ongoing activities to support our research, discovery and clinical development efforts and we expect to continue to incur significant expenses and operating losses for the foreseeable future.

Prior to the Business Combination Transaction, our operations were funded primarily from the issuance of convertible preferred stock, convertible common stock and common stock. Upon the closing of the Business Combination Transaction in October 2020, we received net proceeds totaling approximately $439.5 million, as described above in Note 1, Nature of Operations.  We believe that our available cash resources as of March 31, 2021, of $343.3 million will enable us to fund our operating expense and capital expenditure requirements through at least twelve months from the issuance date of these financial statements.

Impact of the COVID-19 Pandemic

We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including how it will impact our operations and the operations of our customers, suppliers, vendors and business partners. We do not yet know the full extent of potential delays or impacts on our business, our clinical trials, our research programs, healthcare systems or the global economy and we cannot presently predict the scope and severity of any potential business shutdowns or disruptions. We have not incurred any significant impairment losses in the carrying values of our assets as a result of the pandemic and we are not aware of any specific related event or circumstance that could have a material adverse impact on our business, results of operations and financial condition. The extent to which COVID-19 ultimately impacts our business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence. The estimates of the impact on our business may change based on new information that may emerge concerning COVID-19 and the actions to contain it or treat its impact and the economic impact on local, regional, national and international markets.  

3. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include those of the company and its subsidiaries, Cerevel Therapeutics Inc., Cerevel Therapeutics LLC and Cerevel MA Securities Corporation, after elimination of all intercompany accounts and transactions. The accompanying unaudited condensed consolidated financial statements and notes hereto have been prepared in conformity with the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) as set forth in the Financial Accounting Standards Board’s (FASB) accounting standards codification. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Update (ASU) of the FASB.

In the opinion of management, all adjustments necessary for a fair statement of the financial information, which are of a normal and recurring nature, have been made for the interim periods reported. Results of operations for the three months ended March 31, 2021 and 2020, are not necessarily indicative of the results for the entire fiscal year or any other period. The condensed consolidated financial statements for the three months ended March 31, 2021 and 2020, have been prepared on the same basis as and should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report.  

As a result of the Business Combination Transaction, the shares and corresponding capital amounts and loss per share related to Old Cerevel’s outstanding redeemable convertible preferred stock, redeemable convertible common stock and common stock prior to the Business Combination Transaction have been retroactively restated to reflect the Exchange Ratio established in the Business Combination Agreement. For additional information on the Business Combination Transaction and the Exchange Ratio, please read Note 3, Business Combination, to our audited consolidated financial statements included in our Annual Report.

9


 

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to, the fair value of the Equity Commitment and Share Purchase Option, the fair value of stock options, the recoverability of our net deferred tax assets and the related valuation allowance and the accrual for research and development expense. The impact on accounting estimates and judgments on our financial condition and results of operations due to COVID-19 has introduced additional uncertainties. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors and adjust those estimates and assumptions when facts and circumstances change. Actual results could differ materially from those estimates.

Restricted Cash

In connection with our entering into the lease agreement for our headquarters in Cambridge, MA, in July 2019 we were required to provide a security deposit in the form of a letter of credit. We have classified this amount as restricted cash within our consolidated balance sheet as of March 31, 2021 and December 31, 2020.

Common Stock Warrants and Derivative Financial Instruments

We review any common stock purchase warrants and other freestanding derivative financial instruments at each balance sheet date and account for them based on an assessment of the specific terms of the instrument and applicable authoritative guidance in accordance with ASC 480, Distinguishing Liabilities from Equity (ASC 480).

Our assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether the warrants meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

We classify freestanding derivative financial instruments that are indexed in our own stock as:

 

a)

Equity if they (i) require physical settlement or net-share settlement, or (ii) give the company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement), or

 

b)

Assets or liabilities if they (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the company’s control), or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement)

We assess classification of our common stock warrants and other freestanding derivatives at each reporting date to determine whether a change in classification is required. Warrants to purchase an aggregate of 5,149,666 shares were issued by ARYA as part of the units sold in its IPO in June 2020. We determined that our 4,983,314 outstanding public warrants satisfied the criteria for classification as equity instruments as of March 31, 2021, and December 31, 2020, respectively.

