Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 27, 2020 | Jun. 28, 2019 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Entity Registrant Name | Aprea Therapeutics, Inc. | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | No | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 21,054,842 | ||
Entity Central Index Key | 0001781983 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 130,088,869 | $ 65,675,931 |
Prepaid expenses and other current assets | 2,955,878 | 322,146 |
Total current assets | 133,044,747 | 65,998,077 |
Property and equipment, net | 41,639 | 24,450 |
Right of use lease asset | 521,392 | |
Other noncurrent assets | 107 | 111 |
Total assets | 133,607,885 | 66,022,638 |
Current liabilities: | ||
Accounts payable | 2,176,852 | 1,739,337 |
Accrued expenses | 6,642,553 | 3,128,772 |
Lease liability—current | 242,329 | |
Total current liabilities | 9,061,734 | 4,868,109 |
Lease liability—noncurrent | 302,621 | |
Total liabilities | 9,364,355 | 4,868,109 |
Commitments and contingencies (Note _) | ||
Convertible preferred stock: | ||
Total convertible preferred stock | 112,590,631 | |
Stockholders’ deficit: | ||
Common stock, $0.001 par value at December 31, 2019 and $0.11 par value at December 31, 2018; 000 and 1,155,366 shares issued and outstanding at December 31, 2019 and 2018, respectively. | 21,023 | 127,091 |
Additional paid-in capital | 226,284,548 | 19,666,588 |
Accumulated other comprehensive loss | (11,533,778) | (8,761,325) |
Accumulated deficit | (90,528,263) | (62,468,456) |
Total stockholders’ equity (deficit) | 124,243,530 | (51,436,102) |
Total liabilities, convertible preferred stock and stockholders’ equity (deficit) | $ 133,607,885 | 66,022,638 |
Series A convertible preferred stock | ||
Convertible preferred stock: | ||
Total convertible preferred stock | 6,483,044 | |
Series B convertible preferred stock | ||
Convertible preferred stock: | ||
Total convertible preferred stock | 49,742,942 | |
Series C convertible preferred stock | ||
Convertible preferred stock: | ||
Total convertible preferred stock | $ 56,364,645 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Common stock, par value | $ 0.001 | $ 0.11 |
Common stock, shares issued | 21,022,752 | 1,155,366 |
Common stock, outstanding | 21,022,752 | 1,155,366 |
Series A convertible preferred stock | ||
Convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Convertible preferred stock, issued | 0 | 612,446 |
Convertible preferred stock, outstanding | 0 | 612,446 |
Series B convertible preferred stock | ||
Convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Convertible preferred stock, issued | 0 | 7,235,969 |
Convertible preferred stock, outstanding | 0 | 7,235,969 |
Convertible preferred stock, liquidation preference | $ 58,874,347 | |
Series C convertible preferred stock | ||
Convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Convertible preferred stock, issued | 0 | 4,712,698 |
Convertible preferred stock, outstanding | 0 | 4,712,698 |
Convertible preferred stock, liquidation preference | $ 57,115,312 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating expenses: | |||
Research and development | $ 20,950,672 | $ 14,194,732 | $ 13,392,631 |
General and administrative | 8,593,626 | 2,294,671 | 2,459,744 |
Total operating expenses | 29,544,298 | 16,489,403 | 15,852,375 |
Other income (expense): | |||
Interest expense | 156,351 | (182) | (15) |
Foreign currency gain | 1,328,140 | 961,316 | 662,140 |
Total other income (expense) | 1,484,491 | 961,134 | 662,125 |
Net loss | (28,059,807) | (15,528,269) | (15,190,250) |
Other comprehensive income (loss): | |||
Foreign currency translation | (2,772,453) | (473,919) | 495,160 |
Total comprehensive loss | $ (30,832,260) | $ (16,002,188) | $ (14,695,090) |
Net loss per share attributable to common stockholders, basic and diluted (in dollars per share) | $ (4.67) | $ (13.45) | $ (13.17) |
Weighted-average common shares outstanding, basic and diluted (in shares) | 6,002,486 | 1,154,368 | 1,153,069 |
Consolidated Statements of Conv
Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) - USD ($) | Common StockIPO | Common Stock | Additional Paid-in capitalIPO | Additional Paid-in capital | Accumulated other comprehensive loss | Accumulated deficit | Series A convertible preferred stock | Series B convertible preferred stock | Series C convertible preferred stock | IPO | Total |
Temporary equity, beginning balance at Dec. 31, 2016 | $ 6,483,044 | $ 26,399,079 | |||||||||
Temporary Equity, Beginning Balance (in shares) at Dec. 31, 2016 | 612,446 | 3,913,207 | |||||||||
Increase (Decrease) in Temporary Equity | |||||||||||
Issuance of convertible preferred stock, net of issuance costs | $ 23,343,863 | ||||||||||
Issuance of convertible preferred stock (in shares) | 3,322,762 | ||||||||||
Temporary equity, ending balance at Dec. 31, 2017 | $ 6,483,044 | $ 49,742,942 | |||||||||
Temporary Equity, Ending Balance (in shares) at Dec. 31, 2017 | 612,446 | 7,235,969 | |||||||||
Equity, beginning balance at Dec. 31, 2016 | $ 126,838 | $ 18,940,120 | $ (8,782,566) | $ (31,749,937) | $ (21,465,545) | ||||||
Equity, Beginning Balance (in shares) at Dec. 31, 2016 | 1,153,061 | ||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Stock based compensation | 395,440 | 395,440 | |||||||||
Foreign currency translation | 495,160 | 495,160 | |||||||||
Net loss | (15,190,250) | (15,190,250) | |||||||||
Equity, ending balance at Dec. 31, 2017 | $ 126,838 | 19,335,560 | (8,287,406) | (46,940,187) | (35,765,195) | ||||||
Equity, Ending Balance (in shares) at Dec. 31, 2017 | 1,153,061 | ||||||||||
Increase (Decrease) in Temporary Equity | |||||||||||
Issuance of convertible preferred stock, net of issuance costs | $ 56,364,645 | ||||||||||
Issuance of convertible preferred stock (in shares) | 4,712,698 | ||||||||||
Temporary equity, ending balance at Dec. 31, 2018 | $ 6,483,044 | $ 49,742,942 | $ 56,364,645 | ||||||||
Temporary Equity, Ending Balance (in shares) at Dec. 31, 2018 | 612,446 | 7,235,969 | 4,712,698 | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Exercise of stock options | $ 253 | 1,844 | $ 2,097 | ||||||||
Exercise of stock options (in shares) | 2,305 | 2,306 | |||||||||
Stock based compensation | 329,184 | $ 329,184 | |||||||||
Foreign currency translation | (473,919) | (473,919) | |||||||||
Net loss | (15,528,269) | (15,528,269) | |||||||||
Equity, ending balance at Dec. 31, 2018 | $ 127,091 | 19,666,588 | (8,761,325) | (62,468,456) | (51,436,102) | ||||||
Equity, Ending Balance (in shares) at Dec. 31, 2018 | 1,155,366 | ||||||||||
Increase (Decrease) in Temporary Equity | |||||||||||
Issuance of convertible preferred stock, net of issuance costs | $ 5,598,362 | ||||||||||
Issuance of convertible preferred stock (in shares) | 467,179 | ||||||||||
Exchange and conversion of preferred stock and common stock of Aprea Therapeutics AB into common stock of Aprea Therapeutics Inc | $ (128,792) | 128,792 | |||||||||
Temporary Equity, Ending Balance (in shares) at Dec. 31, 2019 | 0 | 0 | 0 | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Exercise of stock options | $ 3,179 | 67,818 | $ 70,997 | ||||||||
Exercise of stock options (in shares) | 322,267 | 322,267 | |||||||||
Issuance of common stock | $ 6,517 | $ 86,899,563 | 100 | $ 86,906,080 | $ 100 | ||||||
Issuance of common stock (in shares) | 6,516,667 | 160 | |||||||||
Stock based compensation | 1,345,722 | 1,345,722 | |||||||||
Foreign currency translation | (2,772,453) | (2,772,453) | |||||||||
Conversion of preferred stock into common stock | $ 13,028 | 118,175,965 | $ (6,483,044) | $ (49,742,942) | $ (61,963,007) | 118,188,993 | |||||
Conversion of preferred stock into common stock (in shares) | 13,028,292 | (612,446) | (7,235,969) | (5,179,877) | |||||||
Net loss | (28,059,807) | (28,059,807) | |||||||||
Equity, ending balance at Dec. 31, 2019 | $ 21,023 | $ 226,284,548 | $ (11,533,778) | $ (90,528,263) | $ 124,243,530 | ||||||
Equity, Ending Balance (in shares) at Dec. 31, 2019 | 21,022,752 |
Consolidated Statements of Co_2
Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit (Parenthetical) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Series B convertible preferred stock | |||
Convertible preferred stock issuance costs | $ 47,047 | ||
Series C convertible preferred stock | |||
Convertible preferred stock issuance costs | $ 53,509 | $ 3,278,302 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||
Net loss | $ (28,059,807) | $ (15,528,269) | $ (15,190,250) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 11,126 | 8,316 | 7,932 |
Stock‑based compensation | 1,345,722 | 329,184 | 395,440 |
Amortization of right of use lease asset | 159,128 | ||
Foreign currency gain | (1,328,140) | (961,316) | (662,140) |
Changes in operating assets and liabilities: | |||
Prepaid expense and other current assets | (2,633,732) | (19,452) | 4,041 |
Accounts payable | 437,515 | 214,380 | 327,054 |
Accrued expenses and other liabilities | 3,513,782 | 706,923 | 1,115,805 |
Lease liability | (154,301) | ||
Net cash used in operating activities | (26,708,707) | (15,250,234) | (14,002,118) |
Cash flows from investing activities: | |||
Purchases of property and equipment | (30,901) | (3,702) | |
Net cash used in investing activities | (30,901) | (3,702) | |
Cash flows from financing activities: | |||
Proceeds from the exercise of stock options | 70,997 | 2,097 | |
Proceeds from issuance of common stock in initial public offering, net | 86,906,179 | ||
Net cash provided by financing activities | 92,575,538 | 56,366,742 | 23,343,863 |
Increase in cash | 65,835,930 | 41,112,806 | 9,341,745 |
Effect of exchange rate changes on cash | (1,422,992) | 161,637 | 1,394,568 |
Cash and cash equivalents—beginning of year | 65,675,931 | 24,401,488 | 13,665,175 |
Cash and cash equivalents—end of year | 130,088,869 | 65,675,931 | 24,401,488 |
Series B convertible preferred stock | |||
Cash flows from financing activities: | |||
Proceeds from Issuance of Convertible Preferred Stock | $ 23,343,863 | ||
Series C convertible preferred stock | |||
Cash flows from financing activities: | |||
Proceeds from Issuance of Convertible Preferred Stock | $ 5,598,362 | $ 56,364,645 |
Nature of business and basis of
Nature of business and basis of presentation | 12 Months Ended |
Dec. 31, 2019 | |
Nature of business and basis of presentation | |
Nature of business and basis of presentation | 1. Nature of business and basis of presentation Nature of business —Aprea Therapeutics, Inc. (or the “Company”) is a clinical‑stage biopharmaceutical company focused on developing and commercializing novel cancer therapeutics that reactivate mutant tumor suppressor protein p53. p53 is the protein expressed from the TP53 gene, the most commonly mutated gene in cancer. The Company began principal operations in 2006 and is headquartered in Boston, Massachusetts with research facilities in Stockholm, Sweden. Corporate reorganization - In September 2019, the Company completed a corporate reorganization whereby Aprea Therapeutics AB became a wholly-owned subsidiary of the Company. In connection with the corporate reorganization, each issued and outstanding share of Series A, Series B and Series C convertible preferred stock of Aprea Therapeutics AB was exchanged on a one for one basis into shares of Series A, Series B and Series C convertible preferred stock of the Company. Each share of common stock of Aprea Therapeutics AB ($0.11 par value) was also exchanged on a one for one basis into shares of common stock of the Company ($0.001 par value). Basis of presentation and management plans —The accompanying financial statements are prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, and raising capital, and has financed its operations through the issuance of convertible preferred stock and common stock. The Company is subject to risks common to companies in the biopharmaceutical industry. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be maintained, that any therapeutic products developed will obtain required regulatory approval or that any approved or consumer products will be commercially viable. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will generate significant product sales. The Company believes that the December 31, 2019 cash balance of $130,088,869 will be sufficient to fund the Company’s operations into 2023. In the event that additional funds are not available thereafter, management would expect to significantly reduce expenditures to conserve cash, which would involve scaling back or curtailing new development activity. |
