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~~2022


☐			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: 001-39620

PRAXIS PRECISION MEDICINES, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware									47-5195942
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

~~One Broadway, 16th~~99 High Street, 30th Floor
~~Cambridge,~~Boston, MA									~~02142~~02110
(Address of principal executive offices)									(Zip Code)

Registrant’s telephone number, including area code: 617-300-8460

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

PRAX

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 ~~April 30, 2021,~~May 6, 2022, the registrant had ~~38,664,518~~45,511,773 shares of common stock, $0.0001 par value per share, outstanding.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains express or implied forward-looking statements that are based on our management’s belief and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•the success, cost and timing of our product candidate development activities and clinical trials;

•our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates;

•the ability to license additional intellectual property relating to our product candidates from third parties and to comply with our existing license agreements and collaboration agreements;

•the ability and willingness of our third-party research institution collaborators to continue research and development activities relating to our product candidates;

•our ability to commercialize our ~~products~~product candidates, if approved, in light of the intellectual property rights of others;

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

•the commercialization of our product candidates, if approved;

•our plans to research, develop and, if approved, commercialize our product candidates;

•future agreements with third parties in connection with the commercialization of our product candidates, if approved, and any other approved product;

•the size and growth potential of the markets for our product candidates, and our ability to serve those markets;

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

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

•regulatory developments in the United States and foreign countries;

•our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;

•the success of competing therapies that are or may become available;

•our ability to attract and retain key scientific or management personnel;

•the accuracy of our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•our expectations regarding the period during which we qualify as an emerging growth company under the JOBS Act, enacted in April 2012, or a smaller reporting company as defined in the Securities Exchange Act of 1934, as amended; and

•the ~~development~~effect of ~~major public health concerns,~~the COVID-19 pandemic, including mitigation efforts and economic effects, and the ~~novel coronavirus outbreak~~ongoing conflict in Ukraine on any of the foregoing or other ~~pandemics arising globally, and the future impact~~aspects of ~~it and COVID-19 on~~ our ~~clinical trials,~~ business operations, including but not limited to our ongoing and ~~funding requirements.~~planned preclinical studies and clinical trials.

In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these

terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause

actual results to differ materially from current expectations include, among other things, those listed under the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021 and under the section titled "Risk Factors" in this Quarterly Report on Form 10-Q. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the Securities and Exchange Commission as exhibits hereto completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements.

The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business and the markets for our product candidates. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data from our own internal estimates and research as well as from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources. While we are not aware of any misstatements regarding any third-party information presented in this Quarterly Report on Form 10-Q, their estimates, in particular, as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties and are subject to change based on various factors, including those discussed under the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 and elsewhere in this Quarterly Report on Form 10-Q.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of March 31, ~~2021~~2022 and December ~~31,~~ 3 201,20 2021	1
	Condensed Consolidated Statements of Operations for the ~~for the Three~~ ~~Months Ended~~ T hree M onths E nded March 31, 202 ~~31, 2021~~2 and ~~2020~~2021	2
	Condensed Consolidated Statements of Comprehensive Loss for the ~~Three Months Ended~~T hree M onths E nded March 31, ~~2021~~2022 and ~~2020~~2021	3
	Condensed Consolidated Statements of ~~Redeemable Convertible Preferred Stock and Stockholders’~~ ~~Equity~~ ~~(Deficit)~~Stockholders’ Equity for ~~for~~ the ~~Three~~ ~~Months Ended~~T hree M onths E nded March 31, 2022 and 2021 ~~and~~ ~~2020~~	4
	Condensed Consolidated Statements of Cash Flows for the ~~Three~~ ~~Months Ended~~T hree M onth s E nded March 31, 2022 and 2021 ~~31, 2021~~ ~~and~~ ~~2020~~	56
	Notes to Condensed Consolidated Financial Statements	67
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2423
Item 4.	Controls and Procedures	2423
PART II.	OTHER INFORMATION	25
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2528
Item 3.	Defaults Upon Senior Securities	2528
Item 4.	Mine Safety Disclosures	2528
Item 5.	Other Information	2528
Item 6.	Exhibits	2629
Signatures		2730

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PRAXIS PRECISION MEDICINES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Amounts in thousands, except share and per share data)


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	131,152	$	296,608	Cash and cash equivalents	$	77,854	$	138,704
Marketable securities	Marketable securities	139,659		0		Marketable securities	144,662		137,207
Prepaid expenses and other current assets	Prepaid expenses and other current assets	7,753		5,718		Prepaid expenses and other current assets	11,957		11,498
Total current assets	Total current assets	278,564		302,326		Total current assets	234,473		287,409
Property and equipment, net	Property and equipment, net	109		82		Property and equipment, net	1,142		1,213
Operating lease right-of-use assets	Operating lease right-of-use assets	571		754		Operating lease right-of-use assets	3,473		3,653
Other non-current assets	Other non-current assets	9		15		Other non-current assets	416		472
Total assets	Total assets	$	279,253	$	303,177	Total assets	$	239,504	$	292,747
Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	5,774	$	4,088	Accounts payable	$	13,269	$	10,780
Accrued expenses	Accrued expenses	7,386		10,869		Accrued expenses	30,929		26,844
Operating lease liabilities	Operating lease liabilities	578		763		Operating lease liabilities	1,025		810
Total current liabilities	Total current liabilities	13,738		15,720		Total current liabilities	45,223		38,434
Long-term liabilities:						Long-term liabilities:
Non-current portion of operating lease liabilities						Non-current portion of operating lease liabilities	3,259		3,501
Total liabilities	Total liabilities	13,738		15,720		Total liabilities	48,482		41,935
Commitments and contingencies (Note 6)	Commitments and contingencies (Note 6)	0		0		Commitments and contingencies (Note 6)
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized and 0 shares issued or outstanding as of March 31, 2021 and December 31, 2020		0		0
Common stock, $0.0001 par value; 150,000,000 shares authorized; 38,621,049 shares issued and outstanding as of March 31, 2021, and 38,268,543 shares issued and outstanding as of December 31, 2020		4		4
Preferred stock, $0.0001 par value; 10,000,000 shares authorized and no shares issued or outstanding as of March 31, 2022 and December 31, 2021						Preferred stock, $0.0001 par value; 10,000,000 shares authorized and no shares issued or outstanding as of March 31, 2022 and December 31, 2021	—		—
Common stock, $0.0001 par value; 150,000,000 shares authorized; 45,506,482 shares issued and outstanding as of March 31, 2022, and 45,300,514 shares issued and outstanding as of December 31, 2021						Common stock, $0.0001 par value; 150,000,000 shares authorized; 45,506,482 shares issued and outstanding as of March 31, 2022, and 45,300,514 shares issued and outstanding as of December 31, 2021	5		5
Additional paid-in capital	Additional paid-in capital	442,524		437,007		Additional paid-in capital	576,955		567,598
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(86)		0		Accumulated other comprehensive loss	(606)		(176)
Accumulated deficit	Accumulated deficit	(176,927)		(149,554)		Accumulated deficit	(385,332)		(316,615)
Total stockholders’ equity	Total stockholders’ equity	265,515		287,457		Total stockholders’ equity	191,022		250,812
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	279,253	$	303,177	Total liabilities and stockholders’ equity	$	239,504	$	292,747

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

PRAXIS PRECISION MEDICINES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Amounts in thousands, except share and per share data)


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
Operating expenses:	Operating expenses:					Operating expenses:
Research and development	Research and development	$	17,929	$	6,868	Research and development	$	52,652	$	17,929
General and administrative	General and administrative	9,490		1,601		General and administrative	16,197		9,490
Total operating expenses	Total operating expenses	27,419		8,469		Total operating expenses	68,849		27,419
Loss from operations	Loss from operations	(27,419)		(8,469)		Loss from operations	(68,849)		(27,419)
Other income:	Other income:					Other income:
Interest income, net		46		128
Other income, net						Other income, net	132		46
Total other income	Total other income	46		128		Total other income	132		46
Loss before benefit from income taxes		(27,373)		(8,341)
Benefit from income taxes		0		11
Net loss	Net loss	$	(27,373)	$	(8,330)	Net loss	$	(68,717)	$	(27,373)
Accretion and cumulative dividends on redeemable convertible preferred stock		0		(2,064)
Gain on repurchase of redeemable convertible preferred stock		0		493
Net loss attributable to common stockholders		$	(27,373)	$	(9,901)
Net loss per share attributable to common stockholders, basic and diluted	Net loss per share attributable to common stockholders, basic and diluted	$	(0.71)	$	(6.08)	Net loss per share attributable to common stockholders, basic and diluted	$	(1.51)	$	(0.71)
Weighted average common shares outstanding, basic and diluted	Weighted average common shares outstanding, basic and diluted	38,470,710		1,629,340		Weighted average common shares outstanding, basic and diluted	45,455,179		38,470,710

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

PRAXIS PRECISION MEDICINES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(Amounts in thousands)


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
Net loss	Net loss	$	(27,373)	$	(8,330)	Net loss	$	(68,717)	$	(27,373)
Unrealized losses on marketable securities, net of tax		(86)		0
Net unrealized losses on marketable securities, net of tax						Net unrealized losses on marketable securities, net of tax	(430)		(86)
Comprehensive loss	Comprehensive loss	$	(27,459)	$	(8,330)	Comprehensive loss	$	(69,147)	$	(27,459)

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

PRAXIS PRECISION MEDICINES, INC.

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

(Unaudited)

(Amounts in thousands, except share data)

Three Months Ended
Series A
Redeemable
Convertible
Preferred Stock Series B
Redeemable
Convertible
Preferred Stock Series B-1
Redeemable
Convertible
Preferred Stock Series C
Redeemable
Convertible
Preferred Stock Common Stock Additional
Paid-In
Capital Accumulated
Deficit Accumulated Other Comprehensive Loss Total
Stockholders’
Equity (Deficit)
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
Balance at December 31, 2020 0 $ 0 0 $ 0 0 $ 0 0 $ 0 38,268,543 $ 4 $ 437,007 $ (149,554) $ 0 $ 287,457
Stock-based compensation expense — — — — — — — — — — 4,666 — — 4,666
Issuance of common stock upon exercise of stock options — — — — — — — — 352,506 — 851 — — 851
Unrealized loss on marketable securities, net of tax — — — — — — — — — — — — (86) (86)
Net loss — — — — — — — — — — — (27,373) 0 (27,373)
Balance at March 31, 2021 0 $ 0 0 $ 0 0 $ 0 0 $ 0 38,621,049 $ 4 $ 442,524 $ (176,927) $ (86) $ 265,515
Balance at December 31, 2019 8,075,799 9,932 14,913,704 49,969 2,666,666 10,431 9,805,827 50,789 1,621,880 1 0 (81,009) 0 (81,008)
Repurchase of Series C redeemable convertible preferred stock — — — — — — (5,825,243) (30,493) — — — 493 — 493
Series C redeemable convertible preferred stock issuance costs — — — — — — — (37) — — — — — —
Vesting of restricted common stock awards — — — — — — — — 13,143 — — — — —
Stock-based compensation expense — — — — — — — — — — 147 — — 147
Accretion of redeemable convertible preferred stock to redemption value — 160 — 890 — 199 — 815 — — (147) (1,917) — (2,064)
Net loss and comprehensive loss — — — — — — — — — — — (8,330) — (8,330)
Balance at March 31, 2020 8,075,799 $ 10,092 14,913,704 $ 50,859 2,666,666 $ 10,630 3,980,584 $ 21,074 1,635,023 $ 1 $ 0 $ (90,763) $ 0 $ (90,762)