We determined our 166,333 private placement warrants were immaterial as of December 31, 2020. In certain circumstances, the identity of the holder may result in different settlement amounts, and therefore our private placement warrants are not considered indexed in our own stock in the manner contemplated by ASC Section 815-40-15. Accordingly, we reclassified our private placement warrants as long-term liabilities in our condensed consolidated balance sheet as of March 31, 2021.

Emerging Growth Company Status

We are an “emerging growth company” (EGC), as defined in the Jumpstart Our Business Startups Act (JOBS Act) and we may choose to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not EGCs. We may take advantage of these exemptions until the company is no longer an EGC under Section 107 of the JOBS Act, which provides that an EGC can take advantage of the extended transition period afforded by the JOBS Act for complying with new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards and as a result of this election, our consolidated financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions until we no longer qualify as an EGC.

10


 

For additional information related to our other significant accounting policies, please read Note 4, Summary of Significant Accounting Policies, to our audited consolidated financial statements included in our Annual Report.

Recent Accounting Guidance

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the company as of the specified effective date. Unless otherwise discussed, the company believes that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.

Collaborative Arrangements

In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. This standard clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer for a promised good or service that is distinct within the collaborative arrangement. The guidance also precludes entities from presenting amounts related to transactions with a collaborative arrangement participant that is not a customer as revenue, unless those transactions are directly related to third-party sales. We adopted this standard on January 1, 2021. The adoption of this standard did not have a material impact on our consolidated financial statements as we have had no transactions applicable to this guidance; however, the standard may impact how we account for certain business transactions in the future.

Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements (ASU 2016-13). The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. It also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. We adopted this standard on January 1, 2021. The adoption of this standard did not have a material impact on our consolidated financial statements.

Income Taxes

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. The standard simplifies various aspects of the income tax accounting guidance in Topic 740, including the elimination of exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. We adopted this standard effective January 1, 2021. The adoption of this standard did not have a material impact on our consolidated financial statements.

 

4. Pfizer License Agreement

In August 2018, we entered into a license agreement with Pfizer (the Pfizer License Agreement) pursuant to which we were granted an exclusive, sublicensable, worldwide license under certain Pfizer patent rights, and a non-exclusive, sublicensable, worldwide license under certain Pfizer know-how to develop, manufacture and commercialize certain compounds and products, which currently constitute the entirety of our asset portfolio, subject to the terms and conditions of the Pfizer License Agreement.

Under the Pfizer License Agreement, we are solely responsible for the development, manufacture, regulatory approval and commercialization of compounds and products in the field and we will pay Pfizer tiered royalties on the aggregate net sales during each calendar year, determined on a product-by-product basis, with respect to products under the Pfizer License Agreement, and we may pay potential milestone payments to Pfizer, based on the successful achievement of certain regulatory and commercial milestones. To date, no regulatory or commercial approval milestone payments or royalty payments were made or became due under this agreement.

For additional information on our Pfizer License Agreement, please read Note 6, Pfizer License Agreement, to our audited consolidated financial statements included in our Annual Report.

11


 

5. Fair Value Measurements

The following table presents information about our financial assets and liabilities measured at fair value on a recurring basis and indicates the level of fair value hierarchy utilized to determine such fair values:

 

As of March 31, 2021 (In thousands)

 

Quoted Prices

in Active Markets

(Level 1)

 

 

Significant Other

Observable Inputs

(Level 2)

 

 

Significant

Unobservable Inputs

(Level 3)

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents—money market funds

 

$

343,287

 

 

$

 

 

$

 

 

$

343,287

 

Restricted cash—money market funds

 

 

4,200

 

 

 

 

 

 

 

 

 

4,200

 

Total Assets

 

$

347,487

 

 

$

 

 

$

 

 

$

347,487

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private placement warrants

 

$

 

 

$

 

 

$

729

 

 

$

729

 

Total Liabilities

 

$

 

 

$

 

 

$

729

 

 

$

729

 

 

As of December 31, 2020 (In thousands)

 

Quoted Prices

in Active Markets

(Level 1)

 

 

Significant Other

Observable Inputs

(Level 2)

 

 

Significant

Unobservable Inputs

(Level 3)

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents—money market funds

 

$

383,623

 

 

$

 

 

$

 

 

$

383,623

 

Restricted cash—money market funds

 

 

4,200

 

 

 

 

 

 

 

 

 

4,200

 

Total Assets

 

$

387,823

 

 

$

 

 

$

 

 

$

387,823

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private placement warrants

 

$

 

 

$

 

 

$

 

 

$

 

Total Liabilities

 

$

 

 

$

 

 

$

 

 

$

 

 

There have been no impairments of our assets measured and carried at fair value during the three months ended March 31, 2021. In addition, there were no changes in valuation techniques, inputs utilized or transfers between fair measurement levels in the periods presented.