Summary of significant accounti
Summary of significant accounting policies | 12 Months Ended |
Dec. 31, 2019 | |
Summary of significant accounting policies | |
Summary of significant accounting policies | 2. Summary of significant accounting policies Principles of consolidation —The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries Aprea Therapeutics AB, Aprea Personal AB, which was incorporated in May 2009, and Aprea US, Inc., which was incorporated in June 2016. Management has concluded it has a single reporting segment for purposes of reporting financial condition and results of operations. All intercompany transactions and balances have been eliminated. Use of estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses as of and during the reporting period. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company assesses estimates on an ongoing basis; however, actual results could materially differ from those estimates. Significant items subject to such estimates and assumptions include fair value of stock-based compensation expense. Stock split —In September 2019, the Company effected a 1-for-1.6045 stock split of the Company’s preferred and common stock. All share and per share amounts of preferred and common stock contained in the Company’s consolidated financial statements have been retroactively adjusted for all periods presented to give effect to the stock split. Foreign currency and currency translation — The functional currency for Aprea Therapeutics AB and its wholly owned foreign subsidiary, Aprea Personal AB, is the Swedish Krona. Assets and liabilities of Aprea Therapeutics AB and Aprea Personal AB are translated into United States dollars at the exchange rate in effect on the balance sheet date. Revenues and expenses are translated at the average exchange rate in effect during the period. Unrealized translation gains and losses are recorded as a cumulative translation adjustment, which is included in the consolidated statements of convertible preferred stock and stockholders’ equity (deficit) as a component of accumulated other comprehensive loss. Adjustments that arise from exchange rate changes on transactions denominated in a currency other than the local currency are included in other income (expense), net in the consolidated statements of operations as incurred. Concentrations of credit risk —Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash. Periodically, the Company may maintain deposits in financial institutions in excess of government insured limits. Management believes that the Company is not exposed to significant credit risk as the Company’s deposits are held at financial institutions that management believes to be of high credit quality, and the Company has not experienced any losses on these deposits. Cash and cash equivalents —The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Property and equipment —Property and equipment are recorded at cost. Expenditures for repairs and maintenance are expensed as incurred. When assets are retired or disposed of, the assets and related accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is included in the determination of net income or loss. Fixed assets acquired for research and development purposes are assessed for alternative future use. Depreciation is provided using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the asset. Asset category Estimated useful life Computer equipment and software 5 years Furniture and fixtures 5 years Laboratory equipment and office furniture 5 years Leasehold improvements Remainder of lease term Impairment of long-lived assets —Periodically, the Company evaluates its long-lived assets, which consist primarily of property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. To date, no impairments have occurred. Fair value of financial instruments —The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability between market participants at measurement dates. ASC Topic 820, Fair Value Measurement (“ASC 820”), establishes a three‑level valuation hierarchy for instruments measured at fair value. The hierarchy is based on the transparency of inputs to the valuation of an asset or liability as of the measurement date. The hierarchy defines three levels of valuation inputs, of which the first two are considered observable and the last is considered unobservable: · Level 1 inputs: Quoted prices in active markets for identical assets or liabilities. · Level 2 inputs: Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable, such as quoted market prices, interest rates and yield curves. · Level 3 inputs: Unobservable inputs developed using estimates or assumptions developed by the Company, which reflect those that a market participant would use in pricing the asset or liability. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company’s financial instruments consist of accounts payable. The carrying amount of accounts payable is considered a reasonable estimate of fair value due to the short‑term maturity. Convertible preferred stock — The Company has classified convertible preferred stock as temporary equity in the accompanying December 31, 2018 balance sheet due to certain change in control events that are outside of the Company’s control, including sale or transfer of control of the Company, as holders of the Preferred Stock could cause redemption of the shares in these situations. The Company does not accrete the carrying values of the Preferred Stock to the redemption values since a liquidation event was not considered probable as of December 31, 2018. Subsequent adjustments of the carrying values to the ultimate redemption values will be made only if it becomes probable that such a liquidation event will occur. Accounting for leases —In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016 02, “Leases” (“ASC 842”) to enhance the transparency and comparability of financial reporting related to leasing arrangements. Under this new lease standard, most leases are required to be recognized on the balance sheet as right‑of‑use assets and lease liabilities. Disclosure requirements have been enhanced with the objective of enabling financial statement users to assess the amount, timing, and uncertainty of cash flows arising from leases. Prior to January 1, 2019, GAAP did not require lessees to recognize assets and liabilities related to operating leases on the balance sheet. The new standard establishes a right‑of‑use (“ROU”) model that requires a lessee to recognize a ROU asset and corresponding lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement as well as the reduction of the right of use asset. The Company has adopted the standard effective January 1, 2019, using the modified retrospective method. The new standard provides a number of optional practical expedients in transition. The Company has elected to apply the ‘package of practical expedients’ which allow us to not reassess (i) whether existing or expired arrangements contain a lease, (ii) the lease classification of existing or expired leases, or (iii) whether previous initial direct costs would qualify for capitalization under the new lease standard. The Company has also elected to apply (i) the practical expedient which allows us to not separate lease and non‑lease components, for new leases entered into after adoption and (ii) the short‑term lease exemption for all leases with an original term of less than 12 months, for purposes of applying the recognition and measurements requirements in the new standard. For the impact to the Company’s consolidated financial statement upon adoption of the new leasing standard, see Note 3 to our unaudited condensed consolidated financial statements. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on specific facts and circumstances, the existence of an identified asset(s), if any, and the Company’s control over the use of the identified asset(s), if applicable. Operating lease liabilities and their corresponding right‑of‑use assets are recorded based on the present value of future lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company will utilize the incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. As of the ASC 842 effective date, the Company’s incremental borrowing rate ranged from approximately 3.0% to 4.3% based on the remaining lease term of the applicable leases. The Company has elected not to separate lease and non‑lease components as a single component. Operating leases are recognized on the balance sheet as ROU lease assets, lease liabilities current and lease liabilities non‑current. Fixed rents are included in the calculation of the lease balances while variable costs paid for certain operating and pass‑through costs are excluded. Lease expense is recognized over the expected term on a straight‑line basis. Research and development costs —Research and development costs are charged to expense as incurred. Research and development expenses incurred in performing research and development activities, include salaries and benefits, materials and supplies, preclinical expenses, stock-based compensation expense, depreciation of equipment, contract services, and other outside expenses. Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using or information provided to the Company by its vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued research and development. Stock‑based compensation —The Company measures stock options and other stock-based awards granted to employees and directors based on their fair value on the date of the grant and recognize compensation expense of those awards, net of estimated forfeitures, over the requisite service period, which is generally the vesting period of the respective award. The Company applies the straight‑line method of expense recognition to all awards with only service based vesting conditions. For stock-based awards granted to non‑employees, compensation expense is recognized over the period during which services are rendered by such non‑employees until completed in accordance with the FASB issued ASU No. 2018‑07, Compensation Stock Compensation (Topic 718): Improvements to Nonemployee Share Based Payment Accounting. The new standard largely aligns the accounting for share based payment awards issued to employees and nonemployees by expanding the scope of ASC 718 to apply to nonemployee share based transactions, as long as the transaction is not effectively a form of financing. The Company estimates the fair value of each stock option grant on the date of grant using the Black Scholes option pricing model, which uses as inputs the fair value of the Company’s common stock and assumptions the Company makes for the volatility of its common stock, the expected term of its stock options, the risk free interest rate for a period that approximates the expected term of its stock options and its expected dividend yield. Determination of Fair Value of Common Stock Prior to the completion of the Company’s IPO, there had been no public market for the Company’s common stock, the estimated fair value of its common stock had been determined by its board of directors as of the date of each option grant, with input from management, considering the Company’s most recently available third party valuations of common stock and its board of directors’ assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately Held Company Equity Securities Issued as Compensation. The Company’s common stock valuations were prepared using a hybrid method, which used market approaches to estimate its enterprise value. The hybrid method is a probability weighed expected return method, or PWERM, where the equity value in one or more scenarios is calculated using an option pricing method, or OPM. The OPM treats common stock and preferred stock as call options on the total equity value of a company, with exercise prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes. Under this method, the common stock has value only if the funds available for distribution to stockholders exceeded the value of the preferred stock liquidation preference at the time of the liquidity event, such as a strategic sale or a merger. The PWERM is a scenario-based methodology that estimates the fair value of common stock based upon an analysis of future values for the company, assuming various outcomes. The common stock value is based on the probability weighted present value of expected future investment returns considering each of the possible outcomes available as well as the rights of each class of stock. The future value of