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2021	45,300,514	$	5	$	567,598	$	(316,615)	$	(176)	$	250,812
Stock-based compensation expense	—	—		7,886		—		—		7,886
Issuance of common stock from at-the-market public offerings, net of issuance costs	70,410	—		1,368		—		—		1,368
Vesting of restricted stock units	81,130	—		—		—		—		—
Shares withheld for taxes for vesting of restricted stock units	(17,850)	—		(230)		—		—		(230)
Issuance of common stock upon exercise of stock options	72,278	—		333		—		—		333
Change in unrealized loss on marketable securities, net of tax	—	—		—		—		(430)		(430)
Net loss	—	—		—		(68,717)		—		(68,717)
Balance at March 31, 2022	45,506,482	$	5	$	576,955	$	(385,332)	$	(606)	$	191,022

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

PRAXIS PRECISION MEDICINES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)

(Unaudited)

(Amounts in thousands, except share data)


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2020	38,268,543	$	4	$	437,007	$	(149,554)	$	—	$	287,457
Stock-based compensation expense	—	—		4,666		—		—		4,666
Issuance of common stock upon exercise of stock options	352,506	—		851		—		—		851
Change in unrealized loss on marketable securities, net of tax	—	—		—		—		(86)		(86)
Net loss	—	—		—		(27,373)		—		(27,373)
Balance at March 31, 2021	38,621,049	$	4	$	442,524	$	(176,927)	$	(86)	$	265,515

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

PRAXIS PRECISION MEDICINES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Amounts in thousands)


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net loss	Net loss	$	(27,373)	$	(8,330)	Net loss	$	(68,717)	$	(27,373)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	Depreciation expense	23		10		Depreciation expense	93		23
Stock-based compensation expense	Stock-based compensation expense	4,666		147		Stock-based compensation expense	7,886		4,666
Non-cash operating lease expense	Non-cash operating lease expense	183		169		Non-cash operating lease expense	180		183
Amortization of premiums and discounts on marketable securities, net	Amortization of premiums and discounts on marketable securities, net	261		0		Amortization of premiums and discounts on marketable securities, net	375		261
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(2,035)		(294)		Prepaid expenses and other current assets	(1,061)		(2,035)
Accounts payable	Accounts payable	2,208		991		Accounts payable	2,489		2,208
Accrued expenses	Accrued expenses	(3,477)		(1,097)		Accrued expenses	4,616		(3,477)
Operating lease liabilities	Operating lease liabilities	(185)		(169)		Operating lease liabilities	(26)		(185)
Other	Other	7		4		Other	56		7
Net cash used in operating activities	Net cash used in operating activities	(25,722)		(8,569)		Net cash used in operating activities	(54,109)		(25,722)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchases of property and equipment	Purchases of property and equipment	(4)		0		Purchases of property and equipment	(289)		(4)
Purchases of marketable securities	Purchases of marketable securities	(140,006)		0		Purchases of marketable securities	(83,022)		(140,006)
Maturities of marketable securities						Maturities of marketable securities	74,761		—
Net cash used in investing activities	Net cash used in investing activities	(140,010)		0		Net cash used in investing activities	(8,550)		(140,010)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Payment of deferred offering costs		(575)		0
Proceeds from at-the-market offerings, net of issuance costs						Proceeds from at-the-market offerings, net of issuance costs	1,368		—
Payment of issuance costs for at-the-market offerings and initial public offering						Payment of issuance costs for at-the-market offerings and initial public offering	(262)		(575)
Payments of tax withholdings related to vesting of restricted stock units						Payments of tax withholdings related to vesting of restricted stock units	(230)		—
Proceeds from exercise of options to purchase common stock	Proceeds from exercise of options to purchase common stock	851		0		Proceeds from exercise of options to purchase common stock	333		851
Repurchase of Series C redeemable convertible preferred stock		0		(30,000)
Net cash provided by (used in) financing activities		276		(30,000)
Net cash provided by financing activities						Net cash provided by financing activities	1,209		276
Decrease in cash, cash equivalents and restricted cash	Decrease in cash, cash equivalents and restricted cash	(165,456)		(38,569)		Decrease in cash, cash equivalents and restricted cash	(61,450)		(165,456)
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	297,208		45,415		Cash, cash equivalents and restricted cash, beginning of period	139,720		297,208
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	131,752	$	6,846	Cash, cash equivalents and restricted cash, end of period	$	78,270	$	131,752
Reconciliation of cash, cash equivalents and restricted cash:	Reconciliation of cash, cash equivalents and restricted cash:					Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	Cash and cash equivalents	131,152		6,246		Cash and cash equivalents	77,854		131,152
Restricted cash	Restricted cash	600		600		Restricted cash	416		600
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	131,752	$	6,846	Total cash, cash equivalents and restricted cash	$	78,270	$	131,752
Supplemental disclosures of non-cash activities:	Supplemental disclosures of non-cash activities:					Supplemental disclosures of non-cash activities:
Purchases of property, plant and equipment included in accounts payable		$	51	$	0
Accretion of redeemable convertible preferred stock to redemption value		$	0	$	2,064
Redeemable convertible preferred stock issuance costs included in accounts payable		$	0	$	36
Purchases of property and equipment included in accrued expenses and accounts payable						Purchases of property and equipment included in accrued expenses and accounts payable	$	—	$	51

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

PRAXIS PRECISION MEDICINES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of the Business

Praxis Precision Medicines, Inc. (“Praxis” or the “Company”) is a clinical-stage biopharmaceutical company translating genetic insights into the development of therapies for central nervous system ~~(“CNS”~~("CNS") disorders characterized by neuronal excitation-inhibition imbalance. Normal brain function requires a delicate balance of excitation and inhibition in neuronal circuits, which, when dysregulated, can lead to abnormal function and disease. The Company is applying insights from genetic epilepsies to both rare and more prevalent neurological and psychiatric disorders, using its understanding of shared biological targets and circuits in the brain. The Company applies a deliberate and pragmatic precision approach, leveraging a suite of translational tools including novel transgenic and predictive translational animal models and electrophysiology markers, to enable an efficient path to proof-of-concept in patients. Through this approach, the Company has established a broad CNS portfolio with multiple programs, including ~~multiple disclosed programs~~product candidates across ~~CNS~~psychiatric disorders, ~~including depression, epilepsy,~~ movement disorders and ~~pain syndromes,~~epilepsy, with 3three clinical-stage product candidates. Each of the Company's clinical-stage product candidates is advancing in more than one indication and the Company anticipates expansion into additional indications. The Company ~~intends to develop differentiated therapies that can deliver long-term benefits to human health by meaningfully impacting patients~~expects multiple topline readouts from its clinical-stage programs and ~~society. The Company’s most advanced~~anticipates the launch of two additional clinical development programs ~~PRAX-114~~in 2022. In addition, the Company has established a robust pipeline of preclinical stage programs through internal research and ~~PRAX-944, are currently in Phase 2/3 and Phase 2 development, respectively. PRAX-114 is an extrasynaptic GABA~~A receptor preferring positive allosteric modulator currently being developed for the treatment of major depressive disorder and perimenopausal depression. The Company plans to initiate Phase 2 trials of PRAX-114 in post-traumatic stress disorder and essential tremor ("ET") in the second half of 2021. PRAX-944 is a selective small molecule inhibitor of T-type calcium channels currently being developed for the treatment of ET. The Company plans to initiate a Phase 2 trial of PRAX-944 in Parkinson's disease in the first half of 2022.in-licensing.

Praxis was incorporated in 2015 and commenced operations in 2016. The Company has funded its operations primarily with proceeds from the issuance of ~~convertible debt, Series A~~ redeemable convertible preferred stock (the “Series A Preferred Stock”), Series B redeemable convertible preferred stock (the “Series B Preferred Stock”), Series B-1 redeemable convertible preferred stock (the “Series B-1 Preferred Stock”), Series C redeemable convertible preferred stock (the “Series C Preferred Stock”) and Series C-1 redeemable convertible preferred stock (the "Series "C-1 Preferred Stock" and together the Series A Preferred Stock, Series B Preferred Stock, Series B-1 Preferred Stock, Series C Preferred Stock and Series C-1 Preferred Stock are collectively referred to as the “Redeemable Convertible Preferred Stock”), and from ~~proceeds from its~~the sale of common stock through an initial public offering, ~~("IPO").~~a follow-on public offering and at-the-market offerings under its shelf registration statement. From inception through March 31, ~~2021,~~2022, the Company raised ~~$411.0~~$517.8 million in aggregate cash proceeds from these transactions, net of issuance costs.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including but not limited to, risks associated with completing preclinical studies and clinical trials, receiving regulatory approvals for product candidates, development by competitors of new biopharmaceutical products, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Programs currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from product sales.

Liquidity

In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these condensed consolidated financial statements are issued.

The Company has incurred recurring losses since its inception, including a net ~~losses~~loss of ~~$27.4~~$68.7 million for the three months ended March 31, ~~2021.~~2022. In addition, as of March 31, ~~2021,~~2022, the Company had an accumulated deficit of ~~$176.9~~$385.3 million. The Company expects to continue to generate operating losses for the foreseeable future.

The Company expects that its cash, cash equivalents and marketable securities as of March 31, ~~2021~~2022 of ~~$270.8~~$222.5 million will be sufficient to fund the operating ~~expenses~~expenditures and capital expenditure requirements necessary to advance its research efforts and clinical trials for at least one year from the date of issuance of these condensed consolidated financial statements. The future viability of the Company is dependent on its ability to raise additional

capital to finance its operations. The Company’s inability to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue its business strategies. There can be no assurance that the

current operating plan will be achieved or that additional funding will be available on terms acceptable to the Company, or at all.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”). 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 ASUs of the FASB.

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three months ended March 31, ~~2021~~2022 are consistent with those discussed in Note 2 to the consolidated financial statements included in the Company's ~~2020~~2021 Annual Report on Form 10-K, ~~except~~other than as noted ~~immediately~~ below.

Unaudited Interim Condensed Consolidated Financial Information

The accompanying condensed consolidated balance sheet as of March 31, ~~2021,~~2022, the condensed consolidated statements of operations for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the condensed consolidated statements of comprehensive loss for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the condensed consolidated statements of cash flows for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 and the condensed consolidated statements of ~~redeemable convertible preferred stock and~~ stockholders’ equity ~~(deficit)~~ for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited annual consolidated financial statements, and in the opinion of management reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of March 31, ~~2021,~~2022, the results of its operations for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 and its cash flows for the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021. Financial statement disclosures for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 are condensed and do not include all disclosures required for an annual set of financial statements in accordance with GAAP.

The results for the three months ended March 31, ~~2021~~2022 are not necessarily indicative of results to be expected for the year ended December 31, ~~2021,~~2022, any other interim periods, or any future year or period.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates 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 reflected in these condensed consolidated financial statements include, but are not limited to, ~~the accrual for~~accrued and prepaid research and development expenses, stock-based compensation expense and the recoverability of the Company’s net deferred tax assets and related valuation ~~of equity awards.~~allowance. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ materially from those estimates.