The carrying amounts reflected in our condensed consolidated balance sheets for our cash and cash equivalents, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities approximate fair value due to the short-term nature of these assets and liabilities.

The private placement warrants represent the only Level 3 assets and liabilities carried at fair market value as of March 31, 2021. The fair value measurement of the private placement warrants is sensitive to changes in the unobservable inputs used to value the financial instrument. Changes in the inputs could result in changes to the fair value of each financial instrument.

The following table provides a roll forward of the liability associated with our private placement warrants:

 

(In thousands)

 

Amount

 

Liability, December 31, 2020

 

$

 

Reclassification from equity

 

 

(305

)

Change in fair value

 

 

(424

)

Liability, March 31, 2021

 

$

(729

)

 

We reclassified our private placement warrants from equity to other long-term liabilities as of March 31, 2021. Our estimate of the fair value of our private placement warrant liability was determined through a binomial lattice model utilizing a discount rate of 0.80%, an expected volatility implied by the market price of the public warrants of 37.7%, an expected dividend yield of 0% and the fair values of our common stock and public warrants as of March 31, 2021.

12


 

6. Financial Statement Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

 

 

 

As of

 

(In thousands)

 

March 31,

2021

 

 

December 31,

2020

 

Prepaid clinical trial services

 

$

807

 

 

$

172

 

Prepaid research and development expenses

 

 

1,433

 

 

 

1,650

 

Prepaid insurance

 

 

2,678

 

 

 

3,675

 

Other prepaid expenses

 

 

1,444

 

 

 

1,280

 

Other current assets

 

 

162

 

 

 

160

 

Prepaid expenses and other current assets

 

$

6,524

 

 

$

6,937

 

Property and Equipment, Net

Property and equipment, net consisted of the following:

 

 

 

As of

 

(In thousands)

 

March 31,

2021

 

 

December 31,

2020

 

Computer equipment

 

$

881

 

 

$

96

 

Furniture and fixtures

 

 

322

 

 

 

322

 

Laboratory equipment

 

 

545

 

 

 

101

 

Construction in progress

 

 

25,941

 

 

 

23,728

 

Less: Accumulated depreciation

 

 

(92

)

 

 

(82

)

Property and equipment, net

 

$

27,597

 

 

$

24,165

 

 Construction-in-progress primarily relates to the build-out of our headquarters in Cambridge, Massachusetts.

Other Long-Term Assets

Other long-term assets consisted of the following:

 

 

 

As of

 

(In thousands)

 

March 31,

2021

 

 

December 31,

2020

 

Deferred expenses associated with financing activities

 

$

461

 

 

$

 

Other prepaid expenses, net of current portion

 

 

1,363

 

 

 

1,389

 

Other

 

 

485

 

 

 

500

 

Other long-term assets

 

$

2,309

 

 

$

1,889

 

As of March 31, 2021 and December 31, 2020, other prepaid expenses, net of current portion, primarily consists of deposits paid under certain clinical research organization (CRO) agreements that will be held until the completion of the related clinical trials which are anticipated to end more than twelve months from the balance sheet date.

Deferred expenses associated with financing activities as of March 31, 2021, are comprised of costs incurred with third parties directly related to the Funding Agreements described in Note 14, Subsequent Events.

13


 

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

 

 

 

As of

 

(In thousands)

 

March 31,

2021

 

 

December 31,

2020

 

External research and development services

 

$

16,002

 

 

$

8,893

 

Accrued compensation and personnel costs

 

 

4,483

 

 

 

9,489

 

Accrued construction-in-progress

 

 

1,930

 

 

 

2,618

 

Accrued deferred expenses associated with financing activities

 

 

424

 

 

 

96

 

Professional fees and consulting services

 

 

1,263

 

 

 

1,150

 

Other

 

 

155

 

 

 

273

 

Accrued expenses and other current liabilities

 

$

24,257

 

 

$

22,519

 

Other Long-Term Liabilities

Other long-term liabilities consisted of the following:

 

 

As of

 

(In thousands)

 

March 31,

2021

 

 

December 31,

2020

 

Private placement warrants

 

$

729

 

 

$

 

Other

 

 

236

 

 

 

236

 