the common stock under each outcome is discounted back to the valuation date at an appropriate risk adjusted discount rate and probability weighted to arrive at an indication of value for the common stock. These third party valuations were performed at various dates, which resulted in valuations of the Company’s common stock of $0.92 per share as of May 31, 2016, $1.01 per share as of October 2, 2017, $3.18 per share as of December 31, 2018 and $10.95 per share as of July 15, 2019. In addition to considering the results of these third‑party valuations, the Company’s board of directors considered various objective and subjective factors to determine the fair value of its common stock as of each grant date, including: · the prices at which the Company sold shares of preferred stock and the superior rights and preferences of the preferred stock relative to its common stock at the time of each grant; · the progress of the Company’s research and development programs, including the status and results of preclinical studies and clinical trials for its product candidates; · the Company’s stage of development and commercialization and its business strategy; · external market conditions affecting the biopharmaceutical industry and trends within the biopharmaceutical industry; · the Company’s financial position, including cash on hand, and its historical and forecasted performance and operating results; · the lack of an active public market for the Company’s common stock and its preferred stock; · the likelihood of achieving a liquidity event, such as an IPO, or sale of the Company in light of prevailing market conditions; and · the analysis of IPOs and the market performance of similar companies in the biopharmaceutical industry. The assumptions underlying these valuations represented management’s best estimate, which involved inherent uncertainties and the application of management’s judgment. As a result, if the Company had used significantly different assumptions or estimates, the fair value of its common stock and its stock‑based compensation expense could have been materially different. Income taxes —The Company accounts for income tax in accordance with ASC 740-10, Income Taxes (“ASC 740-10”), which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the Company’s financial statements and tax returns. Deferred tax assets and liabilities are determined based upon the differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and for loss and credit carryforwards, using enacted tax rates expected to be in effect in the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that these assets may not be realized. The Company determines whether it is more likely than not that a tax position will be sustained upon examination. If it is not more likely than not that a position will be sustained, none of the benefit attributable to the position is recognized. The tax benefit to be recognized for any tax position that meets the more-likely-than-not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon resolution of the contingency. The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for income taxes. Net loss per share —The Company has reported losses since inception and has computed basic net loss per share attributable to common stockholders by dividing net loss attributable to common stockholders by the weighted‑average number of common shares outstanding for the period, without consideration for potentially dilutive securities. The Company computes diluted net loss per common share after giving consideration to all potentially dilutive common shares, including options to purchase common stock and convertible preferred stock, outstanding during the period determined using the treasury‑stock and if‑converted methods, except where the effect of including such securities would be antidilutive. Because the Company has reported net losses since inception, these potential common shares have been anti‑dilutive and basic and diluted loss per share have been the same. The following table sets forth the potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to include them would be anti‑dilutive (in common stock equivalent shares): Year ended December 31, 2019 2018 2017 Series A convertible preferred stock — 612,446 612,446 Series B convertible preferred stock — 7,235,969 7,235,969 Series C convertible preferred stock — 4,712,698 — Options to purchase common stock 3,499,934 1,844,188 1,897,206 Total shares of common stock equivalents 3,499,934 14,405,301 9,745,621 Recently issued accounting pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that the Company adopts as of the specified effective date. Unless otherwise discussed below, the Company does not believe that the adoption of recently issued standards have or may have a material impact on our consolidated financial statements or disclosures. In June 2018, the FASB issued ASU No. 2018-07, “ Compensation—Stock Compensation”, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees, except for specific exceptions. This ASU is effective for annual or any interim periods beginning after December 15, 2019. The Company is currently assessing the impact of adopting this authoritative guidance on its financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. ASU 2016-13 was adopted by the Company on January 1, 2020 and has no current impact on the Company as we do not have any financial instruments covered by the topic. Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on the accompanying financial statements. |
Property and equipment
Property and equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property and equipment | |
Property and equipment | 3. Property and equipment Property and equipment consist of the following: December 31, 2019 2018 Lab equipment $ 88,107 $ 69,770 Furniture & Fixtures 20,580 16,313 Computer equipment 18,399 12,689 Property and equipment, at cost 127,086 98,772 Less accumulated depreciation and amortization (85,447) (74,322) Property and equipment—net $ 41,639 $ 24,450 Depreciation expense for years ended December 31, 2019, 2018 and 2017 was $11,126, $8,316 and $7,932, respectively. |
Fair value measurements
Fair value measurements | 12 Months Ended |
Dec. 31, 2019 | |
Fair value measurements | |
Fair value measurements | 4. Fair value measurements The Company’s financial instruments consist of accounts payable. The carrying amount of accounts payable is considered a reasonable estimate of fair value due to the short-term maturity. The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the proceeds that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. All fair value measurements are classified in the three-tier fair value hierarchy, which categorizes the inputs used in measuring fair value. These categories include (in descending order of priority) Level 1, defined as observable inputs, such as quoted prices in active markets for identical securities; Level 2, defined as inputs other than quoted prices included in Level 1 that are either directly or indirectly observable; and Level 3, defined as significant unobservable inputs in which little or no market data exists, therefore, requiring an entity to develop its own assumptions. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases | |
Leases | 5. Leases On January 1, 2019, the Company adopted ASC 842 using the modified retrospective transition approach allowed under ASU 2018-11 which releases companies from presenting comparative periods and related disclosures under ASC 842 and requires a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption (Note 2). The Company is party to two operating leases for office or laboratory space. The Company’s finance leases are immaterial both individually and in the aggregate. The Company has elected to apply the short-term lease exception to all leases of one year or less. Rent expense for years ended December 31, 2019, 2018 and 2017 was $278,603, $263,518 and $242,263, respectively, which are included in operating expenses. Further, the Company has applied the guidance in ASC 842 to its corporate office and laboratory leases and has determined that these should be classified as operating leases. Consequently, as a result of the adoption of ASC 842, the Company recognized a ROU lease asset of approximately $329,384 with a corresponding lease liability of approximately $348,040 based on the present value of the minimum rental payments of such leases. In accordance with ASC 842, the beginning balance of the ROU lease asset was reduced by the existing deferred rent liability at inception of approximately $18,656. In the consolidated balance sheets at December 31, 2019, the Company has a ROU asset balance of $521,392 and a current and non-current lease liability of $242,329 and $302,621, respectively, relating to the ROU lease asset. The balance of both the ROU lease asset and the lease liabilities primarily consists of future payments under the Company’s office lease in Boston, Massachusetts. The Company is party to an operating lease in Boston, Massachusetts for office and laboratory space. The lease commenced in November 2016 with the initial term set to expire in December 2021. This office lease does not have any renewal options. The Company was party to an operating lease in Solna, Sweden that had month-to-month payments and expired on June 30, 2019. Additionally, the Company entered into a new operating lease for office and laboratory space in Solna, Sweden that is effective July 1, 2019 and expires in June 2022. Base rent for this lease is approximately $128,000 annually. The Company recognized a ROU lease asset of approximately $355,330 with a corresponding lease liability of the same amount based on the present value of the minimum rental payments of such leases. Quantitative information regarding the Company’s leases for the year ended December 31, 2019 is as follows: Year Ended December 31, Lease Cost 2019 Operating lease cost $ 161,856 Other Information Operating cash flows paid for amounts included in the measurement of lease liabilities $ 174,846 Operating lease liabilities arising from obtaining right‑of‑use assets $ 355,330 Weighted average remaining lease term (years) 2.0 -2.5 Weighted average discount rate 3.0% - 4.3% Future lease payments under noncancelable leases are as follows at December 31, 2019: Operating Future Lease Payments Leases 2020 $ 251,008 2021 253,303 2022 63,539 Total Lease Payments $ 567,850 Less: Imputed Interest (22,900) Total Lease Liabilities $ 544,950 As most of the Company’s leases do not provide an implicit rate, the Company used its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the incremental borrowing rate on January 1, 2019 for operating leases that commenced prior to that date. |
Accrued expenses
Accrued expenses | 12 Months Ended |
Dec. 31, 2019 | |
Accrued expenses | |