~~Marketable Securities~~Recently Issued Accounting Pronouncements

The Company ~~invests~~does not expect any recently issued accounting pronouncements to have a material impact on its ~~excess cash in money market funds and debt instruments of the U.S. Treasury,~~ financial institutions, corporations and U.S. government agencies with strong credit ratings and an investment grade rating at or above A-1 or P-1 by two of the three nationally recognized statistical rating organizations. The Company has established guidelines relative to diversification and maturities that maintain safety and liquidity, and periodically reviews and modifies these guidelines to maximize trends in yields and interest rates without compromising safety and liquidity. The Company classifies its investments in debt instruments as available-for-sale. Available-for-sale investments are reported at fair value at each balance sheet date, and include any unrealized holding gains and losses in accumulated other comprehensive gain (loss), a component of stockholders’ equity. Realized gains and losses are included in the Company's condensed consolidated statements of operations. All of the Company'sstatements.

available-for-sale securities are available for use in its current operations. As a result, the Company has categorized all of these securities as current assets even though the stated maturity of some individual securities may be one year or more beyond the balance sheet date.

The Company evaluates securities for impairment at the end of each reporting period. Impairment is evaluated considering numerous factors, and their relative significance varies depending on the situation. Factors considered include whether a decline in fair value below the amortized cost basis is due to credit-related factors or non-credit-related factors, the financial condition and near-term prospects of the issuer, and the Company's intent and ability to hold the investment to allow for an anticipated recovery in fair value. A credit-related impairment is recognized as an allowance on the balance sheet with a corresponding adjustment to earnings. Any impairment that is not credit- related is recognized in other comprehensive (loss) income, net of applicable taxes.

~~Recent Accounting Pronouncements~~

~~Recently Adopted Accounting Pronouncements~~

~~In December 2019, the FASB issued ASU No. 2019-12,~~ ~~Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes~~ ("ASU 2019-12"). The ASU simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740, Income Taxes, related to the approach for allocating income tax expense or benefit for the year to continuing operations, discontinued operations, other comprehensive income, and other charges or credits recorded directly to shareholders’ equity; the methodology for calculating income taxes in an interim period; and the recognition of deferred tax liabilities for outside basis differences. On January 1, 2021, the Company early adopted ASU 2019-12 on a prospective basis, with no material impact on its condensed consolidated financial statements and related disclosures.

~~Recently Issued Accounting Pronouncements~~

~~In June 2016, the FASB issued ASU No. 2016-13,~~ ~~Financial Instruments—Credit Losses (Topic 326)—Measurement of Credit Losses on Financial Instruments,~~ which has been subsequently amended by ASU No. 2018-19, ASU No. 2019-04, ASU No. 2019-05, ASU No. 2019-10, ASU No. 2019-11 and ASU No. 2020-03 (“ASU 2016-13”). The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology and require a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for the Company on January 1, 2023, with early adoption permitted. The Company is currently evaluating the potential impact that this standard may have on its financial position and results of operations, as well as the timing of its adoption of this standard.

3. Marketable Securities

The following is a summary of the Company's investment portfolio atas of March 31, 2022 and December 31, 2021 (in thousands). ~~The~~


	As of March 31, 2022
			Gross Unrealized					Estimated
	Cost		Gains		Losses			Fair Value
Available-for-sale securities:
Corporate debt securities	$	54,259	$	—		$	(438)	$	53,821
Debt securities issued by U.S. government agencies	46,073		2			(70)		46,005
Commercial paper	32,907		—			—		32,907
Total securities with a maturity of one year or less	$	133,239	$	2		$	(508)	$	132,733

Corporate debt securities	12,029		—			(100)		11,929
Total securities with a maturity of one to two years	$	12,029	$	—		$	(100)	$	11,929
Total available-for-sale securities	$	145,268	$	2		$	(608)	$	144,662


	As of December 31, 2021
			Gross Unrealized					Estimated
	Cost		Gains		Losses			Fair Value
Available-for-sale securities:
Corporate debt securities	$	52,214	$	—		$	(31)	$	52,183
Commercial paper	34,993		—			—		34,993
Debt securities issued by U.S. government agencies	12,111		—			(8)		12,103
Other debt securities	6,398		1			—		6,399
Total securities with a maturity of one year or less	$	105,716	$	1		$	(39)	$	105,678

Corporate debt securities	31,667		—			(138)		31,529
Total securities with a maturity of one to two years	$	31,667	$	—		$	(138)	$	31,529
Total available-for-sale securities	$	137,383	$	1		$	(177)	$	137,207

As of March 31, 2022, the Company ~~did not have any marketable~~had 15 securities aswith a total fair market value of $90.8 million in an unrealized loss position. As of December 31, ~~2020.~~

Gross Unrealized Estimated
Cost Gains Losses Fair Value
Available-for-sale securities:
Commercial paper $ 55,926 $ 0 $ 0 $ 55,926
Corporate debt securities 44,686 0 (40) 44,646
Total securities with a maturity of one year or less $ 100,612 $ 0 $ (40) $ 100,572
Corporate debt securities 26,888 0 (46) 26,842
Debt securities issued by U.S. government agencies 12,245 0 0 12,245
Total securities with a maturity of one to two years $ 39,133 $ 0 $ (46) $ 39,087
Total available-for-sale securities $ 139,745 $ 0 $ (86) $ 139,659

~~The~~2021, the Company ~~recorded~~had 14 securities with a total fair market value of $95.8 million in an unrealized ~~losses related to the marketable securities listed above as of March 31, 2021.~~loss position. The Company believes that ~~the~~any unrealized losses associated with the decline in value of ~~these~~its securities is temporary and primarily related to the change in market interest rates since purchase, and believes that it is more likely than not that it will be able to hold its debt securities to maturity. Therefore, the Company anticipates a full recovery of the amortized cost basis of its debt securities at ~~maturity.~~maturity and an allowance was not recognized.

Securities are evaluated for impairment at the end of each reporting period. The Company did not record any impairment related to its available-for-sale securities during the three months ended March 31, 2022 and 2021.

4. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. The Company categorizes financial assets measured at fair value based on a fair value hierarchy. The following fair value hierarchy is used to classify financial assets based on observable inputs and unobservable inputs used to value the financial assets:

•Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets;

•Level 2: Quoted prices for similar assets in active markets, quoted prices in markets that are not active, or inputs which are unobservable, either directly or indirectly, for substantially the full term of the asset; or

•Level 3: Prices or valuation techniques that require inputs that are both significant to the valuation of the asset and unobservable.

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and ~~indicates~~indicate the level of the fair value hierarchy utilized to determine such fair values as of March 31, 2022 and December 31, 2021 (in thousands):


		As of March 31, 2021									As of March 31, 2022
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:
Cash equivalents:	Cash equivalents:									Cash equivalents:
Money market funds	Money market funds	$	127,773	$	0	$	0	$	127,773	Money market funds	$	44,165	$	—	$	—	$	44,165
Marketable securities:	Marketable securities:									Marketable securities:
Corporate debt securities	Corporate debt securities	0		71,488		0		71,488		Corporate debt securities	—		65,750		—		65,750
Debt securities issued by U.S. government agencies										Debt securities issued by U.S. government agencies	46,005		—		—		46,005
Commercial paper	Commercial paper	0		55,926		0		55,926		Commercial paper	—		32,907		—		32,907
U.S. government agency and treasury securities		12,245		0		0		12,245
		$	140,018	$	127,414	$	0	$	267,432		$	90,170	$	98,657	$	—	$	188,827

As of December 31, 2020
Level 1 Level 2 Level 3 Total
Assets:
Cash equivalents:
Money market funds $ 290,931 $ 0 $ 0 $ 290,931
$ 290,931 $ 0 $ 0 $ 290,931


	As of December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	131,372	$	—	$	—	$	131,372
Marketable securities:
Corporate debt securities	—		83,712		—		83,712
Commercial paper	—		34,993		—		34,993
Debt securities issued by U.S. government agencies	12,103		—		—		12,103
Other debt securities	—		6,399		—		6,399
	$	143,475	$	125,104	$	—	$	268,579

5. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

March 31, 2021 December 31, 2020
Accrued external research and development expenses $ 4,541 $ 4,206
Accrued personnel-related expenses 1,281 5,516
Accrued consulting expenses 822 220
Accrued other 742 927
Total accrued expenses $ 7,386 $ 10,869


	March 31, 2022		December 31, 2021
Accrued external research and development expenses	$	26,092	$	17,763
Accrued personnel-related expenses	2,341		7,180
Accrued other	2,496		1,901
Total accrued expenses	$	30,929	$	26,844

6. Commitments and Contingencies

In ~~October 2018,~~May 2021, the Company entered into a sublease agreement for office space located in ~~Cambridge,~~Boston, Massachusetts that expires on ~~December 30, 2021,~~January 31, 2026, with no option to renew or terminate early. The base rent increases by approximately 1%2% annually. The Company issued a letter of credit to the landlord related to the security deposit, secured by restricted cash, which is reflected within ~~prepaid expenses and~~ other ~~current~~non-current assets on the accompanying condensed consolidated balance sheets as of March 31, ~~2021~~2022 and December 31, ~~2020, as the lease term expires less than twelve months from the condensed consolidated balance sheet dates.~~2021. This lease qualifies as an operating lease.

7. Common Stock and Preferred Stock

Common Stock

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the authorized capital stock of the Company included 150,000,000 shares of common stock, $0.0001 par value.

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company did 0tnot hold any treasury shares.

Shares Reserved for Future Issuance

The Company has reserved the following shares of common stock for future issuance:


		March 31, 2021	December 31, 2020		March 31, 2022	December 31, 2021
Shares reserved for exercise of outstanding stock options	Shares reserved for exercise of outstanding stock options	6,648,367	5,944,546	Shares reserved for exercise of outstanding stock options	7,862,576	6,468,501
Shares reserved for future awards under the 2020 Stock Option and Incentive Plan	Shares reserved for future awards under the 2020 Stock Option and Incentive Plan	3,515,208	3,036,776	Shares reserved for future awards under the 2020 Stock Option and Incentive Plan	3,014,484	2,667,780
Shares reserved for future awards under the 2020 Employee Stock Purchase Plan	Shares reserved for future awards under the 2020 Employee Stock Purchase Plan	654,204	327,102	Shares reserved for future awards under the 2020 Employee Stock Purchase Plan	981,306	654,204
Shares reserved for vesting of restricted stock units	Shares reserved for vesting of restricted stock units	328,363	0	Shares reserved for vesting of restricted stock units	840,277	440,079
Total shares of authorized common stock reserved for future issuance	Total shares of authorized common stock reserved for future issuance	11,146,142	9,308,424	Total shares of authorized common stock reserved for future issuance	12,698,643	10,230,564

Preferred Stock

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the authorized capital stock of the Company included 10,000,000 shares of undesignated preferred stock, $0.0001 par value.

8. Stock-Based Compensation

2020 Stock Option and Incentive Plan

The total number of shares of common stock authorized for issuance under the 2020 Stock Option and Incentive Plan (the "2020 Plan”) as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 was ~~5,184,455~~7,449,480 shares and ~~3,271,028~~5,184,455 shares, respectively.

2017 Stock Incentive Plan

The total number of shares of common stock authorized for issuance under the 2017 Stock Incentive Plan (the "2017 Plan”) as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 was 5,937,763 shares. Any authorization to issue new options under the 2017 Plan was cancelled upon the effectiveness of the 2020 Plan and no further awards will be granted under the 2017 Plan.