Other long-term liabilities

 

$

965

 

 

$

236

 

Other Income (Expense), net

Other income (expense), net consisted of the following:

 

 

 

For the Three Months Ended

March 31,

 

(In thousands)

 

2021

 

 

2020

 

Loss on fair value remeasurement of Equity Commitment

 

$

 

 

$

(15,760

)

Gain on fair value remeasurement of Share Purchase Option

 

 

 

 

 

50

 

Loss on fair value remeasurement of private placement warrants

 

 

(424

)

 

 

 

Other, net

 

 

(1

)

 

 

 

Other income (expense), net

 

$

(425

)

 

$

(15,710

)

The Equity Commitment and Share Purchase Option were free-standing financial instruments that were recorded at fair value on the Formation Transaction Date. We revalued these financial instruments each reporting period and classified the fair value of the remaining Equity Commitment and the Share Purchase Option as an asset or a liability in our condensed consolidated balance sheets through their termination. We recognized the changes in fair value of the Equity Commitment and Share Purchase Option as a component of other income (expense), net in our condensed consolidated statements of operations and comprehensive loss.

For additional information on the Equity Commitment and Share Purchase Option and their related valuation, please read Note 7, Equity Commitment and Share Purchase Option, to our audited consolidated financial statements included in our Annual Report.  

7. Stockholders’ Equity

The condensed consolidated statement of stockholders’ equity has been retroactively adjusted for all periods presented to reflect the Business Combination and reverse recapitalization as discussed in Note 3, Summary of Significant Accounting Policies.

14


 

Preferred Stock

Upon closing of the Business Combination Transaction, pursuant to the terms of our Certificate of Incorporation, we authorized 10,000,000 shares of preferred stock with a par value of $0.0001 per share. Our board of directors has the authority, without further action by our stockholders, to issue such shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, and to fix the dividend, voting, and other rights, preferences and privileges of the shares. There were no issued and outstanding shares of preferred stock as of March 31, 2021 and December 31, 2020.

Common Stock

Pursuant to the terms of our Certificate of Incorporation, we authorized 500,000,000 shares of common stock with a par value of $0.0001 per share. There were 127,325,116 and 127,123,954 shares of common stock issued and outstanding as of March 31, 2021 and December 31, 2020, respectively.

Voting

The holders of our common stock are entitled to one vote for each share of common stock held at all meetings of stockholders (and written actions in lieu of meetings), and there is no cumulative voting.

Dividends

Common stockholders are entitled to receive dividends whenever funds are legally available and when declared by the board of directors. No dividends have been declared to date.

Warrants

ARYA issued public warrants and private placement warrants (collectively, the warrants) in its Initial Public Offering in June 2020. Upon the consummation of the Business Combination Transaction each outstanding warrant of ARYA become one warrant to purchase one share of Cerevel Therapeutics Holdings, Inc. Pursuant to the agreement, no fractional warrants were issued upon separation of the units and only whole warrants will trade. If a holder would be entitled to receive a fractional warrant, we rounded down to the nearest whole number of warrants to be issued to the warrant holder. None of the terms of the warrants were modified as a result of the Business Combination Transaction.

As of March 31, 2021 and December 31, 2020, we determined that our 4,983,314 public warrants outstanding satisfied the criteria for classification as equity instruments in our condensed consolidated balance sheet.

As of March 31, 2021 and December 31, 2020, there were 166,333 private placement warrants outstanding. The fair value of our private placement warrants as of March 31, 2021, totaled approximately $0.7 million. We reclassified our private placement warrants from equity to other long-term liabilities in our condensed consolidated balance sheet as of March 31, 2021. Upon establishment of this liability, we reclassified approximately $0.3 million from additional paid-in capital and recognized a charge of approximately $0.4 million to other income (expense), net, resulting from the change in fair value of these warrants. We did not recognize a liability in relation to our private placement warrants prior to March 31, 2021, as we previously determined that the fair value of these warrants was immaterial.

The warrants will become exercisable beginning on June 9, 2021. Each whole warrant entitles the holder to purchase one share of common stock at an exercise price of $11.50 per share. The warrants will expire five years after the completion of the Business Combination, or earlier upon redemption or liquidation.