Accrued expenses | 6. Accrued expenses Accrued expenses at consist of the following: December 31, 2019 2018 Professional fees $ 207,917 $ 80,771 Compensation and benefits 961,790 624,298 Research and development 4,992,311 2,178,086 Other 480,535 245,617 Total accrued expenses $ 6,642,553 $ 3,128,772 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Income Taxes | 7. Income taxes Components of the net loss consist of the following: Year ended December 31, 2019 2018 2017 Foreign $ (25,268,373) $ (15,713,032) $ (15,185,931) Domestic (2,791,434) 184,763 (4,319) Net loss $ (28,059,807) $ (15,528,269) $ (15,190,250) A reconciliation of the effect of applying the federal statutory rate to the net loss and the effective income tax rate: Year ended December 31, 2019 2018 2017 Statutory federal income tax rate 21.0 % 21.0 % 34.0 % Earnings in jurisdictions taxed at rates different from the statutory U.S. federal tax rate 0.4 % 1.0 % (12.0) % Permanent differences 3.7 % 0.4 % (0.1) % Changes in valuation allowance (25.1) % (16.7) % (21.5) % Rate change due to TCJA — % — % (0.4) % Rate change due to Swedish tax reform — % (5.7) % — % Effective income tax rate — % — % — % Significant components of the Company’s deferred taxes as of December 31, 2019 and 2018 are as follows: December 31, 2019 2018 Deferred tax assets: Net operating loss carryforward $ 20,536,344 $ 12,816,395 Capitalized research and development — 1,951 Intangible assets 26,842 — Accrued expenses 17,779 — Lease liability - ASC 842 128,337 — Gross deferred tax assets 20,709,302 12,818,346 Valuation allowance (19,676,794) (12,661,874) Total deferred tax assets 1,032,508 156,472 Deferred tax liabilities: Fixed assets (1,692) (2,050) Stock Compensation (908,322) (154,422) Right of Use Asset - ASC 842 (122,494) — Total deferred tax liabilities (1,032,508) (156,472) Net deferred tax assets (liabilities) $ — $ — The Company has no income tax expense due to operating losses incurred for the years ended December 31, 2019, 2018 and 2017, respectively. The Company has provided a valuation allowance for the full amount of the net deferred tax assets as, based on all available evidence, it is considered more likely than not that all the recorded deferred tax assets will not be realized in a future period. At December 31, 2019, the Company has $89.9 million, $7.3 million and $5.8 million of foreign, federal and state net operating loss carryforwards, respectively, that expire at various dates through 2037. Certain of these foreign, federal and state net operating loss carryforwards may be subject to Internal Revenue Code Section 382 or similar provisions, which impose limitations on their utilization. The valuation allowance increased in 2019 and 2018 by $7.0 million and $2.5 million, respectively due to the increase in the deferred tax assets by the same amounts; primarily due to net operating loss carryforwards. Realization of the future tax benefits is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Under the provisions of the U.S. Internal Revenue Code and Sweden tax law, certain changes in the Company’s ownership, including a sale of the Company or significant changes in ownership due to sales of equity, may have limited, or may limit in the future, the amount of net operating loss carryforwards that could be used annually to offset future taxable income. For U.S. and Swedish income tax purposes, the Company has not completed a study to assess whether a change of control has occurred or whether there have been changes of control since the Company’s formation due to the complexity and cost associated with such study and because there could be additional changes in control in the future. As a result, the Company is not able to estimate the effect of the change in control, if any, on the Company’s ability to utilize U.S. or Swedish net operating losses or other tax attribute carryforwards in the future. For Swedish income tax purposes, the Company’s net operating losses may be subject to limitations in accordance with the country’s group contribution restriction laws. The Company files tax returns in Sweden, the United States and Massachusetts, and all tax years since inception remain open to examination by the major taxing jurisdictions to which the Company is subject, as carryforward attributes generated in years past may still be adjusted upon examination by the Internal Revenue Service (IRS) or other authorities if they have or will be used in a future period. The Company is not currently under examination by the IRS or any other jurisdictions for any tax years. As of December 31, 2019, the Company had no uncertain tax positions. The Company has elected to recognize interest and penalties related to income tax matters as a component of income tax expense, of which no interest or penalties were recorded for the years ended December 31, 2019, 2018 and 2017. In June 2018, Sweden promulgated changes to the Swedish regulations on corporate income taxation. The law will apply from January 1, 2019. Among other things, the changes decrease the corporate income tax rate in two steps from 22% to 21.4% as of January 1, 2019 and 20.6% as of January 1, 2020. U.S. GAAP requires companies to revalue their deferred tax assets and deferred tax liabilities as of the date of enactment, with the resulting tax effects accounted for in the reporting period of enactment. This revaluation resulted in an overall reduction of deferred taxes of $0.7 million and a corresponding reduction in the valuation allowance. As such, there was no net impact to the Company’s statement of operations as a result of the reduction in tax rates. In December 2017, what is commonly known as the Tax Cuts and Jobs Act (the Tax Act), was signed into law. Among other things, the Tax Act permanently lowers the corporate federal income tax rate to 21% from the statutory rate of 35%, effective for tax years including or commencing January 1, 2018. As a result of the reduction of the corporate federal income tax rate to 21%, U.S. GAAP requires companies to revalue their deferred tax assets and deferred tax liabilities as of the date of enactment, with the resulting tax effects accounted for in the reporting period of enactment. This revaluation resulted in an overall reduction of deferred taxes of $0.1 million and a corresponding reduction in the valuation allowance. As such, there was no net impact to the Company’s statement of operations as a result of the reduction in tax rates. |
Convertible preferred stock
Convertible preferred stock | 12 Months Ended |
Dec. 31, 2019 | |
Convertible preferred stock | |
Convertible preferred stock | 8. Convertible preferred stock The Company has 440,000,000 shares authorized for all classes of equity combined. Series A Preferred In June 2011, the Company issued 145,469 shares of Series A Preferred for gross proceeds of $3,233,417. In March 2016, the Company issued 466,977 shares of Series A Preferred as settlement of its outstanding bridge loans totaling $3,249,627. All 612,446 shares of Series A Preferred were issued to related parties. In connection with the completion of the Company’s IPO in October 2019 (see Note 9), all outstanding shares of Series A Preferred stock were converted to common stock. Prior to its conversion to common stock, the rights and preferences of the Series A Preferred were as follows: Conversion —Each share of Series A Preferred may be converted at any time, at the option of the holder, into a share of common stock. The Series A Preferred automatically converts into shares of common stock when 1) shareholders representing a majority of the outstanding preferred shares calls for such conversion or 2) at the closing of an initial public offering of the Company’s common stock at a per share price of at least one and a half (1.5) times the average amount (EUR 16.05 based on all Series C preferred shares issued as of December 31, 2018) paid per Series C preferred share (as adjusted for share splits and similar) and aggregate proceeds in excess of EUR 50,000,000. Dividends —Holders of Series A Preferred do not accrue dividends. Voting rights —Preferred Stock and common stock vote together as one class on an as converted basis. Common stock voting rights on certain matters are subject to the powers, preferences, and rights of the Preferred Stock. Holders are entitled to vote on all matters and shall have the number of votes equal to the number of shares of common stock into which the shares of Preferred Stock held by such holder are then convertible. Series B Preferred In March 2016, the Company issued 3,322,762 shares of Series B Preferred for gross proceeds of $22,609,485. The Company also issued 590,445 shares of Series B Preferred in settlement of its outstanding bridge loans totaling $4,108,818. In October 2017, the Company issued 3,322,762 Series B preferred shares at a price per share of $7.02, for an aggregate purchase price of $23,349,617. All 7,235,969 shares of Series B Preferred were issued to related parties. In connection with the completion of the Company’s IPO in October 2019 (see Note 9), all outstanding shares of Series B Preferred stock were converted to common stock. Prior to its conversion to common stock, the rights and preferences of the Series B Preferred were as follows: Conversion —Each share of Series B Preferred may be converted at any time, at the option of the holder, into a share of common stock. The Series B Preferred automatically converts into shares of common stock when 1) shareholders representing a majority of the outstanding preferred shares calls for such conversion or 2) at the closing of an initial public offering of the Company’s common stock at a per share price of at least one and a half (1.5) times the average amount (EUR 16.05 based on all Series C preferred shares issued as of December 31, 2018) paid per Series C preferred share (as adjusted for share splits and similar) and aggregate proceeds in excess of EUR 50,000,000. Dividends —Holders are entitled to dividends of 8%, compounded annually if not paid. No dividends have been declared or paid . The Company has not accrued dividends on the Series B Preferred since dividends are only payable upon the occurrence of a liquidation event, including the transfer of more than fifty percent of the Company’s outstanding shares or the transfer of substantially all of the Company’s intellectual property. Approximately $8,806,426 of accrued dividends that were payable through December 31, 2018 was added to the stated liquidation preference amount of the Series B Preferred, which totaled $58,874,347 at December 31, 2018. Voting rights —Preferred Stock and common stock vote together as one class on an as converted basis. Common stock voting rights on certain matters are subject to the powers, preferences, and rights of the Preferred Stock. Holders are entitled to vote on all matters and shall have the number of votes equal to the number of shares of common stock into which the shares of Preferred Stock held by such holder are then convertible. Series C Preferred In November 2018, the Company issued 4,712,698 shares of Series C Preferred for gross proceeds of $56,725,342. In February 2019, the Company issued 467,17 3 shares of Series C Preferred for gross proceeds of $5,651,872. A total of 4,219,854 shares of Series C Preferred were issued to related parties. In connection with the completion of the Company's IPO in October 2019 (see Note 9), all outstanding shares of Series C Preferred stock were converted to common stock. Prior to its conversion to common stock, the rights and preferences of the Series C Preferred were as follows: Conversion —Each share of Series C Preferred may be converted at any time, at the option of the holder, into a share of common stock. The Series C Preferred automatically converts into shares of common stock when 1) shareholders representing a majority of the outstanding preferred shares calls for such conversion or 2) at the closing of an initial public offering of the Company’s common stock at a per share price of at least one and a half (1.5) times the average amount (EUR 16.05 based on all Series C preferred shares issued as of December 31, 2018) paid per Series C preferred share (as adjusted for share splits and similar) and aggregate proceeds in excess of EUR 50,000,000. Dividends —Holders are entitled to dividends of 8%, compounded annually if not paid. No dividends have been declared or paid as of December 31, 2018. The company has not accrued dividends on the Series C Preferred since dividends are only payable upon the occurrence of a liquidation event, including the transfer of more than fifty percent of the Company’s outstanding shares or the transfer of substantially all of the Company’s intellectual property. Approximately $389,970 of accrued dividends that were payable through December 31, 2018 was added to the stated liquidation preference amount of the Series C Preferred, which totaled $57,115,312 at December 31, 2018. Voting rights —Preferred Stock and common stock vote together as one class on an as converted basis. Common stock voting rights on certain matters are subject to the powers, preferences, and rights of the Preferred Stock. Holders are entitled to vote on all matters and shall have the number of votes equal to the number of shares of common stock into which the shares of Preferred Stock held by such holder are then convertible. Liquidation preference Upon liquidation, dissolution, or winding up of business, the Preferred Stock holders are entitled to receive a liquidation preference in priority to holders of common stock at the original issue price plus, in the case of Series B and Series C Preferred, any unpaid accumulated dividends as follows: 1) If a liquidation event occurs prior to the Company achieving a certain clinical milestone, Series C Preferred shareholders shall receive an amount per Series C Preferred share equal to the original subscription price per Series C Preferred share (as adjusted for share splits and similar) plus unpaid accumulated dividends. Secondly, after the Series C Preferred shareholders have received full payment, the Series B Preferred shareholders shall receive an amount per Series B preferred share equal to the original subscription price per Series B Preferred share (as adjusted for share splits and similar) plus unpaid accumulated dividends. Thirdly, after the Series B and C Preferred shareholders have received full payment, the Series A Preferred shareholders shall receive an amount per Series A preferred share equal to the original subscription price per Series A Preferred share (as adjusted for share splits and similar). When the Preferred A, B and C shareholders are satisfied in full, any excess assets available for distribution will be allocated ratably among holders of common stock and preferred stock based on their pro rata shareholdings on an as‑if‑converted basis. 2) If a liquidation event occurs after the Company achieves a certain clinical milestone, Series B and C Preferred shareholders, based on their pro rata shareholdings, shall receive an amount per Series B and C Preferred share equal to the original subscription price per Series B and C Preferred share (as adjusted for share splits and similar) plus unpaid accumulated dividends. Secondly, after the Series B and C Preferred shareholders have received full payment, the Series A Preferred shareholders shall receive an amount per Series A preferred share equal to the original subscription price per Series A Preferred share (as adjusted for share splits and similar). When the Preferred A, B and C shareholders are satisfied in full, any excess assets available for distribution will be allocated ratably among holders of common stock and preferred stock based on their pro rata shareholdings on an as‑if‑converted basis. The liquidation preferences apply to each series of preferred stock only to the extent the holders would receive less than three times their respective original purchase prices. |