2020 Employee Stock Purchase Plan

The total number of shares of common stock authorized for issuance under the 2020 Employee Stock Purchase Plan (the "2020 ESPP”) as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 was ~~654,204~~981,306 shares and ~~327,102~~654,204 shares, respectively.

Restricted Stock Units

The following table summarizes the Company’s restricted stock unit activity:


		Shares	Weighted Average Grant Date Fair Value			Shares	Weighted Average Grant Date Fair Value
Unvested as of December 31, 2020		0	$	0
Unvested as of December 31, 2021					Unvested as of December 31, 2021	440,079	$	41.86
Issued	Issued	329,963	52.16		Issued	520,328	17.33
Vested	Vested	0	0		Vested	(81,130)	51.78
Forfeited	Forfeited	(1,600)	52.53		Forfeited	(39,000)	23.43
Unvested as of March 31, 2021		328,363	$	52.16
Unvested as of March 31, 2022					Unvested as of March 31, 2022	840,277	$	26.57

As of March 31, 2022, total unrecognized compensation cost related to unvested restricted stock units was $20.9 million, which is expected to be recognized over a weighted-average period of 3.32 years.

Stock Options

The following table summarizes the Company’s stock option activity:

Number of
Shares Weighted
Average
Exercise Price
per Share Weighted
Average
Remaining
Contractual
Term Aggregate
Intrinsic Value
(In years) (In thousands)
Outstanding as of December 31, 2020 5,944,546 $ 7.47
Granted 1,139,723 52.60
Exercised (352,506) 2.42 $ 16,671
Cancelled or Forfeited (83,396) 20.14
Outstanding as of March 31, 2021 6,648,367 $ 15.31 9.10 $ 140,012
Exercisable as of March 31, 2021 792,732 $ 2.48 7.48 $ 24,004
Vested and expected to vest as of March 31, 2021 6,498,698 $ 15.49 9.16 $ 136,220


	Number of Shares	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
				(In years)	(In thousands)
Outstanding as of December 31, 2021	6,468,501	$	16.92
Granted	1,631,898	17.63
Exercised	(72,278)	4.56			$	739
Cancelled or Forfeited	(165,545)	21.50
Outstanding as of March 31, 2022	7,862,576	$	17.10	8.68	$	14,030
Exercisable as of March 31, 2022	2,496,400	$	13.35	8.03	$	8,116
Vested and expected to vest as of March 31, 2022	7,862,576	$	17.10	8.68	$	14,030

The aggregate intrinsic value of stock options outstanding, exercisable, and vested and expected to vest is calculated as the difference between the exercise price of the underlying stock options and the estimated fair value of the Company’s common stock for those stock options that had exercise prices lower than the estimated fair value of the Company’s common stock at March 31, ~~2021.~~2022. The aggregate intrinsic value of stock options exercised is calculated as the difference between the exercise price of the underlying stock options and the estimated fair value of the Company’s common stock on the date of exercise for those stock options that had exercise prices lower than the estimated fair value of the Company’s common stock on the exercise date.

Stock Option Valuation

The weighted-average assumptions that the Company used in the Black-Scholes option pricing model to determine the grant-date fair value of stock options granted to employees and non-employees on the date of grant were as ~~follows:~~

follows for the three months ended March 31, 2022:


	Three Months Ended March 31,
	~~2021~~2022
Risk-free interest rate	~~0.66~~1.61		%
Expected term (in years)	~~6.14~~6.15
Expected volatility	~~85.28~~90.36		%
Expected dividend yield	0—		%
Weighted average grant-date fair value per share	$	13.20

~~The weighted-average grant-date fair value~~As of ~~the Company’s~~March 31, 2022, total unrecognized compensation cost related to unvested stock options ~~granted during the three months ended March 31, 2021~~ was ~~$37.54 per share. There were no stock options granted during the three months ended March 31, 2020.~~$70.0 million, which is expected to be recognized over a weighted-average period of 2.76 years.

Stock-Based Compensation

Stock-based compensation expense was allocated as follows (in thousands):


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
Research and development	Research and development	$	2,318	$	102	Research and development	$	3,214	$	2,318
General and administrative	General and administrative	2,348		45		General and administrative	4,672		2,348
Total stock-based compensation expense	Total stock-based compensation expense	$	4,666	$	147	Total stock-based compensation expense	$	7,886	$	4,666

As of March 31, 2021, total unrecognized compensation expense related to unvested stock-based awards was $81.2 million, which is expected to be recognized over a weighted-average period of 3.30 years.

9. Net Loss per Share

~~Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share data):~~

Three Months Ended
March 31,
2021 2020
Numerator:
Net loss $ (27,373) $ (8,330)
Accretion and cumulative dividends on redeemable convertible preferred stock 0 (2,064)
Gain on repurchase of redeemable convertible preferred stock 0 493
Net loss attributable to common stockholders $ (27,373) $ (9,901)
Denominator:
Weighted average common shares outstanding, basic and diluted 38,470,710 1,629,340
Net loss per share attributable to common stockholders, basic and diluted $ (0.71) $ (6.08)

The following potential shares of common stock, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share ~~attributable to common stockholders~~ for the periods indicated because including them would have been anti-dilutive:

Three Months Ended
March 31,
2021 2020
Outstanding stock options 6,648,367 1,634,686
Unvested restricted common stock and restricted stock units 328,363 35,047
Series A Preferred Stock 0 3,773,820
Series B Preferred Stock 0 6,969,173
Series B-1 Preferred Stock 0 1,246,133
Series C Preferred Stock 0 1,860,126
6,976,730 15,518,985

The shares of common stock issuable upon conversion of the Redeemable Convertible Preferred Stock for the three months ended March 31, 2020 assumed automatic conversion in the event of a qualified public offering.


	Three Months Ended March 31,
	2022	2021
Outstanding stock options	7,862,576	6,648,367
Unvested restricted stock units	840,277	328,363
Potential shares issuable under the 2020 ESPP	30,341	—
	8,733,194	6,976,730

10. Related Party Transactions

On September 11, 2019, the Company entered into a Cooperation and License Agreement (the “License Agreement”) with RogCon Inc. (“RogCon”). Under the License Agreement, RogCon granted to the Company an exclusive, worldwide license under RogCon’s intellectual property to research, develop and commercialize products for the treatment of all forms of epilepsy and/or neurodevelopmental disorders in each case caused by any mutation of the SCN2A gene. Pursuant to the terms of the License Agreement, the Company will conduct, at its own cost and expense, the research and development activities assigned to it under the associated research plan. In addition, the Company is responsible for reimbursing RogCon for any costs associated with research and development activities RogCon performs at the request of the Company. One of the founders of RogCon became the Company’s General Counsel in June 2020. The Company continues to reimburse RogCon for its out-of-pocket costs incurred for activities performed under the License Agreement. ~~During both the three months ended March 31, 2021 and 2020, the Company expensed less than $0.1 million for the reimbursement of RogCon’s out-of-pocket costs.~~Expenses incurred during all periods presented were not material. As of March 31, ~~2021,~~2022, the Company had accrued expenses of $0.3 million due to RogCon under the License Agreement.

11. Subsequent Events

The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the condensed consolidated financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. The Company has concluded that no subsequent events have occurred that require disclosure.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited financial information and the notes thereto included in our Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission ~~or SEC,~~(the "SEC") on ~~March 17, 2021.~~February 28, 2022. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021 and set forth in the "Risk Factors" section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a clinical-stage biopharmaceutical company translating genetic insights into the development of therapies for central nervous system, or CNS, disorders characterized by neuronal excitation-inhibition imbalance. Normal brain function requires a delicate balance of excitation and inhibition in neuronal circuits, which, when dysregulated, ~~leads~~can lead to abnormal function and disease. We are applying insights from genetic epilepsies to ~~broader~~both rare and more prevalent neurological and psychiatric disorders, using our understanding of shared biological targets and circuits in the brain. We apply a deliberate and pragmatic precision approach, leveraging a suite of translational tools including novel transgenic and predictive translational animal models and electrophysiology markers, to enable an efficient path to proof-of-concept in patients. Through this approach, we have established a broad CNS portfolio with multiple programs, including ~~multiple disclosed programs~~product candidates across ~~CNS~~psychiatric disorders, ~~including depression, epilepsy,~~ movement disorders and ~~pain syndromes,~~epilepsy, with three clinical-stage product candidates. Each of our clinical-stage product candidates is advancing in more than one indication and we anticipate expansion into additional indications. We expect multiple topline ~~clinical trial~~ readouts from ~~all three~~our clinical-stage programs ~~in the next year~~ and anticipate the launch of ~~a new~~two additional clinical development ~~program in 2021. We intend to develop differentiated therapies that can deliver long-term benefits to human health by meaningfully impacting patients~~programs this year. In addition, we have established a robust pipeline of preclinical stage programs through internal research and ~~society.~~in-licensing.

Our broad portfolio of CNS programs is currently structured by therapeutic focus in three franchises – Psychiatry, Movement Disorders and Epilepsy. Within our Psychiatry franchise, our most advanced ~~programs,~~clinical candidate, PRAX-114, ~~and PRAX-944, are currently in Phase 2/3 and Phase 2 development, respectively. PRAX-114~~ is ~~currently~~ being developed for the treatment of a broad range of patients suffering from major depressive disorder, or MDD, and ~~perimenopausal depression. Together, these conditions affect more than 22 million patients~~post-traumatic stress disorder, or PTSD. We have completed the Aria Study, a Phase 2/3, placebo-controlled study evaluating PRAX-114 for monotherapy treatment of MDD, and expect to report topline results in June 2022. Following topline results from the ~~United States. We plan~~Aria Study, we intend to engage with the U.S. Food and Drug Administration, or FDA, for an end-of-Phase 2 meeting and subsequently initiate a Phase ~~2 trial~~3, placebo-controlled study in the fourth quarter of ~~PRAX-114 in post-traumatic stress disorder and~~2022. We also expect to report topline results from the Acapella Study, a Phase 2, placebo-controlled, dose-ranging study evaluating PRAX-114 for treatment of MDD, in the third quarter of 2022. In addition, we expect to report topline results from a Phase 2, placebo-controlled study evaluating PRAX-114 for the treatment of PTSD in the second half of 2022.

Within our Movement Disorders franchise, our second clinical candidate, PRAX-944, is being developed for the treatment of Essential Tremor, or ET, and Parkinson's Disease, or PD. In May 2022, we reported positive topline results from the second cohort of our Phase 2a trial evaluating PRAX-944 for the treatment of ~~PRAX-114 in essential tremor, or~~ET. We expect to report topline results from the Phase 2b placebo-controlled Essential1 Study for daytime treatment of ET in the second half of ~~2021.~~2022. Following the topline results from the second cohort, Part B, of the Phase 2a study of PRAX-944 ~~is a selective small molecule inhibitor of T-type calcium channels, currently being developed~~ for the treatment of ET, ~~a progressive and debilitating movement disorder affecting up~~we intend to ~~seven million people in~~change the ~~United States.~~primary endpoint of the Essential1 Study from safety to efficacy. We ~~plan to initiate~~also initiated a ~~PRAX-944~~ Phase 2, ~~trial~~placebo-controlled, crossover study to evaluate the safety, pharmacokinetics, or PK, and efficacy of daytime dosing of PRAX-114 for the treatment of ~~Parkinson's disease~~ET in the first quarter of 2022 and expect to report topline results in the second half of 2022. In addition, the FDA cleared the Investigational New Drug, or IND, submission for a Phase 2 study of PRAX-944 for the treatment of PD. We intend to initiate a Phase 2, placebo-controlled trial to evaluate the safety, PK and efficacy of PRAX-944 as a non-dopaminergic treatment for the motor symptoms of PD in the second half of 2022.