8. Equity-Based Compensation

Equity-based Compensation Expense

The following table summarizes equity-based compensation expense included in our condensed consolidated statements of operations and comprehensive loss:

 

 

 

For the Three Months Ended

March 31,

 

In thousands

 

2021

 

 

2020

 

Research and development

 

$

1,797

 

 

$

910

 

General and administrative

 

 

4,340

 

 

 

2,060

 

Total equity-based compensation expense included in total operating expense

 

$

6,137

 

 

$

2,970

 

 

15


 

 

The following table summarizes equity-based compensation expense by award type included in our condensed consolidated statements of operations and comprehensive loss:

 

 

 

For the Three Months Ended

March 31,

 

In thousands

 

2021

 

 

2020

 

Stock options

 

$

6,038

 

 

$

2,948

 

Restricted stock units

 

 

22

 

 

 

22

 

Employee stock purchase plan

 

 

77

 

 

 

 

Total equity-based compensation expense included in total operating expense

 

$

6,137

 

 

$

2,970

 

Stock Options

The following table summarizes our stock option activity for the three months ended March 31, 2021:

 

 

 

Number of

Shares

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining

Contractual

Life

(in years)

 

 

Aggregate

Intrinsic

Value

(in thousands)

 

Outstanding at December 31, 2020

 

 

12,464,668

 

 

$

6.37

 

 

 

8.57

 

 

$

127,301

 

Granted

 

 

4,423,523

 

 

$

12.87

 

 

 

 

 

 

 

 

 

Exercised

 

 

(186,892

)

 

$

3.97

 

 

 

 

 

 

 

 

 

Forfeited

 

 

(617,107

)

 

$

7.02

 

 

 

 

 

 

 

 

 

Outstanding at March 31, 2021

 

 

16,084,192

 

 

$

8.14

 

 

 

8.48

 

 

$

90,771

 

Options exercisable as of March 31, 2021

 

 

4,805,971

 

 

$

5.36

 

 

 

7.59

 

 

$

40,249

 

The aggregate intrinsic value represents the difference between the closing stock price of our common stock and the exercise price of in-the-money options. Our closing stock price as reported on Nasdaq as of March 31, 2021, was $13.73. 

As of March 31, 2021, total unrecognized equity-based compensation expense relating to stock options was $60.0 million. This amount is expected to be recognized over a weighted average period of 3.5 years.

Stock options granted during the three months ended March 31, 2021, include awards granted in conjunction with our annual awards made in February 2021.

The weighted-average assumptions that we used to determine the fair value of stock options granted to employees and directors are summarized as follows:

 

 

 

For the Three Months Ended

March 31,

 

 

 

2021

 

 

2020

 

Risk free interest rate

 

 

0.65

%

 

 

1.56

%

Expected term (in years)

 

 

6.07

 

 

 

6.01

 

Expected volatility

 

 

95.0

%

 

 

105.0

%

Expected dividend yield

 

 

0.0

%

 

 

0.0

%

Weighted-average grant date fair value

 

$

9.81

 

 

$

2.54

 

 

16


 

 

9. Net Loss Per Share

The following table sets forth the computation of the basic and diluted net loss per share:

 

 

 

For the Three Months Ended

March 31,

 

(In thousands, except per share data)

 

2021

 

 

2020

 

Numerator:

 

 

 

 

 

 

 

 

Net loss

 

$

(50,981

)

 

$

(53,208

)

Denominator:

 

 

 

 

 

 

 

 

Weighted-average shares used in calculating net loss per share, basic and diluted

 

 

127,225,535

 

 

 

60,944,732

 

Net loss per share, basic and diluted

 

$

(0.40

)

 

$

(0.87

)

 

Since we were in a loss position for all periods presented, diluted net loss per share is the same as basic net loss per share as the inclusion of all potential dilutive securities would have been anti-dilutive. The shares in the table below were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:

 

 

 

As of

 

 

 

March 31,

2021

 

 

March 31,

2020

 

Stock options outstanding

 

 

16,084,192

 

 

 

14,922,159

 

Restricted stock units outstanding

 

 

57,080

 

 

 

99,890

 

Warrants outstanding

 

 

5,149,647

 

 

 

 

ESPP shares issuable

 

 

17,921

 

 

 

 

Shares to be issued upon settlement of remaining Equity Commitment

 

 

 

 

 

49,929,121

 

Shares to be issued upon exercise of Share Purchase Option

 

 

 

 

 

28,540,304

 

Total

 

 

21,308,840

 

 

 

93,491,474

 

 

10. Income Taxes

For the three months ended March 31, 2021 and 2020, we did not record income tax benefits for net operating losses incurred or for the research an