Common stock
Common stock | 12 Months Ended |
Dec. 31, 2019 | |
Common stock | |
Common stock | 9. Common stock In October 2019, the Company completed its IPO of 6,516,667 shares of common stock at a price to the public of $15.00 per share, which included the exercise in full by the underwriters of their option to purchase an additional 850,000 shares of common stock. The Company received net proceeds of approximately $86.6 million, after deducting underwriting discounts and commissions and other offering expenses. The Company has 21,022,752 shares of common stock outstanding as of December 31, 2019. The holders of common stock are entitled to one vote for each share of common stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, after the payment or provision for payment of all debts and liabilities of the Company, the holders of common stock shall be entitled to share in the remaining assets of the Company available for distribution, if any. |
Stock option plan
Stock option plan | 12 Months Ended |
Dec. 31, 2019 | |
Stock option plan | |
Stock option plans | 10. Stock option plans In October 2016, the Board of Directors adopted the 2016 Amended and Restated Stock Option Program (the “ 2016 Plan”), which provided for the grant of stock options to the Company’s employees, officers, directors, and outside consultants for the purchase of up to 1,224,824 shares of the Company’s common stock. During 2017, the 2016 Plan was amended to provide up to 1,946,849 shares of the Company’s common stock. During 2018, the 2016 Plan was further amended to provide up to 3,069,999 shares of the Company’s common stock. Holders of stock options shall be entitled to exercise the vested portion of the stock option provided that a trade sale, as defined in the plan, or initial public offering has occurred. The holders of stock options may also exercise the vested portion of the stock option within six months of termination of employment. Stock options generally vested over a four-year period and were scheduled to expire in October 2026. In September 2019, the Company’s Board of Directors approved the 2019 Equity Incentive Plan (the “2019 Plan) and each outstanding option to purchase Aprea AB ordinary shares pursuant to the 2016 Plan was cancelled and the Company issued to each holder of such Aprea AB option, a substitute option to purchase, on the same terms and conditions as were applicable to such Aprea AB option, shares of the Company’s common stock pursuant to the 2019 Plan. As of December 31, 2019, there are no outstanding options under the 2016 Plan. The Board of Directors has the discretion to provide for accelerated vesting under the 2019 Plan. At December 31, 2019, there were 1,175,494 shares available for future grant under the 2019 Plan. The Company recorded stock-based compensation expense of $1,345,722, $329,814 and $395,440 during the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, there was $10,811,939 of unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the 2019 Plan, which is expected to be recognized over a weighted-average period of approximately 3.6 years. The fair value of each option award is estimated on the date of grant using Black-Scholes, with the assumptions noted in the table below. Expected volatility for the Company’s common stock was determined based on an average of the historical volatility of a peer group of similar public companies. The expected term of options granted to employees was calculated using the simplified method, which represents the average of the contractual term of the option and the weighted-average vesting period of the option. The Company uses the simplified method because it does not have sufficient historical option exercise data to provide a reasonable basis upon which to estimate expected term. The contractual life of the option was used for the expected life of options granted to non-employee. The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future. The risk-free rate for periods within the expected life of the option is based upon the Swedish Government Bond Rate in effect at the time of grant. In determining the exercise prices for options granted, the Company’s Board of Directors has considered the fair value of the common stock as of the measurement date. The fair value of the common stock at each award grant date was based upon a variety of factors, including the results obtained from an independent third-party valuation, the Company’s financial position and historical financial performance, the status of technological developments within the Company’s proposed products, an evaluation or benchmark of the Company’s competition, the current business climate in the marketplace, the illiquid nature of the common stock, arm’s length sales of the Company’s capital stock, including Preferred Stock, the effect of the rights and preferences of the preferred shareholders, and the prospects of a liquidity event, among others. The assumptions used in Black-Scholes are as follows: Year ended December 31, 2019 2018 2017 Expected volatility 73.5% ‑ 74.5% 71.5 % 71.9% ‑ 75.4% Risk‑free rate 1.53% ‑ 2.63% 2.9 % 2.3% ‑ 2.5% Expected dividend yield 0% 0 % 0% Expected term in years 6.08 - 7.59 8.2 8.6 ‑ 9.7 A summary of option activity under the Plan during the years ended December 31, 2019, 2018 and 2017 are as follows: Weighted‑ Weighted average average exercise remaining Aggregate Number of price per contractual intrinsic options share term (in years) value Outstanding at January 1, 2017 1,237,292 $ 1.85 9.2 Granted 663,224 0.73 Exercised — — Cancelled/Forfeited (3,310) 0.92 Outstanding at December 31, 2017 1,897,206 $ 1.46 8.3 Granted 24,067 1.01 Exercised (2,306) 0.92 Cancelled/Forfeited (74,779) 17.31 Outstanding at December 31, 2018 1,844,188 $ 0.82 7.6 Granted 2,018,796 8.82 Exercised (322,267) 0.23 Cancelled/Forfeited (40,783) 0.99 Outstanding at December 31, 2019 3,499,934 $ 5.49 7.5 $ 141,413,705 Exercisable at December 31, 2019 1,203,298 $ 0.93 6.7 $ 54,101,434 Vested or expected to vest at December 31, 2019 3,499,934 $ 5.49 7.5 $ 141,413,705 The weighted-average grant date fair value of options granted during the years ended December 31, 2019, 2018 and 2017, was $6.68, $0.69 and $0.75 per share, respectively. |
Commitments and contingencies
Commitments and contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and contingencies | |
Commitments and contingencies | 11. Commitments and contingencies The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. As of December 31, 2019, the Company has not recorded a provision for any contingent losses. |
Summary of significant accoun_2
Summary of significant accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of significant accounting policies | |
Principles of consolidation | Principles of consolidation —The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries Aprea Therapeutics AB, Aprea Personal AB, which was incorporated in May 2009, and Aprea US, Inc., which was incorporated in June 2016. Management has concluded it has a single reporting segment for purposes of reporting financial condition and results of operations. All intercompany transactions and balances have been eliminated. |
Use of estimates | Use of estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses as of and during the reporting period. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company assesses estimates on an ongoing basis; however, actual results could materially differ from those estimates. Significant items subject to such estimates and assumptions include fair value of stock-based compensation expense. |
Stock split | Stock split —In September 2019, the Company effected a 1-for-1.6045 stock split of the Company’s preferred and common stock. All share and per share amounts of preferred and common stock contained in the Company’s consolidated financial statements have been retroactively adjusted for all periods presented to give effect to the stock split. |
Foreign currency and currency translation | Foreign currency and currency translation — The functional currency for Aprea Therapeutics AB and its wholly owned foreign subsidiary, Aprea Personal AB, is the Swedish Krona. Assets and liabilities of Aprea Therapeutics AB and Aprea Personal AB are translated into United States dollars at the exchange rate in effect on the balance sheet date. Revenues and expenses are translated at the average exchange rate in effect during the period. Unrealized translation gains and losses are recorded as a cumulative translation adjustment, which is included in the consolidated statements of convertible preferred stock and stockholders’ equity (deficit) as a component of accumulated other comprehensive loss. Adjustments that arise from exchange rate changes on transactions denominated in a currency other than the local currency are included in other income (expense), net in the consolidated statements of operations as incurred. |
Concentrations of credit risk | Concentrations of credit risk —Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash. Periodically, the Company may maintain deposits in financial institutions in excess of government insured limits. Management believes that the Company is not exposed to significant credit risk as the Company’s deposits are held at financial institutions that management believes to be of high credit quality, and the Company has not experienced any losses on these deposits. |
Cash and cash equivalents | Cash and cash equivalents —The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. |
Property and equipment | Property and equipment —Property and equipment are recorded at cost. Expenditures for repairs and maintenance are expensed as incurred. When assets are retired or disposed of, the assets and related accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is included in the determination of net income or loss. Fixed assets acquired for research and development purposes are assessed for alternative future use. Depreciation is provided using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the asset. Asset category Estimated useful life Computer equipment and software 5 years Furniture and fixtures 5 years Laboratory equipment and office furniture 5 years Leasehold improvements Remainder of lease term |
Impairment of long lived assets | Impairment of long-lived assets —Periodically, the Company evaluates its long-lived assets, which consist primarily of property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. To date, no impairments have occurred. |