Within our Epilepsy franchise, we ~~initiated~~expect to initiate a Phase 2, placebo-controlled study with our third clinical-stage candidate, PRAX-562, in the second half of 2022 for the treatment of rare pediatric Developmental and Epileptic Encephalopathies. Our most advanced preclinical stage product candidate within our Epilepsy franchise,

PRAX-222, is an antisense oligonucleotide, or ASO, designed to decrease the expression levels of the protein encoded by the gene SCN2A in patients with gain-of-function SCN2A mutations.In April 2022, we announced that we received an email communication from the FDA that our IND application for the first-in-patient study of PRAX-222 was place on clinical hold. The letter detailing the reasons for the hold is expected to be received from the FDA within 30 days of April 28, 2022. We expect to initiate a Phase 1 ~~trial~~study with our preclinical candidate, PRAX-628, in the fourth quarter of ~~PRAX-562,~~2022 and subsequently initiate a ~~persistent sodium current blocker, for the potential treatment~~Phase 2 study in focal epilepsy in 2023. Our preclinical pipeline also consists of ~~a broad range of rare, devastating CNS disorders, such as severe pediatric epilepsies and rare adult cephalgias. In addition to our clinical~~discovery programs ~~we have multiple disclosed preclinical product candidates~~ in development for ~~severe genetic epilepsies.~~KCNT1 related epilepsy, three ASOs targeting SCN2A in patients with loss-of-function mutations, PCDH19 and SYNGAP1, respectively, and three additional discovery programs for undisclosed targets in psychiatry, movement disorders and epilepsy. We plan to declare ASO candidates for PRAX-080 for PCDH19 and PRAX-090 for SYNGAP1 in 2023.

We were incorporated in 2015 and commenced operations in 2016. Since inception, we have devoted substantially all of our resources to developing our preclinical and clinical product candidates, building our intellectual property, or IP, portfolio, business planning, raising capital and providing general and administrative support for these operations. We employ a “virtual” research and development model, relying heavily upon external consultants, collaborators and contract research organizations, or CROs, to conduct our preclinical and clinical activities. Since inception, we have financed our operations primarily with proceeds from the sale and issuance of convertible debt, sales of our Series A redeemable convertible preferred stock, Series B redeemable convertible preferred stock, Series B-1 redeemable convertible preferred stock, Series C redeemable convertible preferred stock and Series C-1 redeemable convertible preferred stock and the closing of our initial public offering, or IPO in October 2020.equity securities.

We are a development stage company and we have not generated any revenue from product sales, and do not expect to do so for several years, if at all. All of our ~~programs~~product candidates are still in preclinical and clinical development. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates, if approved. We have incurred recurring operating losses since inception, including a net loss of ~~$27.4~~$68.7 million for the three months ended March 31, ~~2021.~~2022. As of March 31, ~~2021,~~2022, we had an accumulated deficit of ~~$176.9~~$385.3 million. We expect to incur significant expenses and operating losses for the foreseeable future as we expand our research and development activities. In addition, our losses from operations may fluctuate significantly from quarter-to-quarter and year-to-year,

depending on the timing of our clinical trials and our expenditures on other research and development activities. We anticipate that our expenses will ~~increase significantly~~be maintained or increased in connection with our ongoing activities, as we:

•advance our lead product candidates, PRAX-114 and PRAX-944, to ~~and through~~ late stage clinical trials;

•advance our PRAX-562 product candidate to Phase 2 clinical trial;

•advance our PRAX-222 product candidate to clinical trials;

•advance our preclinical ~~programs~~candidates to clinical trials;

•further invest in our pipeline;

•further invest in our manufacturing capabilities;

•seek regulatory approval for our ~~investigational medicines;~~product candidates;

•maintain, expand, protect and defend our ~~intellectual property~~IP portfolio;

•acquire or in-license technology;

•~~secure facilities~~take temporary precautionary measures to ~~support continued growth in~~help minimize the risk of COVID-19 to our ~~research, development~~employees; and ~~commercialization efforts;~~

•increase our headcount to support our development efforts and to expand our clinical development ~~team; and~~

•~~incur additional costs and headcount associated with our transition to becoming a public company.~~team.

In addition, as we progress toward potential marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, including potential collaborations with other companies or other strategic transactions. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates or delay our pursuit of potential in-licenses or acquisitions.

Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

As of March 31, ~~2021,~~2022, we had cash, cash equivalents and marketable securities of ~~$270.8~~$222.5 million. We believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital ~~expenditure requirements~~expenditures into the ~~fourth~~third quarter of ~~2022.~~2023. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See “—Liquidity and Capital Resources.”

COVID-19 Business Update

~~With the global spread~~In light of the ongoing COVID-19 pandemic, we ~~have implemented business continuity plans designed~~continue to ~~address~~experience some disruptions and ~~mitigate~~increased risk in our operations and those third parties upon whom we rely. These include disruptions and risks related to the conduct of our clinical trials and preclinical studies as policies at various clinical sites and federal, state, local and foreign laws, rules and regulations continue to evolve, including quarantines, travel restrictions and redirection of healthcare resources toward pandemic response efforts. The COVID-19 pandemic has impacted the enrollment of some of our ongoing clinical trials, including slower patient enrollment and treatment in some of our clinical studies, the impact of ~~the COVID-19 pandemic on~~which has varied by clinical study and program, but none of which have significantly impacted our ~~employees and our business, including our preclinical studies and~~overall clinical ~~trials. Our operations are considered an essential business and we are continuing to operate during this period. We have taken measures to secure our research and development activities.~~trial timelines. While we ~~are experiencing~~have experienced limited financial impacts ~~at this time,~~to date, given the global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the pandemic such as increased inflation, our business, financial condition and results of operations could be materially adversely affected. We continue to closely monitor the COVID-19 pandemic as we evolve our business continuity plans, clinical development plans and response strategy.

In addition, while we have taken and are continuing to take steps to mitigate against possible delays, our planned clinical trials may be affected by the COVID-19 pandemic, including (i) delays or difficulties in enrolling and retaining patients in our planned clinical trials, including patients that may not be able or willing to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services; (ii) delays or difficulties in clinical site initiation, including difficulties in recruiting and retaining clinical site investigators and clinical site staff; (iii) diversion or prioritization of healthcare resources away from the conduct of clinical trials and towards the COVID-19 pandemic, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials, and because, who, as healthcare providers, may have heightened exposure to COVID-19 and adversely impact our clinical trial operations; (iv) interruption of our future clinical supply chain or key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal, state/provincial or municipal governments, employers and others; and (v) limitations in outsourced third-party resources that would otherwise be focused on the conduct of our planned clinical trials, including because of sickness of third-party personnel or their families, or the desire of third-party personnel to avoid contact with large groups of people.

Financial Operations Overview

Revenue

We have not generated any revenue since inception and do not expect to generate any revenue from the sale of products for several years, if at all. If our development efforts for our current or future product candidates are successful and result in marketing approval or collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from such collaboration or license ~~agreements that we may enter into with third parties.~~agreements.

Operating Expenses

Research and Development Expense

The nature of our business and primary focus of our activities generate a significant amount of research and development costs. Research and development expenses represent costs incurred by us for the following:

•costs to develop our portfolio;

•discovery efforts leading to development candidates;

•clinical development costs for our ~~programs;~~product candidates; and

•costs to develop our manufacturing technology and infrastructure.

The costs above comprise the following categories:

•personnel-related expenses, including salaries, benefits and stock-based compensation expense;

•expenses incurred under agreements with third parties, such as consultants, investigative sites and ~~contract research organizations,~~CROs, that conduct our preclinical and clinical studies and in-licensing arrangements;

•costs incurred to maintain compliance with regulatory requirements;

•costs incurred with third-party contract development and manufacturing organizations to acquire, develop and manufacture materials for preclinical and clinical studies; and

•depreciation, amortization and other direct and allocated expenses, including rent, insurance and other operating costs, incurred as a result of our research and development activities.

We expense research and development costs as incurred. We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors and our clinical investigative sites. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our consolidated balance sheets as prepaid expenses or accrued ~~research and development~~ expenses. Non-refundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized,

even when there is no alternative future use for the research and development. The capitalized amounts are expensed as the related goods are delivered or the services are performed.

AAs a company operating in a virtual environment, a significant portion of our research and development costs have been external costs. We track direct external research and development expenses to specific ~~programs~~franchises and product candidates upon commencement. Due to the number of ongoing ~~programs~~studies and our ability to use resources across several projects, indirect or shared operating costs incurred for our research and development ~~programs,~~franchises, such as personnel, facility costs and certain consulting costs, are not recorded or maintained on a ~~program-specific~~franchise-specific basis.

Our major programs, PRAX-114, PRAX-944 and PRAX-562, are those for which we have initiated clinical activities. Our discovery-stage programs are those which are at an earlier point in the development process. The following table reflects our research and development expenses, including direct ~~program-specific~~ expenses summarized by major ~~program, discovery-stage program costs~~franchise and other exploratory CNS indications and indirect or shared operating costs recognized as research and development expenses during each period presented (in thousands):

Three Months Ended
March 31,
2021 2020
PRAX-114 $ 3,201 $ 1,947
PRAX-944 1,328 716
PRAX-562 2,754 936
Discovery-stage programs 3,272 609
Personnel-related (including stock-based compensation) 6,505 2,047
Other indirect research and development expenses 869 613
Total research and development expenses $ 17,929 $ 6,868


	Three Months Ended March 31,
	2022		2021
Psychiatry	$	14,438	$	3,201
Epilepsy	14,264		4,926
Movement disorders	9,104		1,577
Other exploratory CNS indications	2,191		663
Personnel-related (including stock-based compensation)	11,141		6,505
Other indirect research and development expenses	1,514		1,057
Total research and development expenses	$	52,652	$	17,929

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will continue to increase in the foreseeable future as we advance our product candidates through the development phase, and as we continue to discover and develop additional product candidates, build manufacturing capabilities and expand into additional therapeutic areas.

At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from sales or licensing of our product candidates. This is due to the numerous risks and uncertainties associated with drug development, including the uncertainty of:

•our ability to add and retain key research and development personnel;

•the timing and progress of preclinical and clinical development activities;

•the number and scope of preclinical and clinical programs we decide to pursue;

•our ability to successfully complete clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the U.S. Food and Drug Administration, or FDA, or any comparable foreign regulatory authority;

•our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize, our product candidates;

•our successful enrollment in and completion of clinical trials;

•the costs associated with the development of any additional product candidates we identify in-house or acquire through collaborations;

•our ability to discover, develop and utilize biomarkers to demonstrate target engagement, pathway engagement and the impact on disease progression of our product candidates;

•our ability to establish and maintain agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our product candidates are approved;

•the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder;

•our ability to obtain and maintain patent, trade secret and other ~~intellectual property~~IP protection and regulatory exclusivity for our product candidates, if ~~and when~~ approved;

•our receipt of marketing approvals from applicable regulatory authorities;

•our ability to commercialize products, if ~~and when~~ approved, whether alone or in collaboration with others; and

•the continued acceptable safety profiles of the product candidates following approval.

A change in any of these variables with respect to the development of any of our product candidates would significantly change the costs, timing and viability associated with the development of that product candidate. For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect, or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time to complete our clinical development activities. We may never obtain regulatory approval for any of our product candidates. Drug commercialization will take several years and ~~millions of dollars in~~require significant development costs.

General and Administrative Expense

General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits and stock-based compensation, for personnel in our executive, finance, legal, commercial and administrative functions. General and administrative expenses also include legal fees relating to corporate matters; professional fees for accounting, auditing, tax and administrative consulting services; commercial-related costs to support market assessments and scenario planning; insurance costs; administrative travel expenses; and facility-related expenses, which include direct depreciation costs and allocated expenses for office rent and other operating costs. These costs relate to the operation of the business, unrelated to the research and development function, or any individual ~~program.~~franchises or product candidate. Costs to secure and defend our ~~intellectual property, or~~ IP are expensed as incurred and are classified as general and administrative expenses.

We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support the expected growth in our research and development activities and the potential commercialization of our product candidates. We also expect to incur increased expenses associated with being a public company, including increased costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance costs and investor and public relations costs. We also expect to incur additional IP-related expenses as we file patent applications to protect innovations arising from our research and development activities.

Other Income

~~Interest~~Other Income, Net

~~Interest~~Other income, net consists of interest income from our cash, cash equivalents and marketable securities and amortization of investment ~~premiums.~~premiums and discounts.

Income Taxes

Since our inception, we have not recorded any U.S. federal or state income tax benefits for the net losses we have incurred in each year or for our earned research and development tax credits due to our uncertainty of realizing a benefit from those items. Income taxes are determined at the applicable tax rates adjusted for non-deductible expenses, research and development tax credits and other permanent differences. Our income tax provision may be significantly affected by changes to our estimates. ~~There was no~~The income tax ~~provision or~~ benefit

~~recognized~~ (provision) for the three months ended March 31, ~~2021. The income tax benefit recognized for the three months ended March 31, 2020 related to income tax associated with our operations in Australia.~~2022 and 2021 was not material.

Results of Operations

Comparison of the ~~three months ended~~Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021

The following table summarizes our consolidated statements of operations for each period presented (in thousands):


		Three Months Ended March 31,				Change			Three Months Ended March 31,				Change
		2021		2020					2022		2021
Operating expenses:	Operating expenses:							Operating expenses:
Research and development	Research and development	$	17,929	$	6,868	$	11,061	Research and development	$	52,652	$	17,929	$	34,723
General and administrative	General and administrative	9,490		1,601		7,889		General and administrative	16,197		9,490		6,707
Total operating expenses	Total operating expenses	27,419		8,469		18,950		Total operating expenses	68,849		27,419		41,430
Loss from operations	Loss from operations	(27,419)		(8,469)		(18,950)		Loss from operations	(68,849)		(27,419)		(41,430)
Total other income:	Total other income:							Total other income:
Interest income, net		46		128		(82)
Other income, net								Other income, net	132		46		86
Total other income	Total other income	46		128		(82)		Total other income	132		46		86
Loss before benefit from income taxes		(27,373)		(8,341)		(19,032)
Benefit from income taxes		—		(11)		11
Net loss	Net loss	$	(27,373)	$	(8,330)	$	(19,043)	Net loss	$	(68,717)	$	(27,373)	$	(41,344)

Research and Development Expense

The following table summarizes our research and development expenses for each period presented, along with the changes in those items (in thousands):

Three Months Ended
March 31, Change
2021 2020
PRAX-114 $ 3,201 $ 1,947 $ 1,254
PRAX-944 1,328 716 612
PRAX-562 2,754 936 1,818
Discovery-stage programs 3,272 609 2,663
Personnel-related (including stock-based compensation) 6,505 2,047 4,458
Other indirect research and development expenses 869 613 256
Total research and development expenses $ 17,929 $ 6,868 $ 11,061


	Three Months Ended March 31,				Change
	2022		2021
Psychiatry	$	14,438	$	3,201	$	11,237
Epilepsy	14,264		4,926		9,338
Movement disorders	9,104		1,577		7,527
Other exploratory CNS indications	2,191		663		1,528
Personnel-related (including stock-based compensation)	11,141		6,505		4,636
Other indirect research and development expenses	1,514		1,057		457
Total research and development expenses	$	52,652	$	17,929	$	34,723

~~Research and development expenses increased approximately $11.1~~The $34.7 million ~~from $6.9 million for the three months ended March 31, 2020 to $17.9 million for the three months ended March 31, 2021. The~~ increase in research and development expenses was primarily attributable to the following:

•$4.5 million increase in personnel-related costs primarily due to increased headcount, including an increase of $2.2 million in stock-based compensation expense due to the increase in fair value of our stock options since becoming a public company;

•~~$2.7~~11.2 million increase in expense related to our ~~discovery-stage programs~~,psychiatry franchise, driven primarily ~~driven~~ by an increase in ~~preclinical activities~~clinical-related spend for ~~such programs;~~our PRAX-114 Phase 2/3 Aria and Acapella clinical trials which were initiated in the first quarter and second quarter of 2021, respectively;

•$~~1.8~~9.3 million increase in expense related to our ~~PRAX-562 program,~~epilepsy franchise, driven primarily ~~driven~~ by an increase in clinical-related spend to support the initiation of our PRAX-562 Phase 2 developmental epileptic encephalopathies clinical trial and ~~toxicology~~our anticipated PRAX-222 seamless clinical trial, an increase in clinical-related spend ~~related to~~for our PRAX-562 Phase 1 clinical trial, an increase in preclinical activities for ~~this program;~~our earlier stage assets, and the payment of a $2.0 million license fee to Ionis Pharmaceuticals, Inc. in January of 2022 upon exercise of our exclusive option to obtain the rights and license to further develop and commercialize PRAX-222;

•$~~1.3~~7.5 million increase in expense related to our ~~PRAX-114 program,~~movement disorders franchise, driven primarily by an increase in ~~toxicology and clinical~~clinical-related spend for our PRAX-944 Phase ~~2/3~~2 Essential1 clinical ~~trial for this program;~~trial;

•$~~0.6~~4.6 million increase in ~~expense related~~personnel-related costs due to ~~our PRAX-944 program~~increased headcount;

•,$1.5 million increase in other exploratory CNS indications, driven primarily by clinical-related expenses for a ~~$0.4~~planned Phase 2 trial in rare adult cephalgias which we have determined not to pursue, as well as increased preclinical activities for our earlier stage assets; and

•$0.5 million increase in ~~clinical~~other indirect research and development expenses, driven primarily by an increase in technology spend and related ~~spend.~~consulting costs to support our expanding operations.

General and Administrative Expense

~~General and administrative expenses increased $7.9~~The $6.7 million ~~from $1.6 million for the three months ended March 31, 2020 to $9.5 million for the three months ended March 31, 2021. The~~ increase in general and administrative expenses was primarily attributable to the following:

•$~~3.8~~5.0 million increase in personnel-related costs, driven primarily ~~driven~~ by increased headcount, including an increase of ~~$2.3~~$2.4 million in stock-based compensation ~~expense due to the increase in fair value of our stock options since becoming a public company;~~expense; and

•$2.3 million increase in professional fees including legal and consulting services, driven by a $1.8 million increase in consulting costs, primarily $1.4 million of increased commercial-related spend to support assessments of our clinical-stage programs and a $0.6 million ~~increase in audit and legal fees.~~

•~~$1.8~~1.7 million increase in other general and administrative expenses, ~~including a $1.1 million increase in insurance and related costs, primarily due to becoming a public company.~~none of which were individually significant.

Other Income

Other income for the three months ended March 31, 2022 and 2021 ~~and 2020,~~was comprised of interest income on our cash, cash equivalents and marketable securities and investment premium ~~amortization, was not material.~~and discount amortization.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception, we have incurred significant losses in each period. We have not yet commercialized any of our product candidates, which are in various phases of preclinical and clinical development, and we do not expect to generate revenue from sales of any products for several years, if at all.

To date, we have financed our operations primarily with proceeds from ~~sales of our redeemable convertible preferred stock,~~ the sale and issuance of ~~convertible debt and the closing of our IPO. We~~equity securities. From inception through March 31, 2022, we have raised ~~an aggregate of $206.7~~$517.8 million in aggregate cash proceeds from ~~the sale~~such transactions, net of ~~our redeemable convertible preferred stock, $4.0 million in proceeds from the~~ issuance ~~of convertible promissory notes, and $200.3 million in net proceeds from our IPO, after deducting underwriting discounts and commissions and offering expenses payable by us.~~costs. As of March 31, ~~2021,~~2022, we had cash, cash equivalents and marketable securities of ~~$270.8~~$222.5 million.

On November 3, 2021, we entered into an Open Market Sale Agreement, or the sales agreement, with Jefferies LLC, or Jefferies, to provide for the offering, issuance and sale of up to an aggregate amount of $125.0 million of common stock from time to time in at-the-market offerings for which Jefferies acts as sales agent. During the three months ended March 31, 2022, we issued and sold 70,410 shares under the sales agreement for aggregate net proceeds of $1.4 million. We have issued and sold a total of 462,407 shares under the sales agreement for aggregate net proceeds of $8.4 million after deducting commissions and offering expenses payable by us.

Historical Cash Flows

The following table provides information regarding our cash flows for each period presented (in thousands):


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
Net cash (used in) provided by:	Net cash (used in) provided by:					Net cash (used in) provided by:
Operating activities	Operating activities	$	(25,722)	$	(8,569)	Operating activities	$	(54,109)	$	(25,722)
Investing activities	Investing activities	(140,010)		—		Investing activities	(8,550)		(140,010)
Financing activities	Financing activities	276		(30,000)		Financing activities	1,209		276
Net decrease in cash, cash equivalents and restricted cash	Net decrease in cash, cash equivalents and restricted cash	$	(165,456)	$	(38,569)	Net decrease in cash, cash equivalents and restricted cash	$	(61,450)	$	(165,456)

Operating Activities

Our cash flows from operating activities are greatly influenced by our use of cash for operating expenses and working capital requirements to support ~~the~~our business. We have historically experienced negative cash flows from operating activities as we have invested in developing our portfolio, drug discovery efforts and related infrastructure.

The cash used in operating activities resulted primarily from our net losses adjusted for non-cash charges and

changes in ~~components of working capital,~~operating assets and liabilities, which are primarily the result of increased expenses and timing of vendor payments.

During the three months ended March 31, 2022, net cash used in operating activities of $54.1 million was primarily due to our $68.7 million net loss, partially offset by $8.5 million of non-cash charges primarily related to stock-based compensation, and $6.1 million in changes in operating assets and liabilities primarily related to increases in accounts payable and accrued expenses.

During the three months ended March 31, 2021, net cash used in operating activities of $25.7 million was primarily due to our $27.4 million net loss and $3.5 million in changes in operating assets and liabilities primarily related to a decrease in accrued expenses and prepaid expenses and other current assets, partially offset by $5.1 million of non-cash charges primarily related to stock-based compensation.

Investing Activities

During the three months ended March 31, ~~2020,~~2022, net cash used in ~~operating~~investing activities of $8.6 million was primarily ~~due~~related to ~~our $8.3 million net loss and $0.6 million in changes in operating assets and liabilities,~~the purchase of marketable securities, partially offset by ~~$0.3 million~~the maturity of ~~non-cash charges.~~

~~Investing Activities~~marketable securities.