Fair value of financial instruments | Fair value of financial instruments —The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability between market participants at measurement dates. ASC Topic 820, Fair Value Measurement (“ASC 820”), establishes a three‑level valuation hierarchy for instruments measured at fair value. The hierarchy is based on the transparency of inputs to the valuation of an asset or liability as of the measurement date. The hierarchy defines three levels of valuation inputs, of which the first two are considered observable and the last is considered unobservable: · Level 1 inputs: Quoted prices in active markets for identical assets or liabilities. · Level 2 inputs: Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable, such as quoted market prices, interest rates and yield curves. · Level 3 inputs: Unobservable inputs developed using estimates or assumptions developed by the Company, which reflect those that a market participant would use in pricing the asset or liability. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company’s financial instruments consist of accounts payable. The carrying amount of accounts payable is considered a reasonable estimate of fair value due to the short‑term maturity. |
Convertible preferred stock | Convertible preferred stock — The Company has classified convertible preferred stock as temporary equity in the accompanying December 31, 2018 balance sheet due to certain change in control events that are outside of the Company’s control, including sale or transfer of control of the Company, as holders of the Preferred Stock could cause redemption of the shares in these situations. The Company does not accrete the carrying values of the Preferred Stock to the redemption values since a liquidation event was not considered probable as of December 31, 2018. Subsequent adjustments of the carrying values to the ultimate redemption values will be made only if it becomes probable that such a liquidation event will occur. |
Accounting for leases | Accounting for leases —In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016 02, “Leases” (“ASC 842”) to enhance the transparency and comparability of financial reporting related to leasing arrangements. Under this new lease standard, most leases are required to be recognized on the balance sheet as right‑of‑use assets and lease liabilities. Disclosure requirements have been enhanced with the objective of enabling financial statement users to assess the amount, timing, and uncertainty of cash flows arising from leases. Prior to January 1, 2019, GAAP did not require lessees to recognize assets and liabilities related to operating leases on the balance sheet. The new standard establishes a right‑of‑use (“ROU”) model that requires a lessee to recognize a ROU asset and corresponding lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement as well as the reduction of the right of use asset. The Company has adopted the standard effective January 1, 2019, using the modified retrospective method. The new standard provides a number of optional practical expedients in transition. The Company has elected to apply the ‘package of practical expedients’ which allow us to not reassess (i) whether existing or expired arrangements contain a lease, (ii) the lease classification of existing or expired leases, or (iii) whether previous initial direct costs would qualify for capitalization under the new lease standard. The Company has also elected to apply (i) the practical expedient which allows us to not separate lease and non‑lease components, for new leases entered into after adoption and (ii) the short‑term lease exemption for all leases with an original term of less than 12 months, for purposes of applying the recognition and measurements requirements in the new standard. For the impact to the Company’s consolidated financial statement upon adoption of the new leasing standard, see Note 3 to our unaudited condensed consolidated financial statements. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on specific facts and circumstances, the existence of an identified asset(s), if any, and the Company’s control over the use of the identified asset(s), if applicable. Operating lease liabilities and their corresponding right‑of‑use assets are recorded based on the present value of future lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company will utilize the incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. As of the ASC 842 effective date, the Company’s incremental borrowing rate ranged from approximately 3.0% to 4.3% based on the remaining lease term of the applicable leases. The Company has elected not to separate lease and non‑lease components as a single component. Operating leases are recognized on the balance sheet as ROU lease assets, lease liabilities current and lease liabilities non‑current. Fixed rents are included in the calculation of the lease balances while variable costs paid for certain operating and pass‑through costs are excluded. Lease expense is recognized over the expected term on a straight‑line basis. |
Research and development costs | Research and development costs —Research and development costs are charged to expense as incurred. Research and development expenses incurred in performing research and development activities, include salaries and benefits, materials and supplies, preclinical expenses, stock-based compensation expense, depreciation of equipment, contract services, and other outside expenses. Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using or information provided to the Company by its vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued research and development. |
Stock based compensation | Stock‑based compensation —The Company measures stock options and other stock-based awards granted to employees and directors based on their fair value on the date of the grant and recognize compensation expense of those awards, net of estimated forfeitures, over the requisite service period, which is generally the vesting period of the respective award. The Company applies the straight‑line method of expense recognition to all awards with only service based vesting conditions. For stock-based awards granted to non‑employees, compensation expense is recognized over the period during which services are rendered by such non‑employees until completed in accordance with the FASB issued ASU No. 2018‑07, Compensation Stock Compensation (Topic 718): Improvements to Nonemployee Share Based Payment Accounting. The new standard largely aligns the accounting for share based payment awards issued to employees and nonemployees by expanding the scope of ASC 718 to apply to nonemployee share based transactions, as long as the transaction is not effectively a form of financing. The Company estimates the fair value of each stock option grant on the date of grant using the Black Scholes option pricing model, which uses as inputs the fair value of the Company’s common stock and assumptions the Company makes for the volatility of its common stock, the expected term of its stock options, the risk free interest rate for a period that approximates the expected term of its stock options and its expected dividend yield. Determination of Fair Value of Common Stock Prior to the completion of the Company’s IPO, there had been no public market for the Company’s common stock, the estimated fair value of its common stock had been determined by its board of directors as of the date of each option grant, with input from management, considering the Company’s most recently available third party valuations of common stock and its board of directors’ assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately Held Company Equity Securities Issued as Compensation. The Company’s common stock valuations were prepared using a hybrid method, which used market approaches to estimate its enterprise value. The hybrid method is a probability weighed expected return method, or PWERM, where the equity value in one or more scenarios is calculated using an option pricing method, or OPM. The OPM treats common stock and preferred stock as call options on the total equity value of a company, with exercise prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes. Under this method, the common stock has value only if the funds available for distribution to stockholders exceeded the value of the preferred stock liquidation preference at the time of the liquidity event, such as a strategic sale or a merger. The PWERM is a scenario-based methodology that estimates the fair value of common stock based upon an analysis of future values for the company, assuming various outcomes. The common stock value is based on the probability weighted present value of expected future investment returns considering each of the possible outcomes available as well as the rights of each class of stock. The future value of the common stock under each outcome is discounted back to the valuation date at an appropriate risk adjusted discount rate and probability weighted to arrive at an indication of value for the common stock. These third party valuations were performed at various dates, which resulted in valuations of the Company’s common stock of $0.92 per share as of May 31, 2016, $1.01 per share as of October 2, 2017, $3.18 per share as of December 31, 2018 and $10.95 per share as of July 15, 2019. In addition to considering the results of these third‑party valuations, the Company’s board of directors considered various objective and subjective factors to determine the fair value of its common stock as of each grant date, including: · the prices at which the Company sold shares of preferred stock and the superior rights and preferences of the preferred stock relative to its common stock at the time of each grant; · the progress of the Company’s research and development programs, including the status and results of preclinical studies and clinical trials for its product candidates; · the Company’s stage of development and commercialization and its business strategy; · external market conditions affecting the biopharmaceutical industry and trends within the biopharmaceutical industry; · the Company’s financial position, including cash on hand, and its historical and forecasted performance and operating results; · the lack of an active public market for the Company’s common stock and its preferred stock; · the likelihood of achieving a liquidity event, such as an IPO, or sale of the Company in light of prevailing market conditions; and · the analysis of IPOs and the market performance of similar companies in the biopharmaceutical industry. The assumptions underlying these valuations represented management’s best estimate, which involved inherent uncertainties and the application of management’s judgment. As a result, if the Company had used significantly different assumptions or estimates, the fair value of its common stock and its stock‑based compensation expense could have been materially different. |
Income taxes | Income taxes —The Company accounts for income tax in accordance with ASC 740-10, Income Taxes (“ASC 740-10”), which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the Company’s financial statements and tax returns. Deferred tax assets and liabilities are determined based upon the differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and for loss and credit carryforwards, using enacted tax rates expected to be in effect in the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that these assets may not be realized. The Company determines whether it is more likely than not that a tax position will be sustained upon examination. If it is not more likely than not that a position will be sustained, none of the benefit attributable to the position is recognized. The tax benefit to be recognized for any tax position that meets the more-likely-than-not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon resolution of the contingency. The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for income taxes. |
Net loss per share | Net loss per share —The Company has reported losses since inception and has computed basic net loss per share attributable to common stockholders by dividing net loss attributable to common stockholders by the weighted‑average number of common shares outstanding for the period, without consideration for potentially dilutive securities. The Company computes diluted net loss per common share after giving consideration to all potentially dilutive common shares, including options to purchase common stock and convertible preferred stock, outstanding during the period determined using the treasury‑stock and if‑converted methods, except where the effect of including such securities would be antidilutive. Because the Company has reported net losses since inception, these potential common shares have been anti‑dilutive and basic and diluted loss per share have been the same. The following table sets forth the potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to include them would be anti‑dilutive (in common stock equivalent shares): Year ended December 31, 2019 2018 2017 Series A convertible preferred stock — 612,446 612,446 Series B convertible preferred stock — 7,235,969 7,235,969 Series C convertible preferred stock — 4,712,698 — Options to purchase common stock 3,499,934 1,844,188 1,897,206 Total shares of common stock equivalents 3,499,934 14,405,301 9,745,621 |
Recently issued accounting pronouncements | Recently issued accounting pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that the Company adopts as of the specified effective date. Unless otherwise discussed below, the Company does not believe that the adoption of recently issued standards have or may have a material impact on our consolidated financial statements or disclosures. In June 2018, the FASB issued ASU No. 2018-07, “ Compensation—Stock Compensation”, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees, except for specific exceptions. This ASU is effective for annual or any interim periods beginning after December 15, 2019. The Company is currently assessing the impact of adopting this authoritative guidance on its financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. ASU 2016-13 was adopted by the Company on January 1, 2020 and has no current impact on the Company as we do not have any financial instruments covered by the topic. Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on the accompanying financial statements. |
Summary of significant accoun_3
Summary of significant accounting policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of significant accounting policies | |
Summary of useful lives of property and equipment | Asset category Estimated useful life Computer equipment and software 5 years Furniture and fixtures 5 years Laboratory equipment and office furniture 5 years Leasehold improvements Remainder of lease term |
Schedule of basic and diluted net loss per share attributable to common stockholders | The following table sets forth the potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to include them would be anti‑dilutive (in common stock equivalent shares): Year ended December 31, 2019 2018 2017 Series A convertible preferred stock — 612,446 612,446 Series B convertible preferred stock — 7,235,969 7,235,969 Series C convertible preferred stock — 4,712,698 — Options to purchase common stock 3,499,934 1,844,188 1,897,206 Total shares of common stock equivalents 3,499,934 14,405,301 9,745,621 |
Property and equipment (Tables)
Property and equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property and equipment | |
Schedule of property and equipment | December 31, 2019 2018 Lab equipment $ 88,107 $ 69,770 Furniture & Fixtures 20,580 16,313 Computer equipment 18,399 12,689 Property and equipment, at cost 127,086 98,772 Less accumulated depreciation and amortization (85,447) (74,322) Property and equipment—net $ 41,639 $ 24,450 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases | |
Summary of quantitative information regarding the Company’s leases | Year Ended December 31, Lease Cost 2019 Operating lease cost $ 161,856 Other Information Operating cash flows paid for amounts included in the measurement of lease liabilities $ 174,846 Operating lease liabilities arising from obtaining right‑of‑use assets $ 355,330 Weighted average remaining lease term (years) 2.0 -2.5 Weighted average discount rate 3.0% - 4.3% |
Schedule of future lease payments under noncancellable leases | Future lease payments under noncancelable leases are as follows at December 31, 2019: Operating Future Lease Payments Leases 2020 $ 251,008 2021 253,303 2022 63,539 Total Lease Payments $ 567,850 Less: Imputed Interest (22,900) Total Lease Liabilities $ 544,950 |
Accrued expenses (Tables)
Accrued expenses (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accrued expenses | |
Schedule of accrued expenses | December 31, 2019 2018 Professional fees $ 207,917 $ 80,771 Compensation and benefits 961,790 624,298 Research and development 4,992,311 2,178,086 Other 480,535 245,617 Total accrued expenses $ 6,642,553 $ 3,128,772 |
Income taxes (Tables)
Income taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Schedule of components of the net loss | Year ended December 31, 2019 2018 2017 Foreign $ (25,268,373) $ (15,713,032) $ (15,185,931) Domestic (2,791,434) 184,763 (4,319) Net loss $ (28,059,807) $ (15,528,269) $ (15,190,250) |
Summary of reconciliation of the effect of applying federal statutory rate to the net loss and the effective income tax rate | Year ended December 31, 2019 2018 2017 Statutory federal income tax rate 21.0 % 21.0 % 34.0 % Earnings in jurisdictions taxed at rates different from the statutory U.S. federal tax rate 0.4 % 1.0 % (12.0) % Permanent differences 3.7 % 0.4 % (0.1) % Changes in valuation allowance (25.1) % (16.7) % (21.5) % Rate change due to TCJA — % — % (0.4) % Rate change due to Swedish tax reform — % (5.7) % — % Effective income tax rate — % — % — % |
Summary of significant components of deferred taxes | December 31, 2019 2018 Deferred tax assets: Net operating loss carryforward $ 20,536,344 $ 12,816,395 Capitalized research and development — 1,951 Intangible assets 26,842 — Accrued expenses 17,779 — Lease liability - ASC 842 128,337 — Gross deferred tax assets 20,709,302 12,818,346 Valuation allowance (19,676,794) (12,661,874) Total deferred tax assets 1,032,508 156,472 Deferred tax liabilities: Fixed assets (1,692) (2,050) Stock Compensation (908,322) (154,422) Right of Use Asset - ASC 842 (122,494) — Total deferred tax liabilities (1,032,508) (156,472) Net deferred tax assets (liabilities) $ — $ — |
Stock option plan (Tables)
Stock option plan (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stock option plan | |
Schedule of assumptions used in valuation of stock options | Year ended December 31, 2019 2018 2017 Expected volatility 73.5% ‑ 74.5% 71.5 % 71.9% ‑ 75.4% Risk‑free rate 1.53% ‑ 2.63% 2.9 % 2.3% ‑ 2.5% Expected dividend yield 0% 0 % 0% Expected term in years 6.08 - 7.59 8.2 8.6 ‑ 9.7 |
Summary of stock option activity | Weighted‑ Weighted average average exercise remaining Aggregate Number of price per contractual intrinsic options share term (in years) value Outstanding at January 1, 2017 1,237,292 $ 1.85 9.2 Granted 663,224 0.73 Exercised — — Cancelled/Forfeited (3,310) 0.92 Outstanding at December 31, 2017 1,897,206 $ 1.46 8.3 Granted 24,067 1.01 Exercised (2,306) 0.92 Cancelled/Forfeited (74,779) 17.31 Outstanding at December 31, 2018 1,844,188 $ 0.82 7.6 Granted 2,018,796 8.82 Exercised (322,267) 0.23 Cancelled/Forfeited (40,783) 0.99 Outstanding at December 31, 2019 3,499,934 $ 5.49 7.5 $ 141,413,705 Exercisable at December 31, 2019 1,203,298 $ 0.93 6.7 $ 54,101,434 Vested or expected to vest at December 31, 2019 3,499,934 $ 5.49 7.5 $ 141,413,705 |
Nature of business and basis _2
Nature of business and basis of presentation (Details) | 1 Months Ended | ||
Sep. 30, 2019$ / shares | Dec. 31, 2019USD ($)$ / shares | Dec. 31, 2018$ / shares | |
Cash balance | $ | $ 130,088,869 | ||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.11 |
Aprea Therapeutics AB | |||
Common stock, par value | $ 0.11 | ||
Convertible preferred stock | Aprea Therapeutics AB | |||
Conversion ratio | 1 | ||
Common Stock | Aprea Therapeutics AB | |||
Conversion ratio | 1 |
Summary of significant accoun_4
Summary of significant accounting policies - Stock split (Details) | 1 Months Ended |
Sep. 30, 2019 | |
Common Stock | |
Deferred offering costs | |
Stock split ratio | 0.62325 |
Preferred Stock | |
Deferred offering costs | |
Stock split ratio | 0.62325 |
Summary of significant accoun_5
Summary of significant accounting policies - Accounting for leases (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Property and equipment | |
Leases, election of practical expedients package | true |
Minimum | |
Property and equipment | |
Incremental borrowing rate | 3.00% |
Maximum | |
Property and equipment | |
Incremental borrowing rate | 4.30% |
Computer equipment and software | |
Property and equipment | |
Useful life | 5 years |
Furniture and fixtures | |
Property and equipment | |
Useful life | 5 years |
Laboratory equipment and office furniture | |
Property and equipment | |
Useful life | 5 years |
Summary of significant accoun_6
Summary of significant accounting policies - Stock-based compensation (Details) - $ / shares | Jul. 15, 2019 | Dec. 31, 2018 | Oct. 02, 2017 | May 31, 2016 |
Summary of significant accounting policies | ||||
Fair value of unlisted common stock | $ 10.95 | $ 3.18 | $ 1.01 | $ 0.92 |
Summary of significant accoun_7
Summary of significant accounting policies - Net loss per share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Potentially dilutive securities that have been excluded from the calculation of diluted net loss per share | |||
Total shares of common stock equivalents | 3,499,934 | 14,405,301 | 9,745,621 |
Series A convertible preferred stock | |||
Potentially dilutive securities that have been excluded from the calculation of diluted net loss per share | |||
Total shares of common stock equivalents | 612,446 | 612,446 | |
Series B convertible preferred stock | |||
Potentially dilutive securities that have been excluded from the calculation of diluted net loss per share | |||
Total shares of common stock equivalents | 7,235,969 | 7,235,969 | |
Series C convertible preferred stock | |||
Potentially dilutive securities that have been excluded from the calculation of diluted net loss per share | |||
Total shares of common stock equivalents | 4,712,698 | ||
Options to purchase common stock | |||
Potentially dilutive securities that have been excluded from the calculation of diluted net loss per share | |||
Total shares of common stock equivalents | 3,499,934 | 1,844,188 | 1,897,206 |
Property and equipment (Details
Property and equipment (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property and equipment | |||
Property and equipment, at cost | $ 127,086 | $ 98,772 | |
Less accumulated depreciation and amortization | (85,447) | (74,322) | |
Property and equipment—net | 41,639 | 24,450 | |
Depreciation expense | 11,126 | 8,316 | $ 7,932 |
Lab equipment | |||
Property and equipment | |||
Property and equipment, at cost | 88,107 | 69,770 | |
Furniture and fixtures | |||
Property and equipment | |||
Property and equipment, at cost | 20,580 | 16,313 | |
Computer equipment | |||
Property and equipment | |||
Property and equipment, at cost | $ 18,399 | $ 12,689 |
Leases - Summary (Details)
Leases - Summary (Details) | Jul. 01, 2019USD ($) | Dec. 31, 2019USD ($)lease | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jan. 01, 2019USD ($) |
Leases | |||||
Number of operating leases | lease | 2 | ||||
Right of use lease asset | $ 521,392 | ||||
Lease liability | 544,950 | ||||
Lease liability—current | 242,329 | ||||
Lease liability—noncurrent | 302,621 | ||||
Massachusetts | |||||
Leases | |||||
Right of use lease asset | 521,392 | ||||
Lease liability—current | 242,329 | ||||
Lease liability—noncurrent | 302,621 | ||||
Sweden | |||||
Leases | |||||
Annual base rent | $ 128,000 | ||||
Adjustment | Sweden | |||||
Leases | |||||
Right of use lease asset | 355,330 | ||||
Lease liability | $ 355,330 | ||||
ASU 2018-11 - Leases (Topic 842) | Adjustment | |||||
Leases | |||||
Right of use lease asset | $ 329,384 | ||||
Lease liability | 348,040 | ||||
Deferred rent liability | $ 18,656 | ||||
Operating Expenses | |||||
Leases | |||||
Rent expense - ASC 842 | $ 278,603 | ||||
Rent expense - ASC 840 | $ 263,518 | $ 242,263 |
Leases - Quantitative Informati
Leases - Quantitative Information (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Quantitative information regarding the Company’s leases | |
Operating lease cost | $ 161,856 |
Other Information | |
Operating cash flows paid for amounts included in the measurement of lease liabilities | 174,846 |
Operating lease liabilities arising from obtaining right-of-use assets | $ 355,330 |
Minimum | |
Other Information | |
Weighted average remaining lease term (years) | 2 years |
Weighted average discount rate | 3.00% |
Maximum | |
Other Information | |
Weighted average remaining lease term (years) | 2 years 6 months |
Weighted average discount rate | 4.30% |
Leases - Future lease payments
Leases - Future lease payments (Details) | Dec. 31, 2019USD ($) |
Future Lease Payments | |