During the three months ended March 31, 2021, net cash used in investing activities of $140.0 million was primarily related to the purchase of marketable securities. ~~There were no cash flows from investing activities during~~

Financing Activities

During the three months ended March 31, ~~2020.~~

~~Financing Activities~~2022, net cash provided by financing activities of $1.2 million consisted of net proceeds from at-the-market offerings of $1.4 million and net proceeds from the exercise of stock options of $0.3 million partially offset by the payment of issuance costs for our at-the-market offerings and the payment of taxes related to the vesting of restricted stock units.

During the three months ended March 31, 2021, net cash provided by financing activities ~~of $0.3 million consisted of net proceeds from the exercise of stock options, partially offset by payment of deferred initial public offering costs.~~

~~During the three months ended March 31, 2020, net cash used in financing activities of $30.0 million consisted of cash paid for the repurchase of our Series C redeemable convertible preferred stock.~~was not material.

Plan of Operation and Future Funding Requirements

We expect our expenses to increase substantially in connection with our ongoing research and development activities, particularly as we advance the preclinical activities and clinical trials of our product candidates. ~~In addition, we expect to incur additional costs associated with operating as a public company.~~ As a result, we expect to incur substantial operating losses and negative operating cash flows for the foreseeable future. We anticipate that our expenses will increase substantially if and as we:

•advance the clinical development of our ~~PRAX-114, PRAX-944~~clinical-stage product candidates within our psychiatry, movement disorders and ~~PRAX-562 product candidates;~~epilepsy franchises, respectively;

•advance the development of any additional product candidates;

•conduct research and continue preclinical development of potential product candidates;

•make strategic investments in manufacturing capabilities;

•maintain our ~~current intellectual property~~IP portfolio and opportunistically acquire complementary ~~intellectual property;~~IP;

•seek to obtain regulatory approvals for our product candidates;

•potentially establish a sales, marketing and distribution infrastructure and scale-up manufacturing capabilities to commercialize any products for which we may obtain regulatory approval;

•add clinical, scientific, operational, financial and management information systems and personnel, including personnel to support our product development and potential future commercialization efforts and to support our ~~transition to~~operations as a public company; and

•experience any delays or encounter any issues with any of the above, including but not limited to failed studies, complex results, safety issues or other regulatory challenges.

We are unable to estimate the exact amount of our working capital requirements, but based on our current operating plan, we believe that our existing cash, cash equivalents and marketable securities will enable us to fund

our operating expenses and capital expenditure requirements into the ~~fourth~~third quarter of ~~2022.~~2023. However, we have

based this estimate on assumptions that may prove to be wrong and we could exhaust our capital resources sooner than we expect.

Because of the numerous risks and uncertainties associated with product development and ~~because the extent to which we may enter into~~potential collaborations with third parties for the development of our product candidates, ~~is unknown,~~ we may incorrectly estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates. Our funding requirements and timing and amount of our operating expenditures will depend on many factors, including, but not limited to:

•the scope, progress, results and costs of preclinical studies and clinical trials for our ~~programs~~franchises and product candidates;

•the number and characteristics of ~~programs~~product candidates and technologies that we develop or may in-license;

•the costs and timing of future commercialization activities, including manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval;

•the costs necessary to obtain regulatory approvals, if any, for products in the United States and other jurisdictions, and the costs of post-marketing studies that could be required by regulatory authorities in jurisdictions where approval is obtained;

•the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our ~~intellectual property~~IP rights and defending any ~~intellectual property-related~~IP-related claims;

•the continuation of our existing licensing arrangements and entry into new collaborations and licensing arrangements;

•the costs we incur in maintaining business operations;

•the costs associated with being a public company;

•the revenue, if any, received from commercial sales of any product candidates for which we receive marketing approval;

•the effect of competing technological and market developments;

•the impact of any business interruptions to our operations or to those of our manufacturers, suppliers or other vendors resulting from the COVID-19 pandemic or similar public health crisis; and

•the extent to which we acquire or invest in businesses, products and technologies, including entering into licensing or collaboration arrangements for product candidates, although we currently have no commitments or agreements to complete any such acquisitions or investments in businesses.

Identifying potential product candidates and conducting preclinical testing and clinical trials is a time consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if ever. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.

Adequate additional funds may not be available to us on acceptable terms, or at all. We do not currently have any committed external source of funds. Market volatility resulting from the COVID-19 pandemic or other factors could also adversely impact our ability to access capital as and when needed. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of holders of our common stock. Additional debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends and may require the issuance of warrants, which could potentially result in dilution to the holders of our common stock.

If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs

or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional

funds through equity or debt financings when needed, we may be required to delay, limit or terminate our product development programs or any future commercialization efforts or grant rights to develop and market product candidates to third parties that we would otherwise prefer to develop and market ourselves.

~~Contractual Obligations~~

There have been no changes to our contractual obligations from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations and Commitments” included in our Annual Report on Form 10-K filed with the SEC on March 17, 2021.

~~Off-Balance Sheet Arrangements~~

~~We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.~~

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United ~~States, or GAAP.~~States. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no changes to our critical accounting policies from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Judgments and Estimates” included in our Annual Report on Form 10-K filed with the SEC on ~~March 17, 2021.~~

~~JOBS Act and Emerging Growth Company and Smaller Reporting Company Status~~

In April 2012, the JOBS Act was enacted. As an emerging growth company, or EGC, under the JOBS Act, we may delay the adoption of certain accounting standards until such time as those standards apply to private companies. Other exemptions and reduced reporting requirements under the JOBS Act for EGCs include presentation of only two years of audited financial statements in a registration statement for an initial public offering, an exemption from the requirement to provide an auditor’s report on internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation and less extensive disclosure about our executive compensation arrangements. Additionally, the JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an EGC to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of the extended transition period and, therefore, while we are an EGC we will not be subject to new or revised accounting standards at the same time that they become applicable to other public companies that are not EGCs, unless we choose to early adopt a new or revised accounting standard.

We will remain classified as an EGC until the earlier of: (i) the last day of our first fiscal year in which we have total annual gross revenues of $1.07 billion or more, (ii) the last day of the fiscal year following the fifth anniversary of completion of our IPO, (iii) the date on which we have issued more than $1.0 billion of non-convertible debt instruments during the previous three fiscal years or (iv) the date on which we are deemed a “large accelerated filer” under the rules of the SEC.

We are also a “smaller reporting company” as defined in the Securities Exchange Act of 1934, as amended. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We

may take advantage of certain of the scaled disclosures available to smaller reporting companies until the fiscal year following the determination that our voting and non-voting common stock held by non-affiliates is more than $250 million measured on the last business day of our second fiscal quarter, or our annual revenues are less than $100 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is more than $700 million measured on the last business day of our second fiscal quarter.February 28, 2022.

Recently Issued Accounting Pronouncements

We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, such standards will not have a material impact on our condensed consolidated financial statements or do not otherwise apply to our current operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

~~Reserved.~~We are exposed to market risk related to changes in interest rates. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our cash, cash equivalents and marketable securities are or may be in the form of money market funds or marketable debt securities and are or may be invested in U.S. Treasury and U.S. government agency obligations. However, because of the short-term nature and low risk profile of the instruments in our portfolio, an immediate change in market interest rates of 100 basis points would not have a material impact on the fair market value of our investment portfolio or on our financial position or results of operations.

Item 4. Controls and Procedures.

Management’s Evaluation of Our Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ~~or the Exchange Act,~~(the "Exchange Act") as controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that ~~we file~~it files or ~~submit~~submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the issuer in the reports that ~~we file~~it files or ~~submit~~submits under the Exchange Act is accumulated and communicated to ~~our~~the issuer's management, including ~~our~~its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive ~~officer) and our Vice President of Finance (our principal accounting~~ officer and ~~interim~~ principal financial ~~officer)~~officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of March 31, ~~2021.~~2022. Based on the evaluation of our disclosure controls and procedures as of

March 31, ~~2021,~~2022, our Chief Executive Officer and ~~Vice President of Finance~~Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

As of the date of this Quarterly Report on Form 10-Q, we are not party to any material legal matters or claims. We may become party to legal matters and claims arising in the ordinary course of business. We cannot predict the outcome of any such legal matters or claims, and despite the potential outcomes, the existence thereof may have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors.

The risk factor set forth below updates, and should be read in conjunction with, the risk factors previously disclosed in the section entitled "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 28, 2022. There have otherwise been no material changes from the risk factors previously disclosed in the section entitled "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Preclinical and clinical drug development involves a lengthy, complex and expensive process, with an uncertain outcome. The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and the results of our clinical trials may not satisfy the requirements of the FDA or comparable foreign regulatory authorities.

To obtain the requisite regulatory approvals to commercialize any product candidates, we must demonstrate through extensive preclinical studies and clinical trials that our product candidates are safe and effective in humans. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. In particular, pivotal clinical trials typically involve hundreds of patients, have significant costs and take years to complete. A product candidate can fail at any stage of testing, even after observing promising signs of activity in earlier preclinical studies or clinical trials. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials. In addition, initial success in clinical trials may not be indicative of results obtained when such trials are completed.

There is typically an extremely high rate of attrition from the failure of product candidates proceeding through clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy profile despite having progressed through preclinical studies and initial clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or emergence of unacceptable safety issues, notwithstanding promising results in earlier trials. Most product candidates that commence clinical trials are never approved as products and there can be no assurance that any of our future clinical trials will ultimately be successful or support further clinical development of our product candidates. The commencement and rate of completion of preclinical studies and clinical trials for a product candidate may be delayed by many factors, including, for example:

•inability to generate sufficient preclinical or other in vivo or in vitro data to support the initiation of clinical studies;

•timely completion of preclinical laboratory tests, animal studies and formulation studies in accordance with the Good Laboratory Practice requirements and other applicable regulations of the U.S. Food and Drug Administration, or FDA;

•approval by an independent Institutional Review Board, or IRB, or ethics committee at each clinical site before each trial may be initiated;

•delays in reaching a consensus with regulatory agencies on study design and obtaining regulatory authorization to commence clinical trials; delays in reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites;

•delays in identifying, recruiting and training suitable clinical investigators;

•delays in recruiting suitable patients to participate in our clinical trials;

•delays in manufacturing, testing, releasing, validating or importing/exporting sufficient stable quantities of our product candidates for use in clinical trials or the inability to do any of the foregoing;

•insufficient or inadequate supply or quality of product candidates or other materials necessary for use in clinical trials, or delays in sufficiently developing, characterizing or controlling a manufacturing process suitable for clinical trials;

•imposition of a temporary or permanent clinical hold by regulatory authorities;

•developments on trials conducted by competitors for related technology that raises FDA or foreign regulatory authority concerns about risk to patients of the technology broadly, or if the FDA or a foreign regulatory authority finds that the investigational protocol or plan is clearly deficient to meet its stated objectives;

•delays in recruiting, screening and enrolling patients and delays caused by patients withdrawing from clinical trials or failing to return for post-treatment follow-up;

•difficulty collaborating with patient groups and investigators;

•failure by our CROs, other third parties or us to adhere to clinical trial protocols; failure to perform in accordance with the FDA’s or any other regulatory authority’s Good Clinical Practice requirements, or applicable regulatory guidelines in other countries;

•occurrence of adverse events associated with the product candidate that are viewed to outweigh its potential benefits, or occurrence of adverse events in trials of the same class of agents conducted by other companies;

•changes to the clinical trial protocols;

•clinical sites deviating from trial protocol or dropping out of a trial;

•changes in regulatory requirements and guidance that require amending or submitting new clinical protocols;

•changes in the standard of care on which a clinical development plan was based, which may require new or additional trials;

•selection of clinical endpoints that require prolonged periods of observation or analyses of resulting data;

•the cost of clinical trials of our product candidates being greater than we anticipated;

•clinical trials of our product candidates producing negative or inconclusive results, which may result in our deciding, or regulators requiring us, to conduct additional clinical trials or abandon development of such product candidates;

•transfer of manufacturing processes to larger-scale facilities operated by a contract manufacturing organization, or CMO, and delays or failure by our CMOs or us to make any necessary changes to such manufacturing process; and

•third parties being unwilling or unable to satisfy their contractual obligations to us.

In addition, disruptions caused by the COVID-19 pandemic may increase the likelihood that we encounter such difficulties or delays in initiating, enrolling, conducting or completing our planned and ongoing preclinical studies and clinical trials.

Clinical trials must be conducted in accordance with the FDA and other applicable regulatory authorities’ legal requirements, regulations or guidelines, and are subject to oversight by these governmental agencies and ethics committees or IRBs at the medical institutions where the clinical trials are conducted. Before commencing a clinical trial, the FDA or comparable foreign regulatory authorities could raise questions or concerns with our proposed clinical protocol, including issuing a clinical hold on a trial until such questions or concerns are resolved, which could delay our clinical development plans. For example, in April 2022, our Investigational New Drug application for the study of PRAX-222 was placed on clinical hold by the FDA. We have not received the clinical hold letter that will provide full details on the reasons for the hold and will need to assess the impact, if any, once we have received the letter.We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions in which such trials are being conducted, by a Data Safety Monitoring Board for such trial or by the FDA or comparable foreign regulatory authorities. Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or comparable foreign regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of

adequate funding to continue the clinical trial. In addition, we may need to amend clinical trial protocols that could require us to resubmit our clinical trial protocols to IRBs or ethics committees for reexamination, which may impact the costs, timing or successful completion of a clinical trial.

Some of our trials are, have been, and may in the future be open-label studies, where both the patient and investigator know whether the patient is receiving the investigational product candidate or either an existing approved drug or placebo. Most typically, open-label clinical trials test only the investigational product candidate and sometimes do so at different dose levels. Open-label clinical trials are subject to various limitations that may exaggerate any therapeutic effect as patients in open-label clinical trials are aware when they are receiving treatment. For example, prior major depressive disorder studies have exhibited a high placebo effect. In addition, open-label clinical trials may be subject to an “investigator bias” where those assessing and reviewing the physiological outcomes of the clinical trials are aware of which patients have received treatment and may interpret the information of the treated group more favorably given this knowledge. Therefore, it is possible that positive results observed in open-label trials will not be replicated in later placebo-controlled trials. Additionally, the trial design differences and placebo effects that may be possible in clinical research for the indications we are studying may make it difficult to extrapolate the results of earlier clinical trials to later clinical trials or to interpret the clinical data in any of our trials.

Further, conducting clinical trials in foreign countries, as we have done and may continue to do, for our product candidates, presents additional risks that may delay completion of our clinical trials. These risks include the failure of enrolled patients in foreign countries to adhere to clinical protocol as a result of differences in healthcare services or cultural customs, managing additional administrative burdens associated with foreign regulatory schemes, as well as political and economic risks relevant to such foreign countries.

Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA or comparable foreign regulatory authorities. The FDA or comparable foreign regulatory authority may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the study. The FDA or comparable foreign regulatory authority may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval, or rejection, of our marketing applications by the FDA or comparable foreign regulatory authority, as the case may be, and may ultimately lead to the denial of marketing approval of one or more of our product candidates.

Delays in the completion of any preclinical studies or clinical trials of our product candidates will increase our costs, slow down our product candidate development and approval process and delay or potentially jeopardize our ability to commence product sales and generate product revenue. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates. Any delays to our preclinical studies or clinical trials that occur as a result could shorten any period during which we may have the exclusive right to commercialize our product candidates and our competitors may be able to bring products to market before we do, and the commercial viability of our product candidates could be significantly reduced. Any of these occurrences may harm our business, financial condition and prospects significantly.

Our business is subject to economic, political, regulatory and other risks associated with international operations.

Our business is subject to risks associated with conducting business internationally. Some of our suppliers and collaborative relationships are located outside the United States. Accordingly, our future results could be harmed by a variety of factors, including:

��economic weakness, including inflation, or political instability in particular non-U.S. economies and markets;

•differing and changing regulatory requirements in non-U.S. countries;

•challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States, including our ability to prosecute or maintain patents in Russia due to the sanctions imposed by the United States and other countries on Russia as a result of Russia’s invasion of Ukraine and our ability to enforce patents due to Russia's March 2022 decree that allows the use of inventions, utility models and industrial designs that are held by owners from "unfriendly countries," including the United States, without consent or paying any compensation;

•difficulties in compliance with non-U.S. laws and regulations;

•changes in non-U.S. regulations and customs, tariffs and trade barriers;

•changes in non-U.S. currency exchange rates and currency controls;

•changes in a specific country’s or region’s political or economic environment;

•trade protection measures, import or export licensing requirements or other restrictive actions by U.S. or non-U.S. governments;

•negative consequences from changes in tax laws;

•compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;

•workforce uncertainty in countries where labor unrest is more common than in the United States;

•difficulties associated with staffing and managing international operations, including differing labor relations

•potential liability under the Foreign Corrupt Practices Act, U.K. Bribery Act of 2010 or comparable foreign laws, including expanded sanctions imposed by the United States and other countries on Russia due to Russia's invasion of Ukraine;

•business interruptions resulting from geo-political actions, including war and terrorism, such as Russia's invasion of Ukraine, natural disasters including earthquakes, typhoons, floods and fires, or health epidemics such as COVID-19; and

•cyberattacks, which are growing in frequency, sophistication and intensity, and are becoming increasingly difficult to detect, including an increased likelihood that Russia's invasion of Ukraine could result in more cyberattacks or cybersecurity incidents.

These and other risks associated with our planned international operations may materially adversely affect our ability to attain profitable operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Recent Sales of Unregistered Equity Securities

~~None.~~We did not make any sales of unregistered securities during the three months ended March 31, 2022.

Use of Proceeds from Public Offering of Common Stock

In October 2020, we completed the initial public offering of our common stock, or IPO, pursuant to which we issued and sold 11,500,000 shares of our common stock at a price to the public of $19.00 per share.

All of the shares issued and sold in the IPO were registered under the Securities Act pursuant to a Registration Statement on Form S‑1 (File No. 333-249074), which was declared effective by the Securities and Exchange Commission ~~or the SEC,~~ on October 15, 2020. ~~Following~~

Purchases of Equity Securities by the ~~sale of all shares, including shares sold pursuant to the underwriters' option to purchase an additional 1,500,000 shares exercised in October 2020, the offering terminated. Cowen~~Issuer and Company, LLC, Evercore Group L.L.C. and Piper Sandler & Co. acted as joint book-running managers, Wedbush Securities Inc. acted as lead manager and Blackstone Securities Partners L.P. acted as co-manager of the IPO.

Affiliated Purchasers

We ~~received aggregate gross proceeds from our IPO~~did not make any repurchases of ~~approximately $218.5 million, or aggregate net cash proceeds~~shares of approximately $200.3 million after deducting underwriting discounts and commissions and offering expenses. None of the underwriting discounts and commissions or offering expenses were incurred or paid to directors or officers of ours or their associates or to persons owning 10% or more of our common stock ~~or to any of our affiliates.~~

~~Information related to use of proceeds from registered securities is incorporated herein by reference to~~during the “Use of Proceeds” section of our final prospectus filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on October 16, 2020. There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus. We are holding the balance of the net proceeds in cash, cash equivalents, and marketable securities. We invested the funds received in short-term, interest-bearing investment-grade securities and government securities.three months ended March 31, 2022.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

~~None~~None.

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Item 6. Exhibits.



Exhibit Number						Description

3.1						Amended and Restated Certificate of Incorporation of Praxis Precision Medicines, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K (File No. 001-39620) filed on October 20, 2020).

3.2						Amended and Restated Bylaws of Praxis Precision Medicines, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K (File No. 001-39620) filed on January 7, 2022).

31.1*						Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*						Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**						Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*						Inline XBRL Instance Document

101.SCH*						Inline XBRL Taxonomy Extension Schema Document

101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File (embedded within the Inline XBRL document)

*Filed herewith.

** The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference.

2629

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PRAXIS PRECISION MEDICINES, INC.

Date:

May ~~11, 2021~~9, 2022

By:

/s/ Marcio Souza

Marcio Souza

Chief Executive Officer and Director (Principal Executive Officer)

Date:

May ~~11, 2021~~9, 2022

By:

/s/ ~~Lauren Mastrocola~~Timothy Kelly

~~Lauren Mastrocola~~Timothy Kelly

~~Principal Accounting~~Chief Financial Officer ~~and Interim Principal~~(Principal Financial ~~Officer~~Officer)

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	Three Months Ended
	Series A Redeemable Convertible Preferred Stock			Series B Redeemable Convertible Preferred Stock			Series B-1 Redeemable Convertible Preferred Stock			Series C Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
Balance at December 31, 2020	0	$	0	0	$	0	0	$	0	0	$	0	38,268,543	$	4	$	437,007	$	(149,554)	$	0	$	287,457
Stock-based compensation expense	—	—		—	—		—	—		—	—		—	—		4,666		—		—		4,666
Issuance of common stock upon exercise of stock options	—	—		—	—		—	—		—	—		352,506	—		851		—		—		851
Unrealized loss on marketable securities, net of tax	—	—		—	—		—	—		—	—		—	—		—		—		(86)		(86)
Net loss	—	—		—	—		—	—		—	—		—	—		—		(27,373)		0		(27,373)
Balance at March 31, 2021	0	$	0	0	$	0	0	$	0	0	$	0	38,621,049	$	4	$	442,524	$	(176,927)	$	(86)	$	265,515

Balance at December 31, 2019	8,075,799	9,932		14,913,704	49,969		2,666,666	10,431		9,805,827	50,789		1,621,880	1		0		(81,009)		0		(81,008)
Repurchase of Series C redeemable convertible preferred stock	—	—		—	—		—	—		(5,825,243)	(30,493)		—	—		—		493		—		493
Series C redeemable convertible preferred stock issuance costs	—	—		—	—		—	—		—	(37)		—	—		—		—		—		—
Vesting of restricted common stock awards	—	—		—	—		—	—		—	—		13,143	—		—		—		—		—
Stock-based compensation expense	—	—		—	—		—	—		—	—		—	—		147		—		—		147
Accretion of redeemable convertible preferred stock to redemption value	—	160		—	890		—	199		—	815		—	—		(147)		(1,917)		—		(2,064)
Net loss and comprehensive loss	—	—		—	—		—	—		—	—		—	—		—		(8,330)		—		(8,330)
Balance at March 31, 2020	8,075,799	$	10,092	14,913,704	$	50,859	2,666,666	$	10,630	3,980,584	$	21,074	1,635,023	$	1	$	0	$	(90,763)	$	0	$	(90,762)


	As of December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	290,931	$	0	$	0	$	290,931
	$	290,931	$	0	$	0	$	290,931