2020 | $ 251,008 |
2021 | 253,303 |
2022 | 63,539 |
Total Lease Payments | 567,850 |
Less: Imputed Interest | (22,900) |
Total Lease Liabilities | $ 544,950 |
Accrued expenses (Details)
Accrued expenses (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Accrued expenses | ||
Professional fees | $ 207,917 | $ 80,771 |
Compensation and benefits | 961,790 | 624,298 |
Research and development | 4,992,311 | 2,178,086 |
Other | 480,535 | 245,617 |
Total accrued expenses | $ 6,642,553 | $ 3,128,772 |
Income taxes - Components of Ne
Income taxes - Components of Net Loss (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income taxes | |||
Net loss | $ (28,059,807) | $ (15,528,269) | $ (15,190,250) |
Foreign | |||
Income taxes | |||
Net loss | (25,268,373) | (15,713,032) | (15,185,931) |
Federal | |||
Income taxes | |||
Net loss | $ (2,791,434) | $ 184,763 | $ (4,319) |
Income taxes - Income Taxes Rat
Income taxes - Income Taxes Rate Reconciliation (Details) | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of effect of applying the federal statutory rate to the net loss and the effective income tax rate | ||||
Statutory federal income tax rate | 35.00% | 21.00% | 21.00% | 34.00% |
Earnings in jurisdictions taxed at rates different from the statutory U.S. federal tax rate | 0.40% | 1.00% | (12.00%) | |
Permanent differences | 3.70% | 0.40% | (0.10%) | |
Changes in valuation allowance | (25.10%) | (16.70%) | (21.50%) | |
Rate change due to TCJA | (0.40%) | |||
Rate change due to Swedish tax reform | (5.70%) |
Income taxes - Components of De
Income taxes - Components of Deferred Taxes (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Net operating loss carryforward | $ 20,536,344 | $ 12,816,395 |
Capitalized research and development | 1,951 | |
Intangible assets | 26,842 | |
Accrued expenses | 17,779 | |
Lease liability - ASC 842 | 128,337 | |
Gross deferred tax assets | 20,709,302 | 12,818,346 |
Valuation allowance | (19,676,794) | (12,661,874) |
Total deferred tax assets | 1,032,508 | 156,472 |
Deferred tax liabilities: | ||
Fixed assets | (1,692) | (2,050) |
Stock Compensation | (908,322) | (154,422) |
Right of Use Asset - ASC 842 | (122,494) | |
Total deferred tax liabilities | $ (1,032,508) | $ (156,472) |
Income taxes - Narrative (Detai
Income taxes - Narrative (Details) - USD ($) | Jan. 01, 2020 | Jan. 01, 2019 | Jun. 30, 2018 | May 31, 2018 | Dec. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Operating Loss Carryforwards [Line Items] | ||||||||
Income tax expense | $ 0 | $ 0 | $ 0 | |||||
Valuation allowance increase due to increase in the deferred tax assets | 7,000,000 | 2,500,000 | ||||||
Uncertain tax positions | 0 | |||||||
Recognized interest and penalties related to income tax matters as a component of income tax expense | $ 0 | $ 0 | $ 0 | |||||
Corporate income tax rate | 35.00% | 21.00% | 21.00% | 34.00% | ||||
Increase (decrease) in deferred income taxes | $ (700,000) | $ (100,000) | ||||||
Foreign | ||||||||
Operating Loss Carryforwards [Line Items] | ||||||||
Operating loss carryforwards | 89,900,000 | |||||||
Federal | ||||||||
Operating Loss Carryforwards [Line Items] | ||||||||
Operating loss carryforwards | 7,300,000 | |||||||
State | ||||||||
Operating Loss Carryforwards [Line Items] | ||||||||
Operating loss carryforwards | $ 5,800,000 | |||||||
Swedish income tax | ||||||||
Operating Loss Carryforwards [Line Items] | ||||||||
Corporate income tax rate | 20.60% | 21.40% | 22.00% |
Convertible preferred stock (De
Convertible preferred stock (Details) | 1 Months Ended | 12 Months Ended | ||||||||
Feb. 28, 2019USD ($)shares | Nov. 30, 2018USD ($)shares | Oct. 31, 2017USD ($)$ / sharesshares | Mar. 31, 2016USD ($)shares | Jun. 30, 2011USD ($)shares | Dec. 31, 2019USD ($)shares | Dec. 31, 2018USD ($)shares | Dec. 31, 2017USD ($)shares | Dec. 31, 2018EUR (€)€ / sharesshares | Dec. 31, 2018USD ($)shares | |
Convertible preferred stock | ||||||||||
Aggregate number of authorized shares for all classes of equity | 440,000,000 | |||||||||
Criteria for automatic conversion of Series A preferred shares | ||||||||||
Convertible preferred stock | ||||||||||
Threshold multiplier for determining automatic conversion | 1.5 | 1.5 | ||||||||
Average price paid per Series C convertible preferred share | € / shares | € 16.05 | |||||||||
Minimum aggregate proceeds | € | € 50,000,000 | |||||||||
Criteria for automatic conversion of Series B preferred shares | ||||||||||
Convertible preferred stock | ||||||||||
Threshold multiplier for determining automatic conversion | 1.5 | 1.5 | ||||||||
Average price paid per Series C convertible preferred share | € / shares | € 16.05 | |||||||||
Minimum aggregate proceeds | € | € 50,000,000 | |||||||||
Criteria for automatic conversion of Series C preferred shares | ||||||||||
Convertible preferred stock | ||||||||||
Threshold multiplier for determining automatic conversion | 1.5 | 1.5 | ||||||||
Average price paid per Series C convertible preferred share | € / shares | € 16.05 | |||||||||
Minimum aggregate proceeds | € | € 50,000,000 | |||||||||
Series A convertible preferred stock | ||||||||||
Convertible preferred stock | ||||||||||
Convertible preferred stock, issued | 0 | 612,446 | 612,446 | |||||||
Series A convertible preferred stock | Shares issued to related parties | ||||||||||
Convertible preferred stock | ||||||||||
Number of convertible preferred shares issued during the period | 145,469 | |||||||||
Proceeds from issuance of convertible preferred shares | $ | $ 3,233,417 | |||||||||
Number of convertible preferred shares issued during the period as settlement of debt | 466,977 | |||||||||
Value of convertible preferred shares issued as settlement of debt | $ | $ 3,249,627 | |||||||||
Convertible preferred stock, issued | 612,446 | |||||||||
Series B convertible preferred stock | ||||||||||
Convertible preferred stock | ||||||||||
Number of convertible preferred shares issued during the period | 3,322,762 | |||||||||
Proceeds from issuance of convertible preferred shares | $ | $ 23,343,863 | |||||||||
Convertible preferred stock, issued | 0 | 7,235,969 | 7,235,969 | |||||||
Dividends to which each holder is entitled (as a percent) | 8.00% | |||||||||
Dividends declared (paid) during the period | $ | $ 0 | |||||||||
Accrued dividends added to liquidation preference amount | $ | $ 8,806,426 | |||||||||
Convertible preferred stock, liquidation preference | $ | $ 58,874,347 | |||||||||
Percentage of outstanding shares | 50.00% | 50.00% | ||||||||
Series B convertible preferred stock | Shares issued to related parties | ||||||||||
Convertible preferred stock | ||||||||||
Number of convertible preferred shares issued during the period | 3,322,762 | 3,322,762 | ||||||||
Temporary equity, price per share | $ / shares | $ 7.02 | |||||||||
Proceeds from issuance of convertible preferred shares | $ | $ 23,349,617 | $ 22,609,485 | ||||||||
Number of convertible preferred shares issued during the period as settlement of debt | 590,445 | |||||||||
Value of convertible preferred shares issued as settlement of debt | $ | $ 4,108,818 | |||||||||
Convertible preferred stock, issued | 7,235,969 | |||||||||
Series C convertible preferred stock | ||||||||||
Convertible preferred stock | ||||||||||
Number of convertible preferred shares issued during the period | 467,179 | 4,712,698 | ||||||||
Proceeds from issuance of convertible preferred shares | $ | $ 5,598,362 | $ 56,364,645 | ||||||||
Convertible preferred stock, issued | 0 | 4,712,698 | 4,712,698 | |||||||
Dividends to which each holder is entitled (as a percent) | 8.00% | |||||||||
Dividends declared (paid) during the period | $ | $ 0 | |||||||||
Accrued dividends added to liquidation preference amount | $ | $ 389,970 | |||||||||
Convertible preferred stock, liquidation preference | $ | $ 57,115,312 | |||||||||
Percentage of outstanding shares | 50.00% | 50.00% | ||||||||
Series C convertible preferred stock | Shares issued to related parties | ||||||||||
Convertible preferred stock | ||||||||||
Number of convertible preferred shares issued during the period | 467,173 | 4,712,698 | ||||||||
Proceeds from issuance of convertible preferred shares | $ | $ 5,651,872 | $ 56,725,342 | ||||||||
Convertible preferred stock, issued | 4,219,854 |
Common stock (Details)
Common stock (Details) | 1 Months Ended | 12 Months Ended | |
Oct. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2019USD ($)Voteshares | Dec. 31, 2018shares | |
Common stock | |||
Proceeds from issuance of common stock in initial public offering, net | $ | $ 86,600,000 | $ 86,906,179 | |
Common stock, outstanding | 21,022,752 | 1,155,366 | |
Number of voting rights per common share | Vote | 1 | ||
IPO | |||
Common stock | |||
Number of shares issued | 6,516,667 | ||
Issue price per share | $ / shares | $ 15 | ||
Underwriters Option | |||
Common stock | |||
Number of shares issued | 850,000 |
Stock option plan - Summary (De
Stock option plan - Summary (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Oct. 31, 2016 | |
Stock option plan | |||||
Options outstanding | 3,499,934 | 1,844,188 | 1,897,206 | 1,237,292 | |
Stock based compensation expense | $ 1,345,722 | $ 329,814 | $ 395,440 | ||
Options to purchase common stock | |||||
Stock option plan | |||||
Expiration period after termination | 6 months | ||||
Vesting period | 4 years | ||||
2016 Amended and Restated Stock Option Program | Options to purchase common stock | |||||
Stock option plan | |||||
Number of shares authorized | 1,224,824 | ||||
2017 Amended and Restated Stock Option Program | Options to purchase common stock | |||||
Stock option plan | |||||
Number of shares authorized | 1,946,849 | ||||
2018 Amended and Restated Stock Option Program | Options to purchase common stock | |||||
Stock option plan | |||||
Number of shares authorized | 3,069,999 | ||||
2019 Equity Incentive Plan | |||||
Stock option plan | |||||
Options outstanding | 0 | ||||
Shares available for grant | 1,175,494 | ||||
Unrecognized compensation cost | $ 10,811,939 | ||||
2019 Equity Incentive Plan | Weighted average | |||||
Stock option plan | |||||
Recognition period for unrecognized compensation cost | 3 years 7 months 6 days |
Stock option plan - Valuation a
Stock option plan - Valuation assumptions (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock option plan | |||
Expected volatility, minimum | 73.50% | ||
Expected volatility | 71.50% | ||
Expected volatility, maximum | 74.50% | ||
Risk‑free rate, minimum | 1.53% | ||
Risk‑free rate | 2.90% | ||
Risk‑free rate, maximum | 2.63% | ||
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected term in years | 8 years 2 months 12 days | ||
Minimum | |||
Stock option plan | |||
Expected volatility | 71.90% | ||
Risk‑free rate | 2.30% | ||
Expected term in years | 6 years 29 days | 8 years 7 months 6 days | |
Maximum | |||
Stock option plan | |||
Expected volatility | 75.40% | ||
Risk‑free rate | 2.50% | ||
Expected term in years | 7 years 7 months 2 days | 9 years 8 months 12 days |
Stock option plan - Stock optio
Stock option plan - Stock option activity (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Number of options | ||||
Outstanding, beginning of period | 1,844,188 | 1,897,206 | 1,237,292 | |
Granted | 2,018,796 | 24,067 | 663,224 | |
Exercised | (322,267) | (2,306) | ||
Cancelled/Forfeited | (40,783) | (74,779) | (3,310) | |
Outstanding, end of period | 3,499,934 | 1,844,188 | 1,897,206 | 1,237,292 |
Exercisable | 1,203,298 | |||
Vested or expected to vest | 3,499,934 | |||
Weighted‑average exercise price per share | ||||
Outstanding, beginning of period | $ 0.82 | $ 1.46 | $ 1.85 | |
Granted | 8.82 | 1.01 | 0.73 | |
Exercised | 0.23 | 0.92 | ||
Cancelled/Forfeited | 0.99 | 17.31 | 0.92 | |
Outstanding, end of period | 5.49 | $ 0.82 | $ 1.46 | $ 1.85 |
Exercisable | 0.93 | |||
Vested or expected to vest | $ 5.49 | |||
Weighted average remaining contractual term (in years) | ||||
Outstanding | 7 years 6 months | 7 years 7 months 6 days | 8 years 3 months 18 days | 9 years 2 months 12 days |
Exercisable | 6 years 8 months 12 days | |||
Vested or expected to vest | 7 years 6 months | |||
Aggregate Intrinsic Value | ||||
Outstanding | $ 141,413,705 | |||
Exercisable | 54,101,434 | |||
Vested or expected to vest | $ 141,413,705 | |||
Additional Disclosures | ||||
Weighted average grant date fair value of options granted | $ 6.68 | $ 0.69 | $ 0.75 |
Commitments and contingencies (
Commitments and contingencies (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Commitments and contingencies | |
Provision for contingent losses | $ 